US Foods (NYSE:USFD) reported higher third-quarter earnings and continued market share gains, even as weaker consumer demand and rising fuel costs pressured its foodservice distribution business.
Net sales increased 2.1% from a year earlier to $10.4 billion, while adjusted EBITDA rose 9.9% to $555 million. Adjusted diluted earnings per share increased 17.8% to $1.26, helped by margin expansion and share repurchases.
Chair and CEO Dave Flitman said the company gained share with independent restaurants and healthcare customers for the 22nd and 24th consecutive quarters, respectively. But total case volume growth of 1.3% fell short of the company’s expectations as consumer confidence and labor market conditions weakened and customers became more value-conscious.
“Although these factors pressured overall demand and resulted in total volume growth below our expectations, we remained focused on execution,” Flitman said.
Target customers drive growth
Independent restaurant case volume grew 5% in the quarter, matching the prior quarter’s pace. Healthcare volume increased 3.3% and hospitality volume rose 3.7%, while chain restaurant volume declined 1.5%.
Flitman said independent restaurant performance was fairly consistent throughout the third quarter. After some softness in the first two to three weeks of October, he said growth had reaccelerated in the following weeks to a level at or above the third-quarter exit rate.
Net new account growth reached 5.5%, its strongest level in more than three years, according to Flitman. Lines per customer increased slightly, while cases per line were flat to slightly lower, which he attributed in part to restaurant foot traffic pressure.
US Foods’ Pronto platform, which offers smaller orders and more frequent deliveries, generated more than $1 billion in sales through the first nine months, already exceeding its full-year 2025 total. The company operates Pronto in 52 markets and expects $1.3 billion in sales from the platform this year and more than $1.7 billion in 2027.
AI tools and seller compensation
Flitman said AI initiatives deployed over the past two years are generating more than $75 million of adjusted EBITDA across sales, supply chain and other functions. The company expects that figure to exceed $110 million next year.
The company is lowering its ongoing seller headcount growth target to a low-single-digit rate from its previous mid-single-digit target, citing productivity gains from its technology and changes to its seller compensation plan. Approximately 40% of sellers are now on entirely variable pay, ahead of management’s initial expectations.
Flitman said the compensation transition, previously expected to take two to three years, could finish closer to two years, though he cautioned that it was still early. CFO Dirk Locascio said lower hiring would not necessarily reduce selling costs because sellers would continue to be paid for the cases they sell.
Locascio said the AI benefits do not overlap with the company’s strategic vendor management initiative and have come primarily from incremental sales and margin, with productivity contributing a smaller portion.
Fuel and selling costs weigh on outlook
US Foods tightened its fiscal 2026 outlook and now expects net sales growth of 4% to 5%, adjusted EBITDA growth of 9% to 11%, and adjusted diluted EPS growth of 18% to 20%. It expects total case volume growth of 2.5% to 3.5%.
The forecast includes a 53rd week, which the company expects to add approximately one percentage point to both total case growth and adjusted EBITDA growth.
Locascio said temporary selling costs associated with the compensation transition would be an additional headwind in the fourth quarter, but he expects that pressure to ease in the first quarter and be eliminated by the second quarter of 2027. Higher fuel costs and less fuel locked in at lower prices also are expected to weigh on fourth-quarter results.
The company recovered approximately 70% of its year-over-year fuel cost increase through surcharges in the third quarter, compared with a typical recovery rate of 30% to 40%. Locascio said US Foods expects a similar recovery rate in the fourth quarter and assumes the broader macroeconomic environment remains relatively stable from current conditions.
Acquisition and capital allocation
In October, US Foods acquired Prime Line, a specialty distributor of gourmet Italian products with more than $110 million in annual sales. Flitman said the acquisition broadens the company’s imported specialty assortment and can be scaled through both Pronto and its broadline distribution network.
US Foods repurchased $191 million of shares in the third quarter, bringing year-to-date buybacks to $690 million. It generated nearly $1.2 billion in operating cash flow through the first nine months and ended the quarter with net leverage of 2.4 times, within its target range of 2 to 3 times.
Locascio said the company’s acquisition pipeline was as busy as he could remember, though many opportunities were at an early stage. “We’re going to be discerning” about fit and valuation, he said.
About US Foods (NYSE:USFD)
US Foods Holding Corp. is a foodservice distributor that supplies restaurants and other foodservice businesses across the United States. Its customers include independent restaurants, healthcare and senior-care facilities, hotels, educational institutions, and government organizations.
The company distributes a broad range of products, including fresh and frozen foods, meat, seafood, produce, dairy, beverages, and nonfood supplies. It also offers services and digital tools intended to help customers manage menus, purchasing, and kitchen operations.
US Foods is headquartered in Rosemont, Illinois, and traces its history to predecessor businesses dating back to the 19th century.
