Q4 2024 Performance Food Group Co Earnings Call

Operator: Please stand by. Your program will begin momentarily. Good day and welcome to PFG's fiscal year Q4 2024 earnings conference call. If you would like to ask a question at the conclusion of the prepared remarks, please press the star key followed by the number one on your telephone keypad at any time.

Thank you so much for watching!

Speaker Change: Good day and welcome to PFG's fiscal year Q4 2024 earnings conference call.

Speaker Change: If you would like to ask a question at the conclusion of the prepared remarks, please press the star key followed by the number one on your telephone keypad at any time. I would now like to turn the call over to Bill Marshall, Vice President, Investor Relations, for PFG. Please go ahead, sir.

Bill Marshall: I would now like to turn the call over to Bill Marshall, Vice President, Investor Relations, for PFG. Let's go ahead, sir. Thank you and good morning.

Bill Marshall: We're here with George Holm, P-F-G-C-E-O, and Patrick Hatcher, P-F-G-C-F-O. We issued a press release this morning regarding our 2024 fiscal fourth quarter results, which can be found in the Investor Relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the results in the same period in The results discussed on this call will include GAP and non-GAP results adjusted for certain items. The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found in the back of the earnings release.

Bill Marshall: Thank you and good morning. We're here with George Holm, PFG CEO, and Patrick Hatcher, PFG CFO. We issued a press release this morning regarding our 2024 fiscal fourth quarter results, which can be found in the investor relations section of our website at pfgc.com.

Speaker Change: During our call today, unless otherwise stated, we are comparing results to the results in the same period in fiscal 2023.

Speaker Change: The results discussed on this call will include gap and non-gap results adjusted for certain items.

Speaker Change: The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found in the back of the earnings release. As a reminder, in the fiscal first quarter of 2023, we updated our segment reporting metrics to adjusted EBITDA from the prior EBITDA metric.

Bill Marshall: The results will include GAAP measures to the corresponding GAAP measures to the corresponding GAAP measures. As a reminder, in the fiscal first quarter of 2023, we updated our segment reporting metrics to adjusted EBITDA from the prior EBITDA metric. Our remarks on this call and in the earnings release contain forward-looking statements and projections of future results. Please review the Cautionary Forward-Looking Statements section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. Now, I'd like to turn the call over to George.

Speaker Change: Our remarks on this call and in the earnings release contain forward-looking statements and projections of future results.

Speaker Change: Please review the Cautionary Forward-Looking Statements section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections.

George Holm: Thanks Bill. Good morning everyone, and thank you for joining our call. We have a good deal of material to cover this morning, and hopefully, you all had a chance to review the announcements we made earlier. To ensure we can touch on each topic, we are adjusting the format of this call. I will start with a discussion of our M&A activity, including our agreement to acquire Chaney Brothers as part of our long-term acquisition strategy. Patrick will then review our financials, including the anticipated impact from the transaction, in addition to our reported results and outlook for fiscal 2025.

Speaker Change: Now, I'd like to turn the call over to George. Thanks, Bill. Good morning, everyone, and thank you for joining our call today.

George: We have a good deal of material to cover this morning and hopefully you all had a chance to review the announcements we made earlier today.

George: To ensure we can touch on each topic, we are adjusting the format of this call. I will start with a discussion of our M&A activity.

George: including our agreement to acquire Chaney Brothers as part of our long-term acquisition strategy. Patrick will then review our financials, including the anticipated impact from the transaction, in addition to our reported results and outlook for fiscal 2025.

Patrick: I will then come back for some closing comments on the state of our business and the industry.

George Holm: I will then come back for some closing comments on the state of our business and the industry. This is an exciting day for PFG as we not only closed out a very strong fiscal year and look ahead to an equally bright fiscal 2025, but we also announce our definitive agreement to acquire Cheney, a leading distributor in the Southeastern United States. Today, we also disclosed our purchase of Humsai Santiago, a leading broadline food service distributor in Puerto Rico, in a deal that closed in early June. These two transactions are expected to build upon our food Let's start with our agreement to acquire change. Last night, we entered into a definitive agreement to acquire Cheney in an all cash transaction for approximately $2.1 billion.

Patrick: This is an exciting day for PFG as we not only closed out a very strong fiscal year and look ahead to an equally bright fiscal 2025, but also announce our definitive agreement to acquire Cheney Brothers.

Patrick: a leading distributor in the Southeastern United States.

Patrick: Today we also disclose our purchase of Jose Santiago, a leading broad line food service distributor in Puerto Rico, in a deal that closed in early July.

Patrick: These two transactions are expected to build upon our food service strength, adding to our presence in the Southeast and expanding into the Caribbean. Let's start with our agreement to acquire change.

George Holm: We expect this transaction will be accreted to our adjusted diluted earnings per share by the end of the first fiscal year after closing and will drive additional shareholder value for the long term. Patrick will provide more details on the financial impact in a moment. I have followed Cheney's success for many years and have been impressed with their ability to execute and win this [inaudible]. Change is one of the largest privately held broadband food service distributors in the United States and generates over $3 billion in annual net revenue.

Speaker Change: Last night, we entered into a definitive agreement to acquire Cheney in an all-cash transaction for approximately $2.1 billion. We expect this transaction will be accreted to our adjusted diluted EPS by the end of the first fiscal year.

Speaker Change: year after closing and drive additional shareholder value for the long term.

Speaker Change: Patrick will provide more details on the financial impact in a moment.

Speaker Change: I have followed Cheney's success for many years and have been impressed with their ability to execute and win business.

Speaker Change: Cheney is one of the largest privately-held, broad-line food service distributors in the United States and generates over $3 billion in annual net revenue.

George Holm: The company is known for its strength in the Southeast region, particularly in Florida. The transaction, if approved by regulatory authorities, will add five broadline facilities across the Southeast region and several smaller specials. [inaudible] Cheney is led by an excellent and experienced management team with a culture that we believe will fit very well within the P.F.G. or the. Byron Russell has been at the helm of Channey for over 40 years, and under his leadership, the company has grown into one of the most successful, privately held broadband food service distributors in the United States.

Speaker Change: The company is known for its strength in the Southeast region, particularly in Florida. The transaction, if approved by regulatory authorities, will add five broad-line facilities across the Southeast region and several smaller specialty facilities.

Speaker Change: Cheney is led by an excellent and experienced management team with a culture that we believe will fit very well within the PFG organization.

Operator: Good day and welcome to PFG's Fiscal Year Q4 2024 earnings conference call. If you would like to ask a question at the conclusion of the prepared remarks, please press the star key, followed by the number one on your telephone keypad at any time.

Byron Russell: Byron Russell has been at the helm of Cheney for over 40 years and under his leadership the company has grown into one of the most successful privately held broad line food service distributors in the United States.

George Holm: As you know, we have had success in our M&A efforts in the past, including Reinhart, Kormark, and Merchant, all of which are generating nice results for us. We believe this success is rooted in how quickly the organizations have come together to work towards a single goal. We expect Channy to be similar and quickly add to our food service flat. [inaudible] We believe Chany will fit nicely with our legacy business, with a focus on independent restaurants, resorts, Country Club, and X-of the five broad line distributions. 4 are located in the Florida market with a remaining facility in North Carolina and additional facilities under construction in the South.

Bill Marshall: I would now like to turn the call over to Bill Marshall, Vice President and Vester Relations for PFG. Please go ahead, sir. Thank you and good morning.

Speaker Change: As you know, we have had success in our M&A efforts in the past, including Reinhart, Cormark, and Merchants, all of which are generating nice results for our company.

Bill Marshall: We're here with George Holm, PFG's CEO and Patrick Hatcher, PFG's CFO. We issued a press release this morning regarding our 2024 fiscal fourth-quarter results, which can be found in the Investor Relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the results in the same period in fiscal 2023. The results discussed on this call will include gap and non-gap results adjusted for certain items.

Speaker Change: We believe this success is rooted in how quickly the organizations have come together to work towards a single goal. We expect change to be similar and quickly add to our food service platform.

Speaker Change: We believe Chaney will fit nicely with our legacy business with a focus towards independent restaurants, resorts, country clubs, and export.

Cheney: of the five Broadline Distribution Facilities.

Bill Marshall: The reconciliation of these non-gap measures to the corresponding gap measures can be found in the back of the earnings release. As a reminder, in the fiscal first quarter of 2023, we updated our segment reporting metrics to adjusted EBITDA from the prior EBITDA metric. Our remarks on this call and in the earnings release contain forward-looking statements and projections of future results. Please review the cautionary forward-looking statement section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections.

Speaker Change: Four are located in the Florida market, with a remaining facility in North Carolina. An additional facility is under construction in South Carolina.

George Holm: The Chaney facilities are state-of-the-art and, importantly, have additional capacity that we expect to quickly fill and utilize to build and expand our business. Cheney's distribution facilities are in the unique position of having scale while offering additional capacity to serve a broad and different customer base than our performance. As with Reinhart, Merchants, and Cormark, we plan to continue to operate all existing Cheney and Performance Food Service distributions, taking advantage of the additional capacity of the Chami. Florida is an important market with demographics and economics that are growing faster than most of the Southeast region in the United States.

Speaker Change: The chaining facilities are state-of-the-art and importantly, have additional capacity that we expect to quickly fill and utilize to build and expand our business . . . . . . . . . .

Cheney: Cheney's distribution facilities are in unique position of having scale while offering additional capacity.

Cheney: The facilities serve a broad and different customer base than our performance food service business.

Cheney: As with Reinhart, Merchants and Cormark, we plan to continue to operate all existing Chamey and Performance Food Service distribution centers, taking advantage of the additional capacity of the Chamey facilities.

Bill Marshall: Now, I'd like to turn the call over to George. Thanks, Bill.

George Holm: Good morning, everyone, and thank you for joining our call today. We have a good deal of material to cover this morning, and hopefully you all had a chance to review the announcements we made earlier today. To ensure we can touch on each topic, we are adjusting the format of this call.

Cheney: Florida is an important market with demographics and economics that are growing faster than most of the Southeast region and United States.

George Holm: By combining our legacy resources with the chain your organization, we anticipate an acceleration in growth, sales, and profits. In our earnings release, we also disclosed the purchase of Jose Santiago. Family Owned Broadline Distributor, Headquartered and Imported

Cheney: By combining our legacy resources with the Chaney organization, we anticipate an acceleration in growth.

George Holm: I will start with the discussion of our M&A activity. Including our agreement to acquire Channy Brothers as part of our long-term acquisition strategy.

Cheney: Sales, and Profitability.

Cheney: In our earnings release, we also disclosed the purchase of Jose Santiago, a family-owned broadline distributor headquartered in Puerto Rico.

Patrick Hatcher: Patrick will then review our financials, including the anticipated impact from the transaction. In addition to our reported results, they now look for fiscal 2025.

George Holm: This is PFG's first entry into the Caribbean market and dovetails nicely with the Cheney deal. Jose Santiago comes with an attractive market position and strong sales. We have already welcomed their management team to the PFG organization and are extremely impressed with their operations. They have hit the ground running and are already collaborating with our PFG, a small relative to PFG's total. We believe Jose Santiago will be creative in increasing earnings, cash flow, and margins immediately. Taken together, we believe these two deals position PFG very well for future growth, South East from the United States and the Caribbean too.

Cheney: This is PFG's first entry into the Caribbean market and dovetails nicely with the Cheney deal. Jose Santiago comes with an attractive market position and strong sales growth.

George Holm: I will then come back for some closing comments on the state of our business and the industry. This is an exciting day for PFG. We not only closed out a very strong fiscal year and look ahead to an equally bright fiscal 2025, but also announced our definitive agreement to acquire Channy Brothers, a leading distributor in the southeastern United States. Today, we also disclose our purchase of Jose Santiago, a leading broadline food service distributor in Puerto Rico in a deal that closed in early July. These two transactions are expected to build upon our food service strength, adding to our presence in the southeast and expanding into the Caribbean.

Cheney: We have already welcomed their management team to the PFG organization and are extremely impressed with their operations.

Cheney: They have hit the ground running or already collaborating with our PFG business

Speaker Change: While small relative to PFG's total business, we believe Jose Santiago will be accretive to earnings, cash flow, and margins immediately.

Speaker Change: Taken together we believe these two deals position PFG very well for the future growth of the southeast United States and the Caribbean territories.

Patrick Hatcher: With that, I will turn it over to Patrick, who will provide more of the details on our financial performance and outlook. Patrick. Thank you, George, and good morning, everyone. As George mentioned, we have a number of items to cover, including our strong fiscal 2024 results, our outlook for fiscal 2025, and the financial impact from the two transactions George just described. First, our organization closed fiscal 2024 on a high note. We were able to leverage our sales growth through tight cost control, driving OpEx leverage and strong bottom-line growth.

Speaker Change: With that, I will turn it over to Patrick who will provide more detail on our financial performance and outlook. Patrick?

George Holm: Let's start with our agreement to acquire Channy. Last night, we entered into a definitive agreement to acquire Channy in an all-cash transaction for approximately $2.1 billion. We expect this transaction will be accreted to our adjusted deluded EPS by the end of the first fiscal year after closing and drive additional shareholder value for the long term. Patrick will provide more details on the financial impact in a moment.

Patrick: Thank you, George, and good morning, everyone. As George mentioned, we have a number of items to cover, including our strong fiscal 2024 results, our outlook on fiscal 2025, and the financial impact from the two transactions George just described.

Patrick: First, our organization closed fiscal 2024 on a high note. We were able to leverage our sales growth through tight cost control, driving OPEX leverage and strong bottom line growth.

Patrick Hatcher: As we had anticipated, Adjusted EBITDA accelerated significantly in the fiscal fourth quarter, growing 18.4% year-over-year and exceeding the top end of the guidance range we provided with the third quarter results. The better than expected adjusted EBITDA resulted in margin improvement in the quarter, a testament to our focus on profitable growth and return. BFG's broad and unique diversification and the food away from home channel provide resilience.

George Holm: Development. I have followed Cheney's success for many years and have been impressed with their ability to execute and win business. Cheney is one of the largest privately held Broadline Food Service Distributors in the United States and generates over three billion dollars in annual net revenue. The company is known for its strength in the Southeast region, particularly in Florida. The transaction, if approved by regulatory authorities, will add five Broadline facilities across the Southeast region and several smaller specialty facilities.

Speaker Change: As we had anticipated, adjusted EBITDA accelerated significantly in the fiscal fourth quarter growing 18.4% year-over-year and exceeding the top end of the guidance range we provided with third quarter results.

Speaker Change: The better-than-expected adjusted EBITDA resulted in margin improvement in the quarter, a testament to our focus on profitable growth and returns.

Patrick Hatcher: And once again, we achieved record results. Our top-line growth of 2.2% in the fiscal fourth quarter was the result of a balance between case volume gains and modest inflation across all three business sectors. Total case growth of 1.1% was driven by 3.7% independent restaurant case increases and the addition of new business in all three reported segments. In particular, we added new chain restaurant business during the fiscal fourth quarter that contributed to both case growth and profit margin.

Speaker Change: CFG's broad and unique diversification and the food away from home channel provide resilience and once again we achieved record results.

George Holm: Cheney is led by an excellent and experienced management team with a culture that we believe will fit very well within the PFG organization. Fibon Russell has been at the helm of Cheney for over 40 years and under his leadership the company has grown into one of the most successful privately held Broadline Food Service Distributors in the United States. As you know we have had success in our M&A efforts in the past including Reinhardt, Cornmark, and Merchants, all of which are generating nice results for our company.

Speaker Change: Our top line growth of 2.2% in the fiscal fourth quarter was the result of a balance between case volume gains and modest inflation across all three business segments.

Speaker Change: Total case growth of 1.1% was driven by 3.7% independent restaurant case increases.

Speaker Change: and the addition of new business in all three reported segments.

Speaker Change: In particular, we added a new chain restaurant business during the fiscal fourth quarter that contributed to both case growth and profit margins.

Patrick Hatcher: Case growth for our chain business within food service increased 2.1% in the fiscal fourth quarter, reflecting new business wins which we largely onboarded in the middle of the quarter. This additional business should continue to help our fiscal 2025 chain business results. Our convenience business also brought on several new accounts in the period. Total company cost inflation was 4.7% in the quarter, including 2.9% inflation in food service, 3% inflation in this star, and 7% inflation for convenience driven by nicotine.

George Holm: We believe this success is rooted in how quickly the organizations have come together to work towards a single goal. We expect Cheney to be similar and quickly add to our Food Service platform. We believe Cheney will fit nicely with our legacy business with a focus towards independent restaurants, resorts, country clubs, and export. Of the five Broadline Distribution facilities, four are located in the Florida market with remaining facility in North Carolina. An additional facility is under construction in South Carolina.

Hayes Crowe: The pace growth for our chain business within food service increased 2.1% in the fiscal fourth quarter, reflecting new business wins, which we largely onboarded in the middle of the quarter. This additional business should continue to help our fiscal 2025 chain business results.

Hayes Crowe: Our convenience business also brought on several new accounts in the period.

Hayes Crowe: Total company cost inflation was 4.7% in the quarter, including 2.9% inflation in food service, 3% inflation at Vistar, and 7% inflation for convenience driven by nicotine.

Patrick Hatcher: We believe that this pace of inflation, particularly in food service, is a better reflection of ongoing inflation and will be similar in fiscal 2025. While absolute price points remain high and are having an impact on consumer purchasing behavior, particularly in candy and snacks, a more moderate, low single-digit pace of inflation should produce better top and bottom line results going forward. [inaudible] In addition to the top line benefit from inflation, we also saw a lift to our gross profit, particularly due to positive mixture. Total campaign gross profit increased 4.7% in the fiscal 4th quarter.

George Holm: The Cheney facilities are state-of-the-art and importantly have additional capacity that we expect to quickly fill and utilize to build and expand our business. Cheney's distribution facilities are in the unique position of having scale while offering additional capacity. The facilities serve a broad and different customer base than our performance food service business. As with Reinhardt, Merchants and Cornmark, we plan to continue to operate all existing Cheney and performance food service distribution centers, taking advantage of the additional capacity of the Cheney facilities.

Hayes Crowe: We believe that this pace of inflation, particularly in food service and Vistar, is a better reflection of ongoing inflation and will be similar in fiscal 2025.

Hayes Crowe: While absolute price points remain high and are having an impact on the consumer purchasing behavior, particularly in candy and snacks, a more moderate, low single-digit pace of inflation should produce better top and bottom line results going forward.

Hayes Crowe: In addition to the top-line benefit from inflation, we also saw a lift to our gross profit, particularly due to positive mix shift.

George Holm: Florida is an important market with demographics and economics that are growing faster than most of the Southeast region and United States. By combining our legacy resources with the Cheney organization, we anticipate an acceleration in growth, sales, and profitability.

Hayes Crowe: Total company gross profit increased 4.7% in the fiscal fourth quarter. Gross profit per case was up 24 cents in the fourth quarter as compared to the prior year's period.

Patrick Hatcher: Gross profit per case was up 24 cents in the 4th quarter as compared to the prior year's period. We believe that the continuation of low single-digit inflation will drive additional gross margin improvement in fiscal 2025, particularly in the food service sector. Our segments did an excellent job keeping operating expenses low, providing fixed cost leverage, and driving bottom line growth ahead of our guidance expectations. This was particularly true of our convenience segment, which was able to produce 42% segment-adjusted EBITDA growth in the fiscal fourth quarter.

Hayes Crowe: We believe that the continuation of low single-digit inflation will drive additional gross margin improvement in fiscal 2025, particularly in the food service segment.

George Holm: In our earnings release, we also disclose the purchase of Jose Santiago, a family-owned Broadline distributor headquartered in Puerto Rico. This is PFG's first entry into the Caribbean market and tells nicely with the Cheney deal. Jose Santiago comes with an attractive market position and strong sales growth. We've already welcomed their management team to the PFG organization and are extremely impressed with their operations. They have hit the ground running and are already cooperating with our PFG business.

Hayes Crowe: Our segments did an excellent job keeping operating expenses low, providing fixed cost leverage, and driving bottom-line growth ahead of our guidance expectations.

Hayes Crowe: This was particularly true of our convenience segment, which was able to produce 42% segment-adjusted EBITDA growth in the fiscal fourth quarter. The food service segment also experienced solid adjusted EBITDA growth of 14%, reflecting a combination of gross profit expansion and tight cost control.

Patrick Hatcher: The food service segment also experienced solid adjusted EBITDA growth of 14%, reflecting a combination of gross profit expansion and tight cost control. Fistar adjusted EBITDA was flat in the quarter but expanded adjusted EBITDA margins by 12 basis points year over year.

George Holm: While small relative to PFG's total business, we believe Jose Santiago will be accretive to earnings, cash flow, and margins immediately. Taken together, we believe these two deals position PFG very well for the future growth of the Southeast from the United States and the Caribbean, with that.

Speaker Change: This star-adjusted EBITDA was flat in the quarter but expanded adjusted EBITDA margins by 12 basis points year-over-year. We expect to build upon these strong profit results in fiscal 2025, which I will address in a moment when I review our guidance for the fiscal year.

Patrick Hatcher: We expect to build upon these strong profit results in fiscal 2025, which I will address in a moment when I review our guidance for the fiscal year. In the fourth quarter of fiscal 2024, PFG reported net income of $166.5 million, up nearly 11% year over year. Adjusted EBITDA increased 18.4% to approximately $456 million, just above the top end of the guidance we announced last quarter. Adjusted deluded earnings per share in the fiscal fourth quarter were $1.07, an increase of 11.5%, while adjusted deluded earnings per share were $1.45, a 27.2% improvement year-over-year. Our effective tax rate of 26% in the fiscal fourth quarter was down compared to the 27.2% rate in last year's comparable period.

Speaker Change: In the fourth quarter of fiscal 2024, PFG reported net income of $166.5 million, up nearly 11% year-over-year. Adjusted EBITDA increased 18.4% to approximately $456 million.

Patrick Hatcher: I will turn it over to Patrick who will provide more detail on our financial performance and outlook. Patrick? Thank you, George, and good morning, everyone. As George mentioned, we have a number of items to cover, including our strong fiscal 2024 results, our outlook on fiscal 2025, and the financial impact from the two transactions George just described.

Speaker Change: just above the top end of the guidance we announced last quarter.

Speaker Change: Diluted earnings per share in the fiscal fourth quarter was $1.07, an increase of 11.5% while adjusted diluted earnings per share was $1.45, a 27.2% improvement year-over-year.

Patrick Hatcher: First, our organization closed fiscal 2024 on a high note. We were able to leverage our sales growth through tight cost control, driving off-ex leverage, and strong bottom line growth. As we anticipate, adjusted EBITDA accelerated significantly in the fiscal fourth quarter, growing 18.4% year over year, and exceeding the top end of the guidance range we provided with third quarter results. The better than expected adjusted EBITDA resulted in margin improvement in the quarter, a testament to our focus on profitable growth and returns.

Speaker Change: Our effective tax rate of 26% in the fiscal fourth quarter was down compared to 27.2% rate in last year's comparable period mainly due to an increase in income tax credits partially offset by increase in foreign and state income taxes as a percent of income.

Patrick Hatcher: mainly due to an increase in income tax credits, partially offset by an increase in foreign and state income taxes, as a percent of income... Our financial position remains very strong, and we're generating significant cash flow through a combination of operational performance and diligent working capital management. Through the course of the full fiscal year of 2024, PFT generated operating cash of approximately $1.2 billion, a $330 million increase compared to last year. PFT generated over $767 million of free cash flow, a $205 million increase from fiscal 2023.

Speaker Change: Our financial position remains very strong, and we're generating significant cash flow through a combination of operational performance and diligent working capital management.

Patrick Hatcher: CFG's broad and unique diversification and the food away from home channel provide resilience, and once again, we achieved record results. Our top line growth of 2.2%, the fiscal fourth quarter, was the result of a balance between case volume gains and modest inflation across all three business segments. Total case growth of 1.1% was driven by 3.7% independent restaurant case increases, and the addition of new business in all three reported segments. In particular, we added new chain restaurant business during the fiscal fourth quarter that contributed to both case growth and profit margins.

Speaker Change: Through the course of the full fiscal year of 2024, PFT generated operating cash flow of approximately $1.2 billion, a $330 million increase compared to last year.

Speaker Change: PFT generated over $767 million of free cash flow, a $205 million increase from fiscal 2023.

Patrick Hatcher: We are pleased with our current cash flow and balance sheet position. Strong financial performance and capital management have allowed for value-creating opportunities such as the items we announced today. During fiscal 2025, we expect to continue to invest behind our organic growth, mostly to support capacity expansion and investment in our fleet. These activities are expected to support our top and bottom line growth over the long term and generate attractive returns for our business. After funding CapEx, we then looked at three areas of capital deployment: M&A activity, share repurchases, and leverage reduction.

Speaker Change: We are pleased with our current cash flow and balance sheet position. Strong financial performance and capital management has allowed for value-creating opportunities such as the items we announced today.

Speaker Change: During fiscal 2025, we expect to continue to invest behind our organic growth, mostly to fund capacity expansion and investment in our fleet.

Patrick Hatcher: Case growth for our chain business within food service increased 2.1% in the fiscal fourth quarter, reflecting new business wins, which we largely onboarded in the middle of the quarter. This additional business should continue to help our fiscal 2025 chain business results. Our convenience business also brought on several new accounts in the period. Total company cost inflation was 4.7% in the quarter, including 2.9% inflation in food service, 3% inflation at this star, and 7% inflation for convenience driven by nicotine.

Speaker Change: These activities are expected to support our top and bottom line growth over the long term and generate attractive returns for our business.

Speaker Change: After funding CapEx, we then looked at three areas of capital deployment, M&A activity, share repurchases, and leverage reduction.

Patrick Hatcher: Today, we're excited to announce two transactions to support our long-term growth. I will discuss more about the financial impact of these deals in a moment. With this news public, we also anticipate an acceleration of our share repurchase activity. We currently have over $200 million remaining on our $300 million share we purchase after a stage. Depending on marketplace conditions, we believe we could complete this program within the fiscal year.

Speaker Change: Today we are excited to announce two transactions to support our long-term growth. I will discuss more about the financial impact of these deals in a moment. With this news public, we also anticipate an acceleration of our share repurchase activity.

Patrick Hatcher: We believe that this pace of inflation, particularly in food service in this star, is a better reflection of ongoing inflation and will be similar in fiscal 2025. While absolute price points remain high and are having an impact on the consumer purchasing behavior, particularly in candy and snacks, a more moderate, low single digit pace of inflation should produce better top and bottom line results going forward. In addition to the top line benefit from inflation, we also saw a lift to our gross profit, particularly due to positive mixed shift.

Speaker Change: We currently have over $200 million remaining on our $300 million share repurchase authorization.

Speaker Change: Depending on marketplace conditions, we believe we could complete this program within the fiscal year.

Patrick Hatcher: We will continue to maintain a strong balance sheet to fund these activities. We anticipate remaining in the lower half of our two-and-a-half to three-and-a-half-times leverage range until the close of the chainy transacts. Once that deal closes, we expect leverage to move to or slightly above the top end of that leverage range, which we will then pay down with our available cash. Turning to our guidance for fiscal 2025, For the full fiscal year, we expect net sales to be in the range of 60 to $61 billion, and we expect adjusted EBITDA to be in the range of $1.6 billion to $1.7 billion.

Speaker Change: We will continue to maintain a strong balance sheet to fund these activities.

Speaker Change: We anticipate remaining in the lower half of our two-and-a-half to three-and-a-half times leverage range until the close of the Cheney transaction. Once that deal closes, we expect leverage to move to, or slightly above, the top end of that leverage range, which we will then pay down with our available cash flow.

Patrick Hatcher: Total company gross profit increased 4.7% in the fiscal fourth quarter, gross profit per case was up 24 cents in the fourth quarter as compared to the prior years period. We believe that the continuation of low single digit inflation will drive additional gross margin improvement in fiscal 2025, particularly in the food service segment. Our segments did an excellent job keeping operating expenses low, providing fixed cost leverage and driving bottom line growth ahead of our guidance expectations.

Patrick Hatcher: This is the upper end of the $1.5 to $1.7 billion long-term range we discussed at our Investor Day two years ago. We are pleased with how the past two years have progressed, achieving our long-term target a year early with fiscal 2024 adjusted EBITDA above the lower end of our three-year projection. We expect this success to continue. For the first fiscal quarter of 2025, we anticipate net sales to be in a $15.2 to $15.5 billion range, with adjusted EBITDA in a $400 to $420 million range.

Speaker Change: turning to our guidance for fiscal 2025.

Speaker Change: For the full fiscal year, we expect net sales to be in the range of $60 to $61 billion.

Speaker Change: We expect adjusted EBITDA to be in the range of $1.6 billion to $1.7 billion. This is the upper end of the $1.5 to $1.7 billion long-term range we discussed at our Investor Day two years ago.

Speaker Change: We are pleased with how the past two years have progressed, achieving our long-term target a year early with fiscal 2024 adjusted EBITDA above the lower end of our three-year projection. We expect this success to continue.

Patrick Hatcher: This was particularly true of our communion segment, which was able to produce 42% segment-adjusted EBITDA growth in the fiscal fourth quarter. The Food Service segment also experienced solid-adjusted EBITDA growth of 14%, reflecting a combination of gross profit expansion and tight cost control. Fistar adjusted EBITDA was flat in the quarter, but expanded adjusted EBITDA margins by 12 basis points year over year. We expected build upon these strong profit results in fiscal 2025, which I will address in a moment when I review our guidance for the fiscal year.

Speaker Change: For the first fiscal quarter of 2025, we anticipate net sales to be in a $15.2 to $15.5 billion range, with adjusted EBITDA in a $400 to $420 million range.

Patrick Hatcher: Due to several timing factors, we expect higher growth rates in both sales and adjusted EBIDOT in the final three-quarters of fiscal 2025 than in the fiscal first quarter. A few things to note in our guidance. First, we have included a full year's benefit from the addition of Jose Santiago in our guidance range. With that said, we believe we would still be within the stated ranges without the benefit of Jose Santiago.

Speaker Change: Due to several timing factors, we expect higher growth rates in both sales and adjusted EBITDA in the final three quarters of fiscal 2025 than the fiscal first quarter.

Patrick Hatcher: In the fourth quarter of fiscal 2024, PFG reported net income of $166.5 million of nearly 11% year over year. Adjusted EBITDA increased 18.4% to approximately $456 million, just above the top end of the guidance we announced last quarter. Deluted earnings for share in the fiscal fourth quarter was $1.7, an increase of 11.5% while adjusted deluted earnings for share was $1.45, a 27.2% improvement year over year. Our effective tax rate of 26% in the fiscal fourth quarter was down compared to 27.2% rate in last year's comparable period.

Speaker Change: A few things to note in our guidance. First, we have included a full year's benefit from the addition of Jose Santiago in our guidance ranges.

Speaker Change: With that said, we believe we would still be within the stated ranges without the benefit of Jose Santiago.

Speaker Change: We have not included any benefit from Cheney and expect to update our financial projections once that deal has closed, which we expect to occur sometime during calendar 2025.

Patrick Hatcher: We have not included any benefit from chaining, and expect to update our financial projections once that deal has closed, which we expect to occur sometime during calendar 2025. To summarize, today is an important day for our company. Not only are we announcing very strong fiscal fourth-quarter results, the culmination of a strong fiscal 2024, but we are also setting ambitious and achievable financial goals for fiscal 2025.

Speaker Change: To summarize, today is an important day for our company. Not only are we announcing very strong fiscal fourth quarter results, the culmination of a strong fiscal 2024.

Speaker Change: We are also setting ambitious and achievable financial goals for fiscal 2025.

George Holm: We have recently closed the Jose Santiago transaction, which expands PFG's food service territory into the Caribbean and is expected to continue their track record of excellent sales growth. Additionally, we are on the path to acquire Cheney, one of the largest privately held food service distributors in the US. Cheney's strength in the Florida market, along with their outstanding management team and associates, is expected to provide another strong platform to accelerate our food service sales and profit growth.

Patrick Hatcher: Mainly due to an increase in income tax credits, partially offset by an increase in foreign and state income taxes as a percent of income. Our financial position remains very strong, and we're generating significant cash flow through a combination of operational performance and diligent working capital management. Through the course of the full fiscal year of 2024, PFG generated operating cash flow approximately $1.2 billion, a $330 million increase compared to last year. PFG generated over $767 million of free cash flow, a $205 million increase from fiscal 2023.

Speaker Change: We have recently closed the Jose Santiago transaction, which expands PFG's food service territory into the Caribbean and is expected to continue their track record of excellent sales growth.

Speaker Change: Additionally, we are on the path to acquire Cheney, one of the largest privately held food service distributors in the U.S.

Speaker Change: Chaney's strength in the Florida market, along with their outstanding management team and associates, is expected to provide another strong platform to accelerate our food service sales and profit growth.

George Holm: I would now like to turn it back to George, who will close with some thoughts about our results and, as Patrick mentioned, it is truly an important day for us. We recognize that the external environment has various challenges for our industry and the broader consumer length. As always, PSG looks at these challenges as opportunities to work with existing and potential customers to solidify our position in the market and build stable platforms for the long term. We have historically seen some of our biggest success when times get tough. Today is no different.

Speaker Change: I would now like to turn it back to George, who will close with some thoughts about our results and industry.

George: As Patrick mentioned, it is truly an important day for our company. We recognize that the external environment has various challenges for our industry and the broader consumer landscape.

Patrick Hatcher: We are pleased with our current cash flow and balance sheet position. Strong financial performance and capital management has allowed for value-creating opportunities such as the items we announced today. During fiscal 2025, we expect to continue to invest behind our organic growth, mostly to find capacity expansion and investment in our fleet. These activities are expected to support our top and bottom line growth over the long term and generate attractive returns for our business. After finding CAPEX, we've been looked at three areas of capital deployment, M&A activity, share repurchases, and leverage reduction.

PFG: As always, PFG looks at these challenges as opportunities to work with existing and potential customers to solidify our position in the market and build stable platforms for long-term performance. We have historically seen some of our biggest success when times get difficult.

George Holm: As you can see from our fiscal 2024 performance and outlook for fiscal 2025, we have built significant momentum. In areas where our top line growth is not as strong as we would like, we have leaning into margin gains and operating efficiencies to produce profit per Convenience is an excellent example of this, which is reflected in the double-digit adjusted adjusted revenue that the dog world for the fiscal year. In food service, we are picking up market share and independent restaurants and growing our chain business with new customers at a higher than average market.

PFG: Today is no different. As you can see from our fiscal 2024 performance and outlook for fiscal 2025, we have built significant momentum.

PFG: In areas where our top-line growth is not as strong as we would like, we have leaned into margin gains and operating efficiencies to produce profit performance.

Patrick Hatcher: Today, we're excited to announce two transactions to support our long-term growth. I will discuss more about the financial impact of these deals in a moment. With this new public, we also anticipate an acceleration of our share repurchase activity. We currently have over $200 million remaining on our $300 million dollar share repurchase authorization. Depending on marketplace conditions, we believe we could complete this program within the fiscal year. We will continue to maintain a strong balance sheet to fund these activities.

PFG: Convenience is an excellent example of this, which is reflected in the double-digit adjusted EBITDA growth for the fiscal year.

PFG: In food service, we are picking up market share in independent restaurants and growing our chain business with new customers at a higher than average margin.

George Holm: This star is expanding into some of the most exciting areas of the market, including e-commerce and micro. We are pleased with how we closed our fiscal 2024 and expect our momentum to continue into fiscal 2020. We expect to host an Investor Day in the late spring and are excited to share our long-term growth plans for all three of our segments. We believe our diversified approach to the food away from home market provides opportunities for scale and synergy.

PFG: NISTAR is expanding into some of the most exciting areas of the market, including e-commerce and micro-markets.

PFG: We are pleased with how we closed our fiscal 2024 and expect our momentum to continue into fiscal 2025.

Patrick Hatcher: We anticipate remaining in the lower half of our two and a half to three and a half times leverage range, until the close of the chaining transaction. Once that deal closes, we expect leverage to move to or slightly above the top end of that leverage range, which we will then pay down with our available cash. Schlow.

PFG: We expect to host an Investor Day in the late spring and are excited to share our long-term growth plans for all three of our segments.

PFG: We believe our diversified approach to the food-away-from-home market provides opportunities of scale and synergies.

George Holm: Adding Jose Santiago and Cheney should only amplify these advantages and provide additional outlets for growth. I'm excited for our company's future and welcoming the teams from Jose Santiago and Cheney to the PFG facility. Thank you for your time today.

Patrick Hatcher: Turning to our guidance for fiscal 2025. For the full fiscal year we expect net sales to be in the range of $60 to $61 billion. We expected just as even us to be in the range of $1.6 billion to $1.7 billion. This is the upper end of the $1.5 to $1.7 billion long term range we discussed at our investor day two years ago. We are pleased with how the past two years have progressed, achieving our long-term target a year early with fiscal 2024 adjusted EBITDA above the lower end of our three-year projection.

Speaker Change: Adding Jose Santiago and Cheney should only amplify these advantages and provide additional outlets for growth. I'm excited for our company's future and welcoming the teams from Jose Santiago and Cheney to the PFG family.

Operator: We appreciate your interest in Performance Food Group. And with that, we'd be happy to take your call. At this time, if you'd like to ask a question over the phone, please press the star and s on your telephone. Please note, you may remove yourself from the question cue at any time by pressing star on the question cue at any time by pressing star. Again, it is star and one to ask a question.

Speaker Change: Thank you for your time today. We appreciate your interest in Performance Food Group and with that we'd be happy to take your questions.

Speaker Change: At this time, if you'd like to ask a question over the phone, please press the star and one keys on your telephone keypad.

Patrick Hatcher: We expect this success to continue. For the first fiscal quarter of 2025 we anticipate net sales to be in a $15.2 to $15.5 billion range with adjusted EBITDA in a $400 to $420 million range. Due to several timing factors, we expect higher growth rates in both sales and adjusted EBITDA in the final three-quarters of fiscal 2025 than the fiscal first quarter.

Speaker Change: Keep in mind, you may remove yourself from the question queue at any time by pressing star and 2. Again, it is star and 1 to ask a question.

Operator: We'll take our first question from Kelly Bania with BMO Capital. Go ahead, your line. Hi, good morning.

Speaker Change: We'll take our first question from Kelly Benya with BMO Capital. Please go ahead, your line is open.

Kelly Bania: I wanted to just ask one about the business and then another one about Cheney, but the gross margin, I guess, was quite strong this quarter. I was wondering if you could just maybe unpack the drivers of that in more detail within each segment, and particularly a note on the inventory gains, and then maybe help us understand what, if anything, is different regarding the drivers and magnitude for 2000 or for fiscal 25 in terms of gross margin support. Hey Kelly, thanks for the question. This is Patrick.

Kelly Benya: Hi, good morning. I wanted to just ask one about the business and then another one about Cheney, but the gross margin, I guess, was quite strong this quarter. I was wondering if you could just maybe unpack the drivers of that in more detail within each segment, particularly a note on the inventory gains, and then

Patrick Hatcher: A few things to note in our guidance. First, we have included a full-year benefit from the addition of Jose Santiago and our guidance ranges. With that said, we believe we would still be within the stated ranges without the benefit of Jose Santiago. We have not included any benefit from changing and expect to update our financial projections once that deal has closed, which we expect to occur sometime during calendar 2025.

Speaker Change: Maybe help us understand what, if anything, is different regarding the drivers and magnitude for 2000 or for fiscal 25 in terms of gross margin support.

Patrick Hatcher: I'll start with the inventory gains and some of the gross margin impact, and maybe George will jump in as well. But as we look at Q4, there was really, you know, what we're finding is that inventory gains are normalizing significantly, and we continue to feel that that's going to be the case in 2025 as well. Quarter to quarter, there may be some impacts, but again, it'll be something that's much more manageable than what we maybe experienced in 24.

Speaker Change: Hey Kelly, thanks for the question. This is Patrick. I'll start with the inventory gains and some of the gross margin.

Patrick Hatcher: In Q4, specifically, we did have some gains, mainly in food service, related to our overall indexing and things like cheese and poultry. But other than that, we really didn't see much impact from inventory gains in the quarter. We are really pleased with how each segment performed in gross profit.

Patrick Hatcher: To summarize, today is an important day for our company. Not only are we announcing very strong fiscal fourth quarter results, the culmination of a strong fiscal 2024, we are also setting ambitious and achievable financial goals for fiscal 2025. We have recently closed the Jose Santiago transaction, which expands PFG's food service territory into the Caribbean and is expected to continue their track record of excellent sales growth. Additionally, we are on the path to acquire Cheney, one of the largest privately-held food service distributors in the US. Cheney's strength in the Florida market, along with their outstanding management team and associates, is expected to provide another strong platform to accelerate our food service sales and profit growth.

Speaker Change: impacts, and maybe George will jump in as well. But as we look at Q4, there was

George: What we're finding is the inventory gains are normalizing significantly, and we continue to feel that that's gonna be the case in 2025 as well. Quarter to quarter, there may be some impacts, but again, it'll be something that's much more manageable than what maybe we experienced in 24.

George: In Q4 specifically, we did have some gains, mainly in food service, related to our overindexing in things like cheese and poultry.

Patrick Hatcher: And then, as we've mentioned before, their control of OPACs really saw a great EBITDA margin expansion as well. Some of the drivers of gross profit were really around our growth in independent cases, our growth in performance brands, food and food service, and convenience. So again, the things that we're focusing on are all the things that really helped drive that gross profit expansion. George, do you want to add anything?

George: But other than that, we really didn't see much impact from inventory gains in the quarter, particularly.

Speaker Change: We are really pleased with how each segment performed in gross profit. And then, as we've mentioned before, their control of OpEx really saw a great EBITDA margin expansion as well.

George Holm: I would now like to turn it back to George, who will close with some thoughts about our results and industry.

George Holm: As Patrick mentioned, it is truly an important day for our company. We recognize that the external environment has various challenges for our industry and the broader consumer landscape. As always, PFG looks at these challenges as opportunities to work with existing and potential customers to solidify our position in the market and build stable platforms for long-term performance. We have historically seen some of our biggest success when times get difficult. Today is no different.

Speaker Change: Some of the drivers of gross profit were really around our growth and independent cases

Speaker Change: , our growth and performance brands.

Speaker Change: Food and Food Service and Convenience. So, again, the things that we're focusing on are all the things that really help drive that gross profit expansion.

George Holm: Well, Kelly, it's really the same story that we've had for quite a while, and that is, grow and better in those higher margin areas. I think convenience is a great example of it. That industry is challenged right now, seeing fairly significant growth with Nicotine in the store, and we're making up for that with true service, where the March numbers are much better. And we expect to continue to see that happen.

Speaker Change: Well, Kelly, it's really the same story that we've had for quite a while, and that's just

George: growing better in those higher margin areas. I think convenience is a great example of it. That industry is challenged right now.

George Holm: As you can see from our fiscal 2024 performance and outlook for fiscal 2025, we have built significant momentum. In areas where our top line growth is not as strong as we would like, we have leaned into margin gains and operating efficiencies to produce profit performance. Convenience is an excellent example of this, which is reflected in the double-digit adjusted EBITDA growth for the fiscal year. Reuter. In food service, we are picking up market share and independent restaurants and growing our chain business with new customers at a higher than average margin. This starts expanding into some of the most exciting areas of the market, including e-commerce and micro markets. We are pleased with how we close our physical 2024 and expect our momentum to continue into physical 2025.

George: We're seeing fairly significant declines with nicotine.

George: in the store, and we're making up for that with food service, we're at the margins.

George Holm: Then when you get to our food service business, we certainly aren't pleased with running 3.7% case growth, but we are pleased that we're continuing to get the same type of market share that we've gotten in the past. So as we go through this year, the way our comparisons will work, last year, we had one of those kind of uptown upside down hockey sticks where, in our first quarter, we were well above seven in case growth.

George: are much better, and we expect to continue to see that happen. Then when you get to our food service business, we certainly aren't pleased with running 3.7% case growth, but we are pleased that we're continuing to get the same type of market shares that we've gotten in the past.

George: So, as we go through this year, the way our comparisons will work.

Speaker Change: Last year we had one of those kind of upside-down hockey sticks where our first quarter we were well above seven in K's Grove we were 8.8 in the second quarter and then January through the end of the fiscal year it's often.

George Holm: We were 8.8 in the second quarter, and then in January, through the end of the fiscal year, it softened. So we're hopeful this year that the opposite of that will take place, but so far, in July, it looks pretty similar to what. Okay, that's very helpful. And then maybe just a little bit more on the Cheney brothers.

George Holm: We expect to host an investor day in the late spring and are excited to share our long-term growth plans for all three of our segments. We believe our diversified approach to the food away from home market provides opportunities of scale and synergies. Adding Jose Santiago and Cheney should only amplify these advantages and provide additional outlets for growth.

Speaker Change: So we're hopeful this year that the opposite of that will take place, but so far

Speaker Change: In July, it looks pretty similar to what Q4 looked like.

George Holm: Looks like a little bit of a higher valuation compared to some past deals, but also higher margin. So can you just help us understand the factors that, in your mind, support a higher valuation? It looks like they don't have quite as strong of a private label business. Maybe the mix and state-of-the-art facilities are very efficient, but maybe you could just help us understand the margin profile there and the valuation.

Speaker Change: Okay, that's very helpful. And then maybe just a little bit more on Chaney Brothers.

George Holm: I'm excited for our company's future and welcoming the teams from Jose Santiago and Cheney to the P.F.G, family.

Speaker Change: looks like a little bit of a higher valuation than some past deals, but also higher margin. So.

George Holm: Thank you for your time today. We appreciate your interest in performance food growth.

Speaker Change: Can you just help us understand the factors that...

Operator: And with that, we'd be happy to take your questions. At this time, if you'd like to ask a question over the phone, please press the star and one keys on your telephone keypad. Keep in mind you may remove yourself from the question queue at any time, but pressing star and two. Again, it is star and one to ask a question.

Speaker Change: in your mind support a higher valuation? It looks like they don't have quite as strong of a private label business. Maybe the mix and state-of-the-art facilities are very efficient, but maybe can you just help us understand the margin profile there and the valuation?

George Holm: The valuation, the valuation, the valuation. Yeah, well, we feel that we paid a full price, and we feel that they deserved that full price. We paid about a turn more than we did for Reinhart and for Kormor.

Speaker Change: Yeah, well we feel that we paid a full price and we feel that they deserved that full price. We paid about a turn more than we did for Reinhart and for Cormark.

Kelly Bania: We'll take our first question from Kelly Banya with BMO Capital. Please go ahead. Your line is open.

George Holm: I think the difference is that it's a market that's growing faster. It's a company that's growing, And in the case of Reinhardt, their earnings had been fairly flat, an extremely well-run company, but fairly flat with earnings; many more distribution centers, including three that handled street accounts, National Accounts, where Cheney's are all broad line, full-scale facilities, they have always built ahead of the need for capacity, and that is a big part of it, as well.

Patrick Hatcher: Hi, good morning. I wanted to ask one about the business and then another one about Cheney, but the growth margin, I guess, is quite strong. This quarter is wondering if you could just maybe unpack the drivers of that in more detail within each segment, and particularly a note on the inventory gains, and then maybe help us understand what, if anything, is different regarding the drivers and magnitude for 2000 or for fiscal 25 in terms of growth margin support.

Speaker Change: I think the difference is it's a market that's growing faster. It's a company that's growing faster.

Speaker Change: And in the case of Breithart, their earnings have been fairly flat, extremely well-run company, but fairly flat with earnings.

Speaker Change: and many more distribution centers, including three that handle Strictly.

Speaker Change: national accounts where Cheney's are all broad line full-scale facilities.

Speaker Change: they have always

Patrick Hatcher: Hey, Kelly, thanks for the question. This is Patrick. I'll start with the inventory gains and some of the growth margin impacts, and maybe torch will jump in as well. But as we look at queue four, there was, really, you know, what we're finding is the inventory gains are normalizing significantly, and we continue to feel that it's going to be the case in 2025 as well. Quarter to quarter, there may be some impacts, but again, there'll be something that's much more manageable than what maybe we experienced in 24.

Speaker Change: built ahead of the need for capacity, and that is a big part of it for us as well. As far as the margins go,

George Holm: As far as the margins go, you know, it's just under a 5% EBITDA margin, which is certainly significantly higher than what we run as a total corporation. But if you look at just our broad lines, Gail Silberman, it's pretty much in line.

Speaker Change: You know, it's just under a 5% EBITDA margin, which is certainly significantly higher than what we run as a total corporation. But if you look at just our broadline scale facilities.

George Holm: We actually have a few that are double that, eBitGa margin. So I think there's some upside there. I think that upside probably does exist with brands. But the way we operate our business, we have to go in and earn those branded sales, and we have to convince their managers of products that fit them.

Speaker Change: It's pretty much in line. We actually have a few that are double that type of EBITDA margin. So I think there's some upside there. I think that upside probably does exist with brands.

Patrick Hatcher: In queue four specifically, we did have some gains mainly in food service related to our over-indexing and things like cheese and poultry, but other than that, we really didn't see much impact from inventory gains in the quarter, particularly. We are really pleased with how each segment performed in gross profit, and then as we've mentioned before, you know, their control of opt actually saw a great EBITDA margin of expansion as well. Some of the drivers of gross profit were really round our growth in independent cases, our growth in performance brands, food and food service and convenience.

Speaker Change: But the way we operate our business, we have to go in and earn those branded sales.

Speaker Change: and we have to convince their management of the products that fit for them. We might have to do some work on some products.

George Holm: We might have to do some work on some products, but that'll be their choice, not ours. I think it'll take a while. But I think there will be some margin gains coming and an Increased Brand Portfolio. I would also note that if you look at Reinhart and Cormark, and both of those, we paid in that 12 times range. Go back with Reinhart, we did that acquisition at the end of December 2019, and if you took our fiscal year that just ended, that company has taken either off from 166 to 34.

Speaker Change: That will be their choice, not ours. I think it will take a while, but I think there will be some margin gains.

Speaker Change: coming from an increased brand portfolio for them.

Speaker Change: I would also note that if you look at Reinhart and Cormark and both of those we paid in that 12 times range

Patrick Hatcher: So, again, the things that we're focusing on are all the things that really help drive that gross profit expansion, and of course, do you want to add anything? Well, Kelly, it's really the same story that we've had for quite a while, and then... That's just growing better in those higher margin areas. I think convenience is a great example of it. That industry is challenged right now. We're seeing fairly significant declines with nicotine in the store.

Speaker Change: If you go back with Reinhardt, we did that acquisition at the end of December 2019.

Speaker Change: and if you took our fiscal year that just ended.

Speaker Change: that company has taken EBITDA from 166 to 346.

George Holm: [inaudible] nd as is our practice, we've kept that company intact. So if you took today's Ibadan numbers, that would be 5.8 times that we paid up today's EBITDA and Cormark, which we closed on in September of 2021. And if you took the combination of core market EB and what we paid for those two acquisitions, we've actually taken that down to a current seven times more. So a 13 multiple with a 9-9 post-syndrome.

Speaker Change: And as is our practice, we've kept that company intact. So if you took today's.

Speaker Change: eBidon numbers, that would be 5.8 times.

Patrick Hatcher: And we're making up for that with food service where the margins are much better. And we expect to continue to see that happen. Then when you get to our food service business, we certainly aren't pleased. So it's running 3.7% case growth. But we are pleased that we're continuing to get the same type of market shares that we've gotten in the past. So as we go through this year, the way our comparisons will work.

Speaker Change: that we paid of today's EBITDA. And Cormark, which we closed on in September of 2021.

Speaker Change: And if you took the combination of core market EB and what we paid for those two acquisitions, we've actually taken that down to a current seven times multiple.

George Holm: We're really confident in the synergies, and those come through procurement, some logistics, some areas like that. We don't really do that by cutting people. Not the way we do things.

Speaker Change: So, a 13 multiple with a 9-9 post-synergy.

Patrick Hatcher: Last year, we had one of those kind of upside down Pakistan, where our first quarter, we were well above seven in case growth. We were 8.8 in the second quarter. And then January through the end of the year. So we're hopeful this year that the opposite of that will take place. But so far, in July, it looks pretty similar to what Q4 look like. Okay, that's very helpful.

Speaker Change: We're real confident in the synergies and those come through procurement, some logistics, some area like that. We don't really do that by cutting people.

George Holm: So we're real confident in what we paid. Like I said, I think we paid the full price. Thanks George, very helpful. We'll take our next question from Alex Slagle with Jeffreys. Please go ahead, your line is open.

Speaker Change: not the way we do things. So we're real confident in what we paid. Like I said, I think we paid a full price and I also think they deserve the price they got.

Speaker Change: [inaudible]

George: Thanks George, very helpful.

Speaker Change: We'll take our next question from Alex Flagel with Jeffries.

Alex Slagle: Thanks, good morning, and congratulations. I know it's exciting to have an opportunity like this with Cheney and Santiago. On Cheney, I guess I just wanted to ask a little bit more on sort of the growth profile, EBITDA growth history, and maybe you could kind of talk to the importance of driving greater density in the southeast and how that might trigger an ability to accelerate share gains, kind of getting closer to customers, how you're thinking through that. Well, their distribution centers are in great locations. Our current ones are in Tampa, Orlando, and Miami.

Speaker Change: Please go ahead, your line is open.

Patrick Hatcher: And then maybe just a little bit more more on Chinese, a chainy brothers, looks like a little bit of a higher valuation to the past deals, but also higher margin.

Speaker Change: Thanks, good morning, and congrats. I know it's exciting to have an opportunity like this with Cheney and Santiago.

George Holm: So can you just help us understand the factors that in your mind support a higher valuation, it looks like they don't have quite as strong of a private label business. Maybe maybe the mix and state of the art facilities are very efficient, but maybe can you just help us understand the margin profile there and the valuation. Yeah, well, we feel that we've paid a full price and we feel that they deserve that full price.

Speaker Change: On Chaney, I guess I just want to ask a little bit more on sort of the growth profile, EBITDA growth history, and maybe you could kind of talk to the importance of driving greater density in the southeast and how that might trigger an ability to

Speaker Change: accelerate share gains, can we get closer to the customers, how you're thinking through that.

Speaker Change: Their distribution centers are in great locations for us.

George Holm: We paid about a turn more than we did for Reinhardt and for Cornmark. I think the difference is it's a market that's growing faster. It's a company that's growing faster. And in the case of Reinhardt, their earnings have been fairly flat, extremely well run company, but fairly flat with earnings. And many more distribution centers, including three that handles strictly national accounts where chain either all broad line full scale facilities. They have always built ahead of the need for capacity and that is a big part of it for us as well.

George Holm: Our current facilities do well. They do it with an almost entirely different customer base than a chainy. We've kind of stepped into some broadline type businesses but haven't been... in spite of our people's great efforts, not all that successful, so we'll run these companies as separate companies, rtfolios, and like I said, it's very similar to what we did at Rhino. The Cheney business will report into our chief operating officer, President Craig Hoskins, and he was the main kind of day-to-day person as we put together the Performance Food Service and Reinhardt.

Speaker Change: Our current ones are in Tampa, Orlando, and Miami. Our current facilities...

Speaker Change: do well.

Speaker Change: They do it with an almost entirely different customer base than a Cheney. We've kind of stepped into some broad line type business, but have been, in spite of our people's great efforts, not all that successful. So we'll run these companies as separate businesses.

Speaker Change: mostly separate brand portfolios, and like I said, it's very similar to what we did at Reinhardt.

Speaker Change: The Cheney business will report into our Chief Operating Officer and President, Craig Hoskins, and he was the main kind of day-to-day person as we put together the Performance Food Service and the Reinhart world.

George Holm: As far as the margins go, you know, it's just under a 5% EBITDA margin, which is certainly significantly higher than what we run as a total corporation. But if you look at just our broad line scale facilities, it's pretty much in line. We actually have a few that are double that type of EBITDA margin. So I think there's some upside there. I think that upside probably does exist with brands. But the way we operate our business, we have to go in and earn those branded sales.

George Holm: And Alex, I'll just add a little on the growth profile, especially around sales. One of the things that's so attractive about Cheney is they're really focused largely on restaurants, independent restaurants, but as well as hotels and country clubs and export. So we think there's a huge opportunity for us. And we also think, when we look at their growth rates in their past history, they're growing at a really nice clip.

Speaker Change: And Alex, I'll just add a little on the growth profile, especially on sales.

Speaker Change: It's one of the things that is so attractive about Cheney is they're really focused largely on restaurants, independent restaurants, but as well as

Speaker Change: hotels and country clubs and export. So we think there's a huge opportunity for us. And we also think, or when we look at their growth rates in the past history, they're growing at a really nice clip. So as George is saying, we're going to continue to operate them separately and have them keep growing.

George Holm: So, as George is saying, we're going to continue to operate them separately and have them keep growing. And like us, they're really not in the chain lodging business. They're not much into the chain, we are, but they're not in the business of supplying contract management people, or healthcare, either acute or long term, very, very small there, but where they're different is in independent hotels and resorts. They do extremely well. They do very well in country clubs, [inaudible] catering and those types of businesses. Broadline and Nature, but not rest.

George Holm: And we have to convince their management. Management, the products that fit for them. We might have to do some work on some products. That'll be their choice, not ours. I think it'll take a while, but I think there will be some margin gains coming from an increased brand portfolio for them. I would also note that if you look at Reinhardt and Cornmark and both of those we paid in that 12 times range.

George: And like us, they're really not in the...

George: chain lodging business they're not in.

Speaker Change: much into the chain restaurant business, which we are, but they're not in the business of supplying contract management people or healthcare, either acute or long-term. Very, very small there. But where they're different is...

George: Independent hotels and resorts, they do extremely well. They do very well in country clubs.

Speaker Change: and catering and those type of businesses that are

George Holm: If you go back with Reinhardt, we did that acquisition at the end of December 2019, and if you took our fiscal year that just ended, that company has taken EBITDA from 166 to 346. As is our practice, we've kept that company intact. If you took today's EBITDA numbers, that would be 5.8 times that we paid of today's EBITDA. And Cornmark, which we closed on September of 2021, and if you took the combination of Cornmark EV and what we paid for those two acquisition, we've actually taken that down to a 7 times multiple.

George Holm: And within those markets, we'll utilize that Cheney brand to pursue that type, and our distribution centers will continue to do what they do a good job of accomplishing. Got it. And a question on the quarter and the Vistar and convenience business, just how big the inventory holding games were you rolling over, and any color on the profit benefits that you might have gotten on convenience related to tobacco pricing and the accruals release.

Speaker Change: Broadline and Nature but but not restaurants.

Speaker Change: and within those markets we'll utilize that Cheney brand to pursue that type of business.

Speaker Change: and our distribution centers, you know, will continue to do what they do a good job of accomplishing today.

Speaker Change: Got it. And a question on the corridor and the Vistar and convenience business.

Speaker Change: Just how big the inventory holding gains were, you're rolling over, and any color on the profit benefits that you might have gotten on convenience related to tobacco pricing.

George Holm: Yeah, on the inventory gains, again, really not a big impact on the quarter. As I mentioned, there was some in food service mainly. But when you look down at VISTAR and convenience, actually, year over year, there's pretty nudgeable; it's actually a little slight decline. So as I said, again, we expect this to kind of get back to normal, where we're not really talking about inventory gains; we didn't have any massive increases last year. We might have some slight year-over-year slight impact in Q1. But past that, we think it should be pretty normal.

Speaker Change: the accruals release.

George Holm: So a 13 multiple was a 9-9 post synergies. We're real confident that synergies and those come through procurement, some logistics, some area like that. We don't really do that by cutting people. Not the way we do things. So we're real confident in what we paid. Like I said, I think we paid a full price, and I also think they deserve the price of God.

Speaker Change: Yeah, on the inventory gains, again, really not a big impact to the quarter. As I mentioned, there was some in food service mainly. When you look down at VISTAR and convenience, actually year over year, they're pretty nudgeable. It's actually a little slight decline.

Speaker Change: As I said again, we expect this to kind of get back to normal where we're not really talking about inventory gains. We didn't have any

Patrick Hatcher: When you look at convenience and the results, obviously, really amazing job again of that gross profit and cost control. As George mentioned, they did an excellent job of cost control. So they saw a really nice increase in EBITDA. But a part of that, a small portion of that was related to those accruals, and we just called that out.

Speaker Change: massive increases last year. We might have some

Speaker Change: year over year slight impact in Q1, but past that we think it should be pretty normal.

George Holm: Thanks, George. Very helpful.

Speaker Change: When you look at convenience and the results, obviously, really amazing job, again, of that gross profit and cost control, as George mentioned, they did an excellent job of cost control. So they saw

Alexander Slagle: We'll take our next question from Alex Lago with Jeffries. Please go ahead. Your line is open. Thanks. Good morning, and congrats. I know it's exciting to have an opportunity like this with Cheney and Santiago.

Speaker Change: a really nice increase to EBITDA. A part of that, a small portion of that, was related to those accruals, and we just called that out, but it was mostly due to operating performance.

George Holm: On Cheney, I guess I just want to ask a little bit more on sort of the growth profile EBITDA growth history, and maybe you could kind of talk to the importance of driving greater density in the southeast and how that might trigger an ability to accelerate share gains. Can you get closer to the customer or just how you're thinking through that? Well, their distribution centers are in great locations for us. Our current ones are in Tampa or Lando in Miami.

Patrick Hatcher: But it was mostly due to operating performance. I also want to mention convenience that we see some softness in same-store sales that's actually a unique time for convenience. They haven't seen this before. St. Georgetown.

Speaker Change: I also want to mention with convenience that we see some softness in same-store sales that's actually

Speaker Change: unique time for convenience. They haven't seen this type of same-store sales decline.

George Holm: So the new business that we picked up isn't showing up as much as it would in maybe a little bit different environment, but we're excited about what we have in front of us from a convenience standpoint. And during this last year, they did an amazing job, getting their arms around warehouse delivery, merging convenience together as far as E.B. and Cormorant are concerned.

Speaker Change: So the new business that we picked up isn't showing up as much as it would in maybe a little bit different environment

George Holm: Our current facilities do well. They do it with a almost entirely different customer base than the Cheney. We've kind of stepped into some broadline type business but have been in spite of our people's great efforts, not all that successful. So we'll run these companies at separate businesses with mostly separate brand portfolios. And like I said, it's very similar to what we did at Reinhardt. The Cheney Business will report into our chief operating officer and president Craig Hoskins and he was the main kind of day to day person as we put together the performance food service and the Reinhardt. World.

Speaker Change: But we're excited about what we have in front of us from a convenience standpoint.

Speaker Change: and during this last year they did an amazing job of getting their arms around warehouse delivery expense.

Speaker Change: merging convenience together as far as EB and Cormark goes, just a lot of progress was made.

George Holm: Just a lot of progress was made, and we're excited, and so forth. By the way, we also just this last week had a record for, Great. Thanks.

Speaker Change: We're excited about what we have coming up in convenience. By the way, we also, just this last week, had a record for food service in convenience.

Speaker Change: Thank you so much for watching this video.

Speaker Change: Great, thanks, congrats.

Edward Kelly: We'll take our next question from Edward Kelly with Wells Fargo, ahead. Hi, good morning, guys. And I'd like to congratulate you on your news appearance today. I was hoping you'd give us a little bit more color on the Santiago deal, sales, EBITDA, purchase price, multiple synergies, the same type of stuff that you provided for, Cheney, and then you mentioned that the guidance, including Santiago, would still be within the range. I assume you still mean within the $1.6 to $1.7 billion range. I just want to clarify that. Yeah, I'll take that.

Speaker Change: Thank you.

Speaker Change: We'll take our next question from Edward Kelly with Wells Fargo. Please go ahead, your line is open.

George Holm: And Alexander Lowe, on the growth profile, especially on sales. It's one of the things we're so attractive about Cheney is they're really focused largely on restaurants, independent restaurants, but as well as hotels and crunch clubs and export. So we think there's a huge opportunity for us and we also think, or when we look at their growth rates in the past history, they're growing at a really nice clip. So George is saying we're going to continue to operate them separately and have them keep growing.

Edward Kelly: Hi, good morning, guys, and my congrats on your on the news today. I was hoping you'd give us a little bit more color on.

Edward Kelly: The Santiago deal, sales, EBITDA, purchase price, multiple synergies, the same type of stuff that you provided for

Speaker Change: Cheney and then you mentioned that the guidance

Speaker Change: Excluding Santiago would still be within the range. I assume you still mean within the $1.6 to $1.7 billion range. I just want to clarify that.

George Holm: And like us, they're really not in the chain lodging business, they're not in the much into the chain restaurant business, which we are, but they're not in the business of supply and contract management people or healthcare, either acute or long-term, very, very small there. But where they're different is independent hotels and resorts, they do extremely well, they do very well in country clubs, and catering and those type of businesses that are broad line in nature, but not restaurants. And within those markets, we'll utilize that Cheney brand to pursue that type of business. And our distribution centers will continue to do with a good job of accomplishing today. Got it.

Patrick Hatcher: So one, just on, as we think about Jose Sanchez, one, we're really excited about this acquisition and the strategic rationales, again giving us the ability to expand geographies into the Caribbean and then all the surrounding areas around the Caribbean. This is a high-growth business as it comes with excellent leadership. And they're really sales-driven and focused. It's also a really strong cultural fit. And they've been working with our teams very closely since the close. We're not disclosing any financial metrics that are related.

Speaker Change: Yeah, I'll take that. So one, just on, as we think about Jose Sanzar, one, we're really excited about this acquisition and the strategic rationales, again,

Speaker Change: gives us the ability to expand geographies into the Caribbean.

Speaker Change: and then all the surrounding areas around the Caribbean. This is a high-growth business. It comes with excellent leadership, and they're really sales-driven and focused. It's also a really strong cultural fit, and they've been working with our teams.

Speaker Change: very closely since the close. We're not disclosing any financial metrics, though, related to the deal.

George Holm: Can I just confirm, Patrick, that when you say that, excluding Santiago, you'd still be within the range for next year, you mean 1.6 to 1.7? Yes, absolutely. But I forgot to answer the last part of your question. So the range of 1.6 to 1.7, yeah, that remains the same with or without Santiago. You know, what I also mentioned was Jose Santiago with this Cheney announcement. That's kind of overwhelmed what we've had happen with Jose Santiago, but it's an excellent company, tremendous warehouse, very similar to chain stores that really have spent the money to make sure that they have a facility, wouldn't have any problem with a hurricane getting through that. And just just a great building.

Speaker Change: Can I just confirm Patrick that when you say that excluding Santiago you'd still be within the range for next year that you mean the 1.6 to 1.7? I apologize, yes absolutely I forgot to answer the last part of your question. So the range of 1.6 to 1.7 yeah that remains the same with or without Santiago.

Patrick Hatcher: And a question on the quarter and the start in convenience business and just how big the inventory holding gains where you're rolling over and any color on the profit benefits that you might have gotten on convenience related tobacco pricing and the accruals release. Yeah, on the inventory gains, again, really not a big impact to the quarter. As I mentioned, there was some in food service mainly. When you look down at this aren't convenience, actually, year over year, there's pretty nudge levels, actually a little slight decline.

Speaker Change: You know, what I also mentioned with Jose Santiago was, you know, with this Cheney announcement.

Speaker Change: uh...

Speaker Change: I think that's kind of overwhelmed what we've had happen with Jose Santiago, but it's an excellent company.

Speaker Change: tremendous warehouse, very similar to Cheney.

Speaker Change: really have spent the money to make sure that they have a facility that wouldn't have any problem with a hurricane, could get through that, and just a great building.

George Holm: And it gives us an opportunity to get to some of those other islands between both Cheney and Jose Santiago, and it gives us a good path to get branded products into Porter, as we get both. Great. And then just a follow up for you, George, you mentioned, you know, about case volume trends, and particularly on the pen side, for fiscal 25, which I hope you were sort of implying was improving through the year.

Patrick Hatcher: So as I said, again, we expect this to kind of get back to normal where we're not going to have some year over year slight impact in Q1. But past that, we think it should be pretty normal. When you look at convenience and the results, obviously, really amazing job, again, of that gross profit and cost control. As George mentioned, they did an excellent job of cost control. So they saw a really nice increase to EBITDA.

Speaker Change: And it gives us an opportunity to get to some of those other islands between both Cheney and Jose Santiago And it gives us a good path to get branded product into Puerto Rico

Speaker Change: as we get both of those facilities up and going.

Speaker Change: Great and then just a follow-up for you George, you know, you mentioned you know about like case volume trends

Speaker Change: and particularly in their Penn side.

Speaker Change: for fiscal 25, hopefully, I think you were sort of implying improving through the year. Can you just maybe talk a little bit more about, you know, like the expectation that you have within the guidance around case volume growth and what you think might drive that improvement as the year progresses?

George Holm: Can you just maybe talk a little bit more about, you know, the expectation that you have within the guidance around case volume growth and what you think might drive that improvement as the year progresses? Yeah, well, we still look at that six to 10% case growth is what we would like to achieve in the independent food service business. And, you know, for this last fiscal year, we just barely snuck in there with the macro situations we got into the second half of our fiscal year.

Patrick Hatcher: Part of that, a small portion of that was related to those accruals. And we just called that out, but it was mostly due to operating performance. I also want to mention with convenience that we see some softness in same-door sales that's actually unique time for convenience. They haven't seen this type of same-door sales decline. So the new business that we picked up isn't showing up as much as it would and maybe a little bit different environment.

Speaker Change: Yeah, well, you know, we still look at that six to ten percent case growth is what

Speaker Change: we would like to achieve in the independent food service business. And for this last fiscal year, we just barely snuck in there because of kind of the macro situations we got into the second half of our fiscal year.

George Holm: We certainly need a better macro. I'd look at the share gains that we're running. They're very consistent, at least according to the information that we have. So we don't have concerns around hitting our goals as long as the macro does.

Patrick Hatcher: But we're excited about what we have in front of us from the convenience Point. And during this last year, they did an amazing job of getting their arms around the warehouse, delivery expense, merging convenience together as far as EB and Cornmark goes. Just a lot of progress was made, and we're excited about what we have coming up in convenience. By the way, we also just this last week had a record for food service and convenience. Great, thanks. Congrats. Thank you.

Speaker Change: We certainly need a better macro.

Speaker Change: I look at the share gains that we're running. They're very consistent, at least according to the information that we get.

Speaker Change: So we don't have concerns around hitting our goals.

George Holm: Now, obviously, we had a very good quarter in spite,,,,,,, But we do have for this fiscal year; we got about three quarters coming up of this additional business with no sales. I think that'll help fill some of the gap with national account business, but we haven't backed off our goal of running. Okay, thank you.

Speaker Change: As long as the macro doesn't prove, now obviously we had a very good quarter in spite of

Speaker Change: slower growth from a case standpoint. We were helped with a little bit of inflation so our sales growth was better.

Speaker Change: But we do have for this fiscal year, we got about three quarters coming up of this additional business with no sales history. So I think that'll help fill some of the gap with national account business, but we haven't backed off from.

Edward Kelly: Jake, our next question from Edward Kelly with Wells Fargo. Please go ahead. Your line is open. Hi, good morning guys. And I had my congrats on the news today. I was hoping you could give us a little bit more color on the San Diego deal. Tails, Yvita, purchase price, multiple synergies, the same type of stuff you provided for Cheney. And then you mentioned that the guidance, excluding San Diego, would still be within the range. I assume you still mean within the 1.6 to 1.7 billion dollar range, just want to clarify that. Yeah, I'll take that.

Speaker Change: our goal of running 6-10% independent case growth.

John Heinbockel: Yeah, thanks. We'll take our next question from John Heinbockel. Guggenheim secured, had your line. Hey, George, want to start with your thoughts, your philosophy now on, you know, expanding the salesforce in this macro, right? Because I think, you know, you guys have gotten up to a level that's higher than you'd normally like, and I think there were some issues with managing that. I think right now you're between five and 6%.

Speaker Change: Okay, thank you.

Speaker Change: Yeah, thanks.

Speaker Change: We'll take our next question from John Heinbuckle with Guggenheim Securities. Please go ahead. Your line is open.

John Heinbuckle: Hey George, I want to start with

John Heinbuckle: your philosophy now on, you know, expanding the sales force in this macro.

Speaker Change: right, because I think you guys had gotten up to a level that was higher than you'd normally like and I think there was some issues with managing that. I think right now you're five to six percent. When you look at the amount, the onboarding of those folks,

Patrick Hatcher: So one, just on, as we think about Jose San Diego, one, we're really excited about this acquisition and the strategic rationale is again, gives us the ability to expand geographies into the Caribbean and then all the surrounding areas around the Caribbean. This is a high growth business as it comes with excellent leadership and they're really sales driven and focused. They also have a really strong cultural fit and they've been working with our teams very closely since the close.

George Holm: When you look at the amount on board, the onboarding of those folks, You know, any tweaks that you would make, right? Because I think you'd like to have them, driving case growth more than more than one time. Is that just not possible today? And you just invest for a better macro? Do you make any tweaks?

Speaker Change: You know any tweaks that you would make right because I think you'd like to have Them right driving case growth more than more than one times Is that just not possible today and you just invest for a better macro? What do you make any tweaks?

George Holm: To a degree, we're continuing to follow the same playbook we always have. Now, we're 5.1% up right now. And we've seen a slight increase in our turnover, and that kind of goes back to when we reached that 10% increase in sales. Let a large group come in this month. We've made another big push to get our number of people out, and the training is quite intense. We're trying as best we can to do that in groups, and we've also done more territory splits than we would normally do. Within our system, those checks are not involuntary; they are voluntary on the part of the people.

Speaker Change: To a degree, we're continuing to follow the same playbook we always have now. We're 5.1% up right now.

Patrick Hatcher: We're not disclosing any financial metrics though related to the deal. Can I just confirm Patrick that when you say that excluding San Diego, you still be within the range for this year that you mean the 1.6 to 1.7? I apologize. Yes, absolutely. I forgot to answer last part of the question. So the range of 1.6 to 1.7, yeah, that remains the same with or without San Diego. What I also mentioned with Jose San Diego with this Cheney announcement, I think that's kind of overwhelmed with what happened with Jose San Diego, but it's an excellent company, tremendous warehouse, very similar to Cheney.

Speaker Change: and we've seen a slight increase in our turnover and that kind of goes more back to when we had reached that 10% increase in sales people.

Speaker Change: We had a large group come in this month.

Speaker Change: , you know, another big push to get our number of people up, and the training is quite intense.

Speaker Change: We're trying as best we can to do that in groups.

Speaker Change: And we've also done more territory splits than we would normally do.

Speaker Change: Within our system, those are not involuntary, they are voluntary on the part of the people. Not to say that we don't nudge it a little bit, we certainly do. But I think that will help us moving forward.

George Holm: Not to say that we don't nudge it a little bit; we certainly do. But I think that'll help us move forward. We just had such an increase in what our average does in business and makes in compensation. So it's helpful for us now that we have more of our experienced people out there without having a full book of business, making calls to new customers, and there's certainly much more making those calls and our new. And then maybe we can follow up on Cheney, right?

Patrick Hatcher: I mean, really have spent the money to make sure that they have a facility that wouldn't have any problem with the hurricane because get through that and just a great building. And it gives us an opportunity to get to some of those other islands between both Cheney and Jose San Diego and it gives us a good path to get branded product. Into Puerto Rico as we get both to those facilities up and going.

Speaker Change: We just had such an increase in what our average salesperson...

Speaker Change: does in business and makes in compensation. So it's helpful for us now that we have more of our experience people out there without having a full book that business makes in calls on new customers and is certainly much more effective.

Speaker Change: making those calls than our new, less experienced people.

George Holm: Great, and then just to follow up for George, you know, you mentioned about case volume trends and particularly a dip and side for fiscal 25. Hopefully, I think you were sort of implying improving through the year. Can you maybe talk a little bit more about the expectation that you have within the guidance around case volume growth and what you think might drive that improvement as the year progresses? Yeah, well, you know, we still look at that 6 to 10% case growth is what we would like to achieve in the independent food service business.

George Holm: So when you think about some of the key KPIs, right, productivity, their Salesforce, the rate at which they're growing, labor productivity in those five D.C.s, you know, cases per mile driven, which probably is pretty decent, where do you think they stand out? And where do you think you can bring the most to the table other than private brands? Yeah, their warehouse and delivery numbers are fairly similar to us; their sales force is actually similar.

Speaker Change: And then maybe a follow-up on Cheney, right? So when you think about some of the key KPIs, right, the productivity there at Salesforce,

Cheney: the rate at which they're growing, you know, labor productivity in those five D.C.s, you know, cases per mile driven, which probably is pretty decent.

Speaker Change: Where do you think they stand out and where do you think you can bring the most to the table other than private brand?

Speaker Change: Yeah, their warehouse and delivery numbers are fairly similar to us.

George Holm: And you know, for this last fiscal year, we just barely snuck in there because of kind of the macro situations we got into the second half of our fiscal year. We certainly need a better macro. I look at the share gains that we're running. They're very consistent, at least according to the information that we get. So we don't have concerns around hitting our goals as long as the macro doesn't prove. Now, obviously, we had a very good quarter in spite of, you know, slower growth from a case standpoint.

George Holm: We... You know, we've got a lot to figure out there, but for the most part, that's going to be us communicating with their leadership, and their leadership kind of making those decisions. It has been a very, very sales-focused company, and, uh..., they take great pride in being real competitive and being very aggressive. I don't see a really getting in there and getting aggressive about changing any as well run. Their KPIs are very similar to us in their broadline world, which is that all of their world versus our broadline, and I just think it's a good fit.

Speaker Change: and their sales force.

Speaker Change: actually similar.

Speaker Change: You know, we've got a lot to figure out there, but for the most part, that's going to be us communicating with their leadership and their leadership kind of making those decisions. It has been a very, very sales-focused company.

Bob: and Bob.

Bob: They take great pride in being real competitive and being very aggressive.

Bob: really getting

Bob: getting in there and getting aggressive about changing anything there. It's well run. Their KPIs are very similar to us in their broad line world which is that all of their world versus our broad line world.

George Holm: We were helped with a little bit of inflation, so our sales growth was better. But we do add for this fiscal year, we got about three quarters coming up of this additional business with no sales history. So I think that will help fill some of the gap with national account business. But we have in fact, off from our goal of running 6 to 10% independent case growth. Okay, thank you. Yeah, thanks.

George Holm: We really want to make progress with the brands, but, you know, that will also be our ability to convince them that it's a better opportunity than what they're currently doing. Thank you. Yeah, thanks. And we'll take our next question from Andrew Wolf. D.L. King

Bob: and I just think it's a good fit.

Bob: We really want to make progress with the brands, but, you know, that also will be up to our ability to convince them that it's a better opportunity than what they're currently doing.

Bob: Thank you. Yeah, thanks, John .

John Heinbockel: We'll take our next question from John Heinbuckle with Guggenheim Securities. Please go ahead. Your line is open. Hey, George. I want to start with your thought, your philosophy now on, you know, expanding the sales force in this macro, right? Because I think, you know, you guys have gotten up to a level that was higher than you'd normally like. And I think there was some issues with managing that. I think right now you're five to six percent.

Bob: We'll take our next question from Andrew Wolf with...

Andrew Wolf: Please go ahead. Your line is: Hi, good morning. I just wanted to follow up on the cadence of sales. I think, you know, the industry, it's pretty well known, had, Depends on who you follow data wise and companies, but you know that certainly things slowed in the latter part of the June quarter. Certainly, that seems to be the case for you with case growth. And I just wanted to get a sense of where you said you were at something similar to what you did in the quarter in July. Does that mean things picked up sequentially from June to July, or did things kind of go down? Or is it just more of a stability issue?

Speaker Change: C.L. King

Speaker Change: Please go ahead, your line is open.

Andrew Wolff: Hi, good morning. I just wanted to follow up on the cadence of sales. I think, you know...

John Heinbockel: When you look at the amount on the onboarding of those folks, you know, any tweaks that you would make, right? Because I think you'd like to have them right driving case growth more than more than one times. Is that just not possible today? And you just invest for a better macro? What do you make any tweaks?

Speaker Change: The industry, it's pretty well known, and it depends who you, what you follow data-wise in companies. But, you know, certainly things slowed in the latter part of the June quarter. Certainly that seems to be the case for you with case growth.

Speaker Change: And I just wanted to get a sense of where you, you said you were at something similar to where you did in the, in the quarter in July . Does that mean things picked up sequentially from June to July of things?

George Holm: Have things leveled off? Yeah, flat, flat in the last quarter. We have seen, From a sales standpoint, a little bit further softening. We've seen a little strengthening in our ability to go out and get new, But it's definitely a slow market. And we've seen this before. George Holm, people like to, And not more cadence, but more of the movie theater cycle, the movie film release cycle

Speaker Change: kind of went down or is it just more of a stability? Things have leveled up. Yeah, flat, flat the last quarter. We have seen from the St. Marcel's standpoint a little bit

George Holm: To agree, we're continuing to follow the same playbook we always have now. We're 5.1% up right now. And we've seen slight increase in our turnover. And that kind of goes more back to when we reach that 10% increase in sales people. Where the large group come in this month, we've made, you know, another big push to get our number of people up. And the training is quite intense. We're trying as best we can to do that in groups.

Speaker Change: Further softening, we've seen a little strengthening in our ability to go out and get new business.

Speaker Change: But it's definitely a slow market and we've seen this before and it always tends to come back. People like to eat out.

George Holm: Do you expect Vistar to turn up just kind of based on some other folks who use, you know, sell into that business? Is that going to turn Vistar up kind of this quarter? Andrew, it's Patrick.

Speaker Change: and not more cadence but more of the movie theater cycle, the movie film release cycle. Do you expect Vistar to turn up just kind of based on like some other folks who use, you know, sell into that business? Is that going to turn Vistar up kind of this quarter?

Patrick Hatcher: Yeah, so what we're seeing in the theaters, I mean, certainly, last quarter for Vistar was a tough quarter in terms of theaters, but we did see some really, really nice improvement with the last two releases of In-N-Out and Wolverine. We do expect content to improve. I think this quarter in particular is going to be a little bit better, but certainly as we get into the fourth quarter of the calendar year, content definitely improves.

George Holm: And we've also done more territory splits than we would normally do. Within our system, those are not involuntary. They are voluntary on the part of the people not to say that we don't nudge it a little bit. We certainly do. But I think that'll help us moving forward. We just had such an increase in what our average salesperson does in business and makes in compensation. So it's helpful for us now that we have more of our experienced people out, out there without having a full book of business making calls on new customers, and they're certainly much more effective making those calls than our new less experienced people.

Speaker Change: Hey Andrew, it's Patrick. Yeah, so what we're seeing in theater, I mean certainly last quarter for Vistar was a tough quarter in terms of theater. We did see some really nice improvement with the last two releases of In-N-Out and Wolverine.

Speaker Change: and Deadpool. Sorry, forgot the name of the movie, but we do expect content to improve. I think this quarter in particular is going to be a little bit better, but certainly as we get into...

Speaker Change: The fourth part of the calendar year, the content definitely improves. So we do expect them to show better results in that area.

Patrick Hatcher: So we do expect them to show better results in that area. I'll look at comment on, you know, some of the pricing. We've got a long history, particularly with candy and snacks. And when there are price increases, there's typically a reduction in volume, and then it gradually comes back. And there have been big increases all across those categories. I think that's got a lot to do with some of the slowness that they can be.

Speaker Change: I'll make a comment on, you know, some of the pricing.

Speaker Change: Who's got a long history particularly with candy and snacks and...

George Holm: Maybe follow up on Cheney, right? So when you think about some of the key KPIs, right, the productivity, their sales force, the rate at which they're growing, you know, labor productivity in those five DCs. These cases per mile driven, which probably is pretty decent. Where do you think, you know, they stand out, and where do you think you can bring the most to the table, other than private brand? Yeah, there were housing delivery numbers are fairly similar to us.

Speaker Change #100: When there's price increases, there's typically a reduction in volume, and then it gradually comes back. And there's been big price increases all across those categories. I think that's got a lot to do with some of the slowness that the convenience industry is facing.

George Holm: That also affects Vistar in their channels, where really all the prices are, so people will adjust to that. We just have a lot of confidence in those two businesses, how they're managed, and we are seeing this do some perking up from a theater standpoint, and we hope Got it. Thanks. Just a couple questions on the two acquisitions. First, on Cheney Brothers.

Speaker Change #100: That also affects Vistar in their channels where really all the prices are up. So people adjust to that.

Speaker Change #100: We just have a lot of confidence in those two businesses and how they're managed and we are seeing this start to some perking up from a theater standpoint and we hope that holds up.

George Holm: Their sales force, actually similar. We got a lot to figure out there, but for the most part, that's going to be us communicating with their leadership and their leadership kind of making those decisions. It has been a very, very sales focused company. And they take great pride in being real competitive and being very aggressive. I don't see us really getting in there and getting aggressive about changing anything there. It's well run, their KPIs are very similar to us in their broadline world, which is all of their world versus our broadline world.

Andrew Wolf: Congratulations. I know it's been a party. A lot of people would like to.

Speaker Change #101: Got it, thanks. Just a couple questions on the two acquisitions. First on Cheney Brothers, congratulations, I know it's been a...

George Holm: Bye. Was that, um, on the background, I guess you might have to disclose more about this, but was it kind of an active auction or did you know, given your reputation of being, you know, having done well with Ryan Hart, other similar businesses were out a little more negotiated and I also wanted to ask about just your general outlook. I mean, Reinhardt, it seemed like it was, you know, very much an earnings power.

Speaker Change #101: A lot of people would like to. Bye.

Speaker Change #102: On the background, I guess you might have to disclose more about this, but was it kind of an active auction or did you, given your reputation, having done well with Reinhart and other similar businesses, was that a little more negotiated?

George Holm: And then the sales were just, you know, remarkably, probably where you'd be, I would expect, at least. Is this just more strategically, and this is, there's so much growth here, this is a strategically, you know, this is a growth acquisition, as well as good finance, you know, as well as some synergies coming out of it, but it's a real impetus here. I think you led with growth, that's why you paid up a little bit.

Speaker Change #103: I also want to ask about you just here General Outlook, I mean.

Speaker Change #104: Reinhardt it seemed like it was you know very much a earnings power and then the sales were just you know remarkably probably where you beat I would expect least

George Holm: And I just think it's a good fit. We really want to progress the brands, but you know, that that also will be our ability to convince them that it's a better opportunity and what they're currently doing.

Speaker Change #105: Is this just more strategically, and this is, there's so much growth here, this is a...

Speaker Change #106: strategically, you know, this is a growth acquisition, as well as good finance, you know, as well as some synergies coming out of it. But it's the real impetus here. I think you led with growth. That's why you paid up a little bit. That's sort of the main strategic rationale.

George Holm: Thank you. Yeah, thanks, John.

George Holm: Is that sort of the main strategic rationale? Okay, well, first, as to how it came together, it's certainly not an auction. Thank you, I have tried to buy Cheney Brothers. It's been a prized asset for a long time. But as far as we know, there was no one else involved in the period of time, and the trip took quite a while.

Andrew Wolf: We'll take our next question from Andrew Wolf with CLK. Please go ahead. Your line is open. Hi, good morning. I wanted to follow up on the cadence of sales. I think, you know, the industry is pretty well known, hence who you what you follow, data wise and companies, but you know, that certainly thinks slow in the latter part of the June quarter. Certainly that seems to be the case for you with case growth.

Speaker Change #107: Okay, well first, as to how it came together, it's certainly not an auction.

Speaker Change #108: I know people have tried to buy Cheney Brothers, it's been a prized asset in our business for a long time. But as far as we know, there was no one else involved during this period of time, and it took quite a while. It wasn't a short process.

George Holm: It wasn't a short process. As far as you know, the future, they've been a very fast growing company for a long time. They've been pretty fearless in putting up new distribution centers and going into New Territories and backing the customer base where they bring a lot of value. That's the reason we felt that it was probably worth more money than a Ryan. Although, you know, we also feel with Reinhart, we paid a full price. They are two different businesses, but for us, the same playbook that we'll use, will run the business very separately.

Andrew Wolf: And I just wanted to get a sense of where you said you were at something similar to where you did in the quarter in July. Does that mean things picked up sequentially from June to July of things kind of went down or is it just more of a stability things that leveled up? Yeah, flat, flat to the last quarter. We have seen from the things to our sales standpoint, a little bit further softness.

Speaker Change #108: As far as, you know, the future, they've been a very fast-growing company for a long time.

Speaker Change #108: They've been pretty fearless putting up new distribution centers and going into new territories and backing the customer base where they bring a lot of value.

Speaker Change #108: Uh-huh.

Speaker Change #109: That's the reason we felt that it was probably worth more money than a Reinhardt, although we also feel that a Reinhardt would be a full price.

Andrew Wolf: We've seen a little strengthening in our ability to go out and get new business, but it's definitely a slow market and we've seen this before. And it always tends to come back. People like to eat out. And not more cadence, but more of the movie theater cycle, the movie film release cycle. Do you expect this to turn up just kind of based on like some other folks who use, you know, sell into that business to you?

Speaker Change #109: Bob

Speaker Change #109: There are two different businesses, but for us,

George Holm: We'll continue to let them operate from their strength, and try as best we can to get our brands into that business, probably where the upside is, but it's growth. It's well run. I don't see anything in KPI that suggests we have any magic to bring.

Bob: It's the same playbook that we'll use.

Bob: will run.

Bob: the business very separately. We'll continue to let them operate from their strengths.

Bob: try as best we can to get our brands into that business. We think that's...

Bob: Probably where the upside is, but it's a growth vehicle for us and it's well run. I don't see anything in KPIs that we have any magic to bring to them. It's just growth.

Andrew Wolf: Is that going to turn this down kind of this quarter? Andrew Patrick, yeah, so what we're seeing in theater is, I mean, certainly last quarter for Vistar was a tough quarter in terms of theater. We did see some really really nice improvement with the last two releases of In and Out and Wolverine and Deadpool, sorry, forgot the name of the movie, but we do expect content to improve. I think this quarter in particular is going to be a little bit better, but certainly as we get into the fourth quarter of the calendar year, the content, definitely improved. So we do expect them to show better results in that area.

Andrew Wolf: Andrew, as I said, we talked about in our remarks, the region. We're really excited about having more presence in this region, the economy, the demographics. It's a region that's growing much faster than the Southeast and faster than the U.S., definitely has a lot of growth. Great, thanks for that color.

Bob: Yeah, Andrew, I'll just add, I mean, we talked about it in our remarks, I mean, the region, we're really excited about having more presence in this region, the economy, the demographics, we just, it's a region that's growing much faster, or faster than the Southeast and faster than the U.S., so it definitely has a lot of growth potential.

Andrew Wolf: And if I could just revisit, asking you about the Jose Santiago deal. One way to look at it is sort of population per distribution center, and it's meaningfully less, you know, Puerto Rico; they want distribution centers that, you know, the Southeast and Florida and up into the Carolinas. So, if we were just to look at it that way, I would say that it's probably less productive in a salesman facility. We're just trying to get a sense of whether we should straight find some proportionality here or haircut the little bit because it's maybe a little less productive than what you bought with Chaney Brothers. No, I mean, it's a very well-run organization.

Bob: Great. Thanks for that, Culler. And if I could just revisit...

Speaker Change #110: asking you about the Jose San Diego deal.

Speaker Change #111: One way to look at it is sort of population per distribution center, and it's meaningfully less, you know, Puerto Rico, they have one distribution center than, you know, the Southeast and Florida and up into the Carolinas. So if we were just to look at it that way, is it fair to say that, you know,

Patrick Hatcher: I look at comment on some of the pricing. We've got a long history, particularly with candy and snacks, and when there's price increases, there's typically a reduction in volume, and then it gradually comes back. And there's been big increases all across those categories. I think that's got a lot to do with some of the slowness that the convenience industry is facing. That also affects Vistar in their channels where really all the prices are up.

Speaker Change #112: It's probably a less productive on a salesperson facility and, you know, we're just trying to get, you know, a sense of whether we should straight line some proportionality here or haircut it a little because it's maybe a little less productive than what you bought with Cheney Brothers.

Patrick Hatcher: It's actually, you know, the KPIs are really strong, and it also has potential growth opportunities outside of the immediate Puerto Rico area. So I would say it's actually a very strong KPI organization.

Speaker Change #113: No, I mean, it's a very well-run organization. It's actually, you know, the KPIs is, you know, are really strong and it also has potential growth opportunities outside of the immediate Puerto Rico area. So I would say it's actually a.

Patrick Hatcher: So people adjust to that. We just have a lot of confidence in those two businesses and how they're managed, and we are seeing Vistar do some purking up from a theater standpoint, and we hope that holds up. Got it. Thanks.

Patrick Hatcher: I was asking more about sales productivity. I'm glad to hear it's well run. So you're looking at the population, but if you think about it, it's also a very popular tourist area. They've had a lot of expansion in that area. So they have a lot of sales. And a lot of sales opportunities.

Speaker Change #113: Very strong KPI organization.

Speaker Change #114: I was asking more about sales productivity. I'm glad to hear it's well run.

Speaker Change #115: So you're looking at population, but if you think about it, it's also a very popular tourism area. They've had a lot of expansion in that area, so they have a lot of sales productivity and a lot of sales opportunities.

Unnamed Speaker: Just a couple of questions on the two acquisitions. First on Cheney Brothers, congratulations, I know. I know a lot of people would like to buy.

Andrew Wolf: Again, thanks for the call. It's almost entirely independent, and to give you a feel that they do have a... A Strong 70 Person Saleh. Okay, thank you. We'll take our next question from Mark Carden with, Go ahead, you're live. Good morning.

George Holm: On the background, I guess you might have to disclose more about this, but was it kind of an active option or did you know, given your reputation, having done well with Ryan Hart, other similar businesses, was that a little more negotiated? And I also wanted to ask about just your general outlook. I mean, Ryan Hart, it seemed like it was very much a earnings power, and then the sales were just remarkably probably where you would be, I would expect.

Speaker Change #116: It's almost entirely independent, and to give you a feel that they do have a...

Speaker Change #117: a strong 70-person sales force.

Speaker Change #118: Okay, thank you.

Speaker Change #119: We'll take our next question from Mark Carden with UBS. Please go ahead, your line is open.

Mark Carden: Thanks so much for taking the questions. So to start, another one on M&A sounds like a really nice opportunity for chain stores, given the growth opportunity that you guys laid out. As you look forward, how does this impact your thinking on pursuing food service expansion in the Western US? Just given that geography remains pretty wide open, white space for you. Would this push out the timing on anything there by a few years, or is anything changed to respect your capacity to pursue something in the region at the right opportunity arises? We would be very opportunistic if we could get something going in the West. It's obviously a desire.

Mark Kardon: Good morning, thanks so much for taking the questions. So to start, another one on M&A, sounds like a really nice opportunity with Cheney, given the growth opportunity that you guys laid out. As you look forward, how does this impact your thinking on pursuing food service expansion in the western U.S.?

George Holm: Is this just more strategically? There's so much growth here, this is a strategically, this is a growth acquisition, as well as some synergies coming on it, but it's the real impetus here. I think you led with growth, that's why you pay it up a little bit. Is that sort of the main strategic rationale?

Speaker Change #121: just given that geography remains pretty wide open white space for you, would this push out the timing on anything there a few years, or has anything changed with respect to your capacity to pursue something in the region if the right opportunity emerged?

George Holm: Okay, well first, as to how it came together, it's certainly not an auction. I know people have tried to buy Cheney Brothers, it's been a prized asset in our business for a long time, but as far as we know, there was no one else involved during this period of time, and it took quite a while, it wasn't a short process. As far as, you know, the future, they've been a very fast growing company for a long time.

Speaker Change #122: We would be very opportunistic if we could get something going in the West. It's obviously a desire.

George Holm: I think we would find a way to get it, given the opportunity. Yeah, Mark, I'll just add, you know, I mentioned, even after we close the Cheney deal, we'll just be on the outside or the top end of our range. And if you look historically, we've paid down our debt very quickly with our cash flow. So we'll be ready if something comes around, but we'll continue to work. And then, as a follow-up, just in the convenience business, you guys called out some lower personnel expenses. What's the makeup of that?

Speaker Change #122: I think we would find a way to get it done if that opportunity presented itself.

Speaker Change #122: Yeah, Mark, I'll just add, you know, I mentioned, you know, even after we close the Cheney deal, we'll just be on the outside or the top end of our range.

Speaker Change #123: And if you look, historically, we've paid down our debt very quickly with our cash flow.

Speaker Change #123: So, we'll be ready if something comes around, but, you know.

George Holm: They've been pretty fearless, putting up new distribution centers and going into new territories and packing the customer base where they bring a lot of value. That's the reason we felt that it was probably worth more money Heart, although, you know, we also feel with Ryan Hart with the full price. There are two different businesses, but for us, it's the same playbook that we'll use. We'll run the business very separately. We'll continue to let them operate from their strengths.

Mark Carden: Is that primarily consolidated warehouses, or something else? Just your thoughts there. Thank you. Hey Mark, I'm sorry.

Speaker Change #123: So we'll continue to look at things.

Speaker Change #124: Great. And then as a follow-up, just on the convenience business, you guys called out some lower personnel expenses. What's the makeup of that? Is that primarily consolidated warehouses? Something else? Just your thoughts there. Thank you.

Mark Carden: Could you repeat that? I missed it. It cut out on me for a second.

Mark Carden: Sure, just in terms of the convenience business, you guys call that some lower personnel expenses. But just where are those primarily coming from? That's really got to do with the warehouse and delivery product. Yeah, so we've taken out all the overtime labor, we've taken a lot of the temporary labor. They're just they're just running really efficiently. And they've done an excellent job of managing their labor profile. Got it. Very helpful, guys. Thanks and good luck.

Speaker Change #125: Hey Mark, I'm sorry could you repeat that I missed it cut out on me for a second

Mark Kardon: Sure, just in terms of with the convenience business you guys called out some lower personnel expenses, just where are those primarily coming from?

Speaker Change #126: That's really got to do with warehouse and delivery productivity.

George Holm: We'll try as best we can to get our brands into that business. We think that's probably where the upside is, but it's a growth vehicle for us. And it's well-run. I don't see anything in KPIs that, you know, we have any magic to bring to them. It's just growth.

Speaker Change #127: Yeah, so we've taken out all the overtime labor. We've taken a lot of the temp labor. They've just, they're just running really efficiently and they've done an excellent job of managing their labor profiles.

Speaker Change #128: Got it. Very helpful, guys. Thanks and good luck.

Patrick Hatcher: Nick, our next question from Lauren, with Deutsche, ahead. Your line, Thank you very much. Does one start with the food service business?

George Holm: Dan, you're all the sad. I mean, we've talked about it in our remarks. I mean, the region we're really excited about having more presence in this region, the economy, the demographics. We just, it's a region that's growing much faster or faster than the southeast and faster than the US. So it definitely has a lot of growth potential.

Unnamed Speaker: Great. Thanks for that color.

Speaker Change #129: Thank you.

Speaker Change #129: We'll take our next question from Lauren Silberman with Deutsche Bank.

Lauren Silberman: Can you talk about the composition of case growth? How much is coming from new customer acquisition versus wall chair? Are you seeing any change in customer turn? What appears to be an increasing promotional environment? Any thoughts you have on the promotional environment? Yeah, we're seeing pretty, pretty good consistency, a little softer with same-store sales and a little better with new business. I think the, you know, we're in an industry that's always been extremely competitive, but I think any industry, when you start to see negative growth. [inaudible] It gets more competitive, and I would say, in today's world, it's probably more competitive than normal.

Speaker Change #130: Please go ahead, your line is open.

Lauren Silverman: Thank you very much. Do you want to start with the food service business? Can you talk about the composition of case growth? How much is coming from new customer acquisition versus wall chair? Are you seeing any change in customer churn, given what appears to be an increasing promotional environment? Any thoughts you have on the promotional environment?

Edward Kelly: And if I can just revisit Ed's asking you about the Jose San Diego deal. One way to look at it is sort of population for distribution center. And it's meaningfully less, you know, Puerto Rico, they want distribution center than, you know, the southeast and Florida and nothing to the Carolinas.

Speaker Change #132: Yeah, we're seeing pretty good consistency, a little softer with

George Holm: So if we were just to look at it that way, is it fair to say that, you know, it's probably a less productive on a sales work facility and, you know, we're just trying to get a sense of whether we should straight find some proportionality here, or haircut of the little because it's maybe a little less productive than what you bought with the Cheney brothers. Now, I mean, it's a very well run organization. It's actually, yeah, the KPIs, you know, are really strong. And it also has potential growth opportunities outside of the immediate Puerto Rico area. So I would say it's actually a very strong KPI organization.

Speaker Change #132: [inaudible]

Speaker Change #133: negative on, you know, growth, it gets more competitive. And I would say that today's world is probably more competitive than normal.

George Holm: But, as I said before, our share gains continue to be right around the same, very consistent. We have a lot of confidence that the industry will come back. I think it'll continue to be very competitive. Are you seeing that competition manifest across all segments and any specific things that other distributors or yourself are doing? to increase competitiveness. I would say that right now... (inaudible) everybody is looking for new accounts. And it is a very competitive situation to get new accounts. And that makes sense, right? The accounts are, for the most part, running negative same-store sales.

Speaker Change #133: I'm...

Speaker Change #133: But as I said before, our share gains continue to be right around the same, very consistent. So we have a lot of confidence that the industry will come back.

Speaker Change #133: But I think it'll continue to be a very competitive industry.

George Holm: I was asking more about sales productivity and glad to hear it. So you're looking at population, but if you think about it, it's also a very popular tourism area. They've had a lot of expansion in that area. So they have a lot of sales productivity and a lot of sales opportunities.

Speaker Change #134: Are you seeing that competition manifest across all segments and any specific things that other distributors or yourself are doing?

Speaker Change #135: Thank you very much for coming back. Yes.

Patrick Hatcher: and Patrick Hatcher.

George Holm: Yeah, thanks for the call. It's entirely independent and give you a field that they do have a strong 70% sales force. Okay.

Patrick Hatcher: I would say that right now it's

Patrick Hatcher: everybody is looking for new accounts.

Speaker Change #137: And it's a very competitive situation to get new accounts, and that makes sense, right? I mean, the accounts are, for the most part, running negative same-store sales. So people are out looking for other business, and I would...

Mark Carden: Thank you. We'll take our next question from Mark Cardin with UBS. Please go ahead. Your line is open. Good morning. Thanks so much for taking the questions.

Lauren Silberman: People are out looking for other businesses. Same thing again, but I think... A little more competitiveness than before, but I, by no means, am rational. And Lauren, I'll just add, and when you get outside of the independence, and you start looking at the chain business, or you look at Vistar or convenience, we're really pleased with the sales funnel that they're working on. They have a lot of opportunities out there, new business, higher-margin business.

George Holm: So to start another one of them in a sounds like a really nice opportunity to Cheney, given the growth opportunity, you guys laid out. As you look forward, how does this impact your thinking on pursuing food service expansion in the Western US? Just given that geography remains pretty wide open and light space for you. Would this push out the timing on anything there are a few years, or is anything changed to respect your capacity to pursue something in the region at the right opportunity emerged?

Speaker Change #137: saying the same thing again, but I think it's just a little more competitive than before, but it's by no means irrational.

Lauren Silverman: And Lauren, I'll just add, when you get outside of the independence and you start looking at the chain business or you look at VISTA or convenience, we're really pleased with the sales funnel that they're working on. They have a lot of opportunities out there.

Patrick Hatcher: So from that standpoint, we're really pleased with what the segments have been able to do in terms of sales. Great. And just a follow up, I guess, on the sales piece of it, the convenience side, it looks like volumes were down seven to 8% with the new business wins. So presumably, the Sanford sales growth got worse from 3Q, which I think you alluded to. Can you help unpack the magnitude of new business wins that are in the base as we try to think through growth in fiscal 25 and any additional color on underlying growth and convenience? Thank you.

Lauren Silverman: New Business, Higher Margin Business. So from that standpoint, we're really pleased with what the segments have been able to do from Sales Funnel.

George Holm: We would be very very opportunistic if we could get something going in the West. It's obviously a desire and I think we would find a way to get it. John, is that opportunity presented itself? Yeah, Mark, I'll just add, yeah, I mentioned, you know, even after we close the chainy deal, we'll just be on the outside or the top end of our range. And if you look, historically, we've paid down our debt very quickly with our cash flow. So, we'll be ready if something comes around, but, you know, so we'll continue to look at things.

Speaker Change #138: Great. And just a follow-up, I guess, on the sales piece of it, the convenience side, it looks like volumes were down 7% to 8% with the new business wins.

Speaker Change #139: Presumably, the Sampser sales growth got worse from 3Q, which I think you alluded to. Can you help unpack the magnitude of new business wins that are in the base as we try to think through growth in fiscal 25 in any additional color on underlying growth and convenience? Thank you.

Lauren Silberman: Well, if you look at the same store sales declines, you got a $25 billion business there that's running close to 5% same store sales, so it takes a tremendous amount of business to make up for the same store issue. So we've brought on, I just don't know exactly what those numbers are, with the lead brought on a significant amount. No, there's no sign of the convenience.

Speaker Change #140: Well, if you look at the same-store sales declines, you've got a $25 billion business there that's running close to 5% same-store sales declines. So it takes.

Patrick Hatcher: Great, and then as to follow up, just in the convenience business, you guys called out some lower personnel expenses. What's the makeup of that? Is that primarily consolidated warehouses? Something else? I'm just your thoughts there. Thank you. Hey, Mark, I'm sorry. Could you repeat that? I miss it cut out on me for a second. Sure, just in terms of with the convenience business, you guys called out some lower personnel expenses. Just where are those primarily coming from?

Speaker Change #141: tremendous amount of business to make up for the same store issues. So we've brought on, I just don't know exactly what those numbers are we can certainly get back to you with, but we've brought on a significant amount of new business into the convenience area.

George Holm: [inaudible] and also we've been running increases in the number of, which I think is really going to help us as we get deeper into this. Yeah, and Lauren, it's hard to see because of the same sort of declines in nicotine, what that's doing, but you really do see it in the gross profit. We're bringing on better business, higher-margin business, so you're getting that mixed. Great, thank you very much. We'll take our next question from Jeffrey Bernstein with Barkley. Let's go ahead; you're lunch. Great. Thank you very much.

Speaker Change #141: and also we've been running increases in the number of independent.

Speaker Change #141: convenience stores that we're selling, which I think is really going to help us as we get deeper into this fiscal year.

Patrick Hatcher: That's really got to do with warehouse and delivery productivity. Yeah, so we've taken out all the overtime labor, we've taken a lot of the 10th labor, they've just they're just running really efficiently and they've done an excellent job of managing their labor profiles. Got it, very helpful guys, thanks and goodbye. Thank you.

Lauren Silberman: We'll take our next question from Lauren Silberman with Deutsche Bank. Please go ahead, your line is open. Thank you very much.

Jeffrey Bernstein: My first question was on growth in the independent case. I think we confirmed that trends did slow for the industry and for yourselves in the fourth quarter, and I think you said it's now stable at a lower level in July. I think you also mentioned your guidance of physical 25. [inaudible] George, something about needing improving macro to perhaps come within that 6% to 7% independent case growth target. It just feels like most people are expecting further easing from a macro or consumer perspective rather than any strengthening.

Lauren Silberman: Just on to start with the food service business. Can you talk about the composition of case growth? How much is coming from new customer acquisition versus wall chair? Are you seeing any change in customer turn given what appears to be an increasing promotional environment and any thoughts you have on the promotional environment? Yeah, we're seeing pretty good consistency, a little softer with same store sales and a little better with new business.

Speaker Change #143: Macro or consumer perspective, rather than a strengthening so I'm just wondering how you think about your guidance, whether or not you can reaccelerate. Your case growth in the second half of the year, whether that can be purely done on compares alone. If the macro headwinds were to persist I don't know how to.

George Holm: So I'm just wondering how you think about your guidance, whether or not you can re-accelerate your case growth in the second half of the year, whether that could be purely done on comparisons alone if the macro headwinds were to persist, and then how to follow up. Yeah, if the macro continues, then it's going to be more difficult for us to know how to stop. But at the current share gains that we're making from historic, you know, we would be well above that 6% case.

Lauren Silberman: I think the, you know, we're in an industry that's always been extremely competitive, but I think any industry when you start to see negative on growth, it gets more competitive and I would say that today's world is probably more competitive than normal. But as I said before, our share gains have continued to be right around the same very consistent, so we have a lot of confidence that the industry will come back, but I think it'll continue to be a very competitive industry.

Speaker Change #142: A follow up.

Speaker Change #144: If the macro continues then it's going to be more difficult for us no doubt about that.

Speaker Change #144: But at the current share gains that we're making from a historic standpoint.

Speaker Change #145: Be well above that 6% case growth if we had normal.

George Holm: Normal growth in the marketplace. And... We don't have a crystal ball. [inaudible] and we've always found that leading out more, businesses on the story. Some type of organic growth certainly didn't turn the great recession. The economy got going again, and people started eating it up.

Speaker Change #146: Growth in the marketplace.

Speaker Change #146: And we.

Speaker Change #146: We don't have a crystal ball as to where things are going but we've always found it.

Speaker Change #146: People eat out more and the business is almost always had some type of organic growth certainly didn't towards the great recession, but once.

Lauren Silberman: Are you seeing that competition manifest across all segments and any specific things that other distributors or yourself are doing? Increase competitors. I would say that right now it's everybody is looking for new accounts and it's a very competitive situation to get new accounts and that makes sense, right? I mean the accounts are for the most part running negative same store sales, so people are out looking for other business and I would say the same thing again, but I think It's just a little more competitiveness than before, but I, by no means, are rational.

Speaker Change #146: The economy got going again people started eating out again.

George Holm: I don't know what more to really give as far as color, and we can always increase our share gains. And then the, I know your prior three-year guide, and this fiscal year, and I think you said you're gonna have an investor day in the spring. Is it reasonable to assume that the growth rates you've seen over the past couple of years would continue beyond fiscal 25, or is there the possibility that that kind of long-term algorithm shifts materially either up or down? Just wondering if you're seeing any material change in trend as we look beyond the current fiscal year. Yeah, that's a great question.

Speaker Change #147: I don't know what more to really.

Speaker Change #147: As far as color goes there I mean, we can always increase our our share gains, but we're pretty stable right now.

Speaker Change #147: Understood.

Speaker Change #147: And then the.

Speaker Change #148: I know your prior three year guide.

Speaker Change #149: This fiscal year and I think you said, you're going to have an investor day in the spring.

Speaker Change #150: Is it reasonable to assume that the growth rates you've seen over the past couple of years would continue beyond fiscal 'twenty five or is there the possibility that that kind of long term algorithm shifted materially either up or down I'm. Just wondering if youre seeing any material change in trend as we would have at least gaze beyond the current fiscal year.

Lauren Silberman: And Lauren, I'll just add, and when you get outside of the independence, and you start looking at the chain business, or you look at this to our convenience, we're really pleased with the sales funnel that they're working on. They have a lot of opportunities out there, new business, higher margin business. So, from that standpoint, we're really pleased with what the segments have been able to be from sales funnel.

Patrick Hatcher: We're really excited to share with you what we will release at investor day. I'm not going to comment on that today, but I do want to just re-emphasize that our previous three-year guide, we did hit the lower end of it after two years. So we're really pleased with the growth that we've been able to achieve and we think the guidance we've given for this next year shows our confidence in our ability to generate really strong results, and then we'll be willing and ready to share with you the next three years.

Speaker Change #149: Yeah.

Speaker Change #151: It's a great question, we're really excited to share with you what we will release at the Investor day, I'm not going to comment on today, but I do want to just reemphasize that our previous three year guide we did hit the lower end of that after two years. So we're really pleased with the growth that we've been able to achieve and we think the guidance. We've given for this next year.

Patrick Hatcher: Great. And just a follow-up, I guess, on the sales piece of it. The convenience side, it looks like volumes were down seven to eight percent with the new business wins. So, presumably, the sampler sales growth got worse from 3Q, which I think you alluded to. Can you help unpack the magnitude of new business wins that are in the base as you try to think through growth in fiscal 25 and any additional color on underlying growth and convenience?

Speaker Change #151: Shows our confidence in our ability to generate really strong results and then we'll be ready to share with you. The next three years.

Speaker Change #151: On this spring.

George Holm: Yeah, also mentioned from a food service standpoint, we've added a good deal with the past, more going in for the fiscal year. And that's that, as always, for us both, where we feel. I think Keeney.

Speaker Change #151: I also mentioned from a foodservice standpoint, we've added a good deal of capacity, we have more going in this fiscal year and thats that.

Speaker Change #151: As always for us bodes well and it's giving us some growth.

Speaker Change #151: We feel real good about the next few years coming up.

Patrick Hatcher: Thank you. Well, if you look at the same-store sales declines, you've got a $25 billion business there that's running close to 5 percent same-store sales declines. So, it takes a tremendous amount of business to make up for the same-store issues. So, we've brought on, I just don't know exactly what those numbers are, we can certainly get back to you. But we've brought on a significant amount of new business into the convenience area.

Speaker Change #152: Cheney and Jose Santiago and be a big help to that.

Patrick Hatcher: Hodulik Santiago would be a big help to that. We should be able to get it resolved, somewhat similar to what we did with Orion. I guess that would be convenient, that group of people, and I got it. And just lastly, on the inflation topic, I know that in this quarter, The Year. Food Service Inflation Accelerator from 60 Bips to close to 300, or 2.9%, just one way to get to show maybe the greatest drivers, and I think you mentioned you expected to kind of stay in that maybe 3% range into fiscal 25, but that I don't think was specific to convenience.

Speaker Change #152: We should be able to get results at least somewhat similar to what we did with our reinhart and I said like I said with convenience. We have we have a lot of confidence that group of people and what their game plan is today.

Speaker Change #152: Got it and just lastly on the inflation topic I know in this quarter.

Speaker Change #152: The.

Patrick Hatcher: And also, we've been running increases in the number of independent convenience stores that we're selling, which I think is really going to help us as we get deeper into this fiscal year. Yeah, Lauren, it's hard to see because of the same sort declines, the nicotine, what that's doing. But you really do see it in the gross profit expansion. We're bringing on better business, higher margin business, so you're getting that mixed benefit.

Speaker Change #153: Foodservice inflation accelerated from 60 bps to close to 300 or two 9% I'm. Just wondering if you could share maybe the greatest drivers and I think you mentioned you expect it to kind of stay in that maybe 3% range in fiscal 'twenty five but that I don't think it was specific to convenience and on the convenience store. It was up 7% inflation, which is obviously outside.

Lauren Silberman: Great, thank you very much.

Patrick Hatcher: And on the convenience store, it was up to 7% inflation, which is obviously outsized. Just wondering what your outlook would be for the convenience-specific channel in fiscal 25. Thank you. Yeah, so on food service, the drivers really were, like I said, some things around cheese and poultry.

Speaker Change #154: Just wondering what your outlook would be for the convenience specific travel in fiscal 'twenty five thank you.

Speaker Change #155: Yes, so on foodservice the drivers really were like I said, some things are on cheese and poultry.

Patrick Hatcher: We expect food service to kind of be in that 2-3% range for the 25. Vistar, we also expect it to be in a similar range. You know, they've continued to experience some disinflation, but we do feel like that's going to bottom out here. And then convenience will be a little higher, as they typically are.

Jeffrey Bernstein: We'll take our next question from Jeffrey Bernstein. With Barclays, please go ahead. Your line is open. Great. Thank you very much. My first question was just on the independent case growth. I think we confirmed that trends did slow for the industry and for yourselves in the fourth quarter. And I think you said it's now stable at the lower level in July.

Speaker Change #155: <unk> foodservice to kind of be in that 2% to 3% for the 25 <unk>. We also expect to be in the similar range.

Speaker Change #156: Yeah. They are continuing to experience some disinflation, but we do feel like that's been a bottom out here and then convenience it will be a little higher. They typically are we expect them to be probably the middle single digits.

George Holm: But I think you also mentioned your guidance of fiscal 25, George, something about needing improving macro to perhaps come within that six to 10 percent independent case growth target. It feels like most people are expecting further easing from a macro or consumer perspective rather than a strengthening. So I'm just wondering how you think about your guidance, whether or not you can reaccelerate your case growth in the second half of the year, whether that can be purely done on compares alone if the macro headwinds were to persist.

Speaker Change #156: It's kind of where we were targeting them for 2025 of them. They do continue to obviously get our price increases in those type of things from tobacco, but that's kind of where we're looking at but total company we have it around.

Patrick Hatcher: We will expect them to be probably in the middle, single digits. It's kind of where we were targeting them for 2025. They do continue to obviously get price increases and those type of things from tobacco. But that's kind of what we're looking at. But total company, we have it around 2-3%. Great. Thank you very much.

Speaker Change #156: Two years to 3%.

Speaker Change #157: Great. Thank you very much.

Speaker Change #156: Yeah.

Speaker Change #158: We will take our next question from Brian Harper with Morgan Stanley. Please go ahead. Your line is open.

Brian Harbour: We'll take our next question from Brian Harbour with Morgan Stanley. Please go ahead. Your line is open. Thanks. Morning, guys. George, can you just kind of think about the kind of customer difference between yourselves and the trainees in Florida. Do they kind of cover roughly the same territory today, or does it expand up into North Florida and Georgia?

George Holm: And then how to follow up. Yeah, if the macro continues, then it's going to be more difficult for us to know about that. But at the current share gains that we're making from historic standpoint, you know, we would be well above that six percent case growth if we had normal growth in the marketplace. And, you know, we don't have a crystal ball as to where things are going. But, you know, we've always found that people eat out more and the businesses almost always had some type of organic growth certainly didn't turn the great recession.

Brian Harper: Thanks, Good morning, guys.

George Holm: Just what? [inaudible] Yeah, well, they go up to North Florida out of their Port St. Lucie facility, and we handle North Florida out of Southern Georgia. So, you know, quite different. But as far as the coverage of the state goes, you know, we're both in most of the, I would say that their customer base is, Like I said, more in the non-restaurant commercial area than we are, very, very successful. Country Club, that type.

George: George can you just kind of a thing.

Brian Harper: I mean, you might have mentioned it but the kind of customer difference between yourselves and trainee in Florida do they kind of cover.

Speaker Change #160: Roughly the same territory today or does it expand up into North, Florida, and Georgia, just what's kind of the difference versus your current footprint.

George: Yeah, well they did go up to North, Florida out of the Port St Lucia facility, and we handle north Florida at a southern Georgia, So quite a difference there.

George Holm: Action, but once the economy got going again, people started eating out again. I don't know what more to really give as far as color goes there. And we can always increase our share games, but we're pre-stable right now. Understood.

Speaker Change #161: But as far as the coverage of the state were both in most of the state.

Speaker Change #162: I would say that their customer base.

Speaker Change #162: Is.

Speaker Change #162: Like I said more in the non restaurant commercial area than we are.

George Holm: And then the, I know your prior three-year guide, and this fiscal year, and I think you said you're going to have an investor day in the spring. Is it reasonable to assume that the growth rates you've seen over the past couple years would continue beyond fiscal 25, or is there the possibility that that kind of long-term algorithm shifts materially, either up or down, just wondering if you're seeing any material change in trend as we would at least gaze beyond the current fiscal year?

Speaker Change #162: Very very successful with resorts' independent hotels.

Speaker Change #163: Country clubs that type of business our business in Florida is very heavy pizza Italian <unk>.

George Holm: [inaudible] Our business in Florida is very heavy on pizza Italian and Latin. We do a lot of seafood out of Miami. The company that PFG bought, this was before we bought PFG, was a seafood only company at that time. So, you know, we've built product capability beyond a heavy seat. In Orlando, we're mostly pizza and Italian when you get to the west coast. Classified. McGill, Broadline, with a heavy dose of Italian.

Speaker Change #163: Latin.

Speaker Change #163:

Speaker Change #163: We do a lot of seafood out of Miami is a company that.

Speaker Change #163: PMT bought this was before we bought PFG was a seafood only company at that time, so we built product capability beyond seafood, but it's still a heavy seafood.

George Holm: Yeah, that's a great question. We're really excited to share with you what we will release at the investor day. I'm not going to comment on today, but I do want to, you know, just re-emphasize that our previous three-year guide, we did hit the lower end of it after two years. So we're really pleased with the growth that we've been able to achieve, and we think the guidance we've given to this next year shows our confidence and our ability to generate really strong results, and then we'll be, we'll be ready to share with you the next three years, come this spring.

Speaker Change #163: In Orlando are mostly pizza and Italian when you get to the West coast.

Speaker Change #163: Classify us as kind of a subscale broad liner.

Speaker Change #163: With a heavy pizza Italian emphasis.

Speaker Change #164: Makes sense. Thanks.

Patrick Hatcher: Um, just on the operating side, you know, I know you've kind of continued to see better Warehouse and Driver Productivity, any other specific kind of helping on the OpEx side. Yeah, I mean, It's really just OpEx leverage.

Speaker Change #164: Just on the operating expense side.

Speaker Change #166: You have kind of continued to see better.

Speaker Change #167: Warehouse and driver productivity any other specific actions that.

George Holm: Yeah, also mentioned from a food service standpoint, we've added a good deal of capacity. We have more going in this fiscal year, and that's, that has always thrust both well, and it's given us some growth. We feel real good about the next few years coming up. I think Cainy and Jose Santiago are going to be a big help to that. We should be able to get results at least somewhat similar to what we did with the Reinhardt, and I said, like I said, with convenience, we have a lot of confidence in that group of people and what their game plan is today. Got it.

Speaker Change #167: Our kind of helping on the Opex side right now.

Speaker Change #169: Yeah I mean.

Patrick Hatcher: And then also, we're just really focused on the associates and safety and making sure that they're working smart. And so, I think we've seen the Weage Pressure that we saw earlier dissipate, but all in all, it's just a combination of everyone just doing a much better job of managing that labor force and making sure we keep the temp labor and the contract labor to them. We'll take our next question, from Carla. JP Morgan. Please go ahead.

Speaker Change #169: It's really just Opex leverage and then also we're just really focused on.

Speaker Change #169: The the associates in the safety and making sure that they are working smart and so.

Speaker Change #169: And I think we've seen the.

Speaker Change #169: Wage pressure that we had seen earlier dissipate, but all in all it's just a combination of everyone just doing a much better job of managing that labor force and making sure we keep the temp labor and the contract labor to a minimum.

Patrick Hatcher: And just leftly on the inflation topic, I know in this quarter, the food service inflation accelerator from 60 bips to close to 300, or 2.9%. I was wondering if you could share maybe the greatest drivers. And I think you mentioned you expected to kind of stay in that, maybe 3% range into fiscal 25, but I don't think what's specific to convenience. And on the convenience store, it was up to 7% inflation, which is obviously outsized, just wondering what your outlook would be for the convenience-specific channel in fiscal 25.

Speaker Change #170: Thank you.

Speaker Change #170: Hmm.

Speaker Change #170: We'll take our next question from Carla Casella with JP Morgan. Please go ahead. Your line is open.

Carla Hodulik: Your line is open. Hi, I'm wondering if you gave the pro forma leverage for the two transactions and then also whether we have just two nice acquisitions here. Are you, will you put on hold your M&A, or will you continue to look for more opportunities? Yeah, so once we close Cheney, we believe we'll be, you know, our ranges of two and a half to three and a half times will be just at the end of the high end of that range of three and a half times to slightly above it, potentially depending on the exact timing. And then the way we're looking at things, again, we are very good at paying down debt very quickly.

Carla Casella: Hi, I'm wondering if you gave the pro forma leverage cause the two transactions and then also having just two nice acquisitions here.

Speaker Change #172: Well you put on hold.

Speaker Change #173: M&A or you continue to look for more opportunities.

Patrick Hatcher: Thank you. Yeah, so on food service, the drivers really were, like I said, some things are on cheese and poultry. We expect food service to kind of be in that 2% to 3% for the 25. This star, we also expect to be in a similar range. You know, they've continued to experience some disinflation, but we do feel like that's going to bottom out here. And then convenience will be a little higher.

Yeah. So on it once we close Cheney, we believe it will be a you know.

Speaker Change #174: Our range is two five to three and half times will be just at the end of the high end of that range of three and a half to just slightly above it potentially depending on the exact timing and then the way we're looking at things again, we are very good at paint.

Speaker Change #174: Paying down debt very quickly, we'll have we'll continue to have excess capacity.

Patrick Hatcher: We'll continue to have excess capacity, so we'll continue to look at opportunities, especially if they're very strategic, as George mentioned, going forward. Good, thank you. And we'll take our next question from Jake Bartlett with Truist. Go ahead, your legs.

Patrick Hatcher: They typically are. We will expect them to be probably in the middle single digits. It's kind of where we're targeting them for 2025. They do continue to obviously get price increases and those type of things from tobacco. But that's kind of what we're looking at. But total company, we have it around 2% to 3%.

Patrick Hatcher: Great. Thank you very much.

Speaker Change #174: So we will continue to look at opportunities, especially if they're very strategic as George mentioned I'm going forward.

Speaker Change #175: Okay. Thank you.

Speaker Change #176: And we will take our next question from Jake Bartlett with Truth Securities. Please go ahead. Your line is open.

Jake Bartlett: Rayne, thanks for taking the question. You know, mine was on the macro environment and how that plays into your guidance. At Investor Day, you framed your three-year outlook kind of with a slight recession, normal, maybe with a better macro environment. Is that a fair way to kind of frame your guidance for 2025? Meaning, if we stay in the current, you know, pressures that you'd be at the low end, you know, is that or but, you know, things improve, then you go to the high end. Is that the right way?

Great. Thanks for taking the question.

Jake Bartlett: On the macro environment and how that plays into your guidance.

Brian Harbour: We'll take our next question from Brian Harbour with Morgan Stanley. Please go ahead, your line is open. Thanks, morning guys.

Speaker Change #178: Investor Day, you framed your three year outlook kind of.

Speaker Change #179: With a slight recession normal maybe with with a better macro environment is that the fair way to kind of frame your guidance for 25, meaning if we stay in the current.

George Holm: George, could you just kind of think, you might have mentioned it, but the kind of customer difference between yourselves and trainee in Florida. Do they kind of cover roughly the same territory today, or does it expand up into North Florida and Georgia, just what's kind of the difference versus your current footprint? Yeah, well, they go up to North Florida out of their Port St.

George Holm: Lucie facility, and we handle North Florida out of Southern Georgia, so, you know, quite a difference there. But as far as the coverage of the state, you know, we're both in most of the state. I would say that their customer base is, like I said, more in the non-restaurant commercial industry.

Speaker Change #179: Pressures that you'd be at the low end.

Speaker Change #180: Is that or but if things improve then you go to the high end is that the right.

Patrick Hatcher: Is there a reproof there in terms of your, you know, outlook on the environment in terms of that range? Jake, I would say, you know, there's been a lot of discussion about the macro in a certain way that we see some softness. But really, that's why we talked about Q1 being a little slower out of the gate than Q2 through Q4 in our guidance. And that's what we've really incorporated into the guidance that we've provided.

Speaker Change #181: Is there a read through there in terms of your.

Speaker Change #181: Outlook on the environment in terms of that range.

Speaker Change #181: Yeah, Jake I would say.

Speaker Change #182: There's been a lot of discussion about the macro and certainly we as we've said we see some softness but really that's why we've talked about Q1 being a little slower out of the gate in Q2 through Q4, and our guidance and that's why we really are incorporated into the guidance that we've provided.

Patrick Hatcher: You know, and so I think that gives you a general sense of how we're looking, Okay. And then, you know, Irving the call is mentioned kind of timing differences, you mentioned that the cadence, but is that really the major input or what are other big, big moving pieces there, whether it's the new accounts wins with, with chains and convenience, maybe some, some cost, you know, comparisons that we should be mindful of as we go throughout the year any, what are the other big timing impacts that will drive the cadence for both top and bottom one?

Speaker Change #182: And so I think that gives you a general sense of how we're looking at things.

Patrick Hatcher: So, in this area than we are, very, very successful with resorts and independent hotels and country clubs, that type of business. Our business in Florida is very heavy piece of Italian Latin. We do a lot of seafood out of Miami, the company that the PFG bought, this is before we bought PFG, was a seafood only company at that time, so, you know, we built product capability beyond seafood, but it's still a heavy seafood in Orlando where mostly pizza and Italian when you get to the West Coast.

Speaker Change #183: Okay, and then earlier in the call as mentioned kind of timing difference that you mentioned that the cadence, but is that really the major input or are there what are the other big.

Speaker Change #184: Big moving pieces, there, whether it's so new account wins with whats changed and convenience maybe some some cost.

Speaker Change #184: Comparisons that we should be mindful of as we go throughout the year what are the other big timing.

Speaker Change #185: <unk> impacts.

Speaker Change #186: That will drive the cadence for both top and bottom line.

Patrick Hatcher: Well, there's this, you know, one thing, again, also in Q1, the Olympics just wrapped up, but they had an incredible viewership. The Olympics tend to keep people at home and not out in restaurants.

Speaker Change #186: Well, there's just.

Speaker Change #186: One thing again also in Q1.

The Olympics is wrapped up.

Speaker Change #186: That is an incredible viewership Olympics tends to keep people at home and not out to the restaurants are already seeing some of that and we also for our concepts are concepts in general that you rely on media to drive foot traffic with the election coming up in the heavy spend in media that elections do.

Patrick Hatcher: I would classify this kind of a sub-scale broad liner with a heavy piece of Italian emphasis. Just on the operating side, you know, you've kind of continued to see better warehouse and driver productivity, any other specific actions that are kind of helping on the op-x side right now? Yeah, I mean, it's really just op-x leverage and then also we're just really focused on the associates and safety and making sure that they're working smart.

Patrick Hatcher: We've seen some of that. And we also, for our concepts, our concepts in general, that rely on media to drive foot traffic. With the election coming up and the heavy spin in the media that elections do, there's always a little bit of difficulty getting your message out if you're a concept to drive foot traffic. Outside of those two things, you know, really, I think we've covered most of the other issues.

Speaker Change #187: Theres always a little bit of.

Speaker Change #187: Difficulty you get your message out if you're a concept to drive that foot traffic.

Speaker Change #187: Side of those two things.

Really I think we've covered most of the other issues, there's nothing that we've.

Patrick Hatcher: There's nothing that's included in the guidance outside of the... Yeah, we try to take everything into account when we give guidelines, who get a tremendous amount of input from our people in the field. And then we try to be real cautious. I think we have a long history of being very cautious with our guidance.

Speaker Change #187: Included in the guidance outside of those things.

Speaker Change #187: Trying to take everything into account when we give guidance.

We get a tremendous amount of input from our people in the field and then we try to be real cautious I think we have a long history of being very cautious.

Patrick Hatcher: And so, and I think we've seen the wage pressure that we've seen earlier, dissipate, but all in all, it's just a combination of everyone just doing a much better job of managing that labor force and making sure we keep the temp labor and the contract labor to a minimum.

Speaker Change #187: With our guidance and we understand it's a slow macro we're going through it we've just gone through this for two quarters and I think that.

George Holm: We understand it's a slow macro, we're going through it, we've just gone through it for two quarters, and I think... If we continue to gain the shares we are... with the guidance, the upside would be if the macro does improve as we expect. You know, we don't have any better crystal ball than you do. We just have confidence around the way in which we get to a guy.

Speaker Change #187: If we continue to gain the shares we are we're in good position with the guidance, we've given the upside would be if the macro does improve.

Patrick Hatcher: Thank you. We'll take our next question from Carla Casela with JP Morgan, please go ahead, your line is open. Hi, I'm wondering if you gave the pro form of leverage for the two transactions and then all having just two nice acquisitions here, are you, will you put on hold your M&A or you continue to look for more opportunities? Yeah, so once we close Cheney, we believe we'll be at, you know, our ranges two and a half to three and a half times will be just at the end of the high end of that range of three and a half to slightly above it, potentially depending on the exact timing.

Speaker Change #187: And we expect it to improve but we don't have any better crystal ball than you guys do so.

Speaker Change #187: But we have a confidence around the way in which we get to a guidance number.

Speaker Change #187: Yeah.

George Holm: Great. And George, could you just go into maybe a little more detail on the convenience business, which is seeing some headwinds? I think historically, we would have thought of the convenience business as being a little more macro, insulated to macro pressures than it has proven to be, in its unique environment. But how do you view the state of the business? What's the path forward?

Speaker Change #187: Great.

George: George could you just go into maybe a little more detail on the convenience.

George: Business seeing some headwinds we just.

George: Sure if we would have thought of convenience.

Speaker Change #188: A little more macro insulate influenza the macro pressures than it has proven to be a unique environment, but what do you view the state of the business, what's the what's the path forward, what's the path out in terms of.

Patrick Hatcher: And then the way we're looking at things, again, we are very good at paying down debt very quickly, we'll continue to have access capacity. So we'll continue to look at opportunities, especially if they're very strategic as George mentioned, going forward.

Speaker Change #189: Trends in that business, improving whether it's just the passage of time or or what how do you feel about the kind of the intermediate term and the near term in the convenience business and what are the drivers to that.

George Holm: What's the path out in terms of, you know, trends in that business improving, whether it's just the passage of time? Or, you know, how do you feel about the kind of intermediate term, in the near term, in the convenience business? And what are the drivers for that?

George Holm: Oh, we sell a lot of stores, a lot of boxes, and we're getting better and better at the food service part of it, where the margins are better, so that gives me a good deal of confidence, and there's price sensitivity, there's price sensitivity all through the food area of the business, and I don't. I can't think of a time when a Vistar and a Cormark faced competition from basically everything they sell having significant prices. And We're working our way through that. And, you know, they're not big purchases, but they're still purchases when people are very price conscious, and they take that into account.

Speaker Change #189: Oh.

Speaker Change #190: We sell a lot of a lot of stores a lot of boxes out there.

Speaker Change #190: And we're getting better and better at the foodservice part of it where the margins are better. So that gives me a good deal of confidence.

Jake Bartlett: Thank you. And we'll take our next question from Jake Bartlett with Truist Securities. Please go ahead. Your line is open. Thanks for taking the question. You know, mine was on the macro environment, how that plays into your guidance. At the investor day, you framed your three-year outlook kind of with a slight recession normal. Maybe with a better macro environment. Is that the fair way to kind of frame your guidance for 25, meaning if we stay in the current, you know, pressures that you'd be at the low end?

Speaker Change #190: And there is price sensitivity price sensitivity in all through the food area of the business right now and I don't.

Speaker Change #190: I can't think of a time, where this star in our core Mark have faced basically everything they sell having significant price increases.

Speaker Change #190: And we're working our way through that and.

Speaker Change #190: Not big purchases, but theres still purchases that when people are very price conscious state.

Jake Bartlett: Is that or, but you know, things improve than you go to high end? Is that the right way? Is there a re-proof there in terms of your, you know, outlook on the environment in terms of that range? Yeah, Jake, I would say, you know, there's been a lot of discussion about the macro and certainly we've said that we see some softness. But really that's why we talked about Q1, you know, little slower out of the gate than Q2 through the Q4 and our guidance. And that's why we've really incorporated into the guidance that we've provided. And so I think that gives you a general sense of how we're looking at things.

Speaker Change #190: They take that into account.

George Holm: Now, we just look at it as a very healthy business. It's been healthy for a long time and will continue to be. We certainly won't see growth in nicotine.

Speaker Change #191: Uh huh.

Speaker Change #191: We just look at it as a very healthy business, it's been healthy for a long time, and we will continue to be we certainly won't see.

Speaker Change #191: Growth to nicotine.

George Holm: But we're going to see good growth in the store and good growth. And Jake, all the saddest we've talked about, we're in all the key categories and convenience we are seeing that we're taking market share, so we're operating very well, and we're focused on the areas that are growing fast, service in that. Great. I appreciate it. Thanks.

Speaker Change #191: But we're going to see good growth in <unk>.

Speaker Change #191: The store and good growth in foodservice.

Speaker Change #191: And Jake I'll, just add as we talked about we're in all the key categories and convenience. We are seeing that we're taking market share. So you know, we're operating very well and we're focused on the areas that are growing the fastest which is the food and food service in that space.

George Holm: Okay. And then, you know, earlier in the call is mentioned kind of timing differences. You mentioned the cadence, but is that really the major input or are there other big, big moving pieces there, whether it's the new accounts wins with with chains and convenience, maybe some, some cost, you know, comparisons that we should be mindful of as we go throughout the year. What are the other big timing impacts that will drive the cadence for both top and bottom line?

Speaker Change #192: Great I appreciate it.

Speaker Change #192: Thanks.

Speaker Change #192: And there are no further questions on the line at this time, so I'll turn the call back to Bill Marshall for any closing remarks.

Bill Marshall: There are no further questions on the line at this time, so I'll turn the call back to Bill Marshall for any closing remarks. Thank you for joining our call today. If you have any follow-up questions, please contact us at Investor Relations. This does conclude today's program. Thank you for your participation, and you may disconnect at any time.

Bill Marshall: Thank you for joining our call today, if you have any follow up questions. Please contact us at Investor Relations.

Speaker Change #193: This does conclude today's program. Thank you for your participation and you may disconnect at any time.

Speaker Change #193: [music].

George Holm: Well, there's just, you know, one thing again also in Q1, you know, the Olympics just is wrapped up, but you know, they had an incredible viewership. Olympics tends to keep people at home and not out to the restaurants. We've seen some of that. And we also, for our concepts or concepts in general that rely on media to drive foot traffic with the election coming up in the heavy spin and media that elections do.

Bill Marshall: Great. Thank you for your participation.

George Holm: There's always a little bit of, you know, difficulty to get your message out if you're a concept to drive a foot traffic outside of those two things. You know, really, I think we've covered most of the other issues. There's nothing that we've included in the guidance outside of those things. Yeah, we try to take everything into account when we give guidance. We get a tremendous amount of input from our people in the field.

George Holm: And then we try to be real cautious. I think we have a long history of being very cautious with our guidance. We understand it's a slow macro, we're going through it. We've just gone through it for two quarters. And I think that if we continue to gain the shares we are, we're in good position with the guidance that we've given. The upside would be if the macro does improve. And we expect it to improve, but, you know, we don't have any better crystal ball than you guys do. But we have a confidence around the way in which we get to a guidance number.

George Holm: Great. And George, could you just go into maybe a little more detail on the convenience, you know, business, seeing some headwinds. I think historically we would have thought of the convenience business and seeing a little more macro. Inflated to the macro pressures than it has proven to be its unique environment. But, you know, what do you view the state of the business? What's the, what's the path forward? What's the path out in terms of, you know, trends in that business.

George Holm: Improving whether it's just the path to time or, you know, what, how do you feel about the kind of the intermediate term in the near term in the convenience business and, you know, what are the drivers to that? Oh. We sell a lot of stores, a lot of box foods out there, and we're getting better and better at the food service part of it, where the margins are better, so that gives me a good deal of confidence.

George Holm: And there's price sensitivity, there's price sensitivity in all through, you know, the food area of the business right now. And I don't, I can't think of a time where a Vistar in a cornmark have faced basically everything they sell having significant price increases. And we're working our way through that, and, you know, they're not big purchases, but they're still purchases that when people are very price conscious, they, you know, they take that into account, you know, we just look at it as a very healthy business, it's been healthy for a long time, and we'll continue to be, we certainly won't see growth in nicotine, but we're going to see good growth in the store, and good growth in food service.

George Holm: And Jake, how does that is we talk about, we're, we're in all the key categories and convenience, we are seeing that we're taking market share, so, you know, we're operating very well, and we're focused on the areas that are growing the fastest, which is the food and food service in that space.

Jake Bartlett: Great, I appreciate it.

Operator: Thanks.

Bill Marshall: And there are no further questions on the line at this time, so I'll turn the call back to Bill Marshall for any closing remarks. Thank you for joining our call. Today, if you have any follow-up questions, please contact us at Investor Relations. This does include today's program.

Operator: Thank you for your participation, and you may disconnect at any time.

Operator: Great, thank you.