Good day, and welcome to PFG's Fiscal Year Q1 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 one key 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. Thank you, and good morning. 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 first 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 GAAP and non-GAAP 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. 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. Now, I'd like to turn the call over to George. Thanks, Bill. Good morning, everyone, and thank you for joining our call today. I'm pleased to share our strong first quarter fiscal 2024 results with you today, highlighting our business momentum, which continues despite a range of macroeconomic factors. As you saw in our release this morning, our top-line performance was just below the top end of the guidance range we laid out in August, and our adjusted EBITDA was above the top end of our guidance range. Our results show our company's ability to perform at a high level through a range of economic scenarios, and we expect this to continue going forward. Once again, we are very pleased with our independent restaurant case growth, which was 7.6% in the quarter as we continue to add new accounts and grow our share in this important channel. We recognize the economic backdrop is a dominant factor in the investment decisions that each of you make on a daily basis. In a moment, I will address a few of these items and share our view on the current state of the food service distribution industry. But first, I want to discuss PFG's strategic focus and reasons that we believe our company will thrive in the years ahead. PFG has evolved significantly since we went public in 2015. We have added new lines of business, broadened our end market channels, and added products and services to capture market share in the large food away from home industry. This shift has been deliberate, and we believe it positions PFG to grow both our top and bottom line for years to come. Our food service business has built scale and breadth in an effort to elevate our independent restaurant sales. We have, and continue to invest in our sales force and build new capacity to allow for a long-term market share gains, which has proven to be a winning strategy. In a moment, Patrick will provide more details on our strong results in the independent restaurant business. Vistar has adapted with the market and continued to reinvent itself. From an organization that largely served the vending machine industry, Vistar now sells a wide range of unique products, servicing more than 10 distinct channels. These products range from the traditional candy, snacks, and beverages that Vistar has always sold and have expanded to include healthy alternatives like protein bars and prepared food, as well as health and beauty aids, non-food packaging, and impulse purchases, and a range of beverage options. The expansion of Vistar's product offerings has allowed for a significant increase in channel distribution opportunities. We are particularly excited about the opportunity we see in the micro market area, which has been growing substantially. The micro market concept allows for a wide range of product offerings and is benefiting from a structural market shift towards this retail format. We believe that Vistar is well positioned to fully capitalize on this opportunity. Fulfillment is another area where we see significant growth potential. We have invested in facilities that are equipped with automation that allows us to efficiently ship small parcels directly to customers and consumers. For suppliers, this is a beneficial partnership, allowing Vistar to manage the last mile distribution of a range of products. We believe this is an opportunity with significant runway for growth for Vistar. All our facilities servicing this market are currently operating at margins above Vistar's average. The ability to produce above average margins is driven in part by a portion of the business that is priced on a fee basis. With many of the supplier partners, we do not take financial ownership of the product, producing very high EBITDA margins. Over time, we expect scale efficiencies to improve these margins further. We have a plan to expand our capacity into additional sites that will allow us to achieve one-day shipments to most of the continental United States. Finally, we are extremely excited about the opportunity that Core-Mark has brought to PFG. The convenience store landscape is undergoing a shift away from traditional tobacco products towards more options in food and beverages. Our broad expertise in food, food service, and immediate consumption is combined with Core-Mark's knowledge and relationship with the convenience industry.... This partnership, which spans all of PFG's operating segments, is expected to provide a long period of market share gains with both top and bottom line growth. The convenience backdrop has been somewhat softer over the past few quarters. Still, we are very pleased with the adjusted EBITDA results Core-Mark has achieved. Importantly, Core-Mark's top-line performance has exceeded the industry growth rate in many key categories, including significant outperformance in the food service and snack categories. The pipeline of new business opportunities remains significant, and we expect to add new customer accounts at a steady rate over many years. Historically, PFG is a company that has not only been resilient in difficult times, but has improved during periods of stress. The pandemic was a clear example of this, during which time we gained more market share than we typically would over a multi-year period. While we would all prefer a smooth operating environment, we do not shy away from moments of volatility. Rather, we view it as an opportunity to get stronger, solidify our position as a market leader, and propel our business to new heights. It is no coincidence that our company has seen some of the largest market share increases during periods of disruption, including prior recessions and the COVID pandemic. With that, let's take a moment to put the current macroeconomic backdrop in focus and discuss how we expect to navigate short-term factors influencing the food away from home market. I will walk through our thoughts on the health of the consumer, foot traffic trends, and the impact from inflation and deflation. There has been much discussion about the health of U.S. consumers and their willingness and ability to purchase food away from their home. Despite significant discussion of a potential drop-off in consumer demand, we have not seen that materialize to date. With that said, there are pockets of the business where purchase behavior is somewhat softer than what is typical, including the traffic at convenience stores I just mentioned. This dynamic is a natural reaction to the significant level of inflation that hit the market. In fact, even the rapid price increases for nearly all products and services that run through our economy, the consumer has proven to be more resilient than many would have predicted at the start of the calendar year. While headline inflation has been slow to move lower, we have experienced deflation in our food service segment over the past two quarters. Through this time, we have demonstrated our ability to show growth and adjusted EBITDA margin expansion despite these deflationary pressures. Through a combination of the work our sales force executes on pricing, along with the continuation of the significant positive mix shift to independent restaurants, these deflationary pressures have been very manageable. We would expect this trend to continue if deflation were to persist. However, we are pleased to see deflation lessen and move towards a more neutral position. In fact, trends in the commodity market, particularly the deflationary areas of proteins, has played out just as anticipated, with lower levels of deflation sequentially in both August and September. If this dynamic continues, as we expect, food service will likely be back to slightly inflationary at the beginning of the calendar year, which is our fiscal third quarter. By the end of the fiscal year, we expect food service inflation to be back to a healthy, low single-digit pace. I'm going to turn it over to Patrick, who will discuss our results and specific drivers of performance, and then provide more color on our guidance for fiscal 2024 and beyond. I want to leave you with a few key themes. First, we believe PFG is very well-positioned in the large and growing food away from home market, with exposure across nearly all channels and product offerings. Second, the consumer remains resilient despite multiple years of above normal inflation. And finally, our company has weathered difficult economic conditions in the past and has grown stronger during periods of volatility. Our view is that the market is stable, and PFG continues to evolve and grow by investing in our people and assets in our effort to produce long-term shareholder value. We're excited for what the future holds and appreciate your interest in Performance Food Group. I'm now going to turn it to Patrick. Thank you, George, and good morning, everyone. As George mentioned, on behalf of our 35,000 associates, we're excited and proud to share the strong start we had to our 2024 fiscal year with the first quarter results we announced this morning. I'd like to start this morning by reviewing our outlook for fiscal 2024 and beyond. I'll then review our financial performance and some of the specific drivers across the three segments. I'll conclude with PFG's financial position and capital allocation priorities before turning to the Q&A portion of the call. As you saw in our press release this morning, we announced guidance for the fiscal second quarter and updated our full year and long-term outlooks. For the second fiscal quarter of 2024, we expect net sales to be in the range of $14 billion-$14.3 billion and adjusted EBITDA to be in a range of $325 million-$345 million. A couple of thoughts on what is embedded in our fiscal second quarter outlook. First, we expect the food service segment to continue to experience mild deflation in the quarter, though moving towards flat as we enter the fiscal third quarter. Second, on a total company basis, we will no longer experience the difficult inventory holding gain comparison, as these gains largely normalized in last year's fiscal second quarter. With that said, on a segment basis, Vistar will have a large inventory holding gain comparison in 2Q, which we expect to be reflected in the year-over-year growth rate for Vistar's adjusted EBITDA. Underlying business results for Vistar remain very strong, and we expect nice profit growth from that segment when we reach the back half of the fiscal year. For the full fiscal year, we continue to look for net sales to be in a range of $59 billion-$60 billion. We now expect adjusted EBITDA to come in at the upper end of our previously announced $1.45 billion-$1.5 billion range. We are essentially flowing through the upside from our 1Q 2024 adjusted EBITDA performance, which was above the upper end of the outlook we announced with 4Q 2023 earnings. This outlook assumes deflation to persist in the food service segment through the fiscal second quarter, rising to flat to up slightly in the back half of the fiscal year. For Vistar and Convenience, we anticipate decelerating inflation through the remainder of the fiscal year, reaching a steady state in the low to mid-single digit range by the end of the fiscal year. Our inflation assumptions have not changed from what we discussed last quarter, and inflation dynamics have played out largely as we anticipated. We are reiterating our long-term outlook, which projects net sales to be in a $62 billion-$64 billion range in fiscal 2025. Adjusted EBITDA is expected to be within a $1.5 billion-$1.7 billion range in fiscal 2025. With that said, we continue to see upside to our fiscal 2024 results as reflected in our updated outlook, and we are increasingly confident that we will be comfortably within the adjusted EBITDA range in fiscal 2025. As you can see from our outlook for the next two fiscal years, we are confident in PFG's current trajectory and believe that our business is on solid footing. Let's review some of the highlights from our fiscal first quarter and underlying drivers of our performance. In our first fiscal quarter of 2024, PFG generated total net sales of more than $14.9 billion, a 1.5% increase year-over-year. Our sales performance was driven by a 2.6% increase in total case volume growth. Our case performance is particularly strong in our highest margin channels, including independent restaurants and several of Vistar's end markets. Independent restaurant cases increased 7.6% in the fiscal first quarter, another outstanding result that reflects market share gains in that important part of our business. Once again, our independent case growth was due to new account wins, which increased 7.5% in the period. Importantly, while our chain volume was down modestly in the quarter, the rate of decline was sequentially better in 1Q 2024 compared to the fourth quarter of last fiscal year. We will continue to run our chain business by partnering with strong and growing chain accounts. Total PFG gross profit increased 5.6% in the fiscal first quarter to $1.7 billion. We continue to show nice gross profit performance and margin expansion due to a positive mix shift across our businesses. Our gross profit performance in the quarter reflects our ability to produce solid profit growth despite a deflationary environment in the food service segment. Gross profit per case was up $0.19 in the first quarter compared to the prior year's period. In the first quarter, PFG reported net income of $120.7 million, a 26% increase year-over-year. Adjusted EBITDA increased about 8% to approximately $384 million. Diluted earnings per share in the fiscal first quarter was $0.77, and adjusted diluted earnings per share was $1.15, a 24% and 6.5% increase year-over-year, respectively. Total company inflation continues to moderate due to deflation in the food service segment and slowing rates of year-over-year inflation in both Vistar and Convenience segments. Total cost inflation was 3.1% in the fiscal first quarter. The deceleration was driven by our food service segment, which experienced 2.3% deflation in the fiscal first quarter. Vistar inflation continued to trend lower in the quarter, though still remains elevated compared to historic norms and finished the quarter in the high single-digit range. Directionally, the convenience segment is experiencing a similar dynamic, showing high single-digit inflation in the fiscal first quarter. I'd like to conclude our remarks today with some thoughts on our financial position, including our cash flow generation, balance sheet, and capital allocation priorities. PFG continued to generate healthy operating and free cash flow in the quarter. Operating cash flow was $87.1 million in the first three months of fiscal 2024. This was a very strong result that included some additional investments in inventory towards the end of the quarter. In particular, we had a large tobacco buy in September. As you're aware, we periodically build inventory in certain products, including tobacco and candy, and then sell that inventory through the subsequent quarter. We expect to see positive cash flow generation in future periods from the sell-through of this tobacco inventory. After investing $53.2 million in capital expenditures, PFG generated $33.9 million of free cash flow. Investing in our business remains the top priority for our company. This primarily includes growth projects to build additional capacity to support our long-term growth aspirations. For example, we are very excited to have opened the new food service facility in our home Virginia market. We believe that investments like these will generate significant returns over time, adding to our top line growth while making our company more efficient. After capital expenditures, we have three main uses for our additional cash flow, including M&A, leverage reduction, and share repurchases. We evaluate these decisions based upon the value we believe each would create for our shareholders and strategically deploy capital against this view. Our share repurchase program considers the value of our stock, as well as the relative valuation compared to historic levels. In the fiscal first quarter, PFG repurchased 500,000 shares for a total of $28.1 million. Subsequently, in fiscal October, the company repurchased approximately 500,000 shares for a total of $27.9 million, which is an average cost per share of $55.69. We are confident in our long-term prospects and reflect this through our share repurchases. We also continue to look at strategic M&A as another avenue of shareholder value creation. We are proud of PFG's track record of continuing integrating acquisitions throughout our history. With the exception of small, immaterial deals, we have not completed larger scale M&A since the close of Core-Mark just over two years ago. The team is working as hard as ever to identify interesting opportunities while remaining disciplined on price and strategic fit. We credit our past success in M&A largely due to our due diligence process, and we are unwavering in our methodology. We believe that this process has become increasingly more important in the current interest rate environment. Finally, we have focused our efforts on maintaining a healthy balance sheet. We have been right at the midpoint of our 2.5 x- 3.5 x net debt to adjusted EBITDA target for several quarters and feel very comfortable in this range. We closed the fiscal first quarter, again, right at the midpoint of the target range. We also carefully consider the balance between fixed rate and floating rate debt, and use interest rate swaps to convert a portion of our ABL balance to a fixed rate. At the close of the fiscal first quarter of 2024, 76% of our total outstanding debt was at a fixed rate, including these swap contracts. We believe our current level of debt provides ample flexibility to fund our ongoing operations while leaving room for the capital allocation priorities I just highlighted. To summarize, PFG started fiscal 2024 with a strong first quarter, and we feel increasingly confident in our ability to deliver strong results over the next 2 years, as shown by our outlook. We believe our business is well-positioned to achieve strong results despite changes in the macroeconomic environment, and we are investing in long-term success for our organization and our shareholders. 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. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one if you would like to ask a question. We have our first question from Edward Kelly with Wells Fargo. Hi, hi, guys. Good morning. Nice quarter. Thanks, by the way, for all the color, you know, around the various, the various gives and takes. So George, I wanted to follow up on the macro, I guess, part first. Can you just maybe talk a little bit more about the cadence of the growth in the case volume during the quarter, especially the independents? You started off pretty hot, in that department, which you mentioned last quarter. Just curious how things sort of played out since then, and then what you're seeing so far in, you know, in the second quarter. Then just thoughts, you know, as it pertains to the guidance, how you're thinking about case volume trends, and the sustainability of what you're seeing today through the rest of the year. Yeah, we, we started the fiscal year off very strong, particularly in our independent business. We had. I think we were 7.8, I think, the quarter before, and, we were just slightly under nine in July. In the month of August, we were only slightly over six, and then in September, it came back to that mid-7s. I think all in all, I mean, we would like to have been stronger, obviously, but I do like the consistency that we're seeing now versus kind of that COVID period where, you know, you could have a three one week and a 14 the next, and it was, you know, very volatile. As far as guidance, you know, we think where we're at now is, is probably about where we're gonna stay. We didn't, we did that with 7.6 increase in cases, but 7.5 increase in customers. So we're still not seeing good growth right at the customer level, and that's in spite of selling more SKUs to the customers than we were selling to them a year ago. So it just shows me, you know, at that restaurant level, there's still some softness. ... We do expect to see our national account business be better as we get further into the year. We thought that last year, too, and it didn't materialize, but we're pretty confident right now that as we get to the back half of the year, we're gonna see some case growth in national. Just a follow-up. If we look at gross profit dollar growth, and you back out that procurement, you know, headwind, gross profit dollars were probably up, I don't know, 7%, you know, touch around that, maybe, on just under 3% case growth. A couple things here. You mentioned cost of goods sold optimization even before mix in the press release. Can you talk a little bit about what that is, sustainability of that? And then as we have, you know, inflation come back into the business into the back half of the year, talk a little bit about how that impacts that relationship across the gross profit dollar growth versus volume growth. Well, I think inflation's our friend. Not when it gets too high, it just has too much of an impact on the macro. But we tend to be able to continue running the margins in an inflationary environment that we do even when it's slight deflation, that tends to help us. Most of our margin growth that we had in the quarter over the previous year really had to do with mix. The mix within each one of the businesses, and of course, the case growth being so much better and independent and our margins being better there. And that should continue for really the fiscal year. We've got a little headwind in inventory gains last year to go up against Vistar in Q2, but it's not anywhere near what we've dealt with in the quarter that we just ended, particularly in our Core-Mark business. Yeah, Ed, I'll just add real quick. You know, if you think about what we've explained as our strategy around margin expansion, you know, independent cases, but also, penetration with brands, growing the Vistar channels, food and food service into convenience, all those are really working very well for us. Great. Thanks, guys. Good luck this quarter. We have our next question from Mark Carden with UBS. Good morning. Thanks so much for taking the questions. So, to start another question on the independent business, are you guys surprised at the resiliency of this customer set? Do you think there's much of a benefit for more normalized peak hour labor at independent restaurants? And then also within your independent business, where are you seeing shifts in demand? Yeah, as far as being surprised, I think when you look at the restaurant industry right now, and you hear a lot that it's that it's slower, and it is certainly the information that we get, transactions are down, but people are spending more money in restaurants than they did a year ago. Now, that's led by menu inflation. So it's just kind of an odd time where we're experiencing this inflation in the menu, but we're experiencing, in food service, a deflation on our product. And I think that's just because it took restaurants a while to get those price increases in. I think some were afraid to raise their price, which is understandable, and some prices were going so quickly, they didn't wanna undershoot. I actually think some overshot because they didn't expect this deflation to come. I don't look at the restaurant industry as being slow or the consumer backing off from restaurants because they are spending more money than they were before. As these menu prices get more accepted, I think we're gonna get back in that position to where traffic comes back. Got it. And then as I follow up on the salesforce build, at this stage, are you still expecting to add many more additional salespeople, or is that largely done at this point? And then how should we think about how long it can take for these new salespeople to reach their full productivity? How much of a, of a tail is there? Yeah, because we felt like we got behind during the pandemic, we did go through a period of a few months where we actually had 10% more salespeople than the previous year. And right now, if you look at the three different numbers, you know, we're around 7.5 case growth, we're around 7.5% increase in customers, and we're about 8% in our number of salespeople. And I think that for us, 8% is strong. It's not what we've typically done in the past. We'll probably come down off of that number some. And we have such a wide variance, and you'd asked about how long it takes them to start to be more productive. We have such a wide variance. We have people that come to us with no experience in the industry, and it might take them a couple of years. And we have people that come with a great deal of experience, often with a non-compete, but they tend to do well fairly quick. And certainly after a non-compete expires, they tend to do really well. So I would say that we're probably hiring more people today that are coming in without the direct experience in the industry as a salesperson, so it's gonna be more in that year to two. Now, that's not a big expense that we'd be bringing on because we have that cadence of where we've been doing that for a long time. So as long as people are clicking after that period of time, it doesn't really affect our expense ratios. Makes sense. Thanks so much, and good luck. Thanks. ... And we have our next question from Kelly Bania with BMO Capital Markets. Good morning. Thanks for taking our questions. I wanted to go back to just the independent customer case growth, which clearly remains strong here, but it sounds like it's being driven largely by new account growth. Can you just talk a little bit about, is that new openings? Is that customers switching to PFG? Just trying to understand a little bit beneath the driver of that new account growth. Well, a good bit of it is new accounts that are opening. There were a lot of vacated, not anywhere near what people expected, but there were a lot of vacated buildings, and they're single-purpose buildings, and it's just taken a little longer for some of them where they're remodeling and, you know, making changes to the box. And I think that's caused some of the softness at the store level. When you've got new places opening and people like to go to new places, and I think that that's probably just still results of going through a pandemic. And then, I'd like to think that we're always getting new customers that are just switching distribution, but I would say that in today's world, a lot of it is new accounts, new openings. Okay, that's, that's helpful. And then maybe just wanted to talk about convenience a little bit. I think there were two comments in the release, one about a strong pipeline of new business. So I was wondering if you could just talk about what that looks like. Is there a big RFP kind of cycle coming up here, or just where you're seeing opportunities in new business? And then there was also a comment about leveraging the PFG platform, and maybe just an update on the extent to which convenience and Core-Mark are really leveraging PFG's platform at this point, and how that could continue to evolve. Okay, we've been showing very good growth in our convenience food service business, and remember, some of that's being delivered at a Performance Foodservice warehouse. It's not out of a Core-Mark warehouse. So we have these, what we call turnkey programs. We have them in several type of cuisines, and some of that is stocked in a Core-Mark company based on the amount of available freezer and cooler that they have. In some instances, in that market, it's only at Performance Foodservice, and some instances it's at both. And that's the way we're gonna go to market probably for the foreseeable future. We don't see ourselves, you know, adding a lot of freezer and cooler space to those Core-Mark buildings. We've seen some slowness in convenience, and we think a lot of that has to do with fuel prices, just inflation in general, as customers are getting used to higher price points. We have not seen coffee and breakfast come fully back from the pandemic at this point. And if you look at the Core-Mark business, it actually had a very good quarter. Not big case growth. We have a very large customer that's gone through some changes and is experiencing some pretty good declines, so that's had an impact. But without those inventory gains, if we were to take those and equalize them, the two years, Core-Mark would have had a double-digit increase in EBITDA. They're doing very well, and they've actually done the best job of our businesses as far as getting productivity in warehousing and transportation back to pre-COVID numbers. We have not been able to do that yet in our food service business or our Vistar business. Thank you. Yeah. Thanks, Kelly. Our next question comes from Brian Harbour with Morgan Stanley. Yes, thank you. Good morning, guys. Just to follow up on one of your earlier comments, George, I think in the food service business, you had a little bit shy of 7% growth in operating expenses. At this point, is that, is that mostly driven by what you mentioned, which is just more salespeople? Or could you talk about, you know, some of the puts and takes in other buckets of operating expense? Yeah, I would say there's three things there. The first would be the increased sales force. It's unusual for us to, you know, be between 8% and 10% more salespeople, so that's been an expense. Productivity, although improved, it's not back to pre-COVID levels or I guess what we would call acceptable levels. And then the mix of business that's different. You know, national account comes with lower operating expenses, particularly in the sales side, but just lower operating expenses from bigger deliveries tend to have a little bit better density. And that mix is just more cost that it takes to handle an independent customer. But as far as our expense ratios in general go, we feel real good about them. Okay, thanks. And just also on the C-S tore side- You know, in the past, you've sometimes talked about kind of the growth in food in that channel versus the declines in tobacco, or are you willing to talk about what that was this quarter? And, you know, is the softness kind of primarily a function of fuel prices like you mentioned, or do you think that there's, you know, other specific areas of C-S tore products that people have pulled back on? Well, I think it's two things. You know, obviously, the inflation and, and the cost of fuel have an impact, but I also think it's that morning day part that has not really come back to, to pre-COVID levels. And, but we-- you know, we've made some changes to our business where we're gonna be, better prepared for both coffee and breakfast. I, I, I just think that as we get deeper into this fiscal year, that those two areas will continue to improve. Tobacco, I mean, it's been running... Actually, I might turn it to Pat. I don't pay that close attention to it, but I think it's been running about 4%-6% declines in cartons. Is that about right? Yeah, that's, that's right around that area. Yes. Thank you. We have our next question from Alex Slagle with Jefferies. Thanks. Good morning. Just expanding on some of the previous questions and the case growth in food service and convenience, and just trying to get an idea how—I mean, how this decline compares to the previous quarters and just how to think about this as we look ahead. I mean, I'm not sure if this trend has been steady here into the early 2Q. And then just any commentary on the new business pipeline in convenience, just expected timing of when maybe these customers might come online. Yeah. We'll see some business that will come online this fiscal year in convenience. So far, in this quarter, it really looks like last quarter, in really each part of the business. I think I'll turn that to Pat to comment on it as well, but that's what it looks like to me at this point. On the convenience pipeline, yeah, it's been performing well. They've done a good job of continuing to work with customers, and it is a long pipeline, so we know that, but we have a lot of really positive things in that pipeline. Okay. And on Vistar, can you expand on the new lines of business where you're seeing accelerated growth? I mean, it sounds like you're highlighting the micro markets and fulfillment, and just to the degree this is a notable inflection or just a continuation of what you were seeing in the previous quarter? I would say a continuation. Micro market just continues to be very strong. And what we call a micro kitchen, I don't know where that term came from, but it's basically where the employer is giving candy, snacks, beverages, for no cost at all. We're seeing more of that, and I think a lot of that has to do with people wanting to get the employee back to work, and I think that's a nice enticement to do that. As far as our fulfillment business goes, that is growing at a very fast rate. It's a great part of our business. It's a great part of our future. It's, I think, a service that we're able to give our supplier that is beneficial for both of us, and we've got good systems for it. We're up to six distribution centers that do that type of fulfillment now, so it's a good part of our business. Yeah, George, I'll just add, I mean, obviously with Vistar, theaters saw a really strong season with Oppenheimer and Barbie, so that, that helped them a lot. So it just proves that when there's content, breadth of content, depth of content, people will go back to the theaters. And then, we did see normally go into kind of a lull as people go back to school, a lot of seasonality with theater. There was a nice pickup with the Taylor Swift movie. And but, you know, obviously, that is a, a, a channel that does have some seasonality to it, and, and so we, we work with them on that. Got it. Thank you very much. We have our next question from John Heinbockel with Guggenheim. Hey, George, two things. What do you think the algo on the sales force and related independent case growth is going forward? Right, once you normalize this 8%, is it, you know, 4% sales force growth, 6% translates into 6% independent case growth? Is that the algo? And then do you guys have a good sense of where your average independent wallet share is? You know, is it 30% more, less? Yeah. Okay, as far as the sales force, we haven't done this for a while, but I would say that we should be able to grow on a percentage basis about 50% faster than we add people. So, you know, a 4% growth in salespeople should get us a 6% growth as far as cases go. And then as far as the wallet share, you know, we only have one point that we use that gives us a feel for what percentage we have, you know, by different types of customers. Of course, we look close at restaurant because we do very little in healthcare or contract feeding or lodging. And typically, we're in the low 20s as far as the share goes. And maybe to follow up on that, so where is the hole and or the opportunity, right? Because I think years ago, the idea was COP was, you know, a big hole, and the specialists were getting more credit for their product than the broadliners were. Is that still true, and how do you address that? We are actually over-indexed when you get to the center of the plate and cheese. So, I can't, you know, speak industry-wide, but- Right ... we're over-indexed because the numbers we get are primarily just broadline distributors, and it doesn't include a lot of the specialties. So I'm not so sure that we can answer that question, but if you look at the world of broadline distributors, we are over-indexed on what we call center of the plate, which we put cheese in there because, you know, pizza is a big part of our business. Okay, thank you. Thanks. We have our next question from Jeffrey Bernstein with Barclays. Great. Thank you very much. Two questions. The first one, just on the broader restaurant industry. It seems like industry data over the past few months, and even restaurant commentary over the past week or so, shows that there was a slowdown in sales trends in August and September. I think you corroborated that, at least in August. But the question among investors has really been, why? Obviously, the one angle is the headwinds on the consumer, which gets plenty of attention, but the alternative has been maybe the return to some seasonality. And the fact that many restaurants talked about a recovery in October after maybe the August and September slowdown, I think more are believing that maybe a return to seasonality has been the culprit for the slowdown and reacceleration, which I think would be encouraging because it would imply that the consumer actually is holding up quite well. So I'm just wondering, being that you service so much of the industry, your thoughts on that idea that maybe seasonality has been the reason for the recent volatility rather than perhaps consumer headwinds. And then I had one follow-up. Yeah, I don't see it with seasonality, but I gotta preface that, you know, this is our customer base, and we're a large company, but we don't have real high shares. I mean, we're a pretty fragmented industry. August was certainly slower than July and slower than in September, yet our share gains were about the same. So, as far as, you know, what the broadline industry produces. So I don't see it as necessarily a slowdown in the market, and we have not seen an uptick since October, really. I mean, October looks like the first quarter to us as far as case growth. And then I think in the chain business, I think that we probably, if you put all of our chain business together, I think we're probably slower than the chain business would be, just because of our customer base. We're I think we're going to see that change with some of the things we have coming up, but right now, I think that our group of national accounts are probably leaned towards the ones that are struggling to grow. Understood. Then just wanted to follow up on the topic of penetration of existing accounts. I think, George, you mentioned that independent cases were up mid-7%, and customer count was up mid-7%, which overly simplistically, I would think would imply no further penetration of existing accounts. I think you mentioned you have maybe low-20% penetration of existing accounts. I'm wondering why that number wouldn't be higher or at least trend higher. I would think your customers would benefit from having less distributors. I'm wondering, do you have initiatives to expand the share of those existing accounts? It would seem like it would be very profitable for you to just be dropping off more product at existing accounts and taking more share from the smaller food service competitors. So just wondering your thoughts on that. Thank you. Yeah, well, a couple of things there. Our penetration isn't 20% within our existing accounts. That's within the broadline market or information that we get. I would suspect that our penetration within our own accounts is much higher than that. I think what's encouraging is that people are spending more money in restaurants, as I mentioned earlier, but even though our case count is only very, very marginally growing faster than our number of accounts, our SKUs within those accounts are growing comparable to what they've grown in the past when we've had better penetration. And it's that the existing SKUs that they're buying, they're not buying as much, and I think that just has to do with, I think, more restaurants out there and the consumer having more choices and the business getting spread across more restaurants than before. Understood. Thank you. Thanks. We have our next question from Andrew Wolf with C.L. King. Thanks. Good morning. I want to follow up on what Jeff was asking about in a slightly different way. So, can you differentiate or give us the breakdown between how much cases are down at same independent... Your, you know, your entire independent group, just how cases are down versus, you know, being offset by the obviously the increased SKUs and lines? They're not. The cases are up 7.6, and accounts are up 7.5. So it's not that they're down, but they're very flat. I'm sorry, George. I meant the same at just your existing customer base, right? Your cases per drop are flat, I think. If that's if I'm thinking about this right. So that would mean that, you know, the independent, the average independent is down on cases, and you're getting to the flat drop per stop on existing customer base through penetration, you know, through increased lines. I was just wondering if you'd say, you know, are cases down this and the offset is this? If you could give us how much the cases per drop are down. Obviously, overall, you're up because of the new customers. Yeah. Our, our cases per drop are up, but very, very slightly. I mean, not even- Okay. Yeah. All right. Okay. All right. The second thing I wanted to ask is on the labor productivity variance between Core-Mark and food service. You know, as you analyze that, is there something structural between how those businesses are just geographic or any other reason? Or is that something that, you know, with best practices and, you know, management changes or improvement, you know, can be addressed more quickly? They operate so much... There's just such a difference in how they operate. And in a Core-Mark, in our fulfillment facilities, a high percentage of the business is pick and pack. It's not full cases. So you have a much wider market of people that desire to do that kind of work or are capable of doing that kind of work. And I think it's probably just simply that, and it's just gonna take a little bit longer from a productivity standpoint in food service, but we'll get there. Got it. The last thing is, did I hear this right? Do you expect the national chain business to improve going forward? And if so, is that kind of new either, you know, expansion of opportunities with existing customers, or? It's new, it's new business, yes. Some of which has already started, some starts the first of the calendar year. And unless, which I don't think would happen, unless we saw some real drop-off in existing business, that will put us in positive case growth. Thank you. Our next question comes from Lauren Silberman with Deutsche Bank. Thank you. Congrats on the quarter. I wanted to ask about capital allocation. You guys bought back $60 million year to date. Stock trading at a pretty big discount to history, even with really strong fundamentals. Can you just expand on your willingness to further lean in to buybacks and how you're thinking about capital deployment and allocation of buybacks versus M&A? Yeah, Lauren, thank you for that question. I'll... You know, when we think about our capital allocation strategy, and, and yes, we did obviously, purchase shares in the last quarter, and then we also shared with you our purchases in October. And when you think about the overall, overall allocation strategy, you know, as we've always said, our number one priority is around capital and building capacity. As you can see, we continue to grow. We're really happy with the growth that we've seen in the independent cases and some of the other segments. So we'll continue to invest there. We're also, you know, gonna continue to look real closely at reducing leverage. And then also M&A, which we talked about. We are looking at M&A, and, you know, the final thing is the share repurchase. You know, we started purchasing shares in Q4, and then we bought them again in Q1, and then again, you can see that we're buying them in this quarter. You know, we have a methodology out there, we have a framework out there, and, and we think it's working really well. You mentioned, you know, a couple of key points, and, and that's why we think it was important to share with you, what we did in October, 'cause we think that framework is working exactly how we designed it. Okay. Thank you for that. As you think about M&A, can you just talk about your appetite for food service acquisitions relative to more than C-S tore? Oh, our appetite for food service is much greater. We don't see ourselves in the near future buying a traditional convenience store distributor. Our focus is more on food service and, of course, the food service part of convenience, but that's where our focus is today from an M&A standpoint. Okay, great. Final one for me is just the Vistar and convenience. Can you just break down what you saw with inflation in those two segments in this quarter? Yeah, I mean, you know, as we've said, I mean, it's largely doing exactly what we've been seeing. They're in the mid-single digits. You know, where at one point, convenience was running a little faster down than Vistar. They've kind of caught up, and they're almost exactly at parity, but they're right in that mid-single-digit area, just a little higher. Great. Thank you very much. We have our next question from Joshua Long with Stephens Inc. Great. Thank you for taking the question. George, your commentary around, you know, the breakfast and coffee dynamics in the convenience trend or the convenience segment were helpful. Curious if you could talk a little bit more about the office coffee business and kind of how that has performed as the return to office trend has continued to play out? Yeah, that's returned quicker actually than, than it has in convenience, and we're seeing good growth right now over the previous year. We are not back quite to 2019 pre-COVID levels, but we're close. Office coffee is doing very well, and I think that's just a function of more people doing the coffee for free and wanting to get people back to work, and, and once again, kind of an enticement. That's helpful. And curious on the capacity investments you made. You called out the new distribution center in Virginia, and then also some investments that you're making on the last mile delivery. Just curious if you could contextualize the, you know, capital allocation plan for, you know, systems investments going forward and kinda how to think about, how we could think about that from kind of a distribution center perspective, maybe on the food service side, or, you know, additional investments on that last mile delivery. It seems like maybe that's a little bit easier to roll out across the system, but just curious if you could share some commentary there. Yeah, Josh, on the food service side, and again, we'll just, you know, we keep saying that, you know, our number one priority is to continue to build capacity into the system. And really, the focus is on that food service segment, where we're building the most capacity. And, you know, we're really excited about the project that we just launched in Virginia, right there in Richmond. It's a very nice facility. It's gonna do extremely well. They, when they opened, they got right out of the gate and have performed very well. I think we're gonna see a lot more type of projects like that, where they bring a lot more efficiency to the system. They're the right size for really growing the business. Then on the last mile side, you know, that's, it's a thing we've been doing for a while, and we continue to invest behind it. Obviously, we're really gonna be focusing on getting to one-day distribution across the country, but we've made a lot of progress there, so we'll continue to focus on that as well. That's helpful. Thank you. And then one follow-up for me, as we think back to, say, 2Q of fiscal 2023 period, can you remind us how trends performed through the quarter? Just curious, you know, if we think about restaurants, there was perhaps a easier comparison, air quotes, easier comparisons from a comp perspective as we go through the, prior year quarter. But just curious how that, how that trend played out from a case growth perspective on, on your side. So just to confirm, it is cutting out just a little bit. Are you asking about how the trends were in the prior quarter for food service, for case growth? That's right. Yeah, in the prior quarter last year. So just trying to contextualize 2Q of 2023, as we start to lap that going forward. Are you talking about the quarter that we're in now? Last year. Last year. Hmm. That's correct. When I look at our histories, it looks fairly consistent to me. I, you know, obviously, the holiday period, other than the holiday weeks themselves, are really strong. As I sit here today, I think that the quarter is gonna look a lot like the quarter we just left. Understood. Thank you so much. We have our next question from William Reuter with Bank of America. So the first is, with regard to increased automation. You mentioned, in Vistar, you were talking about that. How are you thinking about additional investments going forward in automation in your facilities? And I guess, how does that compare, your CapEx this year, how is it gonna compare to last year's $270 million? Yeah, when we... You know, we're actually looking at automation, definitely Vistar, but we're actually looking at automation across all three segments. There's a lot of opportunities for us to look at ways to make the buildings more efficient, and that could just be automation, but also could be simply just technology. But we are looking at different multi-shuttle, various other automations that we can put into our buildings that just make that picker's job that much more efficient. When you talk Vistar, it's a little different. They're doing more automation for those, the pick and pack facilities, and we continue to expand those. And I'm sorry, I forgot the last part of your question. How do you expect CapEx this year to be relative to last year's $270 million? Yeah, I mean, we don't provide a number on that, but what I can tell you is, as we've said, that's a number one priority for us to continue to invest in capacity, and we are looking at things like automation. So we, we'll continue to spend appropriately behind it to make sure that we can accomplish those two goals. I guess, on the automation piece, do you expect that there will be a time when you will have labor savings, that you can essentially reduce the number of employees in the different facilities? It's not really automation for labor savings in the sense of less people. It's definitely automation for labor savings in the sense of making our pickers much more efficient, so we can just increase the throughput in the buildings. I would think about it more like that. The capability to handle more SKUs. Right. It's a big part of our automation. Okay. That's all for me. Thank you. ... We have our next question from Peter Saleh with BTIG. Great, thanks. Just a couple questions. First, on the market share gains, with the independence that you guys are seeing, are there any specific categories or regions that you're seeing some outsized share gains there? If you take what we look at real close, of course, is our gains in independent food service business. The share gains, I mean, they're not spread equally, but there's not a huge difference from where our gains are the best to where our gains are the lowest. I guess if I had to pick a part of the country, I would say probably the Northeast is where we've had some outsized share gains. Got it. Great. And then just on the labor productivity, George, that you mentioned, you know, not back to pre-pandemic levels or just not back to, I guess, acceptable levels, I think is what you had mentioned. What do you think it's gonna take to kinda drive that labor productivity higher? Is it just, you know, less turnover, more tenure, better training? And do you see benefits on that productivity in FY 2024, or is that more of a next year, FY 2025 type of benefit? Well, our productivity and our accuracy has improved as our turnover has gone down and as people have climbed kind of that learning curve. It's a fairly easy job to learn, but it takes a while to get real good at it. And, we're still climbing that learning curve in totality. You know, we have companies that are doing much better than they did even in 2019, and we have companies that are struggling to get there, and it's just a reflection of the labor market and the nature of the work. Thank you very much. Our next question comes from Jake Bartlett with Truist Securities. Great. Thanks for taking the question. You know, my... Sorry, I'm not sure if anyone else heard that noise, but, I am wondering about margin expansion, expected margin expansion in 2024. And, you know, do you expect any contribution from operating expense leverage, or is that really, you know, all driven by gross margin profits? Well, it's driven by mix, would probably be the number one. We do expect to see expense ratios get better as we get deeper into the year. Remember, we have a big investment, kind of outsized for us right now in our sales force, and we still have more productivity gains that we need to get. But we're not in any way displeased with where our expense ratios are. It's what we expected, and we think we're making wise investments in people. Got it. That, that makes sense. I just—I look at, you know, operating expenses and percentage of sales has been up for the last, you know, I think, about four quarters. And so I just want to confirm that. Do you, do you expect leverage on operating expense, you know, for the remainder of the year or by the end of the year to kind of maybe kinda think of operating expense being flat as a percentage of sales in 2024 versus 2023? Well, there's so many moving pieces with that. Our mix of business that we have today versus a year ago is a slightly more expensive customer base to service than what we had a year ago. So, you know, that is certainly part of it. Then, when you get into our fulfillment business, where we don't necessarily take financial possession of the product and we're not the one billing the end user of the product, then we're just running the gross profit and we're not the sales. So that's gonna give you artificially high expense ratios because you don't have the full cost of that case to spread those expenses over. It also produces extremely high EBITDA margins because you don't have, you know, the billing of the full case, only the service to deliver that case to the consumer. Got it. Got it. That makes sense. And just, this is kind of a nitpicky modeling question, but, you know, LIFO reserve adjustment, it kind of, you know, went to a positive adjustment this quarter from negative last quarter. What are the puts and takes, you know, in terms of the reserve adjustments, you know, for the remainder of the year? And maybe what drove the increase, the positive adjustment in the first quarter? Yeah, you know, it's something that just fluctuates around the quarters. We don't really provide any guidance on that going forward. So I'll just leave it there. Okay. Thank you so much. Thanks. We have our next question from Edward Kelly with Wells Fargo. Thanks, guys. Thanks for letting me back on. Just a couple quick ones for you. Working capital. How do you think working capital plays out this year from a cash flow perspective? It's been a drag the last, you know, few years, definitely larger than it would normally be for you guys. More neutralish, do you think it'd be an end this year? And then, there was $215 million in M&A this quarter. I don't, maybe I missed it. I thought about that. Just any color there? Thank you. Sure. On net working capital, Ed, I mean, we continue to see improvements there, so we do think that'll continue to improve throughout the year. And, you know, as I mentioned, we periodically from time to time make investments—like we did this past quarter in inventory, but that's opportunistic. So those do come into play occasionally. And then on M&A, we did make, you know, it's an immaterial acquisition that we had, but it was very strategic to what we're doing with convenience and foodservice, so we feel really good about it, but it's immaterial to our overall financial results. Okay. Thank you. We have reached our allotted time for our Q&A session today. I would now like to turn the call back over to Bill Marshall for closing remarks. Thank you for joining our call today. If you have any follow-up questions, please contact us at Investor Relations. Thank you. This does conclude today's program. Thank you for your participation. You may now disconnect.