Sysco (SYY) 1 Aug 232023 Q4 Earnings call transcript

Welcome to Sysco's Fourth 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 now like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

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

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

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

Non-GAAP to can are The the non-GAAP presentation end and our the these in found reconciliation be our measures of comments presentation measures our financial of today Investors included corresponding included at section slides. GAAP slides is the measures in of website. also the and in

ask During the time sufficient to results all same participant today, year. one one follow-up. the to limit ensure discussion we'd question to today we have to answer to unless are quarter like prior compared each otherwise their stated, and questions, To in time the all

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

today. our thank and Thank morning, you you, everyone, Good joining call for Kevin.

my would like during section our of call. to I three cover topics

performance. a results our QX and provide our full-year I'll of summary First,

for on Second, our Growth convey I'll update strategy. an Recipe

provide some 'XX how will lastly, commentary have that more for guidance during condition intends modeled the detailed fiscal section. we his environment. of Sysco to and Kenny within much components on I'll macro operate which provide And

started. let's get So,

seen the to sales. X.X% full-year record by grew to $X.X net the a results were strong We within a fourth and strong bottom-line the sales the a are fiscal Slide or in results finish during last $XX.X Sysco. top-line as posted growth up year. pleased billion The billion, company with billion Sysco. sales constant-currency annual on generated results, X, Sysco delivering Top-line sales year, equivalent compared a of of We XX.X% basis. at XXX on record new quarter That $XX.X is Fortune quarter. creating

market Foodservice case volumes. case successfully growing and volume our furthering Turning distribution. our number position grew one business, X.X% to share local our volume across grew foodservice in U.S. QX X.X% in

build gains within are We quarter meaningful the fiscal pleased our delivered with year in year which 'XX. on the share for gains

profitable gains. Importantly, these share gains are

domestically are sales pursued vectors, not growing sake of have consistently growth We internationally. growing profitable we for as the and

Moving to gross profit.

delivered merchandising a gross rates and quarter which strong GP dollars in a environment. and perspective. do a is sales GP margin case, easy Our to from growth not teams We disinflationary grew per

brand helps and cases penetrating Sysco profit leads customer our Our sourcing gross teams excellent retention. work reduce strategic are further customers. in increased Sysco to and to brand with COGS Advancing doing

growing are Lastly, profile. which strengthens our we higher-margin overall our business, margin specialty

expense. making quarter of Next, from that the the most progress the of the am is I P&L expenses. we're in reducing proud operating perspective our in

had half chain two supply a have our business that factors: in elevated by of This in the our first with new Investments We clear driven with been 'XX was year colleagues expenses. investors struggling fiscal productivity. and

in QX, colleagues chain improved, of told, fruit. productivity made an our of our more points we colleagues progress major delivered All half GP bearing improved, of on initiatives productivity of leverage chain. ratios and Retention greatly than growing fiscal 'XX, and dollars has operating expense within supply our second accelerated we our expenses. improvement the In XXX supply meaningfully are basis has

Slide the fiscal rate U.S. began the X.X%. year. in the course over Foodservice year We our with growth the last X but over OpEx with of highlights operating year expense a of sequential ended growing segment XX%, the improvement with quarterly

deliver focused efficiencies chain broad-based Our the improvement drove reductions sequential the supply effort to and across year. cost

expect to progress make XXXX. in operating We expense further

focused We will safely be properly our staffed, is productively. zealot-like and on supply ensuring trained, and working chain properly

at leadership regard, infrastructure chain and industry which expertise, average. this We is supply distributor Sysco have margin the one X.X in our why industry times over lead higher supply operates the tools, an to EBIT reason than chain

and in Sysco Record Growth to first of our year. half record QX in than to result was grow excellence for our half top-line The and bottom-line performance on enabling 'XX operations. second more from full EPS is the within execution a XX% Recipe direct notable, focus fiscal for in improvement

In a achieved back $X.X approximately billion strong and addition we QX, during in cash to record year. the free delivering P&L returned we a flow shareholders to

volume quarter market which rapid despite our We the We overall in will speak positions and are be XXXX, to of the conditions, the in strong industry more successful in success, to moment. slower disinflation financial a pleased those growth. business spite I believe with performance in

start like my of initiative. a strategy within brief our summary I'd is our of to select our quarter. from Growth elements recent provide I supply As Recipe custom, for will chain

across dividends. labor supply on chain standards our paying strengthening work Our is engineered

in improving mentioned significant headway we chain our I efficiency. supply a As made moment ago,

productively. work to method recently colleagues have safely standards more work our work training strengthened within transportation roles, our and We enabling

is retention our improved impact this the training workforce better driver Additionally, programs. trained through academy of our program within is a The we've increased national, and rates workforce.

Minnesota. food our made for announced an of month, Last Produce. we the highlight side a Growth. would Recipe BIX agreement progress to does purchase BIX Produce sales is in acquisition opportunity have the I expand we've Now, The like country the an strategic that where in based area to on marketing and expected to FreshPoint distributor currently footprint it specialty produce a geographic its leading provide is not to operations. for of

fresh-cut sandwiches, produce, grab-and-go including and offering value-added assortment capabilities. strong a has production BIX

upgraded during the platform shopping our we our quarter. expanding to digital In addition good work specialty, also in

platform Our now in Shop XXX enhancements. have we available deployed Spanish, than and more is new feature digital

pages, and in search enhancements and For new purchasing. driven cuisine Some a at enhancements page through new volume have an incremental These homepage, navigation, product Deals increase improved of visits these page. You new add-to-cart include and category an a lastly,

our finish digital journey. no line is There in improvement

We customers will to purchase improve from time, continue the Sysco. friction our over buy us to digital reduce our tools more and in inspire enabling experience to

on us the ability tool pricing be, at what call, price centralized customer, given we and region, right item Our level. the has to

QX we USBL business. of and end disinflation first the our 'XX, half experienced During rapid we of even within experienced core And 'XX, rapid towards the the of second half in inflation. deflation

secure have tool our fluctuations merchants are to possible our and strategies. best cost the biting Our real-time cost, pricing into pricing been ensures that built

thousands in and of of approximately sales the margin growth GP tens products reps Managing growth of customers, year-over-year our X,XXX rate pricing consistently thousands never dollars XX been has strong by and quarter. evidenced across of adjusted is performance in stronger. hundreds of This points gross basis

want We engagement, relationship for consultative solving focused sales customer problems and building, selling our reps on our customers.

to those Our pricing SDs more activities. value-added tool enables our time on spend

are now these The we loyalty countries, year with less Sysco investment In XX,XXX neighborhoods live the in Both active compelling continuing work on growth. programs impact over can programs to a and Perks past our bottom-line of program programs Way as XXXX. heavy-lift required XXX in and Lastly, over deliver effort top- maximizing is across compelling and we customers. five Your has to these focus get off been with XXXX, than the ground. is

a others top- delivering profitably versus our in our and results. Sysco our bottom-line Sysco compelling market, and enabling business sector, and growth record Most on Recipe for XX. differentiate home food the seen profitably to growing than summary, is In Slides grow has Growth been is as that is faster from working, space. overall XX away

We share profitably come, expect the market and in way. to to fiscally continue so years to in to a responsible do win

meaningful lower regardless said, advantages. strong is this operators the than scale are in industry time market we like scale operating conditions. that positioning best-positioned I'd is in about a 'XX rate that within matters to expect this 'XX, for that environmental My With fiscal to some environment. and comments at the strong expect succeed, a main very operator we to environment morning message the Sysco's with Sysco 'XX. my and fiscal that grow with wrap-up of

the for standards. the historical inflation below to of also rate be year We expect

our half In the we U.S. fourth the of Broadline within second of towards end fiscal core business 'XX, the deflation followed disinflation experienced by rapid quarter.

second U.S. by inflation We 'XX, for expect that the in Broadline will product Broadline half. first continue deflation fiscal within the muted of half U.S. followed

remain expect geographies. those in given our will coming unique marketplace segment year fiscal International inflationary during We that conditions the

environment we XXXX, Net-net for throughout expect below the for is Sysco, positive largely rate environment, just coming slightly an believe our that the is reflective of year. inflation operating fiscal historical average. exited, the We we QX

Importantly, grew that bottom-line we and within top- quarter. our

managing Despite these bottom-line inflation in volume succeed, our conveyed. in given and expenses conditions, is market positioned the components prudent very to faster being than Sysco deliver We're fiscal the growth. just that grow 'XX I and

also is confidence structural our based advantages. Our competitive on

rates First, expected XX% outperform, of stay and a to sales, providing to natural is our continues U.S. international elevated as the International which remained business, approximately higher hedge inflation are than

will industry. Second, strategic is sourcing environment. a in largest to And secure in our our enable the deflationary the pricing efforts improved purchasing scale Sysco

in with Third, major the Sysco any buffer across help deflation impact strong business of or has to category. diversified categories product sales XX a inflation one

manage the Sysco enable pricing impact to disinflation and be strategic we extremely purposeful our of Additionally, how will on software deflation.

domestically growth further deliver advancing to penetration, environment dollar Brand Sysco and deflationary. pull internationally, when Lastly, another the GP to lever is is

in XXXX. 'XX. muted The 'XX, overall inflation first Lower share exit 'XX half growth versus company-wide at the full expect continued of in we the volume deflation at and confidence here rates of year. strong summary, us gives growth the year, velocity what profitable U.S. results is in the of and least for delivering gains for market for market overall Sysco, fiscal In

ROIC have effort million, disciplined expenses expense management. invested on by focus, approximately Sysco directed Brand I Kenny and within and to advancing extremely for structural progress specialty. $XXX reduce penetration capital return in Disciplined growth continued an

the all we midpoint approximately are guide would $X.XX of adjusted modeling In generate EPS range that an year. total, these fiscal EPS The variables, 'XX. given to growth X% $X.XX inter-working of versus for full

Recipe our positioned third of year for initiatives. certain on accelerator proven Now, on we are press to Growth, the

performance optimize Your example, neighborhoods, Sysco can starting neighborhood. and in a up effort takes launch For less we Way our which

pervasive customers, the optimize with and are becoming of yield increase our Our more and tools to each personalization transaction. can we these through more interactions digital

'XX executing that matters have with fuels wheel laser-focused a Sysco kicking excellence what Growth on Fiscal off is new This have of the next. initiative versus net where optimizing efforts. the be We each programs. for to most, always launched launched said is we a year Recipe against will enable what

it and able in is coming will was business plan less grow to we the be for means our our with This always also Growth reality within 'XX. to This fiscal Recipe investment.

In increase higher expanded of like addition, recently-announced businesses, geography acquisition, BIX the growth of specialty specialty our our impact will the segment.

our 'XX, to higher fiscal return initiatives. a both OpEx In committed are generating growing top-line, and reducing on meaningfully profitably key rate we of

in as a happy that the have that roadmap, Given our long-term compensation team. our confidence we ROIC we leadership to we announce reintroduced for are have long-range metric

of In bonus addition, the increased have short-term metrics weighting our annual program. financial we within

are many I've times we before, companies world objectives. market. I profitably the than on Sysco and growth companies, that said as expect best my these to thrilled As the am continue have grow to Kenny faster in will overall partner the

every producing greatest maximizing shareholder to committed are value. invested in the We dollar

over additional I'll you. who will now to financial Kenny, turn to provide Kenny, details. it over

everyone. morning, good And Kevin. you, Thank

customers, for customers. Sysco operates strong, servicing, would like year response business, improvement sheet deliver fiscal to our and world cash We flow. of record I'm and balance the out quarter. another delivering partners proud statement, high-volume I in delighting our thanking efficient us across a by around income closed start-off the and helping our colleagues, the

income, financials growth net and expense operating record reflect adjusted operating rendered QX Altogether, of EPS. and these and quarter a sales positive volume leverage. income,

an excess Our in to reflect back productivity business for enable shareholders, and we resource operational will and efficiency elevated improvements results reinvest FY theme 'XX important to also cash optimization. beyond. us return performance and expect back This to the into

forefront the Recipe us with growth is company. at proposition for Our as a Growth unique value what the differentiates

at we earlier, on focus here stated role continue will Kevin key high Sysco. and returns, which As is accelerating programs that to a have priority my

turning of reported to for summary the a on XX. starting results our Now Slide quarter

growing grew growing U.S. quarter, our and sales X.X%, the with fourth SYGMA International X.X%, XX.X%, For Foodservice growing X.X%. enterprise

year. $X.X XX With increase billion Foodservice volume of and local increased improved last profit, to respect up year. X.X% increase Adjusted a produced X.X%. prior and increased U.S. to gross bps compared to gross total margin XX.X%, versus an prior from We volume, volume the in sequential quarter X%

and inflation dollar for effectively with our moderated profit margin at quarter consistent gross our the total expectations. reflected to ability percentage which improvement product Our to enterprise, X.X% during fourth the manage continue

The results. by to billion show in from strategic sourcing U.S. or products, All including of driven improvement Overall, improvement increased in to quarterly XX.X% U.S. well improved $X.X Broadline XX.X% for XX.X% adjusted increases SYGMA our to were Local International and as XX in bps prior from penetration a sales, rates bps year. XX from continue gross profitability, efforts in incremental and profit was segments progress the operating by the expenses Brand bps operating as which in quarter, XX substantial the segments. growth four Sysco

Sysco's the fourth strong in adjusted operating and of rate, for the adjusted and income. growing period QX As seen record history, exit FY enterprise highest This to is $X XX operating of on income consecutive compared income now Slide operating showed XX, XX% quarter billion a is the 'XX. quarterly

adjusted income to record, growing important being 'XX the For compared increased at $X.X our billion, to made prior operating year, signal the progress FY of an XX.X% Sysco.

For quarter, EBITDA $X.X billion, XX.X%. increased the growing adjusted to

with progress fourth the for quarter. our International are growing adjusted operating the income We segment XX% of with thrilled

as just balance ago. stated target times robust we quarter. times, to X.X X.X also X.X I'm to milestone our within delivered years important continues leverage substantial the momentum. a another earlier, is ratio. year growth net-debt positive times ratio, sheet, times This our As two particularly the on ended health pleased this from at with X.XX International target strengthened business with We which deliver improvement further over our leverage of of our

year the billion billion with $X.X ended with liquidity of $X.X We no paper commercial net-debt total outstanding. and

FY is without 'XX. until debt well-laddered Our over any billion maturities $X

$X.X flow, cash cash cash generated in flow our billion flow, new $X.X operating record. a free to was Turning which billion and we in

conversion adjusted XX% EBITDA was the rate cash shows and of robust operating conversion XX% flow earnings from power. free company's Our flow to cash

done return billion million through shareholders. $XXX of to strong $X.X repurchases was This Our million financial position and dividends. us enabled share to $XXX of

and our Despite positioned FY gaining, providing top-line our bottom-line to moderate industry 'XX. long results macroeconomic Growth are is the reflective we QX ability to rates. value, addition in industry into are of growth the landscape, several macroeconomic FY of significant Recipe and changing provides both initiatives The grow dynamics for guidance believe in our are Furthermore, these performance in drive to the shareholder we're to proof term. expected 'XX continue as we of traction

As levels Slide with Kevin began highlighted X, we on year the elevated growth. of operating expense

operating 'XX. an important to for chain going year result, FY area progress, a the throughout sequential expect expenses year and operating able supply were This we focus expense the is allowing were significant improvements improve ended We teams with into our produce leverage, us improvements. continued we As of and to margins.

Let's now turn to look-forward.

we During for approximately Sysco. positive Sysco which 'XX, of record This growth will and to FY be expect move will mid-single-digits $XX top-line in volume sales. annual billion another growth,

positive slightly be an year. the to full inflation on for expect we Importantly, enterprise basis

believe quarter, will the Broadline Based the continued of first includes in slightly with analysis and and rebound an U.S. exit step-up. fourth fiscal half year second the will half the on that of positive expected the fiscal half during be half in the This second we the globally from rate year. first our deflation

better impacting without to about our along is well-positioned effectively selling. buying continue structural advantages, and better to demand. on pricing pass Based all is manage our Sysco COGS It and

expenses. to Turning

into we've actions $XXX We from expect the on guidance. based further improvements million the already year, factored continuation in operating leverage where past a month of has the been One to process year. executed support this expense it into cost-outs new of improvement

constant to function. which swiftly finding continue incremental efficiency we evolving operational will enhance the to opportunities in business environment and We adapt

manage We our discipline with agility. and will business

modeled be can are as lower per front-line as and paid have year. growth industry instances, than in much other operations $XXX,XXX We out is news select to This earn above-market fact X.X% our to due drivers chain colleagues much higher wage historical supply approximately the many to but our X%. that our than average,

to free FY on FY expect flow grow in also further record a We 'XX, 'XX. performance cash of in top

modeling several 'XX. tax on compared to strong increase related rate growth is XX% guidance approximately important rates. provide also mix The other driven by geographical increases to The to elements. step to 'XX XX.X% expected for FY and tax in FY International wanted up to is We in state

dividend in year, the be our to remain approximately investments, year. for growth by to with primarily expected expenses cash year line is $XX expected up $XX repurchases, to pension payments, plan We activity. for by for share leverage Other expense. net-debt the is the ratio interest million due and expense uses driven for anticipated M&A to Related step about million

guiding are $X.XX reflects at to 'XX to growth EPS $X.XX. we in, EPS XX%. All X% FY for adjusted approximately adjusted to This of

allocation return repurchases. the to Our strong M&A, and shareholders include strategy at investing investment our of be grade year approximately should Examples share through maintaining to business. CapEx X% sales. credit in consistent on capital will rating, continue with and dividends focus prior of our continuing capital

back as aristocrat at to up increase status, a with fiscal and share dividend and year. shareholders plan efforts billion $X.XX authorization. FY $X and coming $XXX these cash we to is the year the our approximately In start 'XX, million we step of important will complete Returning as we repurchases dividend is expect to remaining we have

FY to goal operate on Depending 'XX, while the X.XX within of in to further, volume X.X times we leverage. share stated could our repurchases of M&A done increase continuing times

balance the ROIC, FY through and prudent of the our and surpass ROIC to growth, sheet. expected margin sales pleased state investment each for 'XX management I to expansion, pre-COVID is driving through lens at levels am look will of growth our and We that

margin dynamically percentage which to we accrete dollars operating both As growth. and time will investment focus continue value shareholder over a as decisions, company, our ROIC and on guide will

months, micro size are am impressed for few operational I advantages business efficiencies high-volume quickly. fast, Sysco. around at runs role my felt a by constantly and in any Now that is scale This adjustments the and a

advantages such our types as education scale industry-leading diversification two-third and Our in category are advantage. and our recession-resistant one-third across restaurants also in margins, also customer with healthcare structural as the reflected industry-leader is a in

operating to take opportunities present us so balance able strong investment-grade of capital Our rated attractive at robust flow access themselves. industry-leading to as they we're gives advantage rates, sheet cash and

than natural continues contributing dynamics day an growth hedge portfolio. higher see growth role look our proving forward believe in create a business, As you I'm even a ahead. helping business International and more to International inflation that I can U.S. into performance our days on the bit is across that results, are one, I and of of in our other We for profitable geographies was engine segment advantage rates be to our our to be of this a excited Sysco. XX progress much

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

Kenny. you, Thank

to provide of like As record we a conclude, XX. on brief consistent generating summary Sysco I has would strong results. a Slide

has fact, XX In Sysco history. out in of grown our years annual sales XX-year

positive momentum in continue to We XXXX. expect our

top-line We an sheet. the with to Sysco to plan margin strongest compelling fiscal balance addition adjusted industry-leader year that perspective the XXXX. In EBITDA growth, strength position of is from build on in

chain EPS fiscal result volume, XXXX growth year the We business. The bottom-line and record contribution. growing with adjusted across both our share year growth, sales, and our ended volumes XX% and top- a was for strong independent with

competitive the year, now further third Growth in into enhancing and We transformation, for scale as going upon its our is advantages. our year, Recipe have momentum building

demonstrated quarter profits expense have of outpacing third consecutive our operating with growth. leverage we Importantly, operating gross

deliver a the are of 'XX, year year opportunities another days our dual for always, and industry growth. away our specifically, Sysco. from efficiency bottom-line and more part commitment fiscal There home I am And focus for measures thank from shareholders. optimization food their proven top- excited and to customers be both growth ahead and of will bright the I For core colleagues XX,XXX-plus Sysco our on proud journey. want to as and, our to

for can questions. now the line open you Operator,

go will Fargo. Your question Please Instructions] at ahead. Kelly first from [Operator come Edward Wells

it industry, guys. Hi, the backdrop tougher that guidance in a respectable. XX% But on is guidance. little normally question be, bit morning. against X% easy, it's Kevin, to providing obviously Good would the is for backdrop is and certainly so that the mean earnings my expecting? confidence of range, be outcome? at not if what than growth can the the at you you you talk drive growth, would would the cause we what And if that cadence were the the level could be end to better that And in the about that? range, were bottom-end that what of of I

Hi, guide past building start, Kevin. is comments. company Ed. I'll tied additional points. few with I most start notably is our Kenny six over operating improvements. and the based of expense This a on for guess, momentum toss continuation I'd to been The the months, a good morning, I'll to has that

Volume big the hard individual three We we three market, worked that do the components our And can call in to we've of then will boulders. inflation, possible what the and expense market make planning process, of very ratios. guiding job be. our projections these sure best

So, let's volume. start with

of As I volume the expect my we growth for prepared said remarks, coming do this muted to be more year. industry the in

factored guide. supplier our data. have to from from that from We that economists, our and partners, triangulated bankers We've own in

across We serve. data all treasure we that have segments trove a of the business different of

that committed can market doing market volume said, we're be and profitably. we, Sysco, more to muted. confident of are So, we growth grow for With we do so the than that the to expect faster

Topic individual is it countries. deflation And have inflation in down we break two to businesses or it individual is, were. as into as that

unique USBL geography do prepared purchasing of have be remarks, fact within at the my at considerations that have segment an first we expect in hedge half we considerations a experiencing those countries. that said natural given I least International is for and the to inflation due deflationary We the Sysco, still As to year.

put that second when time. the a for use altogether year, that So, I'll term you same

below the muted for standards. for inflation historical entire We our that's year expect

positive side, On logistics efficiency. the continued

guide on made are interest. really improving efficiency, we're some expect continue. we A chart was in that below-the-line progress quarter-over-quarter the to slide slides sequentially our with that tax year important in There's in our out is can there. the things to, that pleased our that about talk and throughout Page Kenny logistics X The

we've question performance be To the the had conditions solid with in what with just the a year confidence, solid answer to reasonably overall environmental be in June, and in ending notably that QX, June. and expect exited most on your we environment we Ed, believe end a we fiscal I'll performance 'XX, consistent to

So, what put Those together, when the be our continued the control, to I to be all be improvement, that's cost at that growth be those why to the guide, would performance efficiency within operating accelerate our top. have things on enable at true top-end, directly market. things would versus could us two the the

longer For we're put us deflation headwind would I'd towards a the range of to had be that at that been say, be, longer persisted it of bottom-end more that the modeled, than if lasted range. the or would deeper bottom-end would or be

issued plan, So, our we cost-out can $XXX that we today, Kenny efficiency. baked control already million have profitable driving what and sales is guidance we've major on which We're into as we focus we've at that and I, on of the against got components executed teams just growth. and improvement going drive Sysco. sales announced provided, focused the actually operating to

for going I'm toss to comment. any that, additional to Kenny With

Thank you, Kevin.

in below-the-line level guidance. the bit a And about alluded things. Kevin color. talk the more confidence second, confidence I the a of think couple I'll needs around But the that first is two to, One, as around items guidance.

the Our guidance successfully how is on based managed confidence QX. in we

and we GP the that, in by to XX quarter U.S., deflationary think margins you the operating bps. with ended we QX, still by and expand bps if XX margin about So, managed

again, right we're doing So it now.

we fact a to world-class very that up The environment have I second the would were piece in down, in have change, agility the given and we and $XXX the we has sheet a million have balance place, the our been already structure, we guidance. that, baked-in, say flex executed productivity cost to and is have and that if agile

that the the guidance. So, of around is confidence

One tax bit items, In a want are terms on. two deeper areas rates. to is of go the below-the-line I there

We expect to rate from the step pieces to XX% two our XX.X%. tax up side. There's tax to

our seeing tax are yielding international markets, a higher charge. across we First, is earnings which strengthening

This is a good thing.

seeing growing our arm fast. international We are

higher expecting current is, piece tax second we the expense factors various including are U.S., state. earnings across of The a state This here is due the our mix to view. the in

are We continuing and back report as evaluate appropriate. strategies, we'll to tax planning

to accretive return Overall, The second expense. high-returning is higher piece $XX The risen. capital initiatives, to plan expense. other is And growth last the year-over-year. raise excess rate which M&A, against Again, increase is expenses. shareholders. includes interest to bucket has around cash driving deploy also investments, interest the million we This

related expect $XX As expense. in mentioned my it remarks, we to prepared roughly I be pension million to

Thanks guys.

Thanks Ed.

Your next at come Inc. question will from Please ahead. Stephens go Joshua Long

that's as higher-level tie that your guidance? together, to how that XXXX at, where spend the with that Great. helpful. Obviously, into how we might in could Kevin, choosing curious just is of you. release corresponds you be segments. their the you the thoughts Hopefully, of fiscal trends some able you Thank dollars. underlying and if consumer customer the maybe to dig and about we to core And there of were with able some makeup, see some think provided your on the case volume they're customer

Hi, aggregate the level. more at you start just Joshua. for Thank the question. I'll

food you As we data. of Ed's of from serve about, We answered is trends. when we what know, every trove segment to away home treasure I see have can a meant the which macro question I industry,

at sectors. tailwind that we and growth winning sectors team healthcare, those business of hospitality and profitable and constructs want are our of year, growths clear a banner very I are market recovery there have XXXX, top share education, national those industry, in banner year on see be a profitably had a travel, been to this continuing in to year that's sales past So,

can not in including an are National in partner as export distributor in a for international state view every partner can of coast-to-coast, partners countries. distribute be as into Sysco usually it's we Alaska because because to our freight and every restaurants, overseas use regard Sysco they a food doors these restaurants their business, to to Hawaii, large and mostly many for that backbone licensee like someone We're and international we able button those well, with them. those is, winning have that we group product easy them

for chains, again, we winning been those contracts above at contracts I've these and we've margin historical very signing Those been big. as profit for contracts, are rates. a restaurant multi-year national mentioned, So, them, are attractive and option we've

our in On I a in acquisition that produce winning side, the for mentioned, as BIX us aggregate winning the we're XXXX. market fiscal today, will specialty with intent local Italian share We're tailwind winning in segment a been company. we've be as and

So, American the year end-consumer, XX past of menus, price think rate beef portion this you plus specifically saw consumer, when was put the inflationary, reduced point strain the about on increases. increase a percent at one saw being sizes menu at I rapid inflation you

do the we had we're good about X% deflation impact be on will I normal an think and say the And future, end-consumer. to eventually of are X%, think I currently would that for sector. independent experiencing And particularly as the that be which inflation, what the return to the rates would

see of in should favorable about together that XXXX as for you volume, and come rates Sysco. over is those normal healthy, for dealing of a the and talk inflation a disinflation So, internally, about two things where we're now chart be thinking would our with when time. fiscal now tailwind I going into and elements 'XX, period to teams would And we're normal graph more back inflation curve to next drive deflation, think about that I was well-above

on plate so so well, we thinking share to tend this that when what help app like to added the things them going be our our goes to can providing in we be how see center that up, purchases dessert that have with that help compelling Kenny said, to of and customers discounts to consumers So, customers? can successful purchase, tails down, cost through because by with are work and go purchasing to we're our in best-possible appetizers, value fact economics, value about Sysco. we end-consumers off we As and strong is and our want

these little of dimensionalize heels out comes you million those, is great two, of follow-up, that not million then have it And you. you Thank realization curious or of other into getting if can over bit coming the could, we the the some but helpful. the you just into $XXX $XXX could. think That's When COVID, or year that balanced one the about the last relatively visibility cost-outs, work I the more, maybe maybe that if of a in entirely specifics across more timing on of the are additional you found year, to wins we just in the out had you with we the just categories? Just about third you've you about iterations do experience helpful. you more of the terms pull have this new do provide very have there, of be commentary ability round past there, any margins system as would second as initiatives - can think that cost and time new and maybe drive or think

bit Thanks, detail. Josh. say and Kenny. go I'll It's couple I'll a of things, more

will That be So, our for operating means it's about be EBITDA our business. GP in does expense growth faster our And growth, what all that leverage faster business. will on sales, than driving leverage us, than operating mean? our

to balanced one. on more yes already, question relates it be the directly, will It to across started $XXX Because it is why the right? As your started day year that? million, and we've

all earlier. have point underway. one. baked -- supply the and that continued into is actions we So, number this operations Kevin guidance, already productivity two, all efficiency the executing, our meaningfully incremental gains to been actions number and chain and That's are Point described

continue in flex market conditions. that with last right? The say would not to I thing we're will line stopping, is We

I Now, a more detail. bit know, asked you for

parts There you give me the to example. Let multiple are $XXX million. a tangible

So, able Well, to center, recently advantage. there month example. GSE, Rica. about in markets, scale Costa talent into was been other global further support -- a an shared our and We've I share you our to ago. we a most expand me build accessed give let have great

and So, we're platform business that effectively as scales to grows, for able a leverage earnings. our accretively

you. Thank

Thanks, Josh.

will Your Guggenheim come Heinbockel next at Please question from Securities. John ahead. go

both So, them I'll hit Kevin, two topics. upfront.

right. one, number share, So, on update maybe wallet

thing the past. is today drive that's most that do. opportunity in right, size that Where about the drop you you and if talked You efficient can obviously, and

then is is you're think, And So, to where that? I zero. two, overtime down

if pull want you folks. you don't furlough is to overtime volumes I little right, lever What want at a think guys on, do So, next zero? Where don't go or to were you now do because, you lighter.

I John. be question your what zero. Yes. to It's question Thanks, on and meant excess first I'll taken want was zero. at then crystal-clear do first second. we to by the second overtime overtime

runs industry the So, at good, overtime. rate amount is of a call -- our some desire of average it some an let's overtime because employees overtime

nature doesn't back for going cetera. route, overtime, some of and because that's there's the the to et Your truck XX leaves that warehouse be hours get the

that meant we we disruption, worst chain excess is the enduring overtime. the supply what meaningful So, by excess meaningful, of had that overtime

really can that. we So, improvement come Retention Where good efficiencies jump. feel from? about additional

it retention. historical to of can So, has to get improve our improved, still dramatically levels turnover further and back

ask a retention if hiring through more costs, occur, safer, ways: that more And a because many me much months their lower productive newbie. because veteran what's ago, productivity need single how that they're different do we higher know flows two-day fewer than most effectively? was and in also to job. the trained training improved costs, important you two-year accidents because thing do to Lower six is It They're

So, would one retention be improvement lever. number the

getting to lever a Academy have next discipline work improving discipline But what We we standards. standards just Selector to process. labor through the is to the that's our better Academy, improvement standard technology, improve work Sysco's leveraging call of and The engineered have Driver and keep wave is processes better stronger. we a second productivity and

guidance. into with improvement I'm improve. still made to in continued we've chain. have particularly we the our So, XXXX really we most pleased, opportunity supply factored improvement have pleased And

me percentage share most business, categories further guess we're penetrating opportunity, quote merchandise existing a we do, excites Sysco want of share wallet wallet with what additional customers. to and what them for to Your are the not Perks of of on doing On and side but is which today, Way the I going the need our and

a six is consistent model driver frequency, in that presence and Way our through increased recovery neighborhood, an delivery afternoon delivery sales dedicated Your a rep, Sysco dedicated delivery. The days a with week,

and what are us. those with expect specialty from see to rolling basket, to up is are in which another consideration more eliminating We seeing adding purchase would neighborhoods the the distributor we customers

And it's service XX Your Way Your not But customer a who for not thing. and current miles within neighborhood. from Perks happens we're but be purchases. warehouse, a marketing essentially the incremental Sysco Sysco support, with to could be them capabilities seeing does same Way the neighborhood. providing the a dedicated within They And by

which produce Last, put meat our doing and businesses Italian. and job now specialty. good really our least, is is When our we next business SSMG, We're business, our specialty in not selling, have those generalist, together, old a total specialty we're that but team we're with the and making we business generalist total call on into is the a we bringing lot of the account with the progress moving what call team needle what we which along on SD selling. XX-year specialist

So, it's that things which are us helping we case the on those three as is together, share you said with of put truck. John, profitable most wallet, can the

Okay, thank you.

Thanks, John.

Your next Markets. Capital Kelly will Please Bania come from BMO ahead. at question go

as now versus of in you're give And a how kind a deflation little not tool we certain the gross particularly just question. into dollar pricing this gross we how impacting percentage that? you've wondering here, on as sounds can our just if tool pricing little for And do investors given transition could that your us work talk we a maybe, was can a bit optimization modeling that morning. the think change much included forward dollars? profit point your color you as about business the Good deflation about it that, some doing, centralized of taking on been like move right much category. for I on how disclosure how markup price Thanks margin, and seeing centralized is the markup or more at should this

the just then how he was to with you percent and appropriate articulate I'll Kelly. during toss the This and I'll tool, to start matter he'll what to the on Kenny pricing and Okay, whatever remarks. your for our that, regards leverage on questions in question. tool. deems and prepared tried I we dollars Thank GP handle

that regards up plate. XX%, in increase cost, in was it had because During humanistic would helpful and mean, GP we year. through, and pass through that the it what, world, that have we mentioned case absorb it older of that would flare can I this through, passed a been manual what would and of I going have they they not of have would especially rapid you consultants a to into proteins all a going unlikely past to have it growth In sales extraordinary we period X,XXX center per was an much moments ago. seen put actually as extraordinarily the know inflation, in passing dollars few said, just discipline not I'm we too know experienced I had

call it perform guardrails So, I'm discipline going to within up. the to the on way

our be purposeful happens thing same to customers. on exact down, a are but COGS, different we is it's the consideration. passed the when on prepared secure how value about that improved the to we'll said Well, on we way able very remarks I What

Our intention is to pass to that volume customers. on our

pragmatic thoughtful, do and we And that. to need disciplined, about how be we

of in the up went market that understand short have to We and time. with we competitive to a categories XX% from period be of have down to volatility the double-digits

discipline. And the manages they want that we discipline team do for provide in follow, and relationship replace at that competitive price adjudicates if in I call a SD pressure and a will our point. that those tool not guardrails. on right local importance local the with very ask have within and have we RevMan clear being I structure be It to a they a can at about exception, have level, again, local in of one does the decisions the at have SDs performance level. restaurant what So, to financial an an process

we with see force the the when, moment, So, something to more more within in happening the SDs sales have we it's that in the through data. And something to our respond system things. ability that's fact, going respond provides unique guardrails can and predictability. a on that believe discipline we're better operate that to that at that better point. the make in through and second get combination of level that a 'XX. agile the we're then, two tool ability at working we can't to process and It's efficient give fiscal And is local We faster, and

from comments you Kenny, financial for perspective. a I toss to any

Thank you, of Kevin. things want add. couple to Yes. A that I

Just we did And our three still both margins earlier, GP I of as expanded operating as GP -- U.S. that, all deflation with to in experience QX, well recap, mentioned as we them. per case, both in market. margins, dollars

margin There have Yes, to question, an besides other pricing your enterprise, on as side. quite levers answer tool, the we is pricing. directly help few does right, it that centralized the a

it International enterprise you working through things side. other One that is This because is So, those includes: strengthening our helps right, walk obviously me segments, of on on. inflation some let the

now, Currently, right International on close spot to is right inflation. the double-digit now

sourcing. strategic is piece second The

margin around specialty we Third, penetration, to drive the And things immense going for what pricing, this And going these Kelly is a mentioned, our you last which addition higher four Sysco progress bought all I earnings up and then Brand likes. forward. in enterprise made quarter. just profile

to pass guess, I to your restaurant environment, these And, pricing all customers lower your do consumers? you of just terms expect prices and on this in lower

I defer to the the to comment. leaders business, National Restaurant of companies on those would Kelly,

individual think all their own choices. make I they'll

will I see think the mom-and-pop them. on and menu? will the that. from And some they to volume the will some an lower benefit market center I and them think will, for efficient price local choose it's of plate come level, independent at point of cost purchase down

to fungible, answer defer that it's get large pulled, question, chains. the customer it So, levers national to I'll base these things are our especially but that

Please Your John from next question JPMorgan. at Ivankoe ahead. come will go

market in generation, question know you enhancements years, one of I changes The product or terms been per compensation. account, force sales. sales Thank in Brand, being past Hi. couple account new a Sysco maybe very the of share on is much. there's

the that members force sales certain I a some I of things couple in think most removal recently different of ceilings actually terms there heading comp. were are of total think, including,

get a more the to especially you in Thank be give if mean, can sense sales in sense comment the Sysco responsibility And for in in numbers. of comp Sysco plan? much. should best? 'XX, to wanted works of of focused add stable how salespeople more it like we or so on terms make you the number what the both just it force to So, organization, does make terms a a kind I of and of

thanks I for question. appreciate it. the John, Yes.

making some we're like We actually way, By program. improvements referring our improved compensation to to are model the this pilot John's right now current in we our is an program. What year. with

colleagues Our on all-time the have the our motivates behavior believe sales consultant retention is at we and things. program highs and we motivates right

With that said, continuous improvement, stronger. better make you always something can and

said, with do from been, is sell consultants feedback which today, type sales on that make, we people John just work the that Sysco our can consultants more what earn has exists that. caps, is and I our I sales a like the more Your there don't of and like cap that agree and more should

they profitably we a by if for new which too. Sysco, program, way, to that's are And the their good structure, new business, a earn. they grow piloting So, continue

big a it's it's a big machine, company, engine. big a it's So,

We're pilot. compensation As it and, sure than today, sure We're to a call sales doing to pleased with and I sales need going the need get We August consultants. understandable we announce we're the to details in of why our results change. that's on it's my therefore, pilot. the make that clear, of actually simple, force more X,XXX make it's said right. to We

to yet. because colleagues going going I'm be and discretion, help to comment at told meeting in win the we worldwide we're they've haven't this covered what it's been professional with we optimistic that But us asking very August, will exactly that more not be So, on on we're our the share level. the guidance will deliver well-received what for, it that profitably change, today local will the call, to to announce even sales it choose and because

growth. shareholder it's good Sysco, we're pleased will the profitable motivate and it's for We even good So, because right it's and with and more believe the colleague also for for behaviors, it it's the that good change.

you. Thank

Thank you, John.

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

business, closures being customers? think in of health your receivables, bit But, more a views out see on of for as you touched about Good and more operators, of little Kelly's these to the you're the down. there, morning. on erosion broadly, customers independent with But debt dive you Sysco more a of or the seeing group evidence question. pressures Wanted environment any in Thanks. the traffic both some you little and this inflation restaurant on bad horizon difficult, If local that on the stress that coming restaurant for

very for Alex, sentiment and segment bad ours, of the then debt. question. comments Kenny and start any to important of on I'll that I'll Okay. receivables toss customer for just on thanks

of is they COVID, that entrepreneur. local know, the an from following said You beginning mom-and-pop the I've that very are just entrepreneur

through bit and frankly will with followed a like back normalized that be a come this for we've good a their bit are think volume scrappy, about the little local agile, right, disinflation be deflation that help the will is and little years, X% will will once to is good the could they of on have They with are are lot last we good a This dealt to curve It see deflation to will and business. a by over be X% gotten of because the I you four XX% fighters, from me are because transition margin it they inflation. in Zoom I and thing and operator. for period, wish inflation aggregate inflation they doing, them was benefited

operator. to So, going the to environmental favorable local conditions more for are transition that

to that for who consultant As to who is a possible their core how sales help them, have can best we Sysco sourcing, in operator cost are. is the that through the of Drive expert we it the relates an strategic craft.

Sysco we menu customers solutions. in productivity past Brand continue and for and and strides that introduce expect which conversion penetrating year our well, Kenny Sysco can to through further them Brand, cutting-edge improvement, with to this help very newness innovation You covered tremendous we made to optimization,

do and we buys buying again we those like our distributor which is wonderful and sells a product, job produce fresh, despite believe real they is So, size. in to local they Sysco a other more any and local there people customer, believe than the independent like of reason eat exist local operators local,

that doors, the I customer even we grow of wallet those big When independent the if cover, about have customers John's those is think customers. to increased here, of outlook of head number an opportunity through we from We where and this those period. we going base for with have we half ability of roughly to more share overall back transition to doors question a serve win going

and of be our will year, growth any for customers us to debt. which independent built a source bad So, for on comment Kenny, this coming AR we've guidance. I you into toss

Sure. tailwind Thanks, DSO. debt, these a operating and conversion If and we 'XX, With from bad it's AP flow record improvement working to provided drag EBITDA. therefore not saw working cash seeing flow opposite. capital. actually and year In on we cash fiscal anything, Kevin. are driving in any our respect the capital, inventory All for factors AR and free AR

Okay. Thank you.

Thanks, Alex.

session. for time allotted reached have Ladies the question-and-answer and our gentlemen, we

conclude will ask conference this morning. would this call you for to So, disconnect please We everyone thank lines. and participation your for to like your their