US Foods Holding (USFD) 11 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the US Foods Fourth Quarter Fiscal 2019 Earnings Call. [Operator Instructions].

It's now my pleasure to turn the call over to your speaker today, Ms. Melissa Napier. Ma'am, please go ahead.

you. Thank everyone. morning, Good fiscal quarter our call. year-end XXXX to and fourth earnings Welcome here our CFO. Satriano, with and I'm Pietro our CEO; today Dirk Locascio, Pietro for an the and provide our Dirk for results update fourth full the on and fiscal year. quarter will prepared after your conclude. our take remarks We'll questions Instructions]. [Operator

and stated, XXXX. year During full our and we're fourth fiscal today's call fiscal period results in comparing quarter year to unless otherwise the same

and of today's the earnings website. presentation can this release Our call, on page issued be to financial today's Investor during morning Relations refer certain our earlier Also, accessed will results. slides we organic

As a reminder, September Group contributions organic acquired XXXX. which of from SGA's of in results we Food exclude Companies,

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

turn Pietro. And the to I'll call over now

Melissa XXXX, on fiscal Good our September. talk which Food Melissa. of In with X which, year, total I'll Group Slide an business impact begin in continued acquisition, us. morning, which our the as the year following while overview include grow to results. the our our Thanks, results everyone, will our first going and organic about joining thank said, to SGA for operating We're cover for expanding closed results, I leverage. of full profitably you we

adjusted growth growth. to continued EBITDA metrics. business all X.X% show with We independent share organic X.X% X.X% continued in XX.X%. gain to grew EPS adjusted and We restaurant diluted total space delivered grew key by cases growth financial and the in Our

the fourth our operating either we Our organic or capital of XXXX leverage fiscal we which in happy expanded increased year. all operating results XX.X%. by exceeded and on our XXX to year increased consecutive that report return organic to invested our met guidance for per case, $X.XX basis points I'm by leverage, the

the On a which growth. and total grew XX.X% focus grew organic EBITDA EPS strong and resulted the growth Full Group leverage EBITDA adjusted cases adjusted X.X% on operating bring continued company X.Xx. in our to X.X%. diluted delivered which grew basis, cash acquisition, from includes we contributed X.X%, Food results capital X.X%. restaurants business while Total grew our year combination The independent to and in down working our a of increase in case flow,

forward XXXX. and year are look our pleased results We with full continued very in growth to

Slide X. Food to strategy Moving provide some Food. I'd as of Great to of integration year's an Made Easy. highlight as on the this like update our progress Group. in well

our with side. part let's left-hand So strategy of on Great start the Food the

strategy. launching the heart our with and at analytics. our under and remains edition by coming stickiness sustainable higher exclusive Good customers. products which to including we continues as our brought Scoop, of products resonate most we number spring, continued In evidenced new innovative Our innovative drive our the XXXX, recent Scoop market, better with to products This basket of to are a of XX customers differentiation program. Serve XXth

to our key brands be dollar profit of a gross Private continued driver growth.

more and brand runway see sales total front. total now by our expansion. as a this significant percentage to XX% brands grew we our brand significant basis of private which private sales points, than XX consecutive revenue, year XXXX, is on comprise fourth of During of continue Private

corporate our of program. Sustainable products pillar one represent responsibility social ESG or

Serve and product our our will found sustainably ESG expanded our now Good QX. can efforts be responsibility sourced website, details More and be we on on over we offering, corporate we products XXXX, in later have publishing available. XXX During new report social our

part US which Made about Currently, making customers easier to Easy all run for of their them better making higher strategy through easy the and do both basket business our comes Foods it sales stickiness. of our to for e-commerce is Our XX% over and it business. with site, revenue drives

more been work. recent and on experience, focus where is enhancing and has the more Our mobile customers which more live

new first active reach XXXX, last quarter reach Foods Pronto markets and our our about markets year. the provide new of plan talked add additional in Pronto customers we and call, Direct, existing to X to omnichannel is the we in US On strategy. with ways fiscal customers. and CHEF'STORE us X in

direct number Foods this in or For we our our products and by aisle year-end. products have marketplace, stocked warehouse, are US are online number focused US over we expect extending our Direct to for on available. currently that XX,XXX Foods Direct, -- endless products not of double We the on

exclusive integrate that U.S. portfolio XXXX, our strengthened fastest of by myriad effectively. growing of to solution business and a number Our businesses further restaurant with our tools tools solutions, XX%, when cloud-based, one third over the seamlessly unique value-added portfolio consecutive with check XX% our the business portfolio. a is we own we In the management run more services including in Toast. using year, partnership point-of-sale tools is customers of of some designed the in their increased growth. announced customers Toast Last are year or check of help our

the since well rebranding very received was the Northwest over and at products new tractors QX. by some sales late not our programs completed progress of including We On initiatives, the in only Food of place but and both rolling associates. at leadership to in trained the region some by level. the markets. X, in area right-hand best-selling acquisition Group new X XXX organization I'd We and associates of facilities for customers, Group made our The side region Page trailers. in is now out Food highlight Scoop This the closing like also to we've of

the will of we Group's Foods QX. to completed the begin location the in to year, In expect and Food first first US process of platform, have the operating the quarter we converting coming systems

system selling our to Beyond model and include our implementing of XXXX key team-based the continuing X conversions, priorities processes integrate in the organizations.

We these are run of pace $XX rate the million in and that outlined, achieve previously $XX XXXX. of on generate to we to we've million expect synergies synergies

synergy accelerate -- As a with XXXX, with reminder, and completion conversions. expect this the to in 'XX systems coincident synergies of our -- we

in case We traffic X as between all at of time, look fairly Page growth a Thanksgiving also to volume the experienced attribute growth the month restaurant across volume the season types. during Industry Box we Black turn which slower and now this data Christmas. significant our shorter to for customer December for a during largely fourth Let's quarter. holiday showed slowdown such

Group impact discussed. in expectations X.X%, was hospitality independents holiday slowdown. reflecting part with XX.X%, December organic due line call, other Group. basis own our fourth Organic health the fourth was growth plus to XX discussed and restaurants quarter, case of type, came Gains points, with mirror growth our existing lastly, the the the in of addition up customer just to large I down As basis Organic was the And last of care addition quarter. in XX grew customer points case the case generally basis the on was in chain due points the as results, quarter, wins new organic Total case just full that -- business for December with Food growth to. the as all season -- Food industry with up total independent case XX generally and down from growth was in mirrored was XX.X% growth data our to the growth referred expected. I

of X%, week. of Looking year are all the ahead XXrd to the organic we in also the The is X%, case of includes and X% across of growth. XXXX, XXrd growth to week case worth case assuming XXrd which growth independent week organic about XXXX, segments X% includes which organic addition full

to will Dirk, through who turn I would our our walk like financial call XXXX in now and results to the discuss detail. outlook more over

target In growth. with earnings fiscal Thank and XXXX, our strong produced we and good you, morning. customers Pietro, profitably grew

As grew Pietro was was for X%, X.X%, year year, and the X.X%. for organic over EBITDA XX%. case EPS our independent case and by growth Organic organic diluted adjusted adjusted the total growth increased noted, in guidance organic line with

to We continued continue to to but operate gross leverage in a approach higher expand growing our cost our profit. disciplined through environment have operating

XXX on return We capital, also approximately points year. our invested organic for ROIC, the basis increased or further

sales fourth for sales of cases Group increase billion, Slide $X.X quarter. year. from saw in beef. inflation saw XX.X%. profit X.X% the Food including modest third we took We year-over-year fourth quarter XX.X% were cheese, on modest providing addition experienced a Starting to the quarter the of XX.X% contributed net gross X, dollars. the tailwind prior inflation across and grew from Inflation poultry net We The multiple step-down categories, the a that very an commodity XXXX remains to and peak in manageable and while quarter the

inflation see to We pork. in continue moderate

Our ASF closely, commodity we team inflation. we and do does continue to are monitor higher pork see prepared if

we to to and manageable saw what remain in XXXX, similar expect inflation Looking fiscal ahead XXXX. to we

basis. and year to $X.X GAAP Gross we strong on period XX.X% increase results billion, continued was an gross the in On a increase Slide XX% a deliver adjusted prior profit the quarter. basis fourth X, profit over on

due mix percent profit basis with was organic the impact basis. sales, is basis points The reserve. in gross is Food LIFO and GAAP XX than our we and a expected. what decrease to gross in change on lower of XX.X% GAAP to a results the in unfavorable basis line of This to on a As year is results margin adjusted XX% adjusted year-over-year an on due adding XX-basis-point prior our group

XX company improved customer less fourth weighted gross to case, While on our organic XX discuss basis an leverage in toward an as as points operating was business the The gross chain independent more minutes. mix gross organic mix total change similar rate our a which hospitality change in and care per Group's is approximately Foods' profit rate business volume is This the business. quarter business, meaning in negative lower US basis XXXX margins national Foods' quarter, versus and US adjusted remaining health impact in I'll detail well point Food also and fourth Group's has Food mix few margin impacts basis. the than organic customer between the Food Group more

to optimization performance Our freight strong organic be gross brand growth and private discussed. driven continues inbound as previously we've by profit

year, growth full was the points. basis For our XX private brand

OpEx to of supply percent wages sales chain increased Moving Slide the acquisition-related $X.X from prior XX.X% XX% billion, operating prior quarter. the the addition volume on primarily Group, case X. higher by driven operating the fourth higher $XXX increased from year costs. flat expenses higher over Adjusted year Food to to fourth quarter was XX.X% year a and or and quarter prior expenses million as of

improvement work right As one. I mentioned also supply continuous daily we help the will last higher chain wage to to which toward quarter, and increases our strategy operations, seen, is culture in mitigate we've our continued improve the believe embedding

operating significantly our $X.XX case year of organic basis, and increased organic fourth On Slide on our operating leverage. our the $X.XX leverage X, $X.XX $X.XX quarter our the leverage On for was leverage for per operating case case, and operating year per by full was per in our straight total case. completing gain basis, per an expanding gain quarter a

the a with Food address private sales lower and through I synergies, earlier, at part to over good rate different due we operates time As business gross Group growth plan which brand and discussed customer mix of target cost to a our profile, types. lower profit per of the case, customer of expansion primarily

expectations modestly initial move largely was divestitures. around with $XXX Food adjusted some deferral over of prior to Fourth adjusted primarily was X. to some due EBITDA over period. and quarter prior X.X% EBITDA the income, Slide was EBITDA million, adjusted nonrecurring on period, related costs, the business up increase now total promotional million, year $XXX organic of I'm an Group's combined year below XX.X% the our to

customer the the these longer expect until system these business optimize over remain complete term. we expect We but the conversions costs don't base to impact to costs and

discussed. That As XX sales, of points addition EBITDA adjusted a is a Food point basis Over synergies from of the to decrease organic the of business to XX XX quarter decline XXXX. due time, Pietro was the to $XX with for the expand we percent Food margins million total points basis X.X%, expect basis Group, quarter. fourth also Group's EBITDA of that increasing the

And On adjusted Our diluted was continue of increased adjusted a EPS adjusted the quarter million. net the addition adjusted million, adjusted full diluted net our primarily in million income income X.X% GAAP diluted LIFO to higher for on of net share prior increased Food XX% GAAP $X.XX an decline to year. $X EPS was costs. the over far quarter $X.XX than decreased fourth year or $X EBITDA. right, integration-related an in EPS charge fourth $XX while The grow finally, income faster due as to per the $X.XX, increase we basis, Group

flow $XXX The in Operating contribution results. increase million growth combined working million year for to improved earnings discussed, to $XX the repeating a and prior was compared Turning prior XX. $XXX year. to cash with is Slide previously pension the related not million that I've year capital

flow our produce operating Our that delever. strong to cash business to continues supports ability

Food on third debt-to-adjusted which from year-end and the year year the leverage the the Net is $X.X the end of debt, to EBITDA of end debt to increase Net declined net of in acquisition debt the down the outstanding the our million quarter $XXX prior at ratio as was end we from approximately quarter. was focus an end million, at Group. the reducing the of of third of billion $X.X X.Xx due at continue X.Xx,

pro calculation did closer you XX Food been X.Xx. of full adjusted our of months have If same trailing EBITDA with leverage the to would year Group, the forma

basis leverage ROIC, the over over approach reminder, flow. basis, continue a resulted to a ratio solid cash X to has X As ROIC XXX expansion last points in Xx an in and and disciplined we our operating capital based I of over mentioned disciplined last XXXX efficient on XXXX, we'll basis use On This years. return points a and delevering to of our to XXX increased organic as expect earlier, in consistent years. the demonstrate

Moving approximately expected and of which adjusted EBITDA now view providing is impact our to XXXX. to to includes the add The guidance, week of expected XXrd initial XXXX growth. both week in Slide XX. XXrd X% growth a case We're

growth between X%. be case Specific and XXrd year, total to total XXXX, independent XX%, fiscal we the case and to organic with For for X% expect also growth week. approximately X% X% the expected inclusive of be of is case growth to expected between restaurants,

of be adjusted to between full volumes EBITDA to our rate expected expected lower modestly be and do $XXX guidance or is X% than and Cash expected Total million; between XX% adjusted expected QX XX% growth $X.XX we And XX% million to adjusted be the to interest lower diluted million million XX%. EBITDA between finally, discussed. fiscal XXXX. $XXX million; X%. is between growth $XXX expense $XXX to between for growth to $XXX $XXX organic is and our due and to effective year XX% tax million; of We and EPS to we've XX%, and expect case be approximately CapEx adjusted be depreciation EBITDA $X.XX expense and to expected and

Group in acquisition achieving our we're the Food guidance. future results the opportunities summary, and and In provides about with XXXX pleased excited for our growth XXXX confident

for the Now like call to open Q&A. I'd up

Instructions]. [Operator

comes from Mandeville Chris question from first Jefferies. Your

for all other the something Dirk, the be I year? heard just QX. lines something then believe I segments the color of also on X% terms us guidance the case along you heard respect walk lower And full X% cadence through I to just I of some think cases, with for say the And to Can us for growing In quarter-to-date in expecting maybe the X% total volume to year. X% give Pietro trends. reference you should of organic

some year. for plays you mix can full the with that's to the out commentary us if maybe how just and additional give So that respect case,

Sure.

X% all so to for XXrd total grow make the didn't at X% do for full overall we the X% of guide to expect So X%, overall. for roughly, on any inclusive opposed comment to roughly week, total meaning, case year, to and growth as XXXX the X% other He the independents.

go accelerating in a expect with the with the the exit the year, year year. lower the customers new but think we as then talked provide provided. onboard be larger to line commentary outlook that we basis, as rate bit not We're we've hospitality QX throughout going the about that we through do as to grow growth care expect on QX little lower -- customer we quarter-by-quarter health and specific a of the I but was then to really,

Your next question comes from Kelly BMO Bania Capital. from

I just about guess kind X%. the the X% of -- think just case furthering growth, to

and care you little more particular and puts of thinking an think And and you're hospitality, bit I on with and takes independents what maybe health what exit. a just X organic mentioned across helpful terms be -- basis in with is the would segments. the in

can understand has? you're several in wins that the impact what planning and customer any things -- secure that next to those new why XXXX? you're course Just And Are kind those Are help of you the us over for cemented? planning of months?

Sure.

you I if to higher, X% lower, the have you year, that quarters little throughout the health with back but again, year. little so could be The for care the we a some expect and some as are come now, independents, a of to think hospitality at -- are different all far -- you and consistent that a -- the so to different go relatively different as working with points. different others, onboarding continuing there's some to there's that in, always pipeline customers you're work stages onboard you're that as at pipeline and at -- you expect

that big health we talked the the hospitality a was care quarter, think in fourth customer times large shouldn't a so surprise. and about I few the be

of continue our result to our that. kind about as earlier customer and types ability pipeline through of going as grow and growth the to with target XXXX. it's a good be throughout grow obviously that the feel But lap you to so part a And XXXX, really, rate of lower we

some terms then the metrics just at you giving basket of seems the looking with, my be it up of little creeping a in were particularly past. the think, Scoop I size, bit, and e-commerce, Okay. from And on to notes

So can that? rates you of driving steady. -- And help understand retention maybe like What's that that you seems just forward. you're if see some us that's the other very going how still that's it seeing,

talk further. Just little a maybe that about

Yes.

Pietro, So Kelly. is this

of main retention all of think of we've said creeping we've and close baskets Scoop, reason of not continued, think a market, kind XXth that XX% right? customers the on to So we're the impact up I market words, the the XXX on our impact cumulative just I I use and somewhere, is on still necessarily our edition, now to over products time, over launched the, think, but are somewhere. in for

question And from those items continue their menu. second Scoop And and time. it items become customers' there of greater menu, stickiness you'll creates an as add over to to they to have continue -- just your So add as of. remind me important I that was part we customers to as part a think to

rates. to on wanted retention the touch Just

retention So those both similar impact of products. terms in of from basket all the coming cumulative and impact

just seemed planning expense XXXX? then can know paydown little a terms Your also interest us let you're than for you debt And in thinking. of we were Okay. what bit lower

particular think XXXX, to cuts. to there over taxes. other growth the expect guide, some I so rate with after So would if the but cash we'll -- continue course flow were of we grow relatively would a expect is And commensurate that -- remember, thing, number you not we earnings

that reduce existing We also did on helped rates debt. some refinancing some our

Xx a that you afterward, to probably delever little to bit help more talked ability in we've XXXX on can our about. toward out but outlook in So about our feel continue Scott that good the and we and Melissa

comes from Your Kelly Fargo. from next question Edward Wells

Dirk, ask picture to shortfall then in ex underlying of the and you the changes EBITDA as be absent in you're on just can business what did -- synergies? you looks XXXX? Food about color provide -- more continued QX thinking execution. then on that solid And maybe to on to I assumptions bit about a Group Congratulations want any in that, the how performance

Yes.

your to Dirk quarter. strength the Maybe full So last the before exemplary. about changes talk first in the the said no question, we've and we of the of the in so underlying few people. I good really start has as months and to want think been progress fourth But the and business, talk the part with year. we've really about acquired continue had can assets the And about feel believe, I

the a quarter? fourth you So P&L, If where little maybe volume we was probably expected, in what down happened walk the in bit fact, better.

acquisition, you'll good see from little the remember you volume in presented that a formas bit uncertainty, acquisition. this things. of we post erosion -- that the often of that despite the If we Did get the an case pro when side -- feel assumed with volume made about not in the prolonged so we

is wanting impact as The of was on take a explain other negative this. much One things. -- minute result too of really moves X is temporary XXXX. back deferral the -- I'll to that temporary to to income, a just just of take a And us promotional which comes in not thing

the one as to we necessarily to to system optimal about that some need business but on Kent, with have we not cases, business again, other So the And half the to in that divestitures, came a Kent because be -- network. facilities. out in going kept we business of the long move of the to result that move you have be X divestitures, to it's that facility, is we term, remember had

one And a go on we distribution which so network of some when are we platform. result away incremental being costs, incurring as optimize the

platform, story really temporary go these we And that talk you we when is synergies, costs additional want of only do so And distribution the anticipated of about of fourth go realize also on XXXX? some quarter. one the not Dirk, the to kind away.

Sure.

XXXX, Group, both about good on think business still we business for we as Pietro feel and when synergies. the progress really on we're the outlook core Food the said, about making, the just think I So and

about guidance $XXX year. Food for contribution in our to growth or $XX million is Group million the the total the to inferred think I about EBITDA that's X% in roughly of X%

do lower-than-some-of-you-expected things bigger more may -- able is of specialty little impact the contribute a was little some on upfront. we're divestitures impact on was businesses of think had some the to the that to transaction closing, we work contemplated the some divestitures, post There than I the of from impact over that to which our does million as sales, case, talked across but it gains took their integrate we more broader that $XX produce XXXX, million do as and from $XX expect get time, business those And Foods. impact US from we've meat divestitures. about, when about the one the and bit it we in to

still us don't that feel longer we term. So like impacts over the

Outside impacts of the $XX may similar good factors again, talked and as range, about competition. the an we've increased an from example, acquisition feel one of contemplates million outcomes, business and and organic range in about expect losses the around to macroeconomic range, that, then a for

about feel good So outlook. the

I then profit gross And Okay. case. ask about per wanted you to

looks then what could First you -- I'm but pass-through good. of maybe that, quarter? profit just I just bit gross excluding more And talk inflation provide know, of And seeing per that as performance off, it, a provide in from little can and if don't you about case that, the Food had on kind on a perspective. part the you're curious color impact really Group

Sure, Ed.

about profit $X.XX adjusted case. lower on per $X.XX it's So or gross

We the things to business. that a is things that all because continue the talked that and I time, EBITDA synergies on focus think sort that, lower, talked the improve. of again, will then We knew over margin feel, going of and overall mix around about, again, the lower we've through about. in was it rate we've $X the

there. not So again, -- a of lot surprise not

stable. all XXXX, profit And as I as profitable think -- we've sales gross about us. on about, the really, been talked yes, business, the had about, the for really we strong side, talked otherwise, we throughout And it's performance. pretty organic core growth

with and So the that volume we're it's year. and rate for managing pleased sort very the outcomes growth, that of

that, 'XX, Okay. mean, and just a do flow in. to Xx if leverage And I Dirk, cash I like guidance, numbers squeeze From not on it by standpoint, sort 'XX. looks end get if can the the like I more I of all of mean, you maybe one

Just Any -- return on once thoughts shareholders? potential there? guess, and thoughts to Xx you allocation cash capital for maybe I to get of

Sure.

what talked before -- our get we'll point. but I course this -- Xx we it on et dividends, to And It's pretty your reconsider, nothing as other we close to ability I later whether year, closer, get think or of delever over good it's is definitely into think XXXX, because significantly this whether it's we Investor get close. as year at the just feel about we've X our it's radar. remains to really as our said we've Day, more buybacks, cetera, closer, than we about -- it's share pretty

comes Bernstein Jeffrey from next question Your from Barclays.

as A well. couple of questions

you to been quarter just the The have XXXX between the based February bit frame time and at we specific through acceleration expectation a imply XXXX, an into bounced a fact any move the you back Thanksgiving fourth that below organic first wondering are I'm in have might is that Or -- case factors? to Christmas. think and 'XX, are guiding assuming the least as that due one, trends safe just shortened that level on growth going I you to January mentioned the for higher on little quarter in quarter-to-date? fourth

So I rebound in that. the that you think -- calendar that -- see seen do as think have you and we impact, January, so piece

year you guide, what of think a moving the there's lot think though, throughout I parts. the from

new fruition in you quarter, as early sort XXXX. also So have talked customers onboard to in well. again, comes fully I -- that And that here there's exit the as that we the fourth about of, of you that the pipeline, then combination said, with

again, about good the And overall a a core version bit of grow those. of little So outlook of as XXrd exit, X% and to guidance combined X% -- ability just our quarter-to-quarter year, lower business impact because to it's to the really, -- the out feel week. our calling is then less it's QX about the the opposed this excluding

actually despite as your challenges, some favorably and about of terms restaurant commodity have the least industry at then And restaurant at least industry the you spoken traffic in the about and from clients, of we see foodservice inflation. -- your of growth what Understood. fundamentals labor think chains, the peers

just So you or QSR the you between health characterize independents dining restaurant underlying do the how versus it. might of however wondering slice chains or I'm maybe versus casual industry, distinguishing

Right.

good to independents. a which I that's between it, is think a as said, distinction way and slice you chains So

sources, Our the outlook said, what from part continues and past Technomic positive of holidays, from what the with in looks about QX of is year you of story outlooks other be see consistent with and full we've line the for guidance. independents or fourth we quarter, early consistent. the as and talked And in really remains either very timing the to

chains X% traffic is our best chain, is kind I Box story. chain. continues report, think, The with proxy Black of for which the to a different minus

again, -- but X%, minus to was you So in December and in I X% January. what minus think it's go around back the to minus saw X% down

-- it's nature associated concepts really chains the So with. the just depends you're on of the

Some margin independents. much is, from not. that news profile the a do that some less is accretive good do The perspective, well, with than

more it, muted. the And bit line the on there's much bottom more impact little is a so while volatility to

in well, adjusted guess, guidance there that we about appropriate think XXXX were guidance? differ is to from Got Are meaningfully Are other growth organic as growth to least, a to -- assume XXrd week And case X% of then unusuals was reasonable organic fair EBITDA those ex and those I other view? just than that think volume the -- the term, it XXrd to maybe X% X% is it. if about last would XXXX long-term metrics and long-term I X% week, that's X%. growth X%, at estimates make to perhaps my you mean, of the question longer for for

out in future, long-term anomalies I -- two really. we this actually about to X% talked Investor year. -- X% I growth, our we're think in a lot about -- XXrd more talked what that the the updated aren't, back to And the your you on a when reminder, XXXX, guidance. say there if the other So answer we've tie organic we'll a come than week, things as questions just of Day to long-term But of with though, would

with basis as well restaurant health that and So the the which OpEx long-term about there we really feel from GP growth tougher supply in independent XXX points chain points about accelerate basis still good overall roughly volume, our hospitality, largely mostly growth, ability environment. lower, It's, XXX as to outlook. track on and care operating

of So many areas the still continuing grow healthy. business to

from next Heinbockel Securities. Guggenheim Your comes from question John

of of that And case be me points, you let Foods start don't us think give that drive something that. that maybe So a to couple hundred And and -- where a sense the if basis X I US know between independent roughly growth? right, then things Group. X with right, Food speaking, the would can that's you But like can spread. when growth of spread, it's Food level your get what or Group up most do think notably? or do you you the --

Sure.

the case -- with I growth years through. -- it's to from our they theirs, the compare think right X to given our back think So ago, if uncertainty went what X I a not compare or now probably fair

in kind that Pietro through think there, a believe here think, to about to continues they it some place there's our that. there, of getting growth quarter I really in But model, on we modest selling differentiation. we So think, model fact and XXXX, One flattish fourth is accelerate and overall. the the from we contribute is independents, to various a XXXX that selling talked things which is -- were positive, our

to to then continue tools some available. markets more our become systems, of technology our over -- our As and cut of

finally, then on the side. And product

So we of we innovation example, Scoop of and they'll there. part Scoop broader be that our do spring will a when be -- -- product come they will sort of now mentioned, life that to did for as best and he to continue

we than about, our talked then and is: feel two; that So business, in course to continue or that business. their more we've next that on acceleration get it's their to over good ability that think or the they'll independents ingrained same based core year see in X things our business over marketplace, really there; about at time the of we the to core faster grow our continue

versus you pressure where so warehouse about your would XXXX 'XX, and -- what's of when think those your about you labor -- what then current -- think if And both outlook, the cost freight, sit? is

pretty Probably similar.

think through pretty think similar. warehouse, when I we

elevated wage as couple it was year-over-year where a and quite especially. historically associates, not difficulty where ago, the remain we of was increases still as overall the years it So above then but far like retaining and in warehouse

focus to XXXX. us into continues that So a for be

we the fairly stable. expect think freight on be part, the -- I freight, to second the

it meaningful about, So a was for in as us headwind talked we've XXXX.

a we more stable in There's of it things. us. Rates little get of some challenging, it. internally, some doing of but activities a it's think largely I with kind we're think, XXXX, more the again, mitigates for

impact. a not big So

question Frommer Credit Suisse. from next from comes Your Judah

right? Sorry, can you hear all me

Yes.

obviously, your some in largest on changes strategy first, of just at or local X you big M&A markets your competition start, changing the So side. terms competitors yet? the Have in on go-to-market anything management, to maybe seen

to competitive We in up, changes We characterize a flare and result have of local happen leadership. always industry more tend not. to being our hotspots those as as and

So we seen have not changes. any

inflation I Okay. gotten something like And we've is read X% there's the mentioned think those more categories? in fully that Maybe XXXX the of Dirk pass-through And of level. you've be you seems Would in pass ability and kind on on similar XXXX. then had QX the kind from would for to thing, that That of down coming expectations XXXX. of Makes commodity-heavy in say kind kind good into inflation that that to mixed Xs. a heading expectation the level sense. a

Sure.

we've a tend where But somewhere deflation we environment to And in been, a EBITDA our So markups, impact would on portion decreases don't any we as I so our of categories expect to they increases that volatile. on little of basis. see contract as and be mentioned, to for your the grocery, with point, as as steady been. is inflation. weekly inflation business in fixed be are can or cost tell -- good or change Xs. indicate Commodities us would But significant really anything more in I to these kind a a get monthly just current to less it's consistent be harder reminder, think expect reset we in it be related, more with those cases. Also the to

a and it big see change, the that So we in overall, quarter anything through. ability not to different didn't really pass impacted our

to. expect don't we And

We don't expect forward point. going to, this at

from comes question from Morgan. JP John next Your Ivankoe

follow-ups, A of new think couple well. as couple ones of I a

fourth sure I health customer hospitality in have that is hospitality quarter the Can And I think the sequential divestiture You health -- fourth customer make first mean, losses, that quarter is care going ask between and that of because change quarter. the what right. we segment the happened comment make the that impact in the did specific the quarter. is trough of first to that for I the care it to

So it about I think in what the talked quarter. is we've happened

So quarter of the that sort out. first the is first quarter full it's

we really the our faster to from to we and be achieve softer overall and again, we case QX grow there, accelerate to about overall, as to pace new continue X% to was, expect bit customers at growth bring customers than So a ability for bring a X% it little where year. talked that our on but that new on

you -- don't I can ways. in mean sorry little that if a a interpret obviously, of points? basis basis Okay. I to XX you like number that's and qualitative understand bit if Is it's you XXX And to basis a I'm XXX that comment points? but push, softer? answer, want points?

John, that I to really away the to case I our we've ability shared overall point, would share. we're accelerate And I we've X% that our to X% growth think what thing just is going achieve about. in hope think to you'd the confidence this at take talked

worth comment it which chain company. and supply this -- is mean, do little pursuing distribution kind you customer, has opportunity efficiencies, specific a talked at Aramark a -- about on about bit public thought is Avendra I of you're of of some -- kind A trying. talked for you But business some as least Understood. efficiencies. kind was their Is term to to and sensitive your I like is be should in Okay. opportunity view, to? to Obviously, we that made we a you're guys in there is grow of there's increase take be comments just public it some can of longer anything the business? mean hear. that term and contract would your kind an of If business? talk customer interesting I actually there anything kind because terms that public near of has about that an

John, Pietro. so this is

said asked when -- were things. -- So or I think talked acquisition when about about of by Aramark, the Avendra we X as we we

a very Avendra. with We have relationship strong

well to But a over of and not we're that parlay into we premature very them in broad position, course time, served and could be. about opportunities could have it's We what the to really opportunities. that and talk believe

thank the that physical step-ups in anticipate 'XX? for -- final plant Or we start of some systems capital for as those the and facility in that, question, SGA? you've But fiscal do should some potential 'XX does facilities plus you've 'XX of 'XX, improve to integrated within modernization even you leases helpful. and some Okay. the after acquired in include comments the you guided, were And fiscal CapEx as the

Sure.

for Group the overall, contemplate CapEx XXXX, of for So being part we Food. our would guidance increased Food does US expect

expect large just facilities we cetera, is wouldn't a whether a new step-up part our grow. et as this portion that, us CapEx each allow expansion, to And overall, from to overall of facilities, point, comes typically continue year, number, that So at it's there. to of significant there with,

[Operator Instructions].

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

And on the biggest you just us a around seeing you that, think follow-up are where control prepared you're more a in on And initiatives Just you more Can leverage your see commentary give opportunities some in expenses. to remarks. do greatest XXXX? little then bit what impact. expense expense I the color referenced get

is This Dirk. Sure.

areas number of the initiatives business. -- across cost the think a overall, the really balanced I in are

business the whether So the around throughout cetera and level talked different other although are supply still others continuing there our services for in admin routing, not it's identifying there for, a to process implementation, then systems we that chain, the quality enhancements, areas at pieces improvement through which just smaller we're balances it's cost. et about, striving across bit -- and fair and around And that shared optimize functions. work opportunities

constant a it, of as call I'll stream go we those really, forward. opportunities it's So improving

a the XXXX, that continuous extent, would we drive supply on we productivity about of services supply get there's maybe as get talked lesser and it's to and basis opportunities, But really we is step whether step-up our to these lot that more we beyond cost in to more embedded, chain, step as an improvements there's XXXX, shared we it's believe really think think others. opportunity embedded I improvement I And our we incur. increases biggest up, our be environment to opportunity level an ahead. opportunity as biggest until a the then the chain think to continued up annual across of course, mitigate ongoing or of of also

On you. could just And throughout a the we fuel, quickly. I how headwind Got think as about move then tailwind follow up you fuel year? as if should or

neither. It's compared flat pretty as to I would think it of really XXXX.

our cost and of be fuel portion to have we last So in large was a will already, the locked fuel year. what it similar

market. that Of be and other smaller market would to -- tied are pieces, the the course, level, there

Instructions]. [Operator

comes Your JP from Casella Morgan. Carla from question next

clarification input prior curious talked one about broad where specific fuel business if was that the based mechanisms I'm about are base on cost there's that's that And related, cost pass-through just on or -- missed percentage mechanism. other versus for of is your some there costs? contract that a your you -- Just question I percentage.

Sure.

form So with is cost. roughly we've X/X a of customers, predominantly so of contract. some talked product about that is pass-through business This relates in to the past, of and our our

And on is so pass-through different -- cost structure it's there a cetera, in things, very of contracts, et a fuel, versus are those -- the something product that. they're our around if with but number other direct is

of it contracts? And fuel is the and much others would more pass-through the on terms the Or similar like how business? of in of be your in

be think and will direct so in as directionally, necessarily quick as a the is as same, the of few as you some contracts. but if not A or -- works contracts, about more it's quite timing it it

your your debt? bonds capital between But you Great. questions thoughts just then and the of Okay. refinancing callable -- one structure. about on secured balance and I'm out there got or And bunch unsecured -- a any -- just

Sure.

look hat, we Head structure. our So IR, is our capital being continue to And of than other other the Melissa's Treasurer. at also

market as XXXX. continue looking variable So advantage we look just opportunities those. in refi, in at some that for XXXX And for took will fixed opportunities to those to of conditions we we're always and/or

radar. it's on So definitely our

There now is to further Pietro. time. question this at no the I over would call turn to like

and thanks for Okay. thank your for Well, the you today. questions, all participation

EPS. finally, day. possible. hard thank the Just to growth great in today, And improvement confident a summarize growth, EBITDA quickly, joining these we're Group. adjusted ROIC for case successful and very commitment We're the have which XXXX of you includes very and and Food all whose associates I'd us with and XXXX, in very our work beginnings independent makes results pleased EBITDA the like outlook to to growth, all Thank for company, in our across the integration

this Ladies today's you conference participating. Thank concludes call. for gentlemen, and

You now may disconnect.