US Foods Holding (USFD) 8 Nov 212021 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the Quarterly Earnings Call Conference Call. At this time, all participants lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Plus the question during the session [Operator Instructions].

assistance, further require you [Operator Instructions]. If now your speaker would like to to over conference the for hand I today, Ms. Melissa Napier. Please go ahead.

morning firm today our of our Good for call, we our you. and an I today's Monday. Thank to overview provide am CFO. conclude. results third first and We'll question. quarter for our your Please On call and XXXX. our provide by questions CEO, Satriano, yourself your after nine take and name, your will the X Pietro prepared Dirk Locascio, months remarks happy joined limit of fiscal

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

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

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

Thank you, Melissa. morning, everyone. Good

the up EBITDA and X% was expectations. industry for as quarter year XX% line up over with in were XXXX recover. slightly. prior margins continues to results Volume quarter Third were below the

This to more Since way are successfully in and labor our industry our continue its goals performance discussions quarter. is cash-generation, shifting deleverage that in prior contributed -pandemic from to be manage product which the with well recovery, higher-than-normal is on our pre through strategy. both to and further to resulted demonstrating it we the strong As line inflation. we

Made profitably Easy grow to Food our Great differentiation. First, market share with

optimize intense was focus on do, And industry I taking gross to brief quarter start, line at Second, quarter first, past is largely despite view that restaurants execute surge This COVID. Industry as for prior profit traffic our third, due usually in COVID out the to slide is food Xrd restaurants to on cases margins. resilient, the on the with at X. operational largely update demand But me let with out and underscores or demand in efficiency. with the a eating industry that in Delta. an

the US In fact, Foods with XXXX. to for our other reaffirms customer returning as to entire the confident seen that ability we our industry calling trends, current recover types on XXXX. recover Technomic our ahead chart time right, Based own in levels across XXXX to volume the restaurants are to now industry -pandemic This of market by will by pre on and share. the gain alike is levels continued some

the third I by continues Easy call. mentioned in for these last is quarter to recover, Hospitality market trending Made for the the was slightly volume a with to second and Great our markets. and believe on reasons we our in are Food platform. quarter healthcare Gains challenges, restaurants would on the quarter. have volumes related share attributable achieved fueled higher you third October growth to the that are volumes quarter, staffing to COVID in differentiated volume Now for gains. to was while than that higher flat handful not slide we third volume dip X. let in turn that me generally volumes rate Restaurant If of challenges see our line slight a

food of hurt recovery in given a has recover matter Some Living consumption Senior simply the population. We to in rates. while restrictions think is yet on Senior time, an pre-pandemic Living hospitals, visitors to favorable occupancy has lingering of aging demographics

Lastly, chains. multi-geography across larger success healthcare, customers we hospitality, and continue signing great to have

two are on net billion across XXXX we track types. combining X in and the to For XXXX, $X years customer these business add incremental

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the supply critical during Recent inventory third-party ordering position real-time reaffirmed our to continue research our recent customers leadership provides of lead in with with which promoter several score frequent of times ways with With all mobile including to visibility We to the most is a save to higher our able Foods expand customers releases show and quotes environment money. industry. technology breadth significantly Net the the customers in than this and competition. rating from easier products of app that US update include, setup, volatility. survey process, logical with navigate, Representative a enhancements, better in

that market help navigate to of Foods the operational the page recognition X EBITDA on I'm third our Food cover US that platform, optimizing turning experts, how just seminars, In elements XX of share of gains. to to Fast profit playbooks, matter. named We we and element Lastly, them the of the our team differentiation one covered brands customers is the expertise Company pandemic. now and strategy. Great driving and our margins to Xrd driving efficiency. Made is Xnd and gross That Easy growth of delivered

optimize with gross our to profit. start efforts Let's

shortly, to quarter it product profit gross customer years. for the case expansion this headwinds profit the As gross from been Dirk per has has mix, unfavorable recent in will was cover been: and in considering highest Despite some X.

and Our manage ability to inflation, pass-through X.

our and private optimization in label of brands. terms customers growth Continued third, the And portfolio. continued in

was which label in will label margins. XX.X%, our compared further profit of For as opportunity for sales XXXX. a business expand US total we of broadline to increase Foods legacy see the growth points XXX in penetration, percent further plenty And QX private basis still which gross private represents almost of quarter,

continue better portfolio on but to warranted profitable We the of bringing excellent terms, of new, range. also our business, at optimize customers, profitability low-end were more customers negotiating the

page XXXX we as hiring, levels are to and referred made a and productivity and efficiency. strategy, returns healthcare, intense change challenging of In hospitality X, new headcount coming staffing to for times X the progress the our warehouse the is to high I productivity was surprisingly, in driver XXXX and more new last penetration workforce of above labor our supply on drivers year and this mid-XXXX, I on But have operational margins persists, than by to now update The as national tenure For to that levels. not existing the quarter. you that expect and Still to at chain, our while that third and return higher brought the headwind selectors of do resulting on want significant environment focus close business associates, we base. targets. we element our in and an normal on the to in

well service In addition, With This XXXX. the And we and resumed the complete supply of especially we progress continue which resumed but levels on staffing we associates, also improve middle of we in started year, service by roll to have technology, receiving higher a chain of position, better of XX%, we to of our technology warehouse. make assortment the we Since only to the the customers we also XXXX, the higher picking productivity for efficient that to deployment to efficiency new as has contributes customers. our new beginning have as reduced paused. methods, out now which which had in productivity, by now more expect not have to demonstrated roadmap. in lastly,

on side, we to stability routing. with delivery the greater the put front, greater optimize now On continuing can focus on ordering customer

help will bring initiatives closer efficiency these together, historical expense levels. Taken distribution to

an of with retain sales investment fixed expansion are our in administrative $XXX the talent showing will most that of we sales with side, level cost which we the we up million the on and savings reinvestment of the share. the in drive pleased as year, to very last We're Lastly, -- expect attracting. still X/X force, announced sales market of

culture make to move I now unique Our sellers. products, a will choice and tools, very slide for attractive our our X. us

customers penetration. Chef's fact our come year, On ahead Foodservice both or We support that, in are we growing to Smart And thesis. of markets. The some presence synergy market, see twice quick geographies, with private reductions market new provides update estate X X. real for acquisition in cost rationale front, in label Smart on Food front, The The goods which Stores, that at at the the beginning for above XX open Cash Group Carry a at secure is are into acquisitions, existing which & same-store to sales opportunity synergies XXXX for For revenue least existing the was higher the that, roughly are at and that improvements the two-fold: margins. and call expansion that, expectations. Foodservice our on and to delivery we from the in SGA of nearly levels X. performing expand continue

expect Carry XXXX. business Lastly, Cash for & to EBITDA XXXX we exceed our

Group. due national the growing to Pacific acquisition Northwest complete important our Northwest, Food the note, recently that Pacific to at and for in won acquisition. now a this significant the region. which our in result of Turning customer was presence we footprint rationale Recall was was strong It to the

gone have smoothly. all have now and fairly completed warehouse We X system conversions

expect million have integration, with We the early mentioned discuss captured across by now complete of 'XX centers and Network And some outlook. this of XXXX, earlier, our track. on are by by end warehouses came will entire see Synergies. the I I as the completed starting capabilities over of to Dirk. have results all benefits like US to quarter approximately the that remains turn progress $XX X continued with Foods year-end we we to the acquisition. Dirk million will our revenue And third $XX to and plate call now in capture projected the to on Synergy from

Thank everyone. I will start on Slide good X. you, And morning, Pietro.

compared of financial line our results were in strength QX, the quarter our the to expectations with volume prior with and increased quarter. in third Our business. was Sales our line demonstrate

business. a our decrease impacted that versus slight third XXXX, volume industry COVID and attributable quarter restaurant in our staffing related growth also the mentioned, to Kettner impacted challenges As is

trends was restaurant various sources traffic Our similar for industry and from QX trends commentary to several data chains.

During additional as, inflation, quarter, beef categories we pork. food protein third experienced also namely in cost and the such

inflation addition, costs September. In moderate August and again accelerated seeing July, in these cost food after in

Our team profit to job it performance. excellent do that continued passing gross continued in per of inflation the in to through case strong an customers. effectively managing resulted This

than highest profit and case stronger in noted Pietro recent QX In even years. per the was as fact, gross

open our and staffing hiring and of said, most close and to as filled transportation roles, successfully are also we warehouse quarter, the targets. During Pietro

We hired in focused increasing of are recent the months. on productivity those

large in gross the significant Inbound Strong product vendors supply some Our improves that recent training remains as QX, continue profit of hires in the new is with to supply costs through expected by headwinds experience. be more productivity mid-XXXX others and offsetting of given chain cost to high in improvement costs and challenge. is from labor a industry also we the face. number

effectively our balancing cash flow quarter related operating challenges. focused labor the further look strong model our which that also as At Our managing indicates environment hospitality. we that underlying leverage. platform, and same in supply technology, use customer the on product continuing reduce focus availability We're pre with to was chain continue time, to and by the to we're improvement and -pandemic the levels processes to chain through cash accelerate debt enhance COVID and restaurant for future improved digital our saw line and that further, we in October, to We and restaurant to strategy. supply XXXX there we our to our operating healthcare back demand and as is strong recovery volumes growth challenging continuous

decreased year. most prior being profit up the of as as slide billion continued cost driven the for case, the quarter, generated inflation result up points quarter were for further XX of We XXXX. mainly third a for XX% quarter cost was gross quarter XX% XX.X%, per our the by by from again to XX, margin in experience proteins. it this was Food gross strong product net inflation. $X.X basis billion Moving gross quarter profit sales we from inflation the and Adjusted $X.X in adjusted of inflation proteins. And the to

best margin is in growing the and our even We're optimizing with QX. up pleased I stronger That's food others years. quarter, and gross given headwinds in performance, profit headwind commodity year-over-year profit results. in The of inflation seen gross on a than quarter, primarily while third and we're our gross dollars, typically our the actions case, sales our in again our pricing, especially percent gross XX% mix in categories, it's per of customer gross yet inflation impacting private mentioned in have XXXX compressed, our industry. freight ahead With As margin benefits cost a the over was us as QX, profit the to are label, recent taking we showing last rate.

continues, effectively versus gross in the XX% inflation cost expense food we year. expect Adjusted through profit as to $XXX was manage operating quarter up third long As dollars. to prior increase the million,

As a improvement for prior year from was of expense XX basis percent XX.X% of sales, operating an down points. XX.X%, the adjusted

margin operating to gross rate, food to the cost is inflation of is headwind a as While sales. our it expense a percent benefit

in points due to food a point as XX as of quarter than it of the XXXX, a our third inflation. Just reference, about lower OpEx of significant basis cost percent sales largely was is the

labor continue this inflation largely into experience year, to expected We supply coming chain as additional QX.

$XX that call, of During million this our year last I inflation $XX mentioned half to beyond, we expected additional or $XX annual of normal estimate too. inflation chain half million $XX and labor mostly million approximately in million, still million Above about supply $XX in $XX annualized we inflation. million for incremental $XX the the labor XX best ' our to experienced. The too of million is to

rates broader permanent, we and bonuses, others increased additional to and market driven to We labor expect use expect the the quarter, wage and by markets. industry. We in year's incremental now seeing hiring most continue inflation the this during in be and the increasing in be of we retention comparable outside are impact markets of to to have wages those

some We continue levels. number thus, most incremental In this expect with to labor to productivity be the customers the inflation. having on incremental to do to higher ultimately the expect however, future also margin transitory. of margin of permanent inflation inflation. to environment, that, success years, increases increases will more year in inflation of a current we're the and think offset the We normal in revert And offset

largely since the XX, aligned offset quarter, supply plan inflation. number due cost chain insurance our of a initially from quarter X.X%. our continue for and increased Slide was $XXX hire And third On of in Gross the million XX% outperform will percent of a sales didn't largely new costs OpEx P&L the EBITDA productivity was to by from did higher was additional increase offset inflation of customer from optimize food impact expectations higher EBITDA XXXX. profit Adjusted the as the labor adjusted outcome to hires level to the We costs. The for was outlook. terms expectations. with we our that

optimistic COVID in markets we re-acceleration in XXXX improvements market continues -- as select volume, volume are earlier, volume seeing growth mentioned share shares I the recovery restaurant make slower make and in the expect continue plus healthcare case hospitality will gains will As the at October for cases market we're On decline. recovery to in October up volume. and

to is of gross industry, additional and profit business in significant QX related volume holiday an terms EBITDA and holiday EBITDA impact, mix. chain the to improvement case, in and lower lower comparing As per others the profit expectations it continued chain QX. to we on-boarding fewer year with because The when We the at impact and product inflation costs. higher on to about seasonally a in negative due about also QX have in sold sellers we total New continued and below as than signing EBITDA supply said, QX. to much to high lesser XXXX the volume impact long that the the dollars to the absolute typically the to this due roughly levels until on-boarding supply-chain is on helps in ahead Specific look of if an XXX to gross you're incremental expect calendar, previously. many similar volume, quarter, And we basis expect seasonally we've Year's That continues cases to QX X comparing of largely good drivers EBITDA of as million QX extent points which holiday we've QX, falls supply be the talked volume new QX quarter of hires way timing costs new X due historically, we bonuses comes see to and QX, impact typically XXXX.

We much how aren't sure volume.

gatherings, we have industry, benefit significant rates. we see on can the are will volume impacting We QX from holiday the gross profit in potentially and

watching see that year versus in Likely be levels XXXX, closely. not quite rate we're experienced the profit up likely meaning better we QX. to historically not XXXX, but to So to that, have tick this back than gross the

return volume that be continues forma you're the sometime remember XXXX week mentioned Pietro also a that if to QX an XXXX Just in as extra in comparing a estimate had pro best Earlier, fourth current quarter. volume case reminder, 'XX. our to level XXXX, to

returning have from cost-savings. XXXX then on forma [Indiscernible] pro based and our in sights on top-line adjusted GP and customer expansion firmly synergies, We $X to new including EBITDA, M&A, Pietro billion also net referenced, [Indiscernible] as growing there the growth,

net third a diluted $XXX was adjusted in compared year. was income $X.XX Finally, in prior quarter and the $X.XX to adjusted million EPS the

Turning and in prior the set flow operating amounts the we actions in to line not management the year months in effectively Year-to-date that had of XXXX cash was million pre-pandemic the XX, to first QX. quarters through fully with $XXX of flow The cash year prior of first XXXX slide for operating when three EBITDA are converting we had capital compared took operating in million benefit our unwound working of the end XXXX, by cash. the is X year. demonstrating and still to the $XXX COVID

to turns a have nearly with an total a generates down our paid proactively flow business we of expect cash amount EBITDA. this approximately business use that net and and $XXX debt. in quarter, million debt reduce operating to $XXX Our debt. payments, third total reinvest cash in our debt three outstanding flow each grow standard and million year year-to-date. of significant cash to the We'll we our reduced Incremental additional In

and adjusted to QX ratio significant net leverage the debt in to reduction improvement due the in Our EBITDA. X.X times decreased further

and target and X our we're way ratio Our between leverage remains that times, well on towards X.X target.

our To make focused We progress are continued to expect business. debt additional EBITDA. via the recovery to target continue against in on we increased of the reduction close,

optimize recovery, differentiated our since demonstrated has pre-pandemic Pietro To focus back we're our strategy: industry with share said much X. to focus our on Easy, Food our shifting margins the Made at outset, the Great market and to and intense X. of X. his grow as profitably To mix, customer way its and However, to efficiency. an more bring smartly operational To well

and well and focus OpEx, our this in will capital expect outlook strong We a profit resulting our lead volume the of to gross further growth ahead structure. recovering healthy improving Technomic earnings

the We now and ability reduce business to flow the and use strong our profitably XXXX value we call invest will to cash our our look at open questions. for grow debt, time, this to in We're Operator, beyond. for shareholders. business as our and on deliver continue we can optimistic to

The ask roster. you. pause to would now floor in Thanks Instructions]. We'll a is remind compile everyone, just I the for to a [Operator order to open questions. question Q&A like for moment

comes question first the Your line of from Kelly. Edward

open. is line Please go Your ahead.

morning, guys. Hi. Good Yeah.

than by So the left hoping was the case then customer profit June expect better the that was rating volume should cadence good. that case, the about little is to Maybe us Case very this where obviously others kind where a and a versus of independents, I amount about sense is and you what now? growth challenges was give of a being per the be possible during by had, on a right talk table could impact business little and including color growth it to type, we what lighter talk staffing quantify to it. quarter give bit I quarter the bit think and was? really run just of probably bit as

Sure. Good that. I'll morning. This start is with Dirk.

through the at continued, the QX. QX actually in ultimately So into look [Indiscernible] you quarter, way if

was that's the -- of probably then up pick not then of really then in that softening sources end chains similar, and the August a And where July, and than dissimilar what Our September, strongest early then some data cadence from you've into seen number September. and and industry toward the some June continued traffic is October. and

our is impacts hospitality. we're it of appear volume our of of I'll seeing from sort markets. number -- But demand challenges all -- our in around certain the around really, insignificant. sort And similar slowing ultimately, of call almost restaurants across So recovery, is and pretty a end end of demand of that's perspective, what be any the the on to really, or staffing Delta variant, especially

COVID the our and to continues the through optimistic So October of continues then from of XXXX. year decline, We're in balance as course cases staffing that the we're that, perspective, re-acceleration improve. into seeing

So that's ahead. positive as we look

And way staffing the to is there any component quantify impact?

we're be is, not tell comment staffing be is to had appear dissimilar demand where our the So appears are to don't in volume. were impact others. that quarter. it during will were staffing though we're going to specific there, COVID the -- where foregoing I you a -- challenges saw what consumer the on and we've to we doesn't that we of markets markets demand challenges that, But and seeing lower, to seeing customer in our And

We growing have our at a of markets number double-digits.

there So can and plenty we our we're accelerate and business meaningfully out confident this that get this, growth that we of rate. there's as pass through further

Great. Thank you.

Thanks, Ed.

of Your comes next Rahul Poly. Gretta the line question from

Your open. go Please is line ahead.

Good question. morning, guys. my Thanks for taking

be or the versus improvement back expected within and also these of existing investment before require their going initiative? or this own wanted projects initiatives? evolution X, to to enhancement initiative an projects an near-term these if Just familiar. check without paybacks can incremental is embedded in What this And project sound new with what slide return investment are

is This Pietro.

that, certain some amount historical norms. on continue is, why improve of in go to delivery familiarity talked push after progress to probably would especially I Eventually, compared So distribution, are a the leverage -- about. what and really good to continue levers there's to we dimensions, productivity, out on call to assortment a which some of going rationalization, terms what on, productivity, number is you're we warehouse of in the

In and technology payback terms about modest the in of picking pretty are immediate. investment, very terms X technology, is or the really X question your investment of about that talked

I understand.

Silberma. of question next from comes Your the Lauren line

open. Your line go Please is ahead.

for Thanks question. the

mix. of Just year-over-year per and out and on up and label terms guys inflation optimization gross profit sequentially, private case called you

come commentary thinking the profit into least you from So And profit how the are as uncertainty sustainability understand the here, some XQ? expect per mix of see case case at around be performance. perhaps down customer fourth your just quarter gross about holiday highest XXXX per I shift? or inflation you gross then is thinking Would you on

Hi, Lauren, thanks for questions.

that's I the gross exact on But believe your the we think TBD point level based the combination of things to and even higher the the do and just challenges case. gross that we're -- inflation. ability same stronger the cost also environment maintain what sustainable that we to profit per labor and happens think to -- -- with contribute stronger the all or growth exact with is in higher profits

We So and in our we're leverage EBITDA leading the operating think expanding we there, maintain to I it from as the were expanding our bit gross higher a our around profit improved though you've in And level seen even pandemic. ability little move successful quarter-to-quarter. confident may over years margins. even up to

it's exact to specific the we're quarter, fourth to think speculate going amount. any -- I not

to it how I think be QX is, would how the the and way I is product the out we XXXX change holiday the doesn't I the is, probably it holiday etc. and mix, timing, about a with about guess XXXX and -- industry really beyond. shakes suggest thinking thinks whatever about in recovery think into

will positive others are demand there more out the be activity, that's so think and a getting from what we seems sign is, like seems more. people I from probably it it preparing, and encouraging

XXXX. all the into well think recovery continued I bodes for that,

up driving case like that? a and more it you gross than just profit was there bit this dynamics quarter. then, sales Great. per And per can Anything case looks what's share the about

in the which categories the came around in. more inflation really That's

proteins case per from a those of tend about came it categories So just remember the a what I lot of per I or if to talked pound. third because in more is markup the past quarter fixed as and be -- in from

to gross sales, quite go don't nothing out fundamentally level different. call as up profit you at same necessarily the So there's so that's I would that

so Great. much. Thanks

Thanks.

question Carden. Mark next comes the line of Your from

open. Please go Your line is ahead.

a my Thanks for morning. taking questions. Good lot

at this much point start hit and of point which elevated a more Thanks. you certain a at see concerned risk So Do if to on there time certain become the inflation would front, their a spend destruction? demand for could of period you a that, food inflation just being home? is shift basically leading customers inflation typically that, that,

this I haven't demand from increase ordering and industry you've healthy. demand away mean, we The own seen helped data be -- Pietro, seen the So very our so and consumer with to that. take-out from is in food continues data, digital has home. as

point last I from that the believe I us I outlook Is several if from at home And food at analysts XXXX. home, in -- between and in close way sector really food terms being the industry the think in the at there's healthy. perspective, at is away narrowed to early continues away quarters. the inflation at gap away look home food is to and at very GAAP will the an has lead lines a of of food that, over you that couple away you look the home, by from from confident of if X. believe other food -- than XXXX, home to cross more growth would expectation data one to that, food the spent sometime third we're point, dollars thing, relative that home. home then the

food is within will think of perhaps substitution from being food and both expensive proteins. more it less that in less at inflation the the happens, that we're So proteins And and in commented the proteins home happen seeing, some especially home. that's on any expensive towards or if with the seen their as inflation there's away sector, it, the I

good So about we outlook. feel pretty the

guys call many independent optimizing trucking quarter? have your then Thanks. the And routes optimization standpoint, throughout to last you locations from while an have Great. incremental

question? repeating Do it mind -- adding Was the you about

Sure.

-- independent locations?

Yes, guys with have quarter? independent had in the trucking throughout in to terms some just hiring routes optimize of you just -- driver have you the of guys your call many front, the to last challenges locations

I understand.

Okay.

as facilities, and COVID had that way, due we And of weeks we storage selectors. ability we that to to facility it by serve referring to, disproportionately had a to I was look in in increases share. mentioned, benefited number amount customers. it some to where able we demand other we pretty shortage, about competitors. or market markets large the we were I think serve in sometimes markets, rationalize And to sometimes what terms in X of a that's a through the where unfortunate other of also just But less So was was and other to those went had due markets, X of handful had happened from facilities, I our driver good the at we the setback when those

It's best Great. and helpful very luck. of clarity,

Thanks.

next Miller. comes question line from Nicole the of Your

line open. go Your Please is ahead.

Thank have you. Good morning. I on understood XQ. might the

I commentary said, EBITDA think about down sequentially. you

it question, historically have see better so numbers, and restaurants I misunderstand before traditionally, some your the in that long ask did I a with So don't I XQ that?

of it's the looking No, opposed that's worked. as some think and at you and And them, thing as our historically business new that's business, QX outlooks our is restaurants volume, QX to just And lower industry QX. us I back in -- not. our that's pre-pandemic, considered did that, more absolute QX and and people -- has the have than for historically to

quarter? And understand third or does volumes, then And more you was the item. talked this about X% quarter I you and not? one-time way that to sequentially, other being X lower other there than fourth EBITDA like address that that X was item, trying the in then all translate Can absolute if down seasonally on X% the to was to

Yes.

that I'll very but with be of core change because business, drivers EBITDA QX, the labor in to QX but the comment we because expect was seasonal similar to to buying. do do -- start the the So we perform we're below not QX, we my -- of expect expect

to So piece the if go I volume of yes. it,

fall top year, I is, in we cases reference, other comparing, and Year's then last in week in say So thing the QX, fewer QX XXXX to that million QX. New than gave both as Christmas it And this a of X of sell typically you're X XXXX. if on at

So the of additional that, of a help year year. points impact fourth negative will this negative then it in a of basis has in XXX -- next quarter about QX

So again --

Okay.

not volume change timing. it's in is in the really seasonal, actual outlook. business And even just downturn a again, the is that

are thinking to it's guess, a hiring from? process the sales To basics point you about I And of the or on just teaching labor, at it's of technologies, leverage if being and that. industry hiring I'm your that I the then the on your you just a returning some outside you degree the or sales productivity guess, around mid-XXXX. I and enhanced But it normal shouldn't where unlock in the this talked call is procedures? industry, of new total in are learning that or about business function

around about being Healthcare And of back what XXXX clarify, a was are Nicole. some we growth. prior returning talking and but outlook. volume Just XXXX, of the Senior that what of occupancy see in rates XX% of XXXX, to we in hospitality the X/X refer about levels to still XXXX. below we and of you being terms the That's Living. continued When talk to that's function

In labor terms where terms from. we're is I of the part of coming in think question, your of

drivers you and are pandemic. license, before as of know, drivers to So commercial back these headwind very selectors and a in the been has going Drivers, occupations. experienced driver terms supply there are different

warehouse of industry environment warehouses, sense credit come in. programs in path by Selectors, warehouse necessarily And as most very least that's upwards food from high-volume really from not that where is well, environments. they to it's And but come environments, there and [Indiscernible] And distribution, were vehicle. environment from training train what on your a ours and is the so in they drivers in selectors we're our recruiting. fast-paced, from, method come -- other great Hopefully And might be can their question. aggressively retention different what working our often be doing there they'll the different. they that other have They become it's them but answers our at a a we've so

you it. Thank that. for does. It Appreciate

Sure.

from Jeffrey comes question Bernstein. of next the Your line

Please go open. ahead. is line Your

two I very Great. you much. questions. have Thank

you'd seem Technomic? prioritize I'm would second think prioritize achieve sure Technomic the biggest that's option But benefit 'XX. trying industry it top-line mentioned relative are from We're sales some why there than available you then your business faster mentioned being believe a 'XX, the leverage? yours I'm an about forecast, perspective and wondering, adding that is expectation overly you conservative. further just to the to penetrating levels just elevated you recover existing sales the or get in by for accounts from suggesting would not net for a by one I back or I'm first I XX know perspective, you or M&A you The is you relative if it which as the the will to wondering, with just on opportunity, entirely, you? things. you the term to whether inflation maybe think does side industry even of buckets to near terms broader new of different

Thanks.

that's I so think we've where is, the recovered than part at seen business far. our restaurant we've because industry. seen quickly more Jeffrey, broader

the two the that in gains. around optimistic that healthcare it's market sectors So said, we're And share I hospitality, still that. in recovery very our far about the based large and most for but evidence have as opting part on so again,

way business, the over in where I around expands right or and a fit it's terms come think our business growth terms the absolute SKUs it's to I work type from to, of of the business a the around a of dollars a customers couldn't customers right really where find part in Whether good terms we it's of and we will grow and has of that, we where to X of the cover, to renegotiating right fit. of get portfolio the of growth about new can months wallet fashion margins. some in both with footprint, from, optimizing done [Indiscernible] combination referred we've or that's fit existing that last the terms It's business. the really terms the In that EBITDA referred in and been growing Dirk healthy in as expands margins, a share

is side up. in importantly, but the messages just then follow-up you good a pass distribution on you're to mentioned Foodservice are And things. is a category dollars because that wondering I'm environment the of the the of see place a that to more Understood. I to all be customers. inflation more does to margin hyperinflation down, the seem are pretty the lot much know percentages able investors like along it inflation

inflation ability in the to or double-digits. Just is some high Or to approaches, wondering maybe whether now your the confidence pass continue is as now there's the still through. low concern in

expectation able going still it just in saw being third for thoughts are you that to quarter, relative along quarter. confident that into you whether the the can or plus your wondering 'XX maybe share Thank you. to we just inflation So XX% pass in fourth

Sure. take Hi, Jeff, that. I'll it's Dirk

it I well customer a think are ability to way in us seen through, our for processes up set base our that. that ultimately, we for now are you've the setup, two contracts confident and as pass our row, quarters in

effectively and the across inflation So passing pleased and to I expect continue we'll think long as performance that operate these, we it with continues, as through.

October. bit quarter saw I saw on we July. that the just a in I think call, your said inflation little or see what inflation, seeing point are into is we did But is so last moderate as we

have reference going how they're operators happens. them but certain to made you higher So costs. what continue -- And model and with can they're thoughtful, can if able be earlier, about service in inflation categories at watch they food very different this where to a point, creative, differentiated sales manage go we're to that's with Pietro from And to options are their think perspective. help also as and our to

to you harder as what happens. know into exactly it's think 'XX, go I

time, at through we pass same so making have it, helping our Our focus I we is, well, sure and like it through. running processes the manage can that, that said, operators

our we've QX. seen is has, It being and highest XX% cost to about we've I highest business a and years. food the that's is such of direct that think lot our others through, recent inflation. pass of on as you've the of in don't the and base, an one ability case, our seen gross how the customer pretty opening that of it's seen with or QX QX then in With key on that a of -- lot in pass-through your comment strong one is advantages profit again enablers in of

subside the year last basis Thinking in you year-over-year perspective, a have third. the that some something there think saw we the in that, is inflation quarter if inflation actually the about Or commodity the continue on higher it it. XX% might are been in see third this? year-over-year fourth than still high therefore in from moderation might that fourth the you inflation trends And be have you said, a the idea you in in point would to [Indiscernible] Got were quarter. unusual percentage the like seeing the versus would fourth-quarter quarter

it's that what data saw lot just know subsides, don't third a points. quarter exited. incremental above a using of October It we growth as I is I that where the not in indicates month the

hard it's So as I continue we'll others, to know watch to we quarter. to like fourth think the and go

you. Thank Understood.

Jeff. Thanks,

comes Your next of John question from Glass. line the

Please ahead. open. go is Your line

much. very Thanks

to picking to those -- the think two there packing. you could way to can Is then savings already is warehouse customers? back [Indiscernible] receiving about there mix? from the in structure margin quantify started - you realize you Can how and business as benefit Just about talked shed that to about those the you've in the of gross a the and about to gross back initiatives business? COVID, way what think you case maybe pre a going margins, your a in -- is customer usual, comments mix, What Or and perspective? you talked going do optimizing and unprofitable in customer the the have as

of We impacts haven't specific the have specifically quantify to expect don't and to now, right these.

to reference number XXXX. a driving. top-line the are That growth. and each XXXX to pieces a few are is trying Ultimately, that we're balance helping which of is, things from share that, these I expansion, that a However, year go can margin back just things also what

points. our up in about pandemic, leading So we XX basis the margins expand by EBITDA

wins So Pietro it's in really and hospitality perspective, of in still the new a business each being that pushing negatives From mix seeing we some, some down impact improvements customers had about the are our talked the pricing few last customer meaningful actions of in types quarters. a on net EBITDA healthcare the although for and these certain we're customers levers. the and higher-margin there the and local on on the our a have of is ultimately some positive margins serving

to continue pieces continue label expect brands. move had Pietro as I other manufacturers profitable we to private think the as those, we there, that page to growth on So focus on almost on as the there, on it's a that's twice

still this significant those lot progress in things. So assortment as good we're is there. a remains product for EBITDA. to the recent opportunity chain It's rationalization that we've midstream an and experience would and win-win, actually of Rational that availability challenges perspective our vendors, continue is better we a operation. a great we're order with on that have to made in supply or a in kind And one because opportunities that because from grow continue simplify to improve years we a of customers expect well. to And -- this number environment balance of to then our it strike of helps

you. Thank just Okay. follow-up. X And

take to Is understand through. it? still opportunity that way quantify or a You regular to new challenge? workers sales in your just new we -- on, percentage and Like work were cited and pre-pandemic, versus percentage time the force new there what today of that's what coming new drivers are that to they are like so employees going inefficiency of so what of your that

Sure.

broken amount months. hiring about as percentages tell historically. in done we've recent up. So think now It of sheer you ramp To we that of the you more, because out is haven't specific or meaningfully

are we XXXX and to profitable the at costs, continue grow at remains our to work in improving to continue said, in since warehouse until chain bit that most really get X EBITDA. that, markets, productivity, as able being contend to importantly, feel months to we're well-positioned a mid-XXXX. few and we focus take level. little a customers the neighborhood to to move and but staffing as ahead select they Also, supply selectors on X closer of we be reducing Pietro our serve can longer, and that So level of Drivers to we the were more

Thank you.

the question of line from next John Your Heinbockel. comes

is open. go Please line ahead. Your

more and We'll start the supply then a chain strategic about with question opportunity. think another. you have I When

thinking can that aggressively you share how market also So and balancing it top-line potential. I'm get

to smaller? the it I that, You go supply-chain go outs ballpark eventually then experience. you and it? exact in is think but a fast that don't number, how can the right, may quickly May ultimate proactive And we Is impact not the want sizing balancing customer give year or much too you about talk about at us in ago. it an opportunity cost

John at to about us have that happens Dirk fashion. operational and we need I'll as the opportunity in help think get experience. of start in opportunity (ph) be your effectiveness will John, both maybe John and X I assortment of level great I we and assortment. that over aggressive in chime last between Tennyson you is So Heinbockel build the prepared remarks we What there don't the And with can Look, the terms addition CI example in. think trade-offs, know the efficiency. months of talked too customer The broadly.

customer The While like a typically may and experience. the tail inventory. to that lower service forecast harder is greater that with end surface necessitates you driving on so helping sales look up

to on new. operations. together. all in effectiveness consolidated other those ones. the and actually getting I divisions an on drivers have into and we're the hand were are operational part is just serving The believe to better side, examples of about in areas, when cost of prior natural last for hand single-site we And we're what costs And we about our multi-site talking on Whereas out the in evolution could number you did opportunity now the go that a side. efficiency, variable terms mentioned, and talking it of the and that, we opportunity, customers assortment equal of So Dirk what administrative work area is primarily in who as fixed terms we year the the give selectors addition X

natural we on could COVID, historically, then make some staffed worse. them perspective of during new And technology about initiatives that when in place, talked things short top putting pause layer we benefit. we've be some will the some to there so picking of And are productivity on and new, of you're that, some have

feel now that XXXX resume work levels, we So we pre-pandemic. way talking that's we're given we were feel a why position back in to that of that to our some good

The the size year is to opportunity? there Okay. rise level of And it -- cost ultimate does as a supply did to the or chain the you last no?

point It's to size significant tuned. prepared at material. it's stay not at position -- it. But this But this we're

Alright.

then and stop? what are pieces you -- seeing Maybe with And stop Okay. per lines per lastly,

Good news on those

Yes. Go ahead.

John. sorry, Yes. I'm

over So cases or We're we're as are and And the them of which line the both we've months, seeing for seen go quality optimize per increased both stop lines good our the of customer said, a seeing few continue new us, the up proxy function to customers. as a bringing the increase. gain a we're stop share also news. our lines and to existing line or wallet, and of cases good is And per I last ability proxy I've per historically, of operator demand. portfolio per customers on think of both good well for

Okay. Thank you.

[Indiscernible]

question comes of Alex next the from Slagle. line Your

Please line go ahead. Your is open.

morning. Good Thanks.

of be versus on you've on hear comment you're how mentioned within that XX? seeing the Any where the quarter, in anything You in stock different ' what headwind about this in you you into And done of you're color magnitude fourth market? freight pressures, then some third-party portion the that, the headwinds managing the maybe quarter third these past? would great. if can the wondering and inbound freight how there And using just evolve

morning. Good Alex. Sure,

than continues headwind, to just not tightness and recent in largely that by freight a overall freights driven quarters, different So be it's really the market.

when so largely labor about and its meaningful than impact impact all supply ask volume just we it's is So less a you it chain even I impact, when the will is a working of there. because We steady it's in What the logistics challenge. you're not against We've -- learned back plays put the continued in of the though call the of lot tell part on challenging, costs freight up. I'll of XXXX lot a in it's but labor separate overall, tightened market you XXXX especially increase to a against. place number been target really in those those this executed it's and have business freight so

we are of feel we some made it we've sort progress gone we'll like through a and continue as but a significant and also from work So closing We're those as service get steady environment has year and to through there, both balancing them. of both call a headwind, very be of on, the from the, more to perspective. cost well-positioned perspective,

we're it it's contract So we own really some in we want that that to make environment, about with a our product, it's out picked we the the And getting this and trucks, out sure make into with the loads to partners time. up that getting we pick sure our of trying some it we've of third-parties. have on whether for facilities strength with there, up lot leaned of we're third-parties our

And imminently, something end we will -- the And continue thing to to So control well work The ' be read on it. can P&L sure away side the based XX, continues it it's our you we our going making it's out on continue and focus. of control but we're into it through as what that product can't not there, that's this. make of progress is getting probably we

the had lag product incremental when follow-up and starts short non-contracted customers. ability the of It's capture timing -- Is to margin is just with that drop, and re-pricing to the and some a the on I there perhaps as the helpful when reprice probably inflation. contracts the there's

Yes, there when bit decline. is there on is, it's little a the

our pricing. like call it dollars. and industry in slow does help it opportunities take to steady create our gross volatility down, we to some kind time, and take over yes, some thing the does think -- inflation up But I grow could -- period a business, of are profit and to of

During trying that all our experiencing. this supply really again of we're tight fairly the managing backdrop it's pricing for environment, And to we're to that customers. balance against strike the just

Thank you.

the question next Peter from Your of Saleh. comes line

Please Your go line is ahead. open.

assortment. Great. for to reduced the wanted come around taking to the Thanks question. back I conversation

assortment to mentioned if And early a Are in -- they was that you think how call. the and you on so, are times I comes Should the actively expect the expect the and several we into reducing SKUs? are a come I And process? assortment more as reduction XX, have do in follow-up. back you that levels, or the into warehouses? sales XXXX ' quarter fourth back

by ongoing. efficiency So particularly was perspective. assortment or those prompted and an one prompted an like part push that year optimization that was is of experienced is the that's operational by opportunity volatility But up, optimization part ongoing things never opportunity the supply that, we And put from certain customer ends. of we this

follow-up, a I Peter, I remember. think you as said, you had

Yes.

other sort and question just the you seen The reductions have be, would far, -- do so going on Or assortment you expect any forward? impact of anything sales to-date?

either that the curve with tail. the customers go work our work a is salespeople. store from identifying we those -- in opportunities. not of closely terms typically in the of We after of with we perspective our closely some duplication middle and We have what or And

any we sales that from have work So from impact perspective. not a seen

Thank you.

Your next question from Kelly comes of the line Bania.

Your go open. Please line is ahead.

like to to morning. I'm second it Thanks Wanted where about ask me for morning. and segment the little questions. came but similar Good it at QX, pretty in hospitality had-exited you looks Hi. a just taking bit correct if wrong, quarter. our Good the

XX% down stable and maybe about XX% that. think I pretty or to

then that you're as any, your QX? just that we performance from and if segment what And you're there what the or how compared segment. internal to is expectations. of of of just how expecting look curious seasonality, pace into kind cadence recovery So kind in expected also here, of benchmarking that

call, at factors looking They have chart XXXX. manufacturers. here customers I'm some to X, large see that the just on are the mentioned on it parks parks. so who we show hospitality continue challenged other themselves We'll I last work and that on customers believe I some staffing and to Page does very of progress like need have segment continued out. some

so that's less is guest the There that U.S. into accommodate been limiting so And of the can they amount has that one. in-bound travel

potential this any we've as perspective if those tell. last about well more and continuing how which factors of X that, to to of setting. picking more are our that, hospitality customers to back. but lack Now there yellow return hard business other make even I as segment is overtime is, get that and levels is gain time line we there working distributors. levels. in office now to industry this or Then We opportunities up [Indiscernible] travel, as from share people is well, mentioned than will if other been an with But has talk pre-pandemic the exist domestic seems to opposed the see up one, too ability travel, And back also think we coming think, business we've thing and to be to too, pre-pandemic shortfall see I our pipeline been one the mentioned we coming willing that have the and I held think back the all with us had to opening us to as up is

a follow-up Edward have question Kelly. We from

is go line Please open. Your ahead.

to number think talked just there Do impact where got had. XX cost. back that's sort permanent which out the inflation XX now added investor need guys. be the be. with about visibility labor, What I a I think me for wanted what and How's your labor level is on it's of in. it of on will you that? the annually. mean, I you've now, you front the there you've you about it out and That's obviously cost ask Thanks on anxiety letting to to is good? the feel Hey, force that more associated side labor visibility that the

Thanks Ed. Good question.

people some issue from we a really where confidence with margin were, we continuing the be million think visibility success as gain having is or taking lands we're this don't put the that be quite yes, $XXX we various improvements do on, good. one I million feel like very So feedback that exactly good the think we're was it could of is range. customers. although around imagine, you last others $XX that is can could And other a this try And things thing we're quarter And it. to where as context sizing, that to you in know that the

any But and do will on again, don't go through are in in current or those higher already most that, amount, of not to expect what permanent that we've all that permanent. if to so, And know able inflation margins negotiated increase we lands we where of expected in with level of things that year as on depending we XXXX. be customer offset progress the the -- to and we starting will that,

the So a it's we inhibitor temporary permanent this as of year, don't that, or get think more transitory year. overall from an something through earnings business, to this as we next power next over opposed that's

best take would to per the bridge million annual labor is inflation, the million, add in ' to, be but some. case versus to to I'm subtract to to And trying $XX $XX then way just in 'XX that OpEx XX, do $XX million

me savings and need other to subtract that or like some of to there versus XX I of per case that have do there? are number gets an things that $XXX would savings You million the OpEx

Yes.

you've pieces. big I the think that got

well have Pietro things first about. And talked to plus as inflation XXXX the we half normal inflation on that to next continue this Pietro with referenced we of underway. top some have you're of the that right, higher through You're that productivity as through then inflation, initiatives as do some the incremental you'll incremental to of and right, year, we along the productivity as get cost level year some drive back expect

driver Out selectors, should are things. main distribution in fixed distribution really cost, of which those the about is those etc. is the that, think that more fixed. be reductions, little variable XXX cost a not I there of But XXX, is bit

attribute XXX opposed as I about. pieces to would I to of the So just talked very the that little that

higher let's labor right? helping for same in product. in And contract a normal it it's get today, obviously pass higher through at last on things pass-through? question industry that costs. would just accelerating at then to side. time I mean, But takes you -- the like what situation the you time, just hard Where to is all like, be, Is call the it

X. Maybe, separate I'll into it

automatically is And of So there's from those remember food inflation. happens again, issues, pass-through pretty normal so on supply can as for non-contract I that, when the quickly. probably monthly-ish, then to because product are throughs you That prior contracts the made weekly comments, quick. cost quick the quite reset pass pretty happen that, happening -

resulting actively margins engaging our On very conversation not cases, almost some to constructive to been and the doing them a in it's this opportunities customers with the what improve they of in discussions. are and Because or than with environment, side, try different to what not number really labor have is, doing experiencing. we different a in it's than all labor are discuss

either had in what that already we've reached is on, to agreement close XX-ish in going be number success or we've over of so million $X will place half And coming that, good that months. with place the

that's context, pricing. to expect mitigate most, incremental this if So good all, we'll be us not the year's gives that confidence progress able just and to inflation through there, of what for through and continue

Great. Thank you.

you. right. Thank All

this back the no remarks. like Pietro There ahead, I to Satriano time. Mr. further to closing questions would at call are turn go Please sir. for

you. Thank

thanking our serving amidst associates still by what is generating do environment, have a results close job and to our discuss that the difficult we like a to continued today. customers I'd phenomenal So who of XX,XXX

operational of leveraging the to management Food growing a to show efficiency great by relentless our a strategy margins Great team and you is all possibly Optimizing work great and Thank us And three-pronged that for Our week. Made market gross the joining share today of bringing our result associates. focus Easy, and progress. continues X. have X. by

This joining. today's concludes Thank call. for conference all you

may now disconnect. You