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Debt
 3 Months Ended
Mar. 29, 2025
Debt Disclosure [Abstract]  
Debt DEBT
Total debt consisted of the following:
Debt DescriptionMaturityInterest Rate as of March 29, 2025Carrying Value as of March 29, 2025Carrying Value as of December 28, 2024
ABL FacilityDecember 7, 20275.67%$75 $223 
2021 Incremental Term Loan Facility (net of $1 and $0 of unamortized deferred financing costs, respectively)
November 22, 20286.07%609 610 
2024 Incremental Term Loan Facility (net of $8 and $8 of unamortized deferred financing costs, respectively)
October 3, 20316.07%717 717 
Senior Notes due 2028 (net of $3 and $4 of unamortized deferred financing costs, respectively)
September 15, 20286.88%497 496 
Senior Notes due 2029 (net of $5 and $5 of unamortized deferred financing costs, respectively)
February 15, 20294.75%895 895 
Senior Notes due 2030 (net of $3 and $3 of unamortized deferred financing costs, respectively)
June 1, 20304.63%497 497 
Senior Notes due 2032 (net of $4 and $4 of unamortized deferred financing costs, respectively)
January 15, 20327.25%496 496 
Senior Notes due 2033 (net of $3 and $4 of unamortized deferred financing costs, respectively)
April 15, 20335.75%497 496 
Obligations under financing leases2025–2037
1.26%-8.31%
514 490 
Other debtJanuary 1, 20315.75%8 8 
Total debt4,805 4,928 
Current portion of long-term debt
(116)(109)
Long-term debt$4,689 $4,819 

ABL Facility

The Company’s asset based senior secured revolving credit facility (the “ABL Facility”) provides the Company with loan commitments having a maximum aggregate principal amount of $2,300 million. The ABL Facility is scheduled to mature on December 7, 2027.

Borrowings under the ABL Facility bear interest at a rate per annum equal to, at the Company’s periodic election, Term Secured Overnight Financing Rate (“Term SOFR”) or Adjusted Borrowing Rate (“ABR”), as described in the ABL facility, plus the following margin and credit spread adjustment:

Borrowing Election
Margin based on USF’s excess availability under the ABL Facility
Credit Spread Adjustment
SOFR Floor
Margin at March 29, 2025
ABR
0.00% to 0.50%
N/A
N/A
0.25%
Term SOFR
1.00% to 1.50%
0.10%
0.00%
1.25%

On April 30, 2024, the ABL Facility was amended to provide certain providers of supply chain financings a security interest in certain assets of the Company under the ABL Facility.

The Company had outstanding borrowings totaling $75 million, and had outstanding letters of credit totaling $567 million, under the ABL Facility as of March 29, 2025. The outstanding letters of credit primarily relate to securing USF’s obligations with respect to its insurance program and certain real estate leases. There was available capacity of $1,658 million under the ABL Facility as of March 29, 2025. Subsequent to the fiscal quarter ended March 29, 2025, outstanding letters of credit were reduced by approximately $118 million after additional surety bonds were issued in the first quarter of 2025 to secure the Company’s obligations with respect to its insurance program.

Term Loan Facilities

The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended, the “Term Loan Credit Agreement”), provides the Company with an incremental senior secured term loan borrowed in October 2024 (the “2024
Incremental Term Loan Facility”), an incremental senior secured term loan borrowed in November 2021 (the “2021 Incremental Term Loan Facility”) and the right to request additional incremental senior secured term loan commitments.

The 2021 Incremental Term Loan Facility had an outstanding balance of $609 million, net of $1 million of unamortized deferred financing costs as of March 29, 2025. The 2024 Incremental Term Loan Facility had an outstanding balance of $717 million, net of $8 million of unamortized deferred financing costs as of March 29, 2025. Borrowings under the Term Loan Credit Agreement bear interest at a rate per annum equal to, at the Company’s periodic election, Term SOFR or ABR, as described in the Term Loan Credit Agreement, plus the following margin:

Borrowing Election
Margin
SOFR Floor
ABR
0.75%
N/A
Term SOFR
1.75%0.00%

USF’s maximum exposure to the variable component of the interest rate on the Term Loan Facilities is 5% on the notional amount covered by the interest rate caps described above. Borrowings under the Term Loan Credit Agreement may be voluntarily prepaid without penalty or premium, other than customary breakage costs related to prepayments of SOFR-based borrowings. The Term Loan Credit Agreement may require mandatory repayments if certain assets are sold.

On February 27, 2024, the 2021 Incremental Term Loan Facility was amended to reduce the interest rate margins under the term loan facility to 2.00% for Term SOFR borrowings and 1.00% for ABR borrowings and eliminate the credit spread adjustment. The Company applied modification accounting to the majority of the continuing lenders as the terms were not substantially different from the terms that applied to those lenders prior to the amendment. For the remaining lenders, the Company applied debt extinguishment accounting. The Company recorded $1 million of third-party costs related to the February 27, 2024 amendment in interest expense. Unamortized deferred financing costs of $3 million as of February 27, 2024 were carried forward and will be amortized through November 22, 2028, the maturity date of the term loan facility.

On October 3, 2024, the Company amended the 2021 Incremental Term Loan Facility, entered into the 2024 Incremental Term Loan Facility, and completed a private offering of $500 million aggregate principal amount of its 5.75% Unsecured Senior Notes due 2033 (the “Unsecured Senior Notes due 2033”). Proceeds from the incremental term loans and senior notes, along with cash on hand, were used to repay all of the then outstanding borrowings under the incremental senior secured term loan facility borrowed in September 2019 (the “2019 Incremental Term Loan Facility”). The 2021 Incremental Term Loan Facility amendment reduced the interest rate margins under the term loan facility to 1.75% for Term SOFR borrowings and 0.75% for ABR borrowings. The Unsecured Senior Notes due 2033 are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned domestic subsidiaries that provide guarantees under the Company’s senior secured term loan credit facilities.

In connection with the repayment of the 2019 Incremental Term Loan Facility during the fourth quarter of fiscal year 2024, the Company applied debt extinguishment accounting and recorded $10 million in the Company’s Consolidated Statements of Comprehensive Income, primarily consisting of a write-off of pre-existing unamortized deferred financing costs related to the incremental Term Loan Facility. Lender fees and third-party costs of $10 million related to the 2021 Incremental Term Loan amendment, issuance of the 2024 Incremental Term Loan Facility and the Unsecured Senior Notes due 2033 were capitalized as deferred financing costs.

Senior Notes

Each of the Company’s outstanding senior notes are redeemable, at USF’s option, in whole or in part, at a price multiplied by the remaining principal, plus accrued and unpaid interest, if any, to but not including the applicable redemption date. The senior notes are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned domestic subsidiaries that provide guarantees under the Company’s senior secured term loan credit facilities.

As of March 29, 2025, the Term Loan Facility, ABL Facility and certain variable rate finance leases, which were approximately 30% of the Company’s total debt, bore interest at a floating rate.

Debt Covenants

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends, or engage in mergers or consolidations. The Company had approximately $2.5 billion of restricted payment capacity under these covenants, and approximately $2.1 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of March 29, 2025.