US Foods’ Initial Q1 Results Show Soft Sales but Solid Margins Ahead of Crucial Shareholder Meeting

No-moat US Foods reported preliminary results for its first quarter ended April 2, including revenue of $7.8 billion (a 24% increase driven primarily by food inflation), topping the $7.5 billion FactSet consensus estimate but falling short of our $8.0 billion mark. Efficiency initiatives reduced operating expenses as a percentage of sales to 13%, compared with our 14.6% estimate for 2022, driven by routing improvements, new warehouse selection technology, and process enhancements. Management confirmed its 2022 outlook for adjusted EBITDA of $1.2 billion-$1.3 billion, compared with our $1.2 billion estimate, and we plan to defer any model adjustments until the quarter’s full results are released on May 12. US Foods’ shares, up slightly on the report, are fairly valued at just below our $40.50 fair value estimate.