US Foods Holding (USFD) 15 Feb 182017 Q4 Earnings call transcript

Hello, my name is Dan and I’ll be your conference operator today. At this time, I'd like to welcome everyone to the US Foods Fourth Quarter and Fiscal 2017 Earnings Call. [Operator Instructions] Thank you. I now like to turn the call over to Ms. Melissa Napier, Senior Vice President, Treasurer and Investor Relations. ahead. go Please

morning, Good Thanks, everyone. Dan.

business Joining me your your one quarter our and and and are about questions a Satriano, firm for provide our We’ll management's earnings and today’s Dirk performance CEO; take question. the provide Pietro after call Please Chairman CFO. and Pietro our prepared name, to speak conclude. year. for your Dirk in and yourself update fiscal limit will our Locascio, remarks

otherwise unless and and call we to are same quarter today’s During fiscal fourth our stated full the comparing results year year periods in XXXX.

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

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

and our fourth to welcome quarter and Melissa well earnings Hope morning good call. yearend is Thanks, everyone everyone. and

gross compared a year. and of for percent an as prior X.X% X growth Page overview quarter's So, QX range EBITDA with on quarter which were The point XX results. basis to which growth sales this of adjusted the XXX the per $X.XX freight which in And with very X.X% let's a X.X% cost case. industry increase on a was grew by label begin our to performance per in despite of strong adjusted and year EBITDA X.X% a driven good in profit. significant of growth gross more case operating drag restaurants profit were than results basis points private independent headwinds

sheet and transaction CD&R sold fourth X.X the that are as with a from XXX% part a shares that ending of repurchased to Foods’ million the ago. as we our XX balance now quarter leverage And Moving we in publicly the US X.X meaning ratio owned. a the stock remaining year year sponsors KKR down

the we XXXX almost in what last healthcare and and quarter. performance for in a Brookdale hospitality the independent years X to QX, XXXX our quarter let's turned closer our So, stronger to for of pleased to volume rate shift see fourth detail has forward. two normalized of still get continued of in is year's slightly, to began while X.X% wrap expect absolute very Page basis growth was the were Only of for or with was turn XX timing X.X%. performance. growth the growth restaurants analysis best to addition run more with as QX this organic our fourth so we with line this from We which in growth going X.X% quarter points in down Growth to about

Our year. pipeline the to of closer is back the grow healthy half and to market at a in we rate expect

which closer customers in means group to of fourth holiday other also the the quarter. of third group run this was in in from rate saw customers what The shift the we benefited time for that the normalized quarter

of QX excess ramp bulk nearly begin after will flat portfolio level of the first the with these half. approaching we and of saw optimize is in The to QX which to some planned continue the decline back We in which will wins we growth in year. to to coming half coming excess add up customers some the the chain in to

particular we’re isolates reflects side, customers is restaurants. to the pull part, about some call, but days analyst. negative positive per in choosing tax the sector dive It in EBITDA accretive. As industry shown these strong which margin the restaurants to the little on are XX showing Page One does entire bars. means a reform In the impact last to the the those deposits for with impact accept first. of left impact to tax contribution continues moves right-hand hand the as outlook passed reform. this means no X, different of with Technomic’s a we as announces us in we take which the discussed updated into be modest by outlook a are for associated of On for deeper the green which industry out let’s these operating independent in recently expense assets The restaurant for AHS, by the

target growth in within continued gains differentiation market share are Our independent bar with industry, customers our from benefitted strategy. the had strength our fueled restaurants

update supporting that US those thereby that on and So differentiate market have Page discussed. now an for share the to programs Foods just turn let's gains I X

recent in skewed trend times the to labor XX% products start in left from our kitchen. Trial the products from program. or year featured innovative to our products remove on close Let’s increase that operators new Scoop. with the help of are three-year These XX% in the continues our most approximately three stay to- earlier on

to e-commerce the on can services placements climb On penetration continues value-added middle, the does of left. as see far the you

pages. couple Let's chill down for a of

First, products. Page This launches the our is Scoop in our edition to and preview year it a Scoop, edition next of entirely of X gives XXth week. the is next which seventh sustainable our of dedicated

products a then, XXXX summer least technology. Serve we launched such our customers In independent our at products of XXX in under X first basis, the encouraging. dedicated purchase launched Page You uptake provides our an since on update by brand, been effort may Good reduce the recall XX% monthly either under January, products we almost has On responsibly And the customers also our very Serve one that sustainable of And or Good the brand. industry. our have website. to products, Scoop was weights sustainable that source.

tempt our example penetration website, live. other configured have our we high is Prospects, to to e-commerce, on we dramatically primarily which of why our our and is customers services. the friendly is products our more with prospects. for value-added e-commerce content be Given sales One on the interact website platform on us existing much hand where invested on

explore Another sellers we share so and that ideas given example they collaborate is prospects opportunity have and the together. relevant to can

greater were By reminder, have changes more of an be two and and initiatives. quick finish average and for way a a while on more As profit these of plus maturity, years Page expense up in discussed initiatives operating gross I’m going to detail website will of visitors others which of flight on our which these is several our XX% enhancements, time been nearing by upcoming at indicative our Day. these recently is engagement. to definitely initiated with update are Investor X already result in

start profit on of our with rundown gross Let's the left a hand initiatives. side quick

been pricing very to you our on fully CookBook see. pleased which continue are optimization with deployed Our we and can sellers to has impact gross the profit,

our in from in as will down better looks with of replenishment, the markets more Strategic vendor produce ongoing lower targeting enable us second and scale. the COP continuing more is with opportunity those a future sellers are move which management the coordinate result freight an our adoption to wise. opportunity with expected to have We touch, upside on in centralize

markets Speaking of the customers is points continued local ensure originally importance lastly, this from hand-off by where to the to in is growth our of a above is fashion. from the XXX independent basis expected And be private our as we prompted which slightly to see centralized than finished but replenishment, mentioned we as brands, in seamless benefit completion I that closer well started. our longer it's QX, anticipated, desire as year penetration mix increasing continued of in done the

made to in progress the our optimizing progress to two With services last centralization and operating size another explore on greater supply with Day. these that the given upcoming early in we've cost two of we years our depth sales the areas initiatives, our good we shared and identified, see We've expanding pleased respect will procurement Investor also are the the and productivity. in and for come are of chain, the expense our three, reset, innings indirect our at first force initiatives. opportunity, We upside we tremendous topic the

I you. does we our Lastly, will healthy down more or next we it the in will at stages sheet. pipeline different M&A quarter you with expect Thank will a remain on two. and front, and walk turn the Dirk, balance over P&L who now and our have targets on are of potential news to to number

and good morning, Pietro, Thanks everyone.

strong Pietro fourth As we quarter. commented, a had

significant EBITDA freight continuing $XXX to million, Our in operating income headwind. increased spite a and increased adjusted X.X% $XX of cost our million inbound

other strong experienced also growth cash flow. growth, We restaurant and solid independent with types strong customer

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

than for strong quarter, cost Case at XX part growth was of holiday as at points incremental approximately the healthcare which about Pietro and quarter. impact anticipated we the to volume of restaurants was quarter or X.X%. hospitality in in timing growth stronger X% case the Our independent growth X.X% due fourth and the with growth organic originally mentioned, for resulted basis

the primarily impact opposite in in QX pork to in day due as modestly loss than in modest in and as fourth well from returning Year's we grocery compared year. categories. several third dairy, year-over-year the quarter We to January an have shift saw beef, was inflation later timing inflation commodities XXXX inflation to expect the prior schools as did the and We quarter a New less such in the and produce,

Now gross Slide profit which XX. performance, on see you the

deliver profit We strong continue to gross results.

is that a make Pietro increase continue on quarter, continuing elements headwind. year on GAAP million, the is an basis per X.X% fourth $XX per up quarter adjusted a spite progress good gross up prior which or increase X.X% digit we volume with case on continue case. of gross million $ are $X.X profit freight profit profit gross double again The in talked our focused to billion per the to of this expansion the $XX profit increase on and case rate meaning strategy, over this cents a gross For basis, case was X.X% about

basis reported widely continued of and A lower basis percentage gross out in to XX on has a capacity. than tighten GAAP a year outpacing GAAP is trucking inbound This tight due week, As mid-XXXX for one the prior has Journal mentioned adjusted to period on basis the demand freight The capacity both XX.X%. profit basis sales was available waiting XX continued higher an on XX cited was January every Street and year-over-year three points adjusted just profit inflation been press. negatively since cost by just decrease Wall the I driven a there percent recent which lower impacted freight points basis the Gross article and by costs. loads as primarily compared year higher supply. as freight meaning were is the loads inbound far same for of with to truck sales ago week industry a a this

over As significantly prior increase a we’ve result, seen spot year. freight cost market the

capacity steps to We’re at to costs. of to the party lanes optimize continue through least are XXXX. vendors Industry working headwind freight a to be half impact with is from taking the higher mitigate re and third first our our freight expected

prior increase and LIFO expansion in the year X.X% over growth from benefits and margin the of an volume year offset percentage our dollars from a decreased to prior by partly For full profit our profit charge an XX.X%. year the gross the gross initiatives increased adjusted XX sales profit of increased gross and $XXX or X.X% adjusted basis points as on basis in million

dollars from expenses to or of year lower now decreased end second amortization reduction due the These $XX in decrease volume. from expenses our $XXX million, a case in at Operating quarter, primarily volume. quarter the adjusted for quarter customer basis additional for increased gains. to of a the percentage or sales from XX Adjusted OpEx X.X% higher offset XX.X%, which related than intangible the Moving primarily the and to asset Slide $XX million expense was of year. of to adjusted points and resulting operating higher expenses increase more The restructuring XX. as the expenses the productivity gains operating full a case depreciation on to the due million prior expenses X.X% amortization is prior was a operating and

prior the year, expense were For essentially operating to full dollars flat year the period.

basis X.X% As increases of continues so XX our to a percent were been continue on sales. order our expenses operating that a points year XX.X%. the in focus growth as per percent a to XX a to an gross increased adjusted year, controlling operating sales, From decreased of of case ahead Adjusted OpEx year-to-date to less prior has basis leverage. expenses perspective, rate profit it for be on than points OpEx and drive operating significantly the

you results see a has profit gross As dollars per since gross per XX, more can those adjusted year ago. case on profit we're this case been year our Slide with significant very making than pleased and we're expansion

resulting we the fact, gross significantly every fourth gross XXXX profit growing from compared improvements and profit was XX. fiscal We largest. XXXX its metrics. increased operating the prior adjusted in fiscal XXXX. our quarter million key $X,XXX in per best fiscal the case case fiscal in XX up OpEx to growth per of in per leverage the in case our per $XXX up year our moving between quarter XXXX higher In case being year again basis per meaningfully margins year year EBITDA both leverage than quarter, now quarter in XXXX, fiscal the growth X.X% OpEx by and X.X% was for rate million the made point over We've the operating was difference and XXXX. profitability improved faster to I'm in EBITDA Slide case solid Adjusted

to XX sales, the EBITDA As for for quarter adjusted a year. basis XX and points percent to fourth X.X% the of fiscal increased basis points X.X%

the on increased right, to for $XX fourth year points $XXX fiscal period. XX we've and earlier million quarter million Operating year fiscal year to year-to-date million As And basis margin $XXX to quarter I XXXX. XXXX finally this through income in the net to the million EBITDA compared $XXX $XX increased increased $XXX million income increased far mentioned million. prior to

result strong income intangible results, increased $XX amortization business pretax as a Our million lower asset, and of restructuring. year-over-year lower

to improvement resulting from tax by the no from deferred adjustment decreased net essentially adjusted income year Our new due reflects compared also to current million our Fourth business reflect income $XXX million increase prior corporate credit fourth the to in quarter year the prior benefit income results. net in impact an with quarter tax year the offset tax liabilities $XX adjusted the $XX stronger rate. million tax partially to

period of as million improved tax decreased income net million million by $XXX $XXX the a pretax $XXX year a tax Adjusted income net also results income offset to in than our by offset year, expense. year. higher increased adjusted full to income million benefit a the the $XXX For result to $XXX income improved prior lesser current $X million as million

debt. $XXX of $XXX strong a XXXX. Turning debt flow million year, $XXX $XX cash billion from $X.X was the fiscal flow in XX%. now million to or depth increase to at for decrease year Operating from XXXX was cash in million fiscal million compared end of the prior in at Net the

a decreased completed the $XXX and million our repurchase, nearly quarter net have another that prior-year absent from debt as we share As end. the just reminder, would Pietro $XXX during million mentioned, repurchase

debt leverage consistent third remained the at the end down quarter from times repurchase, of XXXX. with net year the which of times even X.X end Our the X.X at of with fiscal end the is the at and

XX%, Day to Moving at raising also today to Slide guidance updating in outlook and upcoming X% our outlook, mid-term our from XX, which X% for to XX% mid-term We're further to fiscal discuss our beginning providing with we're XXXX. Investor we'll March

and the and of first to approximately primarily growth be X% we low points weather adjusted QX, exits XXX far conditions below for a the related as in this growth occurred fiscal quarter based holiday temporary transition so basis expect as range, as broad multiple customer expect end XXXX timing X% regions in across QX We a well for of QX. be in the costs that some result the to plan to EBITDA in range, to late

throughout QX the types. guidance. customer net rate growth case of our timing accelerate to sales all almost through across I'll year-on-year growth holiday walk adjusted rates will Weather and and now our volume EBITDA expect sequentially We face year. impact

XXXX, we Pietro XXXX. to on achieved above bullish, growth year remain the for at be or expect volume in full we our and levels independent restaurant outlook as For noted, growth

supply $XXX full necessary prior case net period case and amortization XXXX some X% to chain. as in expense to million continue expect even increase faster X% to to from also between and We million. year total per sales fiscal and than we expected X% increase and Interest the investments is to increase case volume profit we $XXX X% in make XXXX, to $XXX significantly depreciation million expect OpEx year million be In to expect gross XXXX. to $XXX per we

$XXX million. We diluted rate in $X.XX expect and our expect tax cash million XXXX share increase to And and per EPS CapEx finally, effective of adjusted be significant between to XX%. a our $X to to XX% $XXX we expect adjusted

performed business pleased for in that, now can thanks And with us the well Q&A. with we XXXX today, we're QX joining to and results. fiscal and Our and go

Your Barclays. Instructions] Karen the question Short first line of with comes [Operator from

line now is open. Your

a week clarification XXXX isn't then is Just extra picture there in guess there. an and I question, bigger the fiscal

to want EBITDA if is to include that So there does includes week XX% an I extra one? that or not growth just X% clarify

what - of you’re kind You to? referring

I XXXX, that is new there include - three-year isn’t fiscal there the week? on target In does your I'm exclude extra to so or just week extra if that guess does an extra an and X% XX% week wondering

XX-week when be on will to a basis comparing normalized This to XX-week periods.

margins, better the just than OpEx, drivers would and more kind you bit into be? a margins, little increase a of of top of it's you little maybe that assuming that gross could give what on drive will that color so dive if if it wondering I'm is could in line, of what margin just terms better So kind it’s

really drivers across with P&L the restaurant growth come independent saw is you our The whole how accelerating.

to talk Investor to as the in lines our services at that. for P&L, And the where comments do the to continue. last and operating biggest That's We for expect continue two that a Day, opportunity that's are those it to shared are supply continue our and is the in - biggest opportunity. increase contributor cost the you’ll about the to we for also my to the of cases see expect that continue see expense chain we per We'll gross profit guidance my and to outlook how part particular in given mid-term. big in

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

is open. line Your now

a couple So things. of

Let off, X% might reinvestment of there how areas is contemplated much there in reinvesting? there tax me you start to or If the and guidance a was in growth. X% be XXXX what tangible benefit was, roughly

not drive portion it's believe where to have continue to higher making the as well are that and facility make little that in as some explicit savings CapEx increase there's a see we've need investment to So, of modest the in seeing of reinvestment an you we our to in that we investments CapEx of the bit have as expect and we we of a business been is costs. order results IT some we continue we spend, can increases the

do right disciplined those reinvestment projects, in I be little but back to areas of more coming to through. to the continue make a you're see think, going the sure that's where where we we

think at the know about from of medium-term I And of is that process, it's end that low primarily? new in share the then what but thought accelerating is guidance, specifically when X% coming secondly, range, only sort gains your you the

John, with question, from guidance? when same guidance about coming to gave or the talking Dirk you you where’s respect QX that say As your

to X X%. the No, is had to low so when M&A, high up I end some the think versus X right, right. The always the XX end X, about

margin share end organic the organic. I low assume Is to So, from gains prior that's accelerating the that as more opposed plan, improvement?

the we continuation better that restaurants, to relative independent what We're we starting Karen, gave My Day the of margin be would with favorable can Investor think little on other on, perform opportunity a Jay at to early is the Jay that a routines spectrum inventory roadmap a of similar independent. to that's to chain, very are always been drive by just perspective. we very supply work we’ve benefits answer as we we the the the better piece we're continues And to Gross said, we and is bit performance. that Gent reap and profit we've which to this that’s trend outlook outlook, from see lastly that our we've a to very supply having high-end the that at cost, from as said, we’ll picture to again in for say I I the hear talent we hear you’ll of just Ty a a we the new doing, XX% Day is the invest see some of as drive of said, Investor initiatives. bit chain at year guidance. little often And the our innings productivity can and is painting of those sure to expect Dirk agenda make drive where and

the next from Fargo. Kelly Edward comes question Wells of Your with line

Your now line open. is

we X% just the XXXX, in target been EBITDA XXXX, you've you are XX% growth in did on start these numbers X% XX%, that of to Can hitting.

freight, you as about essentially if in well? adjust XXXX, that think X% are we the for X%, were to drag, we in transition XXXX As to range

industry Yes, freight, et It’s we're cetera to called weather headwinds the out. close range. you around relatively as that

the as Pietro of part have think about. otherwise just So core a continues talked the business QX those levers and on to you the with form things quarter, all that about especially the strong impact meaningful

does it helpful? color color a would think just there like about more could non-contract you what's just business, lag this passing on side, through, the bit little business, then impact is contract the provide only as impacts how this in And think we be the I the how it freight, some

merchandising I'll take we something days that my just touched. because is it

of bit little a freight I do can. I'll great So a primer if

goods And When cost pick to on non-contract into absorbed vendor that the freight is quickly. us to freight, cost risk built delivers at the gets small in-bound either So margins, one lag. In passed we the we being happens ways, gets as and excluding and vendor so freight, up. our of to by any vendor continuing that we're the two increase that just, or the that passed think the there's about rise. - of delivers we goods. margins potential I contract, they've you degree the contract, that on intimating relatively of they been But look with to when choose it's talk

we pick issue So The that is well. by trucks, governed gone up, that's where minimal pick bargaining has is a we've gave partly right. might with and visibility is are change. up and up up primary drivers impact. as really to and up costs, that staff there and go pick when there's up regulations When two, party when compression has is own The result those we Where we agreements that year-on-year. to outsource which as happened we the on lots spot costs is laws, primarily two the demand come flavors it and collective Dirk there's third Dirk how our article so a seen we when new into prices shrinks, think when it capacity has some of the play, going do electronic into I rates XX% referred of spot

allowance, third renegotiated. has we negotiate those I or be when because guess, between our the But picking the the go And revenue up, immediately. compression to costs vendor and the with happens where up so the that the we're costs from that's parties spread

focused we're that's what And on. so

Regardless we in rates, we year those back will Does headwinds, half those optimizing freight by lanes Dirk comments his with them what renegotiating respect help? vendors. have self-help initiatives. when is So the says, plan that of to around two those those mitigated allowances the to to of and the happens

if more one could And in. just squeeze I

little the think seem divergence. margin broader driving there of are As strategy we be about a some a a intensely companies now. bit does mean, I strategies of right growth, have to little to clearly peers growth, the higher focused your seem you the the of of growth bit here, on

acceleration competition this the that I within is Is for strategies is differences of concerned simply little that this this, counts. case in these all think may point? market price or between an the these a is there some be in companies at just

difference. of is I differences think right. it's to and of strategies bring due assets, latter, focus in different it set and the a it’s It’s some we

line customer we is the mix We three account and third are broad contract singularly to about optimize focused talked so industry. across have of that And those a the three again I for seen, always looking not largest we're customers about. on players of do the

no even gross that's think margins, Case, for a change one impact think on so at look we as been been an profit up I going that, I have as we indication we about and steady, that the good pricing of it's seen as more any there. And price competition has all are competitive pursuing talking and independence, not when or it's though to pretty industry start with

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

now is open. line Your

commentary of some industry about been recently. the There health has some from independent the your restaurant competitors of

of that going there you is healthy to your same-store models? chain - are some cell ways what So price driving any And be are competition just independent? towards concerns the largest among have sort distribution chains a the, what thoughts same Thanks. curious market how of how at lot are share do phone businesses independent, and share of in in of the shifts between is sales terms

Right.

most update and which Karen, as is that to Technomic access haven't to we referred per the recent more all my at answer industry data seen we have it. So positive your if positive. positive than look I not of We reform. benefit does at be attribute previous look update. some sector more tax The some entire we outlook IHS of When continues which granted the as to to

as or, existing you six new look In is the terms as, look at existing comments thing for data months as it of customers, new, pattern or customers last lost we churn no at of new referred it coming We from can where tell the from. customers. you to, call seen internally that comes of we’ve is in some in I growth the growth the change and other the we

haven’t we outlook, change in has a gone better. So that seen

field leaders Our internal consistent. fairly are own with and our conversations very our are the bullish in metrics

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

open. now is line Your

Just the the up would margins, has guess, gross But margin would it's elevated been curious have hear freight. between just walk your another one with margin. weren’t year-over-year, on I it of customers through for have gross that helpful thought freight more costs, you to I supportive been gross if mix the

also third is color in that that back to can via So use steps can the go you as party just and the you coming and if any inbound the on you percent that there mitigate and freight half? exposure your into more just what’s what of

our gross freight headwind we’ve number closer lot because still think of to points basis on calls. margin the a flat and talked of our of that So the I a prior year-over-year that’s inflation have commodity a excluding year-over-year been about would in

though improvement I with you So freight be continue case on think the gross even see at significant you per back our to headwinds. rate if look profit, it

through as our Pietro able be really in with pass on the we’re - our vendors proceed one of year. the things So the we that re-optimizing two order working we’re to talked is as freight about through lane working really internal management as that well sure to that levers we things making the

for estimate, the result XXX and our just we basis but a as a haven’t you freight to points percentages, third use about individual negatively the impacted So party rough of talked for is growth that EBITDA really year-over-year. quarter, we was give piece pretty the compression about meaningful the

X.X%. see can in you pretty able and that the we’re to it So business helps. Hope grow of spite meaningful that even

is and because you're how or share the with of bit both, know point? times. confidence independence, you share an gains to of acceleration word it’s do feel think down that of have thinking gains get or the hard couple with and to just in the themselves on of with that future I pinpoint a I but the getting analysis the heard that number, strength thoughts the independents channel do to that to exact I maybe any little And market the just you're also you the a the them you market about

a data continues X%. And little bit of which be look X%. on going growth both, when it's the X% comes it year And to We're at we external income independents around Kelly. to from

working set building and as economic is share think And best we the the also be particular to to equates we to in driving still the achieving, market are our the that's and sure those of the markets circumstances see across make Xx often extend relates what as things we've on mentioned and target agenda practices that gains. variability right I’ve just terms we seem of I right to So related which continuing sellers. routines the markets strengthen to not to and we leadership have talent the - that

have we number at performance been mentioned - think look top quartile bottom less, our better of the of to top continue sellers churn salespeople big how the tend I've the of to salespeople, mean quartile when our to has you optimize and place. the I the salespeople a in motivation in which past quartile compared I to grow

line of Ajay Your next the Group. from Research Pivotal Jain question with comes

Your now is line open.

just color growth much wanted also you case ask in figure your guidance? on first to then Can And you get any in you're what that growth QX. how of have of on confirm some independent clarification if case X% I to for assuming was fiscal the independent wanted XXXX I organic?

in for And bit helped was had in restaurant normalize, growth that X.X%, timing, very X.X% there organic materials, commented, XXXX, or throughout saw roughly better than for our grow the some independent so and in what XXXX, by about the we’ve bullish that ability as quarter. we number or faster the strongest which is at growth out holiday organic it’s we XXXX. So do a on so Xx to as the strong we the haven't to remain we expect it's a quarter, very very, growth so years, we Pietro but of as continue we little XXXX perform still specific market two have put at

X% already solid. you've a along driver fiscal on questions on like rate EBITDA, know lines, but guidance, main I some for gotten based it looks the these to the what's as leverage growth be slower from little follow-up And year. your comments the in expense independents then X% of the that XXXX and a that should gross prepared dollars And to data you you between growth bit supposed from Technomic mentioned expenses profit is moderate this cited

growth from customer wondering, would based you more in expense a is industry or costs? it's issue expected for the the So earnings partly driven much mix recent I'm on independence slowdown outlook just freight say the of some headwinds for

about or combined continue timing, more as weather half release this as on of meaningful and expect or as fairly cost growth, headwinds past. the factors as private I these chain things better that continue is point accounts first from accounts. on elements the to early the et really they then or It year and exit transition we that talk to around of are the freight impacts unprofitable some be of at margin QX the to well with expect performing we as restaurant the we those to continued three some in well business perform to the holiday well have in national year and cetera in before, drag which talked core four the label, with we levers, the And about than

So that's the for bullish so remain midterm. the outlook why on we

And I Dirk. you, just had maybe to I'll question, final address it one

necessarily a for But of adjustments can't assume of forecast So ahead know there. those is I you on contemplated P&L. of the specifically, the costs are transformation time. lot non-GAAP of business lot all I There a variability

for off future? expect costs something sense should foreseeable when see that you for roll So, those any have to the or do are we eventually

get may chain we parts Really are we we there's our expect business. over into continued to supply driving But meaningfully XXXX. really largely and transformation transformation And We results. big a than decline results right we you has to around add-backs have that’s is, things see the our specifically. last bit goes to in driving course you we're haven't declined the be, XXXX of to ramps even you would down little faster cost But away. the of a our for XXXX like XXXX. do thing And only can span transformation quantified we're we couple GAAP adjusted elements the But minimal XXXX. expect decline as it of I them as what tell and

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

now Your open. line is

then clarification first and At the question. a

over the XXXX On in see XXXX the increase acceleration overall growth of expecting to That’s interesting- clarification, XXXX. in do that drove XXXX? restaurant you know your for that what the in in sales see growth kind we’ll external over people are an

impact reform. factors number was tax factors to were were which when of John, I which There it, of to the contributing several one share. at looked a and happy factors - the happy There share of we’re we’re

Can you them? share

do I don’t Actually don’t but want have latest front I me, to report. misquote it in the right of

But of that of the XXXX. the more in taxes that positive expect XXXX in impact positive is be seen a they than interesting to

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talk quoting right get territory what of and doing of And that’s number if that still you XXXX about managers you is, business? specifically think consider been independent in you’re year-over-year. if new that? What strategy can you for So to some you to the type your that with XXXX you’ve

started grow path finding and grow levers, better sourcing sellers Investor statistics we existing years hear actually driving it Jay you’ll for who’s the this. is they at few to learning more ago us business the on accounts, grow new accounts, three their they Day from insuring a and when just to more So quoted earlier this a more back go couple better through really The our by better it all accounts. been of the

- that hiring really to salespeople TMs grow. there’s driving TMs who approach So from we all the are said order are to in profile accounts slow salespeople that that, necessarily the our benefit we Sales new do and above in do fit people moving sales we're is what Having to who brand performing hire to guess, we assets consultative who in And from and who reduction why underperforming their the well, as being of mixed continue we can the over the I who customers. are that help a force. know interested leverage takers, represent and you have offer. the better tools want aren't

with how of profile the conjunction seller are in of So the our future customers the changing is changing. also

as language, you do in less having of of that. managers for XXXX to company? end get and territory but or Certainly understood the of you that we Yes, thank repeating some the end more seen XXXX anticipate

John. disclose to obvious reasons, want we That for that

going hopefully approach game the being works think the that confidence different database approach, ahead perhaps the to is conversation this. of take years we're gives very work is I to be away five the the what and of about others. the very from going than you industry you today compared the And thoughtfulness in smart its way to the we're

comes of Lynch. Marisa line question next with Bank of from Your Sullivan the America/Merrill

Your line is open. now

EBITDA an of much X% Just to those have? X% follow-up that impact on growth. the and quickly to wanted how Does so include if acquisitions

growth at later new That haven't since at acquisitions the as be this Pietro expected acquisitions and in point this provide would said some would the in we it new would all year further. and would as be new any year, some the our in point acquisitions we had later provide go

is for that the year. all-in expectation our So

the the update M&A or the We would so on be point new we transactions based in have Pietro completed the And year. quarter as next small relatively to extent impacts said that this last in at it two. information would

M&A, pipeline? it but any So existing the new to includes M&A in not confirm,

right. That's

below target, then mentioned those think customer outlook I to little the you the healthcare X% XX of little in XXXX, for cadence mid-term on bit bit in to X% about on in the that the X% XXXX? little but more a think independents case can also just about X% being a the comment the growth hospitality, wins a about how you as you talked then bit just we and channels some and in growth well types, case had as you should And

additional some we of have mentioned, that continued QX, ones in all assets I Pietro other in so we So QX. think the had the within as some

the and never we year, cycle than significant balance would as to to really, continue us as flattish, as is begin closer expected Pietro back did. to growths in new as we a year mentioned and of and QX on so will which then wins QX So softer holiday the big some from well. nor healthcare - customer of more remains And level QX, of hospitality, weather the well more pipeline we on QX holiday negative the to the deal even healthcare be the little hospitality in to in expect and other that getting - That's the bit for as board ramp would expect had healthcare be full we half the to QX by there. we return assets bring the would all expect improve to end solid market as really of the and year customer large QX hospitality

comes line question the Higgins with from Bank. next Deutsche Shane Your of

open. now is line Your

year? know mid-term pretty or I around I year. Thanks. cash the not math $XX times. you of you flow lower taxes from talk have about cash the leverage guys times priorities a finished going to around the with guys share million year for cash three incremental by are this You and my for and just buybacks target free think or X.X and EPS remains strong another guys flow you your whether so Free factored Can are get into guidance

more of debt it’s flow net Investor and we'll share that incremental may more we going At talk forward focused we'll debt capital versus just this information on absolute. we’ll at on use how on been further thoughts actually cash thoughts point that We reinvesting point our the there this business is out about we the share reduce that Day, at broadly to options. some in So historically updated the and other put remain allocation. on

a kind picture And of question. then bigger I had bigger just a

do guess XXXX total portfolio trying How years, and a I three just implications and stabilize does of two today the might out to you of chain portfolio lot Does should next book maybe years in business percent as business. overall about the how you have terms a margin we say think it optimizing to then just do your optimization, in be. of looks national about I'm than start the understand the guys Thanks. of as mix? talked think your it more really to guys much You your opportunity over had that you where different portfolio look

which I consist is presume about chain you're all customers - talking is the other largely portfolio the what what of of.

as So in Dirk as XXXX by reiterated I as and expect the back said Dirk back re-iterated approach by of of flat. XXXX the that you to

the profit. As fewer I that, to the of deals and that's to to is And the don't we work take we we and of this find fewer beyond to last are I customer and you a for said able which works is resort. fewer deals is that reason the always negative something lower I for prefer if Well customers. the XXXX change whereas customers fewer look good approach us. say we’ve said flat, because mean think we as reason obviously win-win top more the to baseline half as result three there's are as opposed the that do potentially on deals of out years years as we there's XXXX is is exit there that and have should deals two have done, is year upside is for works visibility And Dirk proposition, back exit

good in of a from. work So to the say point calling up back for year I this is half starting what would we’re

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

open. now is line Your

kind of normalizing in ask cadence of the kind exits freight of to and of and kind past through, be think then get of this going half the in working associated the so two of right, factors are to customer larger if you as the kind first-half just of some sequential of right. wanted year, second trends also Just of course expenses we themselves

but any just much Kind you get be exits. kind you of freight if rest So, kind of from your more parties, more before volume question from that typically go exits nice color get great? of the third chain how maneuverability higher of two opportunity and they of maybe is you be the you’re is I customers a the not, are much on landscape kind at thinking to just picture customers a when that is you then or of for look of then those first of big look And is some independent worse would lines businesses how on the obviously costs do would at or like better having guess ability much switch guess how on growth, those there perspective those to what on I there? those worth it there where of kind

I’ll Good start on great morning. outlook. the

a to said, in improvement the some half that as noticed see these you year we on, As EBITDA lot as of sequential goes second past because expect of headwinds. in you growth our we “temporary” first get the half

increase. us, we well is a a to making that's then in have a but - lanes within the big mix Pietro our that is the things. freight component. really cetera it’s vendors really are reference expand as the lapping helps where with cost get type combination period the sure It base there to ago, et So may of the as working deal It earlier. things, improvement what of sort our a higher to mix all of you of second three half for the managing the and them it’s we is we carrier better year One of self-help can re-optimizing

not year. the So as we is the to half one go it of quantification, those specific of back but really things

us number where we conversation said, and to whether existing the look margin the it opportunities that's is always for both assortment of if And larger levers course small always one important with from that's customers, for us on chain Vinnie, or really do start those is other they’re to and routing agreement we deal the a a definitely of we contribution the more way I of an as as or conversation can and the and there or better drive start the large strike customers.

line Capital Loop with Markets. of Wolf the from comes question next Your Instructions] Andrew [Operator

Your now line is open.

time talking usage are they're were how I customers and that and the right? trying I heard that engaging prospective you say I spent. sites that's about just and your driving the to you increased sure to thought Pietro also make enhancements sellers heard

Yes.

provide bit little of a an elaborate occur? example you flow maybe would process and that about can so And of how that even the

less Again e-commerce it on website about about need more customers to is But a our platform Day. we'll existing you interact Investor think talk mostly of our this navigate at they if placing they're where view when orders.

site utility our to way Prospects stuff obviously to lot we've And are us slow do because so so done the platform provide the doesn't a through which over down to work remove they of will that in way access don't e-commerce the years get is they of a cross-sell. on the with to done. When but interact e-commerce website. have our to want them they platform opportunities

prospect that opportunity identify over there now there they're courtship identify a content is to now exchange interest have in and of and to the going probably more to is by to is I prospect What that a time. was And process. they way create opportunities a they can get together evolve There's if to attached done about referring so continue configure what more that ways continuing go the and business that’s to information some prospects. we now And is two some less is some talk opportunity a there existing a that friendly. when manager favorite customers can

do on to in help the to basis a in now points, And based drag quarter points up from your growth your could swing, as XX well. the and just will basis I'll to drag taste independents. drag so, quarter but about And XX that forward the independents to holiday benefits mix? mostly to this we look if conference the on with Dirk, follow-up, it’s not the bump

And of break. the timing happens way Christmas lot of types. of week to a a middle is what from goes impacted Christmas the shifts and It different weekend the customer then the

customer types. it our had meaningful pretty a impact different a lot of across So

is So proxy restaurants a number. think is as good for it the the for XX overall independent I

Okay. you. Thank

Okay.

we're thank the I I as Thanks hour. for you. to us. at to like - always joining So do, everyone want

in of our employees seeing Thanks their they our the all about thank to And our and upcoming results continue in many of to some Investor I headwinds generate always, customers, Day on month. to spite - As again. a for we we look the coming you great see. commitment of forward

today's concludes This call. conference

disconnect. now may You