SYY Sysco

Neil Russell VP, Corporate Affairs
Kevin Hourican President and CEO
Joel Grade CFO
Chris Mandeville Jefferies
Judah Frommer Credit Suisse
Edward Kelly Wells Fargo
Jeffrey Bernstein Barclays
Call transcript
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Good morning and welcome to Sysco’s Third Quarter Fiscal 2020 Conference Call.

As a reminder, today’s conference is being recorded.

We will begin with opening remarks and introductions.

I would like to turn the call over to Neil Russell, Vice President of Corporate Affairs.

You may begin.

Neil Russell

welcome third and earnings fiscal everyone, call. morning, to quarter Sysco’s XXXX Good we our Officer. Kevin Executive today’s have On call, Hourican, Joel our Officer; Grade, President Chief Financial and Chief and

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

news could release results filings. earlier A the materials in in be limited of via morning. year to can that but those issued factors the these June forward-looking copy app. IR contained factors from our not about for is in on or in at subsequent Form the ended section information Additional the the SEC Sysco’s contained cause Investors Report to, risk is This found XXXX, this differ XX-K Annual statements SEC in Company’s XX, filings and includes,

Non-GAAP have to one to question can are The our non-GAAP and presentation end and our of To in Investors their the to these today ask limit the in reconciliation time like found section be each measures one answer we to of comments presentation measures our ensure financial of today included sufficient that corresponding included at slides. GAAP slides are would the measures website. questions, also we the time all participant to and in follow-up.

the At Executive to Kevin our this over President call Chief turn Officer, time, like and Hourican. to I’d

Kevin Hourican

hope you staying joining our everyone. And earnings and morning, your healthy thank third call. this safe and during and for XXXX are Neil, time. you you, good Thank families quarter fiscal that I we

our and world business associates, will a company wellbeing and leaders the as first As our operating as of this health our our and customers shareholders. manages be rapidly-changing priority environment, the through

we that to normal remarks content amount you. with Our the longer of want be today to than will due share prepared

and long-term turn this Sysco. you how response leaders discussing My who’ll spend call, over is of discuss for to these Sysco’s inform crisis COVID-XX the manage I’ll both and are morning’s as on today we the the that It horizons. for comments I’ll simultaneously Company rapid will During short-term we also important success. time positioning extraordinarily time success to further it results provide quarter the Sysco’s of updates. financial for then Joel, and third long-term

we Q&A I’ll of Lastly, make before few the remarks closing section complete the a agenda.

long emerge ability assure you, weather As I this to begin an with financial storm entered the taken ensure to we strengthen strong than to balance we and COVID-XX our our important for enable and stronger takes. remarks, crisis our let sheet, We cash to me ability liquidity have extremely my the have ever. as as crisis it further position, the during steps helping

to we environment, response focus. have key identified current four of the In areas

First, to swift we liquidity. our overall strengthen have further taken action

have to we mentioned, our with additional provide and a I flexibility. us in strengthened we position entered As crisis liquidity strong this

this share available capability to and will liquidity investment unprecedented allows the Sysco had invest also There foodservice. customer the I as to am opportunity. upon ability of be levels profitably this has crisis the financial will win be gains competitive demand and during Sysco in and to to built inventory have unfolds, flexibility that and financial us market survivability $X new an cash but return confident on not more of enable will than capitalize service to profitable for We customers. that have billion only crisis,

system. by costs removing focused the Second, on we business are stabilizing the from

shelter-in-place social moment declined orders distancing significantly are we is It a society. to issued. that of our the the March, shelter-in-place practicing good the The curve. thing were business end helping from are Towards the as flatten orders a

With we the that segments restaurant, on and hospitality had significant education that social customer distancing said, serve. orders a impact have

result, a we reduce of our in to level quickly volume. As match expenses needed business order the lower to

swift downturn. force. XX% fiscal XXXX includes has to million In reduce taken the Our removed quarter reductions business, expenses in than permanent workforce leadership staffing of fourth this during temporary by furloughs costs our levels the have more to decision and of from action alone, team difficult the $XXX which we approximately reduce through

and Additionally, driven operating implementing substantially our companies. our have productivity we in miles rerouting by improvements fleet reduced transportation

leverage structural without leaner, Sysco, benefits how be compromising will stronger will will a of in and these realized to an is of changes approximately of more annualized QX service example of be agile, of quality. technology and the fiscal The deliver changes We begin million. benefit will changes those we one version XXXX improvements or permanent to implement This $XXX post-COVID-XX.

are significant, fourth while reductions, the fiscal experiencing. In decreases of be volume top-line sales the quarter will we offset expense by XXXX, that than the more

projects. Additionally, only projects like purchases, transformational they on expenditures been to fleet Physical we expansions, capital reduced business-critical have hold. have put building

will capabilities investments win will CapEx allow improve that things those Our market focus share to and us in will on Sysco’s the future.

planned. team inspire in term that efficiency. reduce effectiveness capabilities our force sales force narrower ordering a digital technology versus Shop tool our that customers the and pricing include friction more investments our and allow pace sales a tool, of purchase selling accelerate which increase on of sales to selling the strategic Combined, spend us increasing Sysco set improve and increase we improve initiatives, of is of our customer of will implementing change enable capability the long complete these customers, we the projects at for simultaneously purchasing these in will efforts our margin rapidly to than and effectiveness time of tool our tasks. visit consultative the and will of can platform, force our management the the to environment. percentage more more sales on from will of focusing key These Examples will their improving previously Sysco, administrative By

customers. to trends offers will basic from customers. example week. weekly, business will streamlined capability our These introduce The suggested orders intersection this items, they the customers personalized, offers more but An buy These is unmatched popular Sysco’s existing items customer. vast the that development our more would of a deals order be a of also the between include individual ongoing of improvement and we’ll will scale to a relevant and garner be company, new for marketplace. As the personalized creates purchasing in even we

leverage now better and will we that our developing capabilities. are now advantages developing We centricity we differentiating customer scale are

place pivoting business the foodservice serves this new during working support are to leverage that crisis opportunities exists the purchases retail current consumption and the Sysco channel. away-from-home, the COVID-XX took shifted to pandemic, place our the broad of inside grocery spectrum U.S. that and Prior within food industry. to and COVID-XX roughly took upside other of half Third, we the and has more obviously a home. customers. half of balance diligently capturing by new the tilted

we pivoted include have new we As and sectors model distribution grocer supply that serve partnerships, a retail, to essentially chain our pre-COVID. not result, did

the evolving and agile meet and supply in of through We customers an of labor the are rapidly chain needs working with best retail both, communities world our the manner partnerships. to companies service some in

chain sales the to retail to national stores demand Over and due Sysco a of shifts shifted has within regional economy. the at strain in retailers alleviate past to several and help food in products weeks, surge supply the

some A wins. brief highlight of of these

for Xst, recently submitted in And our Program. food the the bid on for across we meal with behalf to to supply are service regions U.S., of need Food We In of thank much-needed the insecure kits we food than partnering food are partner We May FEMA In and the the week USDA. the communities would communities government those the in outreach provide working we to in we global in per various as government UK, support farmers with the the XXX,XXX to agencies chain. their through need need. are the these USDA Coronavirus also to we of fresh that version with to like food more provide and DEFRA, Assistance UK’s communities. as in authorities shipping the participate

has of to become retail products Sysco grocers. a supplier

shipped have bulk partners. We fresh of consumables to hundreds and protein, of product truckloads retail select

nature majority partnerships to to staying in We potential of power. the for this have work select expect be transitory the with

increased to our support customers. of level have healthcare our We

have including PPE Our products, increased of XX% to care to sales roughly XX% we healthcare segment for and hospitals, critical deliveries as long-term urgent facilities continue arrange to facilities. care

for We are manner in safe customers. healthcare our delivering associates a and those

better proud frontline to are health. we their workers these to dedication and We salute healthcare support

capabilities. regional offering logistic the use Over brokerage. freight contracts carrier and national logistics services now vast contracts have signed with of provide services, logistics the cross-docking side, companies as Sysco’s been such Sysco fleet transportation to supply chain is On and XX third-party through and service

for lastly, into furloughed members agreements to call temporary returns. as Sysco And provide soon opportunities and Sysco our them team providing to entered select our is Sysco This has volume action back associates. with of enables work labor-sharing as retailers for work

Our is providing highly to retail. assistance needed much skilled labor

transform market. leadership Chain from in sector. by longer I’m Xth, I experience managed Robinson work that worked. brings direct the that collaboratively has the our which our the of confidence team as last chain be Marie supply distribution April she Chief of Marie term a goes will food our substantial complex we position initiatives industries of be She apparel Many Furthermore, department has set with have will decades Supply spoke. chain our addition tremendous we the of team strategic Officer to announce filled we our and supply a will important pleased logistics to On to international networks, rest and experience from Sysco in diverse to to have time has we welcomed Sysco. she full Sysco. how led

retail new good our our rapidly-evolving declines the and not opportunities if the This proud are to partners our offset you important our will, our core these fight, to that to work space. in in quickly culture serve is agility, environment, a within are volume food-away-from-home note business. we to show It adapt downturn to during ability the logistics and while shows opportunities and significant do

is our mistake, we year. Make risk struggling prior I business decreases the substantial The serve. now excited part of our help of to customers to that most about small restaurant hundreds At be with upside within volume of are driving no our successful. right work core thousands efforts is the business customers am food-away-from-home

food am industry more now, that the in steps position taking proud leadership ever everything doing restaurant distribution time. our to customers our take and customers. very of we this new are to than help And seriously. before, we difficult possible during both, are Sysco, we the existing serve At I

more assortment meats Knows Fresh, product produce, delivering is products and that seafood, specialty including an expansive and includes items. refrigerated fresh dairy Sysco solutions, Sysco and

on count across succeed Sysco to for times. business, our during lines all offerings. open product to business they XXX% want of especially challenging and We food are can them customers innovative help We with know these

maintain with keeping business need helping seamless We enable to crucial in delivering developed our business selling keep remain are operations. we essentials, and which bundle Package, takeout COVID customers call to paper introduce it and critical of clean. it on to products. We containers, stock our pivot their bundled By quickly These and products, combination all PPE. a are of takeout Focus-XX in these features goods COVID-XX these customers to them cleaning a that customers. leveraged kitchens and to safe We stock Shop our delivery goods and helping platform solutions our our their

Many do other delivery assisting for helped tools, partners of COVID-XX. takeout have develop menu have development to delivery, home tips, website and traffic, digital drive this outbreak while of been in-house. thousands and design, customers ancillary to of helping smaller during our solutions customer engagement unique platforms and environment. these with capabilities Sysco’s such considerations services provide increased not go throughout the that solutions We provide the containers as and also

for Act training customers taught offering XX funds we and businesses what them help a to used apply during help small their retain hours, CARES the customers loans these be employees their are our and navigate this business. webinars able pandemic. to training running We for small help built are in programs supporting the to under educational them In to and webinar

like for sessions. training is Actions important is customers Sysco future. Our to ensure delivering the partnerships sales great a this long our our team how join actively products. these steadfast us will not invited solutions, into customers just example with It of food-related

increase pop-up helped shops, have dining names restaurants shops condiments, pop-up or two like jobs. includes for bread, only traffic shop of create into helping marketplaces than less essential towels. pantry weeks, product sales or protect communities, for product customers and items but restaurant These industry toilet and In paper eggs, the which are can grocerants additional they’re lots it, transforming of we where areas thousands paper also helping not

our at end improving has the to restaurant week-over-week We customers of mark are it been volume low that hit since sequentially pleased see to March. the

our know At Sysco, business and pandemic. and us helping help in are that win the their their retain stay from activities we business these business, additional transform run customers will them business. We well-beyond

helping restaurant to Sysco business started customers, out direct-to-consumer addition our in pre-COVID. participate sales in we not that of area In rolling has did

have and through direct FreshPoint can Sysco’s sell to be produce Canada, held home. direct to and and several the U.S. their consumers. events specialty companies in Meat which Furthermore, meat Buckhead delivered new Our steaks consumers to websites within Sysco@HOME purchase restaurant-quality pop-up

logistics the ordering. locations product started offer our boxes, the can directly from customer’s delivered space, the have offering, If within front third-party operating of one and services door. product customer our lastly, a to And featuring pick-up we We purchase through specialty from box physical to with of produce web-enabled have meal partnered a they pre-packaged will straight prefers, call themselves. opportunities companies consumer

running. learning does simply not these serve supply are in and supply initial the work our concepts and customers to country chain put, food Because, keep in We opportunities food are without the these lot Sysco. learning this better direct-to-consumer chain a leveraging we

what Finally, key internally the match suppliers with this business planning. levels talk would snapback our that we’re post-COVID-XX. success, supply chain inventory as Integrated ensure work customers I will as the includes following recovery. The snapback ensure about planning key planning like Sysco’s our our leadership refer to We a team to and items: to to doing

strong Our to and customers as suppliers for during with the stay stock our recovery customers. net win also will relationships Sysco enable in period key we new

is this of sales also our We transformation are of work example go-to-market initiatives. accelerating key strategic An the structure.

with our sales the our are more increasing our focused, more sales We and objectives the transforming of of our incentives structure teams of closely business sales to the multiple aligning lines partnership force business. across be

distribution for the as the Sysco that provider demand positioned has properly stands ready returns. food-away-from-home, once

have to will others that capacity made to Sysco business. allow replenish their strong level on capitalize the full the balance sheet will begin have when are to rising and will to same meet customers liquidity more-than-enough We rapidly a upside to of reopen that When strength. invest its winning to new have us not demand, restaurants, deliveries time on and ensure by inventory the our in

economic of won are new SYGMA opportunities the incumbent share fact, as In already challenges. emerging business as a substantial confronted distributor piece

our on team is down focus. Currently, their customer sales doubling

prospecting We better of are focused new on a combination ones. both, serving our customers and

customers the are be to XXX% new be new share. served creates We confident, profitable will as crisis profitable there opportunities to gain

We ready we food-away-from-home return of demand valued to be return enable will confident business time are partner. demand over that continue stand customers’ our we that for to and also most as

value-added combination win liquidity, through a relationships. will agile business a the fuel Sysco in decisions marketplace of and business strong that partnerships

during prospecting Sysco’s the COVID-XX our of net combination more XXX-plus-billion-dollar cultivated the that have are customers the and trust increase the our within we crisis, of accelerating through with market the we sector, paired will from We We new expect that post-COVID. winning will enable the for existing partnership customers business improvements financial with capability company food-away-from-home our strains coupled long-term. share this that during success of believe the

line we along final will finish turn Joel After to discuss environment. details it to around I’ll QA, Company. our perspective over offer the who regarding third results our business to on over financial come additional you. the quarter with a Joel, back Now, would I

Joel Grade

you, morning, Good Kevin. everyone. Thank

segment, Sysco start the followed flow segment on an then and I’ll quarter. give by current of capital cash results results overview update for spend with I’ll for and quarter an by performance. third

COVID-XX about the our and detailed through working of capital capital, impact P&L, the I we’re Finally, go discussion seeing on in working what the business. a will

COVID-XX third Our a total both a of to Throughout profit $X.X saw a decrease quarter, sales volume all in the decreased result segments Sysco weeks basis to results X.X% billion sales X.X% Gross include for of and gross of and billion. of last we the the third margin pandemic. across couple decreased significant the quarter business as $XX.X decline the X points.

few on color further give in that will We a minutes.

while Adjusted cost expense to aggressive to for of the the It $X.X onset increased timing were of billion. initiatives expenses. operating delay is our that reduction at pandemic, there’s the the removal note important implemented a X.X%

and We XX.X% change the such claims, measures as from be senior million pull-forward XX% for and the expect $X.XX in decreased savings share fourth realized third with recent reduction mentioned to items decreased adjusted quarter. of XXXX. income associated impacted certain the expenses and corporate $XXX cost expenses to discrete were operating into by total fiscal quarter last earnings several investments for of Adjusted Sysco. note, to leadership the per the liability Also quarter as

the basis of Operations decreased see Local cases. sales decreased within in Within segment, the was points of prior period. Foodservice billion, X.X%, brand X.X%. year a U.S. local decrease cases operations were of XX% total volume $X.X our quarter, versus products which the the which sales U.S. case X.X% growth third total quarter volume for third points We Broadline XX XX% to case while increased did XX in to Sysco of U.S. basis U.S. and

quarter, XX.X%. to and However, XX profit for points decreased to X.X% gross margin billion gross $X.X basis the declined

operating to operating billion X.X% adjusted and expenses $XXX XX.X% adjusted $X.X to income increased million. Our decreased

points, impacted and modestly gross Our XX%, International decreased exchange decreased adjusted adjusted decreased basis, expenses income changes X.X%, operating operating sales decreased On rates. profit gross Foodservice basis currency a in by Operations were decreased margin foreign X.X%, constant XX XX.X%.

third for UK remained the of Prior the business stable. the impact quarter, to the pandemic

performance for well, these as that convinced Canada Europe improved Our ahead. to is businesses both the around a Sysco years geographies. Both in in will We well for efforts be integration quarter as of our Ireland for investments steady third growth performed work customer and Sweden result Latin platform and a remain support long-term the progressing. and France America in growth

see of of as In growth. a the result steady our SYGMA improvement disciplined profitability to segment, we continued to profitable progress approach

from of The or result fleet software operations flow of for $X.X was discussed $XXX for CapEx the was well was about period of steep was flow $XXX of impact than timing weeks higher Net weeks Free $XXX flow first prior million, we the initially the principally XXXX was million fiscal million XX last of lower XX weeks as XXXX. Cash billion receivable, for first sales. cash fiscal decline, decline first combination as XX year. X.X% in the volume additions, same COVID-XX as free accounts the the and a from of inventory the the quarters. in cash pandemic which have

the on of will impact transition quarter and business the gross to and a rate business, allocation. all in I saw volume, decline now liquidity, sales followed pandemic The results about COVID-XX significant by of exit working details capital pandemic. of profit the the capital segments the across third

total SYGMA were our quarter. XX% the were during XX%, was For down was Foodservice of Operations, XX%. well, sales In Sysco, approximately approximately down weeks two XX% the approximately down and U.S. as down last International sales

sales It our and restaurant may should over-indexing our customers. independent to peer higher our a when compared decline result that be local noted be in of as group

However, we recent end from increases say about have percentage-point the March. are shown that trends XX glad to of

momentum month sequential of a throughout the weekly certain trajectory. that We shows upwards have states opening May. in-restaurant and additional dining, with improvement seen expect we improvement Combined further

compared an impact restaurant restaurants to as volume of types. a less quick-service to had Our less and SYGMA downturn other of sales business experienced

million, in both, recently provide within than onboard in-stock were service. We addition, impact In The days, customer valued financial share in example expertise chain to $XXX fast, to good of piece able the supply of shows stability industry. taking our new the us sales won which Europe. of at steeper a business was X is we a which and more

traffic business foot is have as and orders stay-at-home issued Our sooner decreased a down as countries result. the restaurant

to weeks. As communities improved support we the opportunities during seen a earlier, similar In the safety the trends, as program, another. pivoting to protect has new the to our efforts provide to the serve. Canada, consumers sales in improvement have and measures sales isolation to Those are to Kevin UK mentioned business the sales which that over of U.S. leverage our restaurant also one trajectory past we similar capturing DEFRA diligently the are and performed practicing by several health efforts particularly working upside U.S.

of indigenous of trend such to tapped sales different into, are avenues significant as, communities that might and We amounts contributed redirecting have has pursuing supplying food revenue needs. retail improving normally the the recently. outlets we This inventory with most critical to of not

prominent In As stores to the where Latin America, sales the of our most our in are cash supplement and impact carry Costa business Rica, decreased from been volumes Mexico in COVID-XX rapidly. in has restaurants. helping decrease

to government allowed also has along reopen and sales. restaurants, the the sales for year-over-year increases led to which Rica soft supporting in of to increased Costa recent However, has retail with other sales

that move have impact we covered volumes, about COVID to to commentary will Now expenses. I

roughly thirds expenses our initiatives. reduction reminder, operating As of a been have two are cost we our with swift and variable,

only million. alone, the in deliver expense structural changes remainder mentioned reductions permanent fiscal expenses more which fourth but timing the of $XXX fully be also the permanent reductions will those benefit These accelerated temporarily annualized business. to Kevin approximately As $XXX and and fiscal than XXXX for into quarter make of throughout earlier, XXXX. The of our realized opportunities will reductions, volume, to total adjusted not more million

the to fully not crisis. cost be of will cover the significant clear, However, the impact reductions

operating QX, note, income P&L of summarize as On perspective, a crisis. to from a relates will negative that the it there be to result as

is on reopening, and we certain feel recent trough. based QX the However, income improving operating trends states that

Now, pandemic. let’s business to the of from talk liquidity the some impacts COVID-XX about the

year. remain the As to of the collections expect capital, through it relates working we our remainder to soft fiscal

the as certain made, for have scenarios progress the a the modeling good expected to we million, we’ve reserve item. feel additional we given ahead $XXX subsequent Nonetheless, We extensive estimated of which our flows. situation. quarter of those an done current third impact, are classified reflect cash various and current of to have collections booked we exposure However, about

been with that standard suppliers, our working with On good terms progress to the continuously we’ve seeing and accounts initiative. are payment front, increase payable

Our as leadership suppliers willing size us industry position on due and deeper in strategic have extensions financial and to are strength. allows us partnerships our with partner the of to these our relationship to the

volume For our to flex quickly taken align we’ve inventory trends. appropriate inventories, steps levels to with

combination While our and retail some impact. donation a levels of to we spoilage, transition have business product alleviated of experienced elevated has of food some the

Our consumer will adequately ample levels returns. liquidity demand allow replenish us inventory once and customer to

While take working priorities we navigate we capital this decisive review we our environment, food to as continue to unique manage actions our allocation and costs, capital capital. spend

will our I revisit now four priorities.

As those chosen accelerate capital continue customers investments and our expenditures substantially make previously industry-leading urgent only reduce mentioned, have with to do focus business we certain to Sysco service safety. for and to to and targeted it on to projects to capabilities easier

CapEx But, prior the to we quarter efforts. was fiscal for more quarter. in XXXX, these than third $XXX spend line million year spend below a to fourth expect result be the of as

needed, through shareholders return to dividend moving our payments. approach dividend, our to If forward. quarter committed evaluate would remain value Regarding substantial our we each we this

As complex it continue but this particularly we have not deals. high on large M&A, international should relates to opportunities, environment, potential future deals large in a any priority to reevaluate

previously business use our food-away-from-home. commercial repay net repurchase senior borrowings, as to is return debt, October relates demand well-positioned for to program. temporarily offering to the notes And to for the and warranted, due As ensuring completed of repay that we in the other a our billion intend outstanding paper from $X proceeds We including needs debt share in to March, recently as it paused have we noted offering.

with completion to in our to anticipate even COVID-XX our very where revolving is impacts update to continue As efforts strengthening help ratio part our our of our resolution facility efforts covenant our the continue ongoing circumstances nearing credit covenant, disclosing position, our We expectations. interest these in expense current to in beyond another to pandemic liquidity address near-term. our compliance of are that ensure debt we efforts completing and the EBITDA important

liquidity to of we $XXX million take in In addition, to the support launching the our action needs paper are operations. sterling a European UK offering commercial

sheet balance environment. navigate flexibility and us strong the stability Sysco’s has afforded and this business to rapidly-changing unprecedented

our More importantly, the continued it ability in provides achieve and over long-term. confidence growth success to

available May than have and X, we more XXXX, As liquidity. of cash of billion $X

immediately not we as do available we it expect we uncertainties. to ensure have given to access While the to capital prudent of view the liquidity, the deploy near-term proceeds, majority

Sysco prior for pandemic have asked weather ask this we position money even do will emerge in to not a to assistance. government and strong stronger not was storm the financial COVID-XX government and bailout company. or financial We intend to an

we now take to ready Operator, are questions.


of [Operator Our Instructions] you. Thank with Mandeville from comes first the question line Jefferies. Chris

is line open. Your

Chris Mandeville

Hey. the up there. just varied the profitability, the the can versus structure trends sales and performing remind of International business Good give you can in just us cost on Kevin, kind where us in some if decline in some the quickly, internationally is looking of at appreciate morning, guys. to But, in how perspective relative quarter are we U.S. color. recent performance everything U.S.? And weeks? I of material country-specific together, you light of bundled

Kevin Hourican

U.S. I’ll assets Yes, sure. It with bit toss first the some and mostly take the is on Thank the United But in the to because Chris. I’ll structure our Europe Joel cost own the question, we little for then And different, he’ll you equipment. a end versus part and We of that. do it leasing States overseas.

globe: business B, top-line themselves hit been the of the it declines were than the A, harder other was perspective a steeper. earlier; hit from parts has Europe, and

is the XX% globe, at we week-over-week. in down. news were So, Good trough. XX% are across remarks, as about down Joel about We said the sequentially, we’re at recovering his

slower. earlier, But we were As key in we’re comes has from bit XX% basic about the drive-thrus fewer United up down declines steeper a been Europe little have the mentioned, one and at really, trough. they in it the than Europe States. started concept; where we were to the recovery And

delivery the fast United doing food capability, closed in Many you’re that them drive-thru is and aren’t the have performing more the business and small that’s segment States all temporarily about the in restaurants. the chains Europe, I So, States. and the of think across best our of pretty robustly even Drive-thru United pickup seeing it’s the quick-serve.

come business a So, we not It’s Europe -- taking it’s if, to anticipate little of do matter European business longer. when, bit the a back. and

particular, countries the And practices distance have some is easing business each is month performing good the they’ve in COVID, in will view most some strong. the improved of now what like. of restrictions had in in look that a trends, we and social of mirror. before to business that result of the of quite have even ours And European reopening in of sight countries said, as being well we’re been an as their I strict for as restrictions. quite rear plans select What to June trough of those the see line begin example going Ireland Ireland in was to

I’ll expense toss the you the side to of So, question. on

Joel Grade

Yes. Yes, Kevin. Chris. Thanks,

I Company the way of structure expense that about the most different for in in the is of Kevin beginning much in as are we to sense assets have percentage is in think, rest leased. that, the the owned, Europe of those slightly than throughout mentioned his we organization and the that that think of have higher comments, a the Europe

a aggressively the business, as remainder idea to at the done we’ve this reduction the work that European the across has of from done of type as as so, obviously, variable, of both business And the flex ability well productivity. headcount

there. the to you’re clear, the is lot some again, here. and therefore, And agreements. increased But, terms see However, different. slightly they lease to to work those, there Again, work’s of going have do just on to structure relative of that impact there of done been still expense a some renegotiate be

of the bit that U.S. thing terms stay-at-home in when requirements ahead of Europe other timing the remind a has of in I The is happened. would you curve the been the

they’ve that than further and little a bit And a are on into so, been little deeper again, bit we here.

Chris Mandeville

U.S. so Okay. the of your million I’m is Joel, it, or just whom than can’t related. helpful. guess bit done, I just it curious notably the to to-date. say call different in a that, higher size, write-down $XXX let’s quite Foods a has relative XXX I U.S. And about That’s little but competition then, on to write-down so that is or $XXX U.S. has know you of million, what over speak

respect you you $XXX that? domestically? there you So, And is comfortable I can how respect million just any offer guess, color approach additional how guys with to are that to with

Joel Grade


earnings, one an what we as I know that do We know impacts pressure going to not we -- think absolutely, it to between end things that So, what intended would magnitude. and having an that is that it couple evolve It enterprise essentially quarter now estimate Number amount. in relative forward. is talked million points on it’s things happened the would of of what make fully to thank in reflective the key the about like about best is terms our we anticipate have out I’d is of fourth the quarter. that. you’ve the continue that should a an A terms all in $XXX as as estimate couple essentially said that today. right? and point of of be estimate space, again, But there’s continued you. But, seeing in of of So,

some solid terms of of where we’re my modeling. really Number made our mentioned frankly, prepared efforts. would remarks, actually schedule I terms progress of been ahead have in we And collection in as terms in we the in of one,

The both sales done second tools point our and thought an them incentives force we’ve we incentive we’ve collection center part collection even of our some significantly as to that, our actually help where included our as the team. with for about do and that from actually the refined the time, is efforts, for have at for this engaged work that of during we’ve thing, sales collection the to

and forms of where through selected So, of business in the customers, they’re And one even things effort shorter in very about, of feel plans, so, third collections. we point supported we’ve them of we and despite in of for been make a things to we the that in that, struggling opportunities. is combination challenges, is and again, terms as a terms, can collective thought new that own good I forms aggressive their deferrals support the it’s doing about collecting the of payment help I’d their some then, the of them do the receivables would that the in of on things terms forms say, how

don’t exposure that, efforts again, of we’ve that feel our couple there. want of taken a of now, collection the result combination of all lot I points just as to debt. we about but that in But good for the that But, So, good absorbed fact yes, bad think be the I the a is there.

Chris Mandeville

Okay. I’ll in QX, leave guys. it there. Good luck

Joel Grade


Kevin Hourican

Thank you.


you. Thank

of Frommer with question next Our line Credit the Judah from comes Suisse.

line is Your open.

Judah Frommer

to around guys. us of did. acceleration. the probably bit, hoping you all might a the bit trajectory for recovery? Clearly, my was closing the than the last that independent and better? taking compared of chain versus trends. business of and you are get the Thanks slow that an color the point sequential week to maybe a going Thanks April Easter chains could I morning, independent And And for benefit where of does kind little question. going unpack trends are kind additionally, seeing just slower then, potentially, that some for independents a trough, Good look from little Hi.

Kevin Hourican

Kevin. with then missed. Joel about Hi, trends geographic question back I Judah. in one. macro on can cleanup on It’s Chris’s I’ll in We business and start that the talked anything this differences the

in the have I to what’s pretty business. as you good think, insight a happening

mentioned, that week-over-week takeout fact customers was delivery were Easter Those in you’re ours things the that sequential of I quick-serve fine referencing, of of week just dining getting are restaurants better month it. doing drive-thru all April, of were we doing struggling improvements. not smaller because Two the the as restaurants The throughout saw at happening. and are better a than What most. and So, others capability. the the are

creating my with in media social remarks, with we helped posts. their As websites. helped mentioned prepared we���ve them them We’ve

a Out from week-over-week momentum that called started were creating throughout business just they awareness. result. that running to us, more and we Give small and increase fact, a In entire restaurants as an around #Take up crisis help ordering the campaign Back a those sequentially in are seen to operator, We’ve creating

more into each business. seen April, also we’ve week is in What of back our customers were getting

for social the So, of temporarily shop. this at distancing, very of some them, beginning closed

XX% we serving. week-over-week about that customers seeing in We’re increase number unique the of are a

that we’re many closed, to So, week-over-week. still but increase seeing currently have a customers are clear, be we XX%

Easter. Friday some improvement. many fell that. time in for normalize though can and have pace, that in up States in, normalized up, May we we on as in we’re Latin of opened that We the go similarly to state Texas, and May, is ahead the we slightly open can Easter accelerate and kind there’s month business in with due we the recovery. states will following see back already further, for of sequential Xst, in that. beginning are U.S. uniqueness our United is are and when yes, said, the its and we And of can on And week-over-week similar to I impact week, to actually fact speed the an positive So, American know a seeing, as Canada,

As we Joel, mentioned, is side piece. earlier lagging. there? add lagging and anything Europe it’s out come a to It already, other from entered the And

Joel Grade

Other know. to sequential We month. kind a over A course point was I not actually other was the the there a improvement B to point reemphasize, that, an the No, just don’t of incremental It improvement, or than Judah. XX%. than had of sequential

Judah Frommer

of profitable is side sign other could a SYGMA QSR cost Okay. at side all better. And, of of bit doing accounts, a of color on inflation make the the this, with We large on profitable the nervous just another structure, out you well? margin some win maybe the customer. Kevin, business, incremental clearly this Maybe being help the us you but hear growth does as maintaining on you right? you kind some and how there’s meat pulled

Kevin Hourican

The question wins profitable reason let parts. the clear, say of trying the I new say business. no in is intentions we word new inflation, very to have that I’ll have each want take me profitable I we’ll Joel out take time to two the business upon be So, comment going but and business we wins. buy

intentions rational existing everybody the business. are have of we that in bringing. XX% and our space, and capabilities marketplace share What to We pricing seeing customers. is in I’ll have that of our others we the no are wallet ourselves we the the we’re buying of remind referring by of roughly

we’re in partnerships through help we that them help them to them this work help help teach them doing for we for the delivery, PPE up and and These websites create stay them The for how win-win providing apply business. loans, them takeout we things that set for lobby CARES crisis, helps with we us. the Act, to help long-term teaching to how for

know going The point wallet customers. for an to share some improvements the we of expect suggested you the increase at to time existing from show in shop that increased in the making to will share of we’re provide Investor shop can We I this result in to, the and enhancements later referred those again, of we’re effectiveness that have existing wallet. order hopefully we that tool customers, we an increase Day year,

business level the the net I referring I’ll was do local to first. new on opportunity, What

to who business. work, like who and our meat seafood product, the new in that changing customers, comes organize produce business, align more associates of an winning structure go-to-market those how who of sales local incentives fresh-cut our our structure and are premium additional our calls associates what, changing compensation directly We for we to the we’re new sells does the business also profitably, like

end speak. visa an it’s entire new end it’s rolled vis-à-vis So, and being we out prospecting customer campaign to as

when they customers. sales in the struggling prospecting So, an will have challenges will the we we we in ability to the opportunity, this with will others there ship perhaps are to full, the largest have have to financial place, hinder inventory deal to force ability bring perhaps actively will that need and the new that and industry having time in it’s business, inventory acquire back their crisis, on

to Joel, you I’ll if inflation. add ask for anything have

Joel Grade

beef to result to of just closures. of expect a due we mean, real No, plant the I think, inflationary meat look, have do higher as the shortages, a quick supply the demand on piece. on some I impact and some

one, think continue would one always, -- we there. I that I inventories do mean, the emphasize, I frozen help the just a as supply have number have I of think substantial to carry day will thing we

to access we supplier have a diversified the have choice always, tremendously supplier been where as also, of base. We

products that’s always different any supply of in a during something lot that. provider moving one one a been do there’s again, access right I number, to types these talked April, think, able again, just numbers, And been the been to difficult has We’ve general. so, in That’s lot there’s a a now, inflation shortages. but predict Obviously, of inflation. parts obviously thing And to of of general categories. time as we on about in the

with going without some not And based meat that be I so, really there side, look, the view everything in mean do pressure we’re a just inflationary is on some that forward But, the will doubt. on on there looking to April.

Judah Frommer

Okay. Thanks luck. good and

Joel Grade


Kevin Hourican

you. Thank


Thank you.

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

Your line open. is

Edward Kelly

or down morning. level really a question all Thanks it what for Hi, guidance negative income. out of the you you and in help guys. operating Good is mean, anticipating Can bit QX, on looks are declines color. April’s outlook? more first My XX% us just than -- I probably Joel, around sales your like that so.

million. in about that And is there sort I $XXX need by down on of then, cost be pressure per numbers this to think additional don’t look OpEx pressure saves. like and gross margin talk million model, in to you about or we is know, You run going through like the doesn’t it profit the $XXX case?

Joel Grade


the for Ed. of a things, question Thanks good So, and couple morning.

improvements think trends gradual and economies. their Again, of the I just yes, that your what some think, I way think, reopening following. I talked gradual think about roughly incremental we’re of mean, the I the think, April seeing approach, think, approximation of correct. we is course of is your level the we expecting, quarter, this I be would are I the states’ as obviously I over given would the about,

are do business. we’ve there’s more really talked better the local. about time than particularly impacted, the think the by QSR -- perspective, mix I a think things. of One about, this Obviously, and I’d as been in the a there’s margins has From a I chain, of couple of guess, margin off our bit is space

was in to mix level result done also remove that inventory, of there a had obviously time general, some of will And so, shift. for level period order some in move there that some order we in In of to product. discounting

of irrational suggest to to not is suggest it’s behavior; simply movement inventory. competitive that so, And

you’ll some So, I see think, of to that. continue

there So, is one missing pieces modeling to you’re pressure continuing that margin to is out I the that likely be a is of of probably impact there. that think your

Edward Kelly

And that’s gross The then, net Joel. OpEx, just $XXX million, on number number? or the

Joel Grade

cetera, think Well, variable on about expense kind is We’ve you so, two-thirds in million actually you’re et out. other and should you words, what et suggest anticipating, based taken of a that trends And the I would movement. of volume fixed, then, given $XXX cetera. we’ve

how million. say than to and by So, add back $XXX to it I don’t know model other just expense run your

Edward Kelly

then, And are it looks lot sort were put how How able in costs And reopenings on it that variable It variable customers when they cost the how and one the Okay. you’re the different just in do of we as to all open, about component not is everybody than sideline. what right? and is, follow-up the changes had and costs probably think just like the and drop to of like that -- are what the we how the component, next are reopen? of a maybe, I we sizes -- environment? reopen and things few quarters, ramp cost against half back, looks customers but

Joel Grade

our do for while expect reemphasize point be that’s on a Number say We try Ed. we one. I’d to get we believe to QX. do Well, Number I one, what couple believe to of we we -- the clear trough. that, things want that

emphasize. important I point an to think that’s

ensure in the our trucks. routing. a I the been down less rerouting almost order of in fact productivity that reduction cost emphasize that of agile optimize XX% metric a that as taken decline, and work, only we’re pieces routing and of we We’ve maximize reduction percentage out. overtime part out a -- thing sending only have action and is not reflective way, improvements but meaning we’ve again, our fast that the fleet also heads significant. the very out our We’ve of second and of point it’s called the taken slight lot actually The been variable that have that to actual our made from of costs would volume is that is per trip, the We’ve got to hours

I talking you’re into another here, comes that about. so, think that’s part And way the play

that to we’re done be be terms that guess and the anticipate of whatever of But, and we’re some to a there’s that bow productivity likely we’re drops. we flexible the I will on and restrictions in lower now, put as or our all to we’ve going restaurants, than profitability ensuring to summarize, going very some there be capacity yes, So, normal business do. optimizing to going will agile things


Thank you.

from Our Barclays. Bernstein of the next comes Jeffrey with question line

Your line open. is

Jeffrey Bernstein

as questions well. of Couple

they’re to closures, heels I your X just store questions a are the don’t But, how a the current First lot guide that up lower the just like as of or have towards peers months something prepared just whether on terms significant outlook that potential not independent over outlook. your independent have period those I next XX a wondering, you even because perhaps or history mentioned a you It’s been this. about in you little of recovery, as in any close terms at for might returning lots think then, independents. you use And that’s to of one, their in we over-indexed customers. I’m independent these than sales restaurant of know, thoughts remarks think in you follow-up. kind restaurant accounts getting look of had survival a the time the can of of about terms calls difficult a sizing the aren’t because of of to maybe you pandemic?

Kevin Hourican

this of obviously, I’ll that What components color perspective. Jeff, would question, from key concise we are can’t pretty a with say first on couple you’re a asking. precision question because be predict the Yes. we

we For time customer its a type segment it’s trend in market And where And said we the restaurants, well for space penetration. for a and street organic, significant upside earlier. the local reasons pre-COVID eating back local from the that do and cetera uniquely business potential levels. to over expect et at back like business normalize table, that that anticipate have share to return revert it to to I longest term, to most farm will big that local, our we of one force and pre-COVID, sales perspective. independent the would People was whole profitable is positioned

As relates it expense will for it of calendar outcome be perspective, XXXX, it half an our be potential half of way. than From driving will and to better XXXX, management fiscal we’ll first and that to the and will we what we the make for say second hard be the scenario. be this worst planning preparing

can about point in at on I that’s as clear color. be time this So, that as


for to back remarks. to Thank to our the turn last you. Hourican closing I the that be question. time, like would of would interest call Due over now Kevin

Kevin Hourican

we really a as was Okay. like end with normally provide questions with thoughts we than sorry it to would thank we our us didn’t therefore few I thought we want your But, to important details to for that questions. we that I And everyone have close and took to I’m would liked. you call. final for remarks before many longer did. the they the do get as prepared And

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As clear the With Joel of in said, reviewed, to very our we that on in be that significant very impact are the is Sysco. confident the financial of business we COVID-XX success long-term want short-term.

win this will business will in we and We new continue through leader be to this crisis. business the

serve will during have opportunities identified business in closely that market profitably this we we will and We gain share today the businesses been crisis. evaluate new

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and The manner to taken working and have an Sysco. any at focus in that is words narrow at we of proud agile a set initiatives, has in our strategic We way better those a time on Company’s our in history. team collaborative galvanized are than to crisis heart

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and this associates all thank efforts leadership they’re to tireless like Sysco displaying their would for during I of crisis. our

us. That concludes every joining Our thank day. you inspire today’s me And associates call. we for


Ladies concludes you today’s and participation. Thank this for conference. your gentlemen,

disconnect. You may now