SYY Sysco

Neil Russell VP, IR
Thomas Bené President, CEO & Director
Joel Grade EVP & CFO
Edward Kelly Wells Fargo Securities
Christopher Mandeville Jefferies
Judah Frommer Crédit Suisse
Karen Short Barclays Bank
William Kirk RBC Capital Markets
Vincent Sinisi Morgan Stanley
Andrew Wolf Loop Capital Markets
Marisa Sullivan Bank of America Merrill Lynch
Karen Holthouse Goldman Sachs Group
Kelly Bania BMO Capital Markets
John Heinbockel Guggenheim Securities
Ajay Jain Pivotal Research Group
John Ivankoe JPMorgan Chase & Co.
Call transcript
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Good morning, and welcome to Sysco's Fourth Quarter Fiscal 2018 Conference Call.

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

We will begin today's call with opening remarks and introductions. I would like to turn the call over to Neil Russell, Vice President of Investor Relations, Communications and Treasurer. Please go ahead.

Neil Russell

Virgil. Thanks, everyone. morning, Good joining thank for interest for in Sysco. us you you and your Thank Houston Tom Chief today and in me With are Officer; Joel Chief Bené, and Grade, Officer. our Financial Executive President our

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

At section the slides of like I'd Officer, be Bené. via filings our about A in the information cause includes, these presentation this section and issued comments earlier of Executive the today end included the to Form the SEC Additional report to, of found Sysco's our that factors copy the release Tom included in over results annual forward-looking found This the our [Operator in July on limited year reconciliation the SEC President Instructions]. and to XX-K news morning. in differ The could the for can in risk financial materials statements or Investors turn ended in from this in call our also in our Investors factors Non-GAAP but filings. can at the time, these at those is presentation slides. website. measures GAAP not IR is to measures and to be subsequent and of corresponding are contained are X, non-GAAP measures App. Chief contained company's XXXX,

Thomas Bené

will various year concluded that year. strong with September metrics we ultimately recall initially a XXXX. objectives Many into and quarter year exceeded was final Earlier we this of successful outlined year this Thank you, achieve. Neil, XXXX you we our good three in wanted three we and back that plan targeted morning, fiscal I'm of of XXXX year the our to a initially plan, excited Investor announced Sysco translated three also that announced Fiscal to everyone. Day we share we that that the had during when morning,

was first customer with through doing levels, improve Sysco and service enhanced experience customer retention business the of sales to loyalty. The improve higher

was second associate workplace to safety associates. associate opportunities improved our attractive enhance by and career The providing through engagement for retention growth

was goals of of our growing operating third The since an raised million, $XXX we $XXX -- XX%, $XXX ultimately end excluding these on to to Brakes the then, range to capital of financial at $XXX the million of return while all by million the income which adjusted high million to targeting impact achieve acquisition. least twice of a invested adjusted

the At adjusted leverage to a $XXX three year on and points, X of over growth financial Grow which to through our Brakes of and conclusion expense. expense reduce help comparison local our gross that local Gross financial results growth delivered into XXXX. growth for operating profit to X%. XXXX able goals, execute of three expansion, operating dollar based income, and margin successfully report creating of key of that years. case has case we improving outpaced the million growth, gross we all those administrative levers past I'm would team had and fiscal Specifically, incremental metrics: on supply excluding plan, translated was achieve three the was leverage these accelerated steadily objectives, profit chain operating costs proud fiscal

focused these vision operating operating EPS faster goals income and adjusted our level. the on we our grew than by customer-centric execution driving We working at surpassed return on staying consistent targets. capital both we invested and and achieved Additionally, capital

few element continue forward. years core to we focus experience the past to as has a customer be to success move overall and objective improve a will been the for over Our key our us

in the be we accelerate remains enriching underlying like market. at on our the guided to we by of four This continue including Way; current activating has sales. year, the people. priorities: positive operational a our The growth encouraging, of States last restaurant call momentum business healthy build strong to do; everything Investor we've strategic in overall and in trend continue we that Day in December positive we strategic a customer The third, the finally, of business, is driving what the second, macroeconomic to consumer our First, Sysco doing economic strive delivering with to objectives, As our excellence picture experience power trends in and we'll United employment resulted described Sysco; achieved a the against optimizing and

We also reach growth consumers. they delivery as continued at and flexible customers innovative see increase local menus, their options through additional reach to concepts,

customers, results addition the year, the accelerate X.X% helped continued which new our growth and at customer inflation. a cost strong Looking by growth, $XX.X our some for of few sales acquisitions, billion grew to national product local key customers with driven

activity acquisitions partner. well acquiring including the focused Rican HFM remaining Hawaii, Doerle in transaction as strategy Costa the of in and Food Service during the U.K., XX% a interest as to small our in Frozen our a Sweden also Louisiana, in Mayca, year, on M&A part continue Foods in We be as Kent closed several

management effective management and business exclusive product of challenges we For cases; digital marketing inbound X.X%. category our success few grew Edge using the comprises inflation our a U.S. of the from tools. These to cost continue of Solutions, First, management XX% were innovation overall partially revenue now growth freight profit X%, cases in adjusting continued associates driven in local and was our gross operating hours offset nearly and to of our results fourth has continued offerings to industry product value; categories by the continued year. X%. new was growth third, X at as cases innovative which the in the by platform, case products which product ongoing Overall regulation our factors finally, suite Broadline key strategic our adjusted factors: driven. positive introduce fourth, Broadline capture and business and of for local year, X%, perspective, challenges processes investments costs by delivered on-trend as From ongoing features for U.S. by in of driver Cutting the to the of the such few driven shortages improve local of acceleration to impacted our expense that year an electronic Brand, expense the driven quarter grew platform; a operational customers; It new second, strongest now Sysco growth million training

included translate Some the transformation marketing our technology X.X% occurring chain billion. to for U.S. a work enriching experience the in continued we the income adjusted that $X.X will growth investment of those supply the investments in customers. Overall, solutions more into in of and operating investment U.K., associates in delivered

translated grew operating EPS is of grew addition associates and grown of predicated in Total growth adjusted quarters. annual was of than of beginning were the the customer consecutive as prior direct Broadline growth a was dollar performance the to which who now adjusted XX U.S. for case growth EPS acquisition benefits, our The case executed tax organic. in operations. line X.X%, segment, profit X.X%, business X.X% grew profit on including Top and that was The Sales X.X% healthy mix, the operating mix, for and adjusted by driven operational and to results expenses now With of the a gross hard sustainable growth our X.X%, of higher was disciplined, into income Transitioning strong local improvement was growth. local and grew gross X.X%, as with year, XX,XXX-plus business our growth has HFM results solid year business our Service. product our X.X% Foodservice by growth profitable, strategy is work Food case XX.X% X.X%. Organic effort X.X%, U.S. result of business meaningfully inflation. $X.XX. combination Doerle case grew and

previously Sysco mentioned also the Brand to profit gross dollar in growth. contributed growth positively Additionally, the

to Turning cost. our attention

were X.X%, rising due a labor driven for year, costs ramp-up new a by for throughout costs Our business. adjusted in and fuel expense costs market, increased year combination both warehouse of the operating chain supply tight These and largely growth impacts the weather costs transportation. the and to was

ongoing investments selling organization we in had our better Additionally, to penetrate markets. underdeveloped

gross year Moving X.X%, on grew expenses Foodservice adjusted and adjusted profit Operations. our X.X%, businesses. strong Top grew X.X%, for international to declined income line growth X.X%. Sales across all grew operating International operating was the

performed new our growth local from initiatives led added investments a for and implemented Mexico business, our from Our national customer, well case as accelerated to strategic which Canada business we year. U.S. the -- in

the continue we into a inflation that product single supply U.K., fleet work about Europe. cost chain to to achieved. a mid-to-high warehousing we well progress perspective, network feel across been to temperature a continue acute However, progressing digits. transition in U.K. make from the transformation in the and multi-temperature in we good has The From is the investments experience single

our France the good adapt Brake needs. about We to and that France growing are of create excited also to are the capabilities the and better Davigel on customers' integration Sysco making progress service will and unique new multi-temperature

of the achieved we've integration cost nearly Foods good and Ireland Pallas Additionally, throughout in and complete Brakes the synergies year. is

overall customer the impact International And are direct making the the year. exchange the cost to customer-facing income we adding enhance a Mexico, our strategic technology adjusted new infrastructure finally, in large decline along suite in investments with result segment improve of and during also foreign of tools. The we is translation. making currency operating are investments to the absorbed of a of We the in

And with our the our and focus growth to finally, platform growth. on capabilities continue the We year sales with future by necessary fees investing X%. for of across a SYGMA nearly line plans up during growth as long-term position showed business leveraging in by along inflation, executing by top driven X.X%, International continued against

announcement related goals. is coming our discuss continues lasting while revenue path set meets in However, responsibility for newly out to later with future a briefly protect now backhaul struggle the a our supply like for believe manner increased to operate of change. operating and people, the corporate due to social today. and costs that it transportation positive expenses demonstrate driver commitment that to to be goals Sysco's planet. producing These Today, XXXX will a responsibility our needs in products I'd the care today availability. and customers the defined announcing to reduction the we're clear We business continued responsibly

vision while on, are plan by towards summary, specifically leading excited align able business becoming year we're with industry In partner. results the solid and our valued initiatives specific are our are that goals the our in strategic continuing living business encouraged our future. long-term trusted line to our of be and across we We our CSR we're our priorities, about by including most customers' to business, and achieved our invest fiscal the three growth top in XXXX fundamentals trajectory with

a is and our the on success our direct of executing dedication work hard associates Our result strategic of priorities.

reminder, our first year three overlap a it plan. XXXX of was year and our plan As the three year final fiscal year in an that is the initial of new year

We our three described year plan year financial Chief to remain are to turn the Investor Officer. over the I'll that, results our with December call pleased the Joel objectives that and the in Grade, we our ability new deliver for associated in Day. with Financial With now confident our

Joel Grade

everyone. Tom. Thank Good morning, you,

the of and full foreign we and from from excited saw fourth benefit start X.X%, Tom growth, the pleased positive growth achieving local growth operating in continued three case As a was our and results. we gross exchange. resulting and mentioned year as our of Brand with impacts both Sysco plan are profit strong XX.X% morning, at and per our performance in adjusted and I'll with share quarterly earnings initial Sales Adjusted adjusted income This results the were expense growth operating inflation and quarter year. growth and overall about for respectively, X.X% X.X%, $X.XX. earlier,

for $X.X In addition, year we XXXX. continue billion to we achieved as cash fiscal generate flow meaningful free

X.X%, including U.S. a foreign saw categories, and product benefit our of offset dairy, business, International partly inflation to approximately inflation vegetables Broadline and currency of increasing sales U.K. we by poultry. potatoes both paper by and of also frozen deflation our translation was disposables, quarter, driven few a driven in Sysco in business fourth the by X%. costs experienced exchange Within in combination the a For

penetration. quarter. gross profit the and we overall X.X% driven X.X% Sysco local The investment tighter and in quarter, largely increased Brand costs and volume a in in market had the labor mostly previously expenses our chain by our increase supply growth and by in grew growth driven operations. and which the warehouse During operating both of expense selling improved transportation, Adjusted was U.S. announced related were fuel costs to organization for

in business. corporate the in These make offset and we partly that costs our integration Additionally, to were expense previously in favorable mentioned. transformation investments year versus continue we comparison by International prior

we basis we points dollar don't result, gap to approximately growth basis continue, our between trend adjusted gap this see XXX growth gross XXX a and expect be of a three And operating points. As saw to while expect profit expense plan do that we year quarter. to

fiscal X.X% XXXX million year XXXX flow which a lower exercises. U.S. relates it which our to plan Tax we for As was to for include XXXX. Other were option and was billion, last additional year million flow Cash discussed XX%. fiscal to $XX.X year. of about XX% $X.X from for earnings went than was year, impacted tax rates year where taxes, benefits fiscal by from $X.X credits impacts CapEx higher sales, operations Free federal last fiscal U.S. or last was tax cash $XXX our rates pension $X million net due lower quarter. the billion was stock primarily from for Net Reform to compared from favorable year contribution

mentioned plan excluding adjusted an Brakes. of As our was of achieved earlier, includes on capital, exceeded Brakes, we excluding day than and X improvement target. invested impact better year also any three X results or original that our Tom the original XX.X% capital days working This return targets,

fiscal some Now, I'd the XXXX. for commentary like with to on outlook close

the our current XXXX. of in first fiscal year was As year three fiscal concluding XXXX mentioned, plan Tom

in environment confident likely For to be feel And factors this $XXX our will abated next modest throughout sales. cash continue the of we X.X% federal ability the tax inflationary in XX%. stated, perspective, current least cost macroeconomic U.S. approximately has million our goal a from previously to to $XXX products, rate and at plan, Capital continue to X.X% of operating to our of play for to believe will levels we improvement. impact quarters. of inflation we few the are expected expenditures that we as achieve year can't million of will our income while predict the drop The

benefits and local due similar our occurred effective in With the to XX%, addition the approximately this year state to jurisdictions, rate for some expect we of tax to be tax overall the summary, in that remained anticipate we've repeat we very strong that and three XXXX years fully fiscal will past not fundamentals had a fiscal our XXXX. the over performance In of business solid. rate

XXXX. We the future kick off about are fiscal excited as we

expect fundamentals improved years. momentum three We strong line deliver on to continued management, and building from the cost prior top the

activating well Our delivering business now priorities the and people enriching the the our will of Operator, power accelerate success. excellence, future experience, current us our position operational strategic customer and for optimizing Q&A. for growth of ready we're


Instructions]. [Operator

comes from question first Your from Edward Fargo. Wells Kelly

Edward Kelly

was I there we've we've like, a guess, than time, start benefit than to quarter had. quarter this in kind per Joel, what was, The result really per bit seen I M&A with little of some want seems and really and profit although this case. it Tom gross case profit more gross what weaker,

help role comparison one-off within You -- is I have a freight to Or change more underlying that of know so there. I great. profit does any could plays just per a the there was out will harder you real all, issues? relate there this, rate case in are if growth? be And this wondering, all with

Joel Grade

And view I'd changes no, to Sure, is that. what of Ed. really call, fundamental that I'll the in think start. I our there answer is

contract as certainly continuing, freight this the a quarter growth couple continued of I still certainly Ed, certainly would there. And -- points. terms bit again in was well I that, an to there's think I of a I other impact any you've as mean, that has have our again, impact. higher the we hit anticipate fundamental on call but to none out really

Edward Kelly

basis, open disruption freight incremental it? would seeing vendors just talk been there's the about what competitors. to are in getting just Any maybe reflected of your it talk relates of a you driver you're one from And to Can all? freight, great. actually timely that to from filling regards I as on about positions? it product and largest top you're Is mean, but mitigating how some just in maybe seeing benefiting, you're any be at it doesn't help seem related or this line like you there challenges

Thomas Bené

out Yes. quarters now. Good there morning. challenges mean, This been we've is the Tom. few real. are talking freight this for about a Look, I

think I industry moving them. every that freight is who's with dealing

then we and we right suppliers in approach back in second back We've don't through We so service with the a this. were -- impacts probably plans carriers. our with we filled. aggressive type make the got struggled relationships could what have so making we very place get the our getting place of and first quarter our fourth started to is the trying lanes suppliers needed our dealing the or levels We early in our way all we continued little really went when sure bit were We where issues situation. quarter, say on, might expect we and a our service from getting third I on that expect think this feeling one that of them. with right to And I'd sure started

say to We and about. relates service a level don't others cases, outbound the spot it than some We're having challenges but go that we're own year roles labor offered were certain upfront regularly that freight don't impacts some to we work driver higher rates market's having we markets In I have We're tight. a of side, a market. as I'd that we've drivers still So very can. we company. perspective, got being significant maybe same nearly team we of doesn't to join our much the pay What to because we have having from thing. the some to think as as the the think filling more on That to mitigate talked to still where cost done have a some of challenges there. lot type having to as mean ago, in see of get just incentives we're do a I drivers do

of and So there that tight market -- else for it is. drivers there everyone some is real a very just there's experiencing like we're out that


Your Chris Jefferies. line question of Mandeville comes the next from from

Christopher Mandeville

the acceleration, quite What far? would Was and improved profit growth dollar one XXXX influence, terms in you case attribute both in rank on you really Tom, to? you thus on three seen outlined on gross trends that And what similar some observed it how year. momentum In growth? nicely that the QX of you to would was things? have

Thomas Bené

Chris, yes.

So e-commerce, we're growth, things regarding really lot I'd XX%. we’ve it continuation talked at certainly, about, as case of say about a does but of a grow, now

where would as little get maybe of driver. the talked about lot we've then with improved in bit right seen we've the think And that our e-commerce we've rate the places year I review the exist. who doing then while. But the site, biggest MAs would been is say have to about the We to be productivity I accelerating that's buying even the talked training business have additional we they've and maybe some penetration historically are MAs We That's faster their the grow talked so the to whether applying a can that up underdeveloped amount now in a we additionally, in fair added to well the helping. or that's we opportunities our programs all about. business a of we're customers that and now maybe a specialists certainly area. you And a focus some another one, parts help resources, it work on resources as really sure able where them way been a making process to we've access for got our this about,

also come the that be of we all acceleration as is true out we're together, lot independent think see work us, and a I same that start seeing to of I this things, for mentioned we things is that And really fundamental think it that, those well-positioned. but customer So I too. there. to continues -- kind

Christopher Mandeville

growth shy into Joel, just Okay. some progression This were growth. XXXX. about about Can That's need fiscal three that may think of rate? should for for EBIT plan the coming to drivers just for are primary we thinking past show little the what a X.X% you helpful. be then, we And the then element should just be about the you year? color 'XX completed, that that on acceleration year year you provide And in how just

Joel Grade


do high end than emphasize end that extrapolating to year the plan the we investments plan to even fact reason -- time 'XX three -- things to but over is of we a we and X.X We make to ago, of an that years "Hey, we extent, of we was our I that year. year the in we benefit actually talked plan, last, three last also we're one fair questions we bit that was talking kind about investment the certainly the about certainly up?" that of moving of about spent planning had fact we've talked the have continue we do that, three that just if will range were the year it So of to the here rewound a part And ended you anticipate the that some out we business even we're the the in continued next think of about got an to beyond. strong on, then FY was a the finish continue trajectory idea given are some stronger -- on, lot to

So the from integration International supply in U.K. and of chain had our of technology, made about something from the business that investments of we've that a of and 'XX the from then in view talked out look force, was at merger transformation in we sales somewhat work just in we terms -- I the our some it the that of would called again, some

at And so that I I think would look way. it

and in -- main I forward, obviously, would we was course some really between three we so profit expenses. somewhere that accelerating the plan the say This year this year over anticipate that the year move to And operating of is that X% the talked around as impact at much related gap about. and of a of gross about again, investment gap and, we this came

as in through year certainly called And so as plan. would the that a earlier means, X.X% move I anticipate, three forward move probably out today, from there we a three call and expense -- we go as perspective, gap as some that an we into year improvement plan that we

Thomas Bené

I'll take you only mean, what add I to December. is, about the Chris, is last we're we that that I talked year committed think number three away plan thing should

some as on said, things we we do and feel can need that. we so And Joel and comfortable to there's 'XX just improve accelerate in 'XX and


of line Judah from Crédit comes the Suisse. question from Frommer next Your

Judah Frommer

follow-up of to Maybe the just some on far. so questions

with have going on X.X% profit in per and control the plan and gap So expense how extrapolating about we that OpEx between should gross you in flattish for year the the to that case forward versus operating QX three ability and dollars think forward that line? your dollars, profit the leverage U.S. gross

Thomas Bené

profit actually year or profit Joel start when for profit, our I'll gross on gross jump above three of let think, me gross plan. and let in. flattish you our I mean, say the just Judah, we kind I target So are

if ability there. feel what's to inflation, deliver help can we the our get gross think -- good products some we might And from we can about comfortable get happening we feel with and profit we I So obviously, growth.

cost have gap feel keep to three just to I Joel to focus referring sure side. that I but some make to that we think that which the to the get continue to to, we've point got on need cost ability our raising fact, is this that you're in We good And about can, the there. was work we X.X-point year there, over plan. do think alluded we

Joel Grade

as Judah, a that that there's don't again, gross this Again, earlier, year And concerned I very a I basis. actually at the quarter. earlier, any out question -- outlook said And was moving just we that's particular Tom mean, again, certainly flattening that feel made as case of forward. about I three Yes. about on think our bit know I not the long-term profit you -- mentioned -- good and, this per I'm a for plan on overly about the our

Judah Frommer

I sneak If mentioned. in could national Great. more Okay. that one on Ed competitor

the beyond out a second struggles struggled their as quarter. this anything you'd So of clearly of or implications, usual? kind in cases freight benefit on they business terms calendar Is from in call there

Thomas Bené

not they they benefited No. I'd say, impact out in look, that wouldn't know, remains -- you And the that necessarily about any about talked I It way, very competitive guys we, often. It's there. challenges was we by I'm necessarily very sure talk facing. were this anything say pretty competitive. a similar for us.

we pretty competitive operated think same the always environment much I So we've it's see in.


comes next Karen line the from Your Short of from question Barclays.

Karen Short

case of differently. of growth a in -- going differently Just the little And gross growth little bit or the I'm a terms questions. couple to question ask profit a

growth in seen which case profit I a gross X.X% your time was up kind long of looking mean, gap we've kind definitely is So narrowest and of X.X%, back so thing. up -- X was quarters the

point it a or freight is you could there to? is anything function just really else of So

Thomas Bené

talked that. there of a are couple We about things driving

we more earlier, impact and about which there if so freight that customers in the think about mix, national products the or which then also Joel customer play our not. the fact contract are the into had business; inbound as So some versus comes growth our for sure talked you inflating side; mix on product

and our else things those about numbers. actually still we We given those good combined say good feel going feel hold about that. I'd on. but And flat margin X to basically we're really able affect So probably that, that's really everything


question RBC. next from Bill of from comes the Kirk Your line

William Kirk

in So of very first the expense was plan, the control quarter, year your three in it final that strong. period

that resources make year-over-year understand you in do the how improvements? you cutting future? better can help may aren't us be So sure needed somewhere those And you

Joel Grade

this is Joel. Sure,

this a mean, being that number heads-up this in is think points the some in into the relates strong due of gap anticipated of I side, -- we've to were headed not we this were things people So that year's last this we've on sort that year one as corporate to fact that. expenses, quarter, last one, things to it I given as very a of particularly in on on being couple the this quarter year. that

think, made That's -- something I so would out extremely and of look, time, a obviously, trend, settling point the points between today -- this look to this points at I long-term And is point but OpEx. we -- long-term the XXX again, as also, view point that, a sure really around basis over X gap and making GP in strong. not X.X of

of we've doing management strong that's shape cut forward. the expense And them was as simply in again, as going and, happened -- We year. negatively matter is in throughout somehow had so way, our and certainly savings general the to this moving not continued coming. us interpret what no should anything we over that year, fourth a But expenses. anticipated in or We've our I that the in was gap course onetime make hit operations of of had talked the form that helped to expenses that. this investing that improve, about something that, resource so corporate our something some It's manage those in of of us a quarter and a we a somehow you something or year impact strength our again, is that management the

William Kirk

for on the And next modest expect it. few inflation or expect little those few the Do frame said next or a that's you on? quarters you're comfortable the quarters. I inflation after a different think commenting you something you Got commentary, time just

Joel Grade

Yes. look comfort I typical would not we anything wouldn't things. our say on much that of our that's any so basis in be beyond that's is typically really we responsible on forward. comment just part these and how Obviously, how


question of Sinisi Your from the Stanley. Vincent next comes line Morgan from

Vincent Sinisi

And color of inning to part was I'm terms update? folks said low years And the any past us newer of but you are looking not e-commerce investments. you the you of like? where force in the know kind XX%. be the I go feel terms kind just local cases. just this what quarter what productivity, too long us know case are it was to kind an then solid may that, of I give of back like to growth of versus restaurant sales I of just around we, kind give that's XX%. you in due class ago investment? said of Wanted Could can the guessing

are where tests that better the of kind of productivity be would helpful. toward, some going So

Thomas Bené

hit on of Vinnie. say is few has a yourself, I'd Sure, to actually continued grow. you the things which e-commerce

kind move. has As and at of ongoing which been an you XX% we're said, now

customer As really it's we talked about e-commerce, been how think a lot choice this about platform. we

good And more so we -- news e-commerce. wanting the and customers seeing to is to more we're migrate

about larger that quicker you on speed going that someone about now. produce, cut is believe take basis. used that we We getting a progress us really into we they're helps and territory to And them time drive resources much effective now they're helping more about up Therefore, I get support We we is associates effort if -- them takers more more where but with more being quarters -- results. kind to those I necessarily well. made growing. the not really getting And have, delivering other investing the got that's is that around with of and get And board is big sales actually give something from to say we territories, will, more, their go good marketing we've translating better. think people we're is so some talked into marketing selling think And to our still way so so we're them and And how associated adding them added focused only certainly XX we've programs in to new a move I continue try that, MAs. our point resources. Part bring talk associates last now. months more of to our them the that I we a that at. to of those those the we territory type get sellers. productive, about but our the what we're better associates. starting in the there force, training more productive we're expenses talking capability have really that numbers. as we've get wouldn't on of at couple people's think as importantly, of the to And half years how two When -- to order we're through that we the thing what do and We marketing into to consultative we back is would

Vincent Sinisi

one Okay. just I here. Super one helpful. slide in And could other if

Granted, knew and currency that continuing turning be to International of a second. was the to Just part. a I all inflation, kind for translation

the with control fundamental Just we kind changes, of zones would those say with more some of investments of of more and under on where perspective? inning what's you the the an your are temperature guys' more from kind

Thomas Bené


investments. on I those a think days we're lot of still early

competitive I'd we we're our say very has as out of particular, Now, the in in investment where some Pallas Ireland We the for business to that actually quite the between and France Irish we about it that there, close few both those well the those up gone are business of kind and good for investments are get few but we'd of have environment, like early are of operating these we once do there years talked we businesses to to will multi-temp, to us, us up think news of changes. the our to along of we some still bring where be we days and places, we where kind talked U.K. investing and owned that a is, both full organization well In end Brakes ahead integration there. Pallas in be. as a of coming had geographies, benefits The That now. Europe. the in countries of advantage place about distribution and that years get in Foods really and a break


comes Barclays. the of Karen Your Short next question from from line

Karen Short

how follow-up the this rate? related the as we think about to about you'll 'XX, when My would see think run on start more should it you International, we obviously a be look to we look the do think Should profitability? throughout improvement of getting kind the or of to at as year back we quick more actually half question year, bit little

Joel Grade


think half more And the than you challenges anticipate along in think what would half of the I so, of that you actually that and I saw that beginning -- had but the half. year, the calendar a the remember positive of the second second first we lines again, certainly outlined about more business some in the

to a expectation was fairly half negative I that continue an there's first there. think clearly profits impacted impact. certainly And by calendar grow The we

think of I within that's second to rate year. reasonable more about run think a half the

Karen Short

to you've Okay. And then on I know follow-up inflation. inflation. talked about just modest

and is product is going that So chance from back guess, cost -- I both in on fiscal we FX inflation, up end though, International? it there perspective think, do your thoughts then a And deflation, just also into you in 'XX? an

Joel Grade

level is your to just a first Broadline, U.S. current we the in inflation. that our modest of anticipate So view again, question,

of a again, U.K., the primarily on In terms of certainly would point, not in working is things depending I sterling, still about, do be to I anticipate the to modest that variability more issue you're U.K. the this continues inflation. we their we at effectively, of given suggesting challenges an but but carry still deflation, some manage European, anticipate fact procured say the there So forward half to of seeing in level we're the probably bit. as what the a and talked that, that hard outside product we that Obviously, think to they're from

Thomas Bené

year. U.S., has gotten in that Karen, just it on the inflation less throughout the

we points. the kind X.X. of couple, to slowed has talked X It X to of beginning to a was it the year, So X

So it but right in that's go don't deflationary, some. it's going is assuming slowing. mitigating believe that you're necessarily We to

Joel Grade

meat the just one terms deflation we categories, his the of some matter that. say. mean, that. plate center those, are as less I one inflation, in another poultry I Tom been the of some categories, in I late, some Well, have think of mentioned has the does And of other seen would of comments, seen on it And in comment we've earlier of categories.

there's that and the back some think a of level experienced. that been but gets we So case -- of little per -- there's that, as bit well I GP


Wolf line comes next the Capital Loop Your of from Markets. question Andrew from

Andrew Wolf

looked kind you're folks. hiring big and you step-up allocate -- I that? local Foodservice growth the sector penetration folks the help wanted that How some allocate second little in you for in the customers doing to the it I sales would better focus you on organic sales customers? bringing in and account between up the Could of your restaurant because the the U.S. a quarter, existing case picked like hired customers. new maybe know

Thomas Bené

of combination those things. a it's think I Andrew, all

then And lifeblood that's opportunity I certainly have hardest but that the have customer around seen turn is does obviously, in the the to some an penetration, is continue we -- on which seen industry. and the same-store improve, and of get, going that's something growth of speak, seeing trends We this which think, is penetration news have always seen positively new business. growth we're of which good. good which we That's we some focus -- to our up,

of both. a So combination it's really

Andrew Wolf

but force? you like, I this, could I quantitative And is how if missed us your -- -- don't rate much what a in sales know growth give the

Thomas Bené

on about salespeople We that in necessarily today past we comment again, but the focused of we number of we've targeted were added, we the approach much we good how than more don't out market. kind feel and the do in the we're resourcing

Andrew Wolf

it to-date? sort follow-up. acceleration in sustainability and quarter of of a growth towards Can you the going cadence the one how's give of sense us the just organic and case And

Joel Grade


So a that. got here start we've think of I'll We're take in also -- first I the actually decent this year. part

onetime type at the of other of words, wasn't shot some a this year. in So the end

in of here progress the good this some see part year. to continue first We

Andrew Wolf


would moderately it's maintained up that and cadence So or those -- something kind was along of lines? so the

Joel Grade



America. Your next from the Bank Sullivan of question from Marisa line comes of

Marisa Sullivan

takes. to wanted gross just touch margin of kind XXXX just the I for talk of some and on outlook puts through fiscal and

mix, Are Are margin. then year? gross post-hurricanes that think get some brought last are of if to about much you of that or lap customers assumptions tailwinds? headwind step-up state? think better and worse? be start on offsets? How headwinds potentially are that the you kind And assuming For we You've freight, you steady the assuming for new how a could your the chain freight it some how customer of about lower should we what I and assume on would should

Thomas Bené

Sure, Marisa.

second do the quarter. we're you of lapping that going know the think here I look, we think in to I about our So -- think start as freight, some

that, on that role up And But to slightly. then as play maybe as focused customer until which very we cycle on. a to offset what's at management based Sysco some in of that we will mix, to some our to to happen kind category be to of obviously that business. that look way think that this I predict a space. look well new obviously think national -- Brand, we we you as customer as continue continue to about maybe to continue about to Again, continue hard going of think flat

to management that you and through revenue if we deflation, inflation doing us the it if inflation, manage Brand, we think our management talked us, around category So our help focus. feel Sysco on like about feel we even in gross -- our good combination flips pretty about tools work of margin we're the about

see it necessarily looking to a aren't margin step-up way just either. the go to a new but it as year. in manage looking not as other possible on looking basis, percentage we We're the to necessarily are gross best We in see

Marisa Sullivan

it. Got

think Just follow-up actually private do it Will or the the contract you come some obviously side? for penetration. the you've opportunities label runway is label, on as in a you penetration? see nice private customers customer more from How much do some local more increasing growth on seen there

Thomas Bené

even actually it side. see there on both. maybe contract more And we opportunity think I on probably the

the an bringing we're all participate to making customers those a out products. customers still easy type I that's as balance really right of think there's Brand, do to environment create of for we in in the It's work but sure Sysco we see opportunity there more local still well. to the have

bring million at now items talk me Brand the Solutions Sysco we're innovative items of continue the You solution-type marketplace. heard and about to those Edge are we cases. X can and Cutting products to A majority

We there us Brand. we are more for Sysco the that runway creates seeing traction even on good think and

Joel Grade

our don't se expect don't certainly Yes. again, that's a just set reminder, some of we -- do -- we per And in Marisa, it, we continued necessarily target as -- terms anticipate but continue a by products marketplace. to our grows runway a percentages. there. those And products again, to and ultimately on it's ability in driven the for our value-added drive all creates demand That pull


Your next Holthouse question comes from the from Karen Sachs. line of Goldman

Karen Holthouse

of you've to couple about already. things talked that A follow-ups

should still we next business, this from high still up International be going or maybe step-down year-over think the on First, but could of year's a dollars total year? investment

Joel Grade

would Karen, this about that having year. is think I Joel. still as level some next increase of

Karen Holthouse

any in third year, keeping the or the of of remind should in mind growth case looking into or things last hurricane to quarter, related as fiscal Great. we're we be the side? just either And the maybe terms on disruptions cost then first us -- laps sort

Joel Grade

through in I don't real pretty the probably way be -- I'd of significant not some overlap second we're there there's question, is, that anything Again, freight, terms a Marisa, but when that. of we the the big it, on the be the of I mean, going saw impact quarter, we I managed to but in may of of little that know over overlap. bit overemphasize anticipating I in I a mean, general, there bit it that little reality mean, well. last our of sort


of Your next from Capital. from question Kelly comes Bania the BMO line

Kelly Bania

freight the look your forecasting performance few you coming kind those are of with meet this next expected Or there both magnitude cushion are in the order just of out quarter to that some targets? year plan, factors? us years from can maybe than those areas your you Are context in I you those still items terms the pressures beat as just guess, three in you conservatively better pressures? the or of offset of help over understand in prices. part your and of and fuel Curious and to

Joel Grade

think of have to obviously the puts achieving these lot and guess, takes gross and a that certainly way feel of I'd the and I perspective, year Well, that cases from the lot fuel the freight profit brand, have growing freight we local in our factored in words, certainly about level from on strongly about think that of and of strong time, a mean, have We good area, numbers. I'll there's results and may again, whole the other certainly There's this management. I exactly feeling realizing number. basis all revenue category start. that And our main goes we a plan In in -- the think a things I some about everything on to takes our anticipate thing, the we you that numbers. gross very of committed how feel but about these our growth management, a profit it's certainly those into good not we've in going OpEx fact relative all three terms

perspective, consistency, again, impacting been mean, lot a per basis, On the couple rolling hedges done certainly, fuel side, and there's as ourselves make we've that's it's around of we've case numbers us from on ahead. we're some a work around a here. of But I giving magnitude fuel have cents certainly, kind and to about, that those of some in sure a if talked some a year stability derivative that

covered purchases least some some achieved think there's by I are certainly and of that's so X/X through certainly -- that. our so level consistency at And of that of we fuel good

I to our what some in that and say one enough there's is neither our running those dramatic would impact a are this we year challenges lot company nonetheless. that are is, any -- you stuff and plan, three us go to believe this of different into pull takes mean, places So levers there's of we at in I to roles but puts -- we -- I the guess, of look certainly as two have things going to of to

Thomas Bené

retention the we're to fuel seeing our some just have we Joel expense be side to see in thing now, about way pressure just I'd hiring side driving really add and this challenges same starting Kelly, warehouse, good that the along on at with that our the operating is in delivery the only chain. and productivity driver, with that more supply in talked

cover we'll that real -- all of we overall through deliver operation. in be And per productivity and really those those and we're truck the we headwinds our route the to we what improvements, with. are And on so is productivity focus whether that's do improve focused dealing cases the our on we way very that how that metrics per

do. So And a we we and work that's recent that, -- driven the to to tight years, we've we market in. fuel of a by in probably the Joel's have point, few lot a had labor mostly headwinds have We've of lot that than more try of some build got to increases.

Kelly Bania

that way year-over-year. of that And quarter, the you think operating quarter? maybe, Brakes Okay. was about then Joel, operating income the terms math If just one other imply Is just right to helpful. one is the growth. kind of flat my for in it to the That's it income the correct, seems for

Joel Grade

I think it's roughly that.

I think basis, out you International impacts was it's operation not the an if all and adjusted -- up kind FX whole of back little bit. the on a our

call I down Brakes more -- was probably think a so And not I than bit. would off slightly I'd flat.


line comes question of Heinbockel next the from Your from John Guggenheim.

John Heinbockel

Two things.

salespeople? the very kind similar do last same opportunity And, were distribution of selective, and worked. experienced Were hiring one-off get those guess, have I there that markets the to over MA you thing very investments is foodservice those did other strategically year, On a surgical in those or the predominantly markets return?

Thomas Bené

now approach many would have, John, the so tell in markets. I you opportunities there's think we there I -- that

where who with brought folks maybe We as far little are industry even type our markets position individual bigger either some markets to career the have onboarding new a side it's as program, a the who have and operator others our we're their combination. have Sysco do in our training a -- the folks opportunities. also, market still program more And in are stronger, some development on on where looking but join that to in we those the hiring, And many program, And certainly of -- our side are program is we of experience and earlier of got we've industry. that. say than allows the industry now then got or a finding I'd us kind

in -- working so like And we're for general, really balance it's feel best looking people of who a be would we successful Sysco. the for

John Heinbockel

-- say that still cycle, greatest I of this the months, rate run that ahead know, Is that us impact of we're XX X, at or hiring last, don't now? is X, the of

Thomas Bené

we did a If number, that you're or year right, about. about talking that last the of in, year from we're a majority that this total we're talking

there's go overhang we bit into of as 'XX. So little an

We continue to hire obviously.

we year. have sales of We the every turn -- bit up a force

So we're the biggest hiring we're where look opportunities in to always always market the those going putting at exist. people and

continue think And right the tools more about the so now deploy as selling we places. organization in it you use have should to going to a we're to

e-commerce about selling think consultative 'XX. more As fiscal we of speaking, on like order taking. more wouldn't of continue earlier, MAs generally versus and But talked hopefully, a to year things them I more ramp-up in further because productivity drive focusing

John Heinbockel

load an any giving on sort you Or line has road? lay Is more? the think think past, drivers shortage. the can to adverse you drivers can then dollars more and And cost as out at any the months, six of had year? processes you -- Do it on so that out whatever, one do you then more to way there about the top that throwing actually do you And how the more is how lastly, driver impact more situation? what trucks, really do just outbound existing ability over restructure the

Thomas Bené

an a point. and it's question good really John, important

initiative fact -- year don't level. our improve that we those the 'XX we're to candidates because drivers there. be are couple with I routes is And enables to that that class But to certain to fiscal one about larger. is it it, going our initiative. customers about an We which smaller driver, the some to around that is for least not trucks now if the we that us is the pool there potential learning reason of we've got things the things learnings of is out of increase drops require -- gotten think the of the of talked the small part and you even talked about that's a And recently and really seen fill vehicle in of get we're one -- think service because we've benefits. also accelerating those something of

think going certainly his that that's why that it can ongoing to move top our affecting do the think easier to look, probably service So also deal a deliver delivery and we've challenge. into us our importantly, requirements look perspective, we cost way get meet new customers. of you small not to when that. for Ultimately, you driver drivers it need And ways only effort manage to warehouse we're helps creates impact markets to different continue one it's to job but and them, for line and additionally, satisfaction to this anything maybe more I had as we and -- a got the try then in talked the make articulated, more do but I with can't about it's certain that from we for


next Your the Ajay Pivotal. line question comes from of Jain from

Ajay Jain

is question My industry-specific. more

just if than I'm So softness if competitors it's be impacting even any not in might there's wondering results, industry-specific your more Sysco. evident your that

traffic overall perspective into based independents, 'XX? in industry heading unit for at all and as are growth you terms from seeing of any independents, change you're net So in fiscal spending on an

Thomas Bené

a positive lot we the industry. I of in see Ajay, think trends actually still

industry a don't to relating negative I of see performance. we lot really So headwinds think

spend the that were parts the If you up of very X the challenges for the still some across some industry various quarter nicely. at positive, of fairly segments, traffic look was but certainly

we is And good to while, for a feel still pretty than food-away-from-home, positive. growing so did I think it. continue The about maybe less it while

delivery, And like that we pretty to the you about so which trends. growth good they're significant results is trend, think that we're in hearing XX% area. is seeing not think this we're And delivery food the seeing XX% pretty growth, least, like

products creates opportunities the So that want from consumers for get they more restaurants. to just

seeing we're of So a positives. lot

Ajay Jain

comments obviously, the excludes in Brakes. prepared I you that, you a think, And growth high finished Okay. year mentioned that on the figure plan three Tom, note. And

So Xx the income if in quarter. prior than that's the operating case, I QX estimate you did more That's something like million $XXX alone. growth of

sound $XXX million that think So does right? were I you at through QX.

Joel Grade

Yes, that. Ajay. of Joel. that part some It's take I'll obviously, is I mean, seasonality. so

typically a quarter is third smaller Our quarter.

that you're It just actually expect compare Again, it's similar. whatsoever correct. wouldn't we had and there quarter. to about -- no we as And general, certainly we versus talked plan guess, this purely prior year-over-year I corporate the a number. It that in and this in a that strong a -- but -- expenses year quarter We into So strong in is quarter, a me, with the is year impact on out QX year we three Brakes heading finished QX. had had excuse some strong is anticipated impact be and year, the some way. I

Ajay Jain

finally, shift just had in kind calendar you of some reporting Brakes. for I the think And Okay.

to a fiscal role fourth ending think quarter I a that you from to the conform in play at didn't was thought change Brakes December Joel, So kind Brakes. June there year some of I that performance, your in but mentioned

was the of if the benefit result incremental latest you as terms of quarter Brakes there any? year-over-year for there a if So quantify in was any vendor in impact, can allowances

Joel Grade


of So We to talk for we positively of specifically. more What did you year shift can correct. second the half the you're year about say impacted, I the that quantify don't a and I'd calendar is half the say, first Brakes. negatively

had business would within zero allowances in all However, be in that sort so at be to out about you're far the would all plan. three their year that there's year any referring We our and Brakes of very good feel at called and on had as anything be that very in vendor plan. earlier. and no any ahead. We actually out number exceeded The impact we would had came actually impact numbers we all pure we three as a what It's our it, it.


from from Morgan. JP Your question comes next Ivankoe John

John Ivankoe

a pilot where different to to nationally? prepared and clearly, sprinter-type makes we tie and be sense of we can couple in remarks necessarily this if of companies? delivery don't in a get you secondly, your you're driven forth licenses questions mean, I you that sense of can options. in ago actually back I main guess, Or kind And additional facilities, at the and just doing mentioned where understand does number in out be the get the a kind it a you that go metropolitan service back to this of wanted need within will, areas that to type customer where go spokes, about considering operating closer customers CDL But operating and to of company point I some smaller and to wanted day drivers of thinking beyond make your vehicles. reach are are they to sense, the than can I itself? be driver operating more distribution

Thomas Bené

what well for look, So of as I'd as we more a have operating mode would I standard say, each metro both in while we've learnings pilot at call been urban markets looked and we've those. from companies and

have to not -- these These been market. like one the We feel are situation. there's no fill-in We it's really the add set -- results positive. are not these -- it's will in if continue And everyday out a customer, our get in have or that missed we of that's late something vehicles, the comes actually recovery-type and part routing. this meaning we to product it is delivery

expand a seeing we're for different little about learn continue about as of and different and something so it. things us certainly different And all the benefits markets bit you we'll options for are lots we of talked reasons, to in but

John Ivankoe

talk for the And a grows to kind market much about of an it's big just for this, different look that idea if some total How volume do is think actually ready delivery? I how you're requirement, amount mean, different of when Sysco total -- cases, in at market, you you addressable a can customer, the you pay that? you addressable because maybe case of it's

Thomas Bené

it market it's first as this new necessarily think all, very up for a of we're don't I still through us. going but opens early Well, learning,

whether larger don't drop one it's drop get And for the than a we size efficient think we I to necessarily and us allows have places some today. smaller into are more deliver do the us. it's opens being a think but new that what to, some vehicle to or a market making just harder of I that with little


at This for today's concludes further There you are this call. your no questions time. Thank participation.