US Foods Holding (USFD) 12 Aug 222022 Q2 Earnings call transcript

Good day, and welcome to the 2022 quarterly earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Snehal Shah. Please go ahead, sir.

Thank you, Tracy. welcome Foods and Call. Quarter everyone, morning, to Second US Earnings Good

Officer. on have Dirk Officer; Financial we call Locascio, Iacobucci, Chief Speaking today, Executive Andrew the Interim Chief our and

join Additionally, for Bob Executive Dutkowsky, Chair, our session. our Q&A will

prepared We provide conclude. limit to your after and Please one firm remarks question. will your questions take yourself your our name,

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

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

actual certain In historical risk those from made to Form are could discussion addition those results call in our potential anticipated our considered in statements. information, XX-K to the statements review differ these during detailed a that of Please materially today's statements. for XXXX forward-looking factors factors cause

will today's measures. financial as financial schedules Lastly, as press certain will comparable All are release reconciliations over on non-GAAP our forward-looking are turn providing we US on included we during not to GAAP to website, interest the Thank the and that in call for the the except appendices most earnings to in Foods, I posted indicated the measures refer your measures non-GAAP call, our reconciliations you to as financial in Andrew. to well slides therein. now presentation

our for Thanks, Thank Snehal, everyone. and call. joining morning, so much you good

delivered the growth momentum US we make I'm second our of earnings Today, mentioned my on continues introduced report CEO out As to commitment plan coming against quarter, to our that February. last the continue first interim pleased in I which and progress to to quarter strong as our plan, quarter. in long-range deliver Foods and is

key where you to takeaways quarter. Page X turn Let's from find will the X,

our I'd the customers continuing progress for our the challenges our part plan. industry. QX to progress serve a hardworking our our across despite being to demonstrate this and long-range like for country thank associates on executing critical results good First, of facing

US key again the momentum market continued confidence results from gains share affecting challenging in types. Foods despite customer third, strong our environment its macro our QX, industry. Second, our results deliver reinforce share And to delivering market further

Foods US Page well face related continue market, see a X, in we challenging will food headwinds fuel, inflation to a from as and quarter. to industry whole costs you and this as to in positioned second the remain While On marketplace. the as key highlights labor win well

our the will we part for First, sales quarter large gross year-over-year, case continued profit by net progress XX% long-range saw on per in initiatives at plan that and strength, driven we momentarily. grew discuss

result, adjusted a significant we are EBITDA chain quarter. As result make strides making business. the on a to optimization, of supply the as grew we the continue investments On in XX%

and in warehouse We track this we're complete facilities, in implementation to the of our September. technology continued selection new on

freight income case progress. to momentum per inbound gain initiatives Additionally, continues logistics as our

month-over-month driving fairly while we're levels improvement a vendor in stagnant to Lastly, supply our challenging and operating customers, environment. very in service

year. improved levels, still XXX start points basis Our the levels, just the shy service although through have of pre-pandemic customer of nearly

we industry success. our invest paramount continue led to XX has enhancing for Foods US the the on, is to this Moving in in experience. digital and years area, over customer

key is the This to we to is all footprint, are third customer begin customers. updates the more step MOXe our ease-of-use next-generation and MOXe out In as rolling helping solutions example partnership time well by you providing expand deeper relationships assortment direct right but which approach Toast. the coming is to and demonstrates customer QX, our call speed, with gains differentiators selling commitment to value-added recent excited and and we technology continued services quarters. in and building collaboration quarter, types. This as least, CHEF'STORE We improve online Foods to our tool, are perspective. the in our A And not are customers will performance be on continue in drive team-based and launching experience we renewing save last our US marketplace. confidence our customer to for our from digital experience. which increased control strategic a about change with share us our bring the

portfolio Finally, partnership source farming to hydroponic focus to social local launched and served to support Foods' program progress our making designed the governance, with significant farms companies, the the ESG. to Launched Kalera, or with leading manufacturers. we're better our I XXXX, want is one We connect a continued local indoor on of US producers expand from we and local vertical in customers environment, recently local that served of that on program. world's farmers,

committed environmental operations, reducing remain Scope our by greenhouse recently a by base and reduce science-based the gas announced goal we footprint Additionally, climate X X XXXX emissions XXXX from to of a year. absolute and to XX.X%

by CNG, new to lower reduce to reduce new natural gas converting and emissions fleet by gas XXXX. CNG miles include renewable or footprint technologies to end introducing working Plans deploying driven, carbon fuels. vehicle our of in and compressed the natural alternative vehicles, investing routing to are optimizing vehicles our We XX

La renewable onsite and Corona, In facility at renewable newly our center been broadline addition, diesel diesel fueling fuel California Livermore leverages and fuel fueling its our stations Vista, converted distribution for Mirada providing diesel Sacramento fleet have opened station. to our

X our electric current is diversified our environment. technologies. positioned customer XXXX. optimize into We also in with starts we we in mix. to our US to equipment renewable facilities, Mirada, trucks illustrates energy continue plan operations In It Foods by of adopting California why the well by efficiency our La investing introduce and the building and believe fleet XX Page new energy-efficient

would over our Hospitality types on to these Hospitality we and our half about business types of were mix, them to fully the our X X/X we while and to restaurants represent level customer to and expect such focused to recover. very forward. return Specifically, customer are closer as as Healthcare that propel business prior continue pandemic, of Healthcare sales other

also levels. are XXXX market continue types, and in are gains driving We key above well case restaurants well perform independent share customer to volumes

small relentlessly recall, better focused may customers, number business gaining complex. chain as continue on as ongoing customer you optimization lower a is we of as profitably. is to of US IND, with margin and/or the replace more a business, more market and that primarily our with and flexible Hospitality complex are more result, we customers leading share exit that to As well less typically business ensure right a And fit and mix to growing profitable Healthcare or Foods chain

bed business to operating are XXXX. current in margins to continuing are growth to continue in year-over-year result as the occupancy of Senior existing with environment. to Hospitality, retail relative as opening growth. Healthcare, up back report we the In well wins In new improve segment, We of improved Living significant a settings. is business reflect we in shops positive pleased trend a chain rates case and This our hospital the

type travel. will development customers' work levels home Given this be increased macro customer monitoring closely the as the and inflation willingness recent we impact in to backdrop, from trends

a the capabilities customers. differentiated U.S.-only leverage diverse our positioned of support growth to As are well business, our to tools and pure-play we

we to commitment win to to As this to service groceries. these and us US them, more continue historically enabled they that do and deliver them and appreciate enable expect so. fight telling times. Customers Foods us in our share it customer earlier, does just types helping I to mentioned has will us To grow are through key our differentiation much difficult than

this normal and note much Foods efficiencies. the Additionally, lastly, of types track that to XXXX able these, growth Healthcare record as continue US levels, important as inflation through pricing a to resiliency challenging benefit times. we via and from customer as line contracts these Hospitality US Foods reminder, in or to has to is top supply and of it's tools. rising inflationary during pass will chain economic periods And return tailwinds a via our such Also,

For drive performance and by reasonably instance, walk strong the quarter our flat of our X operational our progress declining during digits. into the expand saw margins well, to profitable Page share long-range only to that, up how let's essentially mid-single through maintained plan improve XXXX, With earnings XXXX, gains, US in Foods volume on recession to case hold efficiencies. turn translates and

or are growth exceed the our to meet targeted market. rate on of X.Xx track We

demonstrated to continuing the share our in types. are We as gains marketplace by in win key customer

approach of our illustrates the As US selling Foods' relative I a competition and continues team-based and be business, omnichannel The in to our continued carry noted important an our customers' of ingredient earlier, CHEF'STORE, our cash power to differentiator the is strategy. success. expansion

QX, store new we in opened During Lynchburg, a Virginia.

know X customers urgent strategy open this to X our pace allows fill still and demand. Foods in customers It building to meet to consumers broadline for help that expect of outstanding the deliveries and capabilities excellent are US lineup offerings. needs between high-quality get fresh and during to year, also the to stores to products future This label way week to years. is potential an accelerate our We private

margin the expansion profit pillar, quarter. had strong we again or optimization results to gross this Turning

call, program our to This we inbound significant seeing our program significant momentum As initiatives. freight are last expansion. on meaningful efficiencies income we drive shared logistics continues with and

exclusive its continues rate. brand to Foods US Additionally, penetration grow

approximately by penetration year. For basis the organic XX QX, versus points grew prior

also vendor program of Cost under consideration. of well spend and total with is schedule, already Goods performing XX% our Our approximately of ahead

Turning to operational efficiencies.

midst macro of We challenging progress the in are making solid a very environment.

cases of XXXX per result mid-single above a across compared on routing our focus XXXX. to despite planning, mile as digits our network volume and levels modestly network optimization case First, being down are continued

still a is significant that have While significant achievement, ahead. opportunity we

our selection to job to on later associates, the that our It's to to I'm warehouse completed warehouse that challenged labor vendor remains rollout a as the customers expected mentioned challenged. of to As outbound which this team important for environment which process, rates levels and to excited service our members warehouse improvement, US our deliver hard be technology enhance month-to-month the continue our with continue I will testament earlier, it leading is satisfaction. remain note is industry. productivity this rollout, better us and given work fill about support track is and Similarly, Foods selection quarter. to

have confident we enter in of productivity as address will strategic the right you Page summary that of our associated imperatives second XXXX. half to X, we plans On the are see we turnover and headwinds. place However, a

profitably profit the X We growing of are LRP we'll by of update improving performance market on optimizing and our pillars efficiency. share, and operational our encouraged gross you continue momentum, to

remain focused platform. and program are first-class customer on relentlessly our building service and upon We

differentiated continue shareholders, to and provide Foods. our We our we as investments our create priorities. allocation US business an make will around for we to will remain prudent enhanced service platform capital value at in finally, And

reducing in Our returning our M&A opportunities. tuck-in pursuing focus and leverage, be shareholders investing continues the to to business, cash

shareholder performance. significant value. these We growth against made over long-term with on will Dirk priorities expect execute ahead, continue and strong that, driving I'll to and progress We've date, continue create review to pass on the to And focus financial expect thus, plan to it momentum. against and our to building this to

results. $XXX we're Page I'm Thank in be continued a Overall, million pleased our the and prior financial quarter. and plan are the industry well the the morning. Andrew, several some They demonstrate walk we you, then X. broader continue key from our on grew that macro to progress year outlook. economy, with XX% as good outcomes. quarter our to considerations Adjusted on spend very time against our second I'll XXXX initiatives as and EBITDA highlights on for second making through and on factor our quarter

case EBITDA strong XXXX. to to the per the QX quarter began. relative was best In dollars, XXXX adjusted our was QX pandemic above adjusted EBITDA EBITDA since addition of

prior encouraged food QX well, delivering are year. over as truly an Adjusted and we're Total demonstrates very billion, actions diluted increase results. increased XX% $X.XX. the of which and net prior flat outcome, XX%. volume the cost was to was believe we we're with sales inflation $X.X were So taking case was which EPS was year

number of Our a negatively impacted case a was the we exits. temporarily QX during grocery by pandemic mid-XXXX small strategic of year-over-year XXX growth points and added basis the roughly exit retail business,

the since As XXXX volume quarter you'll perspective on more very about a strongest page. QX a also the next began talk from strong with pandemic I'll recovery. recall, was volume the

We continue this to growth again robust dollar quarter. drive gross profit

generated chain turnover we as the adjusted higher Our to profit Reducing turnover in we staffing year, a adjusted case work OpEx per similar dollars the for profit priority invest us increased companies. supply higher from gross improving many other retention. face for on continue as and and gross XX% top employee remains presents, to the prior quarter. remained we strong challenges

growth the retail after XX% Looking lower X.X% impact prior and and I year. in XX% by volume, to earlier. at X.X% chain noted independent were exit nearly We Page had the XX. volume cases Hospitality flat prior offset Healthcare Within year growing growth,

Our and quarter a more lower smaller was exits. complex by chain of driven number strategic this decline largely profitability

volume to exit a a EBITDA. margin small and was of basis impact and had retail exits through Half total case expect combination We the about X. point impact lower The on improve growth net on XXX negative the strategic

We continue key gains while on the increasing to delivered customers our again health quality this types. customer with and on quarter We opportunistically chains growing share focus the of in our margins. and

for in restaurants, the were the to since independent gains compared about strongest I seen winning began, Specifically, talked demonstrating share the among QX pandemic market. we we've are volume XXXX.

continues point a was X% is to relative anchor of continue a of case volume customers. recruitment below focus on X% was labor more improved XXXX demonstrating were normal and case hospitality perspective. approximately to hire our we our XXXX market for from entire X, continued QX was above share through volume XXXX, continued QX quarter, encouraged We're environment However, growth. And key the XXXX, from was better half by key the continued as basis most improvement. QX we a On improvement Independent to environment. XXXX, further results. second macro Starting which I XX, and it The growth improve also than XXXX. challenging to below know Healthcare approximately XX% customer QX. below gains cases and labor. as relative X% volume types. look in XXX In us which continuing than with well remains Page to has expected industry from XXXX a about in to for as are total at XXXX, the be

a broadly in to Our good comes position markets when staffing. are very it

Turnover been As is challenge us. it's the historically. I higher to than quarter, not which remains talked about retention, unique primary last remains

a double For what historically, less reference, been us nearly half roughly it's year. of with our for warehouse workforce than been turnover that is and has

work to supply the engagement as job companies. and New tenured associates that than new frontline into allow hires retraining very steps taking our it, for address other challenges such Anecdotally, effective retention positive that limiting and managers employee productive is isn't A and understanding are practices to ease and are supervisors is chain are them associates. significantly processes. less management to likely permanent, to our it we hours on our and similar

the new making deploying With jobs processes, as and planned and as warehouse turnover remaining continuous improvement expected. deployment our much selection improvements our As team Andrew aren't we technology noted, make finishing leveraging of progress on we're to the productivity as easier. a high, we little

are our we've through expect resolved they continued our been that to mid-XXXX, in levels. continues quarter XX%. some seeing of the the service stagnating a and slowed which passing to likely inflation of chain peaks in the industry continued We or don't a inflation cost of supply grocery to to successful customers below customers. has more term. that with Food in of sequential Year-over-year in and Andrew levels We've and earlier. in the inflation year-over-year inflation be we QX other challenges Inflation number improvement categories progress watching categories, fuel something improving it food, discussed which be continued made broadly service to positive. Inflation, for are is remain has signs we and more our the network, through focused near are QX are vendor despite of throughout closely. However, whether is be

solid. good others identify Overall, continue improve to ways service act to Our we volumes Net as remain or to for be Score data than on our and Promoter better customers. service levels as indicates our continue

mid-teens to continued and and quarters. will can growth remains X% watch in Week-to-week vary, continues we Healthcare recent below we're improve for behavioral to continue XXXX versus weeks. recent in watching recent for XXXX has continued changes. to shown in been has Hospitality roughly above and XXXX Independent X% results below be has slowly trends. to weeks. However, improvement X% XXXX

environment customer challenge. strategically a to continue taking in and watch The environment in remains are demand. share macro key for the We types changes macro

from industry customer and business gains has recovery we types. key share our and Hospitality, in are seeing and However, tailwinds Healthcare

staple types quite potentially from home routines, even customer also it as serving makes We in people's than and resilient, a benefit many in from away which most prior eating more downturns.

adjusted our pleased results reaffirming EBITDA, with fiscal on adjusted making in chain. our of high February. We improve specifically CapEx diluted the continue guidance in the and EPS, and provided strength supply QX are expect we We're to and meaningful XXXX net leverage actions progress to continued turnover

expense aggressive be year through now to of the more And we the as higher $XXX result However, XXXX. rate for $XXX a million million increases we to finally, interest expect interest achieve not about slowdown. our expect QX range, end higher the another I macro there's factors earnings outlook. Omicron-like still earnings, and outlook to macro assuming of our or talked wave Fed's the

XX, net capital our Page XXXX quarter reduced on moment I'll this on quarter as of first of Now leverage well as to the the just spend second compared year. structure. a We our

leverage to vendor inflation, earlier. capital we our part inventory net components is a capital Our year. reduction end X.Xx this to our additional Net are quarter from due we the and X.Xx of a face. of noted necessarily and as Leverage of well via receivables invest increased as the ratio ago was of strategy, quarter, to reduction as supply in industry flat reduction we've one from working at debt continued second the relatively as is which X.Xx allocation year from outlined four challenges the continue dollars first Andrew the

progress make of continue achieving net are and to Xx our it. X.Xx leverage, We to to goal leverage toward committed

in we debt priorities. which to other generation, flow stated reduction use Our business has expect strong our cash for

demonstrated progress which closing, pleased significant I'm results. our we QX we're the making, in Just in with

Andrew. to back Now

continues and is plan. in in long-range conclusion, deliver hard to our results. ongoing thank make on In executing for testament This our Foods, Despite environment, serving continued all work we Dirk. questions. execution US a our associates to customers. continue to the US their Foods the of up of I With the macro at progress please all line focus Thanks, operator, positive open that, and dedication them for challenges to

[Operator Instructions].

take Please first question. now ahead, go will caller. We our

open. line Your is

Silberman you I up growth. believe XQ. I an ask wanted looks Suisse. to Lauren independent is Volumes This case from X% acceleration 'XX, versus which about said, from like Credit

How about where 'XX? not talk customer you acceleration? X% shift running seeing from then I So customer X% can above underlying that independent share we you're case to in assume are you accounts with driving customer remains behavior Can versus what's wallet growth is is acquisition new mentioned, much meaningful you And coming versus any recent trends? 'XX weeks. in think,

Andrew. I'll try it. Lauren, Thanks to Yes, parts the for question. the remember it's and

restaurant of pretty if growth. through, as generated being think the And we're would good customers, our new. in existing I with remind Yes, the So miss me I overall, feel going say, any is I I'd penetration as balanced increasing that growth between the independent mix say we them. momentum well very after about seeing a

in best been would customer down improvements the and mentioned, one our still X wallet our versus the we pretty terms and QX seen a terms has 'XX, slightly X. market of Dirk share our of I the certainly are in itself, you were we've a significantly momentum count than as We as flat probably segment. we share actually significant are in to improvement That largely of share forward. sizable, of improvement, seen given but IND in from the We've really, better of to we sort market think, move attribute seeing in

good momentum. I think, about So the feeling, really

of Did be questions? any us some that environment share something But a mitigate change your we're able gain optimism we all will although segment. that able there fact the any... Or -- We slowing demand cover to haven't very that been mentioned, meaningful any this in to obviously, of we've gives seen, in also impact, the behavior, if the was as independent monitoring closely. is on Dirk I

did. Yes, you

more uncertainty great. You're know a we factored sort you confidence the macro to uncertainty Does on the environment, consumer one environment? should I is guide longer-term in could or gives I If challenging on of lot delivering more. What in? that just in of targets, what being ask the a see extent long-term

Lauren, Dirk. this is

put our important control So good in and place focus a that ultimately, back execute. to in is feel the come plan is I the to think thing we about. the which We're plan, to controllables, very continuing we

that X last good have nimble is Our think we've quarters thing progress be put agile, to or want against And COVID that. you it. during I if you to need really shown that learned the

as execute to environments adjust we'll the accordingly, very progress but with our so And adjust, we're against making. the we're see plan we and continuing pleased

take now Please ahead, our will next go caller. We question.

open. is Your line

'XX. past, on back new. volumes of think volume as calculus as curious then I'm volumes. we It's you the Ed Dirk a there. on And to quick not expect strategy you But wanted obviously, the you accounts? Kelly exit part the on at below provide about I margin case to mentioned so been this kind more of color the the mean, a of start Wells do to think Fargo. to improve. the decision Can your I it's bit some -- still just half, in just lower have just have with hand, case I follow-up other you contract has

want you organic saying Do case total -- the you just volume be make that sure saying I So up to there. are you're to half? back what in expect you

in I'll on it's weigh detail. additional Ed, Andrew. Dirk to maybe start, Why and I ask don't

environment with our in reflective case of growth. far we we that particularly and ensure the arrangements we as to grow we have larger right operating closely approached of groups As we -- always we've which working And given customers, we're are is profitable as case in. do way, the the sort have, I we the of saying that think environment have picture, chain been in, volumes feel to a are the very are things, want

arrangement number we and But operating forward those aren't find and an is to of the all those together. business last drive with we decision a something small where as able would an of conversations but model we in exit. work resort. in do, goal continue cases would made Our have to customers, that relatively to And a typically it we that the is to do

as far talk bit to half, it about thinking the we're a Dirk I'll turn As little that. back to how maybe about

Sure.

would improvement see XXXX we've against continued been from assuming to stable where improve and to relative expect we to trending, macro a that. environment Ed, So continuing

the think we're pleased point I other of Andrew share is strength about. independent the volume very the talked continued that with gains and our

and chains the a small has been the of then On number of education customers, part this plan.

And been so I we've deliberate. think

COVID there business the retail about course, during Of I that quarter. last we is up picked that talked

been growing So where even financial there be up one they they opportunistic a particular is We're I versus growing that earnings competitors and our we're as really should dedicated and that. and growth It complexity And on on just continued improvement chains right area right show a be breakeven. sake one this of think no think education, show EBITDA the our there. has on from the are But the those facilities, that And seeing were up who on seeing chain where being higher for opportunistic fit case. in in perspective. surprises in per is answer. have of one, see focus you about, talked the the I and to has

then and customer our and believe is with be opportunistic the focus very continue right one, other the we're thoughtful going types. and independent to and we on to Hospitality on So strategy Healthcare growing

take go question. caller. Please next ahead, now will our We

open. is line Your

from John Stanley. Morgan Glass It's

cases if just would quarter First, so exit going real that chain I quantify more can this question. be Is the the in what in assume could add quarters. Because And and grocery or impact then quarters you're factor a exits? last further will to back half? the of I clarify X that a those be X shouldn't I the you impact future, restaurant lapping

talked I improve competitor And the more there make something in is and contemplating? going reduce one attractive lifestyle is a understand biggest example, and turnover, to question that there I et advance this But turnover more week, your quantum that. training about work efficiency meaningful? about is really what doing do you're you're So X-day way to that efficiency, ideas to and for to hours of what's bigger just can that that? job cetera. mean, labor the Are

then one, first start some and in I'll the with retention that or X/X retail will exit, on But be for maybe retail then lesser magnitude, It and the reference, it second from the the can of the be last will the that will part the third basis impact. about the be of just Andrew quarter, turnover. part, talk of exits. QX, quarter impacted. the XXX and quarter, roughly On about in is that order it's impact X/X out points of in is for chain about there

impact the there. So size up that helps you across

were kind at last is the go and you exited of I think we we if year-over-year, of yet other new when the chains the peak QX chains hadn't onboarded had customers, the -- some some thing to you exits. at see we with year the look that's where on in important, too, of you planned

you sort all want go but is to retention? of about Andrew, this the the on again, helpful that's forward. hopefully, part talk plan, So of

And on feel front, situation. think, sure. we about good the I Yes, labor our staffing

to our almost We the all point. stand staffed what markets our challenge, ability are substantially at in be Dirk mentioned, turnover this type. And to continues as is the

relationship our get to that shifts that's our -- a to needs. themselves some their hires. to of to schedule harden We to comes is greatest significantly let's them We allow typically find face ability lengths exploring shift because lengths work, colleagues from steps new to fits turnover minimize tough also them for where taken have those aggressively it's shift the and be able job, from early group We've flexible it. to reduce are allow sort to that And our is really for a the better implementing really because that helping is that really our some frontline turnover that in all and invest a pretty seen leadership. you work They importantly, turnover think, managers. much in supervisors lot a function a are in in we our training else, steps development result it's area. of who in I taken linchpin for that to a typically markets And then strong leadership aggressive the direct where of position we've leaders, that anything know than and we've critical

expect so see early seen start to that. But from significant that And and training, it's results very -- to leadership promising of really some days continue. we've seen have signs we coming we out to that

We take Please ahead, next caller. will go our now question.

Your is line open.

Did something seeing Saleh It's you returning are into talked to you XXXX. slowed A a seasonality Are back industry, seasonality that summer? seasonality? you of BTIG. restaurants feel about like that the of guys trends the from seeing during to the get as pick as that bit normal you fall? number we well? little Are maybe Peter to and they have had head kind up since haven't expecting And

Pete, it's Andrew.

would think is there. out given there But to which it's I little the sign. a normalcy hard we more little to But trend. business, a bit again, say positive a it is overall, of as I think I volatility returning little hard now, I our is think tell right still certainly think a the a to that it's rhythm declare

inflation, cost then XX%. the And this know on food quarter Great. was I just

What basis bit hundred of quarter. of year? food points in little what anticipating end that first back inflation -- a than think a the saw I you terms the you the in was cost of less couple are in

go. we things are predict we to to hard expect -- think it's obviously I where

customers. -- very seen on deflation but of certainly expect also certainly of slowing but the are we a soon. and it's of our we've increase, anytime having ultimately, standpoint, the think cost we carefully, don't demand, terms a But it in don't we rate from goods impact only not watching in I

brand So and that good of other our dividends the factors through that, is to we of has is our menu pricing ways them working but of. really have to are typically portion those with not that inflation proud pass of really really cost US really well. I at felt to to their made organization have big to inflation something really which something impacted clear categories through we something some in some with as along the the true we've customers as only that sizing that's Foods, to ability help inflationary costs to very help And again, also strides look plus the we of environment, types paid we our more manage address great steer them that continue pretty about, contracts, think

will take go now our Please next question. We ahead, caller.

Your open. is line

Nicole is This Miller Piper from Sandler.

to first and And The truck is, achieve wondering locally and your selector in terms contrast salesperson of the when driver, or and question execution, at you're of also share can tenure addressed average? wallet the where turnover. work gains in of any best the But they market kind versus concert, was one compare DC when what question, in I turnover. you at stand you real you've kind

Nicole, it's Andrew.

versus So selector what driver I I pre-pandemic turnover question where mentioned, than considerably seen a across varied as think within in turnover area our a than I Drivers increase versus the versus Dirk in past pre-pandemic. less your saw selector we sellers, usual twice first levels. say turnover rates the seen how seller. consistent It's even fact, has we've bit think is we've seen, we've And is years. less seen in would very little turnover has

any the the started been working driver relationship a things and along that's one, seller about And between from where the the to with second a the really relationship great lower of feedback that the passed between them that's place we're seeing your one, question, to comes the turnover, which really either of that when -- our think, creating that experience. do enhancing we've significantly the they pretty around relationship is level the of main already positive. and relationship the talk we as reduction community have that's So ensure a really, intentionally seeing think has actually is it. more bulk of the that significant that's to one impact seller X. an customers the is incredibly is And a seeing in especially an driver because and on our such the why And other, have Certainly, turnover I I very consequence. actually both customer driver really in -- important

would customers? there your rates then with And opportunity sell the an drivers? you to to to you, inbound just And rates your how backhaul the characterize fill is outbound

Yes.

about. largely been our customer have the real that a be There's they that that organization what level, change to on speaking, to year. we've that the seen feel to start in despite And been, that the it's a level is the part so from good It's have we're of are always been bit we fill continued in is to I concerned the pretty rates improvement there improvement seeing we month-over-month replenishment of were from that made most inbound. still I day-to-day so tends little rate service achievement I the service is think an of and improvement, And customers about poor is a flat most we to the moving significant. challenges. where challenge relative to fill been But same nature able our which very thing bit a week-to-week. to generally the but categories not think, our not able positive with particular So trend and of drive in we've do of in think progress handling It that. vendor sort target. an that the And fact service those continued

focus. we cases seen backhaul, we part, on we've second other very in with just the freight And a going, inbound inbound your But income definitely To remains our year-to-date. a of to along portion results of -- backhaul that or contributing are strong number ourselves. meaningful have we the that, the logistics a initiatives our

what How deflation. by that us How And easing can profit? and none does it of last really et would our one, happens gross just now through I conditions, supply labor you demand may seems silly OpEx, the does and flow like because contract? of mean, shipping deflation type just likely. through flow it cetera? But remind require sound it

Sure.

a customer in per gross fixed or that deflation, are case a doesn't And the contracts you're versus the doesn't profitability flow so all. up it per our markup, of and same markup it portion impact still profit. at So making OpEx if as in shows that up much cetera, case, it product through it's pound, et

a lot the over you decrease percentage see of if a more bit. of profitability are that deflation, What markup portion contracts be If which the though, can little have over, our you plate it fixed, the time is in can we that it oftentimes a see is center of volatile.

go So that time means lot time, over little time, manufacturers. up way if they over meaningful And goes that's a of down, is over on a tend the ultimate the can a it from grocery, volatile the or then suppliers impact. one to but be

it. we think through I playbook it scale deflation So we broad show manage near don't earlier, term. that, when to inflation we for in noted are a closely, think of that up watching and expect to run But as we we have sort inflation the

will question. Please now go ahead, next take our We caller.

Your line is open.

John Heinbockel, Guggenheim.

that it Xx millions to as the now that's me dollars, they obviously, with on to incremental but So with are Is up, start of material drop What right? meaning, Really down, the know or P&L margin. benefit you forward, and seeing mid-single tens Is low don't probably right, a of is Whether it focused a guys, size. today? we I right? comparable then sit And material drop I I think. of are it's restaurant digit? if locations let because going here be size, kind benefit up independent it's locations, chain. imagine

John, it's Andrew.

second on of You Remind I say make got we we've you would to your question. drop of side, may just sure as drop reported it. mentioned. think first have a I in to repeat seeing the But for size, our small half the are the increase around the reason me second that half I your question half

Xx, Well, margin. be incremental It's that, to right? margin it's not X.Xx on the gross got your But normal margin.

we the that and do clear as a to you is So continue? will think P&L today, sit that benefit

clear the of range certainly cases benefit. incremental cost We quantify additional won't Yes, or relatively the cost those of are but the significant cases it's a marginal additional it, given those definitely of low.

especially existing we independent organization customers. As share mix space, of expect have share of seller continue. that's the certainly of continue growing a is continuing, an in And our with a been I pretty that And do to and far IND area, good focus mentioned, new. certainly penetration gains, to as grow big wallet our the as to

other add. John, just would one thing I

I lies and other as come the back to with Hospitality. shows volume customers. existing you see up is in lot think that that continue opportunity of ahead Healthcare A still

to customers, drop for from And which so are already have. perspective that helps from pretty a drop attractive those tend size they the sizes

that in I going in that? what right? we little a than don't timing this thing right, was lines disinflation, some we're cost to right, Or the labor? the ask, is up, line line the think you same to right, the some and easing do you labor different either easing? as the tightness creates top proactive up the How do deflation, But -- So environment in do think right, going the top respects labor outs or of case if is think have see tee about environment kind doesn't? we environment deflates past, deflates an this cost get I get other makes time The at macro creates, you is maybe to

Sure.

through There way -- kind I you're you your top and X the where is it. of more because line going. are sort of automatic think levers they're manage separate

deflation. I think to point, essentially foreseeable the for -- that, expect future would as said, inflation the is modest and/or not we your likely

a the I shows think I COVID, is, earlier, do through what proactive than come the have on up is quicker we is, to that way manage really on where more be little side. side. through you GP learned you cost back the what about to, That What good in that different as one the talked side, to how I'll of running on in product have that in And cost. as then again, are cost across spectrums playbooks on the effectively how and we're we always to to need deflation. inflation manage the agile. looking environment, very on be the side, see And that we the you

associates, the as that is those hiring recruitment, a has the and it mean, on the to impact being seeing certainly of associated on the we challenges are maybe one I turnover address with costs just be. tightness just John, labor But levels as productivity. benefit. will that question well onboarding that the of face we with right the That now

start So see labor that I loosening important environment. aspect in do to be if certainly think will that an we some

now caller. ahead, go We will next take question. our Please

Your line is open.

strategic just zooming you on today speak My the Mullan, bit. the opportunity. this Maybe long-term Brian the differently just managed to of And in area component doing versus management is believe Bank. business the this could plan. then organization is I vendor Deutsche is an it prior? important what a how question of

here Just earlier this Just to How receptive? this your wonder Are Are speak August, in color. negotiations? you are confidence sitting could in your of being situations in any the year. degree how your win-win finding if to you progressing? partners strategies felt relative you maybe

of of all, the things. as I initiative. in feeling said I very we're actually really, progression opportunity of think maybe We're little a remarks, -- there's ahead a perhaps on of that. And the what's and about today first good our in that than couple my the there schedule past, different

past. made difficult as goods, able couple to in been of had of obviously First, our as precisely we've have -- it of perhaps to last we sort has the volatility the of as well years cost the benchmark

today I going to position this be And large our we've is feel of I of a confidence that versus sure we grown consequence conversations as really can, I had far. given the part is just that in are the productive earlier has really nature making continuing a we year competitive so the of think last, thus we think, very as this this think or terms in and back scale. And

found opportunities have wins. significant We for mutual

far. And work standpoint. the cost that not only standpoint, of have also will find greatest a are world help together but from thus our some are that the to from is conversations vendors goods closely the opportunities fruit right just ultimately efficiency production think I ways now, yielded given help those a us to really way the there more

industry? is mandate on And way? someone just priority food is so then distribution starting or a the of related, just question follow-up, to this the any going, a the pool you there's CEO Board how a in preference the search. there permanent just from can say, particular that at of if then a find candidates to down Or And Understanding on maybe that's can much you is inside narrow time? only a not comment

want Bob, that? to do take you

It's Bob Dutkowsky. Yes.

I'll a shot think that. take to at try I

not executive. executive, the of It to searching of would had culture future, be great So Foods. We US record company candidate. if supply for searching searching in the that embraces firm We're chain CEO. a a terms track value, very built that that company made the search a search we can we of we're process. a in a the example, good next public but food quickly has started for an spec really creating really really one We're into believe relative for a they experience executive industry the C-suite we've pleased hired US with a Foods, we that progress for could formed and shareholder the be proven committee, lead and the importantly,

really we and the has firm The we've of the interviewing plan. strong into process. good list have search a a begun candidates, identified process. We're very well So

are with process. with So we're the really pleased we where

take We caller. our will ahead, go question. now next Please

Your open. line is

customer feeling maybe, the and whether and this maybe supply chain the service is last an now are throughout Jake seems recently, around like that Bartlett on issue more whether is impact like that is is disruptions onboarding the And able this sign be an business to customers look prices indication I'm or could go quarter, for to they exit pushback on the be there. whether were Truist chain It from generally better done, or of a more whether and can the that is pricing we are year. as an customers of maybe broadly ability the business. of -- Securities. very My This first we talking wondering about less the now chain,

Jake, it's Andrew.

is First net up of slightly. all, that chain our I actually say think to new lost it's versus in important

of of chains customers more away from, as an doesn't wouldn't I exit presence, a we are opportunities from been urban which we've it the worked attractive our net well We've a that right restaurant-type the board. brought growth majority move seen negative. certainly is find way And in And a to and more I has the any necessarily the as customers of this coming of the kind to is proven chain ones business, the be happily as them in offering, outcome. signal where characterize So as have typically existing addition, vast very that been with have for said, that resort. on quite last independent

This add. could I Dirk. if is Jake, Just,

the exit we're talking part where strategic So actually, that are are plan. the about they chain of exits in

and losses remain a pipeline there low continue growth regrettable perspective. quite our have across a customer good from types to Our

expenses. one just Great. And then operating on

here are of You what the temporary in costs high and wondering -- mentioned be might time not quarter over workers. worth seen what are to forward I'm kind that cost call the benefit of training recurring? that a still second we may trying go over of years. costs you've what level kind we the from as might Just be have last, the gauge elevated that it, X.X

Sure.

haven't what talked what last But and those. progress. business, higher remains build Andrew And as more about make will of it's shoots there as whether it And other couple quarters, the productivity say we pieces it the I largely So or quarters, different just is we'll driven of would see areas we turnover. the last about, upon green level we to similar that talk of in the by, we quantified that. these expect few is specifically really it to

though retention, the routing to our I there, inbound things are we receiving whether even et initiative seeing other still about, is around again, redesign, talked though, a even gains. whether showing product, are broader be with which it issue, take think that that it kind being cetera, around there the the Andrew is be that case, some of and the industry important away, of thing even progress, process

be So just to with generating are and macro Unfortunately, focused it. battling the we to things retention the continue in others are we the doing address still relentlessly we're know on some environment, gains. and things

We will now next Please take go our question. caller. ahead,

open. is line Your

just on from Great. Bernstein This Jeff Barclays. of business. Two One, the the fundamentals is questions.

service late wondering broadly, common quarter. to more of XX% this any volumes But I terms past changes casual otherwise, being that or you're by of accounts volumes. in kind that exits with of mentioned any income change consumer account dining? Any the think that seeing, change the anything XX%. one terms or volume on quick I'm by maybe then I I were mentioned, know down color no And of of follow-up. you that themes how close seeing chain Are the have is much you color conscious you versus chain in down any level?

Sure. Jeff, it's Dirk.

about overall, the strategic a about So concepts, and if we that, concept. chain continue be you softness last talked in they we mainly contributors then the and to a being recall, of are, we the exits. X quarter, see larger talked to And couple specific down to happen

a and whether losers across some casual, any not winners widespread different specific the softening, chains. And out we're the do But QSR, fast in with continuing customers good ones. any So that see would is seeing call the thing different and trends, seeing better what those point. not seeing cetera, et move cetera, continue that. I at that we're within change trend that types be think I to see see we're across we that et in results this are you -- not toward we And and fit, to it's is

Yes. Jeff, it's Andrew.

that watching no the one in we we something either. The we've look trading carefully we types menu of for any -- when have And meaningful we but down very meaningful not that's haven't that, seen things it, change within would think, closely. of is say say sort again, other, at been I behavior, that's

of are you guys mean, Understood. sure terms I times for I broader for are And unusual the service then for, well, rational seeing industry, obviously, competitive industry these and in distribution mean, you the broadly. just for behavior? food more

large to you both trying how set, get sense small? your Just of behavior see a and for the competitive

think continues I that it describe obviously the real right ongoing well as have There for the we a rational as as sure. market inflation challenges. both would is been volatility now Yes,

of sort this significant any seen irrational point. not at have behavior We

I And to it. lastly, question then contribution the earlier. appreciate Got your Bob,

are in some Or get of Just on most areas change we the look you of brand members have it going those just Board wondering, of the in direction? now would kind Or dialogue? change but maybe kind a constructive recent terms focus? the additions, the conversations of how as early Board? initial the in what of significant inside obviously the don't boardroom, call wondering, Any you a

good new X Yes, beginning since the year. We've question of a very it's here. added members Board the

the really you aggressively We that that and a brought our and executives fresh new chain, have really supply to example. the and perspective, a very, board set ideas we're really aggressively by their Barber to expertise they areas Jim of aggressively. room one of So very members. them Bill of added Quentin productivity have leader and the the around oriented encouraged They're skills. we're with have of experience, And have different Board staffing I'll that US the jumped engaged deploying. supply give addition chain Hancock, are brought Roach. Both Foods of into interesting things X

now with. that the we real And Board with have a place very thrilled we're strong we're really, pleased So additions. new in very,

caller. Please We our will ahead, go now question. take next

open. is Your line

Slagle Jefferies. from Alex It's

range, move towards talked First, EPS on EPS the guide or applied with lower if range offset would the end guidance the the on higher there's the that end higher clarification an sure the in just the there? release, or towards the to you leaning a and confidence wasn't interest about EBITDA also of the if continued expense

Sure.

EBITDA. So for I On stronger. yes, the outlook confident expect in EPS, still

still not upper given sort half, interest like still similar of high expense, likely in the I higher strong the feel where that the assuming environment that at we're to outcome again, think remains that's but of end, leans an in. quite a good strength EPS the

your the work optimizing quarter to and progress the the on additional the to and everything How vendor in a then and And color. second compared follow-up Okay. question just allowances freight get there to case it seemed how levels. which improvement on quarter. your have like And maybe in very first you per if was comment solid income first a the freight compares 'XX quarter, any

here really an last think, is in engaging freight which over X given important, made X been of used really our way vendors only year Yes, contributor place important the more in they're have also made. or back the really years. to arrangements doesn't profitability the catalyst getting of have is I we've to just a underneath them only more made make over late very progress adjustments Alex, the acceleration once think, to the the I markets Finding we the very be really take QX. function saw team think, to rate the not progress. are making, ways a And equation appropriate, versus in lanes And kind which as, pleased flexibility a and really just We've with say would been that We're strong made on to regular that Andrew. vendors progress strong actually to has it's this volatile the of QX we push -- freight. progress And progress we slight in great that the where a also, but it's our been just on get we've I basis, look when a sense.

have we Just questions. to two time advise, only for more

go We next our caller. Please question. now take ahead, will

line is open. Your

just It's differences Smart between some on To from out Foodservice macro customers in much Mark interest you seeing you any given any an cash-and-carry your Do seeing start, And over there? are Carden legacy pressures quarter your CHEF'STORE changes of the legacy and see past UBS. are are our ones? stores? major of how the you then, uptick locations are shopping in that

And a Foodservice consistent see composition big the I a it of been behavior. they're versus wouldn't the gap That's haven't CHEF'STORE Andrew. in categories legacy seen foods behavior terms terms really in in really the I in significant big say again, would a Mark, stores customer throughout. it's nor of we pretty shopping. of between change their

is really are We out among leading new pleased welcome with roll to are looking find and opportunities he of to extremely with CHEF'STORE great business and to team. the to an we in we first very at really a rate ideas that comes since organization, has pleased as we're the the of now to them He's mentioned I ton topic tremendous retail for on is, a background and [indiscernible] expand my which really because remarks, continue the it. accelerate opportunity performance that are to and

have demand private restaurants pressures the from then to demand in And much of reduce across increase last helpful. and Or label picked offset facing? seen pretty costs Has others remain and relative the few That's Great. has to help up quarters? of penetration you board? really an some the that they're consistent

it products. We but I in challenges ease our think a we able that are as Well, as that improvement issue continuing brand forward saw source a past, offers basis up of pretty the XX of we've value bit have And an are in see as can. in we to been to is, supply for business been aggressively our mentioned, starting that needed exclusive are the considerably better of as we as Supply sure additional we sources we driving make proposition part, year-over-year point exclusive an customers. that brands. function to

continue to yes, we definitely, opportunity an aggressively. one in environment this believe will So pursue we and

now will our take go ahead, last Please We question. caller.

open. is line Your

This Bania from is Kelly BMO.

in customer think Hospitality, today? inflationary maybe less you be economically Just that think about like, volumes about is case think do might inflation just And Healthcare that and little wanted bit segments depressing might And moderating you you a different that especially volumes environment? to your by respond a how sensitive? ask how

Andrew. it's Kelly,

we previously, seen have couple meaningful said over last not inflation a change the the seeing. in in we levels behavior quarters spite we're of As that of

it's predict hard predict occur It's in will will happen. how categories. what to So hard to which any moderation

inflationary finding to within of great sales continue the share even feel is drive environment to for I organization, great as in share in we about So good main, as -- that. market we But wallet on unfortunately, gains don't build customers. the our ability our through have ways well existing our an I great you answer to relationships, think what do those feel a

the the of do that I Got think the it. you terms to Hospitality, where can is catalyst maybe you really be? just And back then it What in think Healthcare, guess. to Healthcare or more get and

am I Kelly, Dirk.

one, in that reopen -- back comfort into out as a facilities very it tick think slowly seniors to occupancy systems or of like. confidence people's getting Living getting staffing, I catering is I Senior and continued of lot staff think just and to have to able it's in rates up their to continue continued on they some hospital bed it -- being in and up. the Also, acute

are a for to build And some one -- really others. slower we improvement that have a encouraging. fair people us to it -- that bit continue that than means it where seeing very So that by. goes Healthcare, But And be that, we each as is we is perhaps of that we in recovery -- business little think quarter confidence as continued continues. hopefully really because continues continue that

That the turn back conference concludes would question-and-answer today's like now for to closing or Shah additional remarks. I to session. Mr. any

after Thank participating for shortly day. and a and follow we have everyone, call. up you, Thank you, the today, will great

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

You may now disconnect.