US Foods Holding (USFD) 11 Nov 172017 Q3 Earnings call transcript

Good morning. My name is Natalie, and I'll be your conference operator today. At this time, I would like to welcome everyone to the US Foods Third Quarter Fiscal 2017 Earnings Call. [Operator Instructions] Thank you. It is now my pleasure to turn your call over to Melissa Napier. ahead. go Please

morning, our Good for us joining Thanks, quarter everyone. fiscal for third call. year today Natalie. Thanks XXXX earnings

for update and the and for Pietro are about our Locascio, and today's year-to-date. the CEO; speak will me quarter in Dirk business Dirk Pietro our We'll Satriano, a provide the performance and CFO. Joining our call take today's our otherwise to unless are comparing periods call third month your and same stated, questions X after management's XXXX. prepared remarks fiscal and conclude. [Operator Instructions] first quarter During in we results

earlier earnings release Relations morning Our slides presentation can our of accessed issued Investor this the and today's on website. be page

today's our to forward-looking to filed implied with latest call information, historical factors in made statements the are those the SEC addition statements. for statements. during turn will financial over our I'd point could results call certain the considered review like are refer comparable to expressed And actual potential cause our release. I'll that today's press lastly, those on the to or in financial in Reconciliations Form In Please which differ XX-K included most to certain call, factors measures from Pietro. to materially risk GAAP the we schedules non-GAAP measures. now during out

Melissa, good Thank morning, you everyone. for Thanks, and joining us.

Page Let's get right X. on the and start outlined into it highlights with

and X% EBITDA financial with is growth products volume this our highlights Restaurants is the help include Easy. strengthening of or CookBook; gross growth impact with quarter very and industry-leading our the the impact with for in Underpinning third positive X.X% with these of delivering our performance growth of X.X% to pleased our acceleration margin cost-reduction organic continued our penetration growth third presenting and are continued our adjusted compete. if Made Restaurants, products results the Great Restaurants continued the impact We Financial of case, and technology Independent of registering for innovative continued portfolio Independent result we total of for XX.X% hurricanes. in third, progress initiatives. independents; the Food. well per increased as the growth normalize private-label quarter, Independent as against and of continued Strategy,

As raising of tightening other for guidance a review ranges with And our you result, XXXX we minutes. in Dirk few are several year. a and these ranges the will

Let's turn of for on a Page review X. volume

As above first I organic the the was continues mentioned, Independent been X.X% impact X% with Organic it was have not Restaurants to hurricane. for growth growth been for time the QX target, up growth since XXXX, primary had the of around X.X%, to Restaurants, with Independent would and our accelerate. quarter growth

especially very the on over the territory negative customers. volume care part three down last and very M&A customers, talent first, and of focused a our differentiation the And X%. performance target for with of growth our technology to the innovation performance clip of of existing discussed Overall, with factors: a of and Restaurants was with to Growth Total execution other performance, second exit which hospitality, call. very healthy performing as lower category Independent customers after our rapid resonate health Independent result quarter. second, chain with was on pleased and Our we in other continues continued of with target with on flat the markets. at product our the raise improving Restaurants customers all the Independent of positive; strategy we are lower-margin expected outlook accounts, X% our and remains customers; third, Restaurants we performance reflects for consecutive leading remain our

of on the our customers on Great X, our in support Page And by we Easy. continued strategy. critical Our have is summarized Made fueled growth Food. differentiation strategy. progress with elements target our most

Let's just XX% to are sellers Scoop. kitchen. by This services our helps over traffic, XX%. more per do one middle these menus recent to in earlier placement the for of XX% well operators that had year seller Xx e-commerce that third-party remind or operating terms year start of better Fall Scoop And approximately new to our average you, to stay the campaign. the run in customer to as call in And in help what value-added left their innovative includes continue Trial the benefit from of most below e-commerce own continued expense. focus biggest customers as results in includes of continues as To our provides retention out of with remove year graph, the schedule labor. our the of on the we benefit increase business labor and on a with right, the drive as of e-commerce and over penetration. products terms penetration our In any Scoop, of increase to individual products grew because placements we engineer we in the featured productivity we solutions on drive products on trend effectively or to or applications with

points stickiness Easy. of continue Made increased Easy. Great contributing solutions, our Strategy major customers. of in believe from Made and for Food. to power to seeing customers, reinforcing as We they Part the these pain address the

with the Page our Restaurants. to we We exciting Chef the because to demanding edition challenge restaurants. in he been five Samuelsson. number by Beard Samuelsson such a as Par-Fried and would collaborate Uptown In grandmother. with very Independent Chicken, Chef raise chose Samuelsson the Chef Marcus the featured the us very have we very James customers, products received on Scoop, our conjunction with X. world-renowned Fall Marcus' and most would founder/owner different by is he innovation, knew We award products exciting well time winner with Samuelsson of fall bar of products a on inspired Scoop, XX Moving which is the chef, of burnish of partnership credentials announced he his

Slide initiatives. some cover last X. call. in introduced our highlights of new and progress that our This are against will last to portfolio chart, our I call, marks since operating the gross profit Moving expenses

On is of the end our levers biggest of quarter, the advance. P&L. X/X the cases profit see first replenishment of quarter. the repurchased the year-on-year, with the essentially on what third to completion by the continuing grew progress and centralization we side, of Private track for of shipped label XXX were our gross points continues on basis to respect gross Close profit end as one approximately to

on of most come have down. of good continue did On across as the the productivity at a a and fewer are have we impact where to about the beginning start sellers of We continues make to progress pilots than in the Selling well. sellers XX% as operating transactional to to streamlined now expense to increased several where productive see brand. some see the end number chain, to of some the work we an last expense mapped migrate end-to-end to positive to the not supply having will ledger, reduced as of represent as biggest means And the network. side These of our from we results promising these number warehouse have opportunity we form business we productive are now savings already operating beginning from best is streamline the highly shared who processes sellers we how in these opportunity, processes In and we we and services, replace out out we the processes. year see least the identified that done, attrition to begin mileage. have in roll

in targets the on in we number pipeline as X Lastly, well to are year. were M&A the pursuing of working front, that acquired the earlier a as companies actively integrate the

our and it walk our balance you me who down over Let P&L sheet. Dirk, turn now will to

Thanks, Pietro, and good morning, everyone.

we third a commented, quarter. had Pietro As strong

excluding as operating million, Our over million increased impact. the EBITDA or X.X% increased $XX to estimated adjusted hurricane income reported and XX%, $XXX

with strong target experienced customer types the of continued We and also de-levering balance our growth sheet. case

quarter billion, our the growth X.X% X% approximately sales were increase Let's walk year-over-year Slide increase from with results case This was third in a combined On and an more through net our mix. $X.X of of result inflation X, year. prior over X.X% detail.

strong we health at inflation Restaurants quarter, as as modest lap are case a quarter. month-over-month third sequential well Year-over-year In inflation, with saw a inflation very grew in the commodities and inflation X%. over for expecting for the year-over-year our the poultry, several Independent the in quarter or we as grocery On target and hospitality remain significant will little basis, as quarter grew in in the prior Our year. and primarily was seafood produce such growth fourth pork, X%, care categories. customer deflationary we fourth period types as

on see profit Now Slide X. to you gross performance, which

good We profit gross deliver results. continue to

and basis. a is which per billion, is or prior For profit X.X% $XX up gross quarter, the over on increase, million the $X.X expanded This a basis increase case. year volume the gross on X.X% was profit third an case meaning adjusted we $XX X% or million on GAAP

grew a of from an net profit basis cost points impacted on a on the as expansion XX adjusted from XX.X% percent to quarter. detail few discuss Gross XX a impact period a EBITDA Adjusted well as of GAAP the per down as approximately this As as year profit to higher sales profit in a was the XX.X% prior sales, inbound was rate flat XX.X%, the percentage strong I'll result negatively discussed of dollars due was impact along volume gross the both very as which adjusted points basis to and greater of basis to increases a freight basis. with hurricanes. impact the well hurricane gross minutes. in in we case

case margin gross As on case with the our again double continued quarter. focused profit profit progress good strategy digit to elements this of Pietro expansion earlier, make mentioned per per our gross cents up

quarter year the gross charge. margin increase. in was of profit has million or percent benefits increased growth Adjusted continue by profit momentum. an that sales profit partially gross private-label of gross from profit increase $XXX we On adjusted an the the gross is expansion Year-to-date, increased as to year. talked LIFO expansion which is the dollars our flat initiatives, XX% of for see X.X%. prior drivers good basis, penetration, over One offset of a about X.X% prior volume growth to and over in and our third Pietro the margin It

measures. about business. we to profit case as in period important which feel lengthy the of of per we I'll gross As for continue and trends In that the the deflation is underlying there is note reflection to a basis point OpEx to is prior profit a a inflation, impact rate on talk of sales it from to an accurate and few move a more OpEx performance, percent minutes, year-over-year year year-over-year gross reminder, comparison

or X.X% million, decreased operating Moving quarter from customer million reduction on related year $X -- our Slide expenses to depreciation X. amortization volume. the expenses a QX These and lower gains. in additional to full to a X primarily productivity due amortization intangible prior and charges, $XXX the for and in Page asset resulting the Operating from gains the expenses more expense case than offset higher to restructuring of

percent operating to or expenses X.X% was prior increased year. were the inflation. basis which OpEx of a some or percent case in Year-to-date, higher quarter. adjusted increased as expense points XXX a XX.X% billion. due XX the million prior points in expenses from the $XX of of million operating expenses quarter, was for of sales, Adjusted dollars sales As with decrease decrease X.X% increase the Adjusted primarily $XX operating wage XX%, from operating a is combined year. a volume to $X.X basis The

were As ahead of basis basis the a expenses sales, operating a XX XX to expenses percent Adjusted XX.X%. operating sales. percent X.X% decreased increased prior points as year and year-to-date points of of

Slide As in XX, expansion significant you accelerated this been gross see per adjusted year profit can on has and case our QX.

rate done in inflation with per adjusted OpEx so very fixed case it but progress Meaning times an and like looks has portions make focus large profit in From here has significantly more controlling to case successfully profit less perspective, to been a rate are results operating which fee of a to I'm markups you profitability year-over-year gross continue points. especially in is significantly inflation, significant our now drive than growth it decline the case basis year that leverage, in making that these we per in get than We can This change, not are, have year. basis basis common on the ago. Slide since does commodity XX. growth, in pleased a our continues comparisons, at lost of when order are per we be per the categories part, case. this OpEx on point

adjusted improvement basis appears EBITDA impacted EBITDA hurricane we $XX call It up the year-to-date the Adjusted significant the increased approximately relief I the what made million X.X% profitability million $XX to our see redirected modestly post to course an quarter in as are significantly was X.X%. million primarily $XXX was versus reported from Operating trucking in X.X% the rates quarter being XX Year-to-date, increase $XXX freight on in as We freight key million. related capacity to is increase rates aforementioned quarter basis year, can to increased prior the metrics. away third million higher has hurricanes. points to estimate result in in which million, third-party a results of industry efforts we've will a $XXX reported hurricane $XXX hauling. negatively business EBITDA of year. over and is related our You of adjusted solid of mentioned, up the September stronger points higher ordinary million results. the The and $X lower volume or and increases were as basis XX result to freight income result inbound a million $XX third-party a or and costs prior

or quarter compared compared on to period. $XX decreased prior right, income in $XX million -- $XXX third net million Finally, the the far decreased year million to

increased strong interest Our year-over-year pretax as $XX a results of income and lower result business expense. million

expense. offset was by However, million income higher tax this $XXX

we period, strong results increased increased million income net year-to-date a drivers: increased same million large reminder, to the in in year higher Adjusted release year income improved prior higher million $X period Adjusted the offset income prior on credit. tax large by tax a offset income allowance the valuation million million year. income the resulted had that in prior net expense. As $XXX as business a income pretax $XX million, essentially by expense. $XXX year $XXX prior the income basis, to On $XXX tax our from also net over

increase. end to net was quarter, down in Turning $X.X at in debt or $XXX of compared the flow quarter to the cash was decrease same a the year the prior stood million a cash third year XX% debt. Net $XX million at X.Xx now flow Operating a And approximately $XXX million debt for the and of year-to-date million net at prior leverage end period from the $XXX X.Xx billion, the ago. of third year our period. from

approximately continue with to of business midterm leverage the We pleased expect de-lever progress. to toward our continued are target the and Xx

the deflation. and Moving of be The and to core our in to performing ranges X.X% X% to to year to business XXXX We're our to as XXXX year-over-year quarter narrowing our adjusted EBITDA X%, range. some the to our is EBITDA narrowing X% a We're of X% Slide to impact well. for adjusted more also result we XX. growth guidance. We for significant guidance fourth expect specifically, X%, growth the fiscal do X% updates increasing range to X.X% case the largely sales have

impacting rates, is However, pressure we're as the freight earlier, of in I on noted carrier us seeing higher which third-party inbound form costs. negatively

that to although the quarter-to-date. are continue in quarter have beginning expect improvement fourth see reflected We to our outlook QX and through that

occur. lap year we from and customer by its as points continue. some large our and expect the slowdown to on our growth we case we will wins. expect hospitality last not several total Restaurant momentum expect to in call We prior that further Health QX year continue to as and any care several Independent QX XXX do growth slow basis approximately prior the wins customer discussed slow in We large exits

results. part very to $XXX LIFO and business also combined of amortization to growth. interest we're negative share. result and increasing finally, will XX% range $XXX lower net EPS However, We're And of million $X.XX a improved a it experienced of XX% to of of a $XXX All other a growth our remains range the to for revised as QX customer to benefit our volume million future depreciation our quarter million. end largely and healthy adjusted tightening We're lowering diluted remain result as range per outlook million outlook we increasing to expense with business $XXX in our to are exits. the our third income $X.XX the

closing turn business Our well as we're some perform it Pietro expected, for continues to and pleased far overall very that, With we to with I'll our had so XXXX. in comments. performance back

adversity of and spirit who turn demonstrate second not employees how Irma, recognize of tirelessly those and other, in Dirk, that, our customers, to. in before was we Operator, a proud you, employees perfect and Harvey each thousands Thank let's over the need employees. just the be to communities to call imposed by to it take serve like example to XX,XXX the we overcame to working to what help support hurricanes I'd continue none, belong most questions. turn we to to Q&A, our our of moment with the could to more I

Our Instructions] the Higgins of Deutsche from line from Bank. first [Operator comes question Shane

guys. question. EBITDA a X% Hi, modest for the you Thanks costs the higher function slowdown. That's of freight I said third X% quarter? there in were taking to guys Is quarter the expecting guys obviously a fourth that primarily that you you guidance. Dirk, think saw

so is freight the driver Shane, biggest of that.

large we on modest that as a is some year customer of from well piece as does wins down quarter. impact and slows have ago other bit, a the fourth a lap The volume the

reminder, chain of more as that EBITDA. our the line top our that, piece Just it the than other exits impacts as occurs overall a does

QX those what impact very perform the in other QX. big similar core things, business and the it real first a than quarter. So to X to those for not continues did are But

I to out? that on last calendar are your is call and December versus XX impacts December XX there Okay, year-end know year. any

we'd significant that out. Nothing call

then And just one more Okay. me. from

it case been quarter? growth. up pick the On the Is like third of quarter -- looks the quarters. into it's picking X.X% couple so independent last fourth organic rate far run it running did It the above

we're sure not able to... I'm

we So Independent I on, we're and not what and both momentum good the fourth quarter, been about of going Pietro to think about health I very I is our just is business will commented reiterate talk Restaurant demonstrating. the the but it's that feel

Merrill Sullivan America from line question next Marisa Lynch. comes of our And of from Bank the

Good morning. my question. Thanks for taking

you sales business? -- for e-commerce total Just e-commerce for quickly, disclose the did your total the

the actual about did very I talked so. not We believe We to increase. XX%. It's disclose or the number. it's close XX%

more Got then driving had I'm really the of that And in on that? well? kind it. in -- a Scoop, that -- pickup you services. key marketplace penetration and Or of what's terms curious initiatives making that trial rate, there customers e-commerce nice your part? are receptive is Is value-added metrics as Is the are the across in dynamics

what of term So we a I have describe new-world old-world of would use solutions. catalog an to interesting call apps,

Some of completely them digital. are

Operations helping their are at or with what what Some involve and aimed to major say consider they're Restaurant be we three they some restaurant from Consultants support points. our operators pain

a third As shortage; drive see engineering where traffic. labor in I've calls, a help is I with states operators appetite about ChowNow one; talked talked the is there's around second way And menu to labor we for and these about, particular can partnership as our be these around other driving traffic. and scheduling, in

up anything also wasn't that to wage of there that pressure helped inflation terms accelerate in but it, that? picked Got or

one threats, vary to I say opportunities restaurant would very or to points their another. those particular are pain mean, customers not. No, from situational experience the I and that

just growth, independent me, existing new was customers for last much last of that versus one then for me, case customers? And how

we is where see we from penetration said across most at independent look buckets. always three very performing balance is coming of restaurants the reduced And accounts. growth the we've what and we are three independent new levers: -- good favorably churn, So a of growth the where

Dirk, is of north thing penetration want our company total Marisa, e-commerce this is one clarify is I XX%. to just

Restaurant So Pietro north and for Independent business. total in the of for the talked about XXs it XX%

we similar very So prior. to what disclosed

Thanks Dirk.

of Kirk line question next Markets. RBC Bill from the Capital from comes our And

Your line is open.

a had question. morning, Good everyone. I

the inflation is this than it handle? foodservice of it the food vertical seems many On to it's Is experiencing more for us sector, expected. food inflation; level too of much

through you been of with -- think at So cross-category Farmer's that's have an also we it menu experience trade-offs, gotten volume they where and is of where something have we some restaurant they have various them. again time categories. is seen helps in ahead dealing haven't we I or restaurants engineering where through changes that have on food make our Report called volatility certain would get Again adept in the through help them expect help -- which this course There's of consultants, costs, levers we them literally we more on over that. impact and the the operation the the

that so the is referred the I pretty believe managing through you far changes So to industry well.

comes And John of from your the Ivankoe question line next with JPMorgan.

Your line is open.

Thank you.

something clarification the a growth from a fourth you just XQ. So that slow X% made, around total First, Dirk. the correct? to quarter? to case on further for XQ Expect Is comment point

correct. That's

lapped the go ago exits from effect. large few -- year been we've into about we wins the As talking customers’ and a that chain large

understood. Yes,

I So wanted go. to where that is

remaining a independent slowing and maybe care growth So little. case health you're strong, hospitality

case growth just growth but it on of but is figure case that algebra other. cases all of not could all of percentage What quick case total growth, total other? here, out total So all other I let's what maybe focus percentage some with is

X/X It's Yes. of volume. our case about

losses? to would a that stabilize? to need have -- top does that perspective something lower from business if that numbers in it mean is enough the profitability. a what as impact these part like want we line doesn't influence kind it least our think to big that? that mean total say that you to how after think of it Okay. want current the something words, the is about you Obviously of same grow? a that Is even of layer forecast, model you to business that is is other XXXX case the I at limit has that begin stability of you And So we I

don't specific I guess some add I mean I'll general give -- why some and you Dirk. comments,

Sure.

to think fourth that remain and in we it I area, expect negative through So the XXXX. quarter

I we'll But the point right business, specific to to thing going improving we for our I the really good XXXX more pursue out of give doing think mean it provide it our profitability. that business quarter fourth bound what of of there, think our -- this to because that And we're of of come focused business business. good not at and on and the plenty as that's guidance. in guidance we're in X/X There's none doesn't its going business. continue and good we're is

So where it business. negatively as modestly for those they profitable is where us a or is were negative

on come to more So that.

John I for think we XXXX. as guide

think future, the the made time guidance and the those last comments I to is go what you John, some year types. we around I initial as add of other around the we everyone early the step said, went as we you by of if customer to you I gave would would encourage back thing, model just public is do back each

then So we do we and And that health market. the we growing as it And to that's clearly groups all in it's expect market. for comes except that. are we've the next said continued the With Xx as over comments a I we've when the the ourselves it, we independent a but reminder. we think restaurants, we customers course bit the a market, Those helpful to made say midterm, we grow and pace, would refresher to be primary care see of few the at growing have expected for made. quarters and lap at the would a to expect of fact, other healthy respect two some to Dirk target, I With called performance is very we hospitality, what of set grow flat minimum to ourselves. exits have of with the

on Xx bucket. talked we business, actually that about are thing business is the than is we on other good we within to the and some Xx in All bringing been more that very haven't business bringing are segment, we've Other The exiting profitable

the target So still there's general those capital we that micro less customers other, gave I what customer the what and larger is is because what earlier. improving the all guidance time in is associated the return profitable optimization the quarter-to-quarter, and the happens and about that from aimed other of use. pursuing on but time, lead is you customers on And health going all of of talked an a over than bit care actively, with the customers. get which earlier profitability size associated do at, are volatility portfolio But with of in types I the Dirk would little

Our comes next question of Morgan from from Stanley. the Sinisi Vincent line

open. line is Your

Hey, guys. Thanks morning great, question. good the for taking

wanted for a Just inflation. second to back circle on

just you sorry where XQ? be also of your between since maybe And some kind and what for yesterday any slight the we're in higher you of expecting came kind a of just effects give expected, all but today, the missed margin you're think that earlier, But I expectations? on getting the differing quarter just, seems maybe can are then it then in I'm inflation and if inflation percent. versus I on dollars and that can kind category changes than seeing bit by and most maybe to color folks further you

is This the it's half of lot that seeing inflation, of I'll it of because Dirk. was the last really in we The about when year. a we take talk so we've amounts categories it, significant second deflation been saw year-over-year that. of

center-of-the-plate these in and categories, and similar, cost very largely that's prices driving commodity it. as some so of And what's really moderate

inflation -- we're I of think the very it's sort modest the on broad-based, that grocery continuing talked side to we about very and see.

sequential, but so sort all whole QX last won't point earlier, expect don't significant change Pietro's improvement what to a you But with of quarters. had we two through manage to a from dissimilar it. it manage look And to year-over-year, that from we've we perspective, the QX, it GP the think now effectively to I we're of a per think in probably customers and done think it think further case when effectively our I trying in for lot. I that help sure through they inflation, make

the have maybe some question Yes, kind of going? different how around Can be just then transactions potential quick And with a quick maybe then okay. And pipeline, you and/or around comments I color you some might the from just pursuing of more strong recent future M&A geography earlier. things. done, update on know whether are more of the said those any assortment? give just things us a you that

served, facilities. of -- line towards those next five that what are it the pace, a secondly eye other we're for assortment, country, pun working in pipeline. of well we've a XXXX served. have intended, just-in-time that the and is The country, in targeting are beefing is with we're terms strategy you we the and in or experienced broad good in our a in COP that's outlined of then broad as acquisitions those this continues well. then number Restaurant Independent no sure a have high in In around of And acquisitions, Vinnie, were of circles is the these pipeline produce concentric XXXX So strong And discussions very And or and have up we the we processing, where with pace achieve for less of with we we parts And making line our year. and that well sure in M&A, we're making bull's to some continues tuck-in the penetration. endure. support capabilities, maybe parts those and few and network going of so to we

--. You're

and what did, you yes. Yes,

around the forma We first and customers. And sales And far. performance. to performance We're across have and our to productivity EBITDA acquisitions team think I that didn't we part those the we working of is these so two with as so acquisitions I field the the results. that forward, I've relative on as integration are with bringing continue to years monitor we're last sorry, we replicate guess, with question the playbook in we've mentioned acquisitions retention monitor move brought the the before pleased associated part seamless We generally the of them. your that of is to pleased make integrate before, as pro with acquisitions a focused to manner we playbook solely this and that

the Your from comes line Karen next Short Barclays. of of question

open. is line Your

thanks. Hi,

Just say of XQ is a it to to another case trough? the is statement? fair clarify the And Is other on terms kind in had Or not decline. fair that the that question. I something of then

Good morning. trough. the I it necessarily Karen, is this Dirk. call wouldn't

specificity And again at sense we're we think little we throughout XXXX it provide the on going with, on and XXXX through as I it doesn't. year earnings we'll us to think more be to those then partner where and about customers that makes those can to release as to of a come how point. continue smart QX color out our more it go for about where just also continue you

a or one volume, Just guys the again these as I the remember thing model I customer. reminder on not profitable understand you to think are that all that and modestly is are trying is important to

and healthy So case growth momentum metrics seeing do adjusted in volume impact EBITDA the the in we're that impacts business. other not

follow-up. was be Right. going That to my

still you've the a the EBITDA passed even of a So in then bit that what point seeing And issue in stranded XQ, that kind costs expansion stranded XQ? the right, bit though, little it customer? So because is there little the of once costs. we're these having of Is better idea you margin that is will is in fair? general be exit,

and You're QX versus XXXX? talking about QX

in the like it it expansions look going implied Yes, to your the for expansion's better margin quarter, be fourth in looks than because guidance was the quarter. when you third at EBITDA margin

wondering of passing with function the exit. kind past issue stranded a costs getting of the that's -- I'm if So

to levers a the pulling. we're from going that is of variety quarter overall in performance come The fourth

stranded costs the fourth amount -- of to actively the think except the I these, for through get can continue we go sure nominal exited, the that we have with to from make as work we exit quarter, as will out some stranded cost costs. some the

impact. will that have an So

cetera, do. this allows for stranded from inventory, is target expect with routes, to continue to that thing which it be we other us costs accelerate our growth customer delivery the to whether to spaces up it think I et types, continue frees proprietary

forward, to as a it about on through independents, and opposed to that's plan more kind had growth going Okay. question. then long-term the how Pietro, XXXX. think other and within sounds kind commented you just goals And then like how care about think of just health like a to growth I of

we is, think Is in So like you overall. I'm how model terms changes as statement? a that about three years, sounds like fair it wondering I guess, the next what look business through to of really XXXX, beyond your nothing

that we ensure comments three standardize lot ourselves as just types. we the cost-effective that and targets reliable of reminder to evolves to types we our headline, a become we're ensure look position growth good to we continue a and those than respect I Karen, we customer that that's to stay how that were forward, doing more more today. strategy even those our primary And think across customer a relevant business are to and our made, with I

in So future. apply that statement. general statement there's we've past the that underpinning the over made to a lot But the general continues

from the Your Bania line BMO Capital. next from of Kelly question comes

open. Your line is

Hi, good just taking in to inflation a morning. maybe Thanks question. way. ask different Wanted about again for my

you this expected for about -- your with areas guess executed given for CookBook inflation they see how Or happy you quarter; executed? areas so improvement? a you a in inflation. how significant and tools Or think where have I feel And a curious way just acceleration sequential had are any backdrop? MAs was place and in a that in against pretty that volatile I I'm you you the moderation maybe are there the forth some

processes the to Sure. tools say way we're light. come pretty we the that and generally have with I'd happy

was a deflation the It inflation really refer lot the Between quarter, -- -- year us the heard pointed significant a of you think not sequential CookBook. I last went you've as as out. lot on. for to

So helps in deflation, inflation our passing changes. that times and we're ensure those is tool our of reps appropriately pricing price through and that sales

business we're it make that make have to customers them sure items sure of value for processes is manage commodities these helping around part approach a periods. things that on because key customers also we're focus and that, through We of as that number helping priced well making right our those on

between have think effectively both to the do we've able been and in so I we for the process the And tools quarter. place,

to with process happy in team, our to to any find at tools always and are don't it. revenue function subject we change. improvement. We're as Obviously, management pretty where So that always they're better can and and expect continuing better, be looking opportunities and are that we sales, working with

quarter? the on be so to able inflation And of passed all this was

level pretty a -- I of able think Like difference across when X% much to I with the were were and that We that it's where this that we've industry inflation categories thing time inflation inflation to we talk happy of pass there an because been versus seen fee there's business is, commodity said, important lot fixed about entire spent a healthy the of the as the on. so I talking we it's in are X% about, markups. the has

talk in all profit And margin That's per year-to-date year-to-date, progress the pleased So $X.XX those so if very QX. per same case. amount. per cases the we've exact but are case, less much on and that made the at our accelerated gross it we levers. that looks We're it's in up gross with you making why look about case, you making more in you're situation, like our

just category you've that's of to some able more bring Xx business what Xx and on been profitable you're more. than Perfect, exiting. The I comment in about had one where then other the to the range all new

over this back business seen history to more kind profitable business go of many you replace cycles have I how some with able on this chain the your dynamic mean low-margin you where of If kind you're side?

that forward, of customers. see customers of continue the the attractive than see the what optimize question to more profile. portfolio more way value had more our ones. are lots answer to and within just present to of we we happening the there larger be is of looking opportunity And think I do, to what's They smaller -- portfolio best obviously, maybe a there those we are is just

just we continue see to portfolio opportunity to optimize an time. over the So

Securities. comes question of Heinbockel from the line Our John next Guggenheim from

Your is line open.

total force, that A things. the is sales The sales of the total couple reduction of in size XX% force? sellers,

sales. That is on force the that sales locally is focused managed

Or don't get want -- about org it where where much know what you further you make to if can there structure today, are you do much be? think down you'd some where is think say I that's efficient? that? like you So pretty reduce when further but to else to, you you the And to it want changes more how to

generally, talking terms John, structure? org the You're in of

entire sales, the right? talking The Well, I'm cos, structure. yes, op org

Okay.

clarifying. just So

runs our sales force the this look, it's field people just just operations, right on has a customers, and right on real train management the role account made we few the point the force the local force, I So sales sales Jay who what right? brought to We and the on continue on years supported continue ago optimize -- since business a and like by have is a Kvasnicka, routine. ensuring best that we taking little bit discipline large for and our the

overall X we under down strategy a a John, perspective, And to greater reduce The right? our there's in relaunched lot point but a we've company point made said variability focus reduce greater on opportunity better see the generally yet, X.X we optimal were on the not a progress over the number. we're and business So is better org, performance. standardization, on transformation, opportunity of talent that we of your to biggest Act costs. the sure routines. still is we reach of which years, last When differentiation greater obviously, through bringing we the management the we the what call and With what at variability to doubling respect

reduce You've consolidate administrative seen the leadership back the teams of office. XX, the on XX number us side from to

management, of process drive transactional better lower cost highly that any those some bringing work The those in pleased we're similar you the frontier of is comments work my terms talked with about at consistency receivables that next very did better to and that in can and corporate. -- of imagine. more processes that. is services, shared So just around We number like payables, results discipline I

it presents of talked longest, a and the opportunity bit in that the we've supply one it's we're of biggest journey, the I've side, been that as so selling a innings about chain. On and the late the at is one

represents for he's right? months, or That a supply six and new with quickly operating bucket and a what XX% He's point to expenses, have on been our opportunities where We greatest view the one we travel. have of chain cost the us around are, room getting XX% leader. the it's of

stand we've does the gears, in all has inflation COP been that shifting initiative just way up effort. Where And impacted ramped big of and the been here? rollout then seen by any a that today? And the at Okay. that has

Right.

So questions. separate two

John. do that COP memory, a up was at opportunities the looking whether kind a at here industry, The we've We catch start about win kick could we COP good What others them is -- of along. win win and different produce where time touch continuous it's with talked improvement. at respect found to ago in two journey we probably win-at to we do have sellers, is And a as some of now is the strategies. of to on at good time leaders, is things and some So call identified those the we we're strategies. we of that, internally further on what too, one it's bring new to something as time second one new

terms affects in fashion. a inflation impact all similar all of competitors the and I mean, of inflation, In restaurants

done inflation inflation. training that even customers through strategies right have a impact So hasn't, it help navigate that the really of except our I that really argue to ensure on important win-at lot, had would it impact hasn't really the makes more our to sellers the

Kelly And Goldman Sachs going -- our the from from be next sorry, actually Edward Wells house it's to Holthouse comes question of Karen Fargo. from

Your open. line is

over year business here? I I changed Pietro, sort similar at morning, for know good a yours. reason. to this past guys. was hi, exit there wanted went initiative back to multiunit you the Has you like you anything the ask going time that obviously; Yes, exiting when public of were of

thinking like of internally a the initial lot event. that's Or But more felt within more your bit leading a changed strategy? of anything of of kind onetime today? or just that think of continuation it I has this us were industry-wise is to a

those pruning. you some question, good conversations branches the some remember probably comments off and at about That's and then cutting in that had some refer of to Ed, we A time, I moving to. talked and fact,

So big those those evolved branches of I say that aren't pruning. there of a that's big branches customers. would to only we cut. Really, thing left profitability the our understanding lot of continued And cut, the it's is refined

the hand did We've X.X, two, revenue three We is better with looking have stood back working time sales years a kind in of than hand management to allocation to better also organization, which the of we in do also contracts. we're on job team those against intervening customers. of profit direct how up performing in models ago of costs terms the the those

different. ago. still the this years than we greater The are bit is have same the those three is, have is we we still might headline than a so is around approach discipline three better than embarked little we had just two, down years when more ago, The general tools we have So goal and it the around the had journey optimizing. --

this Ed, Dirk. is

find able raised - to a be them we we're continues process. ones exit, view we've that less have Pietro's bar better at We're been steal as them. they'll call ongoing so behind -- clarity customers. and term better customer what only were journey some for types, the customers, on and thing outcome profitability profitable we out sure our with And a out more target I Other get is the those. and is better it's would grows to I lower think profitable journey, occasions add we few if business get said those that, make and the scenes. We're the as this about a our you and to because constantly larger, where those around we'll it's we've us an we they on I to significant, looking called and optimize talked but we of

best we for make to continue we our So is and the progress investors. the and make think business what decisions

one just on case, we topic And gross follow-up you year. the profit look it's at this accelerated If quick All of throughout your inflation. per obviously, right. for

similar You topic. $X.XX the and way, accelerated, put anyways, seen know inflation better, up but this has a by Sysco. think delicate trend, with a it chart quarter. your Yet I each improved that at is actually, probably And we've of I kind

this So is not to bad it safe just to is that it business? appropriately, I say inflation want ask for but

case. to industry, about inflation talked we've mean, for tends be through able sort it's of healthy passed I inflation to in that the right. That's typically be modest and

the increasing think what commented that. categories. given active that's improvement broad-based in label we've the gains an a XXX-basis-point that growth. and not continue it's with continued win-win as case; in of way that much coming on, a is of well example There's would to make so and in say That that, before sourcing is with passing great commodity like private about, things and contributes partnering this Pietro the to on two we customers talked of improvement higher gross form I the we extra I and whether our inflation profit just markups, in our all number in of these a to profit kind things that's focus as vendors its of through

earlier, or managed us So as far. so I and think customers through been, stunted inflation effectively growth commented to date Pietro has not for

And it have we contract say what business comes Ed, is depends would sometimes from the on just business which quickly noncontract contract categories inflation, from. again, benefits business. I and

level. side, noncontract to of category that regardless revert the show the to the per of back analytics mean over case time, profit On gross that tends price

And level of sensitivity based those so customers. raise the comes in price elasticity the to that trying or is of pricing CookBook of where mean regardless on

profitability So we business. books books try that make to sure two with the of manage businesses each two those we maximize associated to those of differently very of

comes of question from Karen next Our from Goldman the Sachs. Holthouse line

open. line Your is

Jared for of on some last number December had of restaurants A This conservatism about Karen. in Garber the is Hi. after sort quarter actually the have talked we current year.

versus holiday that'd guidance be current guys great. seeing maybe about, could your talk trends, outlook sort you any you're cushioning and just of If you about

Yes.

publications referring impact the to, remains that profitability, to material We Typically, are often respect remains So you and with our our are outlook that more positive. typically you're the positive. larger more and see, focused the of on the because outlook chains. on consistent independents

from Research. Jain comes of question from next line the our Pivotal Ajay And

open. is line Your

X%. Yes, comparable with guidance just now the growth for revised just to beginning had range and that The latest you're X% hi, to to year, referring good I that that's guidance was housekeeping think At morning. growth to the question. to X% want a the confirm growth unit I unit that X.X% guidance of as this case quick the at mentions year, prior point, the I what

when of Is you're assume in I the I'm units thing, right? the and about So talking guidance, in missing case about growth talking and same you're nothing terms nuances. there's that

the and one They're same. correct. are You

Fargo. comes question next the Our line from Bryan Hunt with of Wells

Your open. line is

you. Thank

your what's capability on line to into of or question freight, inflation? likely you look one Just across of to wanted And think do its When passing or the of follow on them. going each food accelerate they're up those you the packaging, inflation products, of whether measures decelerate XXXX? how

business, simple Yes. I gave when a then of that environment don't maximize cost business, an the -- sure Dirk work and contract that deflationary with freight. view through and nonvolatile where answer the noncontract on inflationary we sellers the mechanisms to comes of it's variety ability whether makes make regardless processes is back which on I'll packaging the of or or go we on. said, whether easier have it's outlook, make a our of it as we it we regardless know contractually have pass the pass goods it on, answer to if with of easier And it to it to Ed, the it's side from, the profitability is the or inflation I

is business pipeline made your question, Yes, time, to term? target leverage that would on short my a acquisitions the the talked if next the about the and medium material be for your in there sense ceiling of over hit Is appreciate you've a leverage there you willing was and term. I all

Good is Dirk, morning. necessarily. This not

is I type two think them there continuation the we've into. would doing. is of the One that though of I put been from buckets acquisitions

I we've said the few think as on doing pace. the in occasions, like Pietro is X-ish feel a case, we that been that right

that. adequate the our very that, to flow fund given cash So of business is

that if the think consider I there a came bigger would the would larger was opportunity be up, impact leverage increasing we for target. strategic right

they the they're that all so, said of out XX we've those, be would of attractive, of As not there before, top a if became of many few available. are or kind out to attractive they're -- -- but us

next comes the question line Karru of with Jefferies. Your Martinson from

Your line is open.

this, morning. you hasn't? of increase rates And Good mentioned on My has the just but apologies I if the what's freight that and it the from kind missed it eased? time if line hurricanes,

quarter. So we gone rebound it we've into seen did fourth that bit as not we have much, mention but a the

I early. think still the -- it's

really So we into encouraging been kind TBD, of a but as is ultimate the I fourth moved it's the think, timing quarter.

the or synergies? of just at And those the at being all-in five look of acquisitions, multiples, the of of same still you pace the so, when are terms kind done Okay. in the kind with

just talked lot those. in Yes. on whole of very changed we has change a see what It's and Not similar don't lot there. marketplace we've to about, a the

remains outlook very our So similar.

this are turn further no over to call presenters. the at time. questions the There back I'll

Okay.

thanks engagement. happy as to morning. of generating call time results, our this for job Always which out for the and the everyone and much with. the who just very well on Thanks appreciate employees focus of a XX,XXX questions for we're the very your done business, have your So terrific

This call. concludes conference today's

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