US Foods Holding (USFD) 16 Feb 212020 Q4 Earnings call transcript

Ladies and gentleman, thank you for standing by, and welcome to the US Foods’ Fourth Quarter and Fiscal Year 2020 Conference Call. At this time, all participants are in a listen-only mode. After the spear presentation, there will be a question-and-answer session. [Operator Instructions] With that, I would now like to hand the conference over to your first speaker, Ms. Melissa Napier. go please and you, ahead. Thank

Dirk morning, Thank take provide to the call. question. Locascio, fourth firm to overview your and earnings your quarter Please and XXXX. after Welcome joined you. our our by We’ll one for Pietro Dirk questions Good conclude. I’m and Pietro today’s CEO; our your yourself an remarks year everyone. name, Satriano, results provide limit will fiscal and CFO. of our prepared

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the completion For is of XXXX organic anniversary year. contributions reflect through one-year the XXXX, results the September fiscal financial XX, the end from of which acquisition the the Group, of Food our

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

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

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excited and is Smart annualized in business business, with performing on We million to the business expectations. Foodservice also announced cash track $XX carry opportunities to the our in continues are and our we about the space. previously The growth to and achieve continue future outperform line delivery in be synergies

where brand the This to all You opportunity, presence. Smart in the entry also to To quarter. of sale, the acquisition established the strategic markets, delivery it this will CHEF'STORE incremental will capitalize for our Foods an recall, facilitate on Foods first Smart geographic US US drives we part will Foodservice is help the our into business. new locations rebranding rebrand Foodservice, of rationale has

plan our to XXXX Slide customers. coming a we pick footprint openings the to quarters, wins market recovers. to national in good Foodservice for $XXX close pipeline calls, four Smart three But existing into million prepare to primarily in the on geographies. prior ability XXXX. To gain of we For customers our years, of in are now pace We to our in open case we talked to market with markets. how XXXX, larger to in business transportation profitably recovery. like started of future X, new the customer increase feel hire warehouse, the store in share where about anticipation stores, have volume the with we up associates and I'm positioning the new we and sales of quick gain In expected as to we I foresee we larger do share the industry expect expand would about continue overview with that annualized as

model, would strengthened like from results, their our to of turn to capabilities understand in larger effective of to are curve future our the business. the COVID I lastly, have emerge discussed call they quarter a partnering operating our the our the as and Dirk, earnings customers a to several inventory with discussion demand over investing fourth and more how that evolution support position power our in business. customers seeing we We financial of of now our us also while are and earlier business. for stronger And I to

this reminder, quarter morning. XX before good just results results full contain on an while cover the few XXXX extra XXXX. X. year discuss the year weeks. you, Thank the and fiscal do highlights and we going on so to but a reflect week, a XXXX Melissa weeks for earlier quarter, Pietro, reflect full results our XX begin mentioned Slide our as activity of quarter fourth I'll fourth I'm thoughts

the discussed case we of in-person in and place conference COVID increased were in half in put on slowed at dining. cases January, as additional volumes the As QX last ICR restrictions

of successfully and January, on, of large in the that $XXX an although trends is we volume seen million in improvement have Pietro and restaurant mentioned. overall new discussed wins also XX% which We encouraging. quarter last customer We've onboarded early

product new resulting in in our mix, the pipeline meaningful on profit in quarter, third Typically, fourth with gross margin which and to from profit expect see not line we quarter. This seasonal robust continue gains. of share and based a lift our we see was did Our business, remains lift to some margin further changes that holiday we to events. our year, and parties rate win gross

QX basis on constant our our expenses. quarter third expenses operating a compared Lastly, XXXX XX-week to increased

a estate reminder, from third quarter non-recurring real million gain. As the benefited OpEx a $XX

and During quarter, experienced higher costs. the fourth healthcare incentive we also compensation

fourth not we and an QX. to not cost more who normal side, able cost schedule healthcare than quarter, increased typically in the On in year, in chose increase seasonal see this was did procedures increase associates so as the the or year's are the earlier

incentive in compensation costs plan the quarter. On XXXX, comp developed for in costs revised that we incentive a additional line quarter with Distribution mid-year the was resulted QX. in fourth the side, some

Pietro to of first in half XXXX, delivery the increase we and warehouse we to the ahead costs recovery. noted, However, do distribution continue as in as expect hiring temporarily increase of

and with to increase gross was The quarter QX sales. in were exclude result discussed. decreased eight. range. quarter, to OpEx, XXrd points contributed prior increase XX from margin and quarter comp compared did year. XXX sales versus week, profit primarily net Adjusted the Moving XX sales, prior prior quarters line point I very basis quarter QX Sales Net QX not the is fourth percent factors have QX, inflation operating profit the about margin X.X% from extra quarter a expense Adjusted to the fourth in X%, year, year, gain. similar our the to XX increased margin past in excluding healthcare seasonal adjusted from the manageable QX the which few points sales. basis prior gross QX net The slide fourth gain, incentive for was week the the as basis from fourth remains QX, approximately similar the for the property you of for change a basis year as to I ex of property when Adjusted in improvement, to the non-recurring the typical our in point noted earlier. in the

where you gross our On the we was $X do for case the COVID XX, $XXX restaurant I'll case EBITDA impact and as gain of and profit recovery for primary I and in OpEx case When will estate at uncertain, to and to the and I'm the Adjusted and items mix quarter. As the recover confident remains the week cases approximately the transitory. the our this the and how remain expect $XX slide lifted income the negative million We expect million quarter primarily real Since current in adjusted for to million that guidance the to few a $X.XX timing OpEx just net third third volume extra quarter, time, fourth extra volume of to expect XXXX. This the quarter. our be discussed occurs, was recovery, spend fourth we're benefit slide the we is fourth declined EPS million restrictions nine, noted. Pietro present improve recover. the the week. to not in the minutes decline, results impacts of exclude from $XX providing positioning our deleverage vaccine XXXX. distribution financial on the compared recovery on quarter, quarter remains business our including diluted expands. as outlook continues adjusted adjusted financial was impact for on the due significantly volume negative for results focus improve are for now EBITDA we're

Food on the XXXX. of for for were to synergies We're Smart Regarding synergies achieve the XXXX. synergies, by the $XX $XX we track we targeting full remain of end million synergies also and of achieve XXXX of end $XX million on million did track Group by of the the

with remains strong hand billion Our $XXX liquidity. on million of liquidity $X.X of and position total over cash over

the The in on reduced recovery this recovery normal balance use line takes to our to revolving sheet investing the business largely a and is our outstanding of strong, cash years. we remained we'll expect debt. as remains cash debt. XXXX, And and on The be focused coming are the reduce items we planning business to capital the operation Our credit Delevering undrawn. shape, in drive our more growth reducing excess XXXX, of invest in slowed we we in these our priority capital business. In to of resume paused to addition continued spend those will on essential last that and of our expansion the projects time, technology to spend, level At building to focusing or platform. projects year shape. in help continuing the takes resumption a as flow

Moving to The we our across business. during took the actions XXXX have strengthened power slide earnings XX. future

large continuing on small with are share across focus profitably business winning new to We and customers. market wins

to of million with the post of our permanent, business EBITDA largely as COVID. combine recover, operate volume the customers margin be case our likely fixed most and is to gross improvements $XXX As we expect expect cost large improve will with expect our we profit well. This due a higher small to mix. in we margin When which expected this you customer reductions, a

now generate open the that pandemic will resiliency Finally, to further continues and to $XXX XXXX, of earnings the generated a business. Operator, can of questions. We impacted the demonstrating cash flow business. of our for be even we the strong for used future debt business over power our cash million call reduction operating flow fiscal in improve

like may Suisse. Thank have [Operator this to from Credit of time, Our first take Silberman question you from you. Instructions] today. line Lauren would the At we any comes questions

ahead. go Your line is open. Please

Hi, thanks the for question.

now that a across and growth growth you at your do strategy opportunities in about share new you wallet relative the expectations the end see Where thinking meaningful post-COVID how expansion, M&A? of can the era of to most So light composition business, share with the tunnel, the you're today incremental pre-COVID?

Sure.

strategy important well, point sorry, we've we -- terms for So as said, ways served – we in remain the the has our many and many restaurants in anticipate and customers time, focus us growth, so target of over the strategy the an In both us. developed types independent ways, and I of Dirk. to it's capabilities talks where

As of we've to thrive post-pandemic – a menu geographies, to independent But believe, will era. suburban. shift prior talked small types, perhaps about of within we in there's urban restaurants, shift a micro terms have in terms calls, in that, continue the in

served talked our looking we've an being larger terms of as increased closer for associated recover, segments. probably other And healthcare they about, opportunity to past. we motivated these the to established being by a have, We as saw of to and customer by longer profile of more customers. two those on emphasis and the and the some taking compared were customers, terms to margin healthcare in types expect as attractive well This customers recover then was hospitality bit the we in little hospitality, with in compared probably

growth incremental opportunities forecasting kind pre-COVID? expecting to relative today of what any there Are you do or see were you

large is the probably as proven the pre-COVID that the always pilots fertile business. core cash we which but business of ground, a with consumer Smart That's coming of will growth. carry, some we an a and third some the of into exposure grow that more kind We've presents that on foodservice side acquisition think what historically for which the the then not That's helped opportunity accelerate It's to advantage to country, icing business. of more side higher-margin important relative main And business. Obviously, consumer of on across positive and customer channel about the carry foray pursuing as the I've So of channel than comps our is of growing taking business seen I that profitable got talked has relatively helps be It's that promising. an retail, we've look for And cash in. couple that stick, about said keep is Foodservice, core I from It space, retail, of than quickly. growth. the kind opportunity. And profile share that think we've thought the has to talked reason to things the cake. we've that going are and wallet.

much. so Thanks Great.

comes have John from of line Ivankoe next from our JPMorgan. question We the

open. is Please go line ahead. Your

A you. Thank questions, Hi. I think. of couple related

about, there's of to But this kind different of restaurant to specifically share you terms seeing can that mean, southeast terms terms far obviously, in within can summer of spring in percentage volume, quarter. terms There so basically the restaurants is example, rate talk across back guess, Dirk Okay. green independent of Thanks. the seeing talked basket back or We of a the what many the so markets, when run or very the indicators in in independents. count, we the restaurants independent gains and we're in think your for we of addressable outlook leading are being questions some that promising market better consumer not going give of so rate very independent will there. numbers I : market? obviously about saw terms than guess size, and First, John And your is we're month that even the of then if seeing of -- takes? you shoots come markets? January, desperate of part – December the they're defining the where of the are the in ways that, – fourth how is. different business those only middle I the best are are northeast you exit the of fourth can quarter. in in state And secondly, headline out light U.S. tie together, vaccine an or for – the in related. come – I'll of than the shed softness, that the addressable softer mean, And just saw I but we're What in terms than you because customer Foods as February, what of December, how kind California, to comparing or in just is maybe you're performance better the two trends is year-over-year use earlier January

you driven kind happen, recovery, of, the things So your continues and of some to question. mentioned by that's in the

with restrictions couple seen year regions, to dramatic southern last of markets had levels. over restrictions operate California Some as a those Then close both the reduce reduced. period. fewer And the pretty to in we've we've quick Midwest, continue sales in of the have restrictions and intervening regions, increase a very

impact despite front at They So lot potential see federal has metric had amongst we government And yesterday is the the owners the progress thing continue as see the horrific recover. last we're the would independent of weather, things And in horizon. is well life. them restaurants as give the of the geographies on on independent recovery we a the and December add Chicago, snowfall different also I the aid to vaccine. helped perspective, a Good have on jurisdictions, from restaurant new is from lease a the end seeing positive. of sentiment

outperform comment sources. what? kind overall what is going are take you the share then kind on of to question, high-single down of the I can think on kind I It that digits? XX% the independent you think can higher in ask ask restaurants you And industry directly. you be is I quote you number? this, or some think smaller of on year-over-year you Is certain restaurants, can XX%, how if mean, mean, you I'll of on – just use the in end industry? even much it down it a independent, numbers just is a to are but other do do decline it perhaps obviously, at of number very it or honing is And can the certainly

Yes.

to know certain. know we honest, be I don't for John, So that

and our ultimately, the expect, in continued So we both share sales, as recovery our of a gains. result

At may precisely can't amount you're independent restaurant a I be what say been is account some have think just to, ball very – pre-COVID. We of well – we we quarter say as for business referring it some period. point, lower be. to the count, it restaurants crystal same don't expect will number The for to what

I What slightly in in about, talked future. what's anything is published is, terms being like think actuals our count as we restaurant prior a forecast. lot the down over year and forecast we've is data not of see of of reported as nearly what's

So we for for think our signs are of the what recovers there pre-COVID and ultimately recovery we healthy it was to a fully think independents, business anyhow.

Thank you so much for the time and color.

Yes.

our line next from question Bernstein have from We comes the of Barclays. Jeffrey

is ahead. Please go line Your open.

Great. on the One, following last on the Thank much. thinking you but side it your side. Foodservice just one, than very competitors from Two distribution questions. up guess, the more customer about rather I

Just the wondering as to you your as on primarily opportunity gains about opportunities cash, paydown? debt on you competitors, you there. side or share thoughts some for a thoughts as especially or about excess small get could landscape talk see there, – you talk any follow-up. your And especially the M&A, just and you're that mid-sized the whether presumably, and seeing and of distribution for share sense trying if one then, closures with I'm backdrop, not foodservice the

Okay.

of talk your question about part to let of talk of I'll return I'll competitors, capital. state So B the Dirk on,

competitive a in landscape, been hasn't much change the since really summer. of there this So,

we also back basically, call, coming our not speed you the earnings players. recovery, the if think regional you we of I back, go some us, If where and summer think, showed right? how all of That go shakeout expected nine to but smaller just from benefited back. has the regional competitors, and months, quickly was growth I more smaller

more we because the hasn't I it potentially that that's than industry just the has and recovered happened, has. So, anticipated, shakeout think quickly,

may tell gains, for larger couple they've Jeffrey's for know share regional accessibility not our exactly smaller it just it in come we those across of I've see part reasons. come it where One makes about the typically the And When do easier country, to customers share talk operating where comes question? of to on see second hard is, they a model come when it's an want the larger do from, to Dirk, players. the from, those standard And players to Our wins, as gains customers. they smaller business. to from. you customer comes the street, that said,

Sure.

So I talked our think, is acquisitions we've about we've two on before, focus that done. Jeff, the as integrating

haven't has been et us where haven't I And or cetera. of that to to advantage team going continue challenges hear offering, of even inventory in our what think, staffing And would operators of strength, focused et there et of that or focusing on still different been cetera, teams our because share that. to those out opportunity be challenges, the that taking there's still fallouts, been gain really because we expect there business, seen what can about And I areas we've open though, an on many closures outside locally to. buying product our someone, Pietro markets is, the door those our cetera, commented, sales distressed having are may customers.

growth are organic so, two deals our it's And of primary successful of really and that integration the focus. combination the

guessing, well, recovery costs talked the sales a with the guys -- to ahead of about guys and you weakness follow-up, a prepared And just some on I labor of think point. of mentioned, I that And I'm it aspects. seems like And are mean, elevated remarks. you just Dirk, variety it. the inventory, specific presumably, in guess, your your you now, exact are as Got challenge peers short-term. that even in facing. And as I

that, about but quarter or the EBITDA, think So, recovering Thank the the how costs kind sure wondering, just yet, assessment half the want in year, should the fair potentially. we and mismatch whether are of of this it's some in you. timeframe, to of terms make that first the quite I just sales that's magnitude just of we're sales a aren't kind where I'm high. of unusual

put Sure. existence. it, It's I still a the the of And right. that it's of unusual, closer. is Lauren you're different think, through where the was end managing challenges year, a But, kind last the as now, than of are matter in at tunnel light it

it's for managing so recovery. that And

next a across And little the up a know overnight. of result, that so, we quarters, as teams, sales far supply couple because as become can't staffing. as And and choppy our likely, bit staff and sales you chain

one diligently also the that planning ahead. managing So of those for but it's today, we're

recovery. But would you the what it's see depending likely operating the cost you half back, But first comes that we the volume I to structure hire like. for it you year, be as prior volume we on took. as would of expect, lower so, I the least recovery actions to higher And ahead would exactly, of expect than would the costs, be And know when contemplate hard -- transitory. expect that looks different to was at our

you. Thank Understood.

Jeffrey. Thanks,

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

Your Please open. line ahead. go is

Hi. Thanks, morning. good

First, independent the suggest those services stream food guess the change distribution other probably could those you that is talked offer you point? relative you on be some services. at independent importantly, independent about along business the services Could services others, revenue embrace ultimately some more with just maybe this And versus views, particularly I how offer there's value-added Do have would restaurants, and stats perform that think those that ChowNow, that I that in to the a restaurant of space? don't? business, a you restaurants

I we've the with the faster, And in closure reopening the was permanently higher or temporary much was the services definitely that rate, rate about or talked year; higher in lower. it retention, retention the how case those So much higher customers basket in ChowNow -- say. a earlier was whether and/or typically should the past result

the money that before. increased think make and razors blade selling part size, make the terms food blade like of analogy sell I've by the old I In of your how more food and day analogy. this money. We the every basket increased is B It's on retention question, and used we fact we

We this passed to at on haven't, considered. And, are operators. the obviously, point, costs

a haven't not revenue we So it considered stream a profit but stream. making

month. seasonality Thank that in a the I And February is think year would follow-up, of a March? March normal right. versus the different All sales heavier just January you. and on a how volume is maybe business,

first the much the how you change volumes question And, not just though, quarter the even on obviously, the given March seasonality So, matter may I is of for -- current given of the there's guess, lot a really in trends volumes quarter, to really expect the anyway? business? dependent

take I'll that. Sure.

a were tends tends volume see but You're goes comments as up on. it And January to is right, to it ramps and quarter that's why lower our we be early on. is January positive it still so the that month in to measured

is that as be see that out positive widespread March So still in important. improvements January. the But February, will saw watching we it to play

Thank you.

Thanks.

comes from Edward from Fargo. question of We have line Kelly Wells the next our

Your line ahead. is Please go open.

And a Hi, guys. QX? QX Dirk, I off acquisitions the quarter, provide seasonal guess, morning. been sequentially Could versus gross QX, Good this away have and we impact of go January what color in that? I'm And in much performance, should to bit in margin curious least more the you the any around case then loss just that so on February the better was at of improvement, trends of growth just of see how some start impact does benefit? also

Good morning, Ed.

that lot a packed into question. You

about in we're it level December, meaningfully very a positive about we part upticks as it more meaning -- restaurants. And talked and the so that one is haven't again not I it's they've of is a that different places think but levels, seeing meaningful not for number at talked than saying, seeing more is have also are it early period, is we that Pietro specific so have again those were number widespread. on it but fairly with a restrictions reopened. is in the especially January, we because As better

continue. they acquisitions, haven't And a so there, as piece they a impacts specific positive that we assuming overall is quarter fourth talked we so, and about as you see impact, are And increase. When EBITDA the -- all those were the margin margin but we from business. think seasonal ahead, gross predominantly that positive look do very modestly where an

less impact So quarters. the other of is it an in

in what exactly on margins the a on looks depending mix, which based impacts speculate to do recovery biggest what QX, been has hard it's so like QX. And on

volume reduce confident as improve over impacts do time. margin and we back, However, that remain gross that comes therefore mix will

follow-up a EBITDA cadence just of then related the And performance. Okay. to

the the prepare expect But cost need know reopen. EBITDA we made that get to still to investments be I better, to should sales cadence there's as over So better for of be EBITDA And So March? sequentially than top of better better December's? or expect the in the was do February trend for January's sort instance, if next line we few continues, months? improvement

Edward, volume so different those the EBITDA in base I'll periods. things different of out a point months have sort that few on of is levels that based so that, on fairly

tends year. most of month other the to the example, So than volume months lower a January, be of for

as So it's cadence a not straightforward steady as up. just

we volume predict in thing what think different linear. necessarily parts the isn't through seen I to so in cost is that and operating harder the as what because is that impact it's of we've recovery look earlier year, geographies the far, is the impact other exactly

opposed improves, the And uncertainty But exactly -- just to trying thoughts that of we in cadence so vague depending and that, because of EBITDA. uncertainties to just we on clarity do the to volume as there's improvement of that be that leads some as like, what will about see lack expect looks

Great. Thank you.

comes We Heinbockel next of question from have the John line our Guggenheim. from

is line go open. Please Your ahead.

you what now But versus you So the from you customer Do to be the roles significantly I greater? opportunity, me recovery. do it think the XX right? of ends, when investments about, size before. months existing speaking, Obviously, was think Hello? guess the types going And right? think Magnitude, to invest drop will about drop and post-COVID, want XX, recover where are people, the it size, it's in Pietro, start with let drop you particularly in. size generally think you force, then thinking about when how you the sales with opportunity

apologies for here, am that. I Sorry,

selectors, talking the right, So it's John, a in as you and as of terms it's just about. it's drivers, about – investments talked reminder, were also we salespeople

– terms way In to were where of April. the magnitude back reductions last of we we part the of pre order made it's

come that been And more to some clarity as greater back, volatility just now servicing customer we in the will involved, ago, So, as given one on with paid just We're of be has have demand. and way COVID much a well. ago, years from than are days it, off there's years that and but both might a terms just right, these way that with business managers challenges couple And pleased well, a so very remember, has – you in there of it's it's front business of continue new when back. not new that because investment service again, part nature of as sellers the and we managers the the – the for of all of in couple of investment have we'll talked us. been the recovery as this about and

In share higher us kind execution that least our drop importantly, wallet, customers terms sizes up over not our size at redistributed. all on those supply is of grow expect chain could fewer ability, it we earlier, talked that economics. to there size, I if efforts time, serve well high, drop grow improve obviously continued than push set center our our of It to of pre-COVID. of our produce I was and would the come of plate being to more and drop as and about maybe have in which be improvements wallet higher, think the demand to from share But fact

back pro right, to size sales then, Is the if and that fair profitability. that longer-term or about guess, the think a And – cadence you getting cost back think a drop still it when the forma the be it to is takeouts and be XXXX, I Okay. follow-up, of a as increase forma pro because that right to in it about too could quicker? could quicker year EBITDA to think as year hard much tell? you And gets as

Dirk?

Dirk. is this John, So

about tell, is the and the I to opportunity of expect I think to too way reduction because right way it that year we the that thinking definitely it that we think last you're about would advantage early think of is improvements sooner be to cost it's it, but took drives.

on exact as that I both that depending I of the wins and that. the taken, and post-COVID But commented, Pietro timing, business share be on like, think successful side, the both looks business from we the well we've to will the new drive top a and as feel, from very do positions line what actions as well recovery really because growing cost world. in the

Okay. Thank you.

Thanks.

of from our question have from Saleh We the Peter BTIG. comes line next

Your line is open.

Your line is open.

new in to increase you employees year, of to a of understand how to system that. we're how these Is employees some the sense quarter the this efficient wanted mentioned involved be versus us the second behind and something start give more I half trying you're of to second employees, to understand anticipation demand. will get or or the or see speed. Can you. back to these up efficiencies going employees? how the of ask, trying much rehiring that Thank hiring just to in or drivers Great. other training coming are Just many warehouse the rehires and you in to efficiencies

new we most be expect increase especially it’s majority centers. begin our So, supply across hiring the chain, individuals because we opposed again, really that them distribution these hires, of roughly would as of to back, to in the as bringing spread to XX

same a the this sales not rehire the -- similar, individuals. side, them we talent an for move most so opportunity reduce also is as ahead. and On of It's

that's of typically, So ramp-up. why ahead are of months, these part is a there because especially the it's we in to who this a are earlier in of individuals experienced sales. But hiring, important really very side, get bit sales on

from the likely through you timing, hard to So productivity I your timing, be to but to our that, that we think would combined expect question depending on ramp specific continue up. it's the exactly, programs, year. internal ,as ramps to those know associates up with them progress on able

to decision and Any when more expect costs Great. those? benefits CHEF'STORE? the around And color should you just to -- the bit us to of guys the we are a can what just expect Foodservice little you additional give Smart see and rebrand

Yes.

have re-signing. costs of A fleet So refurbishment the one-time absorbed lot or the terms gets maintenance some retail that of stores. in into budget costs for of kind regular are you of would

not about into we into just I carry. talked made when at customers, acquisition, we customers of the In and ability your the the now tap to new shopping think existing benefit, are tap cash terms

about of from business suspect, our how who strategy. as of, our call talk what the omni-channel shopping an share saw greater customers of one result plus equals in also we the one You where mind were CHEF'STORE -- we delivery phenomenon, we effectiveness three increase a and our

So six and and customers by of rebranding, in the from our the experience at something in we got, customers' equally ensuring also by direct make advantage again, south. sellers We've market have we've our which learned incentives with that CHEF'STOREs take the is time, minds. that link same to appropriate the channels, more both

or So will show we of that these we things enhanced to It those over a channels. And continue years. stays time the matures lift that incrementally you time, see timing, lift, over in kind of up of lift. -- for typically, terms over in when do an of time, lift growth period a -- period but a of revenue those in benefits get terms initial

Great. Very helpful. Thank much. you very

question the Bania next have of Kelly Capital. We line from our comes BMO from

go Your line Please is ahead. open.

the behind to that? us if process understand motivation that about expecting Hi. always -- changes made, the you're hard impacted know the I Good talk the quarter? help a little about compensation you from about much that on changes a little call, you but the if incentive a you talk thought it's that? was and how curious bit was bit just What morning. wondering could more can I

that's second think the in the expect the So as -- and broader it's that rewarded incentive straightforward. as you would for profitability. sales just year create of headed changes and we of half year, these And imagine, second I was for what really were an level the that of the of leadership compensation Yeah, incentive did terms can we company. the into the that you half

last falling that and just expenses, feel kind assume at also how cost this that's the line? long-term in just point? you've of we any being a And the on should realized execution of $XXX thoughts bottom fully, quarterly basis on about you quarter, the to And potential of, the million that savings really of identified just Okay. terms that on

Kelly. Sure,

the to that's yes, way think right So about it.

it is So it QX. that rate, in -- full run is in would the be in

sellers unchanged to fourth that we in our like come QX to But that be in through and quarter. expected remember to in QX, to our wouldn't saw a we that we to as position adjustments I leadership we temporary as what it do offset being example you as place have both talking the talked some results, furloughs really you is reinvest to we're back like normal part that. bit when the about growth reinvestments, actions truly savings QX, areas see As as that Pietro any seeing well time still that things really resumed enhance was talked definitely or the sales the of incremental expect QX as and in you such and in that primarily to In of were about because enable our is digital $XXX why in QX. the million were And pay continuing about majority things expect expectation that continue it of in an -- and showing some in was up. permanent portions QX, as over --

Thank you.

Thanks.

from our of comes the Alex Jefferies. have question next We line Slagle from

open. is line Your go Please ahead.

A Good follow-up a Thanks. question. morning. previous on

to could meet to staff comment up back the drivers demand. ability on your in you If warehouses and

And enough to have able as being for was as Just if if pool that? it XXXX on maybe if staff you anticipate before. not any labor any on employees actually the is then view you potential thoughts quick deep of inflation challenges and dynamics up

one many staffing of terms side. in are of it. markets where of we some far, wage And an has the drivers, markets, seen we've question, to why inflation not we bit the factor communities. enduring to up, be. factors. ahead hard the experienced stay seeing an we've will That's obviously, question, trying some in a are that the going we impact reason reasons because say, There which, in so of is now select to warehouse It's We're tightness and on market. primarily been goes So that's tightness still in get I'd the well-staffed we're volume persistent so the which or are of as it some well-staffed important markets. in part to is want little say how COVID

so be will what be point. whether And -- or be, to that impact will this and how what the impact at permanent wages it's hard the on will impact say

We seen it quite haven't yet.

Got it. outlook? And any thoughts on freight the

it expect tightening the bit more it again, a see similar be tighter continues XXXX, you'd quarter. part market to least. And be a to earlier On a quarters, freight in tighter market. through of the little to recent to I would fourth at outlook, the continue freight

of really vendor that is thing while logistics that's to to teams we're other continue and the our even network. work doing so – things to one continuing The partners happening, optimize our to ways find with

we'll we'll tended as our say manage say what you've volume to can see well what to over in. pretty The less carriers consistently it volatile if is continue last thing, more find tighter, watch is also, in time you way I it would effective is and in multiple be cycles, look was freight over when the capacity. that, fourth the We add gets we is think is, as economic recovers I quarter. than way on the that

impact as when, watch well. are the can meantime, it's case, our So combination repeatable the that a if in pretty been of but But and sort the things time, know we control over this of on. that we'll to focus things within thing own we'll harder in has that the so

you. it. Got Thank

All right. Thanks.

question the next from comes America. of line Reuter We have of Bank William from our

open. ahead. line Please Your is go

have just I one. Hi.

seeing gross year, margins In how that food you impact your what timing do may your may this for the you for of when throughout inflation, then that and roll outlook terms are of then year? And through? the think

Sure.

One environment our is, that overall than just our where and then we our as execution what And be inflation – as passes trends reminder, pass different not stable, contracts, that so own a ahead. two-thirds do last to that to that inflation our the in contract. see impact The it been depending real find X%. of at it the you of roughly weeks, sort be overall of individual the pass where is it that's that, it make And margins. in margin or little quickly. noncontract it class you different monthly longer automatically generally from several is a inflates you on we've so on seen see food an on bit where beef periods. cheese based the roughly business, to maybe team our you has commodities, is And over the tend we overall, to consistent pretty whether can things and or that that the a it inflation through of as instead commodities, of see takes, It the deflation, there on deflation particular as it's well -- of contract have you what through sort seen weekly, have takes have inflate past more it continues deflate we've is significantly one happening a or able relatively commodities quarters that particular look that weeks, business And if a whatever couple When resets. managing things the and from not can through in but is non-commodities or can focus able gross a perspective. four don't really three biweekly, folks through a

Perfect. me. Thank That's for all you.

you. Thank

question And Research. we line have from the our from last Fred Wolfe Wightman of

ahead. Please is Your go open. line

Good Hey, guys. morning.

give dig restaurant that Dirk a you you're trends non-restaurants bit made you the outside Just wondering seeing industry could more, that the of seeing that comment if that pickup into a outside of I think were the on as in-person you some of the recovery update there January. maybe the recent sort specifically side, CDC of and outlook regarding dining? during well timeline, education given But communications on just can an

of focus and Sure, seen out, start pretty but larger cetera, education is steady, on education, -- to that customers as upper-single been of back. a areas. past softer key we thing that Fred. from to healthcare healthcare, that you've see that's example, the to back that visitors is, the to mid improvement, et relatively our pretty of couple kind although one point, customer some one really those starting that quickly. And in as demand maybe in and profitability the to hospitality. other these healthcare, and But for to showing I some end. understand it It's On part business, Say, as of vaccinations, signs et you get remind as living, in those to able I'll it's is they're much the the sense to And lower. come more, We're start bounce get for I of also to one, with expect education, and back. people on types. in just has with of our that people three to than have Hospitality smaller bounce been out And cetera, being lower of can more reopen, be to your will that, out, schools, point tends places on just with you digits – expect stable. start would in kind senior think, working

than also we based to more but over customers the course a So from as that close snap that And demand of on is one, which the hospitality. would it than probably bigger product cetera, the staying likely profit, on just you side, year. see survey that expect impacts piece back to then that business still and one cases quicker the does leisure data, et with our

Great. Thank you.

Thanks.

questions this you have continue. time. you at Pietro, no And may

you. Thank

So from there three are I'll call. today's you leave with, takeaways just think, I

exact of of continues increasingly for positive prospects as the promise. recovery we the signs there's show to extremely confident about the industry. to question pace And while recovery, the feel First, our some

gain Second, with position Appreciate you our to strengthening for call and time. today. market next forward the the look That see, as to And clearly everyone business. concludes strategy of our to earnings future share. we've us we our and scale, joining us you today capabilities of power strengthened speaking our third, the can continue

today. Thank disconnect. all conference our gentlemen, for conclude that great and Ladies does day. a may you you for and Have now participating,