US Foods Holding (USFD) 11 May 232023 Q1 Earnings call transcript

Thank you for standing by. At this time, I would like to welcome everyone to the US Foods Q1 2023 Quarterly Earnings Call. [Operator Instructions]. Adam Dabrowski, Director of Investor Relations, you may begin your conference.

Thank you, operator. welcome Foods and XXXX Quarter everyone, Call. Earnings morning, to First US Fiscal Good

call have [Operator today, Executive the on Speaking we Dirk Chief Officer; Dave Locascio, Financial Officer. Instructions]. and Chief Flitman,

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

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

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

to the comparable measures measures today's we the on presentation therein. included are not the financial call, schedules website, financial most in reconciliations will on indicated are forward-looking the to that during in earnings slides well certain as we posted non-GAAP as as reconciliations our to press non-GAAP appendices release our to GAAP Lastly, All refer financial providing measures. except

And your Foods. to in US Dave. turn now Thank you the for over interest I'll call

Thanks, Adam. QX joining US today. months, for now thank evolution Good and at our excited X day. to been and future everyone, our for into about company continue few sharing followed get we results. each highlights you Foods I the I've go more us our morning, a vision I'll deeper about for of by by and start from the my quarter will then financial

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and prudently further Finally, repurchase capital reduce opportunistically in allocated shares. the we as to continue debt we business and invest

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company. we've While to meaningful results, enhance to strategy strong organizational our quarterly also structure, our we strides continue produce our and culture made of

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also hear investors with I've my US analysts customers, travels, many and about to Foods. met During their feedback

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achieve through progress plan this against as and our current we We to other expect further to XXXX pursue beyond. actions complete work long-range

that, recent turn our With business let's to results.

continuing a was comparison XXXX. volume first financial combination grew period We X. QX through Slide some sales gains on compared results this the to total throughout January quarter to the for same Omicron in our we XXXX. results on highlights. strong build the types. delivered of and Year-over-year of first walk to market quarter, again strengthened in Turning Net excellent quarter share year-over-year I'll customer the fiscal to case XX% QX from target in delivered and growth based X%

in Case growth first quarter X% adjusted dollars grew was sequential health in growth led despite EBITDA hospitality, XX% in X% and independent restaurants, X%. while X care We essentially in the growth by were down of growth XX% cases chain XXXX. inflation

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

on track outlined full adjusted EBITDA remain for $X.XX of to We year $X.XX including in billion. billion we February, guidance the XXXX

focus types and gained experience. market year-over-year share Turning customer our to our via again strategy. differentiation customer in target customer We

later platform, customer to increases among MOXe on customers continued this launch the in national seeing for MOXe, are of year. and adoption digital our customers are track local We

geographies, to grow focused both Finally, Pronto, delivery truck organically continues small markets. dense on recently in existing added our within and service customers targeted

established additional have to in XX remainder to throughout markets presence We X add markets expect X XXXX. and of a the

operations done, the is and pre-COVID taking first with We of trends during seeing our but in the positive are in year. The in to driver now yielding second further progress and strong line essentially am quarter chain quarter continued we our work that half productivity continue we are XXXX turnover warehouse encouraged improvement are of by productivity and the with still supply in is experienced as turnover the well we progress to the the drove There maintained make turnover levels, be last results. turnover actions quarter. we third very I improving. and more the evidence and fourth in

actively markets. and scheduling We our are delivery piloting X in flexible employee additional X-day

very in scheduling qualitative this are improvement it's productivity. planning and during of results, we year, additional too expand feedback same quantify result further to in markets early employee to the the to At remainder positive. the of retention flexible time, which expect been to the we work has portion While

further customer in improved the on levels service supply chain. our Lastly, We quarter.

is customers service to where our to Our COVID. it was nearly level prior

pre-COVID improve, continue which yet encouraging. service vendor levels levels, to to to is are very While Foods they not US back

structure, earnings leverage will year-end actions our our to commitment stewards being the to reinforces Dirk quarter. about continue about of we've value, and growth shortly. Finally, capital debt which the combination the and we of quarter. to responsible taken shareholder of allocating this at meaningfully diligent Each a our X.Xx net of end reduced Through reduction, improve talk capital first we're we prudently from

Slide where our see making share volume market growth, turn with the target progress types. Now drove customer QX strong Starting we long-range profitable growth, our let's plan. you can we're on in to X, especially

through including to in and We care for our target of had business strong types the that We on the year-over-year new our a exceed to each customer full X.Xx pipeline. restaurant case gains goal led independent year further by build throughout on for year, track strong volume hospitality are health growth. and growth share expect

We profitability, care we improved restaurants, faster more continue grow of and profitable our as targeted hospitality. health customer to types independent the in

optimization. margin to Moving

environment managed maintain categories. commodity have through a volatile team to the gross more profit to on accomplished specifically Our effectively This commodity focus was through per volatile pricing process we case. established solid

to with XXXX. our of make on COGS by track and address XX% of continue vendors on of fiscal We progress total by remain jointly additional improvement COGS a working to end the

Lastly, one our innovative supply This quality where better renewed focus strong and customers significant and we we opportunity products through growing our price. as added bring label remains a value on to a private vendor improves, at penetration.

to to Lastly, our continue operational drive efficiencies. we advance efforts

the improving, work and on. we to continues on a routing with as focus reduced Our Turnover, while gains I slide, challenge discussed one optimization via mileage. continue prior further remains

just the Finally, spend area XXXX. significantly on an of year, savings I largely work began which accrue is and This ramping quarter expect more untapped up later we is throughout savings to beginning, action exciting work opportunity. to and to begin non-COGS identify during or indirect this

proud for initiatives drive associates key important grateful plan. is great our of the to am Foods long-range US work advancing our progress. this achieving that who I are the and of

over I'll in detail. financial Dirk further that, to and With it to hand performance guidance go our over

Thanks, good Dave, everyone. morning, and

from results. billion Net X% QX, in in we an momentum quarter nearly Slide $X.X food quarter prior showed X.X% Total and pleased the the sales inflation volume with year what We're to the first over prior cost to have business. accomplished first XX. increase were the approximately This clearly our and in Let's year. X.X%. of the turn we continue was strong case very increased during

sequential XX% earlier, growth mentioned given led a quarter, X% $XX significant while the in while inflation current especially quarter, essentially had by million As million. chain the more sequential X%. Dave prior to strong year or had In grew XX% and health inflation. growth year growth in no the adjusted X% $XXX It year the independents, from hospitality, was very prior first growth EBITDA down were care case was in cases

gross our adjusted significantly strong In grew the addition year margin from more prior OpEx. points EBITDA increased XX to dollars, EBITDA our profit as basis than

We essentially no growth quarter, first we continued our gross was pleased quarter, profit the with, which there through in again, as are sequential strong quite this inflation.

increased adjusted from Our OpEx prior dollars XX% remained gross profit year. elevated. the

was we in all continued thus it are saw impacts increase year-over-year other and than cost much The showing XXXX. However, was improvement, of in up QX, and improved productivity the drove increased initiatives our results. and lower from our turnover

in areas XXXX, actions chain build opportunity still we beyond. are operations. plan and made We and progress our to for and year all take we achieve progress this what to our can continue of supply see upon XXXX this excited will in about and significant in against further date X We to improvement

XX. in the and to reduced both a structure quarter. XXXX meaningfully fourth to and leverage earnings further debt quarter our our Moving strengthened We of growth. net leverage Slide net and reduction the through first reduced We capital compared first combination

ratio X.X turn the a was which net turn a ago from the XXXX. leverage the a first X.X was quarter, from reduction X.Xx end year end and Our of reduction of at

this reducing to to committed to below end Xx on the and remain reduce year. We leverage our of remain leverage by track net

value We the $XX on repurchase the repurchase prudently during also million quarter million to by shareholders million shareholders capital business, tuck-in We our date program. repurchased to invest against of $XXX $XX bringing accretive first share and to target to our acquisitions. leverage reducing remain creating our to in continuing share focused us our for returning capital opportunistically range, program allocating pursuing through shares and

XXXX fiscal the XXXX with reiterating that to February date. we the are pleased released and We progress guidance in are

thoughts guidance. to continue to Slide this to my controlling wrap will will are today the well controllables on on we deliver We with XX. I few positioned focus comments up ensure against a

in momentum X executing all our We of are plan. long-range generating areas our business and

customer driving increase are the customer as and levels improving on We experience and we share efficiencies. gains and drive mix to operations further improved service remain focused our

us macro None lies exactly in what environment. of ahead the know

U.S.-focused across win helping it. a business with US base positioned Foods well is customers a to set diverse focus However, our on and a as with a resilient of make demand customers

balanced compounded delivering to continue are deployment with and prudent focused through very be Finally, capital we approach a on will shareholder value.

to back for it remarks. pass his I'll that, closing With Dave

future joined. I started. Four Thanks, into day am months I Dirk. about where was role, US I I I will excited my close more than Foods in the our

I his becoming productive Christopher During the with one of just night In X months and most recent visits, quickly company, warehouse of crews of led my team site one gained Christopher Moore, night trust our Austin. in his to has associates. the our selection met manager,

Army Struck received operation soon Iraqi he stars. in Freedom years the Defense X asked his in by and I years he chain, supply I his had about XX spent Korean his bronze addition to leadership, where him of background. in food distribution, learned experience XX that supporting

one being many Associates of appreciate part the US Foods. are like I reasons of Christopher

the want thank As in Group Day Memorial of all Employee great we members those this members in head the into I XXX later of who to country. our month, across service serve military our Resource Christopher,

areas team, better spent a with Additionally, of understanding of our our and have as more I I momentum have gained time opportunity.

track results, for will or $X.X While we macroeconomic inevitably XXXX factors at billion. I near are impact believe EBITDA on adjusted

our of I the Foods very our to on finding stakeholders. and rate our are will am of to bright effectively combination company's ways this We strategy highly many strengths focused building for and while future a US improvement. lead more all execute confident upon accelerate

talented work have to Finally, Foods. for to we to would our in XX,XXX thank which and US due part to long-range do each and strategy their the our at that our unwavering clear our associates the commitment like they It's I are large day serve is progress we against make customers. continuing plan, very working, here team is

line Cheryl, please questions. up that, open the With for

Instructions]. [Operator

question BMO Bania first Capital is Your from of Kelly Markets.

here. nice a on Congrats quarter

Just wanted ask seasonality. guess, I about, to

look And pretty quarter. you're year quarter here. up weak seem you seasonally your strong if would where is at perspective, set from that EBITDA came a this in QX it margin an So for

maybe points, plan the talk So might more why just conservatively. Any be XX the rest you can help much impacted maybe up QX basis outlook? about in of factors that versus year but quarter special some conservatism this the

you about and Sure. up pleased those just all QX. that strong say Kelly, we've and the myself heard initiatives this both very the our take quarter we're one. talked is that Dirk. build the over And to sees in as the last really worked hard hopefully year I And think results. things with is we've I'll everyone what in strength Dave show

year And date. we are up that the to do pleased results us with very good sets for a think and

I course think typically you're softer improvements with all a overall, year, set margin. We're think with work the of continue we specific the have the right, over year-over-year what the -- and amounts expect well do happy you I to but We the see up are improvement. done. is QX we is

our And further we'll year. as into into while I as get the point quarter outlook our business. we it's business the think the with And But where to we one your see we're outlook, the guidance for happy pleased, appropriate update on stands the year. and

of little happy no But very for the with more the margin, That's unpack impact gross in It gross customer mix internal the the were here. inflation maybe just in of some like that on you sequential bit unpack us? light Dirk, seems just particular, of help us margin helpful. can can initiatives? a you versus you maybe mix,

of course year. the the done that a Sure. lion's last the help, over we've share of Mix the improvement work definitely all of but is is the

why on growth grow lot that's talked about, that mix so mix, the target we our a is and and customers same types as us, is with we've just So is for thoughtful help. a customer growing not really other any being because important with

the talked optimization, logistics, et But definitely cost about the lion's cetera. pricing all we -- the is from initiatives of goods, from share

Your next of question Jefferies. from is Alex Slagle

on Congrats a to the team mix. promotion. the customer and question on Had Andrew

that mix an moving of do but slides, profile good I where see basis can towards so to the on it back gets pre-pandemic, was mean back get and the still how a eventually that or were to that? mix you growth you it and that or XXX altered provided think and the gradually you previous would do to You If back or in growth during priorities the off. pandemic profile margin perhaps alter the update profile? points your kind customer

It's with -- I'll I'll Dirk. one. start take this

in show you very is noted, few portion. So target and case quarters, saw this those to healthy will yes, you types of care that a tailwind as the last a in growth larger we as pointed as talked those lot we to health strong strong about up of you out, and hospitality a part that we growth, customer other saw quarter a that continue customer especially And become our as recover, types. as again continue those those have with

business continued mix care margin add profitably continue that that, in changed, and And to recovery the balanced our to I of and to accretive hasn't demonstrated health the where get to recovery that were we through we've prior just and business to volume and back new we to be growth hospitality, and our strong expansion. will growing them think think business. continued really our the in our view the they new as approach expect then combination largely with independents to

Lauren Credit question is Silberman Your of next from Suisse.

guide or your much wanted near Dave, we change? underlying on XXXX guide more the environment, on the billion. about see should strategy consumer And contingent quarter. the ask is I Congrats challenging of to might environment? $X.X macro How a at the how

that's as basis but Well, the more business, -- comment. not what was I've Yes. great XXXX, underlying just that only where and importantly, question. in the for my just I say in would you understood just momentum the heard leaned

believe got right control target we destiny great can't you is focus completely say, our the our While heard within we control. on customers. just We've as Dirk the macro,

Obviously, us excitement cycles. diversity to company. believe, we of the downs industry on business win. sets importantly, me inside the the of and going ups is profitability and the the productivity have our things in mix, up resilient talk about I heard work initiatives, through our like economic And you've But the strategy

long We've the I'm here you growth. and momentum, number. top that's about got of reaffirm trajectory line very and a the bottom why excited me heard XXXX

additional willing an cadence what throughout that to is the you're Great. in then quarter-to-date And we've underlying to And growth quarter? given there color provide extent the just you of the of on slowdown? case can been hearing terms any

Yes.

obviously, bounce Omicron quarter in I'll in the of take stabilization. the second question seen from weakness just let the that Like and little bit February, in January, me part your we of here, back the towards second you've comment. started of a Let late is started we've far recovery and lapping heard Dirk end to And thus early others, saw, March.

have And the We think future. we the so momentum. we're excited and about the we're focus excited right about

Yes, I tailwinds of is the care gains across about see and add some levels. think we thing to environment sort only growth normalized X would expect hospitality, a expect we've healthy health of and are our in growth that performance and the share customer do talked recovery continue types and strong to I because we the

question from is of Barclays. Jeffrey Your next Bernstein

goods. Great. know the last one of X% north for to clearly, an then From talking in one of standpoint, I follow-up. I this went quarter. moderation inflation question sub-X% it you cost had and about everyone guys, is quarter from

wondering potential Just quarters, next you that whether you over few for see coming the in see where absolute deflation quarters? going

it's stabilized follow-up. think how about if deflation, And level it versus the difference X to business? had the your be what impact your I here what you of would that the went would to change And then some -- if business, way

rate in decelerate. couple quarters. sequential a remarks, essentially Yes. around of this seen inflation But the in Good here we've lot no as for prepared said the question. of discussions industry. And had A inflation our obviously, we we've

our in by expand driven the continue seen margins. we're large driving, us to initiatives You've part

a have forward. process concerns into built absolutely we So forecast. no the ends our of in going about as XXXX quarter, last have managing that already we I company. lapping deflation around what inflation great happens And up and was in said wherever

last and again there that only Jeff, is Yes. had so, overall, we thing, we've we've up would talked where our is grocery grocery. outlook opposed continuing the have about that And the the seeing commodity We that quarter, and positive, mark to still deflation has been seen add similar therefore, are that's places we see strong core is and gross I the not profit about, hold to changed. proteins fact us rates that as the the talked be tend And and to to that fixed in that more and in as is still expected. place

from? think quantify for is conceptually, you're do Understood. that a that would where then this players which And of able mentioned wondering Dave, were to greater type would you'd where to first slow? the potential just the came see economy it think whether share you you even a in macro? be metric position gains? market of a Is Do offset share to long if the gains follow-up the times, bigger I'm accelerate gains, I think on you the market And maybe you couple know quarter,

share to with profitable in second of substantial take the scale, we've Unequivocally, as restaurant taken you taking in slows, will yes, opportunity in first. Yes, that quarter of this the share I'll answer we've know, target in market long for represents as a eighth and segments, us XXX%. segment. I that But profitable to your the continue been those lean consecutive the have focused question fact, part market And think our share quarter time. independent on customer the economy

we XXX% no it's it. on gains our are, it. share data very there's that granular slow focused team down. where around to reason with We So would data granular that market our are, understand expect very aligned and is -- opportunities a We're

on focus and come. to momentum, feel about the more right the I good So is

Mark Your next UBS. is question from Carden of

is So question Dave. first for

call. Just beginning digging into of some a commentary bit your the the at more of

being Now surface, to the and some Foods where you've as is advantage last biggest the current you've on relative to do that then fruit months Do whole? on And time if now at about can a for see a low-hanging quite side more opportunity company's been you dig talked much to addressed quickly? case US opportunity execution Has and you few as really you had the have competitive an the surprised it well anywhere see changed quarter? some below since be improved focused opportunities those? been industry strengthen really that

questions. Great

I way many pair on We quarter model for have really were in key restaurants. restaurant back-end out our customers is, a of actually mentioned I strong experienced the competitive advantages. with operators, and differentiator this TMs and up And understand our operations consultants fact, last the call, in team-based The believe, selling of our operations our us. we very many chefs, and which have come of the industry

competitive real for us. advantage a That's

our earlier about technology I one second me this heard you would The as to, is point talk and well, advantage.

leader technology. are We the in market

the In we're traction e-commerce about in MOXe. Excited are getting XX% our transactions of transacted today. through fact,

MOXe think customers. chain our to need our is the supply in our operators entire You putting and about of hands

one to company from differentiator other and to has really strong that It's able No none. will in. understanding aggressively capability ordering us second out we visibility it our We're the being to technology. We're for orders. continue for a I inventory, great across And anything that's reserve customers country. rolling believe that have, invest we to their into the real-time our

where downturn? to like and how we to health stage, this growth? are Are then about strategic independents point? economic more relative do chains That's a you'd And to see this your growth at And you expecting your great. exits steeper chains, how business you Are then are to of you if thinking you largely independent thinking chain pursue the be? any at relative about

Yes.

we decisions on the the chains. very the have think We'll this market forward. I the business is right any exits dynamic. strategic point. for focus other going Obviously, at Don't make we ample Obviously, sense. share. makes right independents it to where where segment gain only and more not us chains into for is industry for the one opportunity profitable leaning have opportunistically We're anticipate but a

of You people do excitement experience. in are I heard about share my gain X independents. quarters think for looking an

So these independent need. capability markets tailoring local operators that's why and go The unique restaurants. to they that to of

in private We offerings, our have particularly exclusive our label, brands. great

chains independents say continue accelerate. the that as Our and to about in And growth to you with to have prepared XX%, supply me our my that's exclusive more penetrate there's why is heard the expect remarks, opportunity manufacturers market penetration recovered, in brands. we

are I lot is think, heading there the I think Independent I to they of were many very these And add lot speculation of -- with few last the a focus customers Mark, over the helping back about resilient. weakness and our also would COVID, is independent independent where things health make talked only on Dave it a years. was our of have that's into and of resilient. surprisingly that that thing operators adapted them

COVID. And operators they even so they're into going were stronger I think than probably

Your of Fargo. next Wells Edward question Kelly is from

bit except focus U.S. on lower been of I more think case big think the certainly Foods US number to you they've recovery. of here the profitable a a talk way. then impressive sort the for I independent about the around growth. we've year, COVID your case ask gone number. wanted a dig by impressive. Dave, into inflection of I has this an you I And very out Can a of but don't on Congrats since back, public seen taking mean start step story this? to growth the about

growth level obviously, strong. And How for you're here been that going are about you differ numbers business the think like appropriate targeting? what in terms previously? How case what's of this does what of from forward do these is overall happening pretty

They local share can we are. win. love to is solid. teams think profitably I and I understand granularity and we understand with our believe, the take to grow and can independents. where around basis which I want share rallied have I that. in And the we grow And in sales competitive. our on February, very opportunities growth on this, our They Yes, continue what market a They're focus, commented about

operators. independent these into take to brands great have We

that momentum. good been is the for long at has the of the time. doing work is heart again, of so And the a And culmination just company the QX

quarters You consecutive market heard me share say gains. X just independent of

think provide customers. value we to And for we win, for so can that's us to stay focused our I opportunity continue where an differentiated where on

And it, so organization that I focused reason no take continue. share. The continue can't Excited expect will on is to it. about do market there's and we

grow then just from per follow-up on quick with think per the minimal QX here case for let's to low no continue to gross I point it, mean mean you profit to year that traditionally call progress a reason case. any Great. I despite, from here. gross profit cannot And inflation?

our to I'll we This gross the on last quarters, above mostly continued what comment different the is we grow back And with one. and where pleased that we that. specific was execution continue control, optimistic Dirk. QX. profit and do year ability about within that that And profit as initiatives. the do the our to of we through gross again, it we will gross ahead, come to going I'm profit are comment to is to positive not this take our in think Yes, year. that's, I be expect look but can

the word like inflection. I to fact, use In

that quarter we no at with inflation. a profitable We're level, success expansion, a lot think dollars to we great quarters to now continue recipe gross a with and so right a And had margin EBITDA expand strong think of X types of is customer not very very that in healthy but those continued margins growth inflection it's is point. balance profit. only and We've ahead. an this for sequential grow essentially row We've

I our is strong. would on the have improving add momentum mix we that just And that

and said, in case results, that that But the continue. per just that we're that will profit initiatives has reinforce gross to are aside, point. Dirk as I from The seen gains majority of our You've want the driving.

way lot area a that on low-hanging those customers in for a for sense focused company. see we'll to continue And driving of our business. in fruit the and that makes our I to outcomes of stay continue

Your of Securities. Jake Truist next question is from Bartlett

competitive gaining significant the have losing largest -- be share that and the market share. and environment. environment distributors, seem The others, it are Mine them distributors gaining smaller a suggests market pricing is all on the significant to been of

the more we I question those just question And increase the just easing with to to on you chat what case. competition there and So pricing and about could kind is dynamic supply to But is significantly? compete price. per profits of of you sustainable risk back gross expect if start smaller guess think the what going the that this should chain staffing aggressively constraints to is constraints competitors goes trying --

Yes.

first of And market, say operate highly a right? stay the that. But I ebb big we don't The you running picture things that The that tell internally see more flow, focused Sure, as back is macro competitive would is segments may the always our in let's we I our that. to really see on changing and I things playbook. of get thing competitors keep coming team aggressive.

that have We us. differentiate great products

competitive to. customers We We where our we demand obviously, us. And scale. have that be need tremendous of can

with how a our as talking customers, profitability. an will we're initiative improve the we're heard company control have we about that you they that runway to standpoint excitement to And getting understand our them the more talking from driving pricing before we're As about my we're want about to things efficient price.

it, say and but want So that forward. not I don't to it's just I discount that see don't results distraction, our I to a really going impacting want

you headwinds of some you which others heard as is reflective the I'm annual conservatism the see what also Okay. Great. that the light of some first of maintaining see to perception make sure there. understood don't strong guidance from guidance hearing markets, of but of 'XX is make decreasing, pressuring We've and might about the maybe maintain And incremental results, is cropping slowing, incremental message up? that sure just to My be want some of out guidance. you're kind the the in then I of I demand margins. you But quarter kind inflation I on sort impression want conservatism, kind or negative

that I'll one. take Jake, Dirk here,

a came yes, little the there. our Any into with of expected. in hasn't into guidance really, And on. X way So it And as the outlook changed we'll QX start. Anything our that for inflation had goes would our or Very quarter as bit with ahead the year read year. the outlook of is pleased was we I contemplated update appropriate, the it's in business. otherwise, where

I I for -- So to performance and with very outlook date the land the just on business. one and quarter in the pleased

just we And concerns. unstated X specifically, have

Great. Great. quick. real question last And

of if side? last growth, versus But update from could us the in pretty I point is you the On wallet. the independent new just balanced at a case you had this the where account growth share come quarter, case think there really in

Yes.

excited our be our to growth continue on We focus there. about

we the fact, the the of side of shipped weeks, within customers in couple the record a just independent history the last business, In on number company. of have of

the I off that the segment here So had on upper our focus has will business. success mid- is continue time. mid-single customer our expect that and growing and single through the we've the in quarters, We course that of to digits, for many, new playing intense the digits, focus many organization see of generation

from Heinbockel Partners. is Your Guggenheim next John question of

COP, do with resources to existing the maybe that there, and an to start resources? get existing And that? intense, with add on those think topic penetration the opportunity right, right? how Dave, on, some sales more got so thoughts hitting you maybe then sales you your the accounts, outsized enough attack If you've particularly like -- you'd opportunity, I do wanted account is to last

take we Yes, growth -- have on talent I'll I John, your right see opportunities. level strong we where the room always number great of part right salespeople we'll for that's question the inside and adding Look, is, something first US second greatest market focus Foods, the and think per to continue of question. the

else our being me barriers by anyone driven There are to or the organization. in no success

understand that we sales not, strong for those talent, where find competitive room inside folks talent we've company. or Our the can got teams

you'll we and opportunities. us see the So see add growth continue prudently to specifically where

On the have we . COP side, mean stock I

inside have brands We the great company.

And of as in we I really good we at get haven't have there get into momentum new account a accounts. you're when we certainly we center it led We plate looking is fast an with COP, always if as And focus there. obviously, can. where it's think

And it's So brands go the great as I course to I've time. built of that and front company has center through said, the got to how we market. here

in So we lead with COP. confidence

today, on Okay. next X, fold-outs, on working don't or And do ecosystem. the do right? chain X many capacity, when And I you're right, Obviously, think you but -- how capacity or you about capacity How secondly, then or the anticipate you know would you supply think expansions right? year new bringing maybe you've in got how X? characterize

Yes, that. opportunistically at will look we

my First of this all, a for career learned what's important I in to early large company. and chemical me working

You looking that that sure got right, the to make business, of based profitability next of can incremental you're the justify you and capacity segment at. on where

doing So have of capacity we that's well. needed. sure something we'll make terms where in it's But we're no constraints adding

no barriers limitations. markets There we're we're there to pinched at but do, looking opportunities are capacity to a on what growth capacity our driven are today our where understand where by right are. deciding that few now We success

on ahead. said, we're past that's facilities we year looking continue really to at, and -- an brought area the And X John, look Dave as always in to

the you optimizing when also customer because front So is center. always about what pretty those capacity et throughput, use target and growing inventory, And that's cetera, important your why that's effectively. types think

Your Morgan next question is of Stanley. from Brian Harbour

within year? on just expense got a any drive initiatives the can to to line? Certainly, any tenure there of expenses of think for cost And of that there's separately, elevated the or other about of If type change fleet-related see rest talk might you operating that could maintenance Maybe things about continue more think that there productivity? just are Yes. question productivity. you labor side. retention. how could still getting then in is sort that more of improvements kind labor those any we are specific think other I But part the if you are continuing

the strength work initiatives there with but land, in on. pleased I'm going you've promised we're the quite improve. pleased this at First We're GP of to seen as the operating the not yet. of and all, got we leverage expense have the quarter, our with we our really growth the growth continues versus We're and P&L not

associate further things the that to to will prepared addition In all our enable the terms we've I mentioned base remarks to about like and with flexible you couple company scheduling the year. expand the through of in and the us that's and pilots of get turnover use back that our in that plans talked additional why half these productive going of across on the more got that,

productive, corporate -- of aren't Obviously, improve. going will a we as And the what us, productivity, at at do, have for associates anything new and happen. more we efficient with keeping faster better the just tenured lot initiatives the team do we the it to folks takes SG&A But job from that productivity getting beyond work. the our that, employees, better and aligned them less do to on, time that the we is around that field retaining

we good about feel it. So

is Your question next JPMorgan. John from Ivankoe of

How maybe forget remarks, prepared but Maybe an being talked a the spend. opportunity of dollars 'XX an or Total in that. around in David, the the about $X.X for on you company end towards follow-up would do little as indirect you think much a of OpEx your spend? that I are untapped bit even of the unrealized company billion. that at word classify indirect or point. this unpursued

it of of that, I view 'XX beyond? about point and from -- think begin and And pursue you an as prize, mean, can want call to efficiency effectiveness we a how you to big really if

it we're work over about because flip Dirk now. I'll that excited that in Yes, to that. knee-deep right answer to he's

John, good question.

it's focusing So the instead indirect. this think strategic really of said, And as as Dave on vendor COGS, of management this.

And so a a base. haven't is it large pretty number, but given we specific

it different think we plan, not long-range meaningful. of out we would areas quantified So call if components of the not like the we haven't the it's just

area focused a on is in an work later we're limited underway that And to we've accrue begin is so this into next and savings expect and holistic taking. to it's year here really those that and more and And that capacity there, this approach year.

the that's And So in to come same out to of and at will of invest us the earnings time, work allow that will bottom part the for we the to accrue excited this. business line that growth. continue about think what dollars

if for new we maybe you strategic between but able about the even that coming those be guys, 'XX to mean, are too up see or now that and might newer, bigger some talk of And it is maybe on name on that I them? you're still end you working can vendor that's management, ideas early of are the working you not to

there be to goods. a all opportunities for to year. it's cost It's vendor continuing to consolidate we've though. the way a of same it's grow, and collaborative are improved last better talked about Strategic in process with vendors are opportunities from management of And those different find is really how vendors, joint the spend, result really to opportunities that there -- work process a over do continuation us to we it's the to vendors, with that customer those

as our new goods not opposed to approach cost it's base. through methodical anything thoughtful work So of to a there's very and

them, really supply with chain partnership take the cost Dirk to in a as a jointly said, out it's collaborative Yes, of manner.

initiatives. opportunity think new there I the isn't

plan through XX% we we As be said, COGS year. to of this our about

about was think year through the of XX%. number I last that end

opportunity. the really that's So

about addressing new that behind talk call spend, can still that doors? about that I talk of we to is And in indirect there the terms of on something this is might mean, outside management, be anything vendor closed strategic or

about indirect kinds way all the sort to but specifically, those spend base. travel more facilities cost consulting is, little to a whether of it's talk of We'll to think

a of those of more as to being it's and thoughtful spend opposed looking XX types spend opportunities there's different categories not effectively. XX or So at single to across

in come a plan. starting why little a into as about more So our that. long-range future further we to later initiative [indiscernible] it in also get beginning to That's we're as now. talk the was

King. CL from question Your is next Andrew Wolf of

have a I couple of follow-ups.

infer of from against decelerating was you're gains had haven't on improved accelerating can your cost holding that. the Dirk, successfully comparisons for a toughest yet quarters inflation commentary, that, adds? margin of of accelerated, inflation when you've that we holding few kind and lapped you you've now in or First gross had Is that has product the kind fact, inflation -- -- inventory and periods

people why think sure. question commentary why is, for have much deliberate so And this that, so quarter and yes, we that's our focus Andrew, in Yes, driving inflation last on been the looking we your I sequential to and happened quarter on about sequential year just -- is because when and a you're what right of important when at now. ago fact year-over-year, talking less what's

we've year see That's with continue business. all would to this that we to we results good deliver to gross the gains is continuing as driven in So for and earlier profit. initiative in to the And resulting through gross comment these we strong that us continue XXXX, work there see. back my to to continue is profit, that inventory push gains doesn't. was our gross had outlook our That again, how initiatives contemplated strong profit continue the forward, 'XX, to and in and we a all have, last the gains over even about though year we expect think

operating the improving productivity expenses really supply and and on And getting up. chain it. Got the

was it's hire Just had and before so a and increase training the industry generally, to obvious there wages whole benefit. new the I lot mean cost of that people.

getting to operating optimal close like it far pretty leverage expense think I of where -- things mentioned -- supply impressive for can productivity away But And have sort you how guess an to be you're chain are want how case is, you the so you forth? much I the manage you you that to growth. close question and against Dave,

that We on We're leave right good it but come. good. is things. at We've got more positive regard. trajectory I'll lot more just have momentum, The to lot a of momentum. the in We've focused to got that. do a results

internal you just have and like people the to and it get needed But of there's capacity be to that I'm realize others process, were things and in becoming a lot terms made of investment where seasoned. training people in be sure had I new ones. specifically, in to that

initiatives that, also beyond are is microcosm, internal a of the more a that? referring lot Or all efficiently not operating a adding come? but that top Just just and on other just is to of go you to which stuff, routing, sort warehouse that

it's think I both.

past the for all been Omicron struggling the curveball. X X, think is I with industry We've that years. a through

me with heard the couple is We're And then have more driver productivity earlier you warehouse, not talk on and You the there on comment that in where that stuff. about kind yet so more quite to of my informed sort it about retention we come to about was come. pre-COVID. initiatives going that that of

no now for to Dave this remarks. further are I questions time. will the Flitman closing at There call over turn

thank strong. you We for Well, all the joining a The rest hope us company today. you have great of week. is

Have future. We very a great day. a and great have momentum bright

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

may now You disconnect.