US Foods Holding (USFD) 9 Nov 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to the US Foods Third Quarter 2023 Quarterly Earnings Call. Today's call is being recorded. And I would now like to turn the conference over to Mike Rees, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Lisa. welcome Call. US and Fiscal Third everyone, Earnings XXXX morning, to Foods the Quarter Good call, have today's CFO. On we Locascio, and our Dirk Dave Flitman, CEO

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

on issued at found ir.usfoods.com. Investor earnings can release today's slides at this earlier Our Relations and page morning presentation be the website our

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

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

to and host where We of key be in capital will X announce Day here on will generation details flow strategy Chicago year. our deployment of following set with long-range next beyond that and plans. the our Investor the we the More outline in XXXX, an area along June plan months. our drivers cash new will are we excited

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

I'd like the Now to turn over to call Dave.

thank everyone, morning, today. and Good you for Mike. us joining Thanks,

of and am one First Senior Relations. more Food him officially our I time US QX to Mike welcome team with Neese, His Investor Vice thrilled Builders our Group Foods, experience of new up Performance in including President jumping I to Relations time. with Investor Source. to highlights, XX years Before is want

adviser teams. look and contributions with is Vice XX Additionally, Mark business as late corporate Mark's in governance, a experience years exceptional M&A of Mark joined With transactions President Aha to US I ] than in forward Counsel. leading seasoned commercial company. General and high-performing to Executive Foods the September [ expertise more and many

turn and it start by quarter strategy our before agenda. let's sharing I long-range our and now updated highlights to the plan progress financial our to Dirk to against fiscal hand And guidance. for and over results XXXX review I'll today's

In the long-range the make our business. progress plan third we quarter, continued to broadly across against significant

share We are safety improving our and gains, our cases associates, the driving cash meaningfully margins, our market while leverage. growing net our of independent flow increased accelerating enhancing reducing

of and and plan. long-range XX,XXX focus relentless are our continued am customer quarter growth result third the and share proud of in customers service I gains our initiatives strategic executing associates. and performance operational under to year-to-date our a on our types, of market strong dedication target Our accelerating efficiencies best-in-class their delivering our

on market differentiated team team-based delivered selling Building had hospitality volume industry-leading restaurants, year-over-year our and our types, innovation case health of digital Each model, strong our care independent share momentum, and customer target gains. continuing growth.

of quarter gains independent in consecutive important type. our in customer and share sequentially. exclusive penetration our share year-over-year accelerated Resulting we brand tenth gains Importantly, this

margin XX XX% of margin demonstrated with and EBITDA operating quarter, expanded adjusted adjusted expansion We growth and leverage. EBITDA points. We profitable improvement during by delivered growth meaningful our in the basis

shares generation, business and the Finally, down invest more execute we pay flow in to tuck-in accelerated us M&A. cash allowing repurchase debt,

Turning X. Slide to

to and four focus what operate at we our on service, growth Foods and win profit. we how guides under of strategy culture, Our pillars US

our presidents from inclusion the benefits on leadership We my of continue reap four executive team. to regional

versus teams to recent important further feedback having field I regional We report are from and made corporate decision example organization local is commercial and ensure presidents, communicating the the sales our function. to faster effectively centralized One better streamline more address a by into teams aligning a the our execution.

our has his Jim leader of a December decision Also, to X. in retire trusted and Commercial Jim effective me team. Sergel, executive Chief leadership been informed has voice Officer, EVP on my

for Jim the thank than you has company thought a to and much countless we made I and more years of forward. want our greater company, accelerated backfill steadfast to pending contributions strategy. to more our Jim's the careful role. consideration our streamlined and even decided team given contributions his company retirement, During structure propel our Instead, our people. create collaboration, for to leadership Jim's many commercial restructured not to XX and I've with have his his platform After execution

of EVP Taylor, additional excellence our on responsibilities taken result, for a sales As Field Operations, has marketing. Randy and

] Co Chief we service Dave exceeds been merchandising to continue proposition XX value food within than for distribution. goods Dave's function. to that is [ In veteran he be more with the a reporting we Dave our addition, me. responsible customer seasoned Foods have role, will of are of his through promoted product expanded Merchant right ensuring of the our EVP product In years has portfolio and to competitive leadership merchandising that on cost US expectations experience

growth. to changes on our growth, accelerating for place we making, we profitable that the are organization emphasis and addition sellers we want to reward increased In to we on delivering ensure continue that

growth the compensation more on our likely key sales are closely to working territory of We link our to their which compensation currently manager plan, plan. profitable elements even some will revisions

will our We any more share fourth potential quarter about during call. modifications

local are capacity. in our We accelerating our also selling investment

beyond, We increased and on we count those quarter. in which digits continue month to with ever ensure in teams our In mid-single each fact, the third than tools local contemplated will head support sales be has our our successful. the are already right growth the XXXX low processes to profitable we in additions plan to seller more focused into plan. and long-range been

field efficiencies. supporting our and will our and handoffs organization will importantly, right corporate changes between additional driving the better focus profitable on and serving these Collectively, growth. company they while and further customers teams ensure the creating alignment Most reducing propel with organic

quarter later. now culture third service our I'll profit talk and our and bit Slide a about and briefly progress Dirk growth discuss X. then the pillars pillars, against will Turning to I

at of X, associates our our even for U.S. and have is our provide our environment paramount critical to well-being and Since performance safer is improving operating I of safety of to all The importance associates. stressed an day the success. Foods

to Our as strong leadership is results impactful safety have One been driven more example fewer by to personal our effectively actions on safety more value. where our while training but reinforcing execute initiatives a to training provide safety X,XXX behavior-based example, end process this the with performance. led operation will improvement in year. combined we safety of our that by leaders steady initiatives other This approximately

this both third the quarter year. third well of quarter of as the second year to as Our results improved in the quarter last compared

In frequency quarter fact, safety the results the both our since with and by third accident the quarter year prior first XX% XXXX than XX%. better injury rates to was our best of

rest at However, we zero injuries. accidents we there is are done, be and more won't until and work to

the to X/X to to innovation derived footprint. recently environment. These aim biomaterial example them of or negative our our of serve pillar. within that portion products good Turning portfolio. responsibly sourced Serve asked, customers a gas greenhouse we make our recovery nearly say products products responsible the reduction. important Through including climate featured our create our conscious, SCOOP, contribute conscious carbon good published cultural One to is unveiled to their to impact waste emissions. that greenhouse When our to a it product newly fall is carbon-negative out climate category that on that sustainable gas that our new are sustainability reduce criteria, innovative rolled limit support monogram choices meet utilizes plan

multiple We categories. to in product nearly spans our products which are excited good have portfolio, X,XXX serve

we on Additionally, winning center-of-the-plate our key are upgraded the And have years, categories. proteins and over several fresh we these product last in assortment focused produce.

types category we within and we we is XXX offerings to ensure approximately needs. points meet evolving our will last year-to-date, hospitality. category customers' our X produce the I care proud fastest-growing target estimate market and have sustainable our of current of and independent years fresh health our our continue am captured restaurants, healthy that of share over basis and customer Importantly,

X. to Moving Slide

levels and our in full service customers. to continue to best-in-class specifically focus on delivery, We on time

We area In a is of service of part improve a and for routing prime now product levels. work us. at are system broader improve further pre-coated levels our to focus example as new routing how continue also the availability On-time we underway have can essentially customers optimization to pilot our is key for we customer we service had service.

pilot We our launched the first decart in market. ] [ rounding

planned We XXXX. for a before continue implementation intend to to and learn with from this year-end, national second pilot pilot location

our consumption move third routing we our to levels while us mile and initiative, quarter our best ] also miles driven delivered by company's to in where history. improve with as enable the reducing will combined per cases highlighted to [ Our improvement service customers our performance fuel decart

pilot In our moved in is we progress phase deployment to XX addition, live network, across broader now as solid initiative the flexible our have and locations. scheduling making it's from

to in continue on approximately significant We other scheduling flex We and on to of XX% locations, improvement reduction be year-end. pilots, that especially the network in across versus by safety live productivity. see our is in continued our including twice improvement track year-over-year locations our turnover in our of rate and improvements improvement for remain half

Finally, with we technology also Moxy. digital to customer-facing market-leading invest continue our in

to development improvements and agile orders even place manage make faster their many to Our customers has it for delivered business.

in national complete. XX% Moxy And customers to our full have with planned of Our local the first is half customers deployment we year. next now deployment on of

of the the terms we experience, continue believe to digital In lead industry. customer we

we're manage to to since and Score improved recently. points premier well company inventory. has penetration perspective, From deliveries, and our being XX the our launch even digital at bills, an its set locally managed all-in-one Net improved has pay strong customers XX% track for business is e-commerce Promoter order, basis to further tool for the way total been our XX%. on Our and Moxy

focused expanded to a targeted And customers. as we truck customer return and small investments is our quarter, our the to Pronto am our progress with the we on geographies. Today, best-in-class further are presence the has I delivery service in the pleased Pronto provide to on in we continue dense within experience, markets. making which XX focus service

operating focused Both increased. than We remain accelerating on growth as increasing we quarter. and profit per case care this gross health margins our faster expense per did case further share profitable drove hospitality. We Turning walk driven to expect and later. growing continue quarter third on to and I'll and our Adjusted Dirk more and detail quarter, for for in We increasing Total this we and highlights, will X% volume again types some X% care and a target customer growth through into double volume little Slide was for hospitality growth restaurants, business. continued deliver in to go independent healthy momentum. by EBITDA customer in each that X% strong large net types X% digits target nearly case grew part X. health focused remain with growth, of new our

already I've good spoken so here. several experience about be repetitive our points supply progress customer with won't the and chain, of I

on. Moving

growth. capital for continue strengthen and our than long-term our X.Xx prudently to We XXX,XXX to leverage to allocate We net reduced further and capital shares we structure repurchased more million. $XX fuel

further We with below year. the remainder expect remain improvement for Xx year into of next to the levered

Finally, in an independent in food we we this Central acquisition earlier tuck-in scale that third And additional approximately annual in our Saladinos, the year. with provide of second for quarter. service closed announced will distributor us the California the is acquisition in this Central acquisition $XXX morning, California. million revenue Renzi Saladinos

year-end. close transaction by expect to the We

finish have XXXX. expect we to We as into strong carry XXXX, us we that and momentum out momentum

women acknowledge armed you to on Slide and have faces Before Veterans X,XXX some in can Dirk, like hand celebrate Data served country. would over I we our the will X. brave On have Saturday, the our see so their of men it who associates to courageously forces. who And I served

for service grateful and veterans are on important this celebrate We their and all day. them

we in are to civilian food supervisors offer are their transferable distribution, to in remarkably that corporate committed and back life. including work competitive supporting We do veterans skills roles. transition and drivers, They selectors, to the

veterans, Foods We and U.S. educating veterans and group employee providing of have on opportunities. recognizing our associates to community and engagement resource a our supporting an recruiting volunteer dedicated veteran the value

in employee to veterans valuable resource wish communications who Castillo, in country. merchandising in those who for service happy financial manager corporate Serve have our is veteran's our we I'll And to Group. Navy it a would We group freedoms Dirk successfully our to the that, performance this of senior With of personal detail. who all hand their Employee to go made Those guidance skills all her like Who Jennifer and transferred for is I leading world. efforts further over sacrifices her in very the President thank and Jennifer and over recognize mass protect in a to Resource to day. and Jennifer U.S. served excellence

good and Dave, morning, everyone. Thanks,

as increase The operating execution billion strong Slide were leverage sales to strategy growth sustainable adjusted in quarter. is again driving an $X.X of the of deliver food driven case turn improvement EBITDA deflation Net cost X% X.X%. of prior of partially our product this offset XX. quarter, by third Let's the and year, we total and over volume X.X% impact mix year-over-year by growth

nearly basis independents. of case points. CHEF'STORE added largely points XX X% impacted us. is Our cases for total independent for quarter. approximately was about growth Renzi our XX independent behind volume customer conversion basis growth negatively our by The system the

laser back into focused on are We our volumes driving stores.

to we XXXX. to flat growth as modest growth XXXX We in volume expect CHEF'STORE that be accelerate exit and

by in as driven cost modest year-over-year inflation approximately of the product show be saw quarter. X.X% We which to still grocery year-over-year and deflation center-of-the-plate continues

long-range We plan continue progress our executing initiatives. to make

profit year. the the case per during increased compared prior gross Our X.X% to quarter

gross an from X.X% the goods optimization. XX prior case by total up and sales XX.X%. was gross points basis percent increase driven cost Adjusted sold as profit nearly adjusted a of of to dollars in volume year, grew Our profit

adjusted up was volume. quarter expense case increased year-over-year in case our the which year. driven operating largely by OpEx is Our The X.X% only performance this X.X% per best was per dollars adjusted for increase

up expenses XX.X%. sales approximately net as were percent basis to of operating points Adjusted a XX

per We [ with drive exceeding more growth are we per gross growth. case and ] pleased as to our be profit OpEx efficient. seque profitability case

nearly adjusted adjusted XX margins points. XX% we expanded growth, EBITDA to and by led this basis of All EBITDA

Finally, diluted XX% to grew $X.XX share. per EPS adjusted

We an per rate leverage maintain about through of expense growing operating strong per with have operational case profit the P&L X/X case. And demonstrated gross the expect at of discipline. to we

our for XX Slide pillar. to Turning growth

Our and and sales. capabilities digital attracting portfolio product customers unique driving are new

full leading year. the we and by differentiated our growth, restaurant points continue improved health growth solid in types, track new to We is growth. care and volume strong develop focus model our service mix our convert significantly are With label business of operational customer drove each target pipeline. and basis year-over-year addition, on exceed our independent independent private for excellence to for our In profitable hospitality on share to gains XXX and goal case X.Xx

are We margin expansion we more and customer improved profitable seeing as focus industry and the on outgrow mix types.

margin consecutive evidenced independents. We share by year-over-year third are improvement quarter share tenth of and focused as our our profitable in gross on growth quarter gains

As for sellers in customer over digital to innovations, succeed. help our up experience. with This customers its on sellers self-service and hours saved we Moxy our focus new XX,XXX has hours to accelerate addition capabilities our growth improved the significantly our frees

to Slide XX. on Next profit

We additional profitable further working to EBITDA with on initiatives sold by we progress increase addition on such improvements continue initiatives as to our growth, of jointly cost In margins. drove vendors. make to goods progress

We cost year. address of by remain of to on total the of the end track a XX% of goods

delivery year-over-year We advance continue warehouse. and as both to operational to efforts improved productivity efficiencies our drive from

flow. cash to turn I'll Now

XX. to Turning Slide

flow continue manage capital. earnings build expect this working upon grow and and to We to effectively increase as our we cash

we Our capital will and strong further structure. our growth reinvesting means cash for continue flow strengthen

and $XXX in organic Our million. analytic was year-to-date leases, and fleet to flow chain projects sales fleet insights operating We cash approximately on $XXX improve to further million enable technology invested and supply expand and growth. including enhanced CapEx

target CapEx is ongoing approximately sales. net X.X% of Our

growth, X/X about of CapEx time, technology X/X a X/X spend rule included for we our thumb, of capabilities. which over fleet, maintenance and As for advancing on

also We quarter. for million Renzi the $XXX paid in

at makes in where We remain it pursuing like to valuations. will tuck-in selectively sense M&A and continue reasonable opportunistic Saladino

repurchased a XXX,XXX in million. of for shares the we addition, total In quarter third $XX

fourth $XXX on an repurchase our share leaving million we $XXX quarter, far additional program. remaining $XX in have million million so the repurchased And

XX. debt leverage flow past to free Leveraging our Slide XX Moving the and paydowns, over X.Xx we timely reduced our X.Xx cash from to months.

points. September, was by maturities. The we to offering. range We extended us. are notes a XX on expect market and from XXXX In XXXX of now by we there. to constructive due target senior basis as our In we for and move the refinanced August, to billion our X.X debt our unsecured loan Xx remain billion $X term completing reduced within $X the secured margin

is structure on we allocating focused against have the We any in debt solid XXXX. creating of capital parts allocation overall prudently shape, remain strategy. don't and value for Our until our shareholders maturities X capital

Slide guidance to turning Now on XX.

result $X.XX adjusted our a billion, As of to range we solid $X.XX results outlook our and full to are EPS EBITDA diluted year-to-date full $X.XX billion for raising year, our the to adjusted $X.XX range per share. and year

within have his strong and We leverage strategies and capital returns. years. We right growing into profitability this to long-range plan, range strong are are for target several we it to EBITDA now our and are reduced adjusted delivering we deliver deliver back EBITDA the the our Dave to in on remarks. pass and We margins. adjusted closing deploying next believe place I'll year our

Thanks, Dirk. the us we'll platform reflects four the are making we to and in in The past results at the safety, Moxy the profitable our our of a market win improvement team's which to am build hard work despite positions driving I And the years and pleased we to of our few environment. any that as continued digital platform our lack progress strategy. growth with differentiated pillars with technology over execute is forefront strategy, be overall productivity continue of tailwinds. improved our

consistent improve hospitality. health proposition our gains, restaurants, Our strong focus value and share and has independent to resulted within market in on customer continuing care growth. specifically case

margins. We are growing our adjusted EBITDA our and enhancing

we Even below of with shareholder in tremendous progress, have returns this a us. of runway Our and profitable growth long leverage is now front Xx.

over plan clear, very I XXXX. or margin want near future of growth. remain long-range lead and our believe billion we expansion committed EBITDA be to not to $X.X to for this Assuming at And is stable adjusted the ceiling in macro earnings will backdrop, time, be we further

and We have highlighting growth to Day our on lot future at in sales we earnings look more exciting potential June and beyond, forward a and Investor X. XXXX upcoming the

We gain customer types, enhance and are share profitable execute just our and target to strategy, continue will strategically getting market our within our we capital. margins started, deploy

into questions. and at and competitive It's a market exciting With the your interest. have please Foods, outperform believe in appreciate the great sustainable line position up are future. for to well an we time we US We open advantages today, we Lisa, that, the

from [Operator Instructions] question John with our first We'll take Guggenheim. Heinbockel

let in -- how you're investment various or parse do Dave, got do the you you then what that would sales out team-based making change operationally? sales, force different of the having start the And regional VPs, what right? to those guys positions. the org right, pieces think the investment You've me that between report selling, will secondly,

selling to they where consultants I'm have specialists our investments TMs as customer. chefs And support take digits continue those teaming the well let relative Well, excited up and making excited front John. the It's a we that there, doing We're make we'll We'll team-based in while. that sure me continue come. the sales But about other been we're be that at our in of to the to TMs. in they to for asked that our mostly for to the time as customer. Great. we fractional the long you first as need a have we've low groups and just investment, accelerate force about front model, investments question two to in make mid-single of

to for you field, faster. opportunities where to creates any just excited changes, gave opportunity order as and want to handoffs know, organization the really between and And how terms about efficiencies. corporate and me retirement think we're time the I continue to of going. it inefficiency, we about and then move his need in think Jim about differently there's the the just decision-making slower And

it's into back opportunity sense. rethink me sorts and where customer local the moving an all it. field our the just So for make to sales organization interfaces of

the will course meaningful think change, So but of a time. small I it through prove

independent growth my types, All is is target health versus right? And size, three it's the follow-up, drop right. guess the composition between then parse and case care different, you correct? hospitality, the different accounts how And would and my new out

right. that but start about heard drop Yes. single per the that's No, And broadly some I side, me increase the cases of to the let on foot digits. given flat, think we what traffic, per independent first. you've low our are our relatively line continuing up lines with in are

drive So of also initially, in get but we course exciting growth. of time, customers for that's and we penetrate to through when opportunity to both us continue those an to them terms the continue

And then with nutritionals that have customers contribute differentiation that efficient their that and care, care in talked and in I as differentiated a new hospitality as particularly And new to And and that I the the technology there. are in we've lot say, folks the cost highly we've customers health the and help back also to business. standpoint. not health be past, we're to the else to got our in we great in care, to believe automatically. generating inventory sales, of we got No capability growth office independents. their we've more help mentioned, relative seeking net and health But only a one a customers, care there. productivity our would from in manage hospitality same-store model bring to they do how has

really We're share to prove differentiated through power course our these of all we're that will We've be that have. the we of them. competitors very resilient to for runway of continue us got a a the customer model. speaks don't we and of time. got I to in types And taking have. target that us. ahead model the all winning model differentiated many And think So I places a we've got tell think all as growth this of we've those long of in you,

Markets. next Bania Capital from Kelly take our We'll question BMO with

cost what also there little just bit initiative this through management maybe quite work you're on strategic more us Can goods of your out as initiatives with break your about obviously, and more And then your reduction gross you just you to help learning and broadly Just wanted talk vendor and strong. initiatives, margin, suppliers? a the impact? inflation, touch deflation

Dirk regardless our continue Let going us me and operating details gross want to start, do margins highlighted, two deflation now to Kelly, question. through particularly in I'll I our to there the seen to make, on quarters rate Dirk point appreciate expense what's of at of expand margin large consecutive and much here. the gross been fill I as we've growing. And here and That's is a of what inflation ask and continue case as But the periods per and going our case. is we're faster than that per a winning you've model.

time. that been We continue. a to the work question, going of has expect . Specific will some SBM company that, your for quite it's that piece

As through that. maintaining we very of We're COGS making end XX% said, and we'd of progress. good we're this by the our be about year.

work our margin So to penetration and continue exclusive to with our were and job brands, independents lanes quarter, to we continue our regard, improvement, margins. with this to that along our destiny doing basis that control optimize we own up And a along winning the element in points expand gross improve our in which mix. it. the gross nice say, of of freight of our formula said we're XXX That's we as

those we just in are it's aren't moot point only really the deflation, relatively earnings. I deflation, been is that but year-over-year, reinforce said, when as point thing categories you to flat add impacting of to some that Kelly, a would inflation, modest think takes

control controllable seeing the walls. back things that of point we're our is four So doing and to all our really you're in improvement

As the opposed marketplace. external to

different to may be XX a or that Great. where as maybe opportunity. parts And just you long-range little on planned target. ahead give behind then the an closer I And million of maybe more you opportunity the are bit whether towards working there's that, get touch to wanted of $X.X to more how reaching components or billion it

give bit Just wanted an more. opportunity to kind a through talk of to little you that

delivering confident Kelly. be but We're And time the And results Yes, call, our gained just we'll the we're the I've I'm quarter XX is need. obviously, importantly, billion. balance to great of outcomes $X.X growth more that across guidance year great fourth expense but momentum say and at in confidence our ratios on right or course my question. very increased through and of the the near for working in nothing, months, And about We're our way love next first our just target I'll about say profitably. the our here customer right we've amount driving We're what customers types. P&L. got delivering the I improving that

So to continue that's say, of balance and one We've area impact would expect there's beyond. not in balance. I got the that XXXX terms outsized, there. great I into .

We'll take question next with our from Saleh Peter BTIG.

chains. a seeing Or of just larger behavior I wanted that starting forward? seeing here. couple their any now are independent in changing see and environment health restaurants. taken on we're their some you to more out in us quarters terms The bit maybe to is of first among change the help and discounting Are among of the have your a ask lot independent restaurants? a trajectory little We're deflation guys you going Restaurants price, of seeing.

had foot traffic some the is continued which through We've solid. with particularly the our foot to see of course lower there, the third traffic sequentially, health while the think quarter very challenges chains, results I improved.

I stable. run in win to the me health importantly, the out the think in very the of heard going you've And as they're I And believe is here. we past, independent say long with great their to support to only our but and businesses, market continue with continue people, enables a to technology. not that our and model products also take our service have us share differentiated

macro, on we're of in that going the to So we think customer healthy regardless base. to we're what's continue there differentiated going and penetrate

there's overall, as well new we've between seen restaurants. penetration there as think equally is sequentially share I from I openings and say And importantly, of probably And openings than largely the locations, were penetration out others but pre less split would restaurants taking new pandemic. our in of there marketplace.

So quarters next well-balanced continued through the at I in of would expect this course to see approach locations few here. it's point. a the openings pretty

pretty base and customer So we're stable. of the seeing healthy that part

Great. Very the indirect helpful. just then And on spending.

be to expenses? is started those have cuts think of event? would the bit where that on of cutting couple you those talk you there. XXXX just guys I spending about some past little a have Can quarters, some of some making a you indirect mentioned of more us Or that you Is progress cuts?

Peter.

We accelerate moving we small we see well But XXXX. accrue to expect We do along started have really to savings already. that's to and through begin that as planned. go some as

but some to things So see it's now, come more to come year. fruition good to next

Jefferies. from with Alex our Slagle We'll question take next

to the Congrats. up, any stabilization improvements quarter-over-quarter. is I bit gap chains or the independents looks seeing in any improvement there between it to that chains slightly mean, or more you're relative follow think? the come to I a wanted like narrowed and

think the the market, was traffic quarter. down outperformed just with QX on QX. foot relative going as who in sequentially have and slightly in the what traffic relative We I've going was to what to winners well. broadly is as said you And this past, the I in the folks foot Well, to your portfolio really performance are the

think relatively stable. I that's

right believe in look year, We're middle through within said pipeline and are continue We next opportunities we to the to we'll I time course as we'll year. next to of win. targeting have the of some our past, we've And portfolio. optimization things think in and going change the that into continue for show the improvement

of time I it about? line opportunity this the to guess XX sort of markets it's now. A broader grown think question to cover TAM and can about What's on go Pronto. where

in investments aggressive made Pronto. We Yes.

reach. that products to see particularly serve customers the You'll that that's do platform that. frequently, more to are and for us us these great want in continue better. do an our to of the to frequency opportunity urban Customers fresh deliveries, delivered areas as difficult

it long runway about a to continue we'll to getting So we We it's about opportunity we see penetrate to where love take continue excited it, be our but thoughtful and great We're across of with model. traction. there portfolio that Pronto.

from Silberman Deutsche We'll take Lauren our with question Bank. next

about to allocation. on quarter. wanted capital Congrats the I ask

stock or a really trading history, $XXX So year-to-date, big million so in fundamental had strong to momentum. at buybacks discount

debt opportunities or about buybacks and And you to of on your expand you accretive the down? further specific think M&A you're capital pay can to deployment the in thinking So for how business. most how just willingness about M&A, allocation then lean versus

Yes.

let So in We say company our return paramount. customers in invest organic highest start the and we me supporting is that's always will first. to think growth our

local be as opportunities network, those, acquisitions any at we'll morning with company. market say, We We'll I to like one that the thoughtful do but and across announced expansion miles the efficiencies, density. drive this continue taking first. opportunities our in love And take me system we'll we need Renzi we help our to us don't did this to footprint. with and continue about out we of to heard look you and

of Central the Valley half our competitors to in about So a a about It the We're let opportunity acquisition. gives about million an have up do. me where independent in footprint Valley, just roughly where excited say half the us word don't brought serve and since very Central none is chain you $XXX said that really think customer way in revenue. Saladino we it. independent, we M&A and Saladino We that

So business about Northern of us we're from standpoint. Central from it that we the helping optimize chain that excited the We're about excited and footprint. have standpoint it that California in

take excited serve base say for But of the for miles fraction that, multiple. a paid of what we we'll of that trading about multiple Renzi, which better. most we're I customer part I out fraction a and is I'm So our guess would paying the and

don't won't So that is make we And sense, of and as overpay we disciplined that. them. any we and won't Saladino acquisitions, thoughtful about said, example any great we will and be do another for

terms In potential our under obviously undervalued and my view. we're trading question in around hugely share your repurchases, of

share ramp repurchases. seen our us up You've

to that we've important. come is be make capital to the do hard on we'll of Returning time. need forward. more leaning in we course things do we share sure about continue thoughtful to our shareholders think and been Obviously, the After customers we'll going through well. repurchases, to on growing that I we're But supporting that. and

And quarter provide impressive the trends. really into of Can talk the any similarly, throughout and to the extent you anything follow-up, then October? And cadence And around case just you're provide willing on color you a trends inflation can you October. to [indiscernible] about trends throughout saw growth quarter? on the Great. anything

Yes. Thank you.

our as accelerate said through sequentially actually sequentially I we I that's share case the to continue bit from market quarter, in that growth why QX, QX saw earlier. accelerated things soften the independent market, think and a gains. excited so to And we I'm our

our we think importance for saw and it a terms of in back the largely of one I be importantly, saw the we take half little QX volume types. expect first back couple those fourth underscores the to to we that as it's what in And in line strike So to the us and the were October. start We a of customer competitors would of and of share with differentiated as the the expect differentiation quarter, marketplace. we we QX. target with model the in in lapping from line in relatively in October started would say in quarter, have actually of weeks large continue that I slower bounce the market

[indiscernible] on deflation.

lessen saw the October, actually And improvements improved a or inflation. year-over-year center-of-the-plate. in deflation we went actually the are we saw year-over-year from as So we And primarily coming quarter. modest the through

that modestly still become inflation. as levels of and but modest, very inflationary to is begins grocery then So

that's encouraging. think So we

Harbor take question We'll Brian next our with Morgan from Stanley.

you across be early to expect into just there on going and Dirk, inflation comment, that is in modest of business XQ that kind 'XX. then would now the

in or the indicator good black back it's inflation. a least at is PXX modest that some Well,

as I you you of by it's what's think stabilization the see that's been volatile, think think But encouraging can inflation see we driven in I to more more proteins, predict. the which is that's grocery. proteins, still see part since I harder modest be

I of more are some that a about modest quarter our think in with talked that and even still here in expectation And earlier so gross most come an durability we likelihood that is really the that expand future so just, part think the being had level to I lot in we we've continue we deflation strong. years, bullish quite profit think, of GP talked our remain that I and demonstrates the why It important inflation further. able to indicates what strong stay I that back to about

Yes.

about main point? Makes that quarters. you expansion, of you more And of this drivers go sense. continued et Do in you improvements in Okay. of productivity. from case, would become it's And we that kind kind in keeping at how about are just like Like might digital think check. of about you you mostly What into per of yet the talked seeing the OpEx -- rank those important flex do cetera? drivers as how scheduling, which think subsequent kind much then

Well, I'll quite just with we're start performance. the pleased with,

had, chain case year-over-year I our As that said costs. to really performance comments, in we've driven and supply by distribution per my that's prepared best

a key And so I think is unlock. that

think productivity. when improve coming as improvement per talk across -- to as We'll see into are those to continues when translating we warehouse. flex year-over-year think and continue things some for productivity improvements. But All the scheduling about is life to the delivery I you take what I get yes, you leverage. actions we'll parts, also think all other some on the case

remaining. that of are see And but traction. with have a lot so confidence good are ultimately of and still that we ahead, opportunity gives plenty runway making us that We pleased

Kelly And we'll from next question take with Fargo. Wells our Edward

very productivity follow-up think on don't it's Obviously, results. levels. But per good Just I a case. a standpoint, 'XX OpEx to worker back on

do forward as the basis growth per modeling? You in in specifically, on of OpEx you And doesn't about if look an routing, that then very don't maybe like might speak to you actually think QX, QX, case things the think going we talked about the flex terms know which would much versus but assumption, I that it well. as scheduling. sustained increase a How be QX aggressive suggest down too about that's year-over-year.

and delivery about XXXX. the there, I productivity, it's we so productivity actually quite distribution -- third quarter, our making the progress. was isn't for think with So Warehouse ultimately, but

So think talk are pretty what from the scheduling, it's taking experience, work our are And Dave about encouraged. work taking -- making think I company It's customer over out. the best just -- costs and And the we're company like the a we is flex done the it's mile about history. we've routing heard not in I cases then the whether you doing productive. we're more about service each customer our that all things per about

So good really is a there. balance it

quarter, year, think look a with the -- I to as ahead of in little whether line little bit sort it's lower. a you the prior fourth higher,

say And to I increase have our part us encouraging that you're as X% progress as much comes modest the levels a of think And you've that to is from inflation year year, beginning offset seeing back think if case. cost this is seeing that we're when of we all coming think inflation, can. is of I the very X% make of heard what of in and to fruition. to we more that we I more goal as per

that the bit. that pleased So the a from with progress quarter-to-quarter, example performance little -- I'll but you little could may OpEx better use our goal for remains up and we're fourth with bounce we're in end quarter an a around making.

Okay. Dave, And then, follow-up you. for a just

larger hiring be well. to My gains the with margin we're continue differentiation meaning more is can question competition hearing higher is the adjustments the And players confident in Foods seeing this seem the sales what that everyone are US you focused to some of from players. making what today that of as bit that Obviously, a for in win salespeople. model, doing type allows to compensation You We're you large environment, how customers. you backdrop. on

I hear question. and you your effectively team-based selling as model, with growth about I it's you believe a day that talk part hear of that's highly head model, for think than our I model. why working productively our And is I'll count sales some differentiator. our take see sales it drive But to us it hard. differentiation Great level winning lower our from growth customers. can to we drive first. And say Yes. continue and slightly at hear second may confident single of me to continue the real team. every going competitors. I'm you in a we're the

remind your we'll think first me around our I of that model, continue to that. question, again. And is part the in and really lean a in differentiation

Well, on this at how to that that all win. your really the the other salespeople opportunity it's game, If day? some investing enough you that as I players versus end players idea Is -- beyond everybody hold. or it there the is of three of sort inaccurate market just the traded pertains guess at large looks are publicly the can in

is of minus this think I share. XX% have still three highly plus big a you The fragmented roughly as or market, nominally know. very

So fragmented. still highly that's very

players. others, the think I have we space. the from us of some smaller take a collectively of share see our market relatively I still When business you to share to independent small about continue relative think

is runway have to have I market. think long, all We They models. minuses, everybody this there's all . different their I pluses and growth. but to for the for think, So win in continue room

just and I'd One just what the focus a types that go-to-market you about think with three not our independence. targeting. see in that mean customer other I is our that it's our differentiator thing is I highlight is we're

almost We've at growth to hospitality. X% that. We -- have care. had we continued We're X% health in do

new hospitality. We health continue to and have business pipeline excellent in and care converts an

or growth. in to all the have the customer attractive overall that grow share three gained led pleased and the growth any competitors, leading that at out we we of have, to how types that model of in overall types, the look at solid with and ability those case translates to we're continue key those of if into to case accelerated So strongest you most

next Jeffrey our question Barclays. We'll take from Bernstein with

questions. Two Great.

data actually quarter. on seasonality David, the a And of confirmed consumer have concerns The immediately just been are chains terms is quarter-to-quarter. close I jump and of the the the less a showed lot consumer foot confirmed historical the that normal does The But idea then on getting of hold. industry that first August, why? that our a one, month-to-month third slowdown taking restaurants September. said to people headwinds I or to we've the in think more think restaurant maybe lot in maybe of return finally many a slowed the this think summer, you was I we've question commentary and traffic there

October. in fact, the industries recovered have In some somewhat actually said

thesis think any your So to I'm maybe similar a you're And seeing in uptick One, wondering a just thoughts. surprised do not you of there's seasonality. credence to return that are you the October?

thoughts wondering should the And hold a concerned water? not a some or broader on then your does slowdown be of whether or seasonality I whether consumer follow-up. we Just have

Jeff, for can cases really It's what team Yes, eat. But and time and control piece, have COVID telling and things to going rebound winning restaurants the go although coming It's to the offline thinking gone on to get I spend to our the last handle the with about something still whether that, our is out flow focus relative and to we you I think the seasonality year that to we difficult model around so. seeing of because a time a slowdown out to a said we're It's a regardless that of been us earlier lot things has. all been a ebb is things and I'm that, on bit don't probably then of and in lot the know, little since going get. still there the are market. there's helter-skelter broader in There's what like as People think stability. always it or -- for here, back. just of a it's that I

to where ability our to right our the to that's we customer support to stability to think and customers types key three I now those share. target want in continue in is lean

note, wondering look you macro What's the internal or gauge But kind for seems are your concern outlook $X.X the plans, team? got for your we 'XX blessed greatest as among at to what your of at year. have like maybe concern strong lines. you to just what's billion I'm near versus but your And I'm you on next your business that for momentum it more 'XX? assuming get it's you've a across or looking biggest

be momentum but major got we to have in future of gains, and I that that ability I've that can outcome. our our next macro me hit given confidence a think a be target ability I probably continued the to to work have in the that to lot of would of significant give from what it, underway concern. and see standpoint, thing a in would we terms macro it coming share year, lot a that productivity for have control

guess a more So slowdown. I'd but point to yes, than minor just it would to I be macro, have a have to

little are the Got just M&A, it. a And bit follow-up. lastly, seems productive. discussions then like more It a just the maybe

Just little to Do think are think couple of You've completed it. opportunity? your valuation. line business of And about of interested coming a reasonable bit terms it it more is do a sense. are of peers particular terms of get terms on? Or about geographic to Is you your in them. talking trying in be sides in you'd I opportunity? both a more more you just focusing it a how that know

Yes.

both in Ours Renzi have Saladino very not cases, now but been with more geographic capacity, in both focused those and serving where efficiently. we're markets some

there's with can we've right certainly us at local so we'll you year. two the along But in think talked a a think strengthen do don't that the comes we at if There I that about our across be that ample opportunity about gaps the this markets. look So seen what But it. than I for it something do similar thing right in that's may portfolio-wise, it. network position in still to major opportunistic. any take our far fashion see product time, you've

say is and we was of extremely reasonable. of that heard terms Sales valuations, you what in what elsewhere. And a paid fraction And me

because have going We the sense that to don't we M&A. do things to we're really don't. make So do

to at valuations make going to going be thoughtful. us that it's So And one right for It's us. a problem us time. for the to sense every for be solve

our from take Truist next Bartlett Jake Securities. with question We'll

it pertains competitors. your larger as to as Mine well was you, -- but

doesn't all forces gotten disconnect, the wondering, there's your aggressively. bigger like macro overall it it like pressures guess there, I'm growth, You're expected. market pretty sales much seem increasing seems the I a And are than market's

be force So scale seem that macro doesn't background wide the of sales to better expected. we increase given should the how than in kind interpret the the

share That's somewhat we're can going only growth. for and it, I -- single at us count you in going digits. on think penetrate I mid-single-digit we we growth that speaks we're to that an to it as to share, market. continue going grow take the low the think add to to terms about least low to I thinking speak take Jake, to And we'll that. with that's underlying look, We're how see continue interpret in and head Yes, I increase, low but the of opportunity and of incremental can be top to drive going market to increment very of single-digit another growth

thinking And the the we're so about algorithm. way that's

fractured opportunity relatively there's the to macro. market share still regardless us Given of ample this this industry, for and take nature the of

us I a that, if growing faster the than cases by sellers basis growing independent X% mind, adding for number same the keep regular faster. on that's that thing, growing want in at those do especially other making but we be adding reinvesting, because of think where as areas last in also we're sellers good you the getting -- as we're we're we're reinvesting at we're have time, quarters, to sure leverage you and

your seems you that that's know helpful. fruition. under robust a I Got that It and the story hitting per hasn't per as like in it. of macro to a to people to as on there. profit little price larger context, how case the robust the salespeople a risk case and you with It are doesn't a so much seem is going then like is doesn't expect And still competition for competing these guys, Great. well. gross still somewhat to pressure. competitors profits But But increase? have on really market certainly Do to of out sales remain That's do been it lot have industry-wide think far start more the coming these price? all risk it's happening gross come -- bit

Yes.

That's system. allows productivity at get to front team solve target case is because products out at Moxy very and sales then to the We've a improvement COVID. to bring, much important during we the out this why drive waste back our But has industry, a and per so changed underscores doesn't think chasing always of pre-COVID lot In X% we I to out there. importance is and, value It's selling but penetration why office the the now to model. would a always competitive productive. initiatives I of that profit that have looking two stuff, us it control. cost gross and competitors to is That's selling back our that be. ways the will Not be all. continue things to I One more to productive all think been And there deter great in us. got underway it is competitiveness There's describe And customer. and the of of X% fragmented. this customers levels. important take Jake, importantly, things. we our think problems. helping differentiated that more it the that continue I

from Mark question next our Carden take UBS. We'll with

in simply of extent the the the and here the XQ think So course issue next how of win then a being by back customers? should this to CHEF'STORE of the over slightly from residual XQ. was to in about quarters? effects driven impact bit greater And a it conversion we some Is than headwind a need few these was systems

the hitting you're think of target center in Mark. I the Yes, right there,

the improvement had in effects us. quarter the which started systems month-over-month third year. week-over-week sequential of that, we behind the more largely terms and last course we've of now, As We've business Encouragingly, change in some of seeing lingering is through improvement. lost recently, are said

encouraged I'm ramp-up. the by So

exiting Dirk the that. expect year of line heard to by year. strong end goal with flat we're be say, the to think And you As on I this next largely, position we a growth top to the track of year, do growth to in driving

very I see. by I'm So encouraged what

more couple business. to end Virginia, before location planned the and opened We've the got fourth in continue the of We already one the in in quarter of in new invest a fourth here we've the Carolinas quarter.

I here we expect exit continue progress rate that, and will as that So XXXX. continues, ramp

do And know course, then then Renzi, you a in but you how integration I may understanding still that expectations? acquire to the Saladino need with don't Okay. you pace on your it's And have fare to also, to M&A? while lean Great. faster relative of capacity think is context on at early, necessarily

Yes.

extremely front. gone the on put It's leader there. strong integration well than think in I have We place cultural I could even a very gone great has We've imagined. had fit. better Renzi a

for we market. Importantly, lost talent, any haven't it's transparent key nonevent the a very and customers the in and been

we good, love It's part has then not can the So of Renzi very, second gone. enough very all And I again? about it. how say There's your question positive.

faster new think guys have Just that part, your the to have to do understanding that might acquisition, the with you pace, capacity again, don't you second a you acquire necessarily acquire? basically, at

Yes.

or from the kind market. the it hard Francisco side were as of to efficiently. that there independent on San Valley think, I L.A. It's to we Central said, for I get filled a serving particularly where geographic void us, very

for So problem help and will part acquiring it us. have also chain more that that the base of of us that we effectively. of of half serve related that in business solves the was that the chain business importantly, that we're country segment plenty And customer

a all times So great this said angles. morning, the makes It we're number from multiple I've those we that paid for. time. just excited And a importantly, of about it at sense as right

our question Instructions] Andrew CL next [Operator King. from with We'll Wolf take

I'd like on experienced in labor growth some as for the of questioning productivity. the the year well. case to of sort the follow accelerating you've up and quarter on And

you market You're results. in labor had and tight a good

obviously more metrics can talk terms -- extent you hiring in relatively of can who've labor impressive. So to have as to or discern. what you extent that's to low about productivity growing. able productivity that But that in of pretty measure you're fresh the just what come people impacts How anecdotally much we're

it's increased always been I your that everywhere pre-COVID. why that's to to would those a overtime What you Well, turnover. is pilots, double-digit I as attracting Obviously, scheduling while the applicants in you improvements our that the And around for And flex need think as reduce it to challenge inflow course to we're so productivity And taken in those say in run. this through bit is folks we've jobs start little we're actually initially was of relatively It's And seeing model. has add the same pilot. hurts talent would of retain where it the seeing of important. leads point we I headcount, improve leaned productivity. say hard and the long time. the that

said, the from in And our to both long with levels, of driver our help retain will we're improvement approach the of drive for we're being Dirk So there. over long haul. think as driver key results, pleased got I pleased and lot productivity terms that and us prepandemic back sense turnover activity said, we've we'll with And unique and people, as which Dirk a a it to driving us haul. is the productivity over continue makes here to

regarding I the going you mentioned guidance close this Okay. Does know because update guidance, in is the just exclude solid think Saladino. And to late year. you the

Would insignificant for amount be a fourth very quarter. the

core . strength the So the point, overall business. of really this it at demonstrates

from We'll question with Ivankoe take next JPMorgan. our John

has cost going moderated was is the that mean if seem it current case volume restaurant which to distribution, competition, question a market, of slow already labor probably it. be have on you're current would seeing for be obviously any, environment, actually if the price The moderated. price COGS, seeing would competition, time I which there we

So you're market to there's level your I been recent specific maybe on that change get comments, a in just hearing anything times. a wanted to

it's any always where back say point our it a I change geographic with I or was And pandemic more the been wouldn't It's that less to that customers. said, since competitive. so deal it's a sell to area all prepandemic market country or to there's prepandemic. Yes. It's to getting value why work day. we thing competitive have I of hard would as competitiveness. than Foods the US every always competitive. brings that's the to we And

call additional no time. Flitman Dave like remarks. closing to I'd or back for this further at over any turn to the There are questions

today. thank you Well, for joining all us

about We and We forward talking momentum exciting future Day and the the the X. importantly, great a again Have in our are to June you day. to look Investor business importantly, we excited that have. on

Thank today, you. you today's disconnect. does Thank and for conclude your that please presentation. And participation