US Foods Holding (USFD) 10 Aug 232023 Q2 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 Second Quarter 2023 Quarterly Earnings Conference Call. [Operator Instructions] Thank you.

Adam Dabrowski, Director of Investor Relations.

conference. your begin may You

Thank you, Foods welcome US everyone, Good quarter fiscal morning, second and XXXX to Rob. earnings call.

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

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

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

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

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

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

and Thank call you your I'll interest now Food, for turn the Dave. over in to

for morning, months. Adam. Thanks, Foods already Good today. to joining at us been It's seven you hard US for everyone, and thank I've believe that

Dirk our our into long-range the sharing suppliers and and interact fiscal review before time, this strategy against and and focused by start I effort over During hand business I'll XXXX it plan the highlights results today have deeper continued more and quarter to I get associates, investors. to of to progress updated financial with guidance. for our customers, my

million. on and volume results this $XXX We executing margin in adjusted achieved strong growth through of and as our long-range profitable XX% growth financial combination showed a EBITDA EBITDA quarter we again of record We adjusted our remain plan, delivered it focused intensely expansion.

growth healthy independent case delivered customers, led is has hospitality with of consecutive team X% along we with This our quarter broadline case total growth and X%, by independent share. X.X% restaurant market growth. healthcare ninth the independent Additionally, by underpinned growth, gained X%

cash capital earnings through our accelerated improvement. we flow working and growth Finally, generation

flow Our share to organic loan growth, business cash year-to-date shareholders has strong in repurchases. to debt the via us additional invest return allowed prepay capital for and term

As expectation will guidance, year we performance result momentum, full and for of continue first we fiscal our are will our strong of our execute is the which that half our upon to earnings the and year momentum. increasing My leader. plan Dirk a share continued strong build

Now let's turn Slide X. to

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Slide to X. Turning

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significant early good have with We opportunity momentum remaining.

the IFDA XX note, Loveland, the Driver accident. were years awarded service one of of accolade related an Distributors I to who with a Fame. first-ever driver Association including more special those even Colorado, Foodservice makes US Hall of female to safety to would service On based prestigious International Hall have like Foods Fame. drivers recognize Alicia This the without Truck exceptional this records, is was to named that years of What Seyler, recently elected year XX is only who our XX the of drivers in

drivers associates, customers, world-class operate have Foods the to and these partners communities and US as at proud safe in we are a strive We with business dedicated to hazard-free safety our to environment. provide we

US Corporate Additionally, that and to Responsibility about our of to Foods scholar encourage X proud and Report improvement XXXX and our three program published I planet. we sustainable X the recently made go have continued trucks to focus gas across natural our product to and we emissions from reduction. website our I Social people, compressed am products, our Scope our read you progress areas

on X. service Slide to Moving

most As customers on our products. our correct are services tells a research time, reminder, orders and fresh us important that the high-quality to

improved. Vendor steadily have Our customers line to product service are levels also levels service back Foods with our to levels. in pre-COVID US

reduce progress perspective However, helping is is from service a yielding slightly capital. working and pre-COVID level This below positive they remain our us also levels. results

Our progress. last cases delivered metric best routing in the mile second initiative in we the And years. per make continues three to quarter, the

and to will continue for look preparing software later our our capabilities. We also routing learnings are this new significantly make. will we to pilot of progress which I year, our the a forward increase

customers results. now out are continues as fully our and feedback very customer be Score been positive rolled has to among platform Net MOXē, our our Promoter Finally, digital local

categories. our center-of-the-plate by quarter modest more Turning sequential detail. and, EBITDA to inflation despite Slide XX% a X. essentially year-over-year by bit I'll deflation, grew in walk through highlights We second cost adjusted in no product fact, driven

increased gained restaurants operating Year-over-year, margins hospitality we X% and in quarter. ramp points this was in growth healthy X% case year continue while both and chain growth growth Case growth were and volume down also by was leverage EBITDA X%. adjusted prior led independent to XX X%. our total the healthcare up, from cases at initiatives basis Our as

are case Omicron, Our slower on in growth growth most the quarter softer about lapping same-store was negatively was quarter. from customer chain this longer a impact X.X% across our as due no software independent which case growth behind work to now. This CHEF'STOREs our The and chain for macro the through we independent points the customers. broadline sales results our of primarily us largely basis impacted XX conversion is systems means

hospitality in part large net helping strong new driven demonstrate business. Healthcare growth, by continues to and

we We have continue we our gains. opportunity as the industry, on improve performance to pleased consistent resulting to target how are with share that more execution. customer said, in With focus types still outperform

We have accelerate. further expected good momentum and to

customer customer again, remain differentiated our share market as target types experience. We, on Moving year-over-year focused executing our in gained our to we strategy.

For feedback be independence, our gains, share fully happy are to progress this make. I on and to continue to we seller consecutive to customers, is out positive, updates rolled demonstrates report continue based of which am platform. to ninth regular quarter reactions we very that releasing and this local industry-leading the customer improve the MOXē is

national to out roll to MOXē beginning now are customers. our We

continue other it strong pipeline, well our our and and us This with to business and national types. service target platform, especially new build service our digital model convert a tools customer combined leading customers to in will enable

customers actively overall effectively more also their usage We VITALS, capabilities healthcare manage our customer suite technology expanded help costs. added of and for leverage to our customers

on progress supply quarter. to make our during continue Very importantly, we second the excellence journey chain

we also performance in In making for further expect sequentially our XXXX. addition us progress both very that year-over-year to am back our improved with momentum and to productivity pleased accelerate and which improved encouraging. the warehouse, into and in this delivery half year safety, I of progress the is are and

progressing are and including our flexible in seven-day line reduction each double-digit pilot results our in with Our markets. a expectations, scheduling turnover well, demonstrating delivery in percent of pilots

As broadly. be to scheduling focus flexible our near-term expand will I last out called quarter,

delivery capacity constrained. only roll seven-day We out where opportunistically is

expect will and have to scheduling than Our by improve flex actively of we satisfaction the and on further locations flex more retention. half our we scheduling year-end, which to team working believe live associate is approach expand

to long-term in our been additional debt growth. Xx, we and net and earnings since lowered leverage continue time our structure range our we growth capital reduction, to established. to was we've Through Finally, first fuel target capital prudently allocate which the it strengthen is

strong Our our debt ratings agencies, were upgraded by progress both rating momentum. and business demonstrating underlying

after to reduction, years, the parallel the end million share spent leverage tuck-in our closed quarter, in six Shortly first repurchases. the on of Renzi we $XXX In Foodservice. acquisition on we continued

construction, providing to this X our area. are feet break our loading part in includes space of support dock approximately ground of our square loading base As the expansion on growing base Renzi continued new to of the we in XX,XXX customer refrigerated center Renzi, month, which slated distribution for additional investment

the welcome I to this and excited are with Renzi working to to future high-quality drive We growth. team closely look associates, forward

on the taken creation. manner Each to shareholder actions of deploying long-term our stewards responsible capital to of capital balanced being reinforces in we've commitment value a drive

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

good Thanks, everyone. Dave, morning, and

X. Slide Let's turn to

the XX% are for accomplished which year Adjusted $XXX have to a quarter EBITDA million, we from what continue the $XX prior record million quarter US very the Foods. in momentum with at or second we pleased grew and Foods. US We to strong was

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

adjusted record. is which EPS grew XX%, Finally, diluted a also

Total increased billion by impact X.X%, of quarter, cost deflation Within $X net year. food our sales partially increase prior X.X%. results, an mix volume product and in second case were offset of X.X% the year-over-year over the

growth Dave We system since first customer the in case second a the conversion Omicron slowed year-over-year to no quarter, a as second our expected, at growth case longer lapping in we had overall types. Case growth in primarily quarter. especially healthy was a As target from the and benefit CHEF'STORE. from quarter, largely headwind from faced mentioned,

sales and largely However, through improve. it have seeing this at we point worked are

independent We the growth. case X.X% are with pleased broadline

by fixed of the grocery still driven deflation, a more sequential by as Essentially, impacted impacted quarter. to deflation grocery categories We product and and we deflation. are inflation largely inflation groceries and see modest the year-over-year encouraging. did percent had which not are still year-over-year predominantly seeing are cost by deflation compared in showed markup it plate categories, no center-of-the-plate in and as was which not categories, is markups Since center

prior goods, gross cost continued logistics increased adjusted plan our on progress management across quarter initiatives the we as made the to the X% from dollars excellent have gross strength over profit long-range We profit this our of our pricing. the strong year. due Most of performance and past year is

the critical we have the operating mitigating increased Our been in cost industry and faced. initiatives have broader

the than less above OpEx the we prior increases the second the quarter, significantly was for years. two saw year in albeit past

second better per increased quarter the per increase was higher year-over-year OpEx driven case case incentive compensation largely costs than distribution prior in year. was The by and compensation seller cost as

both against on progress our spend the growth continued each pillars, and minutes We of these. few and profit a I'll

by on types, We digital service gains in profitable are products. leveraging share growth and customer our our unique differentiated focused target and capabilities model,

We the X.Xx exceed full are growth. track by year led restaurant for to our growth volume for case on goal independent strong

second drove share target business in types healthcare and quarter, In a our gains customer the develop we to hospitality and each year-over-year new strong continue of pipeline.

ninth quarter in this independent of a share mentioned, Dave gains. was our row As

with types, profitability. helps our faster grow we As and drives customer customer mix it target our

XX. profit on to Slide Next

initiatives our In to on margins. profitable EBITDA progress increase we addition to to growth, continue make

remain a we a or strong gross initiatives managed progress case. working processes on commodity improvement of such volatile maintain by of time, vendors. the fiscal XXXX. effectively At goods our XX% and team same track the address COGS on per total quarter COGS We Our further our with by profit as jointly to of relatively categories leverage as cost of additional we end for

to drive and productivity We both operational year-over-year improved for efforts as continue delivering to efficiencies advance sequentially our warehouse.

adds results. provides more up are flex to and through US associate customers twofold associates service. demonstrating with a well Ultimately, powerful scheduled retention. our win Our It This and engagement stronger for Foods schedule and pilots initiative and impact. gives progressing this better flexibility a good has

value with cash are progressing XXXX. we further procurement from to up identified have in earnings work pursuing going of creation will opportunities, which pivot Finally, to we now a our indirect and flow. I'm are number and ramp

XX. Slide to Turning

our strong and flow earnings. as expect build this we grow We continue increase upon to to cash

structure. Our to continue and further us for capital strengthen growth reinvesting strong allows cash our flow to

invest expand will shareholders and network. our capital have against the to We return continue allocate to strategically capital distribution in prudently business, and priorities accretive to tuck-in reduce leverage our pursue M&A to core

further growth. projects to million and organic enable we sales fleet to $XXX reducing leases, $XXX CapEx repurchased approximately and In fleet, which shares improved debt million parallel the with of invested $XXX leverage. the including in technology chain of a expand stock insights quarter, further of have million sale. the on from improved talk KKR we and moment Year-to-date, I'll cash second in reduction, supply and came analytic

we million $XXX repurchase, have this share $XXX Following remaining repurchase our program. million on

In early family. the acquisition and team completed of is since are This we Foods acquisition Renzi we our this Renzi of excited July, US the and business the welcome to the first are thrilled about Foodservice, associates. quality to and XXXX, tuck-in

We and our a year-end earnings growth. to compared reduced combination meaningfully leverage Moving debt to reduction XXXX net Slide net through XX. of

past months. the also over can XX You progress significant see on the slide the

is the range. end leverage ratio at net our was leverage the the which Our end quarter, target top of of second Xx

prepaid in year-to-date. $XX and bringing million to of quarter, additional paydown second us debt an term prioritize to the of continue prepayment loan million $XXX We

overall debt if structure any the maturity two. ahead maturities in to quarter good the next expect that XXXX. shape is and XXXX proactively we're or have address in don't said, That we Our looking until to

allocation on prudently across agencies. this from capital We for remain focused four parts allocating Actions capital both in resulted shareholders creating the credit and of quarter our value upgrades rating our strategy.

turning on Slide Now to guidance XX.

reduce result on outlook EBITDA raising we our year, billion below range and share. per to adjusted to to our of a of the for track our diluted full $X.XX of year-to-date and We remain EPS the year. end Xx leverage are full results adjusted range to billion the year by $X.XX $X.XX to $X.XX As strong

deliver we're similar seeing to be of remains to end this positioned well the at earnings to guidance currently. are and against We the guidance expect higher the macro what if

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

opportunity couldn't will about Thanks, for I I our months close be ahead where US my Seven more Foods started. excited role, Dirk. the I business. into and

company, summarizes to XX Foods US is Slide investment continue strong thesis so bullish. why a stronger. get and our I am we and

We U.S.-only a distribution. broadline a focused in pure-play in leader on are fragmented highly a industry distributor based

Our offers the on various laser focus business stability our controllables macro plan. and executing is resilient long-range and across Foods controlling through against US our further backdrops

believe gains. adds for and even and This independents, targeting our value are believe the growth growth hospitality share We we more healthcare and including our in capabilities, been our driven invest service compelling the strong these reasons continued we where by of results seeing in differentiation all are has progress US Foods. to are team, outsized digital quality our model our and MOXē. I

to building and on ways company's while effectively the focused strategy are on rate We core strengths our our finding improvement. accelerate execute more of

this to will stakeholders. bright Foods very and our a of am I confident for future all lead combination US

to XX,XXX to make and Finally, do continued dedication the thank I like our would work day customers each for it. associates they excellent our help their

Our matter cultural our of very associates you to are which our underscores important one critical success beliefs. why is a

With up that, questions. call Rob, please for open the

Carden from line question Instructions] Mark of And UBS. the comes first from your [Operator

you worked your sounds So of thinking you slowdown the like you've periods? to on to channel's of customer coming with your quarter. some share which case meaningful the way overall? about last with growth a what And health in albeit seeing took with a through, of largely to respect it relative the disruption growth contribution you're this any the CHEF'STORE, how start, changes in the market to bit it independent looks are channel, of in Outside like

the Yes, Mark. I question, appreciate

And We we the performance you the and that health second recall, were had operator in quarter. I are mean, we expecting strong seeing of independents. if the

sequentially June quarterly we the here that we the the And March we to recall, some second away May Omicron led can April. stronger. as we the what in we last at tell and has I in while give quarter or saw been lap color third provided the don't got you guidance, And softness into saw quarter, above quarter trajectory. second quarter. had you start If go the exiting slightly

the more to across good and of hospitality healthcare strong take that them, that, board. the very ability on our based differentiation of our both pipelines very and then feel we besides to we of So the And operator, strong. health taking very business. remained about share the in continue We're share in importantly, but very, segment have

a have of Or next with year And more normalized do and the see that intensify $X.X is did great. progressed? much That's a billion you that when backdrop? how return in the a about on your risk it a think you deflation, ultimately EBITDA How to category variety you contingent deflation just grocery initiatives enough your quarter to scenarios? follow-up, get upon as do as much inflation impacting then And sales? target,

Dirk. Mark, is this

the was quarter. the across similar overall, pretty So deflation inflation picture

saw the I continued it think it changing you for year. you the of lapping through little quarter, really were inflation. prior see bit still So a as quarter of But to overall grocery if

So my we proteins, there. lot year fixed markups a still we'll be of that because coming our from prepared inflation teams to as comments, have in And said a haven't And up ago. I much to through of is seen that more take lapping and it. manage deflation more tend the very popping in processes good those the

focus we're of So a even environment little from number to profit you've the And on say really strong initiatives we we've times, a as modest is gross positioned profit or the of we driven in deflation, manage heard this of very controllable, executed. me gross number think been it. through well inflation controlling -- as growth very predominantly the we

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

I wanted to with on side. cost -- I start quarter. start to the Nice wanted

distribution mentioned better case than per cost You XXXX.

and case the progress I at good. in is think progress per look very OpEx we the

seems out period. a Can per case year-over-year maybe entering you of you might look it minimal be that OpEx I couple like next mean, quarters, growth is at As like we the seems just driving thinking per takes wage about talk Are cost down? around a inflation. case more Obviously, distribution puts forward? there's on about bit this the the and what's going we rate side

any Just be there would great. help

good the we've appreciate we win I'll at sequential delivery. improvement to in question. specifics. said warehouse last I chance on both the heard of on say And year-over-year But any the very as give level and as a we momentum Yes. start feel couple our you productivity, there, getting quarters, well Dirk higher of the and had both. about we're the in improvement in as call me the

And so excited driving, about. we're the very initiatives we're

traction year. And in to back doing, this those point large decline. would good supply point, in this where is I to to particularly or And based expense half that's expect in five We a the continue quarters operating our of is row continues the our by work to get growth that out chain. part your in six team

had. the the commented, as by compensation, profit seller overall driven only team in that perform at strong thing was is, per gross quarter, distribution you're would I to then which And was a two drives place cost is is it to secondly, going And higher which than were the I increase good to drove our the continue a really because year it case incentive ago. areas a costs results compensation, have lower And we've stronger level. add

ahead the we effectively and good Dave costs So gain said, as the feel, ability progress our about and manage to very leverage. path and

very with And this some deflation a X% obviously then gross per gain case. encouraging. is quarter follow-up on The profit just

continuing. do think terms is at some year-over-year that of terms upside in in about had at you any like in and profit the ahead, today, I single-digit there all unreasonable that innings where maybe think the just mean, you there it a there stand gross gaining case? that you gain seem color of at least But the here? per just we you where least be reason As stand doesn't you quarters shouldn't low

Sure. Good question.

second the profit for quarter, X%. So about up gross adjusted dollars were

way point, year-over-year, had as So lapping pleased I your gross to -- because such year-over-year some the a very strength think and gains it is those. think normalized And increases with growth good is continue with case. to we're that. have continue environment, runway going in to the OpEx to pro durability target feel get you see back of end. at our have of especially made And on we we've we've strong continue of EBITDA the of may We're our we if goal I a not profit margin lot profit to ahead. get look but there's the I lesser drive to is just focus think those per the more We to balance know, you to continue to -- gains. we a overall gross an And And customer to growth, as happy run here think our to we play because types. profitable gross profit the the and progress faster we're about

Morgan Harbour comes line question next Your Brian from from the of Stanley.

you the with maybe it's comment this trends in know change the case not Can chains? point, focus restaurants? Yes. just kind at but customer of I chain on also any volumes for

we you take were read of back, back the that. one. than the quarter. the with market don't recall, competition in if we the I'll bit has -- each things number do portfolio less a to has, good much large change the of some of was Yes, take part question. too when little It into down to And said in you one you the I had I'll Brian last commentary

Black as weren't to year the progressed. Box X.X% we Technomic of quarter. first Omicron is They I the points to surprised is July. pointed the change, And the data think things. down be January. about Number pointed chain then XXX within quarter has X%. all the segment we One has that at the second changes X% two, lapping I'd between adjusted gotten second effect and had in back the the data to year the for of basis May. we're flat then backdrop two point softer the in because that thing the to in anywhere said that the to going about And they for recent in up And

And going as hard you focus. point playbook. our that's in opportunistic going change, and to issue our chains. lean in be independents not run on on it's to hospitality a continue We're we're and healthcare, So really to traffic out,

quarter I still think, in see said growing at broadline a mid-Xs, I overall our case is Brian, of operating The fact the very that growth. recovered. not here in that's a the in normalized second X.X% sort market. hospitality in pretty think quarter hopefully at what independent the environment is you has which, continue as to that strong We're in well share. we call, X%, chance the Healthcare taking growing and by we're still above first is

And so those and going continue feel are control outlook. we the backdrop, about we're we the things to macro good that where despite our to controllables the stand

thinking it The then Okay. of lower be and benefit still it the just was be from you inventory also kind the had saw, Great. that? quarter, Will similar are third values. deflation quarter? -- Or kind And a through about that fourth factor you if rate second LIFO steady of in think of half? you in second the the something how do that you is sort will

Sure. take reverse. Maybe I'll them in

backed or on what remind based So happens there. we adjusted, the of you way LIFO predict there. is it's hard to reported I'll deflation mean, that out inflation, I

a stable second second our So the half yes, GAAP numbers. was that second us numbers. the does -- not And the is is in the help part help overall pretty in It EBITDA in quarter. our adjusted for it year, in

categories. we're to center-of-the-plate what primarily the I driven expect it the continue we this by -- to based think second continue on be seeing. be to of at see half I year some in if point deflation the

proteins, deflation I some continue to to As before, we results. still hasn't signs mentioned good strong feel if about in drive grocery, see And even really there. we deflation of modest ability our additional our shown as very

from comes from Barclays. Jeffrey And your the line next Bernstein question of

Great. Two questions.

of just the were growth a second that total of expectation of maybe and I or for I'm wondering mentioned -- little bit the 'XX a for independents growth. a just what dissected total total upper back in guidance. macro the I slowing assumes macro for and the half just upper the growth within or holds. of I your mentioned whether Dirk, case wondering first The guess, the follow-up there's the a concern half mean, year? we you on updated case worse. guidance know you But I'm total, what slowdown. end one, better were your Dave, for is or the full the case the earnings chains

appreciate health well, around stability in point the the I the Yes, comments of the made part the to holding I space particularly the the quite and of quarter. calendar put operator early we would I as here the independent up questions. into third earlier the

continue ability our our of Importantly, lean nothing in to that, ability around team, more share. I'm given confident strength but the take getting local to our to basis in, a market strong. and independents. outlook. our continues provide very that's we get where best to really All product understand offerings value and contemplated those very, the and can target That in back half

there. there. chain Dirk? I stable our environment, continue will share the on space already focus to So we a commented and would say take very we in we're and

come just points or mean that of much the to that And comments is Omicron. business. of you he his basis points Dave's prepared across back I around the remarks just lapping basis in made XXX XXX

And meaningfully. a being you when more QX think said that When Dave value-added, pretty which businesses X%. the that much we so really I fact very business about. cetera, of is growing in still that the that customer a normalized you et profitable, types, at faster we very are feel more growing are target of lot going good think backwards environment, And these than have are

stability and saw of overall are, macro. what the the we in So July where we

just X.X%. And know a talked follow-up about to the I Understood. margins. the points EBITDA you expansion the on XX of basis

least looking do time? get to it's full comparable already this margins to stripping historical that the year at whether year those if your just year levels. look again, would a thoughts hope you step to full you mean, compare trying at just a for this sense potential at previously above kind back, But so EBITDA you that of know for a you're Whether kind quarter, from but think I assess 'XX, noted you to the level, guidance of least at of taking because, difficult again, peers next the year. quarter on pre-COVID seasonality, for I now, which and a second over I X.X%, to you're get just ultimate play was forward. were the out seasonality year going pre-COVID back how trends, at Dave, margin you or

here we're good ability we are doing concern doing, feel what initiatives your so times not peers what say juice our in of and lot morning, around we're control what still to focused can things and I about a of but this point that And to think there's the control, as squeeze. our our Dirk control, company. much we inside we couple a heard can you've on

And the we'll positive ramp as reason so against deliver get we growth ability last and ability have guidance confidence around up $X.X execute that profitability. plus to minus a quarter to our our next my or XXXX. feeling in that And further to into our just pause. both provide and around year me But year. gain nothing and comments have say to gives for I continued obviously, billion about I'm increasingly about to

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

maybe little half, I wanted margins seems guess, bit second first to to margins. little about in the half. guidance, little stronger a opposite, than I half in EBITDA second talk your lower your a bit of think, are historically, total just EBITDA imply the a your but I

in how half thinking much about the maybe is impacting half? second the second or talk or that about should of be change that think other might seasonality that we can be as you if curious in about margins conservatism just factors So the we any

this Kelly, Dirk. Sure. is

made the overall So overall, margins. with on pleased the progress we've

for higher about think being includes double the single EBITDA growth normalized in low of year, embedded there, in the in in pretty digits. still healthy high about my the outlook the commentary we end especially a year as think of that environment, even I half a the rate to second what's

we we the is on good still on where the of feel to within progress balance make expect think lines. halfway I'm our feel And margins. to ability year. We our at Dave what of as opportunity going continue to I about ahead. point stand the comment do EBITDA different plenty and there. I the expect specifics not So do we for But still, about outlook there's good commented,

expectation that. we guess, And to if has up. just think curious sales outlook have year deflation to the in into impacted magnitude is is? outlook I understand expectations us that of make and Or was Okay. given outlook kind had your really But the next? you to that helpful. of what this year? evolved year your have pricing of for had kind any where your or next? Help internally just Or your for how follow this don't or maybe year this for to changes food I already That's for and kind if

Sure.

been deflation and that think inflation predict. because to just harder have I

primarily the impact may come it against. what given in overall protein the executed we've categories it's but So sales our impact dollars, doesn't and really it strategy

we that the So case strong have there's case What we've on, adjust. focused had not been the a have and to as to business. across are really growth growth continue know, we whole you is and the lot

do the current environment, in the we're showing last we But quarters. you've seen and different that that up. and inflation will four the over may think course momentum is where categories think generate and that the going five continued or to we very see the stay deflation closely I watch we

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

maybe, one I'm independent with to how thought be. still each served it that distribution And should numbers, on I for versus low And right? Because then not Dave, up? you is think If about giving right, but it others, points, we're start relate too share. growth I you what broadline Which and wanted high how seems the growth, in curious thoughts it's locations way your versus on drop in growth guess, they bigger? is other? wallet to size.

Yes. the John, feel I about we of mentioned earlier. that backdrop health again, of good the with it, operator the

to pleased take those the time. But penetrate up opportunity Our penetration do we're to new on continue customers existing ability ones. ample our currently rate of through there's the with strong. customers an while ramp then for share is bringing And new of our to new account I us generation. course I'm believe of

say of both going a in of bit Our on part lot team have but focused would we're well focused and the very, new to and that that account was in first it. stronger forward. your generation is quarter, the confidence the on algorithm extremely I gets in both a penetration question, very And squarely

looking gross And when Obviously, topic. then had do which set healthy opportunities months, vendor larger? deflation. that out management inflation, think Or vendor should to we But of different bigger, it totally they're maybe or procurement let's XX you a XX customer, is with the at margin piece was right say, one healthy be also I if product sized? management look think you both equally versus not is mix, and

John, both both. not lot given there's I've of a one going point, of sure areas on not we've got still point. room for in this those I'm and lot in either a to To your at activity improvement of

-- because that's that's And think have the profitability you we outgrowing relentlessly -- think we bring think, comes that types we overall journey. about customer focused on really continuous mix I why target the with mix of a about you can And when of that. John, think you And piece, with both if the these value think add. customer been

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

reducing was getting out indirect previous kind consider? showing know opportunities is maybe some are we've think around low-hanging is just unaddressed that And maybe I how talked you we I spend, of journey? Or calls, the is total previously used. actually I spend about much of maybe some part might of more previously opportunity? in this up dollar to your fruit, kind actually Where in that spend? current of guess want

question. for Thanks Dirk. the John,

where up them. We've we've we've dollars ramp So over later after this go of then it identified and to see opportunities. Expect progressed year. -- now to course a show year is begun next some modest really up of number the

So good quarter and is about a progress our last really current about lot spend. it it since optimizing we talked

talk inflation to we one as typically offset as as as try And we cost us that. be you've with do trying so to targeting much of in levers cases, can those these about, heard our we're productivity. And this would

we So think good plenty progress there's opportunity of ahead. and

seen or your Foods spend of structures is is continued things seat you thoughts capital that there maybe longer done of increased CHEF'STORE, the over US come than as regional be any previously way and just And kind should a kind in other of that And that that was kind Are Dave, that that under emerging, you've your and you've and -- have the that are the time evaluation? get to some in from expect exposure of on structured? we business just time? the can things Or differently? that the perspective

Yes.

and a So the I've I see last get little case business the feel looking the very that to in as quickly. around the all and as broadline has stuff that get opportunity lot opportunistically, to value CHEF'STORE. made of to a be the that the take quarter, the leakage right But had Still said here conversion behind to us prove areas synergies we've that I handle volumes P&L. things. about really we with Obviously, ourselves. one very and we'll the forward, system believe get on underlying of got. complication of those we've going data difficult momentum good I'll systems in just a much the sort it of

that more the theme is that forward us And here process here. fairly said future. that. quarter, more thought Dirk to efficient come to say will in in point around thinking the But to have inflation X% business. change getting offset X% up significant improvement I'd see in constant about intent that's But is continuous last that a I and talk by every just to as to I Importantly, a year that this efficiency the We'll more what about the organizational productive going in in believe you on highlighted, you and productivity we ramp range.

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

Just One, guess, able that get there billion you already views or new relative the could a if how be that toward I Or being come, benefit I routing $X.X related for questions. to to of Is of could your 'XX? software upside that target to 'XX? clarify couple follow-up wonder EBITDA contemplated to in previous in this?

company long-range put could always upside, there contemplated the out that of target billion year. in plan when be next the the that was Yes, $X.X as but part for

on next? and XQ, there I you've updates was you've warehouse And guess just color gotten levels on toward already turnover guess, retention, 'XX where Got progress turnover that any the still above. how I driver turnover some back goes and through additional the maybe gotten, you. that far on But

quite side be a The persist to and than at progress we to to the point continues areas. where little your outbound back turnover point, delivery. not in stronger hope this levels. in in we're To both the Really good warehouse on XXXX

to around pilot where the to markets drive the here we've in now getting in half hope we that will in got of and me first turnover of row of improvement flexible the phase both we significant improvement the a than delivery back in a got to more and gives quarters things half initiative scheduling back being However, continue confidence of be. three our like after in our on we've our warehouse in half at productivity, lot year this there and that and and in reduction significant continued ramp-up to discussions that

So more and momentum really to good come.

King. line from Andrew CL question next Wolf the of Your Instructions] comes from [Operator

the share that the distribution -- you with -- that you Taking with independents, market you growing foodservice or the sector are you're Like facing what what is growing? comparing share for us not are your independent is what taking could to? belief

is this Andrew, Sure. Dirk.

more it and So use an month-to-month have use because basis, we a as guys -- to what set actionable. granular we on externally, talked we've it's data we other to. Technomic relative investors NPD that's and access more because about you much many Internally,

share quarterly the about talk data. on we regular when basis, so a gains, NPD using that's And

So them. the or XX% of provides XX% industry

seeing share gains we're using that. So

followed So it's that. an independent, to same have and they everybody please measure the

this said, kind that to independents calls Dave at change think I Technomic, of percent, believe, look a year for down you and overall If Technomic outlook, of for flattish be restaurant the be to yourself. I couple

will and chain take bit relative we you focus. think much been hasn't And continuing and the to to of where day continuing independent of a all that are if to So at that And we our healthcare focus. little X%. again, to pace a grow strong at slower. again, hospitality, But the grow that X% with faster then remains independents in

more could obviously, to folks more, productivity selling your they're increase versus Okay. you share. going new as money. in market the sales On hiring about driver associates, But sales talk of with make -- associate associate the -- product the an they're sales

we way then we're how the And overall, So doing how just we overall it by in it's think at types. by share, underneath categories, -- we when restaurant how doing look markets, we we're doing are market there's about there, performing. that faster parallel, you we to how continue process do -- growing markets a a have in individual management as expect, sales rate. especially are hire those actively in would are But of at reps there performance be

adding is really it driven And continued sellers be think but that markets that definitely we we blend. by to a share are performance those in growing both of on expect So as about faster. gains, management,

it to and some you're coming incrementally on given mileage, distribution. to the making things, delivery, more up Okay. sounds it like on your of the Well, bringing and some way includes it's lower be working same back income and sort of the from quarter? cost as Is for versus already following right? And the obviously, lastly, just I results would the guess So side, the stuff the delivery that at -- most are more fuel warehouse on look think per we fuel. about of now. case better basis, routing, we right that dollar different on on like this and unpack of where progress a not That is

comments productivity seeing talked we're come and we're delivery. pleased both I'll this, is, in with his to on about back where warehouse earlier in this Dave improvement while

cetera, impacts et and contributors. each on on contribute. yes, both they're on, fuel, routing, they They So have each

improvement, leading we're to think the overall I the of we upstream do lower individual, more et we that. think that's So out what without demonstrating of the case when the retention is expect takeaway cetera, more per the seeing and important is to doing that's parsing and cost and on working, turnover,

Jake line question of Truist next comes the Bartlett your Securities. And from from

But that in is so price case ability levels profit impact And on gross few markup, about have my competition? the is seems business deflation question the the understand drive question the they last that. to more you a to allow center-of-the-plate and per risk protein as My could priced is dollar with maintain doesn't generally it. try So biggest be service years. over than that competitors that whether greater price it to are for

risk? kind So how How would pricing you out there? more of aggressive you any forward? going that seeing you pricing Are approach assess to do expect

profit. good the feel of gross about we Overall, our durability

And last seeing. the gross a focus demonstrated few the we've quarters, we for think the that still been And I we've how year initiatives driving profit lapping of we've hopefully, what people that comes results inflation results large strong despite with execution ago. asked our would have we thought fare seen had back to we're as that. own on

pre-proven competitive a than to stable. normal operate it's we world I continues a would It's environment, level that a in, and be back competitive where but seen haven't any where really irrationality environment. see different of in to And that's think we macro a a that from you industry. it

continue we healthy expect with gross quite EBITDA and solid good growth. profit, driving So very strong to

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

bleed of fully you XQ? basis Or you impact the just is that do any to Great. conversion issue come the point back wanted Can to issue. system on elaborate was? consigned to And into quarter? CHEF'STORE I the that just XX think what will second

Peter, this is Dirk.

new we to our of a as this overall, earlier purchase we So by through year did. think had system there a which under agreement, convert system part is off we of

are have have see. conversions for not -- of did some when converted. to uncommon, magnitude which we markets challenges, And unfortunately, you all this So it's

just me into Let put it context.

it talk are single to So independents you there. it's are about more impact has some low But down challenges broadline sales in when there, digits. when X.X%, compare that meaningful the we that up a

we do et weren't of some where there us fully through, cetera. the resulted And challenges conversions in around going orders issues were

been That's that to year. store all back of few customers product focusing the a do we second recoup So on less the months, for and growth continuing back et to shelves, half has to been expect It in get cetera. remediated. and get to had we've been on in the

are And this going you'll and the Is on do share shift Xx. naturally? thinking allocation capital around repurchase forward? Currently, EBITDA leverage Or leverage in kind to you bit time you more how debt of a continues think Great. at kind of about just as down? down more comes point grow little the pay then being it to

in Dave's close early you that the the comments acquisition. Renzi I Well, quarter did -- third expect on know, as we Foodservice

I And focus then both we're of continued repurchase. share continue debt and that, important, a for the is We down top a that expect are think of QX to going So do and pay on. near term, to balance use. on

good team performance service as improved. I capital have the think year this the working levels

those found focus remove that's added funding with levels et stock service helped acquisition, allowed have teams methodically cetera. while still numbers when the levels service were has which some working to Our the very us on added vendor of through opportunities even lower, the capital high maintaining this to and gone stronger we year, of the customer generate

balanced, question, but answer to to directly So we're M&A, will about. first you excited which expect have see our be your it tuck-in I to, I

Dave end And call over I Flitman for question-and-answer closing turn we the have session. our will to of back reached remarks. final some now the

Thank us you for all very much joining today.

accelerate in ability great a confidence I momentum. Have Our business great our have and is strong, our to day.

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

disconnect. now may You