ROSEMONT, Ill. - US Foods Holding Corp . (NYSE: NYSE:USFD) announced today its intention to offer $500 million in senior unsecured notes due in 2033 through its subsidiary, US Foods, Inc. The company aims to use the proceeds from this private offering to repay part of its existing term loan facility.
The offering is subject to market conditions and other factors, and there is no guarantee that it will be completed as described or at all. The notes, along with their guarantees, will be available to qualified institutional buyers in the United States under Rule 144A of the Securities Act of 1933, as amended, and to non-U.S. persons in offshore transactions in compliance with Regulation S under the same act.
These senior unsecured notes and the related guarantees have not been registered under the Securities Act or any state securities laws. Therefore, they may not be offered or sold within the United States without registration or an exemption from the registration requirements of the Securities Act and applicable state laws.
The announcement made clear that this press release is purely for informational purposes and does not represent an offer to sell or a solicitation of an offer to buy the notes or any other securities. Moreover, no sales of the notes or other securities will take place in any jurisdiction where such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
US Foods Holding Corp., headquartered in Rosemont, Illinois, is one of the largest food companies in the United States. The planned offering represents a strategic move to manage the company's debt profile and is based on a press release statement.
In other recent news, US Foods Holding Corp. made significant strides in its financial performance and strategic initiatives. The company purchased approximately $211 million of its common shares from a fund managed by Sachem Head Capital Management LP, as part of a broader $1 billion share repurchase program. CEO Dave Flitman expressed confidence in the company's business strategy and its commitment to profitable growth and market share expansion.
In addition to this, US Foods reported an adjusted EBITDA of $478 million in the second quarter, a figure that surpassed the projected $467 million. The company's gross profit met analysts' expectations, demonstrating the effectiveness of its strategic initiatives aimed at increasing gross profit dollars more than operating expenses.
Several analyst firms have adjusted their outlook on US Foods. JPMorgan (NYSE:JPM) raised the company's stock target from $58.00 to $60.00, while BMO Capital Markets maintained an Outperform rating and a $62.00 price target. Both firms cited the company's strategic plan for 2025 to 2027, which targets a 10% annual growth in EBITDA and a 20% annual increase in earnings per share.
Truist Securities, Wells Fargo (NYSE:WFC), and BTIG also raised their price targets following the company's strong first-quarter performance in 2024, which included a 6% increase in adjusted EBITDA to $356 million. Furthermore, US Foods announced the acquisition of IWC Foodservice and plans for aggressive share repurchases throughout the year. These are the recent developments for US Foods, reflecting the company's commitment to driving shareholder value.
InvestingPro Insights
US Foods Holding Corp.'s decision to offer $500 million in senior unsecured notes aligns with its strong financial position and market performance. According to InvestingPro data, the company boasts a market capitalization of $15.36 billion and has demonstrated impressive revenue growth, with a 7.72% increase in quarterly revenue as of Q2 2024.
The company's robust financial health is further evidenced by its profitability. InvestingPro Tips indicate that US Foods has been profitable over the last twelve months, and analysts predict continued profitability for the current year. This financial stability likely contributes to the company's confidence in issuing new debt to refinance existing obligations.
US Foods' stock performance has been particularly noteworthy, with a striking 58.28% price total return over the past year. The stock is currently trading near its 52-week high, reflecting strong investor confidence in the company's prospects. This positive market sentiment may create a favorable environment for the proposed debt offering.
It's worth noting that while US Foods demonstrates financial strength, an InvestingPro Tip suggests that the company suffers from weak gross profit margins. This could be a factor to watch as the company manages its debt and operational costs moving forward.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for US Foods, providing deeper insights into the company's financial health and market position.
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