US Foods Holding (USFD) 2 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the US Foods Third Quarter 2020 Performance Review. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator like conference now speaker to hand Ms. today, to would over the your I Napier. Melissa you. Thank ahead, go Please ma'am.

Thanks our XXXX third Good quarter Cara. morning, fiscal earnings everyone. call. Welcome to

Dirk Pietro Joining after as some yourself provide We'll will fiscal the of firm the our me saw first call provide for overview as CFO. questions are prepared during take results details October. quarter on CEO; month and today's of an and XXXX, and third Locascio, question. our trends Please we Dirk nine well conclude. on our that Pietro the your your of Satriano, provide to and our remarks name, volume your months one limit

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

in earlier Our of Relations Investor morning, XXXX the closing time results during exclude earnings on acquisition. acquired presentation today's the to financial of period and page date accessed be we the which slides organic anniversary issued call this April prior from for release can the exclude our Foodservice, and contributions of References the Group website. of today's Smart contributions to Food from also the

actual during historical for these our the potential factors, today's to statements to filed statements. implied could Please SEC materially the results and our in XX-Q differ expressed with Form or are information, addition our statements. certain XX-K risk considered forward-looking In XXXX from call in made those review factors last those cause quarter's which

our presentation website. to posted most refer Pietro. to over in are comparable in as All today's financial to turn call we the earnings the I'll slides measures. the well release included will the appendices during as non-GAAP measures our certain press the call, on now Lastly, schedules on to financial reconciliations

Thank And morning, good you, everyone. Melissa.

Slide environment. Their get what customers associates truly have efforts they their challenging we summary helping navigate I'm to and X displayed on none. our in with like our we'll to all going been for an second I thank today. commitment this started, would executive begin cover Before dedication that have to of

by of remain consumers to out, ingenuity return the appetite evidenced eat country, restaurants continued as as over out that take across as to well the our industry the time. we First, and levels confident pre-COVID will of continued

marked improved, Second, gaining steadily and the saw market our third have quarter in Case a we’re business. profitably volumes share. improvement

to improvement actions Recent is Food Food expectations Smart Group Third, acquisitions of combined of our our in cost with reduction with steady And volume have will on I and the second adjusted on three. performed a the Group will improvement line integration Foodservice case his Dirk track. the in finally, with and cover our perspective led the financial the industry. the results marked point EBITDA cover was this that first in fourth Starting over review of quarter. and

to like Moving restaurants food visits at away compares from stores. establishments X, food-at-home grocery like the Slide chart establishments visits consumer at on to left home the

affirm and April, food recovery to XX% After habit pre-COVID. over will total March XX% visits pre-COVID food home illustrates away desire towards back that industry down consumer can home of consumer our pre-COVID you establishment food ultimately belief decades, has the the purchase has to were shaped from level home This and our experienced been recover the the As industry from of in that a we that establishment, from and away level. from consumer are helps consistently visits at away visits. stepping increased roughly trending late see,

this in the has drivers of One continues of been off-premise importance. dining, grow recovery which to

a compared in that to was survey A XX% consumers are this full-service XX% XX% off-premise restaurants, on able of June at to confidence navigate traffic As state colder in our of growth compared XX%. will least more that post-COVID in off-premise the country The be the we also for increase said the an pre-COVID. in last climates XX% call, gives to of recent restaurants once continued a us winter dining pre-COVID, month takeout months.

several also a known kitchens, space delivery. have brands past to we virtual seen takeout which on restaurants kitchen months by can embrace the way create their solely Over focused those kitchens, use new operators as and

hear and a build well we've air operators restaurant The open In way And trust some are the of operators the addition, a restaurants prolong purification and begun experimenting new for consumer well for checked UV tents, indoor to dining, about heaters mechanisms run outdoor improves. as has to are as looking closure with external operators even capitalized such and promoting permanent way some a to to low others igloos level. as ingenuity dining. environment rate as at lighting opportunities

XX% quarter, restaurants. in August types. Let's improvement Throughout of customer chain down types. year-on-year, was over as pandemic. most customer both has of X% to third result of independent Organic independents while of approximately a X% October chain we a industry independent a were go total seen When take and volume down was for you chart volume X, approximately case different is the including week now at the been last restaurant our and at and well across restaurant XXth case few compare The September the beginning and we volume line own year-on-year. case fourth to on uptick both see green prior to The Foods performance has been given chain organic to to Slide look into weeks, ending down steady the volumes, the almost remarkable organic we as the under have in the case just shows XX% XX% part XX% down our share. year, the that across the case early compared gaining US in volume an month volume improvement which the quarter of

year. customer as previously basis, pipeline new business last to the wins us of we up, up and of have the hospitality also also improved, business leisure had this demonstrating has as return remains profitability. new different strength multiple in commented the share. we of now spoke, in these business next an have rate the of in I as Healthcare across margins, to since as on especially one total we designated report travel yellow both that healthcare customer won picked first are $XXX designated discussed, on-boarded, to the limited a hospitals customer the by annual rates expect have visitors of to overall by Several quarter, million of we are the by pace new market we this business The hotel strong. with fully travelers some started we allowing for as new picked over geographies had win kind pipeline half of the end on-board healthcare to look line of occupancy calendar $XXX substituted have other types, volume fashion. line a This run to new grow gain and And is year, our And Hospitality on Moving has the and our continue types, on helping arena, improved. types. multiple another. million case has blue ahead across happy formats, contribution to good I'm Last business year. in the

have Slide Let's and share the factors a market these gains. led that discussion of to X move to

US X many it, advantages we over As has see Foods distinct competitors.

our The our first scope. scale is and

appeal Our US distribution national consistent like footprint customers particular looking partner servicing for to customers stable multi-geography who Foods. and approach are to are large a

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and been particularly has offering product offering times customers important shop e-commerce Our to are as during orders place online. able our extensive these

suite Business Third, value-added Tools. our is or services of CHECK

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already our impact loyalty products. comparable solutions featured new innovative leading more EPA-registered which to launch and Now platform, by customers pre-COVID. is seen operators. line approximately we not and also only distributor And that of we sanitizing features supported how we to analytics, continue Ghost Holiday growing ingredients Response has that many was differentiated portfolio This products of and by are fourth to to In that kits. XX% for to only Scoop, are addition grown of off-premise delivery. of helping platform. safe suited customers with building the just our and which such that sustainable that and the use launch but using than in used new items are terrific, The relevant have customer keeping has geographically Foods, the family this strong September, more how value-added our who of for proprietary was extending this are X-in-X with features that off-premise launched that Scoop, environment A services to focused does dining menu solutions with and the Tamper-Evident thereby their our in items dining Last the items not particularly items, great also most COVID dining. off-premise a products several create an on is new Scoop concepts allow new for are food their importance. sanitizer and as to cleaning causes more, our US mitigate diners. much this operators penetration the playbook, to advantage Kitchen confirms buying into including ChowNow both serve individually customer These be and example containers, we trust is COVID-XX, add that packaged including meal Holiday that more reach, restaurants to helped drive effective meals, customers Fall see off-premise portfolio products we virus perfect week, to keep current launched against needs, home rates

our Lastly, want on acquisitions. Page X an update on recent to I X, provide

trends well, the discussed the continues business we benefiting of we to Group's in the from As recent national out last QSR some seen perform industry. chain favorable play quarter, have Food

to completed went front, conversion. In systems successful the synergies without to signs Seattle also and integration progressing in On we are this a another hitch. well. Over our the systems early completed weekend, first we point the required and past of conversion enable the conversion some expected second that conversion market, systems August,

the annual we of and result, pace previously realize achieve original the have on up As to on most time the $XX COVID, we which this synergies communicated a million million pause XXXX. line, temporary of to run $XX made those synergies of are due in expect rate year to we of

performs Foodservice, capture value Smart look offering stores year. carry case the business The have economic it and outperform to delivered Foodservice to the mid-single-digits to changing EBITDA customers food-at-home of us cash target in open Moving allowed the volumes in are we expect last our typically several model. to business, down expectations, low the business shift Smart the some with our months to our previously provides. synergy with downturns comps and also to pace that achieve well to we over on to continue prior without as the public, The discussed. this has over and Adjusted remains

to of goal pleased quarter our announce stores store over I'll of count. of Smart the for is of third this beginning in existing now to turn I'm the opening ultimate our year. results. the the Dirk Lastly, discussion expansion it the financial a quarter fourth new to X double just store Foodservice This with plan,

begin on results. Pietro. taking where highlights our quarter cover like deeper I'll into dive X, to before the you, I'd a the financial for Thank Slide

highlight from improvement for the the significant showed prior the results and work we've post-COVID. quarter position business done quarter third success to Our

underlying saw Pietro This as the as improvement gain industry. of volume share mentioned, fundamentals consistent progressed. to improvement ability as improvement in our market the is well quarter we the case to attributable in As

Our the profit from quarter adjusted stable the improved quarter. points gross was basis throughout second margin XX and

our our returns We mix as profit our pre-COVID to continue and volume customer recovers levels. to will expect margin gross improve case product adjusted

fixed and we line post-COVID. the enacted will side, an permanent in higher of quarters basis, cost manage $XXX reductions we’ve continue receivable areas continue a reserve mostly of third the million in EBITDA we'll again reduced series quarter. business, second These as we a cost position with fixed $XX cost approximately costs eliminated collection that see outstanding volumes. back variable costs case we annualized reductions business, On the On strong receivable. corporate efforts And and account result, are this on by I'm and pleased in our the to that margins and from million further the the uncollectible the to office report accounts our of for business to

of reserve COVID the COVID-related quality $XX incremental sits million our Our seen began. degradation in have a account uncollectible and now at since receivables we not

XX. Slide to Moving

from decline were significantly and quarter, improved results lower of XX.X% financial for sales the combination customer quarter trough negative Inflation by the XXX categories. mix, quarter driven significant case points, compared which third by the we we the year-over-year for down in second year from saw in improvement Our XX% and was the the a the Net cheese quarter. to experienced primarily prior sales beef is inflation in net a basis driven volume quarter. second the

to Our and take expect points quarter. income points XX at improve. as year Changes the Lower inbound inbound network works basis compared XXX reoptimize to case and customer were adjusted for to higher basis case the inbound improve work gross but decline. we in we scale This year-over-year process, logistics resulted margin compensate of freight down inbound needing the our improved effect levels. inbound the volume reoptimization second of income profit our was and benefit in us and loss logistics product volume in mix from case lower prior the from the that is drivers our to volumes

mentioned, to previously remains gross expect XX rational levels. at I increase level pre-COVID the Gross customer increased and our to as compared a to mix Adjusted normal similar As recovers rates, we and points prior product more we case continue margin customer our to operating pre-COVID margin returns volume basis to the year. expense environment. competitive see adjusted

case We the despite a point basis from was this basis improvement However, a second XXX fixed increase compared XX cost point deleverage to lower quarter. experiencing year-over-year experienced volume.

quarters. line variable expense of with third XX quarter, the done had net benefit with couple largest discussed the cost expect were excess of don't the of land volume the while we quarter, with We points, side. in in, cost be In million our a of managed the in operating that we're reductions repeat the a factored to was upcoming work successfully I enacting the case the to cost on items permanent in approximately Southern we've which earlier. pleased benefits Even California. piece During there $XX basis to these gain a adjusted the extremely items on

fixed third but delta improvement cost shrunk in result This quickly if largely has a taken. from is adjusted the the sales notice, and Our cost would This margin. running of it again and Prior as in discussing percent annually. the our changes despite EBITDA thought XX, At quarter. volume. the mid-X% Slide minutes to is in our allowing us adjusted operating we've quarter, to remains expanded the adjusted adjusted our XXX adapt a mix which the our X.X% the with and helpful And quickly flexible, a of in operating I line gross range profit our basis you actions expense customer quarter was EBITDA pre-COVID. case margin, to points, is second be On to it to spend structure leverage in operating expense, is volume. is increasing trough COVID, the adjusted case difference cost in where lower deleverage between and this the direct few to in

our as case on of to expect adjusted level And an This network. help is us work organization continue operate line inbound the improves, in to lower be our adjusted EBITDA adjusted to expense pre-COVID. in post-COVID. The and believe, effect, than our work volume volume our adjusted the the levels. in of to helping freight we operating recover independent profit with we drive case margin mentioned, gross be volume case independent As I expansion our improvements. restaurant pre-COVID net will increase we profit reoptimize an recovery will gross at just And the side margin did equation, to we

XX. Slide Moving to

Our indication teens. we from EBITDA of dollars run is business. This despite within case quarter, million for model adjusted business the the exists positive of return do earnings high which adjusted the adjusted of improved QX included returned in third the shares we this to earnings both generating in volume a will cost calculations. $X.XX to quarter, an had the in preferred means quarter on that adjusted equity quarter, these EBITDA flexible Since for count second the $XXX diluted In If the earnings, meaningfully and EBITDA EBITDA quarter our net per annualized adjusted income approximately share. GAAP structure margin. $XXX not calculation, the the generating are the $XX third to and in another is additional EPS for Adjusted being down and rate, operating diluted results was positive on the net the we million share based been those income, of share were the be GAAP net loss for million $X.XX. per included for earnings would shares factored have third the quarter the When quarter. in basis

cash quarter in of ended Turning and liquidity. capital remains cash business we We a to the billion to had benefit, with expected strong reverse quarter. XX. flow billion second total a liquidity third working which The Slide in and $X.X third position. quarter, the the In of large on hand we $X

the this the reversal of third complete. of largely quarter, is end As

During the normal volume in quarter, support case reinvested to return we a and schedule. current vendors payment levels to inventory

a focused continues end X.X ratio, case debt to with flow manage experienced recover. debt both extremely the the is Overall, demonstrated on we'll dollars pleased We the our the volume do outstanding at through improvement in ratio leverage to current in our which and debt, the the capital with reducing in ability as we consistently I'm business expect net in In third flow levels, past. times case to expect and levels time, an reduce we reduction our we've our third case the expect experience from stands forward, balance positive, for Thank recovery cash volume. pre-COVID to leverage volume the and during quarter. we Over operator, case volume. at questions. remain continued you. and can recovery the the net open With to call now strong in the a benefits the quarter to made we've the Going up we that, return in as EBITDA cash lowering working progress line business we of

[Operator Instructions].

of question Partners. Heinbockel with the Guggenheim first line from comes Your John

in dig And that it quarter. like sounds would It things in I is that sort And you million, the $XXX go that wanted safeguarding? to two about that at safeguarding the run rate much a how didn't top-line. see did all impact Pietro, The the impact quarter? you third beginning is fourth now your of of -- how field did into. not

talk the in about reductions, You cost million $XXX John?

Yes.

Yes.

So the primarily been as -- did small aligning sales the of -- April, size in on the primarily We force the office. add more the on know, this, has count back the Dirk sales John, long-term. the and focus some make over customer force expected in back can reductions with you

fashion EBITDA add? a of as presents by you a and a result to We've not -- lean, reductions and of result, we we've also in made to higher as impacted bringing -- COVID. had long-term, by to result can mid large the learned we more as success have margin. long over Dirk, you in on more the of anything the customers, a kind so And -- want think market us. agile the operate will Dirk gains that And we've share as terms see in said, that

that just, John, a in again, the in that reductions a types quarter. do fourth And sales the were roles. the mostly year be the the expect here point, Pietro reduction rate we full happened back add, is mentioned on your at and of more just ones recent to run to earlier would office were reminder I Pietro

it a more think you and that All would synergy, million come rate you forma a follow-up, And be the quickly right, how returning no? $XXX pro synergy. sales And given fair? would on be come right. got Is business maybe profitability, basis as million maybe it the -- sense, faster back profit the sooner would the profitable $XXX margin -- idea top-line. that again, pro right, you given do a could like to on profitability seem plus to makes then think about forma, that than -- right, profitability, the revenue would would year think a When or before the back number you it

effect much that to I given that reasonable that hard with would your exactly volume it quicker. it So But taken essentially does a help would the on as is profitability. back is recovers, to assumption quicker. come But It's it John, point, profitability cost expect that, think the to actions quicker. come now, back into reasonable we've predict how go

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

a couple questions. Just of

and how more you're see bit like just as the First Foodservice Wondering if about the contributions Smart then some efficiency are could on trends on It strong. there? And performing another those the talk you costs Smart just as and improve performing little SGA. you that how bringing Food a continuing? question back and quite on sounds trend

and Pietro I add start as can appropriate. then can

point, I acquisitions, indicated business. the Smart as well quite your to earlier, as in. Pietro up for think well -- a To the holding environment they're we're some performing relative

Food of pleased Also, to move to continue starting noted, So Pietro better a for just at with from a better little part And which the business, begun the slightly to Food some their have driven organic Group, quarter, EBITDA were Foods, of the with and we the synergy now the progress we large a as chain are exactly the of higher in have the really From that successful than of a overall make that. you're right. business. decline conversion, second reaccelerated US business organic flow good Smart bit system integration in that pace was through. Group, because mix benefits sales by Foodservice, ahead than with on

business EBITDA mid-single-digit being prior in really some The the from well off and for range, reasons about. quite talked has of much volumes up Pietro to levels. low the down that year held not So case

profitable presents from from well So we an continue that existing highly what opportunities business. to as by this as excited expansion be footprint

in them strengthen of to our and that. continuing to and them build penetration both on to our with of both footprint today work continue and pleased we're So

point minor -- would terms of part Foodservice only The country. in we've to the with CHEF'STORE comps of comps in in much Smart Kelly, low different is with seen line the add, our is I X negative mid-single-digit that a performance very the

of goes reaffirm channel, So to kind of these channel challenging it especially the this appeal more economic of this the in resilience just and times.

And size just cost can sales that you've force sales just back Perfect. in the the tie contributes efficiency, And of as brought the as million improved, have how just costs you is in some the maybe now? of kind and savings? if to with just $XXX of that of where it much

Sure.

So to the up the maybe flexing variable -- volumes tried results case I million and things depending down is our the -- and one what is out separate reason we $XXX that distribution used labor start so that distribution is the and that from pool of different in the with on markets. costs are

order And volume. we'll do to to match in so pretty and active in been continue that, managing we've

would other that and where we've you the in $XXX as which office the place one main million that the that's area of lot. pretty markets order profitably where the a the rules, some selling we're is volume think around recover. labor to But improves So thing we in this sellers that back see case, sellers admin have moving we that talked reductions. are and talked we size have in and we But bring case, type to in and expect about I continues about of to the we've original lot as in from will demonstrated back the admin, past the a From back grow as pleased more bulk with brought largely in stay certain that, needed, sales.

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

to could teens. around the have in it somewhere case want seeing I through -- looks current you're is October maybe just currently. total start like more guess, organic it what week down I growth the you you if high of I looks XX, maybe trends, and know a with like, bit case provide color

we you've which more rising any COVID of if given in globally maybe that Just the curious And kind weather? just the are seen rise change here, restrictions cases recently, then that some see seeing Do cooler could start and and we recovery think back in the see to sort get you into of we fall of the we deeper U.S. some winter? as in step like in that

Pietro. It's

bit it's throughout So increase mean, before, it a the of see increase this that. a steady -- pattern, a the from the surprisingly. where kind of where slow week -- which -- from and the been fall, week steady little the in summer, slowed has was terms slow not after were pages I But versus could you before increase the it's and we

In terms headwinds would of tailwinds. I offsetting possible also I the thing head the think we is the might you positive mean, into mentioned, you that ask about

the think, I through, you walk let's mentioned. things So

in back, a Arizona, summer, time. and a bit -- a level the states, were Georgia, COVID is Florida, So was a the sales at But number increasing we characterized this they of bounced before primarily Belt they little and was there in a we is, the of wave looked for Sun than cases, second as there one the of what was we is things those was then what we did wave. did what found second and at Texas, what we higher step recovered sales bit back found of that do

COVID trend trend up go mid-term overcome and the just cases. kind continues So long-term the of to or

pre greater yes, the people spike. and even were in might they come than period back -- of for they they sidelines some might consumers So so back come time, then but that numbers go on

that's I So encouraging. think

terms indoor is can happen. parts think obviously, But country, not little talked that I whether of of about climate, think number about I I growing both it's there's prolong as or the the of a takeout bit there's and season. much in delivery. that continued In comfortable outdoor the make feel some trying are to diners off-premise more things And colder restaurants in comments. my dining importance well doing to outdoor as the dining, dining wildcard of a

There's restrictions place. last places also terms come the couple country a right, have still there's have that In that like you're haven't in restrictions, of place that in the restrictions off in California. week in of places put

of those across think have might I So portfolio the offset geographies.

So as that described. some as short-term, to be positive. what continues the the I you there would say remain of headwinds And many is trajectory positive think may medium tailwinds to long-term, I

color curious, Okay. EBITDA provide cadence taking this could me guess, we And Dirk, QX just the the looks then about was to a of asking of $XXX on month. be And a around step if because some high. by thinking you sort QX? back, I just should kind question so, I'm I'm seems be estimate consensus little or of to million how as to which curious I

Sure.

overall cadence in just all different. the wasn't the So that broad terms, --

You end lot volume little quarter. whole there's recovered add. to up EBITDA throughout stronger the have But a a that, I with beyond not as

I to in we the would to of the incremental as cost piece cadence out in show more expect nothing timing. as up timing of call little sorry, think the savings otherwise QX. the a other that specific the is, specific the quarter, But -- far beyond

of little QX. maybe sprinkle in running were you month think more we a end Is that about QX, by cost saves, fair? where and sort how bit kind a in So of of that's EBITDA

in customers, talked the decisions us good the -- make just make things. to same a ourselves small of and I that this share interest that in we're to it. really Pietro time, the balance think other balance gaining success to about prepare the the timing timeframe that things and few months, think for well of coming at you think that to large as but on are post-COVID ahead doing in there's and last order as up you so the to, seasonality to And trying these core on to business on for trying of we're that strong going would success few about this as setting help things the push But to really want way and very that's I know think about for on continue to had further some always when the near-term sure I think There's I the we've months mid-term. side. business,

Okay. this squeeze just If more I I could you Pietro, one guess. for and

pre-COVID exceed can profitability that optimistic levels. You're

the balancing right drive bit on you talk the that decisions I about the guess, EBITDA the on you're earn pre-COVID? depends, margins you of a look million company curious what you just $XXX this all business similar desire in thinking those in, with the and sort that. of you're how making about Just on focus the take that Some of margins growth, as near-term kind today. probably post-COVID would to brought Can to

Yes.

that as customers customers look But comments, large upper if we of spectrum profile in for business margins margin at obviously there are for portfolio. the the in or lower tried healthy, to in, had my customers to that So are -- customers. that we brought large of I than of quartiles small new in large the have in that the independents come you very allude historically the our

which So the customers. bring of we've terms we rate in very on those judicious at been

of talked I think the a about. The those that's profitable factors partner some more that gains. those especially are share value-added value-added, really market to scale, decision driving to with make the difference. with, the of of is some driving what customers think I still a provide, who those we customers, probably multi-unit stability make And of I local that's the to some advantages smaller do interest about big different the

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

revisit that kind the $XXX restructuring, back of get final off those $XXX that there is in back taken the majority Is on and on structural you of kind just And table? to companies some cost that Is you're off, opportunity question, cuts? you or Where front table? which cost investments obviously, any just that customer. you small off of cut of other are wanted compensated, to that I burner not -- That's doing a Are And that million? a the in I losing not kind talked that which type future any force I business, happened department have said case functionality taking kind you've some -- their just are also were of way regionalization work of the consolidations, the changing of corporates number of the maybe the of major the know as but as in and hit of savings, about office the process? know. broader facing there sales that via million the office, their the what's corporate.

of some the things. then with start business I'll maybe Pietro, some model Maybe costs, of initial the comment on you can

$XXX the I that, that people-related decisions making of what to being is out so to customer, we say on So service the we -- the negatively with impacted it ability our would I really think so that customer. But John, of million, most approach we costs. an took to weren't felt try balance

it cases, prior service fact, the in in really, is customer X to really focus more customers relentless, say, for would and In strive COVID in X some last we to inventory than months as I was that. in on fact, to more our investing levels

these as can we've of of in of we've admins, these through, different have lens if this some some gone think take areas, you out. across a you do because lower, it applied I there's some volume

through some using We to have our found some streamline improvement process continuous of some ways processes.

not of investments are you the as a and in coming maintain big So prioritization good top expense and cost still ability the we leadership -- their COVID. out side to very at future of think expand have of and are priorities and in many about structured, our but priorities areas about sacrificing feel way this our on the applied our

span. things. area. of table, they the we that structure think to couple move model multi-site are management Yes. a right that our other in it region moved areas things in said, us well. referring And the to served aligned have then to presence some We We're that you'll of think presume be X that's off or I very at overlooks we it. you're terms on of number, and we is, remember, XXXX. happy consistent One to the And a that markets, you've time with John. with Most

So with happy we think terms the years of a of operating work model. did number that in our we results that of and work ago, we're

how that more are the whether and you the terms is see if are the could rethinking customer the it's being of just served, on within could facing make organization. coverage changes any mean, way efficient? what territory of there selling managers the the also that that customer the integrated in how are the sales anything And business part just they're being or compensated I

Right.

years So we one is, that for reminder. in again, thanks team-based ago. approach The many place selling put

As compensation a couple to ago. we you slightly modified know, our of approach years

the that has consultants, where of, settle. restaurant particular, again, the have were that We we of specialists before that are who call So or through experts are ability are have compared on reach to right? those on in and technology. and focused virtual made, through restaurant, we pretty been able we already changes to operation they operations the been only the our are product, to make we have different then The environment is in their them really who and we've made, focused restaurant back office -- we and sure ROCs, specialists, increase this we consultants, want webinars thing

in customers. results and government persist, what a March a support, to which blueprint to back with better customer we do to couple have about, a some suspect or reopening with how especially So that apply everything broader much of learn experience in respect ROC or April, respect for people ROCs John. will with try able or to market is, specialize give we've the to able I best the to were as been in opposed one of to the reach,

experience You're reach able customers. expand kind the for and of to the provide a better

more the expect comes lot specialists, change is of product more on, it to hands I that a when don't on of So front. which

everyone the is That'd be looking a nice shows the schedule. getting back reminder sure that to on I'm COVID is food forward And over.

of comes question next Lauren Credit from Suisse. the line Silberman Your with

organic what been for sales customers seen the store and have restaurant decreases versus versus offset new by existing sales closures share case growth dimensionalize new wallet of wallet to customer acquisition you gains customers? extent Can on-boarding impact same-store declines of and independent net amongst restaurant share gains? So

So is market I great We're is around said, gains, recently get gains say, from share starting would data to some to of not try what that. better -- as I able that. share to There's data. been we've on come triangulate Laura, and the have market

I've be compensated, those had the some climates. course, off-premise as especially dining and there's summer customers, -- indoor some where have same-store to Of colder through sales the but and course, said, fall, of dining, remained the throughout restrictions,

your hard So with it's question. I really data, would be be a of hard would all I don't factors, it think think to -- that have there's -- different generalize and to and to the we to I generalize. know it number specifically respect

understood. Fully

XX% weeks. organic few like on last It the near-term down case follow-up growth. the about to Just looks restaurants

further here, the quo? I predicated near as the some gains you recovery felt So opportunities increases know near-term about largely continued most current environment headwinds. assuming we they capacity see the for you meaningful do from think in of is But are term, sales really on status Or restrictions?

don't So to potential the environment was as so parts the near-term next respect said, are different as country. environment. deteriorate, improve, And implying well over I X current time, forces positive I many very I it if headwinds as the to think Ed may -- X on depends just anyone there the with of months, know that may as

of replaced other sidelines, that the to just and the I new organic on habits and who some just in despite in And if those especially consumers other we we're increase to perhaps really organic is seeing medium to where environment, were. more time, is who obviously haven't there off-premise, consumer tenants. perhaps in the that on think what's are what vaccine go medium long-term think encouraging -- some long-term slow once -- consumers I the things. of the despite steady think with performance really place, steady encouraged where the staying amongst back -- performance We're I over steady the occasions would out focus over slow there's Laura, they that dining are is increase second what by the a wave,

performance suburban disparity and significant seen market. a in in urban pretty We've

relative So what's versus exposure your concentration areas? suburban in urban

appropriately, you to cover you shift portfolio some the growth. experiencing of or know a making when types of that, example more quantify And it's whether I are we're some the hit and different but seen well-diversified able of of a again, areas. to very think stock, make where a takes that like country have we've sure resilient, do, sure bunch point. menu hard, another they we're puts don't leaders that and it's that to alright, do more urban local but markets been different like to raise are our the sub-geographies That's offsetting I shift we

question of next Jefferies. Slagle from Your with the Alex line comes

I wanted to follow-up quarter-over-quarter points margin basis gross XX on improved solid the quarter. margin commentary. this a And

about year think which heading dynamics XQ there's wondering we the should pretty Obviously, our consider some we the faces this Just XQ, quarter. a unusual should factors is into in high-margin If how historically view? circumstances. any

Sure.

environment. see mentioned with margins, stable, as when they've think to earlier, we rational I I start and been continue pretty competitive I the a customer quite core that

something point, So doesn't at this consider it indicate that to as changing.

Like in to out I which that it I last than months. we and seeing that would think thing months mix as time, again, of differently from far nothing that the versus rates. called are said, but improvements the continue any improve But main expect plays more recovers. as the it as we versus in the it volume seen gross coming positivity margins kind And or as to health, run the call there's the historically this and and and that X expect is happens out would out to there. exactly, predict has quarters, have we volume core And we underlying happen has as specific it's quarter really and recovers mix over at the quarter to hard volume mix second that volume as recovers I happen, recovered. recent the QX call, as of I recent --

Do what opened of follow-up on on so the stores a idea far you like a in business. Foodservice look then XQ. pace have development couple It you rough like And into you think sounds a Smart the of the 'XX? will

on So we've opened those, one.

haven't will be more we that talked a specific about opened. one And We pace. near-term have

see us that the the presence over double opening the One plans the shop and in have long-term. earlier, stores, to for positive commented not really match. allow customers be integrate to to that you may year. who smaller in difficult of have pipeline the things be delivered the more those We're that And we from is the in omni-channel we've business business that the only CHEF'STORE do we talked there will working with more. also footprint get to incremental and is our past to remember, we of Pietro next are as continue do footprint strong as own And buying about our that

So accretive it's not front. -- it's on that

benefits the we look And see we to that to continue on expand so as to forward as likely well.

So exciting of Foods' as part future for Smart US family. Foodservice the

Casella from Your with the of Carla comes line JPMorgan. next question

can and I'm categories business, independents wondering, contracts that what acquisitions, the the changes the hospitality and gotten given key to breakdown are you've you the restaurants, either for like you've us that of sense versus made, your give the the of sales a healthcare? new percentage your overall

repeating mind that one more please? time, you Do

you stands the where Or it it's today, If the the independents? the it hospitality dramatically I'm mix tell us you out. looking still business changed business business and given can between healthcare? restaurants, acquisitions could much if break of new added, is you've for how and

Sure.

some there's also you're in shifts, at because aware, specifically, what well would point, volumes. I with haven't changes So say, we this though, is current as quantified

had So the shift been from for But time, meaningfully when we example, hospitality look being lower. and over to what expect the we at is wouldn't customers core we business you where expect that historically.

the mix little bit I business long-term, but think about a than to being hospitality where been. little about as is to you it's a recovering bit less taking recover recovering, with of over up longer than the spend would because it end similar the -- otherwise. the historically But the think just You

you as in sales to to what or said of restaurants? So are the independent percentage your past,

me So have I'm you trying -- is honest it that what to we've we've Melissa, said remember roughly…? talked keep about roughly is -- to here,

a about to sales what call all we to then, would And a Carla, About said of restaurants. independents, a XX% third to are we've also other. to hospitality, third about about healthcare third

be as would that as well independent So chains.

of question comes line Your from with next Bernstein Barclays. Jeffrey the

your to average on then And your inventory is SKU menus? quarter, levels? for levels customers Jeff your you've of sense whether maybe pre-COVID through customer simplified Priester their maybe trending have us provide? and This the they you back your positioning you any still or kind to Can not menus, it on kind rebuilt relative as of is of Are give just a you. management sense want other count or running inventory for running Jeff how second actually following you Bernstein. metrics X of inventory questions second, full do are to a per

Sure.

actively serve we're pretty, the running sorry, a pace far -- items DIOH. that levels -- invest balance I'm couple our little between bit the order just the getting really sales extra matter the -- challenges And striking cost service actively we're are vendor time, certain levels. And and monitoring. inventory of moving. in because we've because which what we some are our here, at the days a it's teams inventory So the different. on inventory And or mentioned have customers. managing the say, not to having we order earlier, of, replenishment of the product getting to product chosen in in that SKUs We're a higher I've I'd our But of we're inventory on as

a more, monitoring little different all So that again, not and closely.

know, that are And continue menus, for a stable risk you would them think scope their while running loss or will environment. simplified a this own inventory customers for for a in think way expect about I and your that's I I return to and we I more in manage until spoilage to a that that, think indicate does it question the them menus, more still to environment.

there customers whether now, taking update Got is the your not right are be permanent then on or -- deliveries it you. temporary closures? customer And any of of number that

level in what of our is to with single-digits. on at And will the but temporary in point, it's single-digits. some that of of about we expect, expect talked that and do have we sort the permanent closures So sort work of and we've some that closures of we the sellers remain being still -- the this -- -- them level

continue takeout operators and get over is time that point, things through that we've this very seen talked But is a trends. to of as about at that I one we've have with gets in they're restrictions think do about resilient. it appears as that I the thing as and few place. And are first offerings the of to different tell far general expand some harder Pietro how much a really ways it talked think now they COVID as as better the and before, delivery today the the of group, when we uncertainty entered be in some positioned operators through dealing that

John with comes Glass Morgan Your the next of from question line Stanley.

if back just I margin. to First, gross go could

quarter of around pressures by detail mix, this takes, related you year-over-year quarter, puts cetera. You change et details some various to what have Do helpful declines, last those sort customer had volume and provided the were acquisition those buckets? for

gross profit, For specifically?

Correct.

Sure.

So of and the the what roughly driven is, mix points, of I sales would entirely the so of out inflation. say by XXX basis combination it's impact

as an quarter this benign pretty acquisitions as the far were Sort impact. of

And the earlier, quite really balance, of is an and of is it backdrop across of environment. inflation. And margins so customer combination I commented those actually, really our the a mix and as it stable

but we've improve. the to continued as in So quarter the we've as positivity, third volumes volume that's recover. of improvement those the gives -- us return even continues seen the what And the mix, optimism across seen

you improvement think are do follow-up, wallet talk acquisition. your quantify how or primary measure can a you wallet maybe aside However seen of Some much customers? customer wallet share among that you -- their has about the a shares distributor to existing someone's Can sense customers. among holding perhaps then independent in new gaining distributor? sort share a changed in independent of the switching And have you customers just what among as that give secondary sense you wallet a share such you've

Sure.

recent gaining [blind] continue markets among national specific share we broad-based the basis, we share as more that gaining industry, industry And our data more does do So customers share regions team there across data. that in the And comment versus about, we sales, in that that to our not with is, the on Pietro that indicates in of engage the NPD others. gaining earlier, number, compared on but the independents. share are through we great independent believe the with believe about use Pietro conversions. There's also of the each to talked pretty rest a about a some data then the industry as months larger in wins customers our haven't And we space. talked with that we're are

Bank Your next question of line America. with William of the comes from Reuter

how That's if And permanent of seem of Are if relatively that the just you restaurant were X. about losses remarks, this openings talk from second have quarter, between some that closures? any about acceleration store this sequentially gross But you there did me. then see In I your offsetting an customer discussed to year. at be meaningful? and closures achieved guess, benign prepared you you I you've those talked point. could all [XXX] third

Sure.

I environment openings to that some there's that to adapted as far in QX, And nothing as out operating change meaningful in. closed in in closure, in cases, from think, any they a operators from were through many call see case, would QX we're that as the So we QX. I started fact, that

there. So do it's please? specifically your call second mind again, you out to And nothing question meaningful repeating then,

Yes.

was you there's offset losses those? question to new second if the doors, XXX any chains. gross of XXX gained And just then The

Sure.

think us, the of So I in years. growing as it's in is that It's there's about one cetera, that about earlier, that and with the again, sales, sales from for we're economics attractive years in had or pipeline just national wins of that And we number On remains when profitably and net the growth very forth team, strongest not million is of very a a fact, $XXX net that. the Pietro, And because these we we're this strong. our in team number, business has levels serious. and said bringing on taking with consistency so talk of roughly -- it's these scale, of the basis, cases. on our differences literally wins, bringing tools, are very, operations, sales have et some pleased just coming offset

from And final JPMorgan. of comes your line Carla question with Casella the

a I So had follow-up.

the cash X On -- side flow follow-ups. actually,

Do I'm actually wondering it. much that? assets sold? you your in to do continue you paying you you currently some slated the if You're for picking sold or preferred quarter, And and then what to time in expect and have more sale also that's

Sure.

was that's then and the then the is that and expect structured, to first we we're cash So through just the were way paying play I agreement on. would we one year, of expect pick post the focusing that instruments

cash The the sale. right the recent post would before things getting talk we us our over executing COVID and on flow the to continue of fact, as consistently of X.X acquisitions, we focused demonstrated to time we about is have really we One ahead. your X back through times, following that on achieved that which, and expect in when and to in I X delevering strong to that order move had point to use do -- to

left property future and was we pieces that sold we bought improved has ago. to piece from of an of on, at potential in property of piece and results. case, years And in be we footprint, cetera, time, the the number we in to kind et properties out need that's time and time and we property and would $XX it. our buy will time buy has So or looked called centers our what in had we distribution to gain operations from of We, the since the excess sell wanted we because clear so in order but that script it earnings was time this with thankfully, and sell particular had we sure of that million to for as in we the our or that a -- determined bought why we California market we make release, not ultimately do of gone gains excess losses,

There's given ones that far of those, on have year, many the As X there's your potentially I give typically, And mean, as a we wouldn't if updates we X. now. about market we in couple we just smaller progress a we -- question or expect. on have I move do may we have would forward. others? as have nothing

time. this no at are there further And questions

you. Thank Okay.

the toward think there, unfortunately, that, the call. I end right Pietro was kicked off

closing. So just in

have hope I you leave today's really -- takeaways. you Just X as call,

the return is First, pre-COVID resilient, levels. to industry just expected to volume

customers. scale want Second, tirelessly leading differentiation who that to in that I and third, this, second financial just of for associates to our And of our as the serve improved have reiterate company are pandemic from a market share our results quarter. all the thank since And our beginning gains. this the worked trough and really to significantly

joining that you call that, all day. ends Thank thank with and a you. So Have our today, comments. good for our

This Thank for your you concludes today's call. participation. conference

disconnect. now may You