US Foods Holding (USFD) 10 Nov 222022 Q3 Earnings call transcript

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the US Foods Third Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank Relations. Investor Adam Dabrowski,

You may your conference. begin

you, Foods Third Good everyone, morning, US to welcome and Quarter Thank Rob. Earnings Call.

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

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

earnings presentation Relations take Our slides accessed the questions Investor can of [Operator your this our earlier will our prepared be issued We concluded. morning page website. remarks after Instructions] release and today's on

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

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

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

Thanks, Adam. Good morning, everyone, and thanks for joining us today.

to quarters momentum US performance long-range strong continuing results, reflecting XXXX to the driving quarter Foods third continued from our We underscores foremost, and delivered in remain our report delighted committed first I'm long-range of we First three plan. our outlook. our the achieving plan. that to execution and confidence date

quarter. for key turn Let's Page takeaways from X the to

long-range pillars solid quarter three the plan. our continued demonstrate of this execution First, across results our

a execution on and critical of Our on our them to am I for associates serving customers. and their focus progress, grateful this are part

worked Ian, tradition us the continued support which up In and customers. their we Most preparation recently, US customers associates customers for of on Hurricane need key a in communities strong best-in-class industry. operate Based the during in most. many This could our on customers East why to received, serve of their relief focus intense quarters addition day-to-day our execution, our ensure XXXX. and have Foods large we of on tirelessly our our our are with response customers we've teams our types delivering market severely agencies effectively capture impacted stepping feedback to of when and part share able been Coast, is all three customer storm to properly and

strong with customer in well light environment, our Foods US of in our diversity recovery deflation, in macro continued effective and scale increasingly and plan, and tailwinds. Second, of momentum is positioned an management win our inflation particularly to evolving

the finish a results to to our strong Our confidence deliver reinforce year.

shareholders creation Finally, share to we for new drive expect program morning. value repurchase through a meaningful announced this

to value. We U.S. committed long-term flow strong Foods cash deliver utilizing are to shareholder

growth strengthened business Turning QX delivered volume our our X. to progressed, as growth off, sales quarter our see for EBITDA an the our the quarter I'll again Starting start results. we once for third grew XX% the Net walking through strong by highlights. financial Page year-over-year, customers. quarter as for acceleration rate. which XX% both nearly we positive from grew Adjusted quarter, for and

EBITDA we as basis adjusted operating prior XX gained Our also year margins the from points increased leverage.

XXXX adjusted EBITDA our our of range. guidance the toward prior Finally, we top outlook have end updated

earlier resiliency this to of we year. and show in our put forth on team the deliver the Our the results plan ability business our

to types, further processes. launched We share which next-generation experience. customer as operating industry-leading we and digital our we we into share key MOXē, our to our continue expect data with gains continue market to embed tool customer Turning drive

us brings in before opened with XXXX. further more an our QX. expanded open end two to the date four to two QX openings stores new chef which we stores, and of omnichannel expectation This Finally, with early of

service, expand a focused nearly continue with our smaller XX on to active also program delivery markets. We geographies customers service that in Pronto and in are concentrated

Next, from and warehouse about selection our to system associate planned. ultimately, happy we seeing driver warehouse progress chain. are experienced with progress. improve our actions experience. have Both what This on customer continued are We quarter improved a pleased selection supply are experience, we as last better technology to a completed talked accuracy deployment HX. various and in that turnover I'm we enables the taking better report employee improved and we I retention,

be, strengthening leadership want before respect and offers yet improving greater pilot and our week are on flexibility Southeast offering work seven-day and the retention We to the promising, Ian. Early we helpful to returns by in after not schedules. from have simplifying shift it engagement and laser-focused proved remain we our very processes, been where core flexibility Hurricane with

financial improved collaboration. continue third-party ahead plan make we partner the on Finally, well logistics, is work results resulting for year. inbound to This in of and further progress

Lastly, in capital X.Xx managing and QX of end leverage reduced our the as we've XXXX. to structure been of intentional our have

term During the capital. let's how pillars value of improve our move plan and price on shareholder expand confidence that another Page With progress has this significant the very responsible and at million prepaid to of earlier in announced were million share highly our a $XXX in strength commitment structure, QX, in prepaid Board drive three evidence quarter to value the future We translates of share have long-range efficiencies. we to margins to is on repurchase Directors demonstrating see on our $XXX our XXXX current and further accretive turn capital stewards step our the share our program, profitable pleased million into focus term We gains, today shareholder in performance of that, our creation. $XXX further being as also approved of on shareholder a operational loan, to discuss and our XXXX loan. October X

restaurant the market. of X.Xx growth our we Looking first are at to pillar, our rate tracking exceed targeted

are care MOXē The in win milestone. continuing step from marketplace, launch by of earlier is key our customer I the to mentioned share to significant hospitality. in as demonstrated perspective. experience and performance a MOXē gains We is independence, change and a a customer types ease-of-use also the health

customer and ensuring been We control. on have speed, increased confidence focused

Our our Customer shop very the we app to it and XX% has new is experience industry. and been similar is seller one-stop faster lead leading user than apps. the feedback this in positive to expect extend technology was retail before of and

earlier, the communicated. previously range to As Chef end stores expect of the six new high mentioned XXXX, we we is open which in

capabilities in pace open XXXX. As that we to building stores, we our accelerate are

optimization the on margin pillar. move Let's to

As a to of case independent reminder, on per we've working internal been that conditions. are a initiatives profit number improve market of gross

momentum running the plays. example, the logistics continues initiatives process deflation our continue to from In For inbound to and program we drive efficiencies. We proven management inflation build by as our effectively on managed less with margins saw the of experienced remained third in in first the the than strong half first and quarter, we year. inflation of yet our line the sequential we half gross year, and

goods well year-end. of approximately of management XX% is with to vendor continues addressed of expected total ahead schedule by and cost Our our also be spend performing program

last efficiencies. operational to Turning

environment. We are making the macro despite challenging progress

date. optimization further quarter of and per best routing mile the ahead third in continued, XXXX seen our improved the network results Our and planning to to cases work we've

from network-wide still phase. come to we pleased doing routing quarter as on the in a productivity turnover the markets from progress, focused and than benefits saw in schedules and system and third initiatives efforts benefits in the yet with a lower engagement, yielding combination optimization opportunities. work is quarter. process of We in we greatest tackled on We a with productivity targeted the experienced the we standardization, work are are employee the second The example, select through this remain replacement future flexible for

to Turning relentlessly X. We've achieve to build we quarters Foods drive pillars. next plan The on expect progress against and these our are US actions last entire executing that made organization significant all initiatives our is over and on plan. and to long-range that Page focused the the three three progress

and leading to year-over-year improvements. share the gains our As result, customer and experience we are profitability operational a enhancing significant foundation,

We are customer serving types. many a resilient business

Given and challenging in well our rightness our positions belief focus, the of in than are our This win less environment our achievability a volatile long-range plan. U.S. strengthens even the others. operations further and macro us to

build against our to to and momentum will deeper flow do this deliver growing to plan, priorities results. of to create continue Dirk, this XXXX and four strong progress I dive strong a us you. it a that, build I XXXX. up a we financial to momentum we over Dirk With against will over As for we value. set cash confident our am and strong In hand prudently into will on our energized shareholder this the am and to proud allocate year, by I summary,

X. will what accomplished We're start Thanks, pleased very morning. good Andrew, Page and quarter. I with we on this

on the prior to QX from acceleration our last from We demonstrated quarters rate. from EBITDA continue $XXX momentum the to two plan. against for is long-range an our XX% million progress quarter, our year grew Adjusted which the growth build and

to cost the were the adjusted are dollars, grow quarter, exits. points the growth $X.X adjusted of we of quarter was from In last QX the EBITDA diluted XXXX. exit increase XXXX and during approximately our over QX the was prior case Adjusted and food a delivering the prior Similar addition year. strong impacted of demonstrate the increased our third inflation over the EBITDA prior QX number year-over-year was business added The by an volume per relative small planned highlights to start to prior actions case prior over the was the strong of X% and remained quarter XX%. we case and in year. best the taking pandemic year XX% QX, billion results. EBITDA growth These basis X% with case strengthen pandemic. Net strategic retail since mid-XXXX to $X.XX. XXX to XX% meaningful EPS negatively year business our sales in to increased increased Total temporarily are Independent grocery further line

gross dollar quarter. trend continued strong our We of again this profit growth

And the increased signs strong as year. of similar case. Our progressed, adjusted we improved gross because is maintain adjusted we XX% gross experienced prior and saw half profit we sequential important per we're OpEx productivity yet compared the large positive profit able result, profit year, dollars to first generated the with to This rates. turnover a amounts inflation however, quarter as case. little gross from in remains operations elevated, the per

and retail increased and at exit XX% lower care on impact further volume chain cases XX% by Independent on look Page nearly of volume the grew prior top X% grew health previously. approximately the noted Let's in X. Hospitality year. X% offset I X%, growth

macro the briefly what with the QX about total quarter the case type. growth types QX. we QX talked to quarter driven last again gains will still improve the performing for for to number with strategic profitability I stronger above momentum This rates with or as in exit expect of independent at by largely have prior quarter. customer delivered we were very XXXX, XXXX quarter quarter's We of backdrop. was strong recovery growth focus overall the all finished XXXX. growth ended more and to this customers, We decline lower they the X.X% exit small was strongest was almost the embedded above most types. below of customer each full-year rates pandemic. and across volume COVID with started above on outside share X.X% IND this cases chain customer regardless cases types in consistent positive, relative the in and growth the about QX We QX. rates gains key of further growth Our growth than our Case complex a case

and approximately cases improvement care health As XXXX XXXX, QX X% hospitality while from results. below QX were below XX% about showing was

and positive show volume September October and as they We are continued strength about our improvement. optimistic in trends

Turning to Page XX.

updating are our provided fiscal We previously. XXXX guidance

remains the while further, restaurants negative to Technomic We Within XXXX, we positive, overall, improve volume relative while our to calls for number compared be goal expect even expect to to positive Technomic's latest with independent XXXX [indiscernible] year is expected negative. the growth for to market. exceed be to restaurants of outlook a our the strategic discussed. and small outlook is previously for

on for We exceed to outlook line for are care and in their also track hospitality. be health

been relative recovery industry. area hospitality improve an that accelerates, expect lagging lodging, has to we in further to the full-service As

Moving to earnings.

our updated is $X.X cash long-range are against to to $XXX be to the $XXX EBITDA quarters CapEx, tightening our fleet to execution are as provided range of the EBITDA pillars to our to for financing billion. million. EPS $X.XX range Interest billion the We and our in confidence three is million guidance and strong high $XXX diluted plan. of tightening $X.XX a CapEx three Total the approximately adjusted achieving end $X.XX our range. significantly million to $XXX adjusted reflects This be previously We're a expected of of increased with cash to be result, expected range, expense expected adjusted $XXX to million to leases align million. also including

expect at net to approximately X.Xx year-end. continue we Finally, to leverage be

QX XX. We both in strengthening Page leverage compared structure further again We and QX made at progress XXXX. reducing reduced this quarter XXXX net our leverage. Looking and capital to our

prepaid approximately million net reduction from ratio X.X from and turn $XXX of year was year. date, a quarter, term X.Xx term to allocation $XXX debt of have which reduction QX $XXX an the million is at reduction a we Leverage strategy. reduced loan. of turn QX QX, third end focus prepaid X.X capital QX areas Our compared the of million finally XXXX XXXX the in And this leverage during gross ago one of of We a is to our loan. additional and

the leverage, in fiscal X.Xx continue priority continue delivering our with to expect Xx structure net I am net and strong we range our goal to make strengthening We to and further XXXX. progress capital achieve our quite leverage. make to leverage we toward in to reduce on of pleased progress

US and to Foods our cash XX. using we're stated Page strong to Turning has flow, priorities. fuel

against invested as and roughly business and stores and Chef technologies center center MOXē our XXXX. distribution We such as for with selection, capital warehouse in to in will facilities such sustainable in fleet. invest million And continue our new in environmentally in New the Sacramento, growth Orleans New $XXX distribution most

made reducing X.Xx in our of significant to expect have in We XXXX. Xx to target leverage and range our progress achieve

by using to doing cash debt and are reduce earnings. this strong We flow our growing

reduction program. announce a to $XXX further on meaningful million leverage pleased have of return balance very the capital share and are we shareholders. is demonstrated of we significant leverage Finally, as a repurchase to This step and reduction focus

create opportunistic cash we value the business, reducing structure our shares. and strong resiliency These see repurchasing some tremendous balance shareholder our begin strength In and activities opportunistically the our our fourth to in XXXX, and continue we expect value. parallel. shares demonstrate of flow expect repurchases commitment in It generation our We to and actions capital leverage outcomes in the refunds quarter. in a to sheet, strong that

the in may inclusive to year target our range, expect end any of We to leverage capital return we shareholders.

with our our Just this in to sum it year, confident up, it I am that, I'm to deliver progress Andrew. to With XXXX our pass back ability pleased outlook. and I'll

it closing, growing operational profitable hard margins continue and confident building Thanks, continue have gross the operator, they as momentum. To to open am team gains, that, plan to put on financial driving our and please questions. proud and In strong focus of we line laser-focused the and we of Dirk. With long-range succinctly, talented customers in our our the expanding excellence. of executing be initiatives with share strength to winning, and on progress. up our business, I I'm the thanks for our underway serving on work our we are

[Operator question of from Jake from Truist Instructions] first comes line Your Securities. Bartlett the

Your line is open.

I whether a generation? plus follow-up, please. the on have and thanks that's what's nice How question. been account wondering detail share more if see is provide case independent acceleration? Great, it's driven going traffic or acceleration driving is to by an for new acceleration My you the is whether the gains a could for growth. first on wallet there. the customers, by or a -- I'm taking drag And Then

are pleased well. we're It in they actually quite as Thanks Hi, own we've a that of that seeing suggesting reasonable balance growth. the actually also new share too well with that will I we're Andrew. as for Jake, of say, question. both seen is demand, combination gains the our as a And of Yes, it's strengthening customer wallet also growing business.

growth So customers our business. their of combination in -- new themselves as expanding all growth share of as new it's wallet, sort customers driving three well of customers seeing a through across

I was in the It third question versus other then And versus most segments, hospitality quarter case health a care, Great. versus slight deceleration a the than 'XX, growth 'XX. like there the in looks the had and on second.

drove kind slightly? if was just those I Whether -- similar quarter just what your were versus could on hoping commentary So you comment that? what of any the And why share on second? gains the third in just decelerate

Dirk. is morning, question. Jake, Good this Sure. Good

I We've of like there, had slower entered as I quarter about, -- a some I bit confidence of start What trajectory feel Hence, overall, across the just about quarter, improve sort had to slower and of with growth. in little the saw good we're broadly. the quarter So the think which has just we seen that case was of demand gone the we the just talked Andrew broadly continue little -- pleased. exited saw the you a have what bit on. a beginning the and fourth third quarter

think key well tailwind. do really continuing those also, a gains and share and we as improve customer And types. across continue care expect relative that just important is is I continue to built-in to the see to to hospitality XXXX we with are health our and think thing

positioned to the it's talked us, right -- growth we've feel is I as grow to a right with key -- growth. types for opposed types, are well customer So profitably of for just position the about the lot with we about well customer as growing sake the

ended the good feel quarter the where fourth and quarter. we about So

to trajectory what to were Jake, we we consistent share question, saw saw to And Yes. your add QX. in in quite just that gains

you. Thank it. appreciate I Great,

Your the from Miller of next comes Nicole line Sandler. from Piper question

open. is line Your

bit about inbound of material much. Can that's any little couple so both opportunity a talk and backhaul you. and fairly opportunity, outbound fill you believe -- A rates, your ones. I do quick then a quite it's you Thank for

the It's Nicole. Yes. Thanks, Andrew. question. Appreciate

is rates, fill The of speaking, fairly say and fill fairly to rates improvement main inbound extra sure our bit aren't flat to a and in of manage would versus key alternatives we outbound supplier continue up stock little to we got that products But a when we primaries our that to our build we've where our in two to in have stock categories. flat, still to in One So basically bit key means. make improve. was base QX, it secondly, though categories. generally safety has through continue our customers to little been some diversify ensure

the opportunity, that some those that As logistics you've have time. results And off. seen efforts far as something we actively backhaul income -- really that you'll is for pursuing are freight see from our been quite results paying or

I think to something some and that, on. that, still to focused go got opportunity we is continue team after very that's that

I question, us opportunity had own remind the something like to And own problem this or today? their there. It's I've understand like domino the with capacity, inbound, the of late, their trying inventory, guess, side on the effect what's the asked that their to. manufacturer Is

improvements. like, fill because of to our the through. would as fill categories. it's have we supplier And the got even our though all as system rates material list rates in has de continued absolute supply facto I'd I see think raw diversification to of still some much base. challenges. terms some The of challenges our above challenges improved haven't definitely that We're it's improved that starting as The of only some add working continued in is thing

cases. still are in the the not we product, getting from usual sources it all So is which getting

right, would think bigger go consumer of of periods. to thinking any that in speak importantly, share back prior bigger you guess, or up of to Or or and to did I your guess period those smaller from you more it take US peers? Did Did share And peers? you when terms types to. organic then see I Foods, be down. you really back smaller prior care or could And sales, recessions macro weakness

question. a Good good Dirk. That's morning, Nicole. This is

So overall, itself be has our and industry to shown our resilient. business quite

earnings recession in were was you very down cases relatively If XXXX, what at were a flat. tough XXXX, mid-single look digits,

though, four much XXXX, you less recessions, of at XXXX, If last or outside three look other you saw inflation-induced volume the decline.

So very, it's small impact. very a

the I think of resiliency business. our a of that's demonstration

around even things A we I you the done of differentiation has 'XX think One we've that prior, the since were that company. look 'XX, if a and been lot in different very then. back of work

types expect better that we positions we resonating to all fact, us resonate. past. things to challenge any that that even a were to I in us think are so to these kind And of across would today same share than customer weather that take comes the for the And continue in key

can't drive the and on. well that's and going So initiatives that, control focus can't we control even and long-range though I positioned the we of think macro, to plan our what we're we're to execution the

is And the please. impact versus top less How line? bottom and last inflation impact disinflation Thank you until underlying movement does commodity question, lag the what items? the the market And see in that you.

Sure.

what overall, relatively is So short. lag -- the see is we

or noncontract to from can to of most a again, it contracts month, so. our call or a be, within it, week month price that be So a tends

earlier whatever beginning the think strong. that protein markup of fixed saw many actually I or so cost we've remained be QX, And our think that I over think categories to to is actually The profit that reference quick. in our business. gross effectively. that tend to made that almost saw amounts the half demonstrates quite resiliency to quite likely we are playbooks are inflation show we think, And deflation. categories we our Andrew we that those some first in amount processes those relative very of center so have, manage year, And deflation. categories and small per all saw is. I through the the inflation quarter, the more that the of yet a within plates since, of positive the that at And the seen the XXXX the sequential we And sequential of third and -- case least the thing pretty

time, over really overall So impacting our profitability. not therefore,

with inflationary So through environment. our pleased progress, with we're where positioned quite deflationary the quite and an management it and from pleased

much. very you Thank

And your from John next question Heinbockel comes from Guggenheim. the line of

open. line Your is

independent size. drop lastly, start were think is of impact imagine And fourth cases, number you your accounts that, you've coming far in a that growth thus Any of slower, the then you've maybe right? but to right? that maintain fairly to market of quarter. current modest, the on And seen So the said that's just right? On from improvement I'd think If I the flex the can would wrong. quantification you do up level or X.X grew topic, market ability to it's grow?

for say happy the So by in rate driven we're we with that Yes, would better earlier Jake, question the you the And would the IND pretty John, thanks the question. in meaningfully saw that of as be growth. a we quarter. mentioned, said overall from factors a driving I we're than the in balance combination we're way exit seeing

we've how that seen we offerings the and the differentiation our through environment, way enable hard succeed in the outgrow helping see to them second something outgrow environments. be of would how expect And help PPP manage expect as that customers I through effectively the customers to we use we a shake get that think know And further through we going think them it's you them with what have to their the a thing in I ability to as the to we just would loans, them, is manage what to us on that in factor would would would if but to them help out we the slowdown, difficult is to even that inflation be say how to businesses. helps way I think period. part outgrow is potentially we're Yes. was their well where exactly

think we're allow probably will to work I we positioned, think share. So -- that to us if is doing, take better continue anything, we're the but

over and where think that, and the of nimble growth been And of the three been the be I first to contributor And the what of year. think to COVID is. has resources gains that's John, entire really redeploy through most share agile sequential just add ability one the significant I things a learned pretty quarters we've the to very market period-over-period steady course really to is

much the normalized that? And then usually little go-forward selectors -- be or benefit Will then on staffing second labor than that that do stand think we update I'm with bit would hours a you an Dirk, where labor give rate, in basis, of drivers, curious, the right? Do maybe lower to right on below and I And digit right? on case one, So that? right? productivity, you hourly opportunity mid-single growth right? there's wage can how And hours an of expect bring grow assume a

the a why start don't I what about then talk and side. maybe John, Yes. on Dirk bit seeing can we're rate little

the of our markets. situation, far vast We're as As position in our staffing we feel good. very in a solid very majority

we've over saw was want the real environment better Those little also engage we from to meaningful initiatives help course some As show quarter. undoubtedly taken turnover I to are driven my a think reduction our workforce be and the combination, create a a remarks, primarily, we've culture that the by pretty third of But take macro in And of well. the mentioned of they impacts. a really some bit starting had to part that as of. I

So productivity, is impact I the in immediate on get of starting our our show the that place business. and right I'll feel we've second What to obviously, up we an better I as staffing that start almost primarily part pretty to has the is, question. on a good about maybe now, situation. would say, seen

we're facilities need overall other see for we've short more reduction over probably time hours in that The time, term. thing also in the first seen impact much our is lot a less which straight going more necessarily to there's is than the likely

get look what I on point at back think forward. to John, to costs going the we

we in back line to grow environment can than less think to do cases. costs where get I So an

I with turnover part not be, the by that's pleased we of but early continue that think the on we're is happens, there, harder to that a to we we're retention signs said, much improving pace to is as the so it And what we're just want we're Andrew going and and little at factor. where to that be know know that. driven knowing the focused seeing exactly

to I think appear ahead, from levels to It's inflation. with exactly we're where of closely. call as to there takeaway depending would hard be But know you that closer macro we important historical overall of as quite as and outsized to look I coming we appear managing new wage inflation But see watching it, happens that last as the expect, doesn't on settles. perspective, appear the is though and back, increases be level year's what it think it the does norm.

thank Okay, you.

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

Your line is open.

kind year with that that of item you're about of profit I you figure current guess this mix, gross is how trying even I couple or of I as next accelerated. of even we from intentionally Hi, level. like terms out, looks to it's profit the sort it of have highlight in good And benefit that continued profit gross you as grow already. inflation in sustainable. forward this Just per just think, curious per the level zero the here? case quarter, about case, a gross is on case morning are things asked fact that of cost very been line could to going and pretty But that I'm decelerating been is guys. wanted off into think thinking Dirk, strong yet implying a you per to has then

Sure. Good Thanks, question. Ed.

you that And I make was per our really is that intentional in the durability sure is is center we deflation of see very think we're there what managing people likely which more right, it the of think trying in gross grocery. highlighting is profit we're it. just You're And And plate where clear potential deflation, environment we case. in to the is than think to of that. in more where through the in

our four to as that of or strong that think the made in majority part continue a parts point, Andrew helped, the have doing are the inflation we I we walls and we're pieces inflation we on So growing both do gross are of business of by especially gross deflation to look your percentage points that sticky. and ahead, -- vast think things we to our really gains are plan as that is And of we the majority the can from coming profit. think our profit the of as markup, are underscored opposed

So positioned, overall, that progress very the to continuing and like forward this made well feel with into quarter we're very XXXX. look happy we

In good it's fact, example. a

we even to of look As when XXXX. and XXXX ahead think we

us very we and that the pillars, will initiatives drive lot spectrum we've growth So of get earnings think year across work much into on done the of well position this the as of a the we our XXXX.

are are of behind the know then miscellaneous know Great. And But like exits. other focused of stand a net quick the sort sort forward, just it really of you? case some of meaning on you where I of in where the a growth exits. exits you you you're at and customer now on terms lot follow-up retail then more going point

Sure.

about is the XXX quarter, So I it the talked fully little the the that basis was points that quarter. the by by of end grocery we under think out the piece, third retail that lapped first -- of half of of a end this

What with and continue focus right would through that's QX. continues piece been changed other to is will be has around The say the our I growing customers.

opposed to growth. about just profitably as growing So case it's

having to what's any we is part customers through replacing when I'll right call would at I looking across business, the there. others of, customers of better what I you we sort look expect, it, do hygiene and level mix think go as some think and you of and the would and

business this is about what customers. -- business, are it And end quarter more you of is hopefully, XXXX. XX% growth XXXX growing well EBITDA those it is the XXXX with overall, the that see growing to with about positioned profitable but think as and really we exit So sorry, we

Awesome, thank you.

Thanks, Ed.

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

open. Your line is

you Thank much. very

is As and -- capital share the about you. in fit talk relative want I can you where of to first I allocation announcement those just think reducing and the with which change priorities buybacks repurchase debt? priorities how to your start the Thank program,

Sure. Good question. Lauren. Good morning,

a manage Andrew intentional. we used I really structure. So about to the this in in it's to very the way And We've our think us for be been this. exciting talk been word position capital intentional is

Xx we've four the our levels lot we and we we repurchase way into debt priorities at would this really, to be get to, way clear create parallel with especially we've an so grow the that opportunistic leverage value, further that in again, expect as to high that they're the in getting And inclusive secondly, shareholder in need range. what at. in range that forward, what of reducing the end is we this well fits be next all that we will is But to -- order Xx end to we'll one But to reduce a sort is shares regularly is of shares. we it repurchase remain be And capital talked of by right And any though as said about. think of the And that of does the that going think of I don't to to expect begin year, this. about X.Xx committed will earnings to that return. range what the

just and pleased So to of that of plan strengthening as very our the in this part it of priority the ability our to, is been about maturity whole structure, that next managing journey that just because the is announce the really step and we've capital today. with

most to about opportunities see would going seeing or initiatives what forward, environment, increase the the gross I And the you're in you expect more even higher. talk in you challenging And an see on label? meaningful get can just guess side, you And profit private Thanks. level just of level that with penetration? Great. to

the Thanks a question. opportunity have hi our Yes, it's improve Yes, seen for we to absolutely penetration. throughout Andrew. great Lauren,

supply. a of to We're times, value pre-COVID very, that challenges, of we really those expect we've a And done change Most much fairly alternatives aggressively improvement really doing after of get good stable to as represents. job as seek significantly and supply course, And to of of have has that supply that. been we've increases. thinking from tend very into brand are good a limited we around situation. spot had our go place. number One a a that the We've to better in accelerate to out natural control our foundation the customers seen arrangements suppliers with now in a from the

So yes, I definitely quarters. expect to see that penetration the several level go up over next

last one. the just And

On provide you're your that? case, the per much markup extent gross business is on to a markup profit willing dollar percentage a to of versus the how

Sure.

the the straight business, half percentage, of on kind then combination a noncontract business. pricing a half about fixed of of other spot it's type and a is As markup and/or either more of

Perfect, thank you.

Thanks.

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

line Your is open.

Thank you very couple much. of questions. A Great.

the first food just on service The business. one chain

decline independent relative business the in to mentioned You that growth.

get Just certain heard of trying in there's big portion is What business. others chain that slowdown an from exits actual a mentioned we've a sense, that you maybe to business. of intentional the actual

for trying So 'XX? to perhaps maybe between down the for and the that slowing you business going exited versus get see into consciously just balance the a sense what what you is outlook

we've below talked more that Absent about XXXX two decline it is with as of these we're about our well as in chain Sure. the the If exits levels. talked seeing we business sales. is was meaningful have still that combination things, reductions compare line that that two all same-store we've XXXX. that where those the are relatively Almost the in concepts of amount

your to think I point, Jeff.

it closely. watching we're So

see do different You across the chains.

perform that some to You well. see very continue

well you in watch of in. spectrum. and we're board if on have that environment You positioned to margin think of any the a But well. don't kind sort And perform more chains the we again, the typically that slowdown. see that discernible even on those others that to of see continue see are as end lower We'll we growing are

going key customer to is key in growing very and types with those to with other. the all being be our then So continue opportunistic

the concerning and is there would Understood. but or all? to -- whether be couple inflation wouldn't mentioned expect a to would I digits [indiscernible] out mentioning plate, perhaps in for that a times. fall deflation then the inflation a easing, it that you'd continued 'XX. side, concern you mentioned as we comfortable overall think went actual of at it that to sense where see single that And be short you or you you into means if it's turn is on the close not you're not term as going the basket, there you kind of would And know implying whether commodity were a basket that specific I basket of concern Any deflation? deflation it or

Yes.

we a about predict sort through it's what seen as inflation all several have what ability commodity do. is obviously, of manage a the hard quarters, we of easing in of to little over going bit is -- signaling to think discovered categories, So little good is our off the I a last Dirk and we've that. very feel couple Where to

we categories. a fair and from in therefore, of commodity area, to categories, in we've stickiness one past, be be direction that off Our but amount non-commodity of very go noncommodity the easing that easing some is I Typically, in could expectation, there the prices though, we and see in inflation well look categories think expect, same standpoint. an we level be will said expect and the as likely forward, to there in this don't

dynamic realistic the better goals at think getting into has $X.X for still lastly, margins in, either XXXX? And that 'XX about it because a X.Xx we're the you've you're it. from assume but Or of that away had back thrown the and out growing Is billion you there change just upper or the ranges. mean, now month like mid-X% guidance Got I XXXX. or coming I range. for is that to reasonable seems it least those so more at in prior EBITDA end made Is know in that recent market, achievable? I for that also talked worse?

Sure.

is think, with. kind update QX. we will tell what I So I very Andrew we're that progress Jeff, and our sort where of at pleased with But 'XX exit expect I that you to is we're what will both to the date of we're we just reinforcing and release said we when

which the where more good the forward good may, progress talking you in the very think We you with And feel about it feel against take with look is. we business we'll to I about let about that, again, very and So February. that plan.

much. very clear. It Thank sounds pretty you

line from comes UBS. of question next from Your Mark the Carden

Your line is open.

Good morning. Thanks for so questions. taking much the

should good sounds So from early think expect far. rollout about XQ. be of we few Or reasonable tailwind to you're then quarters? a in over next how Would it broadly, a ramp this is for hearing broader the MOXē, perspective? so like so feedback still deployed far too on it to it's more pacing been start you And where the the

Thanks, Mark. Yes.

use all being MOXē pleased really very from get returns the MOXē. this of short past we benefit inducement has there functionality. are early in term is creates sort on of of further talked about been definitely to we a that and in to the we've our primary to e-commerce with So the platform, which of customers agree of all terms retail in sorts out the benefits. and of any ease of really would the comparable platforms We've told leading

the likely that, as at is in part far driven on we're to by haven't on seeing it's As impact tried isolate clear we independent momentum case the the least of growth, that MOXē. specifically but tailwind sort and

in it for worked see half next on up that that set actively to make In our do got make the base -- and of need order we customer the have their to adjustments is it is the now will of to rolled But entirety for some year. and fit some across available some out We the basically our to this business platform as -- something terms our start make to to typically. local rollout, order customers. first national be in of it still come likely to guide platform we've work

seeing standpoint e-commerce of a the benefits using are that the specific very, being from very -- we've doubt impact local of MOXē. with that sort of on historically have haven't of very from -- pleased a of that isolated result by So we many seen but increases folks platform as seen MOXē we've driven getting what little

going to and And then second debt to forward? your Lauren's exposure are a how my does your follow-up you there And question. After Great. paydowns, mix floating out? about recent is fixed Okay. thinking how one shake the rates

Sure.

the ended we So quarter.

about bit. debt so expect variable end variable the of $XXX be would additional will percentage So variable -- were I from sorry, against pay QX, the million additional a little that going that of down rate increase of would XX% as will forward fixed we we the fixed, debt.

over continue time. the that fix to will increase So

good thanks much Great, so and luck.

right, Mark. thanks All

Mark. Thanks,

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

Your open. is line

taking Thanks for morning. our good Hi, questions.

inflation on a follow-ups that anticipate or Just the and may here not may impact environment the competitive environment. couple of I inflationary impact. one, you guess, moderating do

volume start has So really that's inflation part stronger moderate stronger I growth really some you you elasticity if the some trying to with here, one. the volatility, to impacted have to be think could And then offset start growth could do question that. how there to as volume see all inflation ask hard also, the to just tell guess we volume. I'm

It's question. Appreciate thanks, Yes, Andrew. the Kelly.

paying softening. share believe have the address of meaningful growth dynamics degree necessarily we've close I will, we as of years, the that's a rationality as issue. to for today is attention continue our able we but determine we a of in that pricing think and I as there's priority that not of in extent close couple that. don't competitive we're volume competitive We've environment change far But seeing the and we're relative all from result prices softening cost last to our steps a say concerned, done obviously still environment to in to something reduce fair it, to category only and our paying position category a we're looking would through have would been continues what standpoint. We're say, obviously by the some allow to price also price opportunities be, as the a that I where to far much more think that's be gains And I to attention, and for is level. as a very very to goods seen competitive And if the of everyone. us seeing taken anticipate to

I we've good to to. a good seen been about something have fact able to rate quite the time of very prices been pay but happen, go same continue growing that the at equally great couldn't close between overall, market balance we've Not the So way going we while an to growth in environment it considerable though which impact certainly been say, feeling someday grow rate. the and at have -- up margin attention even good share our on in to a not volume and the we're a But pretty margin would continued we've deal based at rate. at managing saying

comes And line your JPMorgan. of Ivankoe question the from from next John

Your line is open.

gosh, -- straight kind are and a step in you really I but you we've grow talked been obviously, take this base, the some to to obvious this be base you the in that outside dynamic obviously maybe can that's could wonder identifying could haven't focus question. of what XXXX what customer segments, we most why health factors price, on changing your mean, look that key changed of your might gain you things, I back, what a the if thank many relative reasons do if put Hi, as the make think couple would of to are of you. drive at of I reasons but kind market customer could customers. obviously, independent like new ago independent restaurants. thing you restaurants, you're the able years important to care so stickier Foods that's What you and why What if your evolving be that's just do, improve losing customers? in retention, to US just and well, an When environment? most hospitality perhaps might but how about profitable maybe and

the Yes, John, question. thanks for

today. the way And see grown sequentially expect through of that segments I until would share our there's we've very reflected we couple our in of we for really beginning reasons our to we've which the a gains year all And key been pleased business say think in with say the continue. I'd market from really across that. as

our fore, think namely to to what sort of the we our the supply the come the we -- customers. as environment I of to innovative technology the some better product really that platform be important differentiators believe bring to as well company place, as gets selling, have we a it to allows our great team-based a as

of the And the the some of to around growing been just work so segments business think in I have areas just grow, it's well after combination the on a ability the of those you the great profitable it's as business year been things mentioned. those where team of as continue share grow of has ongoing done focusing across to made terms key really success our sort in

a a flexibility? would were mean, have Or not few of their the really orders like that flexibility changes made I customers' I customer a minimum your those mean, let getting ago, happy types some in what changed is ability how the I me years obstacles necessarily day ask ago, that that time or maybe route of may or I remember then of cases And this. think about, for to -- you things terms a there maybe could years wasn't order? overall in the mean customer were have mean that I I efficiencies, influenced were deliveries, serve the changes that customers demand maybe the that trying of mean, about were have just that to number to day factor?

typically we as Yes. customers earlier But pay you'll It's we strive prepared your but to obviously product -- of the question -- many quite tight pretty to a be service. delivered find window, of want look, is -- can't and strong that's the sort our are one their customers that's within they once. balance. do, And at something getting have to for everywhere back well, to things

there's profitable customers the some effective that We to most I have that logical been has allowed not building the miles. really work prioritize approach benefits But mentioned we've ensure get What deserve. really has of important and we forward. select things move we a turnover that as found of those we week, in that has or I a standpoint, we which service as better by minimize service also have optimistic those to also us build upon a routes, spreading create to there's also of what of our but to that for been seven-day continue really why build way earlier, been think to very a we which much customers our some we is customers a well, from an to that volume about has, most And across we're high-value a experience efficiencies, think but exploring, that is could some opportunity week only in think lot roots very that's will creating something bring. as think, or our they the sort

largely have broad attractive in and for our there. those quick urban And you seen storage worse space, issue in cetera, live we've is that customers fact, experience I customers be almost that on because a think specifically size, not some that is, of smaller later more just John, less on have and runway the can in And customer there's an more customers, that still in the about, late. in markets. cutoffs -- which economics focus drop our underscores line sort the here dense, real we fact, service a more truck flexibility, so think trucks be of that's very trucks Andrew also allows we that on But for one on there, talked allows is think core the that and small things about things et areas has have the sort almost to XX on is delivery small our Andrew Pronto talked that customer drops competitors, cause I that it of cases,

as of online, the Our to Cash smaller And shop about, of allows way. which well as talked to broader that direct add and their continue other a fill-ins a assortment much customers ship. existing which that direct finally, course, it's Carry, & do to our to is we've then more we customers

opposed try with things is a serving it So broad as all be the think, about, to to really right to people. having line, customers we right the all options

you. thank Excellent,

John. Thanks,

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

Your is line open.

target. anything the did of But to I progress. to of -- there's -- And that you're transitioned going maybe a with the now. up actually was and on seven-day X.Xx the working more what and timing, what in I that I wanted And more Hey, the pilot I I and just 'XX, or capital, if program I of just to if to covered becoming there. thanks. ask shift wanted that. but Good are Otherwise, week bit tailwind little I of here, guess, the fair think Xx work range Dirk X.Xx, said to of it end maybe have that to getting you positive about morning on looking we've say kind within congrats at is yes, we was a at clarify follow to doing those. this you the

Sure.

part add that on Andrew really much not first think So there's more overall, the to I mentioned.

positive talked the a pilot, work is seven-day it week, he on. early but early On as returns about,

win we we company the but really if -- able as ahead to that associate, customer were good the a progresses, forward sort So of for look the to updating successfully. and move

think I right, good to good positive, you're so capital, look next overall, shift. when we year, working a

as your know tailwind, question? but that last I me types, capital in ahead. be then you think more part -- I of remind finally, closer environment the And I working think as that a I look we it's being the to normalized of gets can continues will a don't recovery think it it certain customer

leverage Debt target.

if that guidance of -- be our Xx do early pleased we But is our the do that specific. add, about to XXXX. end have year. anything to So we by will XXXX we I expect we that X.Xx talked in and X.Xx and when more just specific within to for on next the range, wasn't we track reiterating

really delivering forth. put the So we sure making that against have that we're commitments

or there think might any last anything Great. calendar about? fourth Are impacts shift I been quarter year. in to like think there have

-- New the I holiday it's shift. think trying remember, little a Year's bit to is I'm There at

remember modest right, potentially to modest fairly QX, or again, a modest. I if So negative but quite

much. Got it, all Thanks very right.

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

open. Your line is

of appreciate that the sheet, now. on balance and much. back very Dirk, I the all Thanks and just buybacks sort conversation about balancing

intend what either fix the the now? are back and to think so rate, rates of to You market is the to debt. rate that if that maybe amount to you or variable to what you to that? do One, Is you can if still do have do a that, guess as large you were you prohibiting that hedge the right about factor an something prevailing I action? go do adjunct And Thanks. --

Sure.

when think we market do variable mix. inhibitor we that. do the our is expect an that To than have overall, current issuance. new your look update, we'll capital extent that financial to being we we to So in a to But that form we update, we at an to have reduce instrument definitely provide an provide point, more a And a potentially don't would able rate. that -- are of to likely that. structure We the action take some continue

so our and is overall well in the important at right environment. manage the think will positioned borrowing think I and at relatively now, that solid, even rates they're we we're rates thing that quite are the

business think context, is holistically, you segments. know growing in to you Thank restaurants. What They including exceed right the about growth, X.X% growing peers now? Where times in you. I that to X.Xx you're that the going talk what you're right? grew Can your at for at? talk Houston maybe share are all target your or market? you market, And about And relative said that you this at your just down whatever in on market

that line. with in this Xx we again. that, over than little to the do have about expect would be goals we year be market largely the overall for with overall, or piece the retail in line But other out our business, to expect be would So a which we We would Xx. pull

maybe I in separate they don't all think same. the not reason important is is because thing talk we to way the and do same growth and about it the away it take the that that

outsized this focus. had chain profitability targeted we seeing more at And or you're types. our key think education, you're increases our And are customer in is larger So attractive in K-XX if in seeing really growth really what show those up not in overall. you I that outgrowing is

grow you And that grow smartly, should expect us. so and of we'll and continue to

Okay, thank you.

Thanks.

your And comes from from line Peter final question BTIG. of the Saleh

open. Your line is

the Great. hospitality the summer operators, just in guys question. we've Can summer you many in your Fall. heard the comment and return kind on I the kind ask seasonality, about accelerated -- Thanks this and into for of as seeing taking of restaurant to a bit the any little seasonality wanted in return? from slower seasonality and if well, care business, little that on quarter year in Omicron Also in any fourth particularly and think bit which comments I was last there's maybe the -- are a seasonality in which health just you XQ. was

on Just helpful. any comments that be would

question. good you, Thank Peter. Sure,

to answer so your limited point, start in maybe So more with to I'll in QX, Omicron, impact QX.

-- As we time in we the tell fuel prices had the And because that as also harder that. as on see if is slowing happened I to summer, also of some spike. closely really were think far as timing you about same they it's exactly that -- the very the about think the correlated slowing, oftentimes like seasonality, that it's seasonality

exit the for part important that talked part the and of strength QX. The the our we is into rates about business increased early

that, I the health events, do care seasonality reference the holiday you would events other closely think beyond that as on I and have come something not will and as that watching group be larger that much back. is some of we're on hospitality,

around things hospitality the in again, be goes there the in year closely as main other as things final watch watching continue we'll events the would and football Those that on. think think fall, that the there. you would to have I thing I and about that

recovery untapped just the segments, I thing some and care real in to add two think, I'd think, we we have, those important hospitality. continue pretty other health Peter, is

typically And next And there the so. of to think with expect to baseline acceleration so -- probably the in those is we course sort that year over the we or next the some be of them. will that segments associated will, that seasonality sort of defy continue see

times my that Any think and XQ you're Thanks seeing? to evidence deflation plate. I won't the and into suggest into mentioned of way there to center some you last 'XX? be, continue just any several would what in question quantify that And is

quantify would sort returning a deflationary to would categories than say I reverting that those saw typically are, more pretty level, I back volatility, describe think I systematically in necessarily but it, a But pullback. of don't some normal we world. categories, We to at meaningful

back In again. we've of much There in standpoint typically start a such don't fact, the sort foreseeing from supply team I continues trend, driving to market think, of poultry instead, that, seen don't a it. unpredictability up already where upwards. as perhaps category of creep just to think I was we've the a but continued the foresee, started than trajectory number is mostly downward volatility be the volatility that's, more of to I see the

much. you very Great, thank

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

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