ROSEMONT, Ill. - US Foods Holding Corp . (NYSE: NYSE:USFD) has successfully priced its $500 million senior unsecured notes offering, with an interest rate of 5.75% and a maturity date set for 2033. The company, one of the leading foodservice distributors in the United States, announced that the net proceeds from this offering will be utilized to repay a portion of its existing term loan facility.
The notes are scheduled to be issued by the company's wholly-owned subsidiary, US Foods, Inc., and will be guaranteed by all of US Foods' existing and future wholly-owned domestic subsidiaries that also guarantee the company's obligations under its term loan credit facility. The offering is expected to close on October 3, 2024, subject to the satisfaction of customary closing conditions.
US Foods has structured the notes offering to be exempt from the registration requirements of the Securities Act of 1933, targeting qualified institutional buyers in the United States under Rule 144A and international investors under Regulation S. The notes and their guarantees have not been registered under the Securities Act or any state securities laws, and they may not be offered or sold within the United States without registration or an exemption from the registration requirements.
This financial move comes as US Foods continues to manage its debt portfolio and strengthen its balance sheet. The company has stated that there is no guarantee that the offering will be completed on the proposed terms, or at all. This announcement is made purely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The notes will not be available for sale in any jurisdiction where such an offering would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
The information for this report is based on a press release statement from US Foods.
In other recent news, US Foods Holding Corp. has announced plans to offer $500 million in senior unsecured notes due in 2033. The proceeds from this private offering will be used to repay part of the company's existing term loan facility. In a parallel move, US Foods has repurchased 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.
On the financial front, US Foods reported an adjusted EBITDA of $478 million in the second quarter, surpassing the projected $467 million. Analyst firms including JPMorgan and BMO Capital Markets have responded by adjusting their outlook on US Foods, citing 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.
Other recent developments include the company's acquisition of IWC Foodservice and plans for aggressive share repurchases throughout the year. These actions reflect US Foods' commitment to driving shareholder value. Analyst firms such as Truist Securities, Wells Fargo, and BTIG have 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.
InvestingPro Insights
As US Foods Holding Corp. (NYSE: USFD) moves forward with its $500 million senior unsecured notes offering, it's worth examining some key financial metrics and insights provided by InvestingPro.
US Foods has demonstrated strong financial performance recently, with a market capitalization of $14.72 billion and impressive revenue of $36.7 billion over the last twelve months as of Q2 2024. The company's revenue growth stands at 4.9% for the same period, indicating steady expansion in its operations.
An InvestingPro Tip highlights that US Foods has shown a high return over the last year, which is corroborated by the data showing a remarkable 58.28% price total return over the past year. This strong performance suggests investor confidence in the company's strategic decisions, including debt management moves like the current notes offering.
Another relevant InvestingPro Tip points out that US Foods' liquid assets exceed its short-term obligations. This healthy liquidity position aligns well with the company's decision to refinance a portion of its existing term loan facility, potentially improving its debt structure and financial flexibility.
It's worth noting that analysts predict US Foods will be profitable this year, which could further support the company's debt management strategy. The company's price-to-earnings ratio stands at 28.13, indicating investor expectations for future growth.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on US Foods. In fact, there are 7 more InvestingPro Tips available for USFD, providing a deeper understanding of the company's financial health and market position.
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