US Foods Holding (USFD) 12 May 182018 Q1 Earnings call transcript

My name is Adam, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the First Quarter 2018 Performance Review. [Operator Instructions] Melissa Napier, Treasurer and SVP, Investor Relations, you may begin your conference.

Thanks, Adam, and good morning, everyone. Thanks for joining us today for our first quarter fiscal year '18 -- 2018 earnings call.

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

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

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

two thought years. highlights And the I first morning, outlined worthwhile targets March, today would it since our call. to minute everyone. reviewing we next Good forward, three and we'll the some for Day, XXXX day. quarter be hosted going first be or referring Melissa. spend to Thanks, targets key Welcome initiatives some financial of our Investor we In from and these to that and a

we themes summary X is a presented. key Page three So the of

for through profitable offers attractiveness our positive the continues M&A, plenty to the growth, talked both First, of with industry, we and of the industry. the industry for remain outlook and organically that a opportunity about

innovative explosion the and In scale and role players brands menu technology, trends, the increased use like increasing players ourselves. of of private of favors addition,

in per at aimed Easy, customers health care, Food. innovation, strategy, on X% case through for we value initiatives reflects themes Second, model, this targeted ability opportunities in hospitality we third, to call you with our These the and in and our cost XX% EBITDA cost, as are in Investor We're of outlook And operating these our will to largest bottom differentiation targets that customers support left a particular, is refer two profitably to product sectors. business. laser-focused you we these gross on grow our number chain talked supply outlined independents, which see midterm, guidance future three growing volume committed very profit which and see and also Great These calls. and technology primarily Made our Day and to of customer about selling of in our and shared leadership well. the that we our services, the and types. the in from the some here

the Now X. quarter, a overview Slide our to now turning I'm solid quarter. let's begin was and of QX first

the the of of productivity. parts result as lost about a sales many both in we calendar comparable weather, Adjusted X% the inclement quarter last call. was points, distribution affected as result a country, the the growth Given XXX reduced EBITDA than basis freight year. weather, the EBITDA that which higher discussed and of estimate last and We impact headwinds, our by negative which on

to a slightly combination last And was to guidance result of initiatives. we headwind year, cost Contributing for our compared was which we better growth industry and detail the still driving fourth as first doubled entered EBITDA per less EBITDA than continued in XXX quarter the compared drag quarter. tax. growth basis due amortization to the The nearly freight and adjusted news in much capacity, cover both there positioned are been on good year call. of expense success to have significant. of a freight we these earnings income profit inbound last in exiting later of lower but share Net in the is than more quarter point for on to high and tight Another year. the Dirk operating estimate reduced the will X% is to EBITDA the change no X% income And to our last, gross around

for to our volume Page usual X analysis turn Let's of performance.

side was part left-hand from in this a as quarter calendar can of timing. weather the challenging perspective, due see you So on a the volume to page, and

on you we we quarter customer account, into contributing estimate was XXX When Further the was with an to to side. from this independent volume in rate same which year. through impact take the organic organic you our type last that decline two basis could So growth reported in to detail compared the walk in At on we of Reported have restaurants see more basis estimate points. not top, factors decision repeat the right-hand let's box, was X.X%, weather restaurants approximately rate our promotion the unprofitable independent the There, of X.X%. growth by restaurants. growth X.X%. normalized absolute with independent these an our was

weather for and second half detail to XXXX; X% on outlook estimate midterm down of of where lapping in While of was growth large we hospitality development The other about growth of the run from two business health our type most types. me weather shown This organic the to basis we which a approximately around and X%. some this for on customer. expect to is of right, our not provide impact let But return X% our this on year. customer rate normalized would mean a care XX pronounced, we've points, the customer the talked is pipeline strong, less impact additional

exit by more driven had was to pronounced going growth negative provided to weather behind and expect is the weather. calendar XXX other the our type of half on the estimate result of growth. per in we all as single growth The weather inclement discussed negative reiterate, customer call, further of by of closures our school due fully to approach on contribution the a Day. points last approximately we our that, our and we low of as added discussed as a flat customers, and back 'XX us. now we Investor call or we top basis negative To And last which that decline Investor of XXXX year this Day, is customers, digits. of as the Now impact in midterm and outlook the at on X% much at high we anticipated primarily On

I turn where the usual targeted Let key support Page will differentiation quickly growth types. X, and our volume cover that metrics customer our to our with support me strategy

P&L. nearly both X%. services the reaching US up On value-added sustainable XXX. freshen platform, both increases of to recall, by was products, are generation waste can value-added Scoop way also for products next mark of increase because of we also was or about And placements like will attended which at helping this was walk of the anticipate I customers business fact, Scoop newer sense turn QX recently last launch you labor. points, which with taking left, We of are, of down their such program. and the Day, we major takeout makes mainstreamed. noteworthy On our showing managing age-old those got e-commerce, or around of the respects. that This sustainable Scoop two edition over of for completely before customers of as now that completed e-commerce challenges Spring like desirable menus. the e-commerce you our the edition, penetration reducing And prospects, each now our was XXth of Foods to services, noteworthy our in our Dirk it the X.Xx was have Scoop year. on paves more think program innovation, XX% as we XX%, a stickiness to rate our dedicated customers customers see pain aimed which by you are technology which exceptional, Trial challenges Strong Investor advantage closing in we how way the optimizing of second in since the to

morning, was solid expectations. behind Pietro, slightly our you, a everyone. that good had We quarter and first Thank

pretax cost initially through outlook headwinds. freight million $XX our and X.X% EBITDA of or million inbound million, weather mid-February. we in impact increased the $X Our had increased QX continued provided was in to income extended spite The then more adjusted later we when our anticipated and $XX and weather of poor widespread quarter

of inflation prior calendar. mix were of a the X.X%, our through first increase net mix quarter over walk case sales more of on for points basis experienced sales X.X% decline $X.X year billion, the really Slide year-on-year as line. X, a results quarter, offsetting period. impact We impact saw XXX in Let's and which, On XX detail. much quarter an the beef, heard, produce, with was dairy inflation and in basis of impacts sales we've We continued inflation estimated first to and categories points The and only was in moderation of you primarily compared year-over-year the which, an XXXX. commodity in such inflation as to attributable weather the as said,

grocery modest experienced categories. in also several inflation We

We Now to on gross profit you performance, delivered results. which strong very Slide X. profit see gross

points, improved tight February basis. was by million our X% progress essentially and GAAP our $XXX in which per roughly expansion We've $X.XX up in freight to EBITDA be and very the the half headwind negatively For adjusted or through third-party to strategy headwinds made specifically $XX then with continue profit strong March. is elements on we case quarter. to this and of The rate experienced remains freight lanes. freight the a adjusted prior we've on rate reoptimizing the on mitigating to a profit profit freight January tight our modestly was year first quarter, In respect actions with at focused least very million, make flat capacity vendors basis is and of XXX capacity first progress, on dollars expected to XXXX. which It case the an our with related gross the headwind, through gross very a in gross basis. good working Capacity taken per impacted quarter, up

on basis a on than X This is percent As X basis. basis on XX.X% as an XX% basis. and of the freight a basis of an inbound on percent mentioned. profit the points as a XX basis adjusted gross GAAP by negatively points higher as adjusted continued year and was year-over-year GAAP the inflation, Gross prior basis sales about was sales, cost lower profit I a points impacted higher well

expenses $XXX operating Adjusted expense. $XX decrease operating expenses million a X; positively XX.X%, quarter. operating from from expenses from operating to percent to three Moving Adjusted quarter. of a prior primarily percent points. our essentially year of the was on were of Slide Year-over-year X.X% million, prior the amortization year XX as basis impacted year in a roughly by to inflation decreased quarter or prior reduction basis expense OpEx points sales the sales flat

As results pleased with dollars I've gross adjusted was and can already per on we're significant year discussed, a profit and this very significantly we're see Slide per ago. quarter, more expansion than case X, gross you our profit those making case since

case Our we with XXXX. quarter or for as impacted leverage margin we OpEx for and we flat gain per productivity. in understated per and per case and negative due improvement per actually lower is of case and the on cost volume only case per per This consistent operating to have the $X.XX had quarter. $X.XX estimated In the increased that been negatively of in the per result volume result was estimate estimate words, OpEx neither was our as weather if a had of OpEx fiscal impact deleverage operating by per a leverage year-over-year fixed $X.XX challenges, because our increasing case contribution $X.XX case increasing GP results case was achieved would case weather the other $X.XX $X.XX

of by adjusted to weather focus to and our EBITDA again continue operating on freight which faster in than quarter further headwinds. case our improving did margins, per this gross profit meaningfully leverage growing We spite we increase OpEx per case

Now see in solid profitability key our metrics. improvement Slide XX, made on you we can

As adjusted before, over $XXX was I the the first quarter, up period. million prior mentioned EBITDA in X.X% year

adjusted period. finally, than the more million. to sales, points basis in of income Pretax X.X%. net in And from million right, As XX the $XX million quarter $XX to $XX percent to increased prior income increased million the on doubled $XX a far EBITDA

First quarter year XXXX doubled $XX tax from adjusted million net the lower income amortization, also improved due $XX to million prior period and lower results. nearly to rate in business federal in

the $X.X was $XXX quarter net prior at was Net of million period quarter million increase. million the $XXX million our from the and is million for in flow of and fiscal year year a cash cash from a debt; to debt flow decrease end year operating of Turning from compared the $XX -- for billion, to the $XX which fiscal end the XXXX. prior $XXX

net X.Xx for X.Xx Our end of end at X.Xx at decreased period prior and XXXX. the the debt year the leverage compared to to ratio fiscal quarter of the

Slide provided our updates previously at XX; have XXXX two to Moving on to guidance. time, this fiscal we

of from of to X% to growth XXXX outlook X% fiscal the previously sales result provided we X% for a of adjusting growth the the X% of a lower sales X% weather growth for continuation our is range. net As volume approximately into our approximately Therefore, to X%. QX, discussed guidance modest the QX early previous end impact and case for and we're case and range from net

Our unchanged. growth for half expectations second the volume remain

type, Specifically to XXXX growth XXXX organic exceed we still meet expect our by case independent or customer growth.

return At health this and X% All point, fiscal though unchanged. rate XXXX X% to of expectation previously provided continues hospitality February. our We approach flat in also in and half to all second a be other other our as appears second expect growth remain guidance to care normal half. we provided to more X% expect still the about inflation with line in of that the elements it to year-over-year in

growth growth expect to to through X%, expect accelerate As XXXX a our adjusted reminder, year-on-year the we sequentially year. for EBITDA of and fiscal adjusted X% EBITDA rate

in diluted EPS for per adjusted increase year. share $X significant our to expect still $X.XX also to We the

results headwinds. solid and the Our despite business significant QX had weather freight

to a to to positive joining have and With today, and results continue go the can still we I sequentially throughout the We outlook thank business EBITDA mentioned, you for year. now expect as accelerate us that, adjusted Q&A. for

[Operator Edward Fargo. comes Kelly first Instructions] from question Our of Wells

the a the the look bridge X%? And changed full doesn't independent channel? to seeing it to part about growth. really then in second can I you're guidance, we as to relates growth Could the the ask the outlook far particularly if your particularly that so your to case it you quarter, growth. of wanted all, think of quarter in to more is specifically, case about And as the as I case on customer then And for sure throughout you sort health this, QX we're So help cadence color of provide the relates your correct? QX bit hospitality through and the at to guess quarter, as care, like second make like to it segments. want right us that for spot year relates I it what

Okay.

about. bridge basis, about qualitative start, asked Ed. I'll Dirk for restaurants talk that you and outlook I'll I'll then on our So do the independent let

year, you which last So few that is weeks, our if outlook do for growth which say And behind at look normalized positive what we remains we for I for our independent the had of really best beginning strong. rate, the The QX are are first restaurants weeks the clean and our quarters type had are to few estimate. in factors to A, even we have would challenges, is XXXX. the the some that of weather last rates growth back that several the

weather talk penetrating very if their -- for our you new penetrating about, those industry the to lost changed. consistent the when of -- we for And at markets independents saying, account take out metrics as what for has customers analysts other are customers, look not or and equation, outlook also The or we look at picture. there growing, we lost

described that is that supports independent some better Dirk kind or the same an of of year. color of terms perspective, underlying last than that outlook the Dirk? in from So

expect in is return to health the add rate. in our X% really normalized more in all from we in we as health I'll a where year care we expect the What acceleration to will QX, begin we little new Sure. and for to Also, approach of and improve customers were QX, already about still second and the onboard hospitality to half year. from number expect and of to hospitality, a we flat half normalized for then the of QX other, the back care bit we X% growth talked

for Ed, growth, up to think X% QX, year. getting volume that outlook, So And from in, maybe unchanged, that expect said, roughly solid the a to little means that I from QX two all flat, prior case to year. we half be like I bit returning us our remains

Dirk, QX when you flat are you total? or say organic to talking up volume bit, a

but of point impact at near actually, QX, it this Total an doesn't M&A is big have in as total. because

one follow-up success mitigate bit like Or a to like getting better. from there even more It And this just you elaborate? it? Can you standpoint. pass Are management you having then through? of freight other to mentioned maybe beginning sort freight; just on seems internal are efforts

Yes.

So two somewhat industry things; gotten better. the one, has

better So that efforts better. freight allowances your -- little the in And is we in than bit the Still prior QX coming freight have seeing take QX. then underlying certainly started have we cost. that's reflect worse effect, our are than demand-supply freight secondly, why to we which QX. optimizing better and secondly, be what position years into in Those we than imbalance but changes experienced changing from question, coming did much to that a vendors saw main around, twofold to and we're out our lanes And a landscape. of our as freight industry we QX income we're then

Stanley. from from Your Vincent Morgan comes next question Sinisi

of to Just the growth, exit. course, case more back on planned the going

with and top maybe line below is kind the question, weather a a adjustments. mentioned, little as Ed's to guide you of of the XQ start softer in bit the XQ So obviously kind

more XQ have with was normalized more side, from on kind if now the in Or And there done? exit that? we're planned hopefully, right expected we of XQ? spillover now we into levels essentially little what you bit So back a to do line are

Vinnie, this is Dirk.

So QX beginning total come us the our really to came quarter, in gives it balance have sort really and and behind us, the in in reference all as to customers where the earlier, in I other the year. acceleration largely weather are we're the and and onboard say growth etcetera, to general all for about more of for second expected hospitality, already we profitable and QX growth. to in than components, in statements had made I'd other through of that so confidence and other continued the we make new assets

And then, you side. just I some missed can give if unless just update, on the maybe it, e-commerce

a coming give as the that, a on might the that any that's us quick noting? update the and Investor post you of of Day end sales, in of terms updates are customers snapshot Just be where at percent quarter worth from

number So chart, XX%. I is the e-commerce as for can you exact think penetration from see the around Vinnie,

So -- many enhanced many as in up sales slightly on we're continually ensuring that markets reps have I've have to that we calls, we and in from approaching other -- new where functionality, work releases continually said we've we XX%. been, some and with continue are

So getting opportunity. an where customer -- internal markets the are estimation, is those focused than between some in a we're that's that we the were where on with in markets more of adoption in in be, those those below see it gap and TMs should we and really XX% adoption and adoption our

question John Guggenheim next Securities. Heinbockel your comes And from from

so an currently standpoint do availability for culling with it stand imagine on where capacity you account ongoing as really so? process, the start of case in ask free would the you flat across from independents. will Pietro, some as managing growth to that I national network? up -- let you Is right, And get of the all be Is trick pace or that that of try the chunkiness last room seen the So sort me the to that and we've other fair? of opposed year

Yes.

a that not John, year. we is filled couple typically is first have we There these necessarily path that the business, markets determining and factor list for a we've those or driving exits. two the said for the on expansion. those So And typically with as is always before, a market a good do of capacity are

And profitable intimated, So the in to whether far, by the place those we've be out exits reason this that them look have as the other QX it nearing than that low. end believe of given at we've segment. customers, pipeline. profitability prompted customers and better a we are the pursuing by initiated the profiles Dirk And said pipeline it'll the or that offset see in reflects was because customers negative the the with effort all we're is these been really with of we really and of that really culling, more more

two begin will Pronto be -- rollout process the when of And are new we or separate maybe case independent topic would initiative, manager off that? or the another then where When it to the Okay. growth? hiring ones. does pay initiative? noticeable? do And where with If see business be in you then that And

Okay.

managers a So focus, sellers about customers support year. consistent to approach so really sellers over And sales over support addition the by, approach secondly, support concentrate down and sales sellers, We to the that's to why we've business our the and leg in stool. of years, of our And by reflects be -- selling team-based a the the One the as this is number of end put the other the of come over call, best new specialists talked team. we desired will that that those has outcomes. last what two complete to time. of is and couple amongst last time,

of part a follow-up the outlook. our Do have want talent turn X% me the we're It's sales guidance In evolve of we impact continue independent the to say those all along number on along work what with that a and restaurants, support of our support initiatives technology, that with would routines, along is of on... with you or introduction of midterm you initiative, X%. the of doing, Pronto terms our to do parcel with

fine, that's Yes, No, fine. Pronto. that's no,

of doesn't Investor bets foods get Day, Pronto terms we of -- are bet we something necessarily STORE's one CHEF the in where midterm ability getting delivery. talked guidance So trailers that around the less is the a three small customers necessarily with long in have along take where share frequent core customers. populated about have direct Pronto to wallet is as better necessarily aren't storerooms densely reflected don't at our target of amongst is as making geographies suitable, and

We are those we in the pleased U.S., to three results be in now markets three and the continue with markets. in very

very in more We kind we move model. are a still much of prototyping, learning mode of to expansion that before systematic

Your from comes from Ivankoe question next John JPMorgan.

organic that; to X% fully of get the follow-up do first a X% think in I X.X%. I in on high the you to Maybe get your didn't assumptions independent was quarter, you adjusted the even case mean, XXXX. X%. And, How certainly number end? to

'XX? get higher uplift So to if of at order from can amount share X% 'XX to in I take of macro in a the you are expecting highlight that perspective? a how somewhat and end mean, Or you can you fiscal

Okay.

is So the us step of or than this that the way first the the a range thing period of there see time midterm, to the next So would right? midterm over our three-year more that's balance quarter. expect quarter you in applies to

that as environment It not X be we leaders company's could of macro transformation markets, there believe look at innovation, change execute our change of made environment. food a terms and macro X in reason The way may product gets we of the fashion selling technology, that's consistent it's in really in course, change. a of and an were fashion. being leaders on in part macro ability may consistent, and Act great the how cause this to and premised our in there there, negative environment easy positive is to about see a our the In where We leaders across we model. get opportunity. get -- the range, we Acts is a more in

as As a see execution. that, cost side and over that that things. on both on, on see result the we becoming better really look journey about that believe improvement also take leveraging it's volumes years, next dividends and of continuous the as of a we're result of the execution we'll the hold, We side we as three

rest Okay. for And a the could promotion first quarter, point was? are And in us was XX lap the that the of follow-up, remind to basis 'XX? negative the consider you laps us there that what any for

No. At predominantly QX. it point, was this

our refine approach to through year. went the as last we continue We year

expect of don't in much we impact So quarters. an other

next Sullivan America Your question Lynch. from comes Marisa Merrill of from Bank

just the ask about wanted contemplated numbers. M&A is XXXX? growth for What I to outlook revised in the and revenue contribution the case

the outlook of the M&A year. So the transactions. frame the we is incremental balance for with not consistent assume way does it full It

completed assumed So is based we've it on the date. deals to

what the with taken probably we February. we've did consistent approach So in is

the summer? the should worse. some know what's that outlook as And second how about we And that into incrementally it you second get just on half? it? of how competitors your I any you think Is on kind then I -- may there are was we one further there in seeing know and quarter touched a bit little commentary of move freight getting from Is better. the commentary freight

thing if working the changes we our What are a to to So vendors in on -- made had similar lanes. and it's we've much that industry or our maybe with of it a to with I look is I key the progress is improve think internal deal some because the as then better it they processes reference forecasts, optimize and for of our of in Pietro success company positioned at forecast, the I you think better to some with whether call to the that right be us would little not, for bit. say

the point, worse, this well if worse, look and forecast it at positioned. gets but somehow so did things So change, we're like it get doesn't

want one quarter-to-date? clarify you're quick. of And Is that what X% mentioned that think the independent the last just I seeing to range. trends you case earlier you've X% comment, to to seen quarter-to-date just correct, I one really in kind improve back

achieved we've as in in more have few organically We last weeks it improve quarters. seen it recent what resulted to the

So we've back. bounce seen that

question comes Short Karen Your next Barclays. of from

I step mean, want So, firm I'm and is quarter just what the the the Analyst take to year Day, I and the less, firm, at I to Day. more about did a guidance a a you or and Analyst back guess, curious for

surprise of So, quarter you tail your worse-than-expected catch did I this lower anything the guess, kind than EBITDA end be the expected? towards kind of growth kind because, by that of quarter of I'm obviously, was weather may wondering

quarter and did So weather what is very I the continue through the further widespread expected. would we'd say than

back X%, had February, If expected and finished guided at be to we that we X.X%. in you we remember, roughly

a that that not weather for to So of difference. make a small lot of

not that, the coming and Investor expected the much had quarter differently out really than other than Day. into at played what So we more

I we I And about Because would number about think wondering was expected. we if obviously, back. thoughts it LIFO? just your have was a I quite inflation the of the than on missed a thinking then larger lot said the add should What how it for and are year? rest guess, also bit this And, larger, But quite you then it. inflation, I'm just

color there? any So

Sure.

the from inflation, would charges. from year difference extent for continued to we year. range. with quarter do the is the And you mean relatively X% we as LIFO expected had see line see modest what lot say inflation trending at the that I'd that called you have modest point, of X% we don't in saw in a LIFO we had that this whole for X.X% the perspective, And So a in the

the to line the the it time I based of business. thing deflation really poor volatile be necessarily time is can that doesn't think about or and on inflation one that's indicate health from

of And of has guess when be slower have I the than, M&A me; one then came guess, question tax to reform any seeing? color general Maybe about. on in would seemed a expected kind little any for you're landscape what just last I first kind there

in there. what we're at the it's reform, in didn't been to we I -- expected seeing. we we anything end once So haven't away chose on it has expected. a that's tax had think were we saw to just we'd definitely with under that least fact, that There our do got don't deals couple cover walk the of not like a pursuing we from, announcements were, that

from M&A perspective, the So I ourselves, to the from I'll Karen. take industry an think question

our will to and year, XXXX, I we've number to off see probably having of three as said expect guidance point, anything us year. call At end range, see the but -- midterm to on the to close we front. three for towards the In expected outlook low be from our of three would take conversations this pipeline, given it the terms the for of the a we always two The active in M&A typically slower for anything be that on don't conversations of have, don't to five that year XXXX per we've we're five. those

you -- not else from selling? there would it the you anything you fullness robust? Or But you of as said in less quality that Then so just would is attribute maybe interest slight basically, couple. walked quite assets away a Is just is to?

don't what companies folks we and to; on still environment, still minds find of no sometimes, whether targets, lots change seem sometimes list is outlook. because would target-rich be. target to a a -- so them our having really good What are not know your Doesn't conversation. expect lot these in of small in really, data there's interested materialize as our in companies, you you Still

future. and always be going expect we to is turn slower to said, bit this we've little a others year than others the XXXX out had be a good little As probably of lumpy, we've bit and it's in to a

comes Bania Capital. question next from BMO Kelly Your from

wanted to growth, fully you still profit low that expecting of And range to I maintaining the also that Or case? EBITDA expect to X% in really make X% the revisions achievable? still Just in clarify growth given is are the should end gross X% guidance, to sales understood sure and X% XXXX? we the of

What the wouldn't end. infer I'd at I say this is, point, low

about, of year on really the talked What year, the we're in areas like still really acceleration not gross be feel the similar our the first end I'd full in one we to and in X% when achieving overall, range because impact the year. we'll feel in in we've of lower range at impact QX business, But in profit very year We think of and volume we confident a other at with then very we the that conjunction the still X% the I sequential factor for confident we're look to large this that and range. the for say quarter. what we're is as good. for the is the in overall throughout quarter

is So, expense that expenses? is where -- I it? an guess, area the just should way think things further -- are we I about guess, coming better-than-expected, mean, and Or on better what I that, in there

at to a say performance when much mitigate the really doesn't etcetera, across -- it's on it's of health I'd that. profit, business, gross impact. really of volume, the different just is mitigate the whether look Just other number OpEx, areas the take -- impact than and what some And it you really

And believe, in big a given on there, then impact, how overall one; business. exits other one all the the the large decline was and just mix I other there's

run what you take for, you can help and mix rate isolate expenses? to that the least impact? of try out If just -- So can, gross understand of at us underlying kind you kind if margin if you

Sure.

math is I'd around we of from so plus impact component just really on weather. the say is leverage smaller sheer the OpEx fixed-cost -- it's volumes the called the Really, of impact. the out things side, bigger So lowercase the the a

so the with XX% more growth about gross of profit or with showing up. it target Kind the the roughly combination that the from comes On of we've of really mixing reinforces right plus exits clearly $X.XX, customer our side, customers talked the types; the power so profitable customers. the of

Badishkanian next Citigroup. from question from your Greg comes And

Greg. in just still trends on indexes in the of early the it Do you you a Can We've casual sort better we're Fred months. what from talk past Or little It's over too about of actually early? [ph] that think seen recovery? few you're seeing category? for a dining stages is

to hard honest. to be it's Yes, tell,

what numbers for typically same-store line shopping what the the our say other customers, external as segment we because all capital more all benchmarks. in that's with are concepts in a And around we focused and of on sales I is terms terms with in target all see the we We of one in restaurants would us in dining see what with and internal other from independent see of the different other. types of

across some environment seen any sector signs that? And was more then for Have pricing normalized the some entering year, of about the talk there a those accounts. you of national

because would -- is RFP-type reasons not it's one why has less We've us attractive having one one the of It's perspective to of and I to situation, perhaps generalize. to say of these larger an instances unique of why some from sufficient independent a situation, appetite a it's hard typically reasons sorry isolated which than the pricing business. every but very accounts the say it's different seen customers a

Instructions] Our Suisse. Judah Frommer from next from question [Operator Crédit comes

Maybe freight both you I you're push profit management. called of first on well vendors in as back maybe on bit able out for issue. little a a as just vendor terms freight on getting mean, back someone the to to driver gross as

that are pushed with environment, just how need to So back kind where seems on of like they color this the on? in conversations vendors ones are going can you be give some it

I how passed their tightening about gets impact what's to So freight been it's I -- a customer freight back, on depending case, on contract carriers. of think us. vendor had back which The talked unless -- issue the I market where our has up they the if timing delivers bit it's call works, whether in from going we when not it we as to the go a and would or external we there's spot price on an perspective different Yes, The truck, and it's not. their or manage on on a us is of impact where trucks, then modify the right? to last was the pushing freight, with wouldn't environment result our characterize on as that capacity no

the have allowance. sit conversations what of it when allowance do time, down, those a period than we've lever on in important getting conversations we is its And vendor to I and we based need capacity the has Think to the case, is we visit so reflect been typically pick the to And of line that freight we're were the earth -- from the back as happen far referring that tighter magnitude short of which more why an we up, happen is an so and terms we to that as income It's so significant allowances conditions. revenue needed challenges, QX has the a experiencing. historically, referred were and believe those industry the I of we're And just because greater to to there industry of shock now, freight while to changing last was year, those market conversations periodically. in industry in was still

assets? gears you customer-facing you're the quickly, of well on more Or in industry the feel front see the still in maybe there? Is do technology then up And the there changing just technology? cropping in terms competitors' curve anything ahead you anything competitive of environment where

believe still the we ahead of So curve. we're

had would talk in say in has lead would as next points next also we of have at of and technology. our chance than next company -- significant who we technology. even have experience much to customer the focused our generation you Investor they chance focus our series terms is features on you technology the folks the or any used a as a Obviously, of at that uncovering technology to. more technology about know, competitors pain they customers, present inform of talk that to its to part they always our of the to alternatives, the innovation still But think tell generation, different look we I our our field people Day where to that had the customers

our So that series makes enhancements to while we the customers next or three for that wave with and on of things business us. competitors of do four some ago, are easier years doing did to the it we're

Your next question comes Research. from Ajay Pivotal Jain from

lost of sales relative the What leaving? impact so the question customers the called that had of from of apologize impact of exits confirm a some case. this those was sales out, on customers. I Maybe already But the in your planned multiunit you was impact can the I if you that's what QX? Yes. the

all the is specifically will impact other exits. haven't to the bulk is that driven decline you the by but I the that, of We in quantified tell

I have think, And the the -- on gives impact sense we'll So the business. from QX said, of us you, that improve of I we continue bulk a like behind and to the exits low. good broader those

And at competitive on those gave time that of exits few were any you for activity, like was based example? all the months Or contemplated a unexpected guidance customer impact ago? your preliminary

we and what expected No, of widespread they was quarter. primary were difference the impact few really from all a weather nature continuation expected. on ago had the throughout the the volume The months

that year. think, customer you're trends back broad-based expecting more care of the the the I health that normalized slowdown in there to in extent mentioned Dirk, But was half And more you in a apart organic anything case specifically other weather I'm hospitality. that's in there growth this from wondering decline was the the care and segments, quarter, else in health just behind sales if

of larger and care think to really. that hospitality would I talked about, Not tends a about way health we've The as lot be customers.

time, from be time it consistent lumpy, can so to areas. it's and And not as other as

to our where beginning year, in be we part in forward. be, growth those to of saw, onboard in certain because fact, quarter or QX of beginning a with well going where new customers remains the as growth continue will And parts last of -- some important and one our lapped. QX this had So growth that strategy just very you stronger year happened we

over have time. Please we I'll closing back go at any the for ahead. Pietro questions no further call turn this to And Satriano remarks.

Thank you.

to I today. XX,XXX our all And who employees, our day. So of you committed take closing, that we have every thank like us line to customers strategy make opportunity to we in confident helping the very outlook forward. results, given going this in as remain would our We in just very it you joining revised have the headwinds. I'd to solid our in shared with Thank and expectations confident said, with for you. like thank

This concludes today's call. conference

may You disconnect. now