Nov. 09--US Foods, the privately held Rosemont-based food service distributor, reported a decline in its third-quarter sales, but company executives said it was regaining its footing after a failed merger with rival Sysco.
Houston-based Sysco officially called off its December 2013 plan to buy US Foods on June 29 after a federal judge effectively scuttled the deal because of antitrust concerns from parties that included the Federal Trade Commission.
Last month, US Foods announced in an SEC filing that its parent company, USF Holding, would file for an initial public offering within the next 12 to 18 months, "subject to market conditions."
Under the company's new three-year plan, US Foods is focused on reducing costs and differentiating food, particularly within the independent restaurant segment, US Foods CEO Pietro Satriano said on a conference call with analysts Monday.
By the numbers: The company reported net sales of $5.79 billion for the third quarter ending Sept. 26, which represented a decline of 1.9 percent from the same period a year ago.
US Foods also reported net income of $36 million for the third quarter, an increase of $73 million from the same period a year ago.
Unit volume was down 0.6 percent, said US Foods Chief Financial Officer Fareed Khan, but that was partly offset by volume growth from higher-margin independent restaurant customers.
Merger-related costs were $22 million, Khan said, an increase of $15 million from the same period a year ago. That included expenses related to information technology, employee reductions, and legal and professional fees.
The "why": Satriano and Khan interpreted the third-quarter results as a step in the right direction for US Foods in the wake of its near tie-up with Sysco.
"With the merger uncertainty lifted, customers are coming back into the fold, and we are building momentum," Khan said.
Other highlights from the quarter: Recently, US Foods launched its first "grass-fed" burger in response to the continued call for "local and sustainable products," Satriano said.
And on the cost-cutting side, Satriano said, the company recently announced the freezing of defined benefit plans and moving toward an enhanced 401(k) for its nonunion employees. There will also be further reduction in administrative costs beginning in January, he said.
In terms of mergers and acquisitions, since the deal with Sysco fell apart, there's been "increased interest on the part of the sellers," Satriano said.
Quote you on that: "We had a good third quarter, results that show we're regaining momentum since the deal was terminated at the end of last quarter," Satriano told analysts.
gtrotter@tribpub.com
