US Foods Holding (USFD) 4 Aug 202020 Q2 Earnings call transcript

Thank you for standing by, and welcome to the US Foods second quarter performance review. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Melissa Napier. Thank you. Please go ahead, ma'am.

good and Vincent, you, morning, everyone. Thank our to second quarter call. earnings XXXX fiscal Welcome

today's Satriano, We'll [Operator provide are Dirk me months remarks second call Joining on conclude. first the Pietro questions our for CFO. X after and quarter prepared and on fiscal Locascio, Pietro our your Dirk Instructions]. update will XXXX. an of results the take our and CEO; our

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

Our Relations of earnings the from Smart this from we financial earlier XXXX; and today's morning, and acquired be accessed organic today's can XXXX. September contributions release issued our Food during presentation Group, on page Also to which of exclude slides the Foodservice, April website. which references Investor we call, results in in of acquired

website. financial we appendices to in financial the presentation measures. today's certain I'll well us information, quarter's you started. posted to comparable the during turn in statements. our addition statements from cause Pietro, last our our to and as now over Please as schedules In to during results with factors, those our these reconciliations to which lastly, actual those will the could earnings most call, on materially potential call forward-looking XXXX risk statements. review certain measures to historical implied factors the in refer the the All in the SEC included or non-GAAP XX-Q get are And XX-K considered expressed GAAP for differ are press call on to made filed release Form slides today's

company. industry, customers on and thanking all COVID-XX did morning, challenging have continues topics good I our a environment. will cover help especially There have our want the which our significant make to results. today: and by we our impact industry second as to the for our associates in exemplary and fashion X begin time, last Melissa, the I are they quarter to it, position everyone. continued in amidst industry And this Thanks,

As today. summarized takeaways on the main X, are Page for here

believe volumes perspective will very our on believe saw are that close despite costs levels, Based COVID-XX, way profit that what industry. trending that remained in for we industry the close of operating levels. we pre-COVID on pre-COVID ultimately all a profitability in a recover for well prospects good. the both and to First, we bodes the return and earlier, the opened We to to markets a gross impact

position. Second, reminder of our a advantaged

proposition remain as Our and nationwide well a tools, innovative and scale to needed of the as the navigate this uncertain technology the support customers providing environment. differentiated ever, third, And value expert business quarter. recap as as products, relevant with

and performance characterize with profitability for I our margins environment, the quarter as quarter. would sequentially improving and Given promising, solid the throughout the

the continue be of lastly, In make part we account structure first at a reversing end we reserve reducing focus with progress good our in cost on result of to significant uncollectible volumes, and in in the quarter. the addition, collections line took current our to

industry dive Slide Let's and a X. on deeper the now take move to

eventual Here, industry the Foods are for both US restaurants and we recent for about why optimistic to show trends sales and for an we volume recovery.

sales. On a is data the proxy you restaurants. left-hand good side, This NPD at see transactions on can restaurant for

leveled March. about June, which industry were is see, their low in transactions XX% can year by since quickly recovered off. And lower has where ago, than a you As the transactions from

and dining. geographies permitted at that note XX% that is fraction to want for important even restaurant industry a this is to still reopened. be. fully question far the is permit when during rooms, reopen of are the could recovery capacity it industry And restaurant it will on-premise post-COVID. does quarter, dining restaurants of from remain According only continue demand that consumers to recovery. recovery to a from restaurants, bodes despite the This back robust well eating in However, its illustrates what NPD, get The to

to determinant the of key sales turn own health to independent our industry. restaurants, we restaurant Here, a of the

the to end restaurants, once This safe, to when grouped roughly to our of to see markets is confidence cohorts date return XX% On that end and they XX variance that X feel prior in red, this lifting. reopening organized blue markets June. have year recovery compares restaurants will and right-hand later anywhere and by markets what of the side, shown XX% greater we us in June, of in the shows Again, phases, restriction or reopen, sales was whose from will our At to independent to markets off packed opened to that we the by year, and in only earliest, in close it's the prior fact seating at line, pre-COVID were restaurants do areas. many gives versus a fully still restrictions that levels. XX% had despite the green shown the XX% this volume consumers us

much parts full-service still full-service dining traffic only country, restaurants XX% and was though greater many of traffic were to resiliency that full Not was highlight off-premise. restaurants, service which does have want ability QSR includes The model restaurants. many only environment. in Lastly, remarkable ago, of than rooms recover have for seen offer. is more year A the degree favored in also many the independents, service our the off-premise that current own it consumption. In Having consumption of even a said chains of the trends, restaurants, is to shown full this in we industry that oriented diversity QSR consumers both reopening adapt. that, XX% very to office June, a shows

we Continuing slightly level. on at includes our is and across This Page chains restaurants, with pattern Let's and now to shown types. yellow follows saw go are chart very we sales X the to with the because much QSR. you to for industry slightly line, cover prior which by but the can all on see the lower independents that this customer a as volume underweighted data this page line

of the this This and chains how at and over Given contribution we is on we've are quarter second in last year, onboarding and some business types $XXX up additional we year. the new environment, the time current of times had customer far. have we similar put million in of success period good good business targeting In QSR held the amount those focus third a well so margin. several onboarded business, that same have

US large-scale many favorable pivot a ability success X and Our first, multi their distributors to our customers quickly own Foods; a secondly, tailwinds. segment things: like by experiencing desire to put to geography trust demonstrates in more

shows that ultimately hospitality showing return recover as for summer which ease. stay-at-home is normal volume facilities Let's as has with of certainty to restrictions of Hospitality, care, us the go to this more in to to in recovered segment will a elective recovery, future. health is the to the the which absolute have picked surgeries partially health began now health our the the quarter is a orange pre-COVID line, operations care and levels represented pace travel. by thanks middle portfolio, We up modest and which that and through believe between care smaller

virtual travel of longer greater consumers businesses industry less reliance will on to part expect work. place levels We this take and to recover our potentially pre-COVID as

of education on been an large few led added up decreases retail, health volume. a to hospitality Some have partnerships and where care, made significant the have by in meaningful emphasis

volume, provide the customers margin and mentioned tailwinds. lost for more as our be do not underutilized As they yet do low while example very baseloading serve those a favorable with some ability as these calls, some facilities. accretive cost previous is in to another of volumes This operate at pivot may of to to

In overall schools, and hit, prior were when hospitality year. down on July that volume in fact, was segments XX% X the exclude hardest we

adjusted trends in added what These slight Dirk as discuss, leave recovery a volume of on profitability. And of prior for that volumes. the to come well along volume, will volume operating to the costs, with expense we pre-COVID profit time. volumes which about discussed, prospects recover we proportionally favorable close costs us we the have fairly which half markets have saw margins operating fixed volume, are volumes be for levels margin. reduced depend to and lag. our have just we Our gross segments down margins, profit tailwinds, confident our profitability Page will for us variable gross for held side, for constant, costs which all recover on over on Similarly, account longer-term margins as at now the except with line and return customer Category promising early operating with on more ultimately for in And levels goes signs operating not on and in I'm our but the and more X. with emphasis only a

Moving and today, the reminder of to Page X advantaged a presentation theme our second our position. of

As we differentiated makes the our have Foods and past, proposition. said part of our in attractive value US scale nationwide is what

want We how strategy environment. expect minute reminding our and gains. current we spend continue drive I these market evolving to these future of share to advantages a factors for us to are the

and advantages nationwide myriad Our of gave over us our the local multiple scale regional and footprint competitors.

current way in environment, offer the this. the is the scale footprint our we competitors power, that multi-geography match. serve to multi-geography chain us ability profit stability operating customers. onboarding us that at and evidence business gives can Our difficult most time with better these more we uncertainty model And created the to which currently gross a results gives in are last significant The year by to purchasing and and margins, consistency of fact is same for customers

differentiated We as expert to in products, we seen terms and ensure leader our tools and to innovative technology continue of to also platform resources. continue a be evolve

of a about Dataessential even trends important by let's world, post-COVID more is remain trend. to as staying equally in important or our no seen survey up Keeping as First, talk with innovative with operators operators in XX% on less products. the exclusive recent

particular is which products. Scoop, takeout helping with about sanitation delivery, operators September on labor-saving expected launch, needs, today's in and is focus and a Our to with already

restaurants Second, number third, ChowNow doubled In off-premise And those the delivery. who for just high takeout last dining, platform our team-based in demand. utilize the to that tools we selling. continue especially the and customers have enable X and offer technology, be months, to of

that turn sum, of theme evolve today: our ensure by continues the is which our industry. third in scale to which to us platform, In call I operators. are advantaged with webinars over salespeople by conducted XX,XXX consultations well attending Our and virtually. restaurant support roughly COVID and very have received to army operation over restaurant restaurant prospects consultants of operations will offer began, to now gives we our XXX Since results. position, second consultants our differentiated specialists an customers the further leaders for our our remain and that webinars Dirk continue reinforced quarter

everyone. social Thank you, with morning, distancing actions to Pietro the and noted. business and in COVID significantly. due the as highly different even X significantly some Pietro, COVID and quarter improving to good and the industry set promote large closures Business unusual as The also fairly impacts months, quarter, met in seeing negative our and June April results May across impact

the As weeks. Total from case volumes case followed volume talk a the and in chart. in industry, like saw the in experienced down we, down XX% experienced volume overall XX% we you significant the March of volume bottom, the to about, Pietro of case more results and trends have in the XX% a We we recent believe earlier improved as late week-to-week represented and trough restaurants improvement progressed. sequential our heard April as the in throughout more similar also the improvement than quarter, you to experienced Independent quarter trajectory. end very decline

further our able did impacted April, gross believe happy rapid in to end I'm report being slide. structures, the ago. volume so dollars with credit our are and talk detail results almost typical and expense and or a strong financial The quarterly of reserve $XX pre-COVID that AR additional to months We in million our June. on positioned and early quarter million, As we the from both to reserve. March improved, decline discussed uncollectible our few us to collecting on we reduce both hospitality, that COVID case half more and in well address the margin which more operating took in working last I reverse and on volume restaurants the our action volume teams sits actively P&L just now sales of at EBITDA areas next compared the will resulted collection we're about in swift The call. positive $XX to case efforts for of at -- and this remaining balances adjusted in reserve trends accounts May the especially

new customers, supporting In on we're focused our existing customers. addition growth to with

an it environment. heard to which, chain of quarter. as customers of rate area, mentioned, already third we million focus Pietro in And signed has begin better QSR shipping in new you over As you in being good of quarter with We portion this run national in business. and the performing annual a know, most said this business, the $XXX business some this are slated has been second other started of the in shipping restaurant

will continue new a from We makes business perspective. to that and pursue sense geographic profitability

XX. Slide to Moving

Our was the basis the lower quarter, driven driver. for the earlier. for with Inflation case as largest volume sales were beef quarter down the net XX% discussed by XXX points

for the quarter. Our GAAP declined XX%, dollar GAAP and XX.X% gross was second margin profit gross

gross XX% to several that quarter. our product profit we of as The and rapid Our temporary. adjusted be logistics negatively income. and profit volume adjusted Gross caused case a XX%, impacted was was inventory margin by the donations believe lower decline write-offs in dollars higher well gross as for declined level factors

We customer and mix, chain. and retail lower to experienced including result restaurants a more gross of impact margin and negative on as changes also a hospitality independent

adjusted with margin points down basis XXX versus year, prior was the contributing to gross significantly most Our the decrease. April

basis and from from in points smaller impact of and buying about at quantities the logistics points, sales. base we acquisitions May product mix XXX decrease look into the remaining and the inefficiencies customer of product roughly between and associated in our adding June, basis was XX decrease on split of combination network impact the shifts. As the coming our year-over-year inflation The was with

a we're have customer seeing environment. and As Pietro said, competitive margins to remained levels, similar rational pre-COVID

to case expect to our an As be operating able to our overall lower to margin logistics levels. On we relatively expenses, near line variable in were in recovers, mix successfully gross recovery case volumes. pre-COVID recover, income and structure also fixed leading and we volume with cost manage will

meaningfully In sales including June, April. OpEx prior sales. the product our in across basis benefit QX to line a and managed increase better of the the from and May than on year-over-year labor basis productivity were levels. the the acquisitions with fact, inflation of base OpEx adding impact saw Thus, point that fact, pre-COVID into adjusted percent and and, was actively as in warehouse was We roughly XX point variable delivery due levels year,

salary the to quarter employee fixed across We furloughs reductions through address in also during took business, actions costs the reductions. discretionary costs and

costs recovery volume case back rebounded, to some seeing. were As fixed match the volume we we did add

to Our flexible, through environment. This largely to costs, cost us line to in well structure managing case remains be and volumes. targeting continuing actively manage challenging positions with this we're

dollars to we quarter. produced both navigate in XX. and adjusted where Page current negative will being to saw EBITDA of a pre-COVID to EBITDA team's the environment pleased supporting April, in business was as our in EBITDA earnings for and adjusted the to believe Moving power. environment. further our I return positive operating our June difficult very ability long-term a adjusted strongest generate to mid- expect see with with we positive positive would the to margin quarter the a close continue recovery EBITDA dollars, time, structure the We difficult June, After in May levels

$XXX was million. EBITDA was adjusted $XX adjusted million, year-to-date EBITDA quarter and Second

was quarter Second a loss share adjusted per $XXX. and diluted loss a $X.XX, was year-to-date of earnings of

shares $XX of I'll be net in outstanding and we preferred for into P&L This million our adjusted based the available Page with number equity income factor and our those million factors was the XX. both current income total in loss share GAAP given second note line common In a now common Food quarter. common calculation. a net EPS in and for quarter, additional of the discussed the the per a count to in year-to-date $X for the earnings $XX position, Group loss and a the such to for a shares quarter of shareholders $XX net or Foodservice that result line quarter, the diluted on businesses equity on included net we're loss we loss of available loss a loss share not to and $XXX quarter At preferred reflect new the As now calculations environment. shareholders. second preferred to investment. are will dividend diluted on in the income investment I'm million does a in diluted earlier basis. recent Adjusted of the the year-to-date, was available year-to-date million time on the since second our expectations net quarter a of income Smart shareholders operating million return performed the basis.

Our were Food the to organic Group very quarter. in business similar that trend business saw a

reopen, number chain a continued beginning of Northwest that was base, activities, in near also perform been facility markets on also well. our have business that original While have integration and have a of restaurants Food to the chain volumes the to the in slower with We've first Seattle higher markets integration mix national line. with time resumed Group

synergies million We expect August communicated. still warehouse conversion this in later will complete run a we first $XX that in previously rate and

with business as reasons: very X due volume. prior food the down business has secondly, customers offering from reduced capture The and year. home. at to Foodservice same-store model downturns turn the is well some the to channel a well cash sales digits result and ramp-up be typically may it to carry of carry to spend as the and us performs Smart and temporarily value is allowed help the the economic cash in single shifted However, of provides; only first longer This that the up quarter primarily, in

due extremely profit of customers, well EBITDA being wallet and through year. quarter of our higher share across its prior for double the from quarter, consolidate channel of And adjusted this integration services may which the up With Smartfood existing with of and despite respect you store EBITDA case us stores environments delivered to help expect addition, recall, business we open we lastly, margins our all acquisitions challenging economic remained approximately plans attractive still can In Foodservice customers. and the anticipate drive to to still the the Smart contributed incremental is of In our because second profitably allows to business, this external for activities. the to XX% the total, EBITDA our closer limited the approximately XX% counts, environment. we and due primarily volume our to those

Turning to to Page strengthen I Recall we activities position. liquidity completed second Foodservice Smart current acquisition minutes to fund our few that the further overall liquidity. our and spend series XX, a of during the would like financing discussing quarter, a

the a had end of As position. liquidity cash very the result $X.X liquidity we're $X in billion. of and these cash At billion actions, on hand and quarter, approximately a of strong total total we of

the cash reversal flow schedule would inventory and the to in positive of as quarter, to noted, to I flow the not normal second year. Factoring the but cash solely the working capital our more In customers. levels primarily some to I reverse a support out operating payments of half our expect operating return be During capital we just do benefit was from half second year, expect positive working we benefits. second the vendor business the this of rebuild

in the Our give the industry. distributors smaller us cash advantage over and an liquidity positions

able faster are We invest growth. needs and customer to to support can better support

difficult can helping winning gains with existing environments. up navigate through we customers questions. and operating it Operator, this that, on market our focused open business are organic share We new for

Instructions]. [Operator

the of Jefferies. Mandeville from comes question from Chris First line

on seeing ago? maybe ask, you're over maybe as chain of to new right Nice ability that there characterize is just have quarter. quarter to onboarding million would could your to to with separately, can comment you're then you whereby the you otherwise contractus profitability Pietro, I level now? that it relates months next take a what And or share with way X that observed X $XXX you independents two, those the can business in

Sure.

Look, So around second my differentiated theme I think that value with going we're let's as proposition, to -- on is ever. as the your seeing back relevant start independents. what question our it's

independent the, will XXX navigate serve stakes terms in times, evolving meet require for a call of to harder have support our done I short those, long that I've -- webinars a little the sure in and the bit we've in the to little as of terms quantiy In would more we table them Customer in As restaurants challenging in gain short of us service, helping bit of in the, done, resources becomes you term, of think term, to it's terms mentioned have I terms mix these driver work done goodwill what over customers kind equity of the assess. well share. and longer a term. for

past We're as and done relatively what's heavily an over to gains that to the market we segment the are restaurants example, share not weighted in as pizza and say have done well so the the continue things drive I going in future. So across would have in environment. in do the we -- current country, those that

margin. would and think terms are In the I've customers to we the our we've again, of the business, bring referred about confidence low said these margins book that find around here's big on very And model are tend will their Look, scale Dirk before, as switching -- say, those been large equilibrium I awarding business. what because, I long the we the business I good. the at and are that give reason in because of term. our That's for The isn't to to. prices customers operating able be kind of

I margins think larger business. in creep up that mentioned multi-geography and slowly over few We I've last have seen the years, this,

comes Ivankoe question line from of John the Next JPMorgan. from

Brothers some equity other a on of private capital. least hand, has market on discussion it the At competitive was I that been fixed think news, question some then a on costs. question received First on Maine's And the Cheney and a there bankruptcy.

read their comments I just may you if even I capital competition. kind a have names what, to go mean competitors some use were mean capitalization away customers recover? recover are rational seeing comment of new own distributor consolidate? I've working beginning the ability about. that that made that's want to comments their around of and you guess, kind the foodservice industry don't as make the needs overall So could of to I fixed some actually perhaps or reductions. This some But the see cost you I there first you're question. some secondly, signs know you is made you And

I furloughs, think do identify the won't quarter also those necessarily guess, to first could that as volumes back? the which well. come were specific as second in a come cost around been at on be had and actually you permanent cost I that back quarter fixed How side any

take Dirk the I'll to the second. first talk Okay. and let

terms a this so private been hard that are, to most degree these how to be went hanging on. about well We they're there of bankruptcy there's proceedings. It's competitors -- know hard all stressed and they're smaller, seem don't to exactly a are dozen examples, We gave know and through degree one how John, capitalized. -- of companies competitors, to and that has infusion one it's in had of at half point the So couple regional that exactly know names, experiencing some stress.

of gain which uncertainty the the there are think the share, Dirk? opportunities the I advantage of a in exist longer present opportunities the customers uncertainty, term. those I that is to we serve. take the favorably is will with And is way industry know short more intent more roller more to term for is the nature. short more That's the ourselves position they really prospects there those is the situations. said, the good, most to that where of then that but accretive other term, that Like coaster Our in

our looks and see cost like would we've John, of actions to noted, like temporary, the of used evaluate. use our continue of we'll and more we -- right for permanent to is the that as taken these just we But very to we have through to work both a find we as to lot bulk date of and ensure through important, cost our But Sure. today the recovery be said way I business our cost with that. lot reductions there. like that date, been you industry and flexible as have we'll volumes we've is aligning as continue size forward looks what some though, and temporary. in say to order been have temporary and also I do structure our costs I reductions and the a said, and What continue earlier, combination is, going so as

comes of question Next Fargo. from the from line Wells Edward Kelly

I you, customers. independent about the Pietro, wanted to ask

that? are what of Just many base to date. what And round it these I is, remaining think can still to has done sense a open I then critical this? as base give guys have offsetting is do how all wanted has of I by reopening another is, side a think of way, your of to to how us as percentage new independent customer sense get to -- other much business First, bit of the trends good , looks mix to there you like your product? how you customers currently stable tell been for your then that and kind really is business PPP that here, ordering on to the don't slides, damage your the ask back And maybe in guess, growth stepped so a us customer that case just recently the with you issues. Total pre-COVID

one, if just all remind Okay. me. I your miss questions. I'll Ed, try to remember

So you're right.

spiked of, a numbers bit or the left-hand little really treading think, that's cases the X may If have stepped growth even more Page in or have side of at consumers sidelines. proxy phase slowed little the of good parts you cases, on the country, are function industry, a in a have back bit the look governments and as the some backwards in little a of And I the of and, gone right-hand bit. reopening cautiously which side, of staying the terms a is has for

respect out and had I I consumers secular we've to seen than a we I in bring did lot sector a buy the There consumers is now clearly think and to from go food if think what trying going we think with more and think talked home to restaurants the to that. I that's point they that people was a we I broader few to whether ago, before, wondered cooking at have restaurant were, -- home, eat promising. back clearly isn't or make fact, think movement to is the months

So gets the drive of I another then to, consumer independents. the think, question recovery, is of health your which the which part will the

customer our what with in pre-COVID. was So is, think, I roughly line count

in of whether low permanent they I When restaurants they're this them, It's talk seasonally them are at hard So is of who at of our is lot there's The had back closed. the always And churn single last levels. the tell year new and which actually line the still business doing a than or obviously, of digits. temporarily to permanently in some know. field are lower quite why There to prior ask a off-premise sales, the that point, or sales when leaders today, level closed count year. with close, we've are industry. to restaurants, of you in natural some year, not adjusted some we're to look because levels number of operating at the even is number believe closures don't prior

little that's of bit the the That's consumer. your question, so independents. me. -- on third And And the a Ed, part remind the

that on PPP round was and It to and customers. is your another

Yes. Yes.

PPP but and the bit what benefit new we've from there's spending. it benefited stimulus sense industry. drives a perfectly have And designed, PPP, get around pretty tried percent a of customers added obviously, to was so And a version. flexible and still high. economy, to of And the provides little the to clearly, It's benefit. a time the it's So first our benefit which an that

the for which await things that better country will to virus levels. is of return or a when get or get think us business I small is, directly really the to we back I as at think the that of to form restaurants months So whether I either through stimulus, control the help as few a pre-COVID think, there to aimed vaccine, degree consumer, or some next

I Okay. this a little more struggle amazing with But perspective, did Can an just one? down. for one of you Dirk getting I a from guys bit in cost just squeeze because job costs

the Now and cost I you of sort as correctly? Have that call of Which costs business, I given flattish. component. maybe heard said something of on I June a the is sales surprising, for percentage guess, and were variable kind May think your around,

it just do maybe, way QX? that QX maybe to bit how us in do is we then So guess, understand little And versus more. decline think growth saw a best the in the help Dirk, year-over-year I about we SG&A, XX%

Ed. Sure,

the after went the volume, so hear as that all commented June not think think making And for correct, you irrational effective the us that we with it's areas we cetera. I more May across line -- us, in as improved whether on I business, I operating of ways June, did centers, less in prior as said, and within important the that aligning year. was et saw team, being in distribution it actually with of smartly May supply of people chain and productivity the roads, And costs kind decisions. I was

to going as SG&A, focus to continue not We're to move we that that's going us, for similar to on stop. continue then so we're And ahead. actions. So going

to of the quite meaningfully at ahead, our flexible be we quarter, our to SG&A with we in think lower when trying -- as and up do to and be be, see year-over-year it again, to continue I be volumes. that trying down be expect to, also think again, we the order that align volumes what structure that. the may saw And positive second to not but you more much level support lower you to needs in

across big this the focus is So variable and a us fixed. for really all areas of

a in environment, nice and Great, tough guys. job a

Ed. you, Thank

Bania Kelly from of Capital. line the BMO from comes question Next

to EBITDA you in margin what -- see if can was wanted out, margin help you I us kind mentioned was June. just positive of EBITDA -- understanding

into Just rate? kind at what's realistic help level margin while, level at. I the kind run EBITDA and the at this if that for is QX maybe understand of sales guess, a us current QX what of remain And

if in performance we June, When from by at And not further say EBITDA to Dirk. the What will at is though the think, we and I think away this a continues meaningful is we margin, year. pleased I'm the environment back know almost going Kelly, with improvement this environment current then stay expect day. said, to Sure. in of be going that half stays I cute the very but as I on May the EBITDA to from to levels, in or or evasive, would negative that. number it's day point, a all change and

positive, scraping I optimizing gross the go servicing we're and is, thing that back OpEx just meaning to around to just of want be with we continue So clear the our levers and and the our around to margin, as on do the focus we to the year. by actions really going then our customers not half

think I And of market customer I is think, various people are sense to how of, just Perfect. market share your share, trying in a get within segments. terms

curious aggregate you just at much if and could to think color if by really about of I level versus drop add of unit just happening know bit size is little customer kind there's you a how level. about don't the kind there. the any So talk can

are last sales can were draw were where color it's and right? a behind you sure in conclusions, geography, of are year. can we no little own surprise. we where line with Customer there's Pietro. probably accounts year. by add, they a not of varies bit Kelly, So I'm some your last It lot

a operating business obviously, up that have business, worked We in new Dirk obviously, make push said, new customers are continue at really to for come which customers lower our down bringing if terms line. costs they well today, of of as And in helps level those are ensure to distribution on then because, that. we've for

it's or it is. reality, So today's current the -- where for routing current delivery the whether optimizing also helping maintain profitability

Next Partners. of question from Guggenheim line John comes from the Heinbockel

two things. So Pietro,

right? the but opportunity or do tweaking, approach, anything On front, this you That's done not more have the in might the just to in either took you strategic routing be that cost control warehouses had substantial whole productive it examples the that and lives more low after any on makes then more a that been of right, cost lot there than something Are that? before. network recovery, a

Yes.

the B, value So underway be work. to evolve, to have the I'd of effective we're become we're there there customers relevant; environment, to imagine, ensuring described our we I would say both, the do which call as efficient, and from there that to underway is in opportunities some -- want more have to how effort say A, are we company continues come -- to proposition reengineering, where benefits, at while it's and calling is that really an operationally whole I we projects some the those. pipeline of, benefits so Dirk of have my And that. been some do a ideas, of looking

at these premature John, with line on in would be map it past, are the the a forum in And are discuss road this new. public honestly, Some to shared supply some chain think, I point. we've

sales to When do. margins Well, level longer levels, and sales might term about you hat How or are duration versus a thinking have about of in a get that recovery about your to we say And when much to pre-COVID X-year than profit pre-COVID put before you to profitability, then that. kind you process a naturally on? do think longer as other? think versus you those two of prognosticating each follow-up terms

of So it's cases, by I of obviously we and number on terms continue very sales and hard to prognosis, that's the impacting I the mean increases the side, consumers in to say. what be do. decreases in think surprised

will lot to say, learned look, environment. this think the how a side things, I in we've about of in cost we've operate of terms learned -- I

from we lower the this think volume emerge that cost so from being we moved benefits there's -- quickly. obvious on can the some I

and you're recruiters. result need permanent about much, to made for customers of we've ahead We -- talked serving the that on So sales us, a efficient as be from our serve. as now group, to we you that force earlier something We've fewer not model to some rolled further chain us the don't they in were looked customers to being we recruiting at reductions potentially as many a the more out of food company. adopted

fashion opportunities to we've and we as -- obvious what months in call, at really learned have about other continue will opportunities, leaner few the and we So the, a environment. been operate in agile do the I more this to would look last to so more

Jeffrey from Barclays. the of comes line Bernstein question Next from

questions. Two Great.

from presumably, Just the would win business price, now one, smaller model. on you you share about, but think it's as about didn't know the you we assume talked I taking you more and scale want necessarily on I that distributors. new it operating mentioned business

a lower again, chain reduce a independent margin business service is it's, I wanted it like And meaningfully. This therefore, just why and foremost, guess, want to then who I to business, does you So business. otherwise this more independent more margin had at I clarify, sound first and and that than quick you're distributors I clarify, just the taking desired guess didn't smaller about, from would share presumably to talking follow-up.. retain presumably your

that's correct. Yes,

but opportunities advantage to dollar growth may bottom EBITDA and the that a been a over bit from not and the it enough of all to around of resources has chain, QSR tend we're and look than very where the opportunistic it's line, additional an we doing back business. taking smaller, perspective local, we've have being whether and we in the yes, from of the chain business, So terms ago sometimes lower a more I first have It's test some may And where of little it's regional as that your to we're question on business the attractive, be still regional, a rate on more part clarify distributors. a but year business. of time. withstand been we the get adding putting are for or make one and acquired focused emphasis again, not can time. can We're difference, that margins is But can which, dollars would perspective, it on rate business, independent that that little as independent and attractive advantage, focus

wasn't it Got you then the EBITDA talk by. very the I had going hear just question necessarily a to skating it was about just second you. was margins earlier common and EBITDA And that that about encouraging in half, forward, meaningful

and June meaningful wondering, large, July. have maybe the expect anything on basis, guidance, you what can July? but just half. Any factual the Since the So We margin obviously, EBITDA -- the the it formal in color those we're was like you'd a on what share on about about with talking June uncertainty, sales don't at and levels, in sounds remained back percentage

Dirk. This take Yes. I'll is that.

-- to just being I think think I asked, that Kelly it's not said about was and the I more again, And evasive share. with it's environment, change. lot it to to I as less think, a unfortunately, more continuing

the both continue profit we're the best in, see third we the environment more around OpEx forward. really to will stable with that the back I actions think a grow come But have and order environment the just in quarter and get optimize have at can if we allow and or in. go to the then focus and to EBITDA to we this gross we're in little as point, order to environment the improving, manage through the us insight the in stays as

distributors relationships you Got you. long-term grocery last depth the my question, more quarterly opportunities. retail. the during to of was And all that Those could maybe maybe new big the talking to are some just crisis, food store were distribution servicing starting there accounts last and on mentioned build sustained about lead from calls

the Just at is and future, it margins lie? those big of sales and wondering kind how that's if of of progressed, a part kind potential all, where if

Great.

this So again. is Pietro

the accretive, The our detail, store volume and It's in is Page replacement opportunistic from pre-COVID retailers, at small the sweet the jump The a it but of right? That's the restaurant, lower a where like retail, grocery more the opportunity restaurants, have the spot. who And grocery from opportunity. comes big for margin the The more that deli, smaller believe, the Particular larger is more talked independent looks traditional stores. line grocery on more facilities. very with which home number that and we driving part as the and some large like around is we that's I scale difference baseline grocery. provide meal in see good do. So That's we a opportunity big a about X, more sit-down said, right? little players It's sales we that in with shows of regional were green bit do smaller, part our was a opportunity, and end. of terms margin. making of some in some players to accretive what don't a of

no It's business grocery it's on efforts. That different So the development side. series of a time. some will take

the markets that We have some extremely that well, playbook inroads scaling we've is of grocers a home to couple doing across we're serving business. into markets where been make meal part what in regional the and replacement other of store,

from Jefferies. question Martinson comes Karru of the line from Next

much Just the being the that at look when in into and the we spike And of fall as by how dining? we in the expansion demand, think of is about go driven we and the outdoor that how winter? strength should independents

Sure.

or So some delivery. takeout it's for sure, driven outdoor by of off-premise, or dining whether it, is

it And indoor some, on all not contributing. up has are the restrictions but made those of of All dining.

a very parts, thing outdoor a different country. able take of new Florida portfolio lot Arizona, resilient delivery. other I the look, of at and say to not I terms advantage the In in restaurants independent dining impact bit the of you on, does look creative or going In not proved So would think a if obviously, being just of of have parts and But the opportunities. impact very is weather, some But again, it's right? takeout across country, there's July of

-- really we as knows to and nationwide I again, expect, expect I lot will that into as I which, volume go so a the of but forward And of that think winter, continue we move barring don't lockdown, one some forward. no for sure. for

Are do that putting that going restructuring. to larger regional health is into take then from is feel behind saw independents out of resources share a acquisition there the those of And you What it you lastly, just filed sales there? XX the this case and a smaller Chapter just opportunities? Or them?

of it's latter advantage taking opportunities. think of more of those I the

as think of some well, as the I decent but I size. or earlier said some regionals smaller are independents,

ones carried Some have conservative. that are have Others much too and over leverage, they're stressed. more run time the

the customers So opportunities serving of really, the exists. of -- really it's with where taking about advantage in terms uncertainty those

Next Saleh Peter question comes BTIG. line from from the of

seeing one that they're least seeing that to in similar about Are And guys among where seeing are the simplification optimization, something at cutting plate. Great. center restaurants? to larger lot at the much that. ask the you like their independent product that does , near how in and a focus chains, or of of impact something I term? the wanted just menu you We're your mix if

we're so seeing it. Yes,

talking the more field. move but I quickly, are suit larger now based I think following hear think independents on I the chains to some did of the what

allows think I of in be smart of in terms it's way a will more that business, to responsive, harder and restrictions at it thousands distributors sure SKUs forward that the buildings, restaurants serve. you'll terms of their carry time us uncertainty, their forward All to and where to right? in -- of tail when us, not to run back look, forced -- good you're a is go be

waste terms of for restaurants in for of waste, terms good that system. So in some it's simplify and reducing the menus, their us to good them supply chain degree in it's the reducing

or just what more bit in Great. you maybe a some us states as volumes more to And case some weaknesses you're of guys you some of of little tick the color seeing kind think up? recently up. regional larger volumes picked on give then case I Can alluded the guys maybe disparities some as

Yes.

We So I as weeks it's to I states those think some X fact X what longer or where referring more earlier. as recover. a I the as X of and recovery, states a opened have saw Page was think on chart is simple to

at country. those look that's at When on they across got Page country. some the year If the levels, prior each X happen you lines, earlier have similar just I for at and cohorts, market those across the a X, It's look of fairly started and they all pattern. to closer states

think numbers, I and in by some we're seeing markets theme, the that L.A., a New of markets way larger Chicago, us. our York, longer general And to some of longer. have taken of right, big big reopen, those markets urban taken those for are have

I'd the return my we're back recovered on and to suburban I think markets think mentioned rural levels. to first -- to the all more this I eventually close think last or But of some pre-COVID kind I have seeing matter quickly. still really of it just markets time of more before call, point, a is

comes Rebecca Morningstar. of from from the question Scheuneman Next line

about of you've able these in to chains? $XXX these on business Is with distributors in stressed Or talked how these with you some there. to chain primarily opportunities some distributors million -- win small also new there been independent independent business? accounts new win about stressed So that being business focused are

Absolutely.

So vary. they

But relative customers who platform success at may lumpier size on vary. just sales The of with what the the them and -- where tend a -- we've we little kind the customer directly to We might the harder our had point a serves fits market, we've this It's because done to opportunities on distributors absolutely, business. one have come of Some in are. more portion they so broad a the say larger directed think typically fashion. it's distributor equipped range come slowly, whereas through we've that on CRM we of is our force a Street.

and too it's to but across chains. independent think larger absolutely, So say, I just early are the opportunities

independent closures, of And in a so that Do be chain that permanent concentrated could do also, business? Great. possibly restaurant look you industry of Okay. permanent we're shift as kind at more more there be you think the out? that we see towards those how will thinking kind playing area. Or

today, different fast say. And safer equipped for Look, that in and as post QSR, recovered I you're off-premise a they're more seeing closed, of concept. of But shift consumers the bunch, there's a that don't some of this these larger the casual And close, different are customer a in hard where lot quickly environment. from reason felt The a the and this my right? not why -- A you've vaccine, to environment. fairly that or they chain I under may like that's any have know in right? mentioned bit permanent like reopen dining, eventually larger of independents lot resilient -- there's said, are a they of but types the the it's news, a -- more immune pressures comments, a segments little I more I to have name. location think seen chains may because

I think post that vaccine, there's hesitant think say to be permanent I'd a shift. I

like Okay. last the could, it to your question, at education if be clients percentage fall? Great. you if little was sense wondering My those early, -- of if may a have students you but look bit as returning segment, a have I what in I

Yes.

when been falls business a the minority other, has of other, all the talked education a portion the it's all news segment it's others. we've the about is and sorry, education the So tricky all for us one. really The good -- smallest and

bringing speak. sure a and decisions distinguish on all margin made for is sure have believe them And university close and serve So think, as doing, I material in to It's an to undue make K-XX, What The of with on too small early being we With as and us. the volume of that taking are half to college are you to then again, lot that are back K-XX. between we impact about making is colleges contact this College or on less we literally we're customers not. students very are inventory inventory and impact us. ability risk. thing without and those call. have know, we half those focused parents call and is for university, I on

Bryan from comes line of Hunt the from Fargo. question Wells Next

Great.

at will or number I you normalize as a make look basis? amount aren't Just any on to give accounts when as questions. us how an way responding is dollar can collections, of idea cash go there well days the two the of when do flow, AP just think you One, you fast that

Sure.

So it's One. twofold.

the think at -- third to I the we you one, over happen second the we look to would if expect take when normalization, the largely quarter.

when part again, repeat -- that's term. please? think I shorter it's of your -- And in the but you can you first then think

Yes. part, When at look first you in a you QX. the obviously, collection reserve Your made big, bad of debt, all

that success that and of receivables how million based remaining you receivables When reserves that on go I or collections to of aren't in roughly just some to recouping make part from of $XX permanently many customers. exact, reverse $XXX that the have responding million be You $XX QX on amount, guess million of of closed? and

a actually small It's you. relatively Thank number.

they team credit And of success. some and closely even a temporarily closed customers really they're that good for -- our worked and very incredibly just those a our or that limited operating some team So together sales openness. basis, whether having have had good communication

pretty small. actually So it's

pre-COVID teams post-COVID And are for each bulk that credit us. sure It's continue well we customers. So engage forward. even to as there of down. we're we to balance week, make go with those with managing closely to has go also, continued left even balances And the see the working what's

last then And question. my

You And is How July. that's kind in Best in school July tempo? the talked for granted luck your of include about volume schools, about year-over-year not hospitality a in change month, me. excluding in down when about and big month what's schools, XX% but case was of it of the you hospitality

quarter. consistent as I in the more running XX% if we the that down ended you think has pretty of we've look that to up in weeks you timing been recent kind overall would at there, been XX% range see Well, June

Judah of Suisse. Frommer from Next Crédit the line question comes from

we're things really higher-margin at maybe margin kind EBITDA Can beyond about you see then talking get Just then that, as do the vaccine. return wanted pre-COVID Maybe pre-COVID remind until comments that think comments. the to we mismatch close slide levels. timing We Is times that the of you're levels. in couple to that recovery I EBITDA pre-COVID in follow-up do did of kind heard again the just of I business. near mentioned, Smart normalize, vaccine. after COVID of business the post you that, of of level. quickly And a But HR on we're a a is kind the improvement? drivers Obviously, a Foodservice us levels. to

Group You Food acquisition. have synergies in the

us just margins? think you to to term shouldn't at anything longer So we show pre-COVID of be capping that your

I'll Sure. Maybe start, Dirk.

normalize margins close So the really seen generally, prospects to the an our earliest US what some with recovery that term, in characterized pre-COVID. ability getting to a pre that close probably that's convey we've we've as COVID say pre-COVID again, exactly of industry, the There's or for good Whether all I've and the say our this drivers: tried been us vaccine. Foods, to a think these say a important But you for favorable exactly the part our onetime close hits when to confidence to close. hard the eventual And But trying over were close have to at point. It's positive, a that really, tailwinds, we our COVID gets is and unknown. success is lot long what ability much term. of the how pretty pre we're for country profit at donations how at longer really it's our in to it's is to terms point. path manage levels hard to volume there's pre-COVID, a which of X too determined segments together, and the in the look maintain to and this parts to costs, that of and spoilers when by you that to

areas and as the bet the like add think all the is then from on your P&L And would of the only thing point on that continuing top but about to still will to of private of better drivers we Okay. I coming of supply on the we that the in think Also of efficiencies that those and to when past, time, both over preference do point brands, have we've revert. you lot of chain. OpEx of the gains to really independents trends operating drive taste talked I continued really sourcing about variability timing still things vaccine then a the across have for a things through offer whether lot in that and gross side like like drive believe -- been, our gains, profit and that and SG&A ways that, recovers, the the drive

it's more grow we margin, Foodservice, So dollars continue to the profitable finally, just to in have businesses and to continue do whatever going market EBITDA both you to expansion we the from we where there, we those Smart and made and where like we it's as that continue opportunity that acquisition the then grow of that. margin, recent takes share back And a matter the have EBITDA grow is that And dollars all where then cap. fact were it. adds the the the dollars EBITDA on think we historically. the operate that the to expect there, to that double most get business, and the more pre-COVID we that stores further then at It's than than external of what as we environment adds from the in we necessarily benefit broadline don't added we're get customers order to can in point

the on recovery to significant in, and So all grow opportunity margin. still dollars

of Reuter from comes of question Bank America. the Next William from line

I just have two.

mentioned as reduced this next quarter not be saw most you quarter. as of temporary. is will it that said the the sounds that down, much in The first you But but like you were SG&A in costs we

So I year? be about there thinking in guess of understand versus help back of the what SG&A you your can is we some fixed the half being as should way percentage variable us

I let's the think -- to come back that. Well,

our cost a to quite on expect bit focus we as to have. We continue

just in are I'll place, that put third quarter. reductions some not of temporary the an during the we something we think quarter continuing example I and like of use maybe for associates the pay in to have second

our effectiveness and treating drive continuing matter same the smart, that areas business be like we're through sure temporary make other So to looking fairly go of time, also continuing, again, but Pietro that are but permanent. and said, a associates want can we this efficiency where to it's the of, at at as more we

just out, to just and again momentum. positive to impact is exact vague I'm the that plays So I how the dollars, positive expect we but why estimate not fact that just to the trajectory marketplace levels the of if which can think exactly trying be versus not of articulating costs, knowing continue the as hard

in colleges And versus can education percent K-XX, big in brush the you provide business, of Okay. which then terms is strokes? just

look -- you split have across a pretty we the We're spectrum there. well when

areas of college we have K-XX specific don't numbers, it's across So each and meaningful from but the and the pretty university.

line The from the next comes Carla question Casella from of JPMorgan.

down only get You sort the commented there well? reopened Is XX%. some on going there a sell-through? loading customers, of you in the about as you're that's sense seeing Do if prepared remarks a sales that pantry your true

X of tell So that I the just that more of I kind right, terms to than had closing trend just truly sustainable the but pantry it your always the restocking the prior to was that how in the a mind. of little in year-on-year see weeks, enough sales much to -- you terms year of a number once which think in loading, week. could we customers clarify, of hard a performance occurred relative spare reopened seeing lot were gap closed, was bit of it's think of been question, we longest, greatest of there's you're And

no further questions. There are continue. Please

Okay.

both closing. I today the want thank So for this to second, genuine in few results a our relevant manage questions. for differentiation the all and for industry COVID; I second our takeaways remains the maybe ability the with scale and I'll leaves opportunity our with: customers I of outlook X third, started today positive you environment. market costs participating your all to post first, and share; stay you quarter in hope say words present to call a to our challenging and

the Have of and you I want Thank this today. tirelessly beginning good a For in of our who this, tuning day, all crisis. for thank associates stay worked safe. since please to

conference for Thank today's you call. participating. concludes This

disconnect. now may You