Q4 2024 Sysco Corp Earnings Call

Please stand by, we're about to begin.

Operator: Welcome to Sysco's fourth quarter fiscal year 2024 conference call. As a reminder, today's call is being recorded.

Operator: Welcome to Sysco's fourth quarter fiscal year 2024 conference call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions.

Speaker Change: Welcome to Sysco's fourth quarter fiscal year 2024 conference call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions.

Operator: We will begin with opening remarks and introductions. I would like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

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

Kevin J. Kim: I would like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead. Good morning, everyone, and welcome to Sysco's fourth quarter fiscal year 2024 earnings call. On today's call, we have Kevin Hourican, our Chair of the Board and Chief Executive Officer, and Kenny Cheung, our Chief Financial Officer.

Kevin Kim: Please go ahead. Good morning, everyone, and welcome to Sysco's fourth quarter fiscal year 2024 earnings call. On today's call. We have Kevin Hurkin, our Chair of the Board and Chief Executive Officer, and Kenny Cheung, our Chief Financial Officer.

Kevin J. Kim: Good morning, everyone, and welcome to Sysco's fourth quarter fiscal year 2024 earnings call. On today's call, we have Kevin Hourican, our Chair of the Board and Chief Executive Officer, and Kenny Cheung, our Chief Financial Officer. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Security Litigation Reform Act, and actual results could differ materially.

Kevin J. Kim: Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in our annual report on Form 10-K for the year ended July 1st, 2023, subsequent SEC filings, and in the news release issued earlier this morning. A copy of these materials can be found in the investor section at sysco.com.

Kevin Kim: Before we begin, please note that statements made during this presentation that state the companies or management's intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results to differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes what is not limited to risk factors contained in our annual report on Form 10-K for the year ended July 1st, 2023, subsequent SEC filings, and in the news release issued earlier this morning.

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

Speaker Change: Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings.

Speaker Change: This includes, but is not limited to, risk factors contained in our annual report on Form 10-K for the year ended July 1st, 2023, subsequent SEC filings, and in the news release issued earlier this morning.

Kevin Kim: A copy of these materials can be found in the investor section at Sysco.com.

Speaker Change: A copy of these materials can be found in the investor section at sysco.com. non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the investor section of our website.

Kevin Kim: Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the investor section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year.

Speaker Change: During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year. To ensure we have sufficient time to answer all questions,

Kevin Kim: To ensure we have sufficient time to answer all questions, we'd like to ask each participant to limit their time today to one question and one follow-up.

Speaker Change: We'd like to ask each participant to limit their time today to one question and one follow-up. At this time, I'd like to turn the call over to Kevin Hourican.

Kevin J. Kim: Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the investor section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year to ensure we have sufficient time to answer all questions. We'd like to ask each participant to limit their time today to one question and one follow-up. At this time, I'd like to turn the call over to Kevin Hourican. Good morning, everyone, and thank you for joining us today.

Kevin Hurkin: At this time, I'd like to turn the call over to Kevin Hurkin. Good morning, everyone, and thank you for joining us today. During our call this morning, we will cover the following key topics. Food away from home buying trends, including bush traffic to restaurants, Sysco's performance for the quarter and the year relative to the overall market. In status updates on key topics of interest, including inflation, local case growth, supply chain productivity, and finally, Kenya, we will cover the financial details of our Q4 2024 as well as provide our fiscal 2025 guidance.

Kevin P. Hourican: During our call this morning, we will cover the following key topics: food away from home volume trends, including foot traffic to restaurants. Sysco's performance for the quarter and the year relative to the overall market, and status updates on key topics of interest, including inflation, local case growth, supply chain productivity, and finally, Kenny will cover the financial details of our Q4 2024 as well as provide our fiscal 2025 guidance. Let's get started with the key highlights of the business on slide number five.

Kevin P. Hourican: Good morning, everyone, and thank you for joining us today. During our call this morning, we will cover the following key topics.

Kevin P. Hourican: Food away from home volume trends, including foot traffic to restaurants.

Speaker Change: Sysco's performance for the quarter and the year relative to the overall market.

Speaker Change: and Status Updates on key topics of interest, including inflation, local case growth, supply chain productivity, and finally, Kenny will cover the financial details of our Q4 2024, as well as provide our fiscal 2025 guidance.

Kevin Hurkin: Let's get started with key highlights of the business on slide number five. I'm pleased to report that Sysco delivered 79 billion of top line revenue for the year, a growth of 3.3% versus fiscal 2023. The revenue growth was driven by USFS volume growth of 3.1% and USFS inflation of 0.5%. Cisco profitably took market share in fiscal 2024. I will speak more to this in a moment. Importantly, we delivered adjusted earnings per share of $1.39 for the quarter and $4.31 for the year. The full year performance was one penny higher than the midpoint of the guidance that we provided at the beginning of fiscal 2024.

Kenny: Let's get started with key highlights of the business on slide number five.

Kevin P. Hourican: I'm pleased to report that Sysco delivered $79 billion in top line revenue for the year, a growth of 3.3% versus fiscal 2023. The revenue growth was driven by USFS volume growth of 3.1% and USFS inflation of 0.5%. Sysco profitably took market share in fiscal 2024. I will speak more about this in a moment.

Kenny: I'm pleased to report that Sysco delivered $79 billion of top-line revenue for the year, a growth of 3.3% versus fiscal 2023.

Kenny: The revenue growth was driven by USFS volume growth of 3.1% and USFS inflation of 0.5%.

Kenny: Sysco profitably took market share in fiscal 2024. I will speak more to this in a moment.

Kevin P. Hourican: Importantly, we delivered adjusted earnings per share of $1.39 for the quarter and $4.31 for the year. The full-year performance was one penny higher than the midpoint of the guidance that we provided at the beginning of fiscal 2020. Kenny calls this our say-do ratio, and I'm pleased that we delivered above the midpoint of our initial guidance for the year, despite a softer economic environment in the second half of the fiscal year.

Kenny: Importantly, we delivered adjusted earnings per share of $1.39 for the quarter and $4.31 for the year.

Kenny: The full year performance was one penny higher than the midpoint of the guidance that we provided at the beginning of fiscal 2024.

Kevin Hurkin: Kenny call this our say-do ratio, and I'm pleased that we delivered above the midpoint of our initial guide for the year, despite the softer economic environment in the second half of the fiscal year. During RQ-4, our team once again displayed agility and accountability, enabling a strong financial performance, despite negative year-of-year foot traffic to restaurants.

Kenny: Kenny calls this our say-do ratio and I'm pleased that we delivered above the midpoint of our initial guide for the year despite a softer economic environment in the second half of the fiscal year.

Kevin P. Hourican: During Q4, our team once again displayed agility and accountability, enabling a strong financial performance despite negative year-over-year foot traffic to Russell. As I said in my introduction, I would like to start by providing an update on the health of the food away from home industry. Traffic to restaurants was down approximately 3% year-over-year for the quarter.

Kenny: During our Q4, our team once again displayed agility and accountability, enabling a strong financial performance despite negative year-over-year foot traffic to restaurants.

Kevin Hurkin: As I said in my intro, I would like to start by providing an update on the health of the food away from home industry. Traffic to restaurants was down approximately 3% year-of-year for the quarter. This is consistent with what you have heard from many restaurant names over the past couple of days and weeks. Sysco was successfully able to grow our volume 3.5% for the quarter, despite the declining year-of-year foot traffic. We did this by taking market share versus the overall market. In fact, for the full year, we grew our business more than 1.75 times the market.

Speaker Change: As I said in my intro, I would like to start by providing an update on the health of the food-away-from-home industry.

Speaker Change: Traffic to restaurants was down approximately 3% year-over-year for the quarter. This is consistent with what you have heard from many restaurant names over the past couple of days and weeks.

Kevin P. Hourican: This is consistent with what you have heard from many restaurant names over the past couple of days and weeks. We were successfully able to grow our volume 3.5% for the quarter despite the declining year-over-year foot traffic. We did this by taking market share versus the overall market. In fact, for the full year, we grew our business more than 1.75 times the market. That performance was above our stated goal for the year of 1.5 times market growth.

Speaker Change: Sysco was successfully able to grow our volume 3.5% for the quarter despite the declining year-over-year foot traffic.

Speaker Change: We did this by taking market share versus the overall market. In fact, for the full year, we grew our business more than 1.75 times the market.

Kevin Hurkin: That performance was above our stated goal for the year of 1.5 times market growth. Sysco's performance versus the market is calibrated via multiple external sources, and the performance is versus the total industry overall. The strong 1.75 times growth was a result of several important factors, as seen on slide 6 and 7. The largest distributors in the industry are taking share versus the overall food service market. Sysco specifically is winning with our specialty platforms, including FreshPoint and our specialty meat businesses, as well as our recent acquisitions like Greco and Edward Don. The combination of our industry-leading broadband business with our expanding specialty portfolio is winning in the marketplace.

Speaker Change: That performance was above our stated goal for the year of 1.5 times market growth.

Kevin P. Hourican: Sysco's performance versus the market is calibrated via multiple external sources, and the performance is versus the total industry overall. The strong 1.75 times growth was a result of several important factors, as seen on slides 6 and 7. The largest distributors in the industry are taking share versus the overall food service market.

Cisco: Sysco's performance versus the market is calibrated via multiple external sources and the performance is versus the total industry overall.

Cisco: The strong 1.75 times growth was a result of several important factors as seen on slides 6 and 7.

Speaker Change: The largest distributors in the industry are taking share versus the overall food service market.

Kevin P. Hourican: Sysco, specifically, is winning with their specialty plots, including Freshpoint and our specialty meat business, as well as recent acquisitions like Greco and Edward Dye. The combination of our industry-leading broad line business with our expanding specialty portfolio is winning in the market. Lastly, our national sales business is winning versus the total market, with notable wins in the food service management space and hospitality. We are pleased with our overall performance versus the total market, but with that said, we are not satisfied with our growth in the important local sector. As we covered at our Investor Day, we are confident that we can improve our local case performance in fiscal 2025. I'll speak more about those plans in a moment.

Speaker Change: Sysco, specifically, is winning with our specialty platforms.

Speaker Change: Including Freshpoint and our specialty meat businesses.

Speaker Change: as well as our recent acquisitions like Greco and Edward Dunn.

Speaker Change: The combination of our industry-leading broadband business with our expanding specialty portfolio is winning in the marketplace.

Kevin Hurkin: Lastly, our national sales business is winning versus the total market, with notable wins in the food service management space and hospitality.

Speaker Change: Lastly, our national sales business is winning versus the total market with notable wins in the food service management space and hospitality.

Kevin Hurkin: We are pleased with our overall performance versus the total market, and with that said, we are not satisfied with our growth in the important local segments. As we covered at our Investor Day, we are confident that we can improve our local case performance in fiscal 2025. I'll speak more to those plans in a moment.

Speaker Change: We are pleased with our overall performance versus the total market, and with that said, we are not satisfied with our growth in the important local segments.

Speaker Change: As we covered at our Investor Day, we are confident that we can improve our local case performance in fiscal 2025. I'll speak more to those plans in a moment.

Kevin Hurkin: For the board quarter, Sysco delivered the following performance. Continuing compelling profitable case growth within national accounts. Local case growth of positive 0.7% to last year. Importantly, our local cases in international grew 5% for the period. Sigma cases grew 5% from Q3 to Q4, with a June exit velocity of positive year-over-year growth. This is a reversal of recent negative volume trends within Sigma, as we have last week 52 of a customer exit, and we have signed new profitable business at start, chip dates during our fourth quarter. We expect Sigma to be a volume and profit growth business in fiscal 2025.

Kevin P. Hourican: For the fourth quarter, Sysco delivered the following performance, continuing in compelling profitable case growth within national local case growth of positive 0.7% compared to last year. Importantly, our local cases in international grew 5% for the period. Sigma cases grew 5% from Q3 to Q4 with a June exit velocity of positive year-over-year growth. This is a reversal of recent negative volume trends within Sigma as we have left week 52 of a customer exit, and we have signed new profitable business that start ship dates during our fourth quarter.

Speaker Change: For the fourth quarter, Sysco delivered the following performance.

Speaker Change: Continued and compelling profitable case growth within national accounts.

Speaker Change: Local case growth of positive 0.7 percent to last year. Importantly, our local cases in international grew 5 percent for the period.

Speaker Change: Sigma cases grew 5% from Q3 to Q4 with a June exit velocity of positive year-over-year growth.

Speaker Change: This is a reversal of recent negative volume trends within Sigma as we have lapped week 52 of a customer exit and we have signed new profitable business that had start ship dates during our fourth quarter.

Speaker Change: We expect Sigma to be a volume and profit growth business in fiscal 2025.

Kevin Hurkin: Sysco has a well-balanced business with strong market share in the non-restaurant space. Many of the non-restaurant sectors, like healthcare and food service management, are less impacted by consumer confidence and restaurant puts traffic. At times like these, our well-balanced business portfolio is a strong asset for Sysco, including our international segment. Our growth profit rate for the quarter was strong, with GP growing 4.2% year over year, and GP per case growing 1.3% first priority. Our merchant team continues to do an excellent job with strategic sourcing and product innovation. Overall expense management continues to improve year-to-year, with operating expenses increasing slower than our top line.

Kevin P. Hourican: We expect Sigma to be a volume and profit growth business in fiscal 2025. Sysco has a well-balanced business with strong market share in the non-restaurant space. Many of the non-restaurant sectors, like healthcare and food service management, are less impacted by consumer confidence in restaurant foot traffic.

Speaker Change: Sysco has a well-balanced business with strong market share in the non-restaurant space.

Speaker Change: Many of the non-restaurant sectors, like healthcare and food service management, are less impacted by consumer confidence in restaurant foot traffic.

Kevin P. Hourican: At times like these, our well-balanced business portfolio is a strong asset for Sysco, including our international sector. Our gross profit rate for the quarter was strong, with GP growing 4.2% year-over-year and GP per case growing 1.3% versus the prior year. Our merchant team continues to do an excellent job with strategic sourcing and product innovation. Overall, expense management continues to improve year over year, with operating expenses increasing slower than our top line. Most notably, our corporate expenses were down 10% for the quarter on a year-over-year pace. The corporate expense reduction was a result of the efficiency work that we deployed in Q3 of this year.

Speaker Change: At times like these, our well-balanced business portfolio is a strong asset for Sysco, including our international segment.

Speaker Change: Our gross profit rate for the quarter was strong, with GP growing 4.2% year-over-year and GP per case growing 1.3% versus prior year.

Speaker Change: Our merchant team continues to do an excellent job with strategic sourcing and product innovation.

Speaker Change: Overall expense management continues to improve year over year, with operating expenses increasing slower than our top line.

Kevin Hurkin: Most notably, our corporate expenses were down 10% for the quarter on a year-over-year basis. The corporate expense reduction was a result of the efficiency work that we deployed into three of this year. Benefits from those expense reductions will continue into 2025, and Kenny will speak to that in more detail. All told, these factors resulted in a 6.4% increase in our operating income year-over-year, enabling us to exceed the midpoint of our four-year adjusted EPS guidance.

Speaker Change: Most notably, our corporate expenses were down 10% for the quarter on a year-over-year basis.

Speaker Change: The corporate expense reduction was a result of the efficiency work that we deployed in Q3 of this year.

Kevin P. Hourican: Benefits from those expense reductions will continue into 2025, and Kenny will speak to that in more detail. All told, these factors resulted in a 6.4% increase in our operating income year-over-year, enabling us to exceed the midpoint of our full-year adjusted EPS guidance. Now that I have highlighted our financial performance for the quarter, I would like to continue the theme of our Investor Day and provide you with a bit more color on two of the biggest levers within our P&L, local volume growth and supply chain productivity improvement. Let's get started with volume growth. Specifically, I'll highlight progress we are making on the actions to deliver increased profitable local case volume in fiscal 2025 on slide nine. But first, let me start with hiring status.

Speaker Change: Benefits from those expense reductions will continue into 2025, and Kenny will speak to that in more detail.

Kenny: All told, these factors resulted in a 6.4% increase in our operating income year over year, enabling us to exceed the midpoint of our full year adjusted EPS guidance.

Kevin Hurkin: Now that I have highlighted our financial performance for the quarter, I would like to continue the theme of our Investor Day and provide you a bit more color on two of the biggest levers within our P&L: local volume growth and supply chain productivity improvements. Let's get started with volume growth. Specifically, I will highlight progress we are making on the actions to deliver increased profitable local case volume in fiscal 2025 on slide number 9. First, let me start with hiring status. In full year of fiscal 2024, we successfully hired 450 net incremental sales professionals. The colleague hiring ran throughout the year, with many of them being hired in the second half.

Kenny: Now that I've highlighted our financial performance for the quarter, I would like to continue the theme of our Investor Day and provide you a bit more color on two of the biggest levers within our P&L, local volume growth and supply chain productivity improvement.

Kenny: Let's get started with volume growth.

Kenny: Specifically, I will highlight progress we are making on the actions to deliver increased profitable local case volume in fiscal 2025 on slide number 9.

Kevin P. Hourican: In full year fiscal 2024, we successfully hired 450 net incremental sales professionals. The hiring ramped throughout the year, with many of them being hired in the second half. The new colleague cohorts, hired in 2024, will begin positively impacting our P&L throughout fiscal 2025 as they grow their new territories and become more knowledgeable about our product offering. As we mentioned on our investor day, we plan to hire an additional net 450 sales professionals in fiscal 2025, with those new cohorts expected to positively impact our fiscal 2026 results. We are confident in our ability to hire and train these new colleagues.

Kenny: In full year fiscal 2024, we successfully hired 450 net incremental sales professionals.

Kenny: The colleague hiring ramped throughout the year, with many of them being hired in the second half.

Kevin Hurkin: The new colleague cohorts, hired in 2024, will begin positively impacting our P&L throughout fiscal 2025 as they grow their new territories and become more knowledgeable about our product offerings. As we mentioned on our Investor Day, we plan to hire an additional net 450 sales professionals in fiscal 2025. With those new cohorts expected to positively impact our fiscal 2026 results. We are confident in our ability to hire and train these new colleagues. In fact, we are supplementing our industry-leading training program by hiring more sales trainers and sales administrative staff. One of our top priorities as a company is to ensure that these new colleagues get the training that they deserve and ramp up the productivity curve in an efficient manner.

Kenny: The new colleague cohorts hired in 2024 will begin positively impacting our P&L throughout fiscal 2025 as they grow their new territories and become more knowledgeable about our product offerings.

Kenny: As we mentioned on our investor day, we plan to hire an additional net 450 sales professionals in fiscal 2025, with those new cohorts expected to positively impact our fiscal 2026 results.

Kevin P. Hourican: In fact, we are supplementing our industry-leading training program by hiring more sales trainers in sales administration. One of our top priorities as a company is to ensure that these new colleagues get the training that they deserve and ramp up the productivity curve in an efficient manner. Our executive leadership team is taking personal ownership to ensure that we track the new trainees cohort by cohort to ensure that they are maturing on schedule and that they are provided with the support and resources they need to be successful.

Kenny: In fact, we are supplementing our industry-leading training program by hiring more sales trainers and sales administrative staff.

Kevin Hurkin: Our executive leadership team is taking personal ownership to ensure we track the new trainees cohort by cohort to ensure that they are maturing on schedule and that they are provided the support and resources they need to be successful. Our strong supplier community will be assisting in the ever-important product training that goes along with new colleague hiring. We greatly appreciate our supplier community for their support.

Kenny: Our executive leadership team is taking personal ownership to ensure we track the new trainees cohort by cohort to ensure that they are maturing on schedule and that they are provided the support and resources they need to be successful.

Kevin P. Hourican: Our strong supplier community will be assisting in the ever-important product training that goes along with new colleague hiring. We greatly appreciate our supplier community for their support. On the first day of our new fiscal year, we introduced a new compensation program for our U.S. Broadline Sales College. We have remixed the base pay to incentive ratios within our compensation program.

Kenny: Our strong supplier community will be assisting in the ever-important product training that goes along with new colleague hiring. We greatly appreciate our supplier community for their support.

Kevin Hurkin: On the first day of our new fiscal year, we introduced a new compensation program for our US broadline sales colleagues. We have remixed the base pay to incentive ratios within our compensation program. In the process of doing so, we have increased the earnings potential of our sales staff, and the incentives put in place motivate the specific behaviors that will help advance Cisco's P&L. The communication and change management of the new compensation program is well underway, and we are confident that this program will be good for our colleagues, our customers, and our P&L. benefits of this new program will be felt as the year progresses, but I don't anticipate any major movement in Q1.

Kenny: On the first day of our new fiscal year, we introduced a new compensation program for our U.S. Broadline Sales colleagues.

Kevin P. Hourican: In the process of doing so, we have increased the earnings potential of our sales staff, and the incentives put in place motivate the specific behaviors that will help advance Sysco's P&L. The communication and change management of the new compensation program are well underway, and we are confident that this program will be good for our colleagues, our customers, and our profits. Benefits of this new program will be felt as the year progresses, but I don't anticipate any major movement in Q1.

Speaker Change: In the process of doing so, we have increased the earnings potential of our sales staff and the incentives put in place motivate the specific behaviors that will help advance Sysco's P&L.

Speaker Change: The communication and change management of the new compensation program is well underway, and we are confident that this program will be good for our colleagues, our customers, and our P&L.

Speaker Change: Benefits of this new program will be felt as the year progresses, but I don't anticipate any major movement in Q1.

Kevin Hurkin: Our total team selling program continues to advance with our sales consultant, generalists partnering better than ever with our produced and protein specialists. At our investor day in May, Greg Bertrand, our global COO, covered the compelling growth opportunity via our total team selling program. As he presented in May, a customer that buys from Cisco Broad line plus one of our specialty businesses spends three times more per week than a broad line-only customer. Winning with specialty is a 10 billion dollar plus opportunity for Cisco as we work to earn our fair share of the specialty market. Cisco specialty is a compelling mode versus the overall industry that has taken more than 20 years for us to assemble our specialty assets.

Kevin P. Hourican: Our total team selling program continues to advance, with our sales consultant generalists partnering better than ever with our produce and protein specialists. At our Investor Day in May, Greg Bertrand, our Global COO, covered the compelling growth opportunity via our Total Team Selling program. As he presented in May, a customer that buys from Sysco Broadline plus one of our specialty businesses spends three times more per week than a Broadline-only customer.

Speaker Change: Our total team selling program continues to advance, with our sales consultant generalists partnering better than ever with our produce and protein specialists.

Kevin P. Hourican: Winning with specialty is a $10 billion plus opportunity for Sysco as we work to earn our fair share of the specialty. Our specialty is a compelling moat versus the overall industry. That is, as it has taken more than 20 years for us to assemble our specialty. Integrating the Systems, Supply Chains, Colleague Compensation Programs, and the important Go-to-Market Selling Strategy between Specialty and Broadline. This was a very large work effort

Kevin Hurkin: Integrating the systems, supply chains, colleague compensation programs, and the important go-to-market selling strategy between specialty and broad line. This was a very large work effort. In the coming years, we will continue to expand our specialty capabilities, both domestically and internationally, to a combination of M&A and green field activities. For example, we are adding our Asian goods business to our recently open downtown Pennsylvania distribution center. This addition will greatly improve our ability to serve the large and growing Asian markets in the Northeast.

Speaker Change: Integrating the Systems, Supply Chains, Colleague Compensation Programs, and the important Go-to-Market Selling Strategy between Specialty and Broadline. This was a very large work effort.

Kevin P. Hourican: In the coming years, we will continue to expand our specialty capabilities, both domestically and internationally, through a combination of M&A and Greenfield activities. For example, we are adding our Asian foods business to our recently opened Allentown, Pennsylvania Distribution Center. This addition will greatly improve our ability to serve the large and growing Asian markets in the North. Lastly, our international business delivered compelling local case growth of 5% for the quarter. We are running the Sysco Play International program, with programs like Sysco Your Way and Perks beginning to positively impact our customers. We're also bringing improved technology and Sysco brand products to these important geographies.

Speaker Change: In the coming years, we will continue to expand our specialty capabilities, both domestically and internationally, through a combination of M&A and Greenfield activities. For example, we are adding our Asian Foods business to our recently opened Allentown, Pennsylvania Distribution Center.

Speaker Change: This addition will greatly improve our ability to serve the large and growing Asian market in the Northeast.

Kevin Hurkin: Lastly, our international business delivered compelling local case growth of 5% to the quarter. We are running the Cisco play internationally with programs like Cisco, Your Way, and Perks beginning to positively impact our outcomes. We are also bringing improved technology and Cisco brand products to these important geographies. All told, the strong local case growth enabled our international segment to deliver a compelling 13.1% profit growth in the quarter. We expect international continued to be a top and bottom line tailwind for Cisco in fiscal 2025.

Speaker Change: Lastly, our international business delivered compelling local case growth of 5% for the quarter. We are running the Sysco play internationally.

Speaker Change: with programs like Sysco Your Way and Perks beginning to positively impact our outcomes.

Speaker Change: We are also bringing improved technology and Sysco brand products to these important geographies.

Kevin P. Hourican: All told, the strong local case growth enabled our international segment to deliver a compelling 13.1% profit growth in the quarter. We expect international business to continue to be a top and bottom line tailwind for Sysco in fiscal 2025. Now that we have covered our local case growth performance, let's turn to the status and health of our supply. As I've said many times, the key to success in this business is being the distributor that can consistently ship on time and in full to our customers. Over the past quarter, we have continued to make progress in improving our service levels to our customers. We improved and advanced our on-time rates with a dedicated focus on routing.

Speaker Change: All told, the strong local case growth enabled our international segment to deliver a compelling 13.1% profit growth in the quarter. We expect international continued to be a top and bottom line tailwind for Sysco in fiscal 2025.

Kevin Hurkin: Now that we have covered our local case growth performance, let's turn to the status and health of our supply chain. As I said many times, the key to success in this business is being the distributor that can consistently ship on time and in full to our customers. Over the past quarter, we have continued to make progress in improving our service levels to our customers. We have improved in advance our on-time rates with a dedicated focus on routing excellence. I am proud of our operations team for the hard work and for the improvement that they are making in on-time delivery.

Speaker Change: Now that we have covered our local case growth performance, let's turn to the status and health of our supply chain.

Speaker Change: As I have said many times, the key to success in this business is being the distributor that can consistently ship on time and in full to our customers.

Speaker Change: Over the past quarter, we have continued to make progress in improving our service levels to our customers.

Speaker Change: We improved and advanced our on-time rates with a dedicated focus on routing excellence.

Kevin P. Hourican: I'm proud of our operations team for the hard work and for the improvement that they are making in on-time delivery. You can see the impact on our MPS scores as satisfaction with delivery is up versus the prior year. In addition to the good work with delivery service levels, our merchandising and inventory teams continue to work collaboratively to improve our first-time fill rate.

Speaker Change: I am proud of our operations team for the hard work and for the improvement that they are making in on-time delivery. You can see the impact on our MPS scores as satisfaction with delivery is up versus prior year.

Kevin Hurkin: You can see the impact on our MPS scores as satisfaction with delivery is up versus prior year. In addition to the good work with delivery service levels, our merchandising and inventory teams continue to work collaboratively to improve our first-time full rate. Progress is being made on core and stock items, as well as improving our agility when a supply chain disruption occurs at one of our suppliers. We improve our prior year in both aspects and will make additional progress in 2025. We have increased the importance of fill rates in our leadership performance evaluation metrics for 2025.

Speaker Change: In addition to the good work with delivery service levels, our merchandising and inventory teams continue to work collaboratively to improve our first-time fill rate.

Kevin P. Hourican: Progress is being made on core in-stock items, as well as improving our agility when a supply chain disruption occurs at one of our suppliers. We improved on our prior year in both aspects and will make additional progress in 2025. We've increased the importance of bill rates in our leadership performance evaluation metrics for 2025.

Speaker Change: Progress is being made on core in-stock items as well as improving our agility when a supply chain disruption occurs at one of our suppliers.

Speaker Change: We improved versus prior year in both aspects and will make additional progress in 2025.

Speaker Change: We have increased the importance of fill rates in our leadership performance evaluation metrics for 2025. Fill rates are a strength point for Sysco historically, and we are working to further advance that advantage through these efforts.

Kevin Hurkin: 5. Bill rates are a strength point for Sysco historically, and we are working to further advance that advantage through these efforts.

Kevin P. Hourican: Bill rates have been a strength point for Sysco historically, and we are working to further advance that advantage through these efforts. As I've mentioned many times, the number one lever to improve our supply chain cost performance is to increase colleague retention. Attention rates improved sequentially quarter over quarter throughout the year, and they more than doubled compared to the prior year in the fourth quarter.

Kevin Hurkin: As I've mentioned many times, the number one lever to improve our supply chain cost performance is to increase colleague retention. Retention rates improve sequentially quarter over quarter throughout the year, and they more than double compared to the prior year in the fourth quarter. The improved retention is showing up and improved safety metrics, reduced product shrink, and increased productivity of our colleagues. Many of these items, like workers' confidentiality, have a long tail, so the improvement we are driving now will reflect positively in our P&L in fiscal 25 and 26.

Speaker Change: As I have mentioned many times, the number one lever to improve our supply chain cost performance is to increase colleague retention.

Speaker Change: But tension rates improved sequentially quarter over quarter throughout the year, and they more than doubled compared to the prior year in the fourth quarter.

Speaker Change: The improved retention is showing up in improved safety metrics, reduced product shrink, and increased productivity of our colleagues.

Speaker Change: Many of these items, like workers' comp and auto liability, have a long tail, so the improvement we are driving now will reflect positively in our P&L in Fiscal 25 and 26.

Kevin Hurkin: The last topic to cover in our supply chain update is the progress that we are making to expand our throughput capacity. During our Q4, we opened our first DC fold out in more than 10 years in Alentown, Pennsylvania. This facility will help Sysco better serve the population-dense Northeast Corridor by increasing service levels and lowering our cost to serve.

Speaker Change: The last topic to cover in our supply chain update is the progress that we are making to expand our throughput capacity.

Kevin P. Hourican: The improved retention is showing up in improved safety metrics, reduced product shrink, and increased productivity of our costs. Many of these items, like workers' comp and auto liability, have a long tail, so the improvement we are driving now will reflect positively on our P&L in Fiscal 25 and 26. The last topic to cover in our supply chain update is the progress that we are making to expand our throughput capacity. During Q4, we opened our first DC foldout in more than 10 years in Allentown, Pennsylvania.

Speaker Change: During our Q4, we opened our first DC fold-out in more than 10 years in Allentown, Pennsylvania. This facility will help Sysco better serve the population-dense Northeast Corridor by increasing service levels and lowering our costs to serve.

Kevin P. Hourican: This facility will help Sysco better serve the population-dense Northeast Corridor by increasing service levels and lowering our costs to serve. As I wrap up my prepared remarks, I want to thank the entire Sysco team for a strong year. We grew our business more than 1.75 times the overall market at industry-leading profitability metrics, and we exceeded the midpoint of our EPS guide for the year. Importantly, we have continued to advance our business strategy, making progress in important areas like improved technology and customer programs like Sysco Your Way. And, Finally, we are focused upon the most important things to ensure success for fiscal 2025 and beyond, and we are positioned well to deliver against the guidance that Kenn So with that, I'll now turn the call over to Kenny, who's going to highlight the fiscal details of the quarter and our year, as well as TFR guidance for fiscal 2025. Kenny, over to you.

Kevin Hurkin: But there wrap up my prepared remarks. I want to thank the entire Sysco team for a strong year. We grew our business more than 1.75 times the overall market at industry-leading profitability metrics, and we exceeded the midpoint of our EPS guide for the year. Importantly, we have continued to advance our business strategy, making progress in important areas like improved technology and customer programs like Sysco or Your Way in perks. Lastly, we are focused upon the most important things to ensure success for fiscal 2025 and beyond, and we are positioned well to deliver against the guidance that Kenny will share in a moment.

Speaker Change: As I wrap up my prepared remarks, I want to thank the entire Sysco team for a strong year. We grew our business more than 1.75 times the overall market at industry-leading profitability metrics and we exceeded the midpoint of our EPS guide for the year.

Speaker Change: Importantly, we have continued to advance our business strategy, making progress in important areas like improved technology and customer programs like Sysco, Your Way, and Perks.

Speaker Change: Lastly, we are focused upon the most important things to ensure success for fiscal 2025 and beyond, and we are positioned well to deliver against the guidance that Kenny will share in a moment.

Kenny Cheung: So, with that, I'll turn the call over to Kenny, who's going to highlight the fiscal details of the quarter and our year, as well as TFR guidance for fiscal 2025.

Kenny: So with that, I'll now turn the call over to Kenny, who's going to highlight the fiscal details of the quarter and our year, as well as TFR guidance for fiscal 2025. Kenny, over to you.

Kenny Cheung: Getting over to you.

Kenny Cheung: Thank you, Kevin, and good morning, everyone. I would like to start off by thanking our customers, colleagues, shareholders, and partners. This quarter's results further demonstrates our ability to deliver solid financial performance in a relatively softer macro environment. Our focus on core performance drivers enhanced operational discipline. As we have said before, business plans don't always materialize the exact same way you draw them up on paper. This past year was no different. We focus on operational discipline in Titan, the belt to deliver on our initial profit guidance. I'm confident these choices, however difficult at the time, create long-term structural returns.

Kenny K. Cheung: Thank you, Kevin, and good morning, everyone. I would like to start off by thanking our customers, colleagues, shareholders, and partners. This quarter's results further demonstrate our ability to deliver solid financial performance in a relatively softer macro environment. Our focus on core performance drivers enhance operational efficiency. As we have said before, business plans don't always materialize the exact way you draw them up on paper. This past year was no different.

Kenny: Thank you Kevin and good morning everyone. I would like to start off by thanking our customers, colleagues, shareholders, and partners.

Kenny: This quarter's results further demonstrate our ability to deliver solid financial performance in a relatively softer macro environment.

Kenny: Our focus on core performance drivers enhance operational discipline.

Speaker Change: As we have said before, business plans don't always materialize the exact same way you draw them up on paper. This past year was no different.

Kenny K. Cheung: We focus on operational discipline and tighten the belt to deliver on our initial profit guidance. I'm confident these choices, however difficult at the time, will create long-term structural returns. There is muscle memory across the organization, helping develop a stronger operating model that positions us to grow share profitably as we look ahead. Q4 financials reflect positive sales and volume growth, as well as our seventh consecutive quarter of positive operating leverage, with gross profit growing faster than operating expenses and operating income growing faster than sales.

Speaker Change: We focus on operational discipline and tighten the belt to deliver on our initial profit guidance. I'm confident these choices, however difficult at the time, create long-term structural returns.

Kenny Cheung: There is muscle memory across the organization, helping develop a stronger operating model that positions us to grow share possibly as we look ahead. Cupid financials reflect positive sales and volume growth, as well as our seventh consecutive quarter of positive operating leverage that grows profit, growing faster than operating expenses and operating income, growing faster than sales. All together, these rendered growth across adjusted operating income and EPS, with the full year coming in a penny higher than the midpoint of the guidance range. Given the multiple levers across our business, we improve efficiency both on growth profit and operating expense.

Speaker Change: There is muscle memory across the organization, helping develop a stronger operating model that positions us to grow share profitably as we look ahead.

Speaker Change: Q4 financials reflect positive sales and volume growth, as well as our 7th consecutive quarter of positive operating leverage, with gross profit growing faster than operating expenses and operating income growing faster than sales.

Kenny K. Cheung: All together, these resulted in growth across adjusted operating income and EPS, with the full year coming in a penny higher than the midpoint of the guidance. Given the multiple levers across our business, we improved efficiency, both on gross profit and operating expenses. The GP dollar growth of over 4% was driven by optimal pricing and sourcing. Operating expense includes record levels of supply chain productivity improvements, coupled with our continued focus on managing corporate expenses, which were down 10% year over year.

Speaker Change: All together, these rendered growth across Adjusted Operating Income and EPS with the full year coming in a penny higher than the midpoint of the guidance range.

Speaker Change: Given the multiple levers across our business, we improve efficiency both on gross profit and operating expenses.

Kenny Cheung: of Texas. GP dollar growth of over 4% was driven by optimal pricing and sourcing improvements. Operating expense include record levels of supply chain predictive improvement coupled with our continued focus on managing corporate expense, which were down 10% year over year. These efforts help us deliver our profit growth, reinvest back into the business, and return over $2.2 billion back to shareholders in FY24.

Speaker Change: GP dollar growth of over 4% was driven by optimal pricing and sourcing improvements.

Speaker Change: Operating expenses include record levels of supply chain productivity improvement coupled with our continued focus on managing corporate expense.

Kenny K. Cheung: These efforts help us deliver our profit growth, reinvest back into the business, and return over $2.2 billion to shareholders in FY20. Now, turning to a summary of our reported results for the quarter, starting on slide 14. For the fourth quarter, our enterprise sales grew 4.2%, driven by U.S. food service growing 4.9%, international growing 3.8%, and Sigma growing 2%. With respect to volume, total U.S. Food Service volume increased 3.5%, and local volume increased 0.7%. Don positively impacted U.S. food service volumes by 2.7 percent and local volumes by 1.6 percent.

Speaker Change: which were down 10% year over year. These efforts help us deliver our profit growth, reinvest back into the business, and return over $2.2 billion back to shareholders in FY24.

Kenny Cheung: Now turning to a summary of our report results for the quarter, starting on slide 14. For the fourth quarter, our enterprise sales group 4.2% driven by US food service growing 4.9%, international growing 3.8%, in sigma growing 2%. With respect to volume, total US food service volume increased 3.5%, and local volume increased 0.7%. Don positively impacted US food service volumes by 2.7% in local volumes by 1.6%. We produce 3.8 billion dollars in gross profit of 4.2% in gross margins of 18.7% with a costly flat with prior year due to mix. A gross profit dollar improvement reflected our ability to continue to effectively manage product inflation, which came in at 1.6% for the total enterprise, consistent with our expectations.

Speaker Change: Now turning to a summary of our reported results for the quarter, starting on slide 14.

Speaker Change: For the fourth quarter, our enterprise sales grew 4.2 percent, driven by U.S. Food Service growing 4.9 percent, International growing 3.8 percent, and Sigma growing 2 percent.

Don: With respect to volume, total U.S. Food Service volume increased 3.5% and local volume increased 0.7%. DON positively impacted U.S. Food Service volumes by 2.7% and local volumes by 1.6%.

Kenny K. Cheung: We produced $3.8 billion in gross profit of 4.2%, and gross margins of 18.7% were approximately flat with the prior year due to mix. Gross profit dollar improvement reflected our ability to continue to effectively manage product inflation, which came in at 1.6% for the total enterprise, consistent with our expectations. The improvement in gross profit was also driven by incremental progress from strategic sourcing efforts in our U.S. and international sectors. Specific to Sysco Brands, penetration rates decreased by 51 bps to 36.6% in U.S. Broadline and 37 bps to 47.1% in U.S. local results.

Don: We produced $3.8 billion in gross profit of 4.2% and gross margins of 18.7% was approximately flat with prior year due to mix.

Don: A gross profit dollar improvement reflected our ability to continue to effectively manage product inflation, which came in at 1.6% for the total enterprise, consistent with our expectations.

Kenny Cheung: The improvement in gross profit was also driven by incremental progress from strategic sourcing efforts in our US and international segments. Specific statistical brand penetration rates decreased by 51 bips to 36.6% in US broad line and 37 bips to 47.1% in US local results. We continue to improve with local customers with single units that's by pressure from local businesses with multiple units. We have a strong history of growing statistical brand penetration, and we have trade management actions to improve the mix over the course of the year. Adjusted operating expense for 2.8 billion dollars for the quarter for 13.4% of sales, a tall bips improvement from the prior year reflecting supply chain and corporate expense efficiencies.

Don: The improvement in gross profit was also driven by incremental progress from our strategic sourcing efforts in our U.S. and international segments.

Speaker Change: Specific to Sysco Brand, penetration rates decreased by 51 bps to 36.6% in U.S. Broadline and 37 bps to 47.1% in U.S. local results.

Kenny K. Cheung: We continue to improve with local customers with single units, despite pressure from local businesses with multiple units. We have a strong history of growing Cisco brand penetration, and we have trade management actions to improve the mix over the course of the year. Adjusted operating expense was $2.8 billion for the quarter, or 13.4% of sales, a 12 BIPS improvement from the prior year, reflecting supply chain and corporate expense efficiency. Adjusted operating income was $1.1 billion for the quarter, improving to 5.3% margins.

Speaker Change: We continue to improve with local customers with single units despite pressure from local businesses with multiple units.

Speaker Change: We have a strong history of growing Cisco brand penetration, and we have trade management actions to improve the mix over the course of the year.

Speaker Change: Adjusted operating expense, or $2.8 billion for the quarter, or 13.4% of sales, a tall FIPS improvement from the prior year, reflecting supply chain and corporate expense efficiencies.

Kenny Cheung: Adjusted operating income was 1.1 billion for the quarter, improving to 5.3% margins. For the year, adjusted operating income grew 8.4% as we expanded margins both on a dollar and rate basis. Most know where the international segment continues to deliver substantial growth, demonstrating positive operating leverage and margin expansion. This included a 13.1% increase in adjusted operating income, with our teams successfully growing share and executing the Cisco Playbook with best practices. This segment remains a growth driver for the company. Adjusted OI growth also benefited from Sigma contributing 44.4% profit growth as to continue to focus on profit enhancements and growth from your customers.

Speaker Change: Adjusted Operating Income was $1.1 billion for the quarter, improving to 5.3% margins. For the year, Adjusted Operating Income grew 8.4% as we expanded margins both on a dollar and rate basis.

Kenny K. Cheung: For the year, adjusted operating income grew 8.4% as we expanded margins both on a dollar and rate basis. Most noteworthy, our international segment continues to deliver substantial growth, demonstrating positive operating leverage and margining. This included a 13.1% increase in adjusted operating income, with our team successfully growing share and executing the Sysco playbook with best practices. This segment remains a growth driver for the company. Adjusted OI growth also benefited from SIGMA contributing 44.4% profit growth as we continue to focus on profit enhancements and growth from new customers. For the quarter, adjusted EBITDA increased to $1.3 billion, or up 5.4%.

Speaker Change: Most noteworthy, our international segment continues to deliver substantial growth, demonstrating positive operating leverage and margin expansion.

Speaker Change: This included a 13.1% increase in adjusted operating income, with our team successfully growing share and executing the Sysco playbook with best practices.

Speaker Change: This segment remains a growth driver for the company.

Speaker Change: Adjusted OI growth also benefited from Sigma contributing 44.4% profit growth as we continue to focus on profit enhancements and growth from new customers.

Kenny Cheung: for the quarter of just an EBITDA increased to $1.3 billion or up 5.4 percent. I am also pleased with the health of our balance sheet, which further strengthens this quarter. We end of the year at 2.7 times net debt leverage ratio, which is within our target. We end of the year with $11.3 billion in net debt, and approximately $3.5 billion in total liquidity, which is a substantial headroom above our minimum threshold. Our debt is well-lattered without any maturities over $1 billion until FY 27. Turning to our cash flow on FY 23, we generated approximately $3 billion in operating cash flow and over $2.2 billion in free cash flow, which was a new record.

Speaker Change: For the quarter, adjusted EBITDA increased to $1.3 billion, or up 5.4%.

Kenny K. Cheung: I am also pleased with the health of our balance sheet, which further strengthened this quarter. We ended the year at 2.7 times net debt leverage ratio, which is within our target. We ended the year with $11.3 billion in net debt and approximately $3.5 billion in total liquidity, which is a substantial headroom above our minimum threshold. Our debt is well-laddered without any maturities over $1 billion until FY27.

Speaker Change: I am also pleased with the health of our balance sheet, which further strengthened this quarter. We ended the year at 2.7 times net debt leverage ratio, which is within our target.

Speaker Change: We ended the year with $11.3 billion in net debts and approximately $3.5 billion in total liquidity, which is a substantial headroom above our minimum threshold. Our debt is well-laddered without any maturities over $1 billion until FY27.

Kenny K. Cheung: Turning to our cash flow, on slide 23, we generated approximately $3 billion in operating cash flow and over $2.2 billion in free cash flow, which was a new record. Our conversion rate from adjusted EBITDA to operating cash flow was over 70%, and free cash flow conversion was over 50%, showing the company's robust earnings power. Our strong financial position enabled us to return over $2.2 billion to shareholders. This was done through $1.2 billion of sherry purchases and $1 billion of dividends.

Speaker Change: Turning to our cash flow on slide 23, we generated approximately $3 billion in operating cash flow and over $2.2 billion in free cash flow, which was a new record.

Kenny Cheung: Our conversion rate from a over 50 percent, showing the company's robust earnings power. Our strong financial position enabled us to return over $2.2 billion to shareholders this year. This was done through $1.2 billion of sherry purchases and $1.1 billion of dividends. Despite the current macroeconomic landscape, we are poised to grow both top line and bottom line results in FY 25 in line with the financial algorithm range. As a refresher from our Investor Day back in May, our three-year growth algorithm costs for sales growth of 4% to 6% and adjusted EPS growth of 6% to 8% per year.

Speaker Change: Our conversion rate from adjusted EBITDA to operating cash flow was over 70% and free cash flow conversion was over 50% showing the company's robust earnings power.

Speaker Change: Our strong financial position enabled us to return over $2.2 billion to shareholders this year.

Speaker Change: This was done through $1.2 billion of share repurchases and $1 billion of dividends.

Kenny K. Cheung: Despite the current macroeconomic landscape, we are poised to grow both top-line and bottom-line results in FY25, in line with the financial algorithm's rank. As a refresher from our Investor Day back in May, our three-year growth algorithm calls for sales growth of 4 to 6% and adjusted EPS growth of 6 to 8% per year. We continue to be confident as we believe this algorithm is achievable and one we can deliver on a consistent basis.

Speaker Change: Despite the current macroeconomic landscape, we are poised to grow both top line and bottom line results in FY25 in line with the financial algorithm range.

Speaker Change: As a refresher from our investor day back in May, our three-year growth algorithm calls for sales growth of 4% to 6% and adjusted EPS growth of 6% to 8% per year.

Kenny Cheung: We continue to be confident as we believe this algorithm is achievable and one we can deliver on a consistent basis.

Speaker Change: We continue to be confident as we believe this algorithm is achievable and one we can deliver on a consistent basis.

Kenny Cheung: Let's go a bit deeper on 2025 guidance as seen on slide 25. During FY 25, we expect net sales growth of 4% to 5%. Net sales growth includes inflation of approximately 2%, which we are seeing now, and positive volume growth of low single digits for the year. We also anticipate a slight benefit from M&A during the year. All in, we are guiding to adjusted EPS growth of 6% to 7% in line with the financial algorithm range. As we highlighted at the investor day, 2025 EPS growth will be impacted by non-operational below-the-line items with a higher tax rate in interest expense.

Kenny K. Cheung: Let's go a bit deeper on 2025 guidance as seen on slide 25. During FY25, we expect net sales growth of 4 to 5%. Net sales growth includes inflation of approximately 2%, which we are seeing now, and positive volume growth of low single digits for the year.

Speaker Change: Let's go a bit deeper on 2025 guidance as seen on slide 25.

Speaker Change: During FY25, we expect net sales growth of 4-5%.

Speaker Change: Net sales growth includes inflation of approximately 2%, which we are seeing now, and positive volume growth of low single digits for the year. We also anticipate a slight benefit from M&A during the year.

Kenny K. Cheung: We also anticipate a slight benefit from M&A during the year. All in, we are guiding to adjusted EPS growth of 6 to 7% in line with the financial algorithm range. As we highlighted at Investor Day, 2025 EPS growth will be impacted by non-operating, below-the-line items with a higher tax rate. We are confident these targets are achievable.

Speaker Change: All in, we are guiding to adjusted EPS growth of 6-7% in line with the financial algorithm range.

Speaker Change: As we highlighted at the Investor Day, 2025 EPS growth will be impacted by non-operational below-the-line items with a higher tax rate and interest

Kenny Cheung: We are confident these targets are achievable. Regarding phasing for the year, we expect similar traffic trends from this last quarter to continue into Q1 with modest industry traffic improvements in the back half of FY 25. We also expect benefits from our investments in sales professionals and other growth initiatives as a year progresses. Consistent with our ROIC focus, our investments with sales professional hiring will yield meaningful returns over the long term. As Kevin stated earlier, we remain focused on improving local case performance in FY 25. For example, the sales consultant comp structure will shift to more bonus, less space, raising performance-driven census and ensuring operating expenses will correspond more closely with sales resources.

Kenny K. Cheung: Regarding phasing for the year, we expect similar traffic trends from this last quarter to continue into Q1, with modest industry traffic improvements in the back half of FY25. We also expect benefits from our investments in sales professionals and other growth initiatives as the year progresses. Consistent with our ROIC focus, our investments in sales professional hiring will yield meaningful returns over the long term. As Kevin stated earlier, we remain focused on improving local case performance in FY25. For example, the sales consultant comp structure will shift to more bonuses and less base, raising performance-driven expenses and ensuring operating expenses will correspond more closely with sales results.

Speaker Change: Thanks for tuning in. I'm Kevin Kim.

Speaker Change: We are confident these targets are achievable.

Speaker Change: Regarding phasing for the year, we expect similar traffic trends from this last quarter to continue into Q1, with modest industry traffic improvements in the back half of FY25. We also expect benefits from our investments in sales professionals and other growth initiatives as the year progresses.

Speaker Change: Consistent with our ROIC focus, our investments with sales professional hiring will yield meaningful returns over the long term.

Speaker Change: As Kevin stated earlier, we remain focused on improving local case performance in FY25.

Kevin: For example, the sales consultant comp structure will shift to more bonus, less base, raising performance driven expenses and ensuring operating expenses will correspond more closely with sales results.

Kenny Cheung: We will be disciplined in adding self-spec count in high growth areas, and we will be focused on profitable local sales growth. Turning to expenses, we expect further improvements in operating leverage based on a continuation of the process improvement from this past year across our supply chain and corporate expenses. We ended FY24 with strong cash flow conversion rates, highlighting the importance of cash generation. For FY25, we expect a continuation of strong conversion rates and working capital management. We expect to distribute essentially all of our free cash flow to shareholders in 2025, depending on the volume of M&A activity, as we did in 2024.

Kenny K. Cheung: We will be disciplined in adding self-tech count in high growth areas, and we will be focused on profitable local sales. Turning to expenses, we expect further improvements in operating leverage based on a continuation of the process improvement from this past year across our supply chain and corporate expenses. We ended FY24 with strong cash flow conversion rates, highlighting the importance of cash generation.

Kevin: We will be disciplined in adding sales cut count in high growth areas, and we will be focused on profitable local sales growth.

Kevin: Turning to expenses, we expect further improvements in operating leverage based on a continuation of the process improvement from this past year across our supply chain and corporate expenses.

Kevin: We ended FY24 with strong cash flow conversion rate, highlighting the importance of cash generation. For FY25, we expect a continuation of strong conversion rates in working capital management.

Kenny K. Cheung: For FY25, we expect a continuation of strong conversion rates in working capital management. We expect to distribute essentially all of our free cash flow to shareholders in 2025, depending on the volume of M&A activity as we did in 2024. Returning cash back to shareholders is an important part of our capital allocation strategy as we value our dividend aristocrat status, as we expect to pay over $1 billion related to dividends in FY25.

Kevin: We expect to distribute essentially all of our free cash flow to shareholders in 2025, depending on the volume of M&A activity as we did in 2024.

Kenny Cheung: Returning cash back to shareholders is an important part of our capital allocation strategy, as we value our dividend aristocrats status. As we expect to pay over $1 billion related to dividend and FY25. Additionally, we are targeting approximately $1 billion of share repurchases, with fluctuations dependent on M&A plans. We also expect to operate within our stated target of 2.5 to 2.75 times net leverage for the year.

Kevin: Returning cash back to shareholders is an important part of our capital allocation strategy

Kevin: As we value our dividend aristocrat status, as we expect to pay over $1 billion dollars related to dividends in FY25. Additionally, we are targeting approximately $1 billion dollars of share repurchases with fluctuations dependent on M&A plans.

Kenny K. Cheung: Additionally, we are targeting approximately $1 billion of share repurchases with fluctuations dependent on M&A. We also expect to operate within our stated target of 2.5 to 2.75 times net leverage for the U.S. Finally, we wanted to provide guidance on several other important modeling elements. The tax rate for FY25 is expected to step up to approximately 25 percent. The increase is driven by the global minimum tax rate. Interest expense is expected to step up to $650 million. Other expenses are expected to be approximately $50 million, and adjusted DNA is expected to be approximately $800 million for the year.

Kevin: We also expect to operate within our stated target of 2.5 to 2.75 times net leverage for the year. We wanted to provide guidance on several other important modeling elements.

Kenny Cheung: We wanted to provide guidance on several other important modeling elements. The tax rate for FY25 is expected to step up to approximately 25%; the increase is driven by global minimum tax rate. Interest expense is expected to step up to $650 million. Other expense is expected to be approximately $50 million, and adjusted DNA is expected to be approximately $800 million for the year. Cat X is expected to be approximately 1% of sales. We will look at each investment through the lens of driving both growth and ROIC. As a company, ROIC will dynamically guide our operating and investment decisions, which will create shareholder value over time as we continue to focus on both margin dollars in rate growth.

Kevin: The tax rate for FY25 is expected to step up to approximately 25 percent. The increase is driven by global minimum tax rate.

Kevin: Interest expense is expected to step up to $650 million. Other expense is expected to be approximately $50 million. And adjusted DNA is expected to be approximately $800 million for the year.

Kenny K. Cheung: CAFX is expected to be approximately 1% of sales. We will look at each investment through the lens of driving both growth and ROI. As a company, ROIC will dynamically guide our operating and investment decisions, which will increase shareholder value over time as we continue to focus on both margin dollars and ratepayers. In closing, I'm pleased with our quarterly performance as we have tremendous opportunities ahead. I'm continually impressed by the size of the skill advantages at Sysco.

Kevin: CapEx is expected to be approximately 1% of sales. We will look at each investment through the lens of driving both growth and ROIC.

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

Kenny Cheung: In closing, I'm pleased with our quarterly performance, as we have tremendous opportunities ahead. I'm continually impressed by the size and skill advantages of Cisco. We are the industry leader in a growing industry. The stronger operating model I mentioned before allows us to continually enhance our competitive advantages in this highly fragmented market. Consistent performance combined with Cisco's focus on the long game is a winning formula to create compounding benefits for our shareholders. Our skill advantages are reflected in our industry-leading margins. Cisco's diversification as the industry leader across customer types, with two thirds in restaurants and one third in recession-resistant categories such as education and health care, is also a structural advantage.

Speaker Change: In closing, I'm pleased with our quarterly performance as we have tremendous opportunities ahead. I'm continually impressed by the size of skill advantages at Sysco. We are the industry leader in a growing industry.

Kenny K. Cheung: We are the industry leader in a growing market. The Stronger Operating Model I mentioned before allows us to continually enhance our competitive advantages in this highly fragmented market. Consistent performance combined with Sysco's focus on the long game is a winning formula to create compounding benefits for our shareholders. Our skill advantages are reflected in our industry-leading market. Sysco's diversification as the industry leader across customer types, with two-thirds in restaurants and one-third in recession-resistant categories such as education and healthcare, is also structural. Our robust, industry-leading operating cash flow and strong investment-grade balance sheet gives us access to capital at attractive rates, so we're able to take advantage of high ROIC growth opportunities as we present them.

Speaker Change: The Stronger Operating Model I mentioned before allows us to continually enhance our competitive advantages in this highly fragmented market.

Cisco: Consistent performance combined with Sysco's focus on the long game is a winning formula to create compounding benefits for our shareholders.

Cisco: Our skill advantages are reflected in our industry-leading margins.

Cisco: Sysco's diversification as the industry leader across customer types, with two-thirds in restaurants and one-third in recession-resistant categories, such as education and healthcare, is also a structural advantage.

Kenny Cheung: Our robot industry leading operating cash flow in strong investment grade balance sheet gives us access to capital at attractive rates, so we're able to take advantage of high ROIC growth opportunities as we present ourselves. And as you can see in our performance results, our international segment is proving to be a benefit, contributing higher rates of growth than our US business. We believe international can continue to be a profitable growth engine for Sysco.

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

Kenny K. Cheung: And as you can see in our performance results, our international segment is proving to be a benefit, contributing higher rates of growth than our U.S. business. We believe international can continue to be a profitable growth engine for Sysco. As we embark on a new fiscal year, I look forward to our progress ahead. We are positioned to win. Thank you for your time today.

Cisco: And as you can see in our performance results, our international segment is proving to be a benefit, contributing higher rates of growth than our U.S. business.

Cisco: We believe international can continue to be a profitable growth engine for Sysco.

Kenny Cheung: As we embark on a new Sysco year, I look forward to our progress ahead. We are positioned to win.

Cisco: As we embark on a new fiscal year, I look forward to our progress ahead. We are positioned to win. Thank you for your time today. With that, we are now ready for questions.

Kenny Cheung: Thank you for your time today.

Operator: With that, we are now ready for questions. Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. Should you find your question has been answered, you may remove yourself from the queue by pressing star 2.

Operator: With that, we are now ready for questions.

Operator: Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. Should you find your question has been answered, you may remove yourself from the queue. By pressing star two. Again, that is star one to ask a question and star two to remove yourself.

Speaker Change: Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: Should you find your question has been answered, you may remove yourself from the queue by pressing star 2. Again, that is star 1 to ask a question and star 2 to remove yourself. We will pause for just a moment to symbol a question queue.

Operator: Again, that is star 1 to ask a question and star 2 to remove yourself. We will pause for just a moment to symbolocy a question queue. We'll go first to Mark Carden with UBS. Please go ahead.

Operator: We will pause for just a moment to assemble a question queue.

Mark Carden: We'll go first and mark Carden with UBS. Please go ahead. Great.

Kevin P. Hourican: Great, good morning. Thanks so much for taking the time to answer the question. So to start, I wanted to dig into some of your on-demand commentary a bit. Are you guys seeing trade down and trade out impacting a broader customer demographic? Or is it still largely confined to the lower to middle end here? And then, on top of economic concerns, would you expect uncertainty around the election to have much incremental impact on food away from home demand in the quarters ahead? Good morning, Mark. It's Kevin.

Speaker Change: We'll go first to Mark Carden with UBS. Please go ahead.

Kevin Hurkin: Good morning. Thanks so much for taking the questions. So to start, I wanted to dig into some of your end of the man comments area a bit. Are you guys seeing trade down and trade out impacting a broader customer demographic? Or is it still largely confined to lower the middle end here? And then on top of economic concerns, would you expect for uncertainty around the election to have much incremental impact on food away from all demand in the quarters at?

Mark David Carden: Great. Good morning. Thanks so much for taking the questions. So to start, I wanted to dig into some of your on-demand commentary a bit. Are you guys seeing trade-down and trade-out impacting a broader customer demographic?

Mark David Carden: Unknown Attendee or is it larger than the lower to middle end here? And then on top of economic concerns, would you expect around the election to have much incremental impact on food away from home demand in the quarters ahead.

Kevin Hurkin: Good morning, Mark. It's Kevin. Thanks for the questions. Relative to just what's happening with the macro trade down trade out. We're seeing reasonably consistent performance across all forms of restaurant types. It's not just QSR that's being impacted. So pretty consistent traffic declines, you know, by segment. We have a tremendous amount of data. As you know, serving the ice and white paper cloth all the way down to QSR and everything in between. So I just want to start with facts: traffic to restaurants down 3% for the quarter. As I mentioned in my prepared remarks. We don't anticipate that getting much better in the near term.

Kevin P. Hourican: Thanks for the question. So relative to just what's happening with the macro, you know, trade down, trade out, we're seeing reasonably consistent performance across all forms of restaurant types. It's not just QSR that's being impacted. So pretty consistent traffic declines, you know, by segment. We have a tremendous amount of data, as you know, serving the highest end white tablecloth all the way down to QSR and everything in between. So I just start with facts: traffic to restaurants was down 3% for the quarter.

Kevin: Good morning, Mark. It's Kevin. Thanks for the question. So relative to just what's happening with the macro, you know, trade down, trade out, we're seeing reasonably consistent performance across all forms of

Speaker Change: Restaurant Types. It's not just QSR that's being impacted. So pretty consistent.

Mark David Carden: Traffic declines you know by segment we have a tremendous amount of data as you know serving the highest end white tablecloth all the way down to QSR and everything in between so I just start with facts traffic to restaurants down 3% for the quarter as I mentioned in my prepared remarks

Kevin P. Hourican: As I mentioned in my prepared remarks, we don't anticipate that getting much better in the near term, probably through the election. As you indicated, you know, Kenny indicated in our fiscal 2025 guide, we anticipate some improvement in the macro backdrop starting in the second half of our fiscal year. So calendar beginning 2025, hopefully, interest rates coming down will be a catalyst for that type of improvement. You know, why would traffic be down?

Kevin Hurkin: Probably through the election, as you indicated, you know, Kenny indicated in our fiscal 2025 guide. We anticipate some improvement in the macro backdrop starting in the second half of our fiscal year. So calendar beginning 2025. Hopefully, interest rates coming down will be a catalyst for that type of improvement. You know, why would traffic be down? You know, we believe it's the cumulative impact of inflation over the past three years, while inflation has moderated significantly over the past year. It's still the cumulative impact over the past three years of pricing increases. As always, we just go convert that into actions that we're taking.

Mark David Carden: We don't anticipate that getting much better in the near term, probably through the election, as you indicated, you know, Kenny indicated in our fiscal 2025 guide, we anticipate some improvement in the macro backdrop starting in the second half.

Speaker Change: of our fiscal year, so calendar beginning 2025. Hopefully interest rates coming down will be a catalyst for that type of improvement. You know, why would traffic be down? You know, we believe it's the cumulative impact of inflation over the past three years. While inflation has moderated significantly over the past year, it's still the cumulative impact over the past three years of price increases. As always, we, Sysco, convert that into actions that we're taking.

Kevin P. Hourican: You know, we believe it's the cumulative impact of inflation over the past three years, and while inflation has moderated significantly over the past year, it's still the cumulative impact of price increases over the past three years. As always, we at Cisco convert that into actions that we're taking so that we can profitably grow our business, even in a slower backdrop, as we did in this most recent quarter. I'm really pleased with our performance in the non-restaurant segment, specifically FSM and travel and hospitality. We're doing very well in those two spaces, our international local business growing notably, and within local in the US. I communicated on today's call the actions that we're taking, we're not satisfied with our current rate of performance in local, and we have a strong plan to improve throughout 2025.

Kevin Hurkin: We can profitably grow our business even in a slower backdrop, as we did in this most recent quarter.

Speaker Change: We can profitably grow our business.

Kevin Hurkin: I'm really pleased with our performance in the non-restaurant segment, specifically, FSM and travel and hospitality. We're doing very well in those two spaces. Our international local business growing notably. And within local in the US, I communicated on today's call the actions that we're taking. We're not satisfied with our current rate of performance in local. We have a strong plan to improve throughout 2025.

Speaker Change: and I'm going to be talking about the non-restaurant segment. I'm really pleased with our performance in the non-restaurant segment, specifically FSM and travel and hospitality. We're doing very well in those two spaces. Our international local business growing notably. And within local in the U.S., I communicated on Facebook and Twitter. I'm really pleased with the performance in the non-restaurant segment. I'm really pleased with the performance in the non-restaurant segment. I'm really pleased with the performance in the

Speaker Change: on today's call, the actions that we're taking. We're not satisfied with our current rate of performance in local. We have a strong plan to improve throughout 2025.

unknown: Great.

Kevin P. Hourican: Great, and then as a follow-up, you're now a few quarters into your new salesforce hires. How is retention trending relative to your expectations? Does it become any tougher to hold on to new salespeople and an increasingly challenging macro? And does the ramp become any tougher for those with less direct food service sales experience?

Mark Carden: And then, as a follow-up, you're now a few quarters into your new sales horse hires. How is retention trending relative to expectations? Does it become any tougher to hold on to new sales people on an increasingly challenging macro? And does the brand become any tougher for those with less direct service sales experience?

Speaker Change: Great, and then as a follow-up, you're now a few quarters into your new Salesforce hires. How is retention trending relative to your expectations? Does it become any tougher to hold on to new salespeople and an increasingly challenging macro? And does the ramp become any tougher for those with less direct food service sales experience?

Kevin Hurkin: Mark, thanks for the follow-up. We track our retention on a daily, weekly, monthly, quarterly basis. No notable call outs on turnover or retention. We have solid retention of colleagues. We don't anticipate the hiring of the new folks to change that dynamic. What the key to success for 25 will be is ramping up the productivity of that sales colleague workforce, providing them the training that they need. A lot of it is product training; to your point, it ends on where they come from. If they come from a culinary background, if they were a sales rep at a competitor, we can ramp them up faster.

Kevin P. Hourican: Mark, thanks for the follow-up. We track our retention on a daily, weekly, monthly, quarterly basis, with no notable call-outs on turnover or retention. We have solid retention, you know, of colleagues. We don't anticipate, you know, the hiring of new folks to change that dynamic. What the key to success for 25 will be, is ramping up the productivity of that sales colleague workforce, providing them with the training that they need. A lot of it is product training, to your point, depends on where they come from. If they come from a culinary background, if they were a sales rep at a competitor, we can ramp them up faster. If they're a good sales associate, but they need to learn the food space, the food business, there's a lot of product knowledge training that goes along with that.

Speaker Change: Mark, thanks for the follow-up. We track our retention on a daily, weekly, monthly, quarterly basis.

Speaker Change: No notable call outs on turnover or retention. We have solid retention of colleagues. We don't anticipate the hiring of the new folks to change that dynamic. What the key to success for 25 will be is ramping up the productivity of that.

Speaker Change: Sales Colleague, Workforce.

Speaker Change: Providing them the training that they need. A lot of it is product training, to your point, depends on where they come from. If they come from a culinary background, if they were a sales rep at a competitor, we can ramp them up faster. If they're a good sales colleague, but they need to learn the food space, food business, there's a lot of product knowledge training that goes along with that. So the real key is actually that focus.

Kenny Cheung: If they're a good sales colleague, but they need to learn the food space food business. There's a lot of product knowledge training that goes along with that. So the real key is actually that focus, intense, meaningful focus on the training of those new cohorts. Working them up the productivity curve. That's the real key to success. As why we've communicated at the hiring that we did throughout 2024 will positively impact 2025, but more in the back half. The majority of the hiring that we did for that net 450 colleague population was in the second half of fiscal 2024 related tied to what you brought up is we introduced a new compensation model.

Kevin P. Hourican: So the real key is actually that focus, intense, meaningful focus on the training of those new cohorts, working them up the productivity curve. That's the real key to success. That's why we've communicated that the hiring that we did throughout 2024 will positively impact 2025, but more in the back half. The majority of the hiring that we did for that net 450 colleague population was in the second half of fiscal 2024. Related, tied to what you brought up, is that we introduced a new compensation model. I'm sure we'll get some questions about that on today's call. We will monitor retention of colleagues very closely tied to that new compensation model.

Speaker Change: Intents.

Speaker Change: Meaningful focus on the training of those new cohorts.

Speaker Change: Working them up the productivity curve, that's the real key to success.

Speaker Change: as why we've communicated that the hiring that we did throughout 2024 will positively impact 2025 but more in the back half the majority of the hiring that we did for that net 450 colleague population was in the second half of fiscal 2024 related tied to what you brought up is we introduced a new compensation model I'm sure we'll get some comfort questions about that on today's call we will monitor retention of colleagues very closely tied to that new comp model but net net we're optimistic and confident that the new comp model will positively impact results

Mark Carden: I'm sure we'll get some questions about that on today's call. We will monitor retention of colleagues very closely tied to that new comp model, but net net. We're optimistic and confident that the new comp model will positively impact results.

Kenny Cheung: Thank you, Mark. Thanks for looking to add on the compensation model. You know, one is that I mentioned earlier in the period of remarks. We're shifting to a more variable incentive plan, which allows us to grow sales and commensurate with expenses, so matches, health flows and both of cash, which also helps with the capital. The other thing is, you know, this plan is the epitome of growing possibly, right? And what I mean by that is the cost of the plan rewards growth and profit; you know, pay those more for, for example, a local case growth.

Kevin P. Hourican: But net net, we're optimistic and confident that the new comp model will positively impact results. Mark, I think one thing to add on the compensation model, you know. As I mentioned earlier, in the prepared remarks, we're shifting to a more variable incentive plan, which allows us to grow sales and commensurate with expenses. So matches help those inflows of cash, which also helps working capital.

Speaker Change: Mark, I think one thing to add on the compensation model, you know, one is, as I mentioned earlier,

Speaker Change: and the prepared remarks, we're shifting to a more variable incentive plan, which allows us to grow sales and commensurate with expenses. So, matches, health foes, and inflows of cash.

Kenny K. Cheung: The other thing is, you know, this plan is the epitome of growing profitably, right? And what I mean by that is the construct of the plan rewards growth and profit, you know, paying relatively more for, for example, local case growth, Sysco branded products, total team selling, specialty, and the like. So it's truly a win-win for our sales professionals as they have the opportunity to win, to make more, and for our company to create value in the P&L. Great, best of luck, guys. Thank you, Mark.

Speaker Change: which also helps working capital. The other thing is, you know, this plan is the epitome of growing profitably, right? And what I mean by that is the construct of the plan rewards growth and profit.

Mark Carden: Let's go for our product, local team selling specialty and the likes. So it's truly a win-win for our self professional as they have opportunities to win, to make more, and for a company to treat value of the PNL.

Speaker Change: Granted Products, Total Team Selling, Specialty and the like. So it's truly a win-win for our sales professional as they have the opportunity to win, to make more and for our company to create value at the P&L.

unknown: Great. Thanks a lot, guys. Thank you, Mark.

Speaker Change: Great. Best of luck, guys.

Lauren Silberman: Next, we'll hear from Lauren Silberman. What do we do to bank? Thank you for the question.

Operator: Next we'll hear from Lauren Silberman with Deutsche Bank. Thank you for the question. I first wanted to ask about the promotional environment. Obviously, the restaurant industry is challenged. Growth margin looked like it was down in the U.S. food service business.

Mark David Carden: Thank you, Mark.

Mark David Carden: Next, we'll hear from Lauren Silberman with Deutsche Bank.

Kevin Hurkin: I first wanted to ask about the promotional environment, obviously restaurant industries, challenge, growth margin, like it was down in the US, service business. Are you seeing an increase in promotional activity to drive customer acquisition more upfront or discounts than any discussion on growth margin? It would be helpful. Thank you. Yeah, Lauren, good question. With traffic down to restaurants, cases per operator would be negatively impacted by that fact. And therefore, distributors of all types and all sizes are going to work hard to be able to get profitable cases to be put on their truck. So yeah, competitive environment and competitive intensity increases when traffic is down.

Lauren Danielle Silberman: Thank you for the question. I first wanted to ask about the promotional environment. Obviously restaurant industry is challenged. Growth margin looked like it was down in the U.S. food service business. Are you seeing an increase in promotional activity to drive customer acquisition more up front or discounts?

Kevin P. Hourican: Are you seeing an increase in promotional activity to drive customer acquisition more upfront with discounts? And then any discussion on growth margin would be helpful. Thank you. Yeah, Lauren. Good question.

Speaker Change: and then any discussion on growth margin would be helpful. Thank you.

Kevin P. Hourican: With, you know, traffic down to restaurants, cases per operator would be negatively impacted by that fact. And therefore, distributors of all types and all sizes are going to work hard to be able to get profitable cases to be put on their trucks. So yeah, it's a competitive environment, and competitive intensity increases when traffic is down. We, Sysco, as you're well aware, operate at the highest profit margin rate in the industry. We are extremely disciplined in our process of evaluating pricing strategies for customers. We will not sell cases below cost.

Speaker Change: Yeah, Lauren, good question. With, you know, with traffic down to restaurants, cases per operator would be negatively impacted by that fact.

Speaker Change: and therefore distributors of all types and all sizes are going to work hard to be able to get profitable cases to be put on their truck. So yeah, it's a competitive environment and competitive intensity increases when traffic is down. We, Sysco, as you're well aware, operate at the highest profit margin rate in the industry. We are extremely disciplined in our process of evaluating pricing strategies for customers. We will not sell cases below cost. We are very disciplined in that regard. Our pricing system, pricing tool and pricing process enables for our RCs to sell competitively in the marketplace but within guardrails. So pleased with our performance in profit management during the most recent quarter, helped enable strong overall bottom line results.

Kenny Cheung: We Cisco, as you're well aware, operated the highest profit margin rate in the industry. We are extremely disciplined in our process of evaluating pricing strategies for customers. We will not sell cases below costs. We are very disciplined in that regard. Our pricing system, pricing tool, and pricing process enable our RCs to sell competitively in the marketplace, but within, you know, guard rail. So please do with our performance in profit management during the most recent quarter, you know, helps enable your strong overall bottom line results.

Kevin P. Hourican: We are very disciplined in that regard. Our pricing system, pricing tool, and pricing process enable our RCs to sell competitively in the marketplace but within, you know, guardrails. So pleased with our performance in profit management during the most recent quarter, which helped enable, you know, strong overall bottom line results. With that said, I'm going to turn to Kenny for further comment on gross margin. Kenny, over to you. Hey, Lauren, this is Kenny.

Kenny Cheung: But that said, I'm going to touch to Kenny for further comment on goes margin. Kenny, over to you. Hey, Lauren, this is Kenny. So on gross, gross margins and gross profit, a few things here, take a step back, gross process for the quarter to 4% and gross process for a case group 1% year on year. So for us, dollars really matter. The key driver of margins slightly down year on year because of the mix. So, if you take a step back, we continue to grow and take share in the CMU space, possibly. And that action, while its margin dollar increases, it does dilute to some extent margin rate.

Kenny K. Cheung: So on gross margins and gross profit, a few things here. Taking a step back, gross profit for the quarter grew 4%, and gross profit per case grew 1% year on year. So for us, dollars really matter here. To directly answer your question on the margin front, the key driver of margins slightly down year on year is because of the mix. So if you take a step back, we continue to grow and take share in the CMU space profitably, and that action, while its margin dollar increases, it does dilute to some extent the margin rate. So with that said, we'll continue to grow both CMU and local and take share, which we have tangible actions against. And the other piece is the Sysco Brand.

Speaker Change: With that said, I'm going to toss to Kenny for a further comment on GORES-MARGARET. Kenny, over to you.

Speaker Change: Hey Lauren, this is Kenny. So on gross margins and gross profit, a few things here, take a step back. Gross profit for the quarter grew 4% and gross profit per case grew 1% year on year. So for us, dollars really matter here. To directly answer your question on the margin front,

Speaker Change: The key driver of margins slightly down year-on-year is because of the mix, so if you take a step back, we continue to grow and take share in the CMU space profitably, and that action, while its margin dollar increases, it does dilute to some extent margin rate. So with that said,

Kenny Cheung: So, with that said, we'll continue to grow both CMU local and take sure which we have tangible actions again. And the other piece is Cisco brand; it was slightly down year over year, as you may have seen in the present. And, you know, we have tangible actions in plan as well to drive Cisco brand penetration for the middle of the year. This includes additional product conversion opportunities, short-term incentives for targeted categories, and driving more product innovation as well. So I'm pretty confident that despite the fact that we already have roughly $22 billion to go sell annually, we can continue to penetrate space and drive margin.

Kenny K. Cheung: It was slightly down year over year, as you may have seen in the front table, and we have tangible actions in place as well to drive Sysco Brand penetration for the remainder of the year. This includes additional product conversion opportunities, short-term incentives for targeted categories, and driving more product innovation as well. So I'm pretty confident that despite the fact that we already have roughly $22 billion in Sysco sales annually, we can continue to penetrate the space and drive margin for our business. Great, very helpful.

Speaker Change: We'll continue to grow both CME and local and take sure we have tangible action again. And the other piece is Sysco brand. It was slightly down year over year, as you may have seen in the past, people.

Speaker Change: And, you know, we have tangible action plans as well to drive physical brand penetration.

Speaker Change: for the remainder of the year. This includes additional product conversion opportunities, short-term incentives for targeted categories, and driving more product innovation as well. So I'm pretty confident that despite the fact that we already have roughly $22 billion in fiscal sales annually, we can continue to penetrate the space and drive margin for our D&L.

unknown: Great, very helpful.

Kevin P. Hourican: And then if I could just ask about some of the comments on case growth, the cadence throughout the quarter, restaurants have seen a slowdown in June and July. Any thoughts on that? And where we should expect trends to run to start fiscal one Q, and if we should expect relatively similar trends. Unknown Speaker, I'm going to go ahead and close.

Lauren Silberman: And then, if I could just ask about some of the comments on case growth, the cadence throughout the quarter, restaurants have seen a slowdown in June and July. Any thoughts on if that's where we should expect trends are running to start Sysco 1Q, and if we should expect relatively similar trends in 1Q to what you saw on 4Q. Thank you very much. Yeah, Lauren, thanks. We won't comment on July specifically, but I'd say, you know, Q1 macro environmental conditions are very similar to the exit velocity of Q4, and that's been factored as we are operating today.

Speaker Change: Great, very helpful. And then if I could just ask about some of the comments on case growth, the cadence throughout the quarter, restaurants have seen a slowdown in June and July . Any thoughts on

Speaker Change: if that's where we should expect trends are running to start Sysco 1Q and if we should expect relatively similar trends in 1Q to what you saw in 4Q. Thank you very much.

Kevin P. Hourican: Thank you. Thank you. Yeah, Lauren, thanks.

Kevin P. Hourican: We won't comment on July specifically, but I'd say, you know, Q1 macro environmental conditions are very similar to the exit velocity of Q4, and that's been factored into the guidance that we are providing today. And as I mentioned, we have the opportunity to grow our business profitably and be successful in these softer environmental conditions, and we anticipate some improvement in the second half of this fiscal year. New customer prospecting is an increasing focus for our Sysco sales colleagues.

Speaker Change: Yeah, Lauren, thanks. We won't comment on July specifically, but I'd say, you know, Q1 macro environmental conditions are very similar to the exit velocity of

Kevin Hurkin: And, as I mentioned, you know, we have the opportunity to grow our business profitably and be successful. You know, in that software, environmental conditions, and we anticipate some improvement in the second half of this fiscal year. New customer prospecting is an increased focus for our Cisco sales colleagues. 50% of the restaurant doors are not currently served by Cisco, and we have a substantial opportunity to grow our customer account. And we're very focused on that. The new compensation model that Kenny talked about. One of the key elements of that program is to incent and motivate new customer acquisition in a profitable way.

Kenny: Q4, and that's been factored into the guidance that we are providing today, and as I mentioned, we have the opportunity to grow our business profitably and be successful in that softer environmental conditions, and we anticipate some improvement in the second half of this fiscal year. New customer prospecting is an increased focus for our Sysco sales colleagues. 50% of the restaurant doors are not currently served by Sysco, and we have a substantial opportunity to grow our customer count, and we are very focused on that. The new compensation model that Kenny talked about, one of the key elements of that program is to incent and motivate new customer acquisition in a profitable way. Kenny, any additional thoughts?

Kevin P. Hourican: 50% of the restaurant doors are not currently served by Sysco, and we have a substantial opportunity to grow our customer count, and we're very focused on that. The new compensation model that Kenny talked about, one of the key elements of that program is to incent and motivate new customer acquisition in a profitable way. Kenny, any additional thoughts? Sure. So, from a phasing standpoint, just to provide color, as Kevin said, I

Kenny Cheung: Kenny, any additional thoughts? Sure. So, from a spacing standpoint, just to provide color, as Kevin said, I agree we're seeing similar industry project patterns from last quarter into this quarter. So now, as you think about the guidance for the year, the 4 to 5% within that, we have volume at most single digits. And in particular, if you think about the pieces of that, most of the hires was completed in the back half of FY24. And the new compensation program works just recently rolled out as well. So we start seeing the financial benefit from the investment in the back half of the fiscal year.

Kenny: Sure. So from a phasing standpoint, just to provide color, as Kevin said, I agree. We're seeing similar industry foot traffic patterns from last quarter into this quarter. So now as you think about the guidance for the year of 4% to 5%, within that, we have volume at low single digits.

Kenny K. Cheung: We're seeing similar industry traffic patterns from last quarter into this quarter. So, now, as you think about the guidance for the year of 4 to 5%, within that, we have volume at a low single digit, and in particular, if you think about the pieces of that, most of the hires were completed in the back half of FY24. And a new compensation program was just recently rolled out as well. So we will start seeing the financial benefit from this investment in the back half of fiscal year. Thank you very much; it was very helpful.

Speaker Change: So, and in particular, if you think about the pieces of that, most of the hires was completed in the back half of FY24, and a new compensation program was just recently rolled out as well. So, we start seeing the financial benefit from this investment in the back half of fiscal year.

unknown: Thank you very much, very helpful.

Jake Bartlett: Thank you, Lauren.

Kevin Hurkin: We'll go next to Jake Bartlett, which are the securities. Great. Thanks for taking my question. You know, my question was on the sales force investments. And you know, I understand you mentioned that retention has not changed materially, which is encouraging. I think there's some concern among investors that the changes that you're making, the large investments, would create some disruption. Maybe it's disruption of account switching salespeople, and that provides opportunity for competitors to come in and take them. So the question is, should we expect a disruption in the near term? I mean, is that one reason why sales might be a little bit weaker as this initiative gains seen?

Operator: Thank you, Lauren. We'll go next to Jake Bartlett with Truth Securities. Great, thanks for taking my question. You know, my question was about the Salesforce investments. And, you know, I understand you mentioned that retention has not changed materially, which is encouraging. I think there's some concern among investors that, you know, the changes that you're making, the large investments, would create some disruption. Maybe it's, you know, disruption of accounts switching salespeople, and that provides an opportunity for competitors to kind of, you know, come in and take them.

Speaker Change: Thank you very much. Very helpful.

Warren: Thank you all.

Speaker Change: We'll go next to Jake Bartlett with Truth Securities.

Jake Rowland Bartlett: Great, thanks for taking my question. You know, my question was on the Salesforce investments. And, you know, I understand you mentioned that retention has not changed materially, which is encouraging. I think there's some concern among investors that the changes that you're making, the large investments, would create some disruption. Maybe it's...

Speaker Change: You know disruption of accounts, switching salespeople, and that provides opportunity for competitors to kind of come in and take them. So, the question is, should we expect?

Operator: So the question is, should we expect, you know, a disruption in the near term? I mean, is that one reason why sales might be a little bit kind of, you know, weaker, you know, as this initiative gains steam? Just wanted to get your comments on the near-term impact of these investments. Okay, Jake. Very good. It's Kevin.

Speaker Change: A disruption in the near-term, I mean is that one reason why we without sales might be a little bit, kind of, weaker as this initiative gained seed? Just wanted to get your comments on the near-term impact of these investments.

Kevin Hurkin: Just wanted to get your comments on that near-term impact of these investments. Okay. Jake, very good. It's Kevin. I'll start just macro commentary about the new sales colleagues, a little bit more color on the comp model. I'll then talk to Kenny, who can talk about how these two factors impact our guides for the year and our confidence in delivering against the guidance that we provided for the year. So let's, again, go back to the sales colleagues. Net 450 new scs. Let's do a refresh on the why we're doing this. Our territory sizes have grown larger than we would like them to be over the past few years, given the growth in our business, the number of new customers that we're serving.

Kevin P. Hourican: I'll start with just, you know, macro commentary about the new sales colleagues and a little bit more color on the comp model. I'll then turn it over to Kenny, who can talk about how these two factors impact our guidance for the year and our confidence in delivering against the guidance that we provided for the year. So, let's again go back to the sales colleagues net 450 new SEs. Let's do a refresh on why we're doing this.

Speaker Change: Okay, Jake, very good. It's Kevin. I'll start just, you know, macro commentary about the

Kevin: New Sales Colleagues, a little bit more color on the comp model, I'll then toss to Kenny who can talk about how these two factors impact our guide for the year and our confidence in delivering against the guidance that we provided for the year. So let's again go back to the Sales Colleagues, net 450 new SEs.

Kevin P. Hourican: Our territory sizes have grown larger than we would like them to be over the past few years, given the growth in our business, the number of new customers that we're serving, and this is a relationship business. So, the positive yield of having increased base time outweighs the short-term disruption of the territory realignment that, Jake, your good question is alluding to. But let me put that in a little bit of context.

Kenny: Let's do a refresh on the why we're doing this. Our territory sizes have grown larger than we would like them to be over the past few years given the growth in our business, the number of new customers that we're serving, and this is a relationships business.

Kevin Hurkin: And this is a relationship's business. We desire for our scs to be in our customers' accounts on a weekly basis, having quality conversations about the business of that restaurant, helping them with challenges and issues that they're facing to help profitably grow their business, you know, and ours. And that can only happen if they're in the backroom of the restaurant's kitchen. So that's the net net objective increase; boots on the ground in the restaurant territory sizes had grown too large.

Kenny: We desire for our SEs to be in our customers' accounts on a weekly basis.

Kevin: Having quality conversations about the business of that restaurant, helping them with

Kevin: challenges and issues that they're facing to help profitably grow their business, you know and ours and that can only happen if they're in the back room of the restaurant kitchen, so that's the net net objective increase boots-on-the-ground in the restaurant territory sizes had grown too large you

Kevin Hurkin: So the positive yields of having increased face time outweighs the short term disruption of the territory alignment that Jake, your good question is alluding to. Put that in a little bit of context. So existing scs they would give up, you know, approximately one current customer to this net new hire. It's not like an existing SCS giving up 10, 20, 30% of their business. They're probably giving up one new customer; excuse me, existing customers. We then expect that current SE to go backfill that right to grow their business. And then this new colleague who has a starter territory, the main job to be done by that person is to go get net new customers to Cisco.

Kevin P. Hourican: So, existing SEs would give up, you know, approximately one current customer to this net new hire. But it's not like an existing SE is giving up 10, 20, 30% of their business. They're probably giving up one new customer, excuse me, existing customer. We then expect that current SE to go backfill that, right, to grow their business. And then this new colleague who has a starter territory, the main job to be done by that person is to go get new net customers for Sysco. So the disruption that you're alluding to is real, but it's manageable given the net-net context that I provided.

Kevin: Outweighs the short-term disruption of the territory realignment that, Jake, your good question is alluding to. But let me put that in a little bit of context.

Jake Rowland Bartlett: So existing SEs, they would give up, you know, approximately one current customer to this net new hire. It's not like an existing SE is giving up 10, 20, 30% of their business. They're probably giving up one new customer, excuse me, existing customers.

Jake Rowland Bartlett: We then expect that current SE to go backfield at,

Kevin Hurkin: So the disruption that you're alluding to is real, but it's manageable given the net context that I provided. And the majority of this growth is coming from winning new customers to Cisco. So that's tied to the hiring. And it's not a flip of a switch, right? These are classes that are hiring cohorts. They hit the streets over time. This is why it's a gradual ramp-up of performance over time. John, a compensation change went live on July 1. So we are one month into that comp change. Just, you know, again, a refresh on what we have done here.

Jake Rowland Bartlett: Unknown Speaker The main job to be done by that person is to go get net new customers to Sysco. So the disruption that you're alluding to is real, but it's manageable given the net net context that I provided in the majority of this growth.

Kevin P. Hourican: And the majority of this growth is coming from winning new customers for Sysco. So that's tied to the hiring. And it's not a flip of a switch, right?

Kevin P. Hourican: These are classes that are hired in cohorts. They hit the streets over time. This is why it's a gradual ramp-up of performance over time. The compensation change went live on July 1, so we are one month into that comp change. Just, you know, again, a refresh on what we have done here. We've remixed base pay to bonus, aka lowered base pay, putting more dollars into the incentive program. I want to be very clear about one thing.

Jake Rowland Bartlett: is coming from winning new customers to Sysco. So that's tied to the hiring, and it's not a flip of a switch, right? These are classes that are hired in cohorts. They hit the streets over time. This is why it's a gradual ramp up of performance over time.

Speaker Change: A compensation change went live on July 1, so we are one month into that comp change. This, you know, again, a refresh on what we have done here. We've remixed.

Kenny Cheung: We've remixed based to bonus, a.k.a. lowered base pay, putting more dollars into the incentive program. I want to be very clear about one thing: every sales colleague at Cisco has the opportunity to make more money in this new program than they were making before, with uncapped earnings potential. It is a net positive for our sales colleagues, but as any talked about in this financial modeling, their pay will be consistent with their performance. For our top performers, this change is a very, very good to change. It's the type of change that our top performers want. If you remember back prior to COVID, they were on full commission.

Speaker Change: Uncapped base-to-bonus, a.k.a. lowered base pay, putting more dollars into the incentive program. I want to be very clear about one thing. Every sales colleague at Sysco has the opportunity to make more money in this new program than they were making before with uncapped

Kevin P. Hourican: Every sales colleague at Sysco has the opportunity to make more money in this new program than they were making before, with uncapped earnings potential through the incentives. It is a net positive for our sales colleagues. But, as Kenny talked about in his financial modeling, their pay will be consistent with their performance. For our top performers, this change is a very, very good change. It's the type of change that our top performers want. If you remember back prior to COVID, they were on full commission.

Speaker Change: earnings potential through the incentives. It is a net positive for our sales colleagues, but as Kenny talked about in his financial modeling, their pay will be consistent with their performance.

Kenny: For our top performers, this change is a very, very good change. It's the type of change that our top performers want. If you remember back prior to COVID, they were on full commission. Our top performers, they want to be paid on their performance, and this program does more of that.

Kenny K. Cheung: Our top performers want to be paid for their performance, and this program does more of that. For a lower performing colleague or a newer colleague, they need to improve their outcomes, and they need to improve those outcomes through behavior focused on key deliverables that we provide them with coaching and resources to succeed against. And it's that colleague population that needs to positively impact their performance to make the type of money that they expect to make and that we want them to make.

Kenny Cheung: Our top performers; they want to be paid on their performance, and this program does more of that. For a lower performing colleague or a newer performing colleague, they need to improve their outcomes, and they need to improve those outcomes to behavior focused on key deliverables that we provide them coaching and resources to succeed against. And it's that colleague population that needs to impact positively their performance to make the type of money that they expect to make and that we want for them to make. Our sales leadership team is extremely focused on that population of colleagues to help them be very successful in this new model.

Kenny: For a lower performing colleague or a newer performing colleague, they need to improve their outcomes, and they need to improve those outcomes through behavior focused on key deliverables that we provide them coaching and resources to succeed against.

Kenny: and it's that colleague population that needs to...

Kenny K. Cheung: Our sales leadership team is extremely focused on that population of colleagues to help them be very successful in this new model. And Jake, we're going to monitor the change in management of that very, very closely. And that would be a meaningful Q1, Q2 meaningful focus, which is why I said in my prepared remarks today that the comp model change that we put forward that started July 1 will have more of a positive impact in the second half of this year.

Kenny: The type of money that they expect to make and that we want for them to make.

Kenny Cheung: And Jake, we're going to monitor the change management of that very, very closely. And that would be a Q1, Q2, meaning focus, which is why I said in my prepared remarks today that comp model change that we put forward that started July 1. We'll have more of a second half of this year positive impact.

Kenny: Our sales leadership team, extremely focused on that population of colleagues to help them be very successful in this new model. And Jake, we're going to monitor the change management of that very, very closely. And that would be a Q1, Q2 meaningful focus, which is why I said in my prepared remarks today, the comp model change that we put forward that started July 1 will have more of a second half of this year positive impact. Kenny, over to you for any additional comments. Sure. Thanks, Kevin.

unknown: Kenny, over to you for any additional comments. So the sales hires, as we said before, this is ROIC positive. That's the headline news. We are deliberate in terms of the one and where we add, meaning investing in high growth markets to ensure optimal return on investment. Now, Jake, the double goods on your question in terms of timing; there is some timing given early on the full return is rendered, given timing of the ramp that Kevin mentioned. Kevin mentioned, not a flip of a switch. So the good news is that we have other levers in the PNL to ensure we achieve leverage from the enterprise standpoint, expand margin on the bottom line, which is on the guide.

Kenny K. Cheung: Kenny, over to you for any additional comments. Sure. Thanks, Kevin. So, you know, the sales hires, as we said before, this is ROIP positive. That's the headline news. We are deliberate in terms of when and where we add value, meaning investing in high-growth markets to ensure an optimal return on investment. Now, Jake, kind of to double-click on your question in terms of timing, you know, there is some timing, you know, given early on the full return isn't rendered given the timing of the ramp, as Kevin mentioned, not a flip of a switch.

Kenny: So, you know, the sales hires, as we said before, this is ROI positive, that's the headline news. We are deliberate in terms of when and where we add, meaning investing in higher growth markets to ensure

Kenny: Outcome of our return on investment.

Kenny: Now, Jake, you know, kind of to double-hit on your question in terms of timing, you know, there is some timing, you know, given early on the full return isn't rendered, given timing of the ramp, as Kevin mentioned, Kevin mentioned not a flip of a switch.

Speaker Change: So the good news is we have other levers in the P&L to ensure we receive leverage from the enterprise standpoint and expand margins on the bottom line, which is all in the guide. All in all, we are confident with the return for our sales consultants and we're confident in our guide.

John Heinbockel: All in all, we are confident with the return for our self-consultant and the content in our guide. Thank you.

Kenny Cheung: We'll go now to John Heinbach from Guggenheim Apologies. So, Kevin, I want to start with going back to US gross margin, right? Because that was sort of an unusual decline versus what we've seen from you and others. So again, as I understand it, the bulk of that, the bulk of the 32 basis points was mixed, both customer and product. So, is that fair? Do you think that is that a one-off or the idea where we're sort of going to be in negative territory? We're here for a little bit, and then I'm not sure what you put into your guide for 25 on US gross.

Kenny K. Cheung: So the good news is we have other levers in the P&L to ensure we achieve leverage from the enterprise standpoint, and expand margin on the bottom line, which is on the guide. All in all, we are confident with the return on our sales consultants and confident in our guide. Thank you. We'll go now to John Heinbockel from Guggenheim. Apologies.

Speaker Change: Thank you.

Kevin P. Hourican: So Kevin, I want to start with going back to U.S. gross margin, right? Because that was sort of an unusual decline versus what we've seen from you and others. So I guess, as I understand it, the bulk of that, the bulk of the 32 basis points was mixed, both customer and product. So is that fair?

Speaker Change: We'll go now to John Heinbockel from Guggenheim Apologies.

John Edward Heinbockel: So, Kevin, I want to start with going back to U.S. gross margin, right?

John Edward Heinbockel: [inaudible]

Kevin P. Hourican: You know, do you think that's just a one-off? Or do we, you know, the idea we're sort of going to be in negative territory here for a little bit. And then I'm not sure what you put into your guide for 25 on U.S. growth. Did you sort of assume flattish and a rebound in the back half of the year? Hey, John, good morning. I'll start.

John Edward Heinbockel: Both customer and product. So is that fair? You know, do you think that is that a one-off?

Speaker Change: Unknown Speaker, the idea we're sort of going to be in in negative territory here for a little bit. And then I'm not sure what you put into your guide for 25 on US gross, did you sort of assume flattish and a rebound in the back half of the year?

Kenny Cheung: Did you sort of assume flatish and a rebound in the back half of the year?

Kevin Hurkin: Hey, John, good morning. I'll start, Kevin. I'll toss to Kenny for the comments on the 25 performance. So it's customer mix and Cisco brand percentage mix are the two primary drivers. As Kenny said, we've profitably grown our CMU business. Key there is profitably grown. We've improved our profitability of CMU, and we have some real solid wins in that space. And we grew national CMU faster than local in the most recent quarter, which applied some margin rate pressure to the overall. We're pleased with our gross margin performance within the local business. It's a customer mix shift.

Kevin P. Hourican: Kevin, I'll toss to Kenny for the comments on the 25 performance. So it's customer mix and Sysco brand percentage mix are the two primary drivers. As Kenny said, we've profitably grown our CMU business. The key there is profitably grown; we've improved our profitability in CMU. And we have some real solid wins in that space.

Kenny: Hey John , good morning. I'll start. It's Kevin. I'll toss to Kenny for the comments on the 25 performance. So it's customer mix and Sysco brand percentage mix are the two primary drivers. As Kenny said, we've profitably grown our CMU business.

Speaker Change: Key there is profitably grown. We've improved our profitability at CMU and we have some real solid wins.

Kenny: in that space. And we grew national CMU faster than local in the most recent quarter, which applied some margin rate pressure to the overall, we're pleased with our gross margin performance within the local business.

Kevin Hurkin: See our comments on the need to improve our local performance; that we're not satisfied with our local case growth performance. We are going to grow our local business responsibly and profitably. We're not going to chase cases to chase cases. We will be disciplined. We will be pragmatic and thoughtful. But we need to improve our local case performance, and we will, and we anticipate that impacting positively our 2025 business performance. The second part, Cisco brand, Kenny did some key commentary early about that. If I could just add one piece of color to Cisco brand. One of the backdrops as to why Cisco brand was slightly down on a percent basis year over year.

Kenny: It's a customer mix shift.

Speaker Change: See your comments on the need to improve our local performance that we're not satisfied with.

Speaker Change: Our local case growth performance.

Speaker Change: We are going to grow our LICO business responsibly and profitably. We're not going to chase cases to chase cases. We will be disciplined. We will be pragmatic and thoughtful. But we need to improve our local case performance, and we will. And we anticipate that impacting positively.

Speaker Change: You know, our 2025 business performance.

Speaker Change: The second part, Sysco Brand, Kenny did some, you know, some key commentary early about that. If I could just add one piece of color to Sysco Brand, one of the backdrops as to why Sysco Brand was

Kenny Cheung: To be clear, Cisco pieces, Cisco brand pieces were up 2% year over year. Our GP dollars from Cisco brand was up 3.2%. But there was a minor percentage reduction of mix to national brand products. Here's the key point. Fill rates of national brand suppliers have improved on a year-over-year basis and a quarter-over-quarter basis. So there's less substitution happening from national brand out of stocks into Cisco brand, while that has a slight negative impact on margin rate. That's actually a good thing for our business. It's a good thing for our operations. We want our suppliers to fill on time and shift to Cisco, including our national suppliers.

Kenny: Unknown Speaker Slightly down on a percent basis year over year. To be clear, Sysco pieces, Sysco brand pieces were up 2%. Year over year, our GP dollars from Sysco brand was up 3.2%, but there was a minor percentage reduction of mix.

Kenny: Two national brand products.

Speaker Change: Here's the key point, fill rates of national brand suppliers have improved.

Speaker Change: on a year-over-year basis and a quarter-over-quarter basis. So there's less substitution happening from national brand out-of-stocks into Sysco brand. While that has a slight negative impact on margin rate, that's actually a good thing for our business. It's a good thing for our operations. We want our suppliers to fill on time and ship to Sysco, including our national suppliers. And it's a good thing that national supplier bill rate improvement has stepped up. In the meantime, it has a moderate impact. We are confident that we can increase Sysco brand penetration. Kenny talked to those house.

Kevin P. Hourican: And we grew national CMU faster than local in the most recent quarter, which applied some margin rate pressure to the overall. We want our suppliers to fill on time and ship to Sysco, including our national suppliers. And it's a good thing that national supplier fill rate improvement has stepped up. In the meantime, it has a moderate impact. We are confident that we can increase Sysco brand penetration. So, Kenny, talk to those hows about providing value to our customers, motivating our colleagues through their performance evaluations to be focused upon it, and bringing product innovation to our customers through the Sysco brand. So, Kenny, over to you for any comments about the modeling for 25. Yeah, John.

Kenny Cheung: And it's a good thing that national supplier fill rate improvement has stepped up. In the meantime, it has a moderate impact. We are confident that we can increase Cisco brand penetration. Kenny talked to those house, providing value to our customers, motivating our colleagues through their performance evaluations to be focused upon it, and bringing product innovation to our customers through Cisco brand.

Kenny: By providing value to our customers, motivating our colleagues through their performance evaluations to be focused upon it and bringing product innovation to our customers through Sysco Brand. So, Kenny, over to you for any comments about the modeling for 25. Yeah, John , so the way I think about the modeling is, you know, as you, as Kevin talked about, as we start realizing benefits from our sales consultants' investments, new compensation models, the Sysco Brand Action, Kevin.

Kenny Cheung: So Kenny, over to you for any comments about the modeling for 25? Yeah, John, so the way to think about the modeling is, you know, as Kevin talked about, as we start realizing benefits from our sales consultants' investment, new compensation models, Cisco brand actions that Kevin talked about, that should drive for the leverage on the GP side. You should expect a GP dollar for cases to expand for us on a year on your basis for 2025. And the thing we haven't talked about is also specialty. Specialty is also a GP-occurative action for us, and that this has grown very well for us as well.

Kenny K. Cheung: So the way I think about the modeling is, as Kevin talked about, as we start realizing benefits from our sales consultants' investments, new compensation models, and the Sysco brand actions that Kevin talked about, that should drive further leverage on the GP side. You should expect GP dollars per case to expand for us on a year-on-year basis for 2025. And the thing we haven't talked about is also specialty.

Kenny: Talked about that should strive for the leverage on the GP side.

Kenny: You should expect the GEP dollar per case to expand for us on a year-on-year basis for 2025. And the thing we haven't talked about is also specialty. Specialty is also a GEP accretive action for us, and that business is growing very well for us as well. So both of the—all three things, Sysco brand.

Kenny K. Cheung: Specialty is also a GP accretive action for us, and that business is growing very well for us as well. So, all three things, the Sysco brand in terms of – and then local sales and specialty growth will all drive GP dollars per case for us. All right, maybe as a quick follow-up to the just curious, you know, going sort of back to existing account opportunity. Right, particularly to free up some time here for existing sales consultants. I know there's a headwind, right, a macro headwind, but, you know, maybe touch on that opportunity, right, to Make Some Improvement on Existing Wallet Share.

Kenny Cheung: So both of the three things, Cisco brand in terms of, and then local sales and also specialty growth will all drive a GP dollar for taste for us.

John Heinbockel: All right, maybe as a quick follow-up, the just curious, you know, sort of going back to existing account opportunity, right, particularly just free up some time here for existing sales consultants. I know there's a headwind, right, a macro headwind, but, you know, maybe touch on that opportunity, right, to make some improvement in existing wallet share. And then I guess, you know, Kevin, when you think about local case growth, when I think you want to get into the two to three percent range, ultimately, what do you think is a reasonable target or the target that you would have for sort of exit rate of fiscal 25?

Kenny: and then local sales and specialty growth will all drive GDP dollar per case for us.

Speaker Change: All right, maybe as a quick follow-up, just curious, you know, sort of going back to existing account opportunity.

Speaker Change: Right, particularly to free up some time here for existing sales consultants.

Speaker Change: I know there's a headwind, right, a macro headwind, but, you know, maybe touch on that opportunity, right, to

Kevin P. Hourican: And then I guess, you know, Kevin, when you think about local case growth, I mean, I think you want to get into the two to 3% range, ultimately. What do you think is a reasonable target or the target that you would have for sort of the exit rate for fiscal 25? Is that a fair exit rate, or is that an optimistic... It's the first part of your question. First, I'll talk to Kenny; he's always going to be the one that talks about the guidance that we have provided in case growth is a part of that guidance. So he'll do that part.

Kevin: Make some improvement in the existing wallet share. And then I guess, you know, Kevin, when you think about local case growth, I think you want to get into the 2-3% range, ultimately.

Speaker Change: What do you think is a reasonable target or the target that you would have for sort of exit rate of fiscal 25? Is that a fair exit rate or is that an optimistic one?

Kevin Hurkin: Is that a fair exit rate, or is that an optimistic one? Yeah, it's the first part of your question. First, I'll talk to Kenny. He's always going to be the one that talks about the guidance that we have provided in case growth is a part of that guidance. He'll do that part. You know, the two main levers for existing customer case penetration improvement opportunity that I would highlight is the total team selling opportunity that Greg Bertrand covered at our Investor Day. We have a very large sample size now of customers that we have sold from a total team selling perspective, and when we can bring that specialty produce sales rep from Fresh Point into an existing broadband account or bring a sales protein expert from our SSMG business specialty meat business into an account, that customer spends three times more with Cisco, and those are cases.

Kevin P. Hourican: The two main levers for existing customer case penetration improvement opportunities that I would highlight are the total team selling opportunity that Greg Bertrand covered at our Investor Day. We have a very large sample size now of customers that we have sold from a total team selling perspective. And when we can bring that specialty produce sales rep from Freshpoint into an existing Broadline account or bring a sales protein expert from our SSMG business, our specialty meat business, into an account, that customer spends three times more with Sysco. And those are cases; those are cases that have higher average ticket values.

Speaker Change: Yeah, just the first part of your question first, I'll toss to Kenny, he's always going to be the one that talks about the guidance that we have provided in case growth is a part of that guidance, so he'll do that part. The two main levers for existing customer case penetration improvement opportunity that I would highlight is the total team selling opportunity that Greg Bertrand covered at our Investor Day. We have a very large sample size now of customers that we have sold from a total team selling perspective, and when we can bring that specialty produce sales rep from Freshpoint into an existing broad line account, or bring a sales protein expert from our SSMG business, specialty meat business into an account,

Kevin P. Hourican: And those are cases that are probably going on a specialty distributor's truck today, and getting them on the Sysco truck or on a Freshpoint truck is a meaningful positive. So we are meaningfully focused on that total team selling opportunity. We have tremendous data, and we know exactly which customers are using that type of product and not buying it from Sysco.

Kevin Hurkin: Those are cases that are higher average ticket, and those are cases that are probably going on a specialty distributor's truck today, and getting them on the Cisco truck or on a Fresh Point truck is a meaningful positive. So we are meaningfully focused on that total team selling opportunity. We have tremendous data, and we know exactly which customers are using that type of product and not buying it from Cisco. We have prospect lists. We can track those prospect lists on an ongoing basis, or compensation systems are properly calibrated to reward that behavior. We can track it by geography.

Kenny: That customer spends three times more with Sysco. And those are cases. Those are cases that are higher average ticket. And those are cases that are probably going on a specialty distributors truck today and getting them on the Sysco truck or on a Freshpoint truck is a meaningful positive.

Kevin P. Hourican: We have prospect lists, we can track those prospect lists on an ongoing basis, our compensation systems are properly calibrated to reward that behavior, we can track it by geography, we can track it by site. We are tremendously focused on moving the needle on winning with specialty. It's our number one opportunity to improve cases per operator within existing customers. The second vector, though, that just again has tremendous upside still despite multiple years of success, is our Sysco year-away neighborhoods.

Kenny: So, we are meaningfully focused on that total team selling opportunity. We have tremendous data, and we know exactly which customers are using that type of product and not buying it from Sysco. We have prospect lists.

Kenny: We can track those prospect lists.

Kevin Hurkin: We can track it by site. We are tremendously focused on moving the needle on winning with specialty. It's the second vector, though, that just again has tremendous upside still, despite multiple years of success, is our Cisco year away neighborhoods. Those neighborhoods tended to be previously prior to Cisco year away neighborhoods where we under penetrated both cases per operator and number of doors covered most likely and most often because these are urban areas where Cisco historically has under represented from a market share perspective. Cisco year away, we've got internal goals. We've not quoted those statistics externally to increase our market share of existing customers, and we have many neighborhoods that are hitting those targets and many more that still have lots of growth potential.

Kenny: on an ongoing basis, or compensation systems.

Kenny: are properly calibrated to reward that behavior. We can track it by geography, we can track it by site. We are tremendously focused on moving the needle on winning with specialty. It is our number one opportunity to improve cases per operator within existing customers. The second vector though, that just again has tremendous upside still, despite multiple years of success,

Kevin P. Hourican: Those neighborhoods tended to be previously prior to Sysco's year away, neighborhoods where we under penetrated both cases per operator and number of doors covered, most likely and most often because these are urban areas where Sysco historically has been under represented from a market share perspective.

Kenny: is our Sysco Year Away Neighborhoods.

Kenny: Those neighborhoods tended to be, previously, prior to Sysco Yearway, neighborhoods where we under-penetrated.

Kenny: Both cases per operator and number of doors covered, most likely and most often because these are urban areas where Sysco historically has under-represented from a market share perspective.

Kevin P. Hourican: A sysco year away, we've got internal goals, we've not quoted those statistics externally, to increase our market share of existing customers. And we have many neighborhoods that are hitting those targets, and many more that still have lots of growth potential. So those are the two things I'm most excited about Sysco's year-away penetration opportunities in total team selling penetration opportunities. For your modeling question on how to think about local case growth, I'll toss it to Kenny. Kenny, it's over to you.

Kenny: Sysco Yearway, we've got internal goals, we've not quoted those statistics externally to increase our market share of existing customers and we have many neighborhoods that are hitting those targets and many more that still have lots of growth potential. So those are the two things I'm most excited about, Sysco Yearway penetration opportunities in total team selling, penetration opportunities. For your modeling question on how to think about local case growth, I'll toss to Kenny. Kenny, over to you.

Kenny Cheung: So those are the two things I'm most excited about. Cisco year away penetration opportunities in total team selling, penetration opportunities for your modeling question on how to think about local case growth. I'll toss the candy Candy over to you.

Kenny Cheung: Yeah John, so you can expect local volume to be roughly low single digits growth for the year. Again for the entire company as well low single digits and part of our guys in which we're gonna pop them as we believe these targets are achievable. Thank you.

Kenny K. Cheung: Hey, John, so you can expect local volumes, low single-digit growth for the year. Again, for the entire company as well, low single-digits, and part of our guide in which we're confident as we believe these targets are achievable. Thank you. Thanks, John. We'll go now to Edward Kelly with Wells Fargo.

Kenny: Hey John , so you can expect local volumes to be roughly low single-digit growth for the year. Again, for the entire company as well, low single digits, and it's part of our guide in which we are confident as we believe these targets are achievable.

unknown: Thanks, John.

Edward Kelly: We'll go now to Edward Kelly with Wells Fargo. Hi, good morning, guys. I wanted to start with the guidance and maybe some color on the cadence of how you think about the guidance for the year. If I look at the volume, obviously you're expecting a volume improvement through the year, both from the new associates as well as some market improvement in the back half. I'm not sure how meaningful that is, but then you have all sets, I guess, around things like corporate, which looked like they may be down quite a bit early on. How do we think about the cadence of the guidance?

Kenny: Thank you.

Operator: Hi, good morning, guys. Kenny, I wanted to start with the guidance and maybe some color on the cadence of how you're thinking about the guidance for the year. You know, if I look at the volume, obviously, you're expecting a volume improvement through the year, both from the new associates, as well as, you know, some market improvement in the back half. I'm not sure how meaningful that is, but then you have offsets, I guess, around things like corporate, which looked like they may be down quite a bit early on. So how should we think about the cadence of the guidance?

Kenny: Thanks, John .

Kenny: We'll go now to Edward Kelly with Wells Fargo.

Edward Joseph Kelly: Alright, good morning guys.

Edward Joseph Kelly: Kenny, I wanted to, I wanted to start with, with the guidance and maybe some color on the cadence of how you think about the guidance for the year. You know, if I look at the volume, you know, obviously, you're expecting a volume improvement through the year, both from the new associates as well as, you know, some market improvement in the back half. I'm not sure how

Kenny K. Cheung: And specifically, are you comfortable with the Q1 consensus number? Because consensus expectations have you up around the same amount each and every quarter. Yeah, so let me answer your last question first.

Speaker Change: Meaningful, that is. But then you have offsets, I guess, around things like corporate, which looked like they may be down, you know, quite a bit early on. So how do we think about the cadence of the guidance? And specifically, are you comfortable with the Q1 consensus number? Because consensus expectations have you up around the same amount.

Kenny Cheung: Specifically, are you comfortable with the Q1 consensus number? Because consensus expectations have you up around the same amount each quarter? Yeah, so let me answer your last one first. So I am confident in the Q1 number, and I'm confident before your guidance number as well. Just to recap, before your guide, 25 is within the outdoor range that we talked about on Investor Day. So that's the point number one. And your first question is where is the cadence in the facing of the forecast? Yes, yes.

Kenny K. Cheung: So I am confident in the Q1 number and I'm confident in the four-year guidance number as well. Just to recap, the four-year guidance number of 25 is within the algo range that we talked about on investor day. So that's point number one. And your second question is more around the cadence and the phasing of the forecast, Ed.

Speaker Change: each quarter.

Speaker Change: Yeah, so let me answer your last one first.

Speaker Change: Q1 number, and I'm confident the full year of guidance.

Speaker Change: number as well.

Speaker Change: Just to recap, before your guide, 25 is within the algo range that we talked about on Investor Day. So that's point number one. And your first question is more around the cadence and the phasing of the forecast, Ed? Yes.

Kenny Cheung: So, from a savings standpoint, we do, so let me take it into pieces here. From an industry traffic standpoint, we mentioned that will improve modestly in the back half of the year. That is our expectation. That's the point number one. In terms of the benefits from the investment on FCs given most number high in the back half, as well as the cost and station models that Kevin just wrote out, we wrote out in July 1st that we should see the benefits in the back half of the year on as well. In terms of color productivity, which is another folder of our K&L, that should be throughout the year.

Kenny K. Cheung: Yes, yeah. Yeah, so from a phasing standpoint, we do. So, let me take it in pieces here.

Speaker Change: Yeah.

Speaker Change: So from a phasing standpoint, we do, so let me take it in pieces here, from an industry traffic standpoint, we mentioned that will improve modestly in the back half of the year. That is our expectation. That's point number one. In terms of the benefits from the investment on SCs, given most of them are higher in the back half,

Speaker Change: as well as the compensation model that Kevin just wrote out, we wrote out in July 1st.

Speaker Change: that we should see the benefit in the back half of the year, as well. In terms of, call it productivity, which is another boulder of our P&L, that should be throughout the year, meaning we have good momentum from corporate this year, down 10%, the actions that we took in Q3, and that rolls over.

Kenny Cheung: Meaning we have good momentum, corporate this year, down 10% of the actions that we took in Q3, and that rolls over into Q1 immediately. Therefore, we expect leverage in Q1, and that is the gift that keeps on giving at because it's not just a rollover. We also have robust productivity along the next four quarters as well. And then from a supply chain standpoint, we do expect as well continue progress on piece per labor hour and productivity. In fact, Q4 was the highest productivity month supply chain and across the past couple of years since COVID actually.

Speaker Change: Kevin Kim, Kenny Cheung

Speaker Change: Unknown Speaker Along the next four quarters as well. And then from a supply chain standpoint, we do expect, as well, continued progress on piece per labor hour and productivity. In fact,

Kenny Cheung: So we do expect that benefit to be more of a consistent throughout the year. Obviously, you have the inflation wage side, but from a productivity standpoint, that's our day one for us into the new fiscal year. So productivity, consistent throughout the year, volume, we expect more back pass given the fact that we expect industry to bounce back in the past year. Got it.

Speaker Change: Q4 was the highest productivity month supply chain across the past couple of years since COVID actually. So we do expect that benefit to be more of a consistent throughout the year. Obviously you have the inflation wage side, but from a productivity standpoint, that starts day one for us into the new fiscal year. So productivity, consistent throughout the year.

Kenny K. Cheung: From an industry traffic standpoint, we mentioned that traffic will improve modestly in the back half of the year. That is our expectation. That's point number one.

Kenny K. Cheung: In terms of the benefits from the investment in SCs, given most of them were higher in the back half, as well as the compensation model that Kevin just wrote out, we wrote out on July 1st that we should see the benefit in the back half of the year. And then from a supply chain standpoint, we do expect, as well, continued progress on the piece per labor hour and productivity. In fact, Q4 was the highest productivity month supply chain across the past couple of years since COVID. Actually, Ed.

Kenny K. Cheung: So we do expect that benefit to be more of a consistent one throughout the year. Obviously, you have the inflation wage side, but from a productivity standpoint, that starts day one for us in the new fiscal year.

Kenny K. Cheung: So productivity has been consistent throughout the year, and volume, we expect more in the second half, given the fact that we expect the industry to bounce back in the second half of the year. Got it. And then just a quick follow up on international, you know, sales inflected in Q4, obviously, you're still very optimistic about this business. I don't think the, you know, macro over there is anything special. So I'm just curious, maybe talk about momentum in the business and, you know, expectations for 25 years there. Good question.

Speaker Change: Volume, we expect more back pass given the fact that we expect the industry to bounce back in the second half of the year.

Edward Kelly: And then just a quick follow-up on international sales and flex it in Q4. Obviously, you're still very optimistic about this business. I don't think the macro over there is anything special. So I'm just curious, maybe talk about momentum in the business and expectations for 25 there. Yeah, good question. Thank you for asking about international. You're right that the improvement in our performance, the growth year-over-year, the profit improvement year-over-year is not from a macro. You know, one of your terms is self-help. It's self-help activities in international productivity improvement within our supply chain is helped with the PNL tremendously in Europe specifically.

Speaker Change: Got it. And then just a quick follow-up on international, you know, sales inflected in Q4, obviously you're still very optimistic about this business. I don't think the, you know, the macro over there is anything special. So I'm just curious, maybe talk about momentum in the business and, you know, expectations for 25 there.

Kevin P. Hourican: Thank you for asking about international business. You're right that the improvement in our performance, the growth year over year, the profit improvement year over year is not from a macro. One of your terms is self-help; it's self-help activities.

Speaker Change: Yeah, good question. Thank you for asking about international. You're right that the improvement in our performance, the growth year over year, the profit improvement year over year is not from a macro. One of your terms is self-help. It's self-help activities.

Kenny Cheung: We're putting in improved technology to be more efficient, which is again helping with our productivity. Cisco brand being introduced in countries that did not have it before, which is helping on growth profit expansion. The local case growth that I mentioned, which is 5% local case growth in international, is from a concerted effort on running the Cisco play, as we call it, which is, you know, Cisco, your way being added, perks being added, adding resources to the local sales force in international countries. Several of our larger international countries had were over indexed on CMU national, so we're going to maintain, retain and grow properly in our CMU business with a real meaningful focus on improving local.

Speaker Change: in international. Productivity improvement within our supply chain has helped the P&L tremendously. In Europe specifically, we're putting in improved technology to be more efficient, which is again helping with our productivity. Sysco brand being introduced in countries that did not have it before, which is helping on gross profit expansion. The local case growth that I mentioned, which was 5% local case growth in international is from a concerted effort on running the Sysco play, as we call it.

Kevin P. Hourican: In international, productivity improvement within our supply chain has helped the P&L tremendously. In Europe, specifically, we're putting in improved technology to be more efficient, which is again helping with our productivity. The Sysco brand being introduced in countries that did not have it before, which is helping on gross profit expansion. The local case growth that I mentioned, which is 5% local case growth in international, is from a concerted effort on running the Sysco play, as we call it, which is, you know, Sysco your way being added, FERC's being added, adding resources to the local sales force in international countries. Several of our larger international countries, Ed, were over-indexed on CMU national.

Speaker Change: which is, you know, Sysco your way being added, Perks being added, adding resources to the local sales force.

Speaker Change: in international countries.

Kenny K. Cheung: So we're going to maintain and grow profitably in our CMU business with a real meaningful focus on improving local. We have a team that started in our U.S. business that's now leaning in and helping each of those international countries with their local business. And we're really pleased with the results, and we expect that improvement to continue into 2025. Kenny, is there anything you'd like to say about international education? Every market, right, between Europe and international America.

Ed: Several of our larger international countries, Ed, were over-indexed on CMU National. So we're going to maintain, retain, and grow profitably in our CMU business with a real meaningful focus on improving local. We have a team that...

Kenny Cheung: We have a team that started in our US business that's now leaning in and helping with each of those international countries with their local business, and we're really pleased with the results. And we expect that improvement to continue into 2025.

Ed: started in our U.S. business that's now leaning in and helping with each of those international countries with their local business and we're really pleased with the results.

Kenny Cheung: Kenny, is there anything you'd like to say about international? Yes, the international, you know, we have a global robbery model that that's working as we replicate the success or record for growth, and it's working across our national market. I think, you know, if you look at this full year, we were top line 7% growth, bottom line 24%. I do think one interesting fact is it's not just one market. If you look at across our portfolio, every market is sitting within, for example, Europe and International America, for the year, grew double digits on operating income, every market, right, between Europe and International America.

Kenny: and we expect that improvement to continue into 2025. Kenny, is there anything you'd like to say about International?

Kenny: Yes, so for international, you know, we have a global robbery model that's that's working as we're working to success or ready for growth and it's working.

Kenny: across their national markets. I think, you know, if you look at the full year, we were top line 7% growth, bottom line 24%.

Kenny: I do think one interesting fact is, it's not just one market. If you look at across our portfolio, every market sitting within, for example, Europe and international America for the year.

Kenny K. Cheung: So it's not just one market leading it. So the benefit that we're seeing is pervasive across the board, and we expect that to continue in 2025. Thank you.

Kenny Cheung: So it's not just one market leading it. So the benefit that we're seeing is pervasive across the board, and we expect that to continue in 2025. Thank you.

Kenny: Group double digit on operating income, every market right between Europe and international America. So it's not just one market leading it So the the benefit that we're seeing is pervasive across the board and we expect that to continue in 2025

Brian Arbor: Thanks, Ed. We'll move next to Brian Arbor with Morgan Stanley. Yeah, thanks. Good morning, guys. Kenny, just your comments on corporate costs. I know you took some actions and pre-Q, right, so that's still kind of a benefit in the first half of the year. But are there ongoing actions just on the corporate cost side specifically? Do you still think you can see improvement there throughout the course of this fiscal year?

Operator: We'll maneuver next to Brian Harbour with Morgan Stanley. Thanks for your comments. Unknown Speaker, Unknown Speaker. I know you took some action. Still kind of a benefit.

Speaker Change: Thank you.

Ed: Thanks Ed.

Operator: Unknown Speaker: Are there ongoing actions just on the corporate cost side specifically? Do you still think you can see improvement there throughout? Hey, Brian, good to talk to you. Yes, the answer is a resounding yes. But let me take a back step on this one.

Ed: Yeah, thanks. Good morning, guys. Kenny, just your comments on...

Speaker Change: Corporate costs. I know you took some actions in pre-Q, right? So that's still kind of a benefit in the first half of the year. But are there ongoing actions just on the corporate cost side specifically? Do you still think you can see improvement there throughout the course of this fiscal year?

Kenny Cheung: Hey, Brian, I could have talked to you. Yes, the answer is a resounding yes, but let me take a back step on this one. So corporate expense of the quarter: $205 million. That was down 10% as we talked about, but I also think it's important to note it was down 7% quarter or quarter. By the structural cost that we did into three and Brian's your question, we are looking for more and we've done more. This includes digital automation, sure service deployment, indirect reporting, procurement names as well. So the answer is we've done 120 million plus last year.

Kenny K. Cheung: So corporate expense for the quarter, $205 million. That was down 10%, as we talked about. But I also think it's important to note, it was down 7% quarter over quarter, driven by the structural cost that we did in Q3. And Brian, to your question, we are looking for more, and we've done more. This includes digital automation, sure service deployment, indirect reporting, and procurement savings as well.

Speaker Change: Hey Brian , good to talk to you. Yes, the answer is a resounding yes, but let me take a back step on this one.

Speaker Change: Corporate expense for the quarter, $205 million. That was down 10% as we talked about, but I also think it's important to note it was down 7% quarter over quarter.

Kenny K. Cheung: So the answer is, we did $120 million plus last year, part of it carries over into the new fiscal, and we have a robust pipeline to ensure we continue to execute the productivity play across the year. Specifically, in international, we have structural cost improvement opportunities in international that we're very focused on. They've already done great work abroad, which is driving the outsized profit improvement versus the domestic US, and we expect that to continue.

Speaker Change: Distributed by Destructible Costs that we did in Q3. And Brian , to your question, we are looking for more, and we've done more. This includes...

Speaker Change: Digital, Automation, Shared Service Deployment, Indirect Reporting, Procurement Statements as well. So the answer is...

Kenny Cheung: Part of the care is over into the new fiscal, and we have a robust pipeline to ensure we continue to execute the part that you play across the year. Specifically an international in particular. We have structural cost improvement opportunities international that we're very focused on. They've already done great work international, which is driving the outsized profit improvement versus domestic US, and we expect that to continue.

Speaker Change: We've done $120 million plus last year, part of it carries over into the new fiscal, and we have a robust pipeline to ensure we continue to execute the productivity play across the year.

Speaker Change: Specifically in international in particular we have structural cost improvement opportunities international that we're very focused on. They've already done great work international which is driving the outsized profit improvement versus domestic US and we expect that to continue.

Kenny Cheung: Okay, thanks.

Kevin Hurkin: You're two percent inflation outlook is that fairly even through the year? Is it kind of some of the same items driving that that you called out most recently, or could you elaborate on that? Yeah, even throughout the years, is Kevin, there'll be ups and downs by category. Kenny always talks about we have 13 different category baskets; you know, some will be up, some will be down. We expect that roughly approximately two percent, which, by the way, we're there right now. We are at that level right now, and we have modeled it, and we expect it to be reasonably consistent at that level throughout the year.

Kenny K. Cheung: [inaudible] Fairly even through the year, is it kind of some of the same items driving that that you called out? Yeah, even throughout the year, says Kevin, there'll be ups and downs by category. Kenny always talks about how we have 13 different category baskets.

Speaker Change: Okay, thanks. Your 2% inflation outlook, is that fairly even through the year? Is it kind of some of the same items driving that that you called out most recently, or could you elaborate on that?

Kevin P. Hourican: You know, some will be up, some will be down. We expect that roughly approximately two percent, which, by the way, we're there right now. We are at that level right now, and we have modeled it, and we expect it to be reasonably consistent at that level throughout the year. Thank you. Thank you. We'll move next to Kendall Toscano with Bank of America.

Speaker Change: Yeah, even throughout the years as Kevin, there'll be ups and downs by category. Kenny always talks about we have 13 different category baskets.

Kevin: Somebody up, somebody down. We expect that roughly approximately 2%, which by the way, we're there right now. We are at that level right now and we have modeled it and we expect it to be reasonably consistent at that level throughout the year.

unknown: Thank you.

Kendall Toscano: We'll move next to Kendall Toscano with Bank of America. Hi, thanks for taking my question. Just curious, I know you talked last quarter a bit about maybe needing to see restaurants take down or invest in prices a little in order to drive an improvement in industry volumes. So curious if you've seen kind of any of that starting to play out, and when you are assuming that the macro backdrop improves in the back half of next year, is that assuming that there is some price investment by the restaurant operators? Thanks.

Speaker Change: Thank you.

Operator: Hi, thanks for taking my question. I'm just curious; I know you talked last quarter a bit about maybe needing to see restaurants take down or invest in prices a little in order to drive an improvement in industry volumes. So, curious if you've seen any kind of any of that starting to play out, and when you are assuming that the macro backdrop improves in the back half of next year, is that assuming that there is some price investment by the restaurant operators? Kendall, it's Kevin.

Speaker Change: Thank you.

Speaker Change: We'll move next to Kendall Toscano with Bank of America.

Kendall Belinda Toscano: Hi, thanks for taking my question. Just curious, I know you talked last quarter a bit about maybe needing to see restaurants take down or invest in prices a little in order to drive an improvement in industry volumes. So curious if you've seen kind of any of that starting to play out and

Kendall Belinda Toscano: When you are assuming that the macro backdrop improves in the back half of next year, is that assuming that there is some price investment by the restaurant operators? Thanks.

Kevin Hurkin: Kendall, it's Kevin. Thank you for the question. It's up to our customers to decide what to do with their menu prices. Obviously, what we start with and what we focus on are things Cisco can do to help them. Driving improved purchasing economics, sharing in the value of that purchasing economic favorability with our customers, advancing Cisco brand, providing them with products that save them time, save them money, pre-cook products when it's appropriate for their menu, et cetera, et cetera. So those are the things we can do. Those are the things we will do. We're here to help as it relates to our receiving movement.

Kevin P. Hourican: Thank you for the question. You know, it's up to our customers to decide what to do with their menu prices. Obviously, what we start with and what we focus on are things we, Sysco, can do to help them drive improved purchasing economics, sharing in the value of that purchasing economic favorability with our customers, advancing the Sysco brand, providing them with products that save them time, save them money, pre-cooked products when it's appropriate for their menu, etc, etc. So those are the things we can do. Those are the things we will do. We're here to help.

Speaker Change: It's up to our customers to decide what to do with their menu prices.

Speaker Change: Start with and what we focus on are things we, Sysco, can do to help them.

Kendall Belinda Toscano: Driving Improved Purchasing Economics.

Kendall Belinda Toscano: Share in the value of that purchasing economic favorability with our customers, advancing Sysco brand, providing them with products that save them time, save them money, pre-cooked products when it's appropriate for their menu, etc., etc.

Kevin P. Hourican: As it relates to, are we seeing movement? Yes, we're seeing movement, specifically within QSR. I think that has been a sector that has written a lot and said a lot about the lower income customer and the impact that raised prices have had upon them. You're seeing a lot of value menu activity happening out there within the QSR space. I do believe it will help that activity.

Kevin Hurkin: Yes, we're seeing movement specifically within QSR. I think that has been a sector that has written a lot and said a lot about the lower income customer and the impact that raised prices have had upon them. You're seeing a lot of value menu activity happening out there within the QSR space. I do believe it will help that activity. I believe for the other restaurant types. It is about the quality of the product that they're serving, the quality of that in restaurant experience. And again, us, we being Cisco, providing them with value. As we thought about this year, we didn't model into the year lower menu prices as one of the change vectors within our guide.

Kendall Belinda Toscano: So those are the things we can do. Those are the things we will do. We're here to help as it relates to are we seeing movement. Yes, we're seeing movement specifically within QSR. I think that has been a sector that has written a lot and said a lot about the lower income customer and the impact that raised prices have had upon them. You're seeing a lot of value menu activity happening out there within the QSR space. I do believe it will help

Kevin P. Hourican: I believe for other restaurant types, it is about the quality of the product that they're serving, the quality of that in-restaurant experience, and again, us, we being Sysco, providing them with value. As we thought about this year, we didn't model lower menu prices as one of the change vectors within our guide. We expect consumer confidence to be moderately better in the second half than the first half, mostly through interest rate reductions. Hopefully, they will begin later in this calendar year.

Kendall Belinda Toscano: That activity, I believe, for the other restaurant types.

Speaker Change: It is about the quality of the product that they're serving, the quality of that in-restaurant experience.

Speaker Change: And again, us, we being Sysco, providing them with value. As we thought about this year, we didn't model into the year lower menu prices as one of the change vectors within our guide. We expect for consumer confidence to be moderately better in the second half than the first half, mostly through interest rate reductions. Hopefully they begin later in this calendar year. Mortgage rates coming down, that has a psychological impact on consumers as you're well aware. So our second half, more optimism is more tied to mortgage rates and interest rates than it is to menu price.

Kevin Hurkin: We expect for consumer confidence to be moderately better than the second half than the first half, mostly through interest rate reductions. Hopefully, they begin later in this calendar year. Mortgage rates coming down that has a psychological impact on consumers, as you're well aware. So our second half more optimism is more tied to mortgage rates and interest rates than it is to menu price.

Kevin P. Hourican: Mortgage rates coming down, that has a psychological impact on consumers, as you're well aware. So in our second half, more optimism is more tied to mortgage rates and interest rates than it is to menu prices. And then my main point here, and this is what I want to end, we, Sysco, can profitably grow our business in these market conditions. We have a share we can take profitably. We have new customers that we can acquire.

Kevin Hurkin: And then my main point here, and this is what I want to end. We Cisco can profitably grow our business in these market conditions. We have share we can take profitably. We have new customers that we can acquire. We have penetration opportunities back to John Heimbuckle's question with produce and protein. And we are going to profitably grow this business in these market conditions, and all that obviously was built into the guide that we have for a year. Excuse me for the year.

Kevin P. Hourican: We have penetration opportunities, back to John Heimbunkle's question about produce and protein. And we are going to profitably grow this business in these market conditions. And all of that, obviously, was built into the guide that we have for the year.

Speaker Change: And then my main point here, and this is where I want to end.

Cisco: We, Sysco, can profitably grow our business in these market conditions.

Cisco: We have share we can take profitably, we have new customers that we can acquire, we have penetration opportunities, back to John Heinbockel's question with produce and protein, and we are going to profitably grow this business in these market conditions, and all of that obviously was built into the guide that we have for you.

Kevin P. Hourican: Kendall, I'll talk back to you if you have a follow-up. Yeah, thank you. Just one quick question.

Kendall Toscano: Kendall, I'll toss back to you if you have a follow. Yeah, thank you. Just one quick another question I had was, I know you mentioned a decline in private label penetration. Did you talk about what drove that? Yeah, the primary driver is improvement in national supplier fill rate inbound to Cisco. So when a national brand supplier is enabled to ship, we have substitute alternatives, and most often that substitute alternative is a Cisco brand because we do a great job of keeping our Cisco brand products in stock at our facilities. So overall, it's a good thing for the industry that national supplier fulfillment rates have increased and improved.

Kendall Belinda Toscano: Another question I had was, I know you mentioned a decline in private label penetration. Did you talk about what drove that? Yeah, the primary driver is an improvement in the national supplier fill rate inbound to Sysco. So when a national brand supplier isn't able to ship, we have substitute alternatives. And most often, that substitute alternative is a Sysco brand because we do a great job of keeping our Sysco brand products in stock at our facilities. So overall, it's a good thing for the industry that national supplier fulfillment rates have increased and improved. It is a good thing. Nobody likes substitutes.

Cisco: for the year. Kendall, I'll toss back to you if you have a follow-up.

Kendall Belinda Toscano: Yeah, thank you. Just one quick, another question I had was, I know you mentioned a decline in private label penetration. Did you talk about what drove that?

Speaker Change: Yeah, the primary driver is improvement in national supplier fill rate inbound to Sysco. So when a national brand supplier isn't able to ship, we have substitute alternatives. And most often that substitute alternative is a Sysco brand, because we do a great job of keeping our Sysco brand products.

Speaker Change: In stock at our facilities. So overall, it's a good thing for the industry that national supplier fulfillment rates have increased and improved. It is a good thing. Nobody likes substitutes.

Kevin Hurkin: It is a good thing. Nobody likes substitutes. Customers don't like them. Our warehouse operations get their own curve balls when we have to do substitutes. So net net is a good thing. It's a short-term small headwind on the percent of cases. Cisco brand. But again, we grew our pieces. Cisco brand. And we grew our profits. Cisco brand long term. We are bullish on Cisco Brand. We are working on providing trade management deals to all of our customer types. And as I mentioned earlier, we've increased the importance of Cisco brand penetration on our performance objectives for Fiscal 2025.

Kevin P. Hourican: Customers don't like them, and our warehouse operations get thrown curveballs when we have to substitute. So, net net, it's a good thing.

Kevin P. Hourican: It's a short-term, small headwind on the percent of cases for the Sysco brand. But again, we grew our pieces, and we grew our profits. Long term, we are bullish on the Sysco brand. We are working on providing trade management deals to all of our customer types. And as I mentioned earlier, we've increased the importance of Sysco brand penetration on our performance objectives for fiscal 2020.

Speaker Change: Kevin Kim, Kenny Cheung

Speaker Change: of Cases, Sysco brand. But again, we grew our pieces, Sysco brand, we grew our profits, Sysco brand, long term, we are bullish on Sysco brand. We are working on providing trade management deals to all of our customer types.

Speaker Change: And as I mentioned earlier, we've increased the importance of Sysco brand penetration on our performance objectives for fiscal 2025.

unknown: Okay, thanks again. Thank you.

Operator: And ladies and gentlemen, due to time constraints, that will conclude our question-and-answer session and Cisco's fourth-quarter conference call. Thank you for your participation.

Kevin P. Hourican: Okay, thanks again. Thank you. And, ladies and gentlemen, due to time constraints, that will conclude our question and answer session and Sysco's fourth quarter conference call. Thank you for your participation. You may disconnect your lines at this time, and everyone have a wonderful day.

Speaker Change: Okay, thanks again. Thank you.

Speaker Change: And ladies and gentlemen, due to time constraints, that will conclude our question and answer session and Sysco's fourth quarter conference call. Thank you for your participation. You may disconnect your lines at this time and everyone have a wonderful day.

Operator: You may disconnect your lines at this time, and everyone have a wonderful day. Thank you.

Speaker Change: ?? ?? ?? ?? ??

Operator: ... [inaudible] Unknown.

Kevin J. Kim: and a special guest, Kevin Kim. This is a special guest, Kevin Kim. He's going to be talking about the work that you do at the University of Minnesota. So, Kevin, welcome. I'm excited to be here. I'm excited to be here. I'm excited to be here.