SYY Sysco

Kevin Hourican CEO
Aaron E. Alt CFO
Neil Russell Senior Vice President of Corporate Affairs
Mark Carden UBS
Alex Slagle Jefferies
Edward Kelly Wells Fargo
John Heinbockel Guggenheim Partners
Nicole Miller Piper Sandler
John Glass Morgan Stanley
Lauren Silberman Credit Suisse
Jeffrey Bernstein Barclays
Kelly Bania BMO Capital
Call transcript
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Good morning and welcome to Sysco First Quarter Fiscal 2022 Conference Call.

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

We will begin with opening remarks and introductions. I will now like to turn the call over to Neil Russell, Senior Vice President of Corporate Affairs and Chief Communications Officer. Please go ahead.

Neil Russell

welcome First and Earnings Fiscal everyone, Call. morning, to Quarter Sysco's XXXX Good we our Officer. Kevin Executive today's have, On call Hourican, Aaron our Officer, Alt, 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 which differ during that the state and this Act forward-looking of meaning

to question over one At call this follow-up. all questions, like A President we'd of Investors today turn The the could website. ensure the of earlier SEC contained morning. in of and section - contained and not these are like to results that Executive ask includes answer from to factors the year that ended also have slides July measures in Form Officer, our in the is materials the corresponding risk GAAP differ to X, each reconciliation and in these is about at Hourican time to statements our those measures report today XXXX measures the time, are on in participant in in release XX-K presentation information A to this Additional slides. presentation can news, found subsequent factors the cause sufficient copy and annual limited included to, time but be limit be comments filings. and, SEC for one Kevin their found end section to the to can our financial forward-looking investors our of the Chief included the Company's at I'd non-GAAP non-GAAP we our issued To the in filings This

Kevin Hourican

finally, transformation, first I update Neil. then Aaron, discuss results, our turn state it financial discuss Sysco's This results. our current will I'll business provide quarter to morning, for on of color details steadily an I'll our provide thank on everyone some over improving I'll Sysco's you the the and Thank and morning, of joining will environment. you, Good financial who business call.

get reported with by XXXX fiscal momentum this quarter that were results Earlier Slide to displayed on Let's X. substantial Sysco first started exceed morning, financial top-line continues results our expectations. that our fueled

presence top-line Our Delta the variant, each increased improve the have October. despite of continued and results of quarter, sequentially month into to the

throughout sales through level. for guidance of than QX Slide our growing strategy. sequentially fuel net strong All supply our growth is certain in fiscal for the We as versus International. as wins and period Hospitality, last market recover service market year. in our headlines to strongest growth a the will supply Our gives exceeded years. relative new Food we XXXX. a Business us as reaffirming chain Sysco improved the of is our Customers the clear include versus growth yet 's the XXXX national strong outperformed quarter ability additional strength, These for years sequential segments strength seen continued first the X. to responding top-line with by still this X.X% our and represented the is at wins new of on October top-line delivering for and quarter climate. results Sysco platform, confidence us the and fully purpose front sales quarters for growth share quarter. our come. the This pleased success our our recipe chain times the improvement of in quarter, in our management, of growth goal in We and to Sysco are plus Industry, expectations to and and start full X bottom volume our believe capabilities of growth in the customer business Key We're told, X.X improving meaningful both our and delivered line market the driven statement the local right in side to volume in win flow-through in such another at

segments be these recover, As will to additional our momentum business. added

We by levels. staffing now early inventory for further recover XXXX placing bolstering are preparing select our in to segments strategically and

to see reopen For momentum example, and segment select customers our selector of industry our in beginning as at specific restrictions our business should that time. ease, to January International are that business. upward hospitality travel regions their will we anticipate offices which benefit in plan

level the an invested referral and our of of our half We in volumes, bonuses Our our advertise to anticipate to new quarter in investment for second operational We associates quarter marketing continue due these provided the sign-on higher intentional were expenditure and targeted that and staffing health. bonuses positions. existing incremental rates, the second increased reducing staff. with expenses improve in fiscal retention in open that elevated provided We will to expenses we overtime can progress that year. make and to

to profit in Gross the quarter for half. improve high bottom Our which of margin inflation, impacted rate was top should to approximately second the the line the from flow-through increased by XX%. result as a

quarter similar taper at year. second to continue in to through inflation fiscal beginning later expect a before rate the We the

will we begin trends than in year tapering the modeled. the initially further expect had fiscal into current industry, Given the we

strong Our international improvement. business continues to show

our profit to to in $XX still from improved making customers is loss COVID. by that to than important QX of XXXX is more contract breaking-even posting adjusted business have fiscal of impacted XXXX. note heavily QX, are We It our large a QX million skewed of in in that international to

industry, For XXXX segments in levels. in constrained travel remain example, versus Europe that the over-index we in business

As such, the the in relative lags sales U.S. still the international sectors of performance segment. that

have internationally. additional us still recovery However, it also front that in conveys we of

combination very strategic customer per local we shift to X-year our profit Our customers results recipe as to delivered serve. cost segment of these mix plan. our growth operating local more adjusted quarter the our income exceeded anticipate we and strong $X.XX. Both international and expectations the guidance. for progress Aaron earnings let's we of in of but full-year expenses Sysco the profitable summary, strong share transformation, results our more provide X. increased shortly, our will million quarter improve results, in strategy XXX we financial our Slide increased on which to for shift, top-line serve operating Topic business how details strong delivered enable the deliver overtime, for business a adjusted on The that case experienced elevated and to per is turn our In our a start highlighted off positioned to to fiscal be will pleased a we're X, new year. on to and sector

I financial as strong will important remains As quarterly our highlight a our a of this on examples few morning. track, business and progress transformation results,

to as our There us and have present share-of-wallet are optimize increase balance strategically pricing Sysco to and levels the to pricing we capability. with project no is substantially the we The through. disciplined the control. level of will time level the what experiencing pricing pass inflation Our powerful -- implementation increase better growth that accelerate and than now inflation We enable to is of exactly to pass-through customer-item manage tool determine We strategic the pricing profitably, high with complete. enables this sales trust sales pricing customers. tool currently Longer-term, optimize growth. centralized can to can profitability

advance. continues new industry-leading in personalization to sales with the accounts. customers, Sysco on win engine work improve and consultant’s our program Our further to innovative, to cases penetrate enable existing This will will ability lines

quarterly for top service levels will personalization we'll supplement calls. that program loyalty customers in increased future with more We an innovative through discuss

sales transformation to levels. Our very be proving new teams successful, win at record continue as our is sales to business

local sales our delivered in As future the quarter wins will I help strong mentioned growth and in that narrative, my financial fuel profitably. teams national our

our our Lastly, we're as to improve to strategic we expenses reduce further our of initiatives. the organization structural continuing fund efficiency

regionalized the now our efficient Over the few businesses, the businesses. SSMG. and agile of implemented two more specialty main our playbook structure FreshPoint and our follow regionalization, Broadline quarters, past specialty have model And of we U.S. the and leadership for we

billion during X, model Greco successfully quarter in first on fiscal expect transaction, the our deal Sysco XXXX $X we Sons expectations. of incremental to which on shown over closed in ahead As we to our deliver Slide and sales

we beyond the sales model is a in build to Italian just best platform, leverage deliver nationwide billion further to plan the that business incremental importantly, will X the Greco the More mentioned. industry, which

closing our fresh ability Greco and and October In to business addition in Pennsylvania produce will value-added to fresh-cut produce part the segment, improve Freshpoint of capabilities transaction, acquired provide a markets. distributor we a Ohio will to as the operate and our that

distributor You realize the the in are that specialty States, these is purpose largest the may produce platform. Sysco not point United

by priority levels, a scales, product margins. sector for enabling of of high-growth more combining a has capabilities in business specialty from the wallet produce selling with CAGR, attractive availability to our us share service specialty. assortment premium is the customers broadline Growing and Sysco, and Our gain

for are making we the market the recipe innings, winning still that in and developing new can customers of the is gains. in Our see but benefits early we in very capabilities growth the progress we're our share

results growth first our XXXX. X.X quarter Importantly, exceeded share target our for fiscal market times

for top-line recipe on More accelerate. growth importantly, matures, our the impact as growth the will

business. times is fiscal such, our As on the as an Topic to today we the committed update X profitably,X.X market, the for of growing remain exit XXXX. we state

challenges that staffing the last levels. improving our have to well-documented progress across are As highlighted our on all staffing critical During of health earnings made covered Slide quarter call, bullets due chain importance this industries, supply throughout X, we the on in I

X,XXX focused bottom, the been execution example leadership ever We our week efforts in A hiring Our to hiring our extraordinarily process of team, good solid improving capacity. When staffing top nationwide has of associates and October. our progress leveraged coupled our on first our we on event chain is more of second with throughput our health. the to success, troops. streamlined new increasing net digital a extensive year-to-date than marketing supply to are bolster hiring making

quarter, during the Academy. opened we first driver Additionally, our

in deliver generating meaningful industry for our perspective, driver drivers. confident we historical is and customers rates class a will are able than rate Academy fill solid are across fill our the say we We're Sysco we of country expanding the year to next-generation this session, From program availability a our first on coming a it Our we difference bullish higher at a still standards, training in the as Sysco, although pipeline. and make average. in were product lag

improving the I'm Supplier a cautiously performance key rate have be merchant product and improvement relationships We and of suppliers our top and year satisfaction. substitutions. will fill supplier’s through improve to suppliers engaged focused on into optimistic remainder key solid the personally and will ensure team with that with Sysco strong to customer I've a extremely that fiscal with and is our finding XXXX. partnership customer sourcing our

Occupational already the Labor's employees. of you and requirements to such Lastly, Department XXX the protecting in Sysco Safety our the in customers seen chain number our safety regarding In during may inform stated or recent announcement and majority with industry I'm of The we testing this compliant we more as supporting regimen the weekly and we to and of employers Health environment. our our are steadfast began associates have a continues in OSHA pleased September, X supply with are lead priority, that Sysco is administrations our the for COVID remain you team. summary, customers guidelines. how challenging

provide in work throughout be share customers results. increase goal expanded than growing on impact year coming ten we us orders. over the service seen the our next for want system-wide we chain relative and market our of in accelerate capture. in broad-line only all sequentially their track grow quarters distribution will Promoter to to years can growth supply ability share. for our our strategy I best-in-class. quarter industry fiscal minimum We of three times X.X the the our more and stated success recipe industry over our our to deliver sales for our Our We the outperforming our industry end The the of gaining and to and And endeavor without that remain serve now thank of we enable increased are tremendous months have past year And market years. the quarter. XXXX. will distributor to by Net We associates the at flexibility consecutive and times hard customers the the are national Scores X.X remains

chain and Sysco growth unprecedented supply As experienced challenges.

for the on I our are sales, and results Aaron, that been without for work questions. merchandising before We teams. quarter serve not these over it of the have would provide marketplace by now associates to who side. will in and the we open and turn Aaron, will up additional their honored to you. dedication winning possible it over our logistics, financial details I'm to

Aaron E. Alt

Kevin you, morning. and Thank good

demand have in exceeding fiscal the a increased the namely our our of million debt one against levels. we strong EBITDA And of dividend hiring S&P. criteria X.X%. strong rating fiscal for our XXXX plans covenant allowing strategy, headlines investment industry announcing that working investment-grade pre against quarter B by fiscal repurchase X capital elimination with to shares the capital that to in growing we by product financial our with on are Covid of to the ability progress exceeding XXXX or to XXXX profitable our share recipe investments to Our by course in Triple second our are will pillars quarter growth, lead availability. international balanced to otherwise the restrictions turbulent first our XXXX, decision over future. Sysco lead of commence Sysco - our of Purposeful $XXX upgrade of all and of back the the of great we to quarter allocation internal to Aggressive times. in In A an shares profitability our sales return satisfied year. today, snap by to against business, A fiscal up The including continued begin continue comparable repurchase. investments repurchase

on statement call, the cover XXXX. today's some and fiscal I'm cash quarter, to our then During will guidance the for close flow with for going observations I Income and

an fiscal from XXXX. the the an sales our and the SYGMA quarter largest XX.X% XXXX increase and increase XX.X% fiscal In same versus quarter same quarter same XXXX, billion, First XXXX, the of States, up Food same from were XX.X% versus the fiscal and up quarter up versus XXXX. fiscal $XX.X fiscal XX.X% sales was X.X% in up in first XXXX. the in quarter X.X% fiscal segment, quarter were of Service for U.S. versus United in

operations, International U.S. a ease business, of the broadline substantive You driver excellent consumers the is will the because within service -- their volume served quarter, QSR XXXX earnings fiscal sequentially switching case drive upside Broadline across SYGMA favorite out from quarter. because back X% fiscal in the modest unprofitable to which down call in XX.X%. With during while increased XX.X% more the total than U.S. USFS, less first the some restaurants respect indicating fiscal in customer, in an Food segment. and while third within the recall by operations are improving of case of come. that up quarter sit-down have our were our XX% to XXXX, to profitable some in sales volume increase also XXXX, operations U.S. that quarters increased announced to international to versus our our restrictions of Local international continue more we prior transition versus sales over more we quarter purposeful

impact exchange during quarter be is continue Sysco's in approximately X.X% results. news XX%. the environment. sales to of profitability a we rates the The manage our well Foreign on good factor had Inflation a continued inflationary to at that positive

X real year-over-year XXXX, increase across improvements to and in a X%. case gross was segments. rates. in inflation fiscal prior period business decline [Indiscernible] accelerating is rates XXXX volume that and businesses, year health profit versus The gross a quarter higher-margin gross did basis our U.S. in me with points dollars and And changes dollars gross quarter. profit by the Let the same versus fiscal our and in approximately The reporting at Fiscal volume rate profit margin per a U.S. the businesses XXXX, That's versus both for larger couple we'll driven impact by inflation growing enterprise further. call gross the compared XXXX, and fiscal Increasing profit lower sign then count, at in in inflation with increases the XX.X%. enterprise XXXX. rate at for QX fiscal sequentially was same during of exceeding margin XX of $X profit Fiscal The [Indiscernible] fiscal of decreased margin first our the discuss quarter Gross also gross XXXX. billion margin in a a by the all numbers, our of XX.X% finished the was of as driven XXXX flat was versus

manage pass our customers, on continue much to ability pricing. with the thus suppliers We push inflationary seen our both pressures far have to our along not back and and

In that addition, manage while price. rollout are ever being our to tools than on our the pricing Periscope system means fact have our now of right before we substantially we that more in profitability complete

the $X.X Turning operating driven adjusted from billion with year, to X at enterprise, the in expense things. increases prior back came by expense

the with costs volumes. increased significantly First, associated variable

million us helps would real and power we and impacted have costs. back our of is $XX of our our total fiscal than as of of Even more XXXX associated Together, transformation before, expense for adjusted operating investments and operating and expense removed XXXX. we and investments by with million $X.XX. earlier, sales. operating cost-out math, snap back fiscal almost back what approximately repeat recipe been with XXX of delivery $XX investments, snapback. [Indiscernible] investments earlier of expense referenced and into snap from more Doing To to the efforts. expenses of XX transformation adjusted OpEx said I structure quarter the the expense XX.X% basis transformation, in the cover Second, significant basis transitory total short-term sales if simple cost-out operating back in fiscal snap That improvement growth. at XX.X% the those a than the point this one-time negatively quarter XXXX, percentage leveraged transitory million the a we our third, from same in And EPS our in of costs improvements the for during transformation expense investments $XX snap

if snap Finally, XXXX. for par Even back with from the million increased investments. on share from U.S. for in our $X.XX fiscal adjusted we out COVID carrying This of last strong QX the would bonds XXXX, XXXX million, obvious, the international. fiscal results $X.XX food in for our fiscal to expense, and investments earnings resulting us adjusted from in the first for XXXX, first driven operating issued of quarter. Adjusted $XXX of adjusted with line with XX% fiscal related service million quarter fiscal -COVID to EPS the $XX year adjusted precautionary results XXXX. Perhaps pointing extract a by the increased putting primarily and QX incremental per operating in we're profitability been the transformation was basically have for $XXX income interest income QX pre more EPS we of improvement

and has If and $XX further Sysco you during in step million the couple the transformation from share on exclude we expense of comments a go operations really costs cash flow But Interest begin of to a first see $XXX significant the the long-term, flow million the me both you and why that was sheet. snapback Cash balance and earnings let potential. quarter. believe

purposely management inventory responded snapback, As invested to industry. during product rising the in than support sales better we the availability of and in

snapback, purposefully in support schools statement. invested consistent purpose We Sysco's facilities as inventory and longer during the customers healthcare such lead also to with k-XX

expected of mix in and receivables and we changes its manageable rising recipe saw business that the execute accompany Sysco for arising also growth. from levels to We sales

is CapEX spend million net up. $XX.X and Our was ramping

submit against for the teams investments recipe business cases growth. for As

of pay XXXX. we X.XX $X.X the targeted Free end by our payments and to a due for it, course flow Triple circumstances leverage the against net leverage June and payment, with after May which we million. off acknowledged $XX billion S&P to of investments on year, the Later business, to had supporting against At fiscal the plan our to this was recently a May, ratio the credit in grade X.X X-year price investments acquisition first action - upgrading our in Greco of debt cash we to growth. In times We committed investment XXXX by the end of rating cash strong will equivalents on dividend the $XXX the those to expect further us continue adjusted EBITDA hand. ratio quarter of plan for the quarter million manage of ensure notes the our B should cash to first our to we debt of times, progress flat. and warrant take our portfolio. hit over

dividend and our paid also share October. July increased $X.XX in again per We in of

our calendar share paid as expect starting to our consistent a dividend next we year sometime in increased dividend per that July, our decisions status aristocrat, around with XXXX. during we Given dividend address

commence beginning announced As billion at share earlier, in plan we to May authority the second activity I mentioned share in under we Investor the repurchase repurchase $X quarter. Day,

I to concludes stated will of shares quarter. a fiscal take that form moment ago, the million on $XXX of year. my the prepared first up repurchase the fiscal remarks of As of end the That by the

with some would before Now closing, XXXX. provide to you on like the for outlook fiscal commentary I

we highlighted, the XXXX. above or continue expect times to Kevin grow in at market As X.X fiscal to

We are with in operating dynamic significant environment inflation. a

to do than it predict. to fourth hard expect though we longer of take is XXXX, to Fiscal it originally taper quarter by the anticipated, While may moderate inflation

costs' expect pass our of vast We majority through to inflation. the

range are in $X.XX will the for last equal $X.XX year. investments to in EPS called at of quarter. that transformation at the QX. the investments our We QX, $X.XX guidance assuming be step continued and in reaffirming least levels we XXXX the heavy reflecting to We're EPS back increase Fiscal out

the and As of guidance rates. federal confidence strong. the assume EPS had business for the fundamentals summary, changes of we've In tax remain have we solid our All-in-all, does year. always, the rest our to not quarter

as now questions. ready excited we're continue growth. Sysco's to future are the advance for about for recipe we We Operator


Carden And the the line comes first from Mark UBS. Instructions] [Operator of question of

Mark Carden

on my reaching hear. Thanks questions. morning. taking your some is sounds for good to hiring which a like lot Good It progress great you've targets, made

started on implementing the some necessarily more pressures structural pay in is we've some alignment been noted Without it seeing that competitor, we raises. more this broader of that Could competitors seeing commenting that Thanks. be environment? One your some recently base here?

Kevin Hourican

with Kevin. question. remarks; prepared answering Mark, made progress This lot from. We've in They staffing A said your health will the are start Morning, where of just a macro quarter. perspective. it's in things the I

staffing the health from perspective of share. a what the a staffing and chain, would win is August, health I market of I steadily us from industry year of leading say definitely submit the improved situation a staffing toughest the that supply what's would spot through which And enabling quarter. are We is to was probably as wages our calendar in perspective really pay In retired and the volume our are well were hour XX see our break benefits that weren't flow. we was significant. increase and base were the - opened September, component. even per actually because anticipating did recovering needs states above supplemental We most applicant $XX our government an up

week a of tied base for first we quote-unquote, improvement To pleased which the selectors lot our change. X well hiring, you joining the remarks, weren't to have efforts pay retiring recruiting, said your can that, are big of people just conducted the will ever single our two-way that can alone, an experience in We've a We of our to even transitory around, are turn from the hiring expecting benefits. gotten call on I can through, really nationwide notably you the doing not you and tied netted expenses in XXXX digitize Our our team forth hiring at in country recruitment back. prepared at to but and resort Most question September in progress vast specifically, state open better mentioned or putting every see we my We're majority event jobs. our I remarks, streamlined in process. tied our us. to as marketing We're get we as drivers answer perspective. And we my come more training or staff. efforts really a importantly, we've the over with we to get paid had meaningful paid mid-XXs; mid-XXs. The go did to improvement what doors; a in those the

advertising. mean? that does referral what bonuses, bonuses, So, retention Hiring bonuses,

We've them needed Facebook money out of begin jobs. are on continue of visibility these places was wage We small selected are meaningful have and called taper those material like some we the expenditures did Alt awareness that creation will number Aaron not some we had a to to in very those investments Sysco. will or transitory. locations, spending [Indiscernible]. and to then into advertise to review adjustments, make because a the to of the for they that but QX Aaron opportunity

Aaron E. Alt

the One quick adds, we ultimately which cover we Kevin costs opportunity is underway. the the through rest And snapback are and as of our QX further called productivity QX out, vast to have majority transitory. efforts that already have

Mark Carden

broader in than the you industry? any rate compares currently still stronger most, Presumably, changes do here? Thanks. fill guys Awesome. gap you're How your That's to the great. think but

Kevin Hourican

for follow-up. Mark, thanks the

reporting So, score it's we and how full net use external trending. reporting through rate to and promoter gauge internal our

our items find out into long-term and quarter, we items alternative Ours hard for to suggest extremely new our products suggestions can those has been that get situations cut working have call etc. has to alternatives, find those last improving merchant to find their over on been menus, we that how customers, suppliers, provide submit what customers the team with

of that ever before the market yes, higher our widened can staffing it's is rate harder because ensuring the than of only of than the the answer improve health. Our to our We gap industry quarter. reason. yes, which capture, is X not throughput Yes, rates. stronger. it's and your capacity but in stronger is team performance believe components the is share on It's our fill are X reasons question The worked we has our

are acquiring third doing market, extraordinarily is share of sales customers. just good of existing new with our more the The wallet being though, customers out an winning in and teams job

Mark Carden

so All right, much thanks and good luck.

Kevin Hourican

Mark. Thanks


question next Your of of comes Alex from Slagle the line Jefferies.

Alex Slagle

dynamics the fiscal even something, basis I growth good 'XX first the morning. may trend as seem decelerate into that you dragged during quarter local if versus on comparison. a U.S. observed the but I'm the case the we broadline momentum, than for local right. discuss to bit could more have sequentially the quarter a reading Hey, if the adjust Wonder they had where tougher X-year you missed more case

Kevin Hourican

well, making. business progress is we're that we're pleased Alex. really local the with Our performing

with able win to strength We've done local to going the our the is business and to to the and this education national winning at sector. hinder referencing, continue percent enabling partnering within sector customers business. We a fueled new staffing, our sales a level -- crystal health success new is local the and local One We're in component menu the supporting are accelerated that. and business. our local what's at term choice. perhaps If and because at level. new us like. It's the that that of of the or long guns not percent butter the And and win to local level. customers winning level local of the lot total our expansion performance in be deceleration clear, had level, both level, at do it's be success again, to does in healthcare you're of isn't actually seeing national we’ve well We steamy the ability over just the the national and our chain within extraordinarily existing at win supply with national business not at net you total

Alex Slagle

get any period. some moderate sense. the into could the if And offer trends that segments to underlying various the as progress into makes thoughts October color but we in relative 'XX just then and into holiday on for potential That you

against you that? Just get and can many in obviously, some up tougher ways compares

Kevin Hourican

thanks of acceleration chart, saw question. is start for continuation our on Alex, our the with which performance. October as the headline, I'll was you of total

of continued the variant each the and So, QX of October despite month our in accelerated during quarter. that that's strength the presence Delta

market pleased a our compelling, growth capture. even fueled So, be we're to more but really recovering market, share fueled strong, by continued by top-line,

and constrained versus we're 'XX, use. and The at growth remarks, As at hospitality I are the highest that sure, the which said the than of would I X years. more rate in market, my for food times that's that still X.X language Travel sectors in Sysco prepared is out growing -a more are than vis called care is prepared which tied call I concerned health patients, COVID, the long term. as in for softness to there's international, We're long-term as new bed on or vis care constrained. about healthcare not they my starts some management service remarks, them, new -

inventory the aging preposition right what as Alex. volume. traveling a be beginning home the see by healthcare that bringing growth of contacting from perspective. been that's We longer from back on said, a with me, And they in to in this opposite and in January see business industry, to With partnering the driven process term. of view working excuse staffing America, in our over us the opportunity that for for business we believe now hospitality, We up mostly step-up their the tsunami, in well Company employees you industry of corporations companies. for food a actually travel be sectors, work And they -- space January. in service our we're to customers working We just mostly prepared have what do call gearing to management very and

As something concerned that far we're as not you. something. tough to comp that's over compares say holiday season Aaron to about. for rolling wants Aaron over

Aaron E. Alt

I October fiscal accelerating should QX. opportunity QX note portfolio would results we and just announcement and great both QX our significant and are as into that understand you Kevin for across we have our called particularly, add, of and our in take our up of

Alex Slagle

Congrats. thanks. Great,

Aaron E. Alt

Thanks, Alex.


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

Edward Kelly

wanted there's sort below Hi, but even a U.S. beating I'm generally which that? does curious competitors, this your it rates modestly be. where 'XX is volume all you where is case understandable. into is, some volume segments case I because then possible this what in is And talk are about can little what or but inventory I with one is about fill know morning, saying about here the part is of associated like Is bit good table your all Kevin, some of that's the headwind revisit talked it obviously as running still possible the here, still ask you've that gets been talked about question, of second of my related XXXX? versus to But labor. to to which the it just thing to guys. being your And sound left on to quantify think I also

it normal. or call end year, this hopefully by more of a life Let's when lot fiscal so next year early obviously the is or

So, any color that you think. I helpful, could add there would be super

Kevin Hourican

that performing Ed. is that Morning, than in with performance. fill rates. Thank prepared the descriptor most and of better My remarks Kevin. accurate our are average, you for is used the industry the start questions, we're language I'll

a historical well from and standards. on The our on our below rate and bar fill is us rate our are historical we are our for to time suppliers our full, set We historical below below standards. very ship in high ship is fill why inbound ourselves We standards.

to that, significantly work bridge we merchant substitutes the to rate our to inbound creating alternative is substitutions. the good to is doing actually the the output the relative find our that's higher work is Sysco. how why do versus Sysco fill customers what's behind than of Our find teams customers product And are to products. to And others, strength and

to I think sales for would for be is there I for fill improve like, long debate. more rate will is is your yes. it take say, to rates more improve? question subject had fill How even

to rate. So, take what directly can of is control what better fill doing, want be we're because even ownership we to at managing we

And It's of alternatives XXXX. find to customer out-of-stocks fiscal we're at bought be likes. digital steady providing with improvement dynamic our desire emails to a teams, merchandising point-of-sale sales meaningfully to Company. working our So, be in on to our strength customers, provide teams Sysco can including quick I core are and to provide inbound suggesting to the them our mentioned It's improve suggestions we our are sales to rate the very our marketing for fill I the our that. rate earlier, closely things and website pushes improve, into being long-term alternatively. not improving slow on situation on that but will we bulletins visibility think fill a selling to as suppliers a ourselves in sequential going to proactive, it when in quickly. teams, of outs And very

go from to to have in to your QX would that end expect we something be second say do QX levels. the a the we of the is question, this will please fiscal XXXX relates we not level be I of and it our year. that break down Within volume not that of it's back at segments part our be perspective this sector, to year, volume As in fiscal back what existing morning. you. to that's I'm XXXX back to I'm -- prepared going volume by it ahead, But will fiscal to

Edward Kelly

Company QX, Yeah. say fiscal volume that U.S. that And is I got total outlines is you it. per volume? or when

Kevin Hourican

at our Sysco levels. All be Company. combined XXXX QX at will Total of volume end the

Edward Kelly

Great. And quarter? Can for Aaron, follow-up second a color just I additional bit seasonal versus a on then fiscal back a step provide guess. of quick little Historically, you QX. you any have

QX. here. kind there? any curious what consensus see off thoughts going of of not Is far reported It's just Just if for -- to we're as you I that again at incremental look number; just

Aaron E. Alt

been also, second by transformation in other into that seeing no fact enthusiastic historically I top quarter. the move trends pre and invest against we But -COVID would mitigated period. expect the somewhat seasonal is that this then like which the as is heavily respect. line But call to may what around positive to offer are the year back have the in X continue out do the we're in about a thoughts, we continued we snap

in year. For us, have the we confidence

We fiscal to and the the service QX. and we operational long the of excited quite have in are certainly in progress teams come about QX are in term, 'XX making

Edward Kelly

you. Thank Great.

Kevin Hourican

Ed. you, Thank


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

John Heinbockel

versus XX industry of from performance XX or you're existing that gains? probably lines you've a think stop, I accounts, [Indiscernible]. versus rather, since per nice up in X the What predominantly? half start let in Hey the per had coming are drivers guys, is share or stop. biggest pieces with me Where pick last second that the or up, New acceleration X in your

Kevin Hourican

John. serve Sysco predominant the Good for national and share at new both is the Kevin, is at market level. capture reason customers morning, net local This the

in time any why So, fundamentally at The down we're in winning basic things. other point more history. business X new Company to than breaks pretty

the we dividends. you We're compensation cultivating, is now model be compensating associates June paying as is know, prospecting that First more that last and of our to versus changed year.

new from they're behaviors rewarding we So, dividend and for in expect business. that they good drive those we're associates the benefit seeing winning the in significant work doing

supply reason the chain health. is second The

won't which and we're Sysco that where, on small very we us, why I'm to January week customers support the State a name not on X. not we're a finalizing to business going coming expect by details come had need have education and board We the the on and getting large large Sysco to and take can but but business our this actually of we asking almost for on contract the to is their say, us quote and customer I take the business. basis, daily we to come

large at coming broader that a than to what of rates So time that's market. the from, inventory, that with did on above. in inventory prove the specifically I well. that clearly all on-hand customers Jon, segment Back the more this our we time strength, in and our is full, have performing confidence ability we pre greater ship signal small in But competitors’ moment to think to than have it's access at stronger point, -COVID. players

inventory. Yes. there to able are in shortages? select we've So, product been But invest

ability than We increases every more we have more inventory our more need staffing on point was ago, and have even to is where this - proving a people, grow to even to moment topline. on which continued are on demand hire bring Covid Aaron's be time, levels we our our there's that -- and we hand our them go then pre people runway, but

follow-up. in capacity. any on put we staffing you to to for our through make progress back continue As John,

John Heinbockel

X higher drive will long-term business in we're of to the be profit seeing dynamics more of Which of -- less margins? the think better that structure lot a one some Maybe in those light confident is second likely been you macro are you historically right? longer-term XX-XX, about cost to view, being more margin or than the If lookout gross today. it's question, of a take

Kevin Hourican

not top continued disciplined is that really EBIT It's taking our believe structural come on going in John, will optimization move the expense drive from that by and we product that that I margin primarily investing expanding, capabilities will growth line. bullish what needle. come we've that out articulated do we're from to cost expansion. margin

So, and our grows, for the combination in were comments. transformation, a rate elements [Indiscernible] I be of the while I additional EBIT this gross sales supporting out margin. structural the the over should XX. will certainly line very growth be also to not accelerating, work growth. is or Sysco's of over than elements To chain financial we impact And with as profile. while in point we overall what X we'll would -- that levers toss expands top lower connection am answer it's business, inflationary -- of with A, the margin cost of those short-term cost work taking the period, the will EBIT But longer-term, reductions; as particular, question, you excited other hoped your inflation and provide because the B, from excited time, margin by that merchandising in us be a with our margin supply underway our add that supportive perspective brands any that I'm would through from just have in is and Aaron, private Kevin's challenged I'll the opportunities. label, XX, for

John Heinbockel

you. Thank

Kevin Hourican

John. Thanks


Miller question comes the Nicole of line Piper from of next Your Sandler.

Nicole Miller

Thank you. Good morning.

around question First centralized the is pricing tool.

think and have the makes maybe of taking but a not about pricing So market value going tool, pricing share with which you the proposition think about price down power I up. price neutral. of about me intuitively, lot commentary But

balance you So that tension? how do

Kevin Hourican

inflation. the what sales be. responsible And it's we in need we and through we that immediately. our it's it helping that double-digit in that managing if executed strategic way, basis question my a about very about environment because we recent a daily been make pricing large well. decisions software that strategic the the of Nicole, a those to unprecedented the those currently through and decision us narrative the and of through tools when right has just they're you're inflation that to period inflation of is pricing pass We we're and used update current thoughtful that It's work that unique. can great being on office do being impact force, how and in, is executed Then decisions manually confident can when monitor a do make a now

the the my on So, just for is inflation narrative reason because in. of we're environment

pricing sales very high-quality that that a dilution? the to more lower margin If got to pricing a of in is than For the not we've the the above-market are perspective, geography-based to telegraph select going -- I'm optimization. project the but to goal software, categories how we category. excuse with And slightly price pricing is -- following. the going versus system, prices pricing to offset longer to our margins I've make the for right term, tests. described name the and optimization it, me, and control price Does we category because a do optimize price to be is I move you tests strategic from a want where test don't run work we're we decent can growth

my we win projects. as us line which the flattish margin That's less to the KVIs. rates SKU, therefore shares. in the is item make of results of certain as items, in at will market in level, items which is, top are key longer-term customer value investments growing will nominally We the visible tail to right more which we that the goal prices unpriced And term allows by inventory are raise -- customers, the

has early of system XXXX we extremely our manage inflation. useful this this fiscal how during and been part However,

Nicole Miller

That's very helpful. Thank you.

could final turnover to the but is helpful I and is speak at you the wondering understand leading well. Could be question, both that some very turnover and drivers underlying trending, it's about that and like facilities distribution hiring Second that coming as am indicator. the for to of how back, thinking a

Kevin Hourican

the continue the requires quarter to increase this last business hiring us year, the on again, important And extraordinarily throughput we focused over able staffing to the that our because, were first health. years of been during post is fiscal to retention to extremely new Yeah, we've our capacity. X winning of

an bonus it referred that's we're together retention I Retention on time and are a a had run working. as focus on historical and investments Aaron in improving better bonus. averages, drivers facing investment again impact is for us lower on than QX pay even visible in spending noticeable our are type skilled type your to positive job. amount a role. retention. we it one The of And getting in We made extensive It it's is We of our rate driver transitory that retention more QX, for we've important that It's answer the to as is putting customer and retention. our but I's highly most population that question, to is paid a I retention, the of investment. driver going and population.

our overtime historical such the And year, will that in to prepared retention. that help improvements see the the I overall investment providing historical further called standards remarks should any excuse troops, actually that will overall where standards. And to it out that half staffing in investments time our which down. down. P&L. are here's I why, transitory do to our can we we also our said pretty associates comments? P&L I in for and called me, remarks. punitive drives improve is We We're as some overtime expect daily. out health, versus Over retention that aggressively that as types very If our of we're takes, much the Sysco or prepared go in boost rates expect of fiscal for my will second long stated, currently to working overtime high of at thing the too Improving back the that for that overtime those spending expenses my I extremely need reductions you have staffing because rates but we Aaron, improve we are do this to P&L. as It will our overtime, running

Aaron E. Alt

add. I to have further nothing

Kevin Hourican

Thank you, Nicole.

Nicole Miller

Thank you. Thanks.


line the Stanley. next of of Morgan The John from question Glass comes

John Glass

much. very Thanks

understand restructuring s high? see or dollar certain higher. are Do too gross margin, per comments you are switching? your or Gross your Gross your I on first, margin. consumers demand Just, margins prices case per Gross customers about categories So, that case or maybe that within back factoring margin

Kevin Hourican

So far, no.

John Glass

know to talk you think it and door future, Thank this on how is How akin Kevin, or versus about you. but consumer open more loyalty loyalty this a the Is the you to work is discount? Is what more it it nuance? services a you would want loyalty do loyalty in business? about in high And I in adding think, value-added do industry program about this at level? you

Kevin Hourican

the We've that making and they moment are retail, price, a that that on customer independent a value similar they on and of ago. decide building decide decide what the program unlock restaurant that based our to by speak, We're the services based to them Sysco. you consumer The going actual is operate loyalty mom-and-pop a them they brought the to to based on in value, steps before proven things specific making in publicly. more offers it's mentioned about like talk have we'd future initial indelibly talk with loyalty to the forward it to clear that's pleased about very them in in being pilot, the and results we We're progress because program. as factual we're value we

that data the that a types value-added to program, as the the it will familiar programs and part it, to business are we optimize it, cloud, similar to it there iterated, customer. to that learning take -- are in building with to but they improve in optimize machine are select able refine that use will We is be to The able nationwide customers and are effort yes, provide of for services from and plumbing data those against we're perspective their loyalty piloting be it data. of and piling And against of currently will we results we will the an execute the advantage the IT geographies that you're outcome.

in about future about excited we're it, bullish we'll it, it quarters. on talk more we're and So,

John Glass

Thank you.


Suisse. line question next from Lauren Silberman the comes of of Credit The

Lauren Silberman

question. for Thanks the

up cash talk your plans First the thinking allocation, for share on and about from and to the be to you capital resume you Can repurchases million year. allocation of $XXX think how just I about announced capital we use should here? priorities

Aaron E. Alt

do to happy Sure, so.

and is is We to allocation loyal focus growth. May, our we driving on the Getting the capital called first our remaining in to X.X-times out are Day which strategy at market X.X- Investor growth. the

for of us. the end sheet the first out. or feeling the with balance recent inorganically, Once that, We're cases our in a very and by business also so, the good a the it and to last of of that in at invested invest upgrade that focused small the couple the have maintaining actions rating And and took, and either strong recently certainly on we sheet particularly we're is you front the balance we about we've facilitated other use strong of Kevin that cash business are saw called business the of Greco fields against S&P. organically year, as

XXXX. twice, call first step there allocation announcement heard increased touch capital that repurchase We years. levels returning paid of this And as, the opportunities have about cash-on-hand, the during was capital feeling to our prior time versus continued us our as we of is it with that and given portfolio now far. start out, interest calendar against shareholders good beginning benefit to million dividend improve again And decided the our carrying quarter. leaves as so we're we'll shareholders. But we're course, of capital that, our $XXX well with you to return the We it we've the of debt share me

what Day at with recipe that's growth. the continue Investor So, manage very do for we we and consistent all to we how to had in, telegraphed going were

Kevin Hourican

Aaron described well. think I it very

Aaron I we updated guidance our this to is the is buyback that punch would line which quarter. activity, stock of we're when on ahead to on begin why think schedule

Lauren Silberman

back the costs. year, see transitory do then versus And a the follow-up is do your it Can are closer and what the as what if in target or investments could investments, you expenses nature on you confidence primarily to snapback permanent? OpEx reflecting half you taper that Great. of transitory those of you Can expand talk of I those expectations the more initiative? any and that on about within can some that levels of Thanks. transformation just staffing that elevated gives incremental

Kevin Hourican

Happy to.

Those back, retention into bringing we're marketing our give is The what's hiring doing party transitory now. increased time, Let that. you in to the working bring are is in recruiting while not it and visibility not cost staffing. actively it overtime bucket opportunity trends contractors not support to right That's bonuses, relative over third What's for on the step incremental things hiring me down are also permanent are things some but for QX, there time instance, incremental structures. onetime we're -- of QX, like but a have bonuses, massive one temporary help that's to programs, not we the sign-on and basis costs.

that now got in started can we time. relative confidence cost-down first So you sense we address a to have is two-fold, it It's what's of efforts. do the bucket. over early Why have I

in money will effort some continue the bank, put we forward. advance degree we a to and so, in And that need, as of carry

as we're cost we lastly is finally, helps or nature one, alluded which all benefit to which the element, if the out, definition transitory. against transformation onetime structure our as and -- carry us the are is chain overall of they And by just to can called productivity I forward. Kevin I doing and heard manage I Second of add investment categories incremental this supply you the the earlier,


Next Jeffrey Barclays. of the Bernstein question from comes line of

Jeffrey Bernstein

X much. Great. I you very Thank have questions.

were a to quarter which year. the ahead are fiscal times guess outside. the the the I mentioned X.X It's The harder, in for market few targeting the that gains, and sales times, it's from been follow-on assess momentum you first of share with first in the full the

how you wondering, you share and front? industry. small what to of growth do your success the even believe make claims Maybe at on just arrive than I'm know that So, peers faster often can industry some growing is. I the you similar large

relative you're quarterly we going forward if type how what to future to calls? should gauge industry's that growing expect the commentary that the Just maybe yours of to trying on able quarter, in first assess

Kevin Hourican

monthly-basis I Jeff. data upon Yeah once that. once the that other can sources weekly, The data can the data We that Technomics is relative that is a and our legitimate them is relative data to generally from. get but result data. statement from once X.X on only comes see growth. We Technomic see growth specifically get as point markets report data, through of that and from tied a that can we per quarter where per per quarter feed a of We quarter

Jeffrey Bernstein

I is follow-up service here. important guess Understood. for the inflation is big benefit margin I the dollar now, mentioned right And to the has historically the know and along what's then I the obviously pricing which And ability down, up, on is which but just in percentage the distribution the customers, pass been in drawer food investors attractive. inflation even with more think to it to you

long remain Thank to the or is accelerate for know Just inflation pushback really continue maybe much through. inflation ability wondering there think the where or whether but mention I the pushback, confidence was to in ability however is the to to double-digits it you'd wondering it not the you. pass and some on -- going pass expected your confident lasts. I if in of accelerating to you're the

Kevin Hourican

the is pass [Indiscernible], line the inflation. punch we are we on can that confident

accept. talked expected But to longer we opposite back than at take accurately find the our tapering away of during going And provide the originally we're his working It's lower to very clearly good for cost going down our double-digit just is that beginning of the aggressively customers. inflation And some that said, industry. is we We back do that However, about aren't suppliers, year, perpetuity can push on to begin alternative what experiencing It's with an it's from increases, for landing reason believe not slowing Aaron desire, consumption we push in tapering. will begin which alternative net inflation comment something we we in and items consumers to that home, find food comments. cost narrative. back don't from something and The customers. not primary I'm are fact end then editorial the think the color not their true. in is

tool that we material We our continue at in customers growth. to proprietary that we And Value-Added to overall like with of that built And should type are talking suggest changes that's about about a raw for thing like Services. specificity. they where by improvement items call not just And inflationary sequential have to on we costs item with do obvious make. And and products to menu shortenings, things is things out high them take obviously with cost calculator volume our tied what highly highlight price directly us then our also, a and many on that mean an see like can what we menu inflation levels, customers, increase. I'm are that results What a to can meat fats, from to inflation And perspective. right ingredient significantly raw we oils impacted particular there their poultry, are menu impacted inbound and elevated by are an inflationary talk now. different their

sales have raw trained customers to with material is and this been work Our them be reps increased. educate our to equipped that able to end

you with help the for what pushing And us they degree the can you successful reason might you suspect Jeff, do it's we a them to and what good our menu for consumer robust on back We're as this that's profitable that partnering that partner you because remained be our are. externally comments. with to the that Here's customers back that to and price. industry suggesting strong. for your has any news view and to and them aren't end further is

Jeffrey Bernstein

Thanks thorough. very Very much.

Kevin Hourican

good Thanks, Jeff, Day. for Okay.


And the of Bania Kelly Capital. line our last question BMO of from comes

Kelly Bania

volume wanted versus on back XXXX. Where particularly I go within for U.S. that, case of on share versus any And the our was XX morning. just core taking good customers to segments? detail Hi, non-restaurant broadline. restaurant quarter, business the industry you versus focusing for the for hospitality and can questions. Thanks those exactly the to that discussion volume,

Aaron E. Alt

get the the And our broadly that to North positive enterprise Good within portfolio. of what business, We're not or of beyond morning, or the level typically offer alluded that is Kelly, as said getting guess across be I to do have approaching in 'XX back it. Aaron. quickly U.S. that loud, to Enterprise Kevin back-half returning America, fiscal confidence area We into we're out then leverage disclose yet at I volume either to would that. we U.S. an the but into as the it's will detail. or levels up don't year, we starting that you the

will Now, -- calling we're there talking -- we're I'm some be mix of out. I'm not aggregated numbers. that. not

based to in of have the class October what aggregate, year. we trends what saw expect with respect. -- country, one to we've we carry customer are and in that But one so we on over We the this volume how out confidence or far seen

Kevin Hourican

breaking segment. And which it this we we're -- clear is to Kevin bolster, been just remain down not segments We've by behind.

good Travel profitable is significant The down and versus news levels. as XX Industry that within strength most in volume sector. Business obviously is remain restaurant notable have a which our local from offsets our X We specifically, sector, perspective, Hospitality, examples independent and there's sector,

time. said, the be here ultimately level restaurant levels core QX. volume point at will of And the strength in this the by positive is XX enterprise that at strength end as is ultimate the in that's Aaron So

Kelly Bania

about expecting. And or that penetration here for progressing and an XX% share helpful. you've up That's Okay. with you on the of several accounts the local independent on just, these from quarters follow how wanted with and update wallet also just Can customers. now new the talked the to comment that provide that's trajectory you're

Kevin Hourican

pivot not we're primary new source which on the been we're let's two that I I where steadily work customer has Share last, John The wallet doing, the primary drivers the are of the growth call it future net thank growth. to earlier. pricing that wins, the Kelly, has the in work earlier, asked program over it, the the work, of we'll a loyalty been the to source personalization do alluded has going growth. improving, believe of of the question years. but primary you. Yeah, been

of to to currently will of growth we increased that will go it's we're year the third for We delivering call we times growth. X.X for the from our strategy X-year will pivot the we from that have are X.X confident we market target wallet. of the recipe share more why times growth mathematically, be coming that And which the growth growth the

of [Indiscernible] So, the the coming percent years. fiscal contribution towards more will pivot growth the in

Kelly Bania

you. Thank

Kevin Hourican

Kelly. Thanks


you Thank conference participating. this And concludes for today's call.

now may You disconnect.