US Foods Q2 FY2026 earnings: Margin expansion lifts profit growth

US Foods (NYSE: USFD) reported Q2 FY2026 net sales of $10.532 billion, up 4.5% year over year, while GAAP diluted EPS rose 29.2% to $1.24 from $0.96 for the 13 weeks ended June 27, 2026. Gross profit grew faster than sales, net income margin expanded by 39 basis points, and 5.1% independent restaurant case growth helped adjusted EBITDA reach a record $604 million.

Core earnings data

Sales growth reflected a 1.9% increase in total case volume and 2.3% food-cost inflation. Gross profit benefited from higher volume, improved cost of goods sold and a $19 million favorable year-over-year LIFO adjustment.

Operating expenses increased 5.1% as higher volume and distribution, selling and administrative costs outweighed savings from streamlined administrative processes. Because gross profit rose faster than expenses, operating income and net income both grew considerably faster than revenue.

Adjusted EBITDA and adjusted diluted EPS are non-GAAP measures. The company’s adjustments include items such as share-based compensation, LIFO reserve changes and business transformation costs.

Business and customer-volume performance

US Foods’ customer categories showed clear divergence. Independent restaurants produced the largest volume increase, while healthcare and hospitality also grew; chain customers were the only reported category to decline.

Organic independent restaurant case volume increased 5.0%, close to the reported 5.1% growth rate. The strength in independent restaurants was therefore primarily organic rather than acquisition-driven, while declining chain volume partially offset gains elsewhere.

Profitability, cash flow and the balance sheet

The $19 million favorable LIFO adjustment increased the gap between GAAP and adjusted gross-profit growth. GAAP gross profit rose 8.0%, while adjusted gross profit, which removes the LIFO effect, increased 6.9% to $1.914 billion. Both measures still grew faster than sales, indicating that the quarter’s margin improvement was not solely attributable to LIFO accounting.

Cash-flow figures were reported for the first 26 weeks of FY2026 rather than the quarter alone. Operating cash flow was unchanged at $725 million: higher current-period net income was offset by more favorable working-capital changes in the prior-year period. Cash capital expenditures increased to $174 million from $161 million, leaving approximately $551 million of operating cash flow after cash capital spending.

Quarter-end net debt was $5.2 billion, and net leverage declined to 2.6 times adjusted EBITDA from 2.7 times at the end of FY2025. US Foods repurchased 4.4 million shares for $374 million during the quarter and approximately $500 million during the first half, with $640 million remaining under its authorization.

Share-count reduction pushed EPS growth above net-income growth

GAAP diluted EPS increased 29.2%, compared with 22.8% growth in net income. The difference was supported by a 5.4% reduction in weighted-average diluted shares, to 220.5 million from 233.0 million, following the company’s share repurchases.

The same pattern appeared on an adjusted basis: adjusted net income rose 14.4% to $317 million, while adjusted diluted EPS increased 21.0%. Investors should therefore distinguish between growth generated by operating results and the additional per-share benefit from a lower share count.

Fiscal 2026 guidance

US Foods reaffirmed the FY2026 guidance originally issued on February 12, 2026. The unchanged ranges call for earnings growth to continue outpacing sales growth.

Fiscal 2026 includes a 53rd week, which management expects to add approximately one percentage point to total case growth and adjusted EBITDA growth. That calendar benefit is important when assessing underlying full-year growth.

Recent insider transactions

The supplied six-month summary reports 632,490 insider shares purchased across 30 transactions and 110,838 shares sold across three transactions, for net purchases of 521,652 shares. These classifications should be viewed objectively because the underlying list includes grants and other nonmarket transactions.

The following were the most recent transactions in the supplied list with nonzero reported values:

No conclusion about management’s outlook can be drawn from these transactions alone.

Risks investors should monitor

• Customer-mix divergence: Chain case volume declined 1.5%, offsetting part of the growth from independent restaurants, healthcare and hospitality. Continued chain weakness could restrain total volume growth.
• Cost and productivity execution: Operating expenses rose 5.1% due partly to higher distribution, selling and administrative costs. Further margin expansion depends on gross-profit gains and productivity initiatives continuing to outpace expense growth.
• Inflation and commodity exposure: Food-cost inflation of 2.3% contributed to sales growth, while changes in product costs can also affect gross profit and customer demand.
• Calendar support in the outlook: The 53rd week is expected to contribute approximately one percentage point to total case and adjusted EBITDA growth, meaning part of the FY2026 guidance reflects an additional selling week.
• Debt and interest costs: Net debt remained $5.2 billion, while quarterly net interest expense increased to $77 million from $74 million. Leverage improved, but debt costs remain relevant to cash allocation.

Summary

US Foods’ Q2 FY2026 results combined moderate sales growth with faster profit growth, supported by independent restaurant volumes, gross-profit gains and cost productivity. Margin expansion drove higher net income, while repurchases and a lower diluted share count provided an additional lift to EPS. The main items to monitor are customer-volume mix, continued expense control and the contribution of the 53rd week to reaffirmed full-year guidance.