Sysco (SYY) 2 May 232023 Q3 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to Sysco's Third Quarter Fiscal Year 2023 Conference Call.

As a reminder, today's call is being recorded.

We will begin with opening remarks and introductions.

I would like to turn the call over to Kevin Kim, Vice President of Investor Relations. ahead. go Please

our and XXXX everyone, Kevin Sysco's quarter Officer. Kenny third our Russell, and Good Chief our call. welcome On year Administrative Cheung, Officer; Executive earnings and have Financial today's fiscal Officer; President Neil morning, Chief to Chief call, Hourican, we

Private Before meaning are intentions, manner. Litigation this or beliefs, in Securities that we predictions that of forward-looking the actual state of differ during please made note future statements expectations the within company's the begin, the and could Act, statements presentation or Reform management's results material a

Additional factors could is subsequent issued from contained this about the in on report contained not This for results statements those company's in news the release to is SEC filings. our year XXXX, annual information differ X, factors XX-K ended that July in includes, SEC Form forward-looking risk in the earlier and to, the filings but cause limited morning.

materials in slides. in corresponding The of time in their ensure time slides can end each is these the limit to questions, can to ask website. participant and measures presentation our answer our and A included at copy the we'd measures to in non-GAAP our be today comments are included section of Investors question. all we the be at presentation of to reconciliation found Non-GAAP measures section found GAAP these sufficient today the financial To sysco.com. have like one to the Investors of

ask queue. have reenter questions, the we you please you follow-up If that

call the At Hourican. Kevin to this time, turn like to I'd over

everyone. morning, good and Kevin, you, Thank

of will start review our performance. financial today We a with brief

Financial what a will capital provide is our we Chief about quarter strategy. joined lastly initial I now he update ago and continue on a around and highlight provide commentary share a the attracted who to then our of role, his him of profitably. team Russell, will to few our will to And the observations. how Growth our as brief financial balanced grow introduce Kenny Officer. provide thoughts as then Cheung, on for Neil elements select We Kenny couple update detailed guidance. Recipe we custom, additional approach allocation a weeks Officer will share on Administrative our Sysco results, will third will Chief

Our QX our case growth of line double-digit driving XX.X%. top Slide growth. continued the X grew than as results, business X.X% of faster displayed on U.S. and sales growth total show bottom We overall across market and Foodservice number profitably, volume

aided segment our strong was Our year-over-year. division from positive performance International doubling with by momentum profits nearly

Our highest total income in in approximately adjusted the company company ever resulting third and adjusted XX%, history. grew EPS quarter profit operating

supply operating strong impacting quarter. the sales softness the the customers month beginning in moderated sales quarter March, the are important progress some most with sequential and in chain expenses we Importantly, productivity am improvements supply chain our that solid our resulted I We despite of volume in the pleased traffic leverage. Core expense overall negatively control. in growth to operating in in making delivered industry throughout March.

growth softer data overall the restaurant been March through than Third-party decelerated indicates that segment. slight volume market had within the expected in

lower for the during inflation volume profit rate gross pressure at lower Additionally, accelerated and declined inflation This sales pattern rate the quarter. total of year-over-year the an on and quarter. of put

EPS the now to Putting to inflation our the together, control is end we These need traffic to two are fiscal expect $X but productivity of rate good a long industry to chain our we carefully fourth for range reduction of lower continue lowering also A the year for factors, XXXX and navigate expected expect our near-term quarter. period. near through fourth the guidance to term, throughout now these thing our the quarter. continue lower we adjusted the and overall Offsetting $X.XX. inflation factors headwinds, supply all expense into progress for these with bottom overall of

which Recall macroeconomic that focus supply what also costs last performance, softer March. exactly that driving structure experienced driving we on by and our quarter we entire company. in we On outlined improvements that is guidance call, scenario the the productivity industry cost in outlined across low-end and our chain fundamental improving considered up

our efficiency Our on growth, expense greater expansion. actions that objective productivity delivered was objective than on quarter, to QX deliver the in at We accelerate into very third focused Sysco. profit to improvement, operating quarter. we fourth We expect gross delivering leverage our profit highest enabling ever the remain growth and

win playing we game, are we Growth for Recipe Sysco, the through and strategy. long to At our are investing

We are distribution centers. increasing our fulfillment footprint of

are our improving digital tools. We

selling our ability building the what marketplace to others deliver has with technology. versus become momentum, XXXX enhancing and a differentiate our remain confident to on and customers. target are Despite for efforts in X.XXx we and process fiscal challenging growing our are We are growth our These the create of we in macro preference environment, track market. more

the We P&L. are present lower handle rates our to also prepared will inflation at and macro a slowing to challenges

most means our meaningful in hyper of quarter, pleased profitable playbook we report are I and what driving our recent chain progress on we We growth supply focused to improving expenses. our am productivity. executing can control. made This that in logistics sales the

retention, improved can expenses. on overall Slide see and labor X, delivered improved productivity you improved As we number

a remain expenses operating elevated step sequential our compared in to historical improvements. standards, While major forward QX marked

our rates helping have to and we healthy levels, improve are Promoter are factors These our Sysco staffing our fill continue customers. Net Scores. increasing to We

our customer We fourth make to will quarter. continue efficiency improving progress into operating in and service

strong specialty Foodservice segments. is our see from growth priority compelling X.X%. FreshPoint U.S. a specialty market our share in the Winning performance target as stated the up share to deliver our continues grew overall to in notable delivered is below market. margin And up these we volumes ago, profit our gains to as on and in year. produce past this I Sysco our case quarter we are fast-growing and local succeed for Sysco stated with X.X% this very in and business performance businesses and versus a We platform, our We fair space moment track business. Italian volumes higher profitably the continue with volume quarter our in sales

due additional brand margin proposition points continues local unique and progress This Sysco benefit with higher adds in U.S. succeed rate Sysco year-over-year XXX XX as segment. of U.S. the customer penetration of a growing Broadline profit points value Sysco mix to due to the Brand the each brand positively basis to our case and retention over impacts importantly increased products. basis in creates to

remains as our adapted our sales sales high sales levels am pricing reps I and well platforms, at record to our Additionally, pleased have our program. report retention improved to that technology, compensation consultant enablement

to program our to reps speaking from profitably. the the implement of program industry-leading incentive coming business program beginning being sales in year. to changes their These more of program, a our the U.S. from feedback force. plan positive. at sales early And even updated compensation for The will fiscal changes modifications the to grow we is came currently our and region, are our directly tested The indications provide

and Growth on the Recipe XX. X for to Slides Turning

in key position the foodservice. and in are Our leading winning initiatives fortifying our marketplace

expand we the internationally. We growth U.S. continue as Way to and drive Sysco neighborhoods the profitable compelling Your across

CAGNY at As presentation, our countries. now recent are we five over in live we XXX-plus across conference highlighted neighborhoods

expectations, this program customer-focused in double-digit The results bottom program continued the our top expand from coming line will quarters. the delivering exceed further to We and growth.

to continue with Sysco gain Perks. we momentum Additionally,

solutions Membership loyalty our We include white rewards providing restaurant to a Your XX,XXX customers to access our grow deliveries their with from Perks into be have Perks invitational exclusive members customers exclusive Sysco succeed, When and we only to benefits our and than two now outstanding are club, is service. glove business. believe enrolled succeed, successful more and Sysco the help to program. competition. our industry-leading our and days up six customers customers help programs Sysco we differentiate loyalty week, Way

customer existing key priorities The Lastly, progress make recent in with to we called and for more sales will enhancing each penetration Sysco sales consultant tool digital excellent ordering our customers. further the tools. clear our enhanced to making our quarter, platform critical to it Shop, In improvements consultants most we launched to increased CRM our even our enhancements we visit. with drive the CRM Shop continue

Turning topic. next our to

having Kenny have to operational of experience, excited profitably a grow as he coupled family in be When with career Kenny. Hertz, XX placement a experts we are thrilled hire CFO. global something Kenny extensive acumen, the Nielsen, confident and exhaustive Prior player, to talent operational process. me talent most and that international search we our an opportunity Kenny he for help strong the was leads as Sysco, conducted to has at CFO experience. fit executive agility with the business. and Sysco with believe team and his as roles served financial, for Sysco and joined the at financial nearly a I'm will find had We recently industry his and financial assessment. are our We to Kenny that approach GE. essential welcome financial operations with CFO, Kenny partnering learning with we in Cheung and next to our he Sysco started hands-on and search cultural will years Hertz. that

Neil is his Chief are greatly position want congratulate acknowledge the leadership for strategy. in I is few Administrative Recipe at of I'm He Neil including help In past Officer. newly our new position ensure and trusted for work impact. program excited strategic his that that months CFO the as on Sysco. initiatives his our expansive will track, great Neil over that partner, I us for interim governance Growth appreciate to publicly and on capacity, our created a him expanded

to now Kenny. it that, turn With I'll over

everyone. distribution honored the of I and thrilled you, largest the company. serve and Thank as world's CFO foodservice morning, Kevin, good am to

our matter global this is markets home opportunistic across $XXX is Sysco? in excited business. for food company the the leadership market one robust yielding Notwithstanding team I and a the time. and growth why of parts I Furthermore, this dynamics, industry and transformation the to on we join dividends bold and in such growing, away is our exceptional of billion a believe long-term leadership transformational already opportunity position industry most currently scale tailwinds. from an attractive So am Size healthy industry at that serve. continued recent with to joining build the

growth. prudent starts robust history cash is generating of which history the with operating back to strong for maintaining long share our other will actions. unwavering structural world one shareholders. accretive render We which It and profitable and a operational scale excellence our believe of supply Combining and food in returning with actions flows value, technology, engaging cash for investments while are and and to solutions M&A culture productivity our share continue chain our our and another. connect has and Sysco purpose, market purpose around with care products important to a compelling all these compound

results includes this customer I companies background industry-leading to about global critical are and come consistent Remaining and for sustainable My my disciplined also value labor field contracted and and chain adding from will plan service create Delivering and allocation will innovating productivity invested our centric. growth. growing to is inventory all leverage my on of profitably supply business to short-cycle experience management In role driving our be customers. both products role, maximizing value for with large return that capital capital people, solutions. it as

importance of and under sustainability already great with understand leadership. initiatives environmental the path Sysco appreciate I Neil's a on Lastly, driving

financial with my as the strategy and the to Growth The only have I our our passion we While for impressed the for with wider strength bench few industry is company. here and further am colleagues and the that the position. celebrate working for bright. Recipe of a extremely Number One forward look I future hand-in-hand fellow organization team weeks, the

chain a unique service position future to with food you opportunity to all. I path the on working We our supply look for build forward ecosystem. and have define the leader to and

to I will financial now details. it will additional turn who Neil, over provide

and Welcome, for year of third our performance start to Kenny. our today expectations And hello, everyone. then will with full quarter review discuss financial the a I go.

to fiscal otherwise all unless year. results today, prior discussion the my the are same During quarter compared in stated,

in allocation in an which evolving earlier is posted this in on news approach to backdrop. As bottom year-over-year top we our Slide highlighted growth release morning, and our and line balanced our of capita issued results. macro website, on we all the midst both XX, double-digit continued And delivered

FreshPoint, U.S. segment, increased X.X%. Italian with sequentially. and case begin XX.X% a and Foodservice third grew XX%. Broadline, with also our me summary Foodservice XX.X%, our grew results. momentum our improved positive of U.S. International which businesses which includes quarter volumes Let segment, in grew grew and X.X% at growing at other The year-over-year Sales continued local and Volumes specialty

increased quarter adjusted seventh the segments, dollars Adjusted all growth. for improving in such gross profit case basis XX marking per gross XX.X% to four margin quarter billion XX.X%. profit points $X.X with grew Gross to the of consecutive third

dollar year. this sourcing and progress by during manage effectively the efforts quarter to to from was profit down Brand incremental during The as continue improvement gross gross our the total which products. margin also Our improvement second of moderated driven strategic to profit fiscal third as X.X% from for reflected the percentage improved product penetration rates ability Sysco quarter our enterprise, from X.X% inflation, well sequentially in

the of year. XX billion quarter or Overall, adjusted prior point sales, the $X.X operating XX.X% expenses for improvement were a from basis

zero productivity costs to reduced during third included transformation $XX quarter the investments down costs, million. the as This Excess quarter. known way were all overtime otherwise of

we our both we cost performance, now these snapback As and eliminated costs. have improve productivity

in again increases substantial in International four segments profitability segments. All Sigma growth and year-over-year including operating showed the

Slide adjusted record for for third is and our now $XXX enterprise As of income by million. third important signal operating operating growth. of the history quarter income quarterly made being to Sysco's an the for recipe Sysco the operating income seen in quarter highest at increased on the via results adjusted is XX, and progress the XX.X% consecutive This

gross growth expense outpacing quarter continued show dollar of important improvement. to our growth profit financial another This illustration operating

adjusted For million. XX% quarter, $XXX to the grew we by EBITDA

liquidity position investment-grade advantage. the remains sheet, Regarding solid and balance sheet, our strong balance competitive a rated healthy cash

debt ratio. EBITDA quarter to X.X times adjusted the We net at ended a

third the shares. repurchased we X.X million repurchased we million and shares X.X have year-to-date, quarter, In now

the We at nearly $XXX repurchases for are million to of share goal our now $XXX up of year, nearing million.

tradition total returned thus billion to dividend of continuing $X.X increase increases Of in Board last approved dividend, Sysco's the our the Inclusive year in annual fiscal our aristocrat. a shareholders in regular another Sysco position has of week long-standing payments, note, dividend of a solidifying XXXX. as far

positioned well As rising a rate fixed interest rates. debt we reminder, Sysco's environment, XX% being current remain approximately with in attractive the of at

our schedule with positioned over well with time. are debt we maturity Lastly, laddering dates staggered

cash. turn to Let's

year. billion, As from shown on the flow year-to-date, was cash at strong prior $XXX improvement over operations a million XX, Slide $X.X

to and few next Net we includes in potential investments invest increased Recipe our CapEx $XXX million capacity new to to fleet markets cuisine facilities. and facilities segments. Growth, This continue new three our as high-growth expansion high planned distribution in respect with in we deliver sites seven particularly as for in the and years

Our with positive investments we are and with driving returns, maximization. ROIC allocation focus capital plan prudent on to a remain

cash liquidity. and during the was strong cash inventory the hand driven quarter billion was by disciplined $XXX ended quarter, Free positive and million third approximately quarter. change during working to the in a increasing $XXX on in We improvement This in capital million over management $X flow total with very year-to-date.

Day. the California for unveiling is fueled are as Earth This renewable As on electric its first seen in on These consisting solar with month our efforts or customers hub first electric speak vehicle kind, Slide Riverside, advanced XX, rolling, and with world's serving sustainability of tractors trailers electric last our trucks ESG energy. our more of by of vehicle way. the electric hub we the

industry-leading include our X a to XXXX. own by to Our with XX% also climate work suppliers targets goals set science-based commitment emissions of their representing Scope

thing business term. right equity believe our the in to diversity, good only not and on is and Importantly, focus it inclusion sustainability will be for long we do, the

disclosed of we adjusted $X to looking expect bottom the $X.XX per the and near per earnings of remainder share. Lastly, diluted year to the ahead of share beyond, range previously the now

of we of our the levels creating Growth levels the activities are portfolio incremental our the slower remainder further inflation. for case lower in outperform some for our recent restaurant this, and Recipe and to customers, the managing traffic pressures softness industry. to market traffic business efficiency headwinds the growth continue due continues impacting resulting impacting market of supply These year. Sysco across and in strategy, are to expect chain actively To success offset the macroeconomic is While improvements cost-out for

fiscal Additionally, QX a for single-digit inflation low this remains on of year. in rate target

to remain we to operating result, on to fiscal $XXX approximately repurchase shares expect dollar the fourth share trend growth. expense Specific outpacing year. profit this in target a million a similar growth we of gross positive As quarter reflect repurchases,

With call turn remarks. that, closing over his I for Kevin the will back now to

Neil. you, Thank

I'd we As on a conclude, like to brief provide summary Slide XX. Number

Our QX another record of operating performance $XXX million. to over reflects quarter, adjusted XX% financial delivering income growth

expense profit outpacing in improved gross Our with operating third the growth profit leverage growth. quarter

performance the We continue that expect to fourth in quarter.

continue Industry macro we trends volume QX. March, which softened to expect in into

two by to rates through performance. experiencing also inflation, productivity These factors supply expect a continue trend offset chain improving are are lower We QX. of partially significantly we

one better No scale. this Purchasing choppy Why? inventory to efficiency landscape route in even a more is Scale diversification optimization But importantly, macro manage matters scale, logistics customer Sysco. prepared scale, than industry? scale.

and and serve we restaurants up and travel all a customer customer Other segment, of Many care. non-restaurant recovery, restaurant volume spectrum. point retain case instance, in segments within business recession-proof, our hospitality education segments. given restaurant price serve base. Within or And At customers up health are Sysco, sectors for we down we trade also that and our are if types, and large the have down still industry. restaurant when

we we steadfastly what focused are can Sysco, on At control.

additional on cases focused winning with are new We and business existing penetrating in customers.

As efficiency. our are focused importantly, on we improving chain supply

conditions. healthy successful prepared a environmental short-term market, the long-term be regardless is are and of we to Food-away-from-home macro

balance our to delivering sheet, remains disciplined capital to Sysco continued and stable deeply allocation Lastly, and shareholders. our committed strong returns

and a are a to going that XXth our distinction remains priority Aristocrat Dividend into status proud Our carry as we year.

advantages. diversified a resilient company is scale with Sysco and

our through advantages for Recipe scale our increasing are strategy. We Growth

for growth our are deliver will work strong confident our and shareholders. that returns profit product compelling We

now line can for questions. open the you Operator,

[Operator question Mark we first Your the question-and-answer will come Ladies ahead. begin session. go Thank and UBS. Please will gentlemen, now Instructions] at Carden you, sir. from

that took Good cost much on dig a front? more were of morning. nature experience over a this labor I the ones offsetting to Thanks on of Thanks. bit than on intensify quarters? question impact front. that position, the expected October. the congrats does few what recent how in and And course in more quite you in in expecting place than so next seeing headwinds wage originally necessary strikes you what’s industry thinking you much Kenny. taking the for and smaller wanted I But the new you’re outs bit are that to know you’re the

Great. This I’ll for the just, acknowledging team, they Mark. that agility Good question. displayed. your just I then the first foremost, for and Thanks morning, answer directly is Kevin. to the our situation start operations strike thank question. and want

any the recent given customers During the our we communicate an able unanticipated in shipping for hours most hours, amount change. which we changed, easy That two benefits of and not XX we business XX to support not our the has to pays at Sysco that is rates, provide and associates. and me that above given compelling strikes do to extremely within Point capacity, not up task to our is, effectively full quarter, will wage on customers, Sysco. were day with market

wage a We in and will leader be benefits.

good For a more than can paying year at example, a make Sysco. It’s $XXX,XXX drivers a job.

indicated are know, through. things you Boston. These there the recent as the strikes most in you that one we’re impacted working were up our and in for Mark, QX quarter some Unfortunately,

during with our and to colleagues continue our labor our the long discussions fair We partners. be will for our manage term also to P&L

deserve, and that we’re goal to to with and is and that. respect treat all our committed dignity doing colleagues partners with solid our have Our they to labor relationship a the of

of we’ll I talked that we not want about that changing. and we’re to August I type names plus names that type XXXX when to annual clear are game that relates fiscal talk in provide increases our restaurant it experiencing know the be increases. about As wage wage, double-digit retail more guidance. have

about Sysco. our provide and at that something August call. on we’ll with clarity experiencing more not are We you specificity that’s And

follow-up as quick then that. to a And Great.

front, from do from You’ve productivity normalized close referenced an productivity. impact think think and of and back levels, front the both the driver new selector stage, improvements overall how then this how to you getting are in do labor At academies? labor you’re much you you date seeing to the

for Yes, follow-up. Mark, the thanks

that rate is the a We start are we at pleased are really I in chain progress to of the QX supply perspective. which made fully we productivity start, like with from staffed.

network. staffed fully a are we So

that down our We’re for come over improved The retention to is, have things action obviously positively the reducing new we flows our that experience for hires, to you hires. as meaningful for productivity because academies on impact types P&L. that drive a in having done behavior have new rates time mentioned, through improving beginning turnover our of and to

of division. to and transportation, doing who’s well to labor colleagues We coaching standards allows provide they transportation improve. for that individually warehousing, engineered [ph] to our understand it have implemented throughput a new when We’ve at always they’re in now how help fully had a and or not and for person recognition person productivity level have can desire and with our proper us the we we which that

QX We’re that for March, with to flex in given our really the we in of which us hit productivity. our improving the week, of our we’re how we any productivity And allows and continued progress. volume match year again, this exit desired day anticipate pleased to, will we the velocity in given any labor make

you. will percent and provide a that we we’ll Neil, you our and an on one XXXX. that still of August. behind We As add still has therefore earnings Neil that specifics anticipate in into as cost comment on versus norm. progress over the chain down elevated at come and there’s clarity to call provide to we’re will progress to carry mentioned to level of our will historical And costs sales more year-over-year, I that. supply transcript, made, be guide you

Listen, a Neil. doing you’re just here. quick Mark. on Hey, Good follow Hope morning. well. It’s

comments heard prepared costs. about productivity a my You comment in

categories over question. of directly to that is great And of know, the were your which So as that of progress we’ve several one course made couple impacting related business you quarters, cost on. a last there the are

costs to types improved as a all, of snapback $XX as hiring our wave what large colleagues originally And a and in nearly those the as quarter our in down were that called related the million. down overtime had productivity cost million were Those we quarter. $XX is to the business. we came And $XX think increased similarly, those and of costs, really million. about your to costs costs we are last $XX of now to basis zero. to were million of eliminated in new high $XX Those with now came volume First of down associated were which the productivity question you $XX the in business point excess to million, should staffing million, then they also

if progress So costs costs made and good progress to signals you point. productivity will both eliminated snapback on of having being Kevin’s really is the

luck Great. Good so much. Thanks guys.

Mark. you, Thank

from Heinbockel question comes next Guggenheim. Please ahead. John at Your go

how true then some wanted start earlier they’re I than Way, right, in to ones, past, you’ve sort And the that Sysco performing, Do entered, the opportunity. you is markets still right, quick perhaps? getting newest the $X Hey, it that versus the of better that’s executing think billion with think was thought Kevin. bigger you real you – most I at Your or of this? so if could frame you thought

the Thank morning, Good John. you question. for

with the Your performance Way. pleased really We’re Sysco of

diminishing we’re each additional on. of seeing Specifically as roll a neighborhoods, the comes individual out neighborhood as new impact not we

attempt it scale launch you heard time. and great, pilot, does you’ve when effect. a talk think diminishes over you then it Hawthorne but before I as it me to that When about the

buying month-over-month that seeing strong twofold. per The every perhaps win call literally dairy Again, on they And is is on specialty every gate basis a we comes Do that protein and is you categories win anything? new out we not within day. the house at a that the truck quarter-over-quarter. and beat, saying, the lie the improves a need remember, Each like rep can anything? are do every showing knocking customers from up we’re We twice all. as and a then walking and distributor, sequentially sequential neighborhood door sales and happens every customers, need house the you we a actually there day. were that existing day, of day or and launch premium specialty And because house. And it, we

and new we’re it specialty gaining within and on neighborhood. doors We’re truck, that winning our business putting then the

neighborhood So we’re each most we that impressively. pleased launched additional

launched it of the We’re now and launched live in in. in Most we’ve in every And model it the is Stockholm, out we’ve been results Sweden. the scaling five gate, really recently, that right countries strong. country have

the it’s internationally anticipate for with that quoted. versus level talk working. today yes, of the $X working, be And we domestically that the we’ll – billion upside, will not have it’s about it exceed but what So really target on We John, potential performance. upside, there’s prepared we’re to pleased

be Sysco and is invite now services of two on Your performance it’s about [ph] Your Sysco exceeding the I’m provide kind have pleased Perks? we restaurants confused. to plus culinary that service, and which more well, with glove marketing and with as engagements. our streets, of or That’s not between of it’s is Sysco streets, providing and those I the in about who’s only what’s clear. is is XX want loyalty a also difference may, them white which town We’re We neighborhood, of couple our in neighborhoods. that It’s of to Perks, XX,XXX best And next one Perks opposite the customers those enrolled, an one customers service Way level a a of really expectations. one than get in specific customers. the lot invitation of Way a questions. It’s I program. customer and Kevin, of those that. is program. If I neighborhoods. program do our

then And one quick follow-up.

change I some what think think is form business. hybrid, is you’re but on relates that, that mentioned to to Because fair? that that do consultants, of You some the impact right? you’re I that that business? assume think is commission, And And the that commission, testing, side then full don’t comp hybrid is sales of the right, the I going you the greatest

on where accurate you we’re you’re thank for directionally John, headed. the follow-up. And

So, for back full to The on everyone commissioned sales Sysco listening, consultant a who’s was model. else go pre-COVID.

significantly, because model through through wage then that bonus we our the for plus criteria quarter-over-quarter dropped to right bonus see During base And did to that population. and retain to base they thing a have COVID criteria. the they a from converted behavior to them, to we make change consultants where business sales pay, have opportunities a can that livable we and desire earn money

customers we for year where John, a to this Sysco their sales it headed more of our put profitably engage in focused to them for coming we’re For Sysco And then business. were was is yes, on grow helping while and the front even brand with consultants incentive Shop. fiscal

And cases onto Sysco they a the get a and obviously more more more they makes Sysco result. as the the put make truck,

going we’re business. for new more real associates and and lines what anticipate of the with we base drive our retention of front put go we our with pay we from on what action component growth like It win business, the more sales more, have And that to life that John But penetrate in will them hunger reaction customers because ups element. keep to in and drives that to a put downs and of occur So quality is we even and out win incentive business. profitably. to existing be want force

go plan we’re to ranks within because motivation and directly my X,XXX it, sales from sales be change we’re mentioned received, remarks, And well the I to and out to are in plus very and sell. be doing in Gave mentioned, on testing going it the we management and communication expect consultants. the sales prepared results, that. results feedback So our exactly we U.S. work positive from the excuse plan our as me, then came and associates and me out win our and go more for as this I preliminarily incentive

you. Thank

you, Thank John.

next from Stephens. Your Long Instructions] Please [Operator question will come ahead. Joshua go at

you the Great. strength associate sales question. into tools and your Was tool Thank the are some Shop sounds that could also Sysco and hopeful you out, performing dig taking for called we well. like PRM digital Kevin, then of

the mentioned manage tools in extent just, others might management do inflation? of to you just tools that you the really from this the pricing going those could into could you Just really environment seen you perspective? then also navigate current where how a that? does you to being you cost share those help that share pace curious of And to important, what and lean you’ve but date how have and use You forward, terms learnings

Good morning, parts, Josh. it’s Thank you for the two I’ll as address question. it And such. so

can’t progress our On our digital team in digital thank for making the just business our tools. that side, team digital the we’re enough and

out shout teams. our Sysco big So technology to

the prong, break I’m then customer. Let the the me question two impactful which to that pieces it going into technology. is down inflation And the helpful are through third answer most to just pricing

and like usability was For that that digital, called Shop we’re sell, we product on We Sysco for Supplies is us improving in which the customers that a Improved tool. margin discontinue of the those results, navigation, website. They the separate the meaningful platform. to the the ordering Fly, categories of margin a go progress of accessibility of capability supplies website shop navigation to the high increasing improving high equipment, search products, are significantly in and difficult our really make very our past. there category categories and is for to to had

Non-intrusive popups most in order it’s them our But help that here’s they powerful. make to customer choices good their to place. where

to we in a forgot that regularly. And that. into order be throughout interact There’ll they item know order to non-intrusive up it pops of their shopping experience have they forward a to remind way. that be able places put an example, dialogue multiple that in For at them with to they to box proceed order

on be buying that and products with them a we're that and riding buying Sysco are they in know providing cuisine on the on truck, with we we're that should based things be that should the that they We're suggestions pricing. integrating

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comes deals should but effectively placed there on of they in just are customer explicitly and this see at piece can be together here's shopability, are two of the in the that those They may up be CRM, suggestions human put digital have the examples, by improved specifically can those for follow offers. methods fact visit. They and the and types So that Sysco things front our improved purchased order, where go into on navigation, may customer ways customer they are of were we're conveyed way. unparalleled tab CRM And customer which shop preparing types to being versus providing that the or tool activated. One have not suggestions is very offers on through a a our can that our can been of now same the in the to dynamic sales past. There the for in rep from.

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and So the we're tools super making. progress our pleased with

of through platform inflation our pricing half about question second This tools. it tool was helpful. is where your The is and how are enormously our we managing

said before, him an business As Neil I'm a and a for to street in going the to is efficient market. local talk comment, has minute

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last pleased this dealing year, dealing we're inflation, with were and really disinflation we that when which with how XX% now performed with company opposite, I'm a time this is the environment.

scale We we for tools market strategic. profitably. versus and on the the to net cost allow are We to win get purchasing us right in on and and be and those value share fact pass using advantages to price Sysco thoughtful of our call the can our lowest customers

Neil, I toss to for you comments. additional

Josh. Yes. Kevin. Thanks Hey,

Sysco a dollar toolbox improvement is and for and you; the these end helpful Just one profit these in profit row of has that of tools so gross has which expenses Kevin very that headlines quarters been that growing faster for couple the performed course result pace growth, of two the tool for now in recently. describing, describing is us than of well is and the that there's things Kevin at brand, processes for was that other a impact dollars in gross a

our toolbox I'm and the customers, the of A tool to very what XX% what combined of and that to we speak profit dollar growth, our XX% the at Now of about XX% of of sorry, we and what managing – sell customers all gross powerful local we leverage that leading of. so we XX% local sell are inflation fluctuations progress those that sell improved overall. to power in things

you. Thank

Ivankoe comes J.P. Please Morgan. go John ahead. at question from next Your

questions suppose. or Hi. points Its related I

the type that mind slowdown that? March your nature if it full-service of customer of the First, customers, profit don't Is think restaurants independent highest saw you which into So local in is I or you April? one what addressing is customers?

Just slowdown the percent wanted then there talk to accounts? could cost are sold about plus component it's these street that? on in? categories get I dollar a what's what is of And likely the secondly, some you mean surface cost in component most to that Thank a happening categories beneath are that if Or inflation. more to plus or you. clarity to cost happening inflation,

start, comment. its Neil John, Okay. I'll I'll for and additional to toss Kevin.

full into did purchasing, slowdown traffic. that's pretty I a data think and color Restaurant did restaurant understood. how March traffic what a built experienced our that's we year. down on Just for more we in March's March; in described convey little cetera, obviously card March, credit the et expectations for names, slow well and QX in now

to been was benefited again tied large Omicron. to also into what a were But traffic bit February our Now pretty continue a to and be are And slower clear, the by tailwind QX. January we year-over-year expecting expected. had March that than

know The we are book. to kind Now callouts growth more outperform our to that across share we I experienced restaurant just going our down. traffic. names across to and marked No we traffic targets. we Sysco expect board, that's the of It's versus of delivering on a trade that profitably, and segments often was question We're within within cover. sectors our about on overarching notable a market. committed comment the win

little The prepared it print provide Specific to X.X%, what the expected. expected a color that number, was quarter the a inflation regard. bit quarter for lower more remarks. started and like a higher Neil we would I as bit said we his The to in than in ended than

So mathematically, the was disinflation rate steeper is we means anticipated. of March what that had in than

that. Now to we're prepared manage

really the we were about about answering when the time industry, dealing and demand mentioned As this it I long-term is for with thing. and that. of consumer a to This receiving inflation on good last psyche what lower consumers a lots were restaurant. would questions and XX% on inflation, be traffic year, question, impact the investors have of Josh's we clear ago second decrease want I in inflation from that

that what to said, the coming be to So inflation good digits. thing. need transition how the fact we With from manage that is QX in strategic inflation expecting is a double-digit about plus down we're low-single to be the we thoughtful and rate

tool. scale consumers. about to those the the be and reinforce able and key created to the do of end our because that's thoughtful we purchasing be couple is to is strategic opportunity on that, advantage in value to our our best a tool a which industry. have it have costs passing We points, I'll pricing And when of is

center point about categories, answer easiest most John, year of plate. to of way that categories was what Specific to inflationary. product And come your mostly were last the I it think, out is

XX% So not a space while time protein is of category what protein specifically overarching you time. it's it's the XX% time book last business, period about this that went all to I about in say for of and category, the a we think in and And inflationary remember deflationary. the deflationary was year, subcategory was

product becoming actually was overall production average set. from begin again Our end that that book the coming year beef supplier And about the then plus X.X%. because we're the in of indications inflationary particular will comment getting much of one that some on more challenges community

to toss I'll you additional Neil, for any comments.

Thanks Kevin.

and those as any that just that swung about. currently Kevin for of us currently like point that have some some around commentary some dairy, some deflationary time categories color of are in given bit little talked are At a inflationary, like for us Just that poultry points.

Kevin which quarter for in a pace us. was it now ended deflationary disinflation, about And we inflation. inflationary that the as terms is of recently said the total at of the for becoming beef, bit, particularly in was X% March quarter So changed and

customer And have XX-year fairly those types our in efficient of still and rate visibility actually if horizon we indicated, with you Kevin this look you all how multiunit pass be longer The through. the inflation of preferred this with of that as fourth to over is you on the a digit of terms market the or would contracts have local which us time customers. inflation and together chain quarter, were both low-single for you for Put customers. expect the side,

last are to think back we now that's right we for where Kevin So any point.

Yes.

a out efficient rate for is question, becoming provide current happening, Simultaneous to Sorry supply meaningful our as that to really disinflation. three-part through at everyone ability cost lower to that it's chain. our and but John, just of therefore answer And the to more aka are of is to our value understand. customers we this costs passes important taking as for inflation,

in within productivity numbers. everything. pieces We efficiency, supply measure of full making measure for concert, supply And I'm really pleased pleased with we it's performance the March are to And exit literally supply in am I efficiency again, things the happen our the that we driving chain. with in our pieces the our everything, rate our is we need that and strong. are per of really improvement chain, exit March truck, you in chain velocity in in labor improvement productivity hour, those see quarter per rate was and and

So as at exactly time. disinflation, begins down to the we're decline our aka inflation bringing rate costs same

Thank you.

Thank you, John.

Your next question Barclays. comes from ahead. at Bernstein go Please Jeffrey

the slowdown, scale stable the wondering share I'm to to just again what perhaps there more what market more accelerate options that you had the I got or likely and the through gains your One in opportunity you is you've in noted presumably quarter. last were fourth maybe do a slowdown matters mitigate. through that an and anticipate what's you Thank Great. continuing on comments that sales quarter, think release question; follow-up you. Sysco fiscal March in stronger

wondering environment just I'm one gains So an opportunity if share And had is in then follow-up. an market I like for that? greater

follow-up. the is and question Okay. Jeff, for this toss then Kevin. I'll the answer first Steve

in win for on bullish we're the term. So Sysco's the long ability market to

said do enabling to playing is we're as are third consecutive do strategy all The be of that better recipe game, our faster customers I the than for to profitably growth growing that about prepared our the is market at in rate year. in a and We business overall serving track my so on remarks. and able rate to growth, for our Sysco long

we time of know we macro working. during Specifically, that on Jeff, double down strategies is what are a will a and period that initiatives slower be would

service, because one ongoing programs that with an buys our even push on be the are would proven Sysco Way, on example, faster to from member who benefits Perks Sysco Sysco basis. engage that with Your that culinary customers harder a and work engages available them an we have Perks Sysco a and So even of Sysco's more

with is we're improve live version faster, more. work our The going even website. Spanish of moved it doing our website language It's soon.

Just an our the cultivating not large our that just winning Italian strategy double over platform remember existing the our doubled forward in past down on part year, working, and share Greco in acquisition, acquisition taking it as in Sons the we've within about Italian, Greco is to through geographies. strategy because nationwide advance market its is the marketplace. was ability example, strategy our our and but

platform in that that an and new progress opening that in going geographies, model to advance We're business. acquisition out L.A., to recently did grow physical through making to California we're being meaningful able acquisition by flip most and meaningfully Italian we Greco the in

XXXX Toss, all growth so the there's in we're doing believe QX, just follow-up. back responsibly. but as opportunity, industry an our fiscal growth do Jeff, So to we into a your we and to And not profitable you for lead about head from profitable perspective.

Yes.

In fact, perfect.

think XXXX. fiscal it I around ended you with thoughts

of equated I talking XXXX. end the XXXX you back that I the range, slowdown I and more. culminated you're guidance in EPS fiscal guess. XXXX, or hasn't the growth, of recent time day, the know at think know lower for I which which to mean, I was fiscal most $X, of XXX in Just been I off was know mentioned reduction had late wondering, XX% it plus, we to fiscal last and built it given it had a quarter now closer in about guidance,

Or further still see it whether throw efficiencies target, Just that of or any to wondering acceleration Kenny. whether is relevance maybe you prior to there whatnot?

can those targets? prior what help table greater wondering earnings set to achieve a the in Just to you of you. bring terms to Thank skill

Yes, comment. and to I'm a Jeff. Appreciate question. Kenny Kevin. I'll then to going the toss start is This for

be to guidance we're going August to for clear, call. our provide our Just XXXX at

what working Sysco to growth. for our call are advance plans confident comments. in are macro We The to our let's and continue some; we recipe or confident it, at strategy is in

grow We faster are profitably than confident business the we our can industry.

have Things we're with our you provide throes we'll supply of more can in deep we process important in because confident that color improvements are to in as fiscal efficiency. the on our speak. planning we We chain August make continue

And then XXXX what inflation book account we we assume efficiency that work be for for the level assume level market what months out our able and of will structural will to perspective, what is for happen specifically on growth we over of will an couple for fiscal XXXX, next XXXX. more cost plans from and of will

guide that provide So all August. additional to we I put together reasonable to comments. for next a That need will you And to year. in come for Kenny, toss

Kevin. Thanks, Jeff. Hi, Sure.

my of from the side So a few things house.

We momentum. XXXX are entering with

mind, will sales year. record in income, year finish entering with of a So and operating next momentum keep lot in QX we So right? this

to As August comes themes and the care unveil there's continuing you for plan growth refer new of few call. Kevin is where very a earnings will in. see One right? that mentioned, in important that's as next That's we us, take profitably, all

business. in Second is, our to continue we operating will leverage drive

be and add healthy sheet I a continues think just think to from and balance mind, I I right? things how leverage standpoint. To your where XXXX our that around call about robust sure making liquidity, do on is and few and there's last question my value a QX and thoughts Third entering, priorities about that it, my these As right? I cash mentioned,

a all, with of business CFO. I I'm hands-on operational very leader So finance view right? a myself First expertise, as a

it I the one – operations, has is period. priority of work that quality mind first and the I'm team and sure value that deploy for ultimately, throughout to from directly maximize from make job and operating of Sysco with continue creates my that where the capital earnings stakeholders. continue generate So our high we the – to EBITDA where enjoyed generate the healthy of inflows cash income conversion

operational Sysco supply pedigree rigor we the excellence, chain with and least, of for our on point driving especially part the piece first not customers, business. and the that second invest this and margins share, in with service like, flow to our right, A that from experience, our is my cash fact we standpoint, per which business to enjoy. brands, circle world-class to accretes to about. starts generate as productivity my given is Everything business that comes overall and to advantage providing have grow our full for market And about as local, we And where but The my continue partner our we in it's specialty we business. team, all talked penny leverage huge, of and top a scale go-to-market customers. create with must the value and our scale further last

you. Thank

Thank you, Jeff.

of America. Please next Your Bank Kendall from ahead. question comes Toscano go at

good morning. for taking question. Hi, my Thanks

So I terms in ask to first, about I XXXX customer the follow-up of wanted the see wanted a But channel. guidance. just just quick to local

the And kind look that So bit you how said. customers? Broadline specifically? does accelerate I was any on we U.S. in local think last terms or of just can assume you it's rate quarter, segment you the some to guess for initiatives had I wondering the if customer the new update about for total that I you said guess, exited And customers growth, that? then segment. talked March of slight at still was acquisition quarter national a running in below a exit for, had low I

Neil this color. I'll and I'll for Kendall, is start Kevin. to toss Yes. then additional

So part Sysco message there, which accidentally of marketplace then a means between all we got and specific. businesses it the is mixed

comment. I about I more card The and That was overall slight or make clear. names leveraging low words aggregate, So it credit comment that is market growth an that and were believe, growth, it data. restaurant third-party data I'll that's condition exact used, unpack in March the

recovery. most in our answer We non-restaurant is volume second which the are growing X% substantially more case is business. long We local. of total that's CMU grew cycle business rate leader that. industry faster lie meaningful industry, our Yes, in those your And business part contracted X%, restaurant twofold. use business is Kenny's remain local we the our than sector and and the the and and question. in that's than the hospitality. One, at And That's the businesses recent quarter the grew to a terms Sysco non-restaurant travel, to

daily rebound the that we're And in seeing business. local to significant more that's back So going reopening. on slight we're seeing basis. seeing travel. health, in on a It's people We're offices not work a

So colleagues work. be of extend you we're per to expect to week the returning days seeing that companies number their

successful our sales that's tremendously So national – been in we've and business.

number, want about not partnering buy for why did be clear the reporting stopped We And net reason I with last wins that. national $X-plus it, companies really but rates is to business. of we the standards. new billion for that our exceeded The those business. was scale. The wins time national contracted are reported We our it historical Sysco margin

to scale the strongly matters this in on Our shine through and couple and from provide and national breadth over of reach last industry years marketplace time in perspective. ability ship full competitive rates our and a

the you color. gives that So

was X%. total Our

local overall the was four itself [ph] market with slight Our plus March volume that’s and the in growth.

anything Our to commentary for would Neil the that. QX, for I'm going about to you say toss to like

your for question. Kendall, Hey, thanks

pace about albeit, on at is total as good about fresh, as in not growth talking local, chain versus end their offerings operators that. innovating slower the on map are seeing and offering local industry much perspective, as customizable we to It's As the it a here outpacing Kevin is or menu, much independent multiunit consumer. the that the Sysco

think that's I we're So ultimately what seeing.

by about the to pertains continue gross at grow a we a to of to And for expect dollar about for here sales as year. earnings do in rate we that and that's that range. we least the the year as be continue share the emphasize, talked We single-digit to about, about expect looking per talked guidance, full we for growth we we'll points to and And our expense us expect on talked that be inflation the to XX% growth leverage it As year. $X call, the that. the profit to low today made exceed to few we've continue

Great.

I again. think questions. my that answers Thanks all

Thank you, Kendall.

next Please Your comes question at Alex from ahead. Slagle Jefferies. go

guess and in X.XX it the X.X thoughts? color in acceleration just for the chart but ramp pretty thinking grow a you to you. to relative Good about I like previous and hear that I the the acceleration reiterated I market on you're further target wanted morning. looked XXXX follow-up strong to ahead didn't more how I times Thank there? XXXX, mean whether times any

comments toss to for any XXXX. to I'll and Yes, start I additional like make he'd I'll question. or appreciate about the that then Alex. Kenny final

So what goal is I said we're this on today's remarks for prepared year. on track for our

are market, consecutive that. growing and that's our doing So consistently the of year more third than

we with making. So that are we're the pleased progress

largest the for has a Sysco been industry long in time. this

and the of EBITDA by have EPS highest we We wide as a a a this growth in have percent time, company. margin for sales a long industry of percent had or become sales as a

consistently growing industry, accelerating are We our more of we rate than are progress. and the

capital footprint, for So the of the how. infrastructure. And the is allocation the and why growth to increased meaning specific recipe

So total the do not number that It's at buildings save Sysco. misspeak. yet. to an capital – how want increase that's we in publicly we said many didn't I

Neil. me over it for forgive So to tossing

in where the Greco as markets, past, currently those Sysco. of model to markets some are increase an we've Italian fulfillment are our Italian have we seven those in geographies don't success going platform. seven In platform to called of rate And in capacity have high physical those our for for be the replicate in able to fold-outs, high-growth buildings we speak. We buildings flight buildings

long-term. bullish we're on our So

at looking The physical our Your website, electric recipe Sysco first down was the is I improved we're Way, California is that pricing our which our long Sysco. growth that working. enhancements playing As infrastructure our the at game mentioned said, has I site capabilities, week Neil Perks, last for in Riverside, trucks.

We leader will that a space. in be

Sysco to industry. an engines delivery. envision and to will on must be Manhattan X into You future between that do than for be Manhattan midnight truck. anyone electric can in prepared be blocks where going Deliveries combustible a.m. need and faster our a

pleased So we're with our progress.

history. just mentioned the the We're obviously, there proud I that company's some the the of those from at if in time-to-time, And we curveballs. profitable prepared were quarter today's posted most market a remarks. few And beginning of overall

word. to relates it to a XXXX, toss final I'll As for Kenny, you

Good Yes. morning.

capital for So is positioned at Sysco. strategy growth allocation

lens invested that which we where earlier, for is positioned are for I are as getting deploy resources. ensure will optimized we and capital capital, right? mentioned growth, operate in return on the to Return We we

on a just allocation. So my of thought bit capital

as as business buildings, capital Kevin growth We fleet, will, and infrastructure well. growth. digital This includes invest in for also right? mentioned, first because investments specific foremost, footprint technology, tools, and That's

right are also the robust return cash our fact to as we has to So the flow shareholders company, – luxury Sysco invest that now, generating we but free given in cash well.

flexibility. us well right XXXX, of optionality we for So believe balance healthy a have, sheet lot given now, the we are allows and that that in I positioned that growth

Thank you.

Thank you, Alex.

so allotted everybody gentlemen, we We will our this for participating, reached be have thank disconnect today's your unfortunately, like to concluded. lines. Ladies ask and please time and to we for would call, would conference you