Good morning, and welcome to the SpartanNash Company First Quarter 2021 earnings call. I'd now like to turn the conference over to Chris Mandeville, Managing Director of Investor Relations. Please go ahead. Good morning, and welcome to the SpartanNash Company first quarter 2021 earnings conference call. On the call today from the company are Tony Sarsam, President and Chief Executive Officer, and Jason Monaco, Executive Vice President and Chief Financial Officer. By now, everyone should have access to the earnings release, which was issued yesterday at approximately 4:30 P.M. Eastern Time. For a copy of the earnings release, please visit SpartanNash's website at www.spartannash.com/investors. This call is being recorded and a replay will be available on the company's website for approximately 10 days. Before we begin, the company would like to remind you that today's discussion will include a number of forward-looking statements. If you will refer to SpartanNash's earnings release from yesterday, as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements. Please remember, SpartanNash undertakes no obligation to update or revise these forward-looking statements. The company will also make a number of references to non-GAAP financial measures. The company believes these measures provide investors with useful perspective on the underlying growth trends of the business, and it is included in yesterday's earnings release, a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. It is now my pleasure to turn the call over to Tony. Well, thank you, Chris, and good morning, everyone. Q1 was an exciting and transitional quarter for SpartanNash. Our frontline associates continue to perform heroically in spite of the challenges associated with the COVID-19 pandemic, and we are taking steps to recognize that performance. As part of this, we raised the starting pay rate for our new retail associates by over 10%. We are doing a similar compensation review with our supply chain associates this summer. These increases represent the first of many steps we are taking to build upon our people first culture and improve the retention and combat the challenges of the current labor market. Also during the quarter, we welcomed several new key leaders, whom I'll tell you a little bit more about shortly. All right. Turning to a couple of highlights on our financial performance. As I mentioned, this was a transitional quarter for SpartanNash. Our overall profitability is on track with our expectations at the start of the year, although the results across the business segments were somewhat mixed. We knew this was going to be a challenging quarter on the top line as we cycled last year's pandemic surge that our industry experienced in March and April of 2020. Despite the significant headwind, our Retail segment performed particularly well. Comparable store sales were down 7%, but they're up significantly on a two-year basis at 9.3%. We were happy to see this trend continue, consistent with how we ended 2020. In addition, we delivered gross margin expansion of 90 basis points for our total company, which included improvements in each of our business segments. Our team continues to seek and win new business within the Food Distribution segment, which will continue our company's growth in both the short and long term. While the performance of our Military segment is trailing a bit behind our expectations due to the challenges in the top line, our team has been working through significant initiatives to grow margins and operate more efficiently. In addition to these financial highlights, we made progress on our 2021 Key Performance Indicators, which I introduced on our last earnings call. As a reminder, these initiatives include investing in our associate experience through programs related to safety and retention, improving distribution service levels, improving our private label brand presentation, and taking action to sustain improvements in gross margin levels. Regarding associate safety and retention, this quarter, we achieved improvements in both reportable safety incident rates and associate turnover. We placed a renewed emphasis on hiring, onboarding, and training of new associates. In addition, we've implemented new safety measures to raise awareness of the best practices and identify potential safety issues. These actions, combined with investments in processes and people, are driving results on these people first initiatives. While on the topic of making investments in people, I want to touch on hiring. Like many other companies, we have been incredibly challenged with hiring due to the labor shortage. Just as an example, in Petoskey, Michigan, one of our SpartanNash markets, there was a job fair held in May with 60 employers looking to fill 500 jobs. Only four candidates showed up. Well, it is our intention to win in this war for talent, and SpartanNash is continuously renewing our compensation and benefits offerings to help us attract new hires. Despite these challenges, we have still been fortunate to make several key additions to our leadership team this year, including three executive leaders, six vice presidents, and 11 directors. These talented hires bring outstanding new capabilities to SpartanNash. You'll hear from our new CFO, Jason Monaco, shortly, first, I want to offer some background on the other two new members of the executive team. Dave Petko has joined as our chief supply chain officer. Dave brings 25 years of supply chain and distribution experience. He most recently served as Senior Vice President of Supply Chain for C&S Wholesale Grocers, among the largest grocery distributors in the country. There, he was integral to many of the initiatives that drove both sales growth and operational efficiencies. Masiar Tayebi also recently joined as chief strategy officer, which is a new position for the company. Masiar previously served as the head of global strategy and business development at Whirlpool Corporation, where he was responsible for acquisitions. Prior to Whirlpool, Masiar was executive director at UBS, focusing on strategy, mergers and acquisitions, technology, and transformational change. Dave, Masiar, and our new CFO, Jason, will work closely with the rest of the leadership team to identify, analyze, and resolve business challenges while capitalizing on new business development opportunities. As a people-first organization, improving our business results begins with having the right talent. These new team members, together with our existing leadership, are essential to building a high-performance culture. Collectively, our strengthened executive team will work to improve our performance, particularly in our supply chain. While we've seen favorable trends in fill rates, throughput, and other key metrics, we have work to do to realize these improvements on the bottom line and to meet our longer-term expectations. We've already begun certain initiatives to standardize processes, streamline operations, and drive costs out of the system. As noted in yesterday's press release, we will be making additional investments for the remainder of this year to deliver further improvements in this area of our operations. Although our plan is currently in the blueprint phase, we expect these results to be transformative. Key areas of focus in this initiative will include enhancements to our network strategy, procurement, transportation efficiencies, and improvements in our warehouse operations. Our team is energized to get started with this transformation, and we expect to provide you with updates along the way. Shifting to our goal on private brands, we have continued to make progress on our assortment and penetration. Our own brands help us to win in the marketplace by driving consumer loyalty and improving margins. I am personally delighted with the work that our team has done to develop new products and packaging. There is growing consumer excitement for our own brands, and we look forward to expanding these offerings throughout our retail footprint and among our independent customers. Finally, as I mentioned earlier, we're continuing to see improvements in our gross margin rates, with contributions across the segments. We are eager to carry on this momentum even as we navigate inflation, challenging labor markets, and cycling pandemic trends in the balance of this year. Next, I want to introduce Jason Monaco, who joined as a CFO in March. Jason brings valuable distribution expertise from his leadership positions at Borden Dairy and Kimberly-Clark. Jason, we are pleased to have you on board, and I will now turn it over to you to review our first quarter performance and discuss our expectations for the remainder of the year. Thanks, Tony. It's a pleasure to be speaking with you all on my first SpartanNash earnings call. I'm honored to have joined the company and look forward to providing you with quarterly updates on our results and progress. Let's dive into first quarter results. Net sales for the first quarter decreased 7% or $199 million to $2.66 billion, versus 2020's first quarter sales of $2.86 billion. While we saw unfavorable results lapping prior year sales surges caused by COVID-19, we're pleased with how well our Retail sales have trended, as Tony mentioned earlier. Our GAAP EPS came in at $0.54 per diluted share in the quarter, compared to $0.43 per share in the first quarter of 2020. Adjusted EPS for the quarter was $0.56 per diluted share, compared to Adjusted EPS of $0.67 per diluted share in the prior year quarter. While we made margin improvements in each of our segments, the decrease in our profitability from the prior year quarter on an adjusted basis was driven by lower sales volumes associated with lapping last year's pandemic-related stock-ups, as well as an increase in supply chain expenses. Turning to our segments. Net sales in Food Distribution decreased by $35 million, or 2.6%, to $1.33 billion in the first quarter. In addition to the year-over-year impact of lapping a pandemic, sales were also lower due to the exit of our fresh production business, which operated for a portion of last year's first quarter. The decrease in sales was partly offset by continued growth with certain existing food distribution customers and our growth pipeline of new business. Inflation remained relatively steady for Food Distribution in the first quarter, but we have received notification of price increases from a number of our suppliers and anticipate further increases for the balance of the year. As you know, inflation generally has a positive impact on our distribution businesses, where we pass through price increases to our customers in both F ood Distribution and Military. However, we will work closely with our vendors to minimize the impact of these price increases on our customers. Reported operating earnings for Food Distribution in the first quarter totaled $21.1 million, compared to $11.4 million for the prior year quarter. The increase in reported operating earnings for the segment was due to lower asset impairment and restructuring charges. Adjusted operating income totaled $21.5 million in the quarter versus the prior year's first quarter adjusted operating income of $26.3 million. On an adjusted basis, the decline is due to increased supply chain expenses and lower volume, partially offset by the increase in margin rates. Retail net sales came in at $739 million for the quarter compared to $783 million in the first quarter of 2020, a decrease of 5.5% or $43 million. Our comparable store sales were down 7% for the first quarter due to the favorable effects of the pandemic in the prior year. Two-year comparable sales were positive 9.3%, as the consumer shift towards food at home persists and our execution at Retail continues to perform. First quarter reported operating earnings in the Retail segment came in at $14.2 million, compared to $12.6 million in 2020's first quarter. Retail adjusted operating earnings were $14.4 million for the quarter, compared to $15.3 million in 2020's first quarter. While we saw an improvement in margin rates, our slight decline in profitability on an adjusted basis was driven primarily by the decrease in sales volume, as well as the resulting decrease in store labor productivity. Military net sales were $584 million in the first quarter, and they decreased by $120 million compared to prior year revenues of $704 million. This was primarily due to cycling favorable sales attributable to increased consumer demand related to COVID-19 in the prior year quarter, followed by the ongoing impact of restrictions for domestic base access and commissary shopping, which took effect after the first quarter of last year. Lower foot traffic stemming from these restrictions continues to drive significant declines in domestic commissary sales and our Military segment demand. Military reported an operating loss of $5.1 million in the first quarter, compared to a reported loss of $2 million in 2020's first quarter. Adjusted operating loss was also $5.1 million, compared to a loss of $1.4 million in the prior year. Although the segment saw improvements in margin rates, the overall decline in profitability was due to higher supply chain expenses and the decrease in sales volume. Interest expense declined $3 million from the prior year quarter due to the company's pay down of long-term debt resulting from strong free cash flow during 2020, as well as the rate cuts implemented by the Federal Reserve over that period. For the quarter, we used $32 million of cash in operating activities, compared to $129 million we generated in the prior year quarter. The decrease in cash from operating activities compared to the prior year relates primarily to changes in working capital and operating assets and liabilities. During the quarter, we built inventory balances in an effort to recover from the depressed inventory levels experienced during 2020, as well as to take advantage of selected favorable pricing opportunities. In addition, our current quarter payout of 2020 incentive compensation resulted in a significant outflow. As business activity begins to recover from the effects of the pandemic, we expect operating cash flows will normalize over the remainder of 2021. During the quarter, the company declared $7.2 million in cash dividends, equal to $0.20 per common share. The company did not execute any stock repurchases in the quarter. Our first quarter adjusted EBITDA was $64.8 million, compared to $74 million in the prior year. Combined with an increase in our net long-term debt balance, our leverage ratio increased to 2.2x, compared to 2x as of the end of fiscal 2020. As we continue to cycle the effects of the pandemic-fueled 2020 earnings, we anticipate full year leverage will continue to be comparably higher to what we observed at the end of 2020, but will remain below 2.5 x. Moving to the outlook for the remainder of the year, we are reaffirming our full year 2021 guidance. However, we expect a shift in the segment performance from a sales perspective. While total sales are expected to remain between $8.8 billion and $9 billion, we now expect that retail comparable sales will be down from 5%-7% to the prior year, an increase of 1% from our initial expectations. Military sales are now expected to decline between 6% and 10% from the prior year, a further decline from initial expectations. We continue to expect that Food Distribution sales will be down 1%-3% from last year. These updates reflect both the trends observed in the quarter as well as our updated expectations for the remainder of the year. Our guidance does not yet contemplate the impact of investments and earnings gains related to the supply chain improvement initiative referenced in the press release. However, we do not expect it to impact the range of profitability that we guided previously. We will continue to update you regularly on this exciting initiative as it progresses throughout 2021. Now I'd like to turn the call back over to Tony. Thank you, Jason. In closing, we are pleased with our performance and the contributions of our team while continuing to deliver results during the pandemic. We are focused on expanding our customer growth within Food Distribution, retaining the Retail momentum we acquired during the pandemic, and making investments in people and processes that will position us for improvements in our operations. We remain committed to our key initiatives and are excited for the contributions from our recently appointed leaders. With that, I'd like to turn the call back over to the operator and open it up for your questions. Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Greg Badishkanian from Wolfe Research. Please go ahead. Good morning. This is Spencer Hanus on for Greg. Can you guys talk about what comps are running quarter to date in the Retail business? Margins were significantly better than we were expecting. How sustainable do you think that the one, two performance will be in the back half? Hi, Spencer. Thanks for the question. This is Jason Monaco. Again, pleasure to be here with you this morning. When we take a look at Retail comps, we continue to run early into the second quarter, similar to what we saw throughout the first quarter. Obviously, there was a split in the first quarter, pre and post-COVID, when you look at year-over-year splits. Stepping back and looking at the two-year comps, we continue to run strong high single digits early in the second quarter. Yeah, if you look at the margins, the second part of your question, a lot of that margin expansion came with a really extraordinary performance in our Retail segment. Some of the contributors to that include the fact we were better on revenue, as Jason mentioned. We also experienced a really good flow-through from that revenue and good leverage from it. We sold into a mix that was more favorable, a little bit more in fresh, more of our own brands, which have, again, changed the mix in a favorable way in terms of profitability. Our shrink was lower and driven, at least in part, by the better flow-through. Some of those elements will soften, perhaps, as we have forecast, that the habits will return back to people buying a little bit more of their food needs from restaurants as opposed to groceries as we go down through the years. I think we'll see some softening of that. We're really happy with the way we performed in the first quarter versus our expectations. Got it. Can you quantify where inflation was running in the first quarter? How rational have your competitors been with passing through that inflation that you've seen thus far? Any signs they're holding back passing through inflation to improve their price gaps at all? Yeah, Spencer, this is Jason again. If you look back, inflation has been pretty modest in the first quarter. I know there's been a lot of discussion in the public press and also in the forward-looking space. In the first quarter, we had relatively modest inflationary factors. Stepping back and looking at the competitive environment, what we've seen has been relatively stable, competitive environment. The consumer, in our view, is on pretty solid footing. That said, we still expect an uptick in inflation going forward as some of the price increases from our vendor community start to pass through. The next question comes from Chuck Cerankosky from Northcoast Research. Please go ahead. Good morning, everyone. You mentioned safety quite a bit as a focus, especially with new employees. Has that been a problem in recent years? Has it impacted productivity at all, specifically your accident rate in the distribution centers? Yeah, it's a great question. There's a number of facets to it, so let me cover a couple here. One, I firmly believe that you can never, ever be too good in safety. One of my mantras in any organization is that we're going to be the safest place to work, and we're going to work hard toward that objective. That, I think, it's a great way to unify an organization. It's a great way to communicate your people first initiatives, is that you're most concerned about their safety and their personal well-being. We also experienced, as you know, a pretty high turnover here in the period really before the pandemic. Really during the pandemic, saw a lot of churn, a lot of new people. New people are uniquely exposed to making mistakes and potentially getting hurt. We wanted to actually focus on that while we're bringing a lot of new people into the organization. I would suggest that certainly we have some efficiency loss, but not so much due to safety as it was just due to the turnover. Those things work together a little bit. As we look at just the difficulty in bringing new people in the organization and the burden of training a lot of new people, you're going to have some efficiency loss associated with that. That's why we talked about in those first KPIs. In the spirit of people first, we want to make sure that we focus on safety and on retention. We believe that's a key to unlocking a lot of great performance for the company. It's been a very strong part of our focus here this first quarter of the year. Tony, as a follow-on to that, what actions can Spartan's management team take to reduce the turnover? Is increasing wages simply a big part of that? It's a big part of it. It's not the only part of it, but it is one we have to recognize out there, too. The game has been changed now as our economy really, not just as an industry, but as a country, sort of has latent capability to really move and grow. We find a lot of businesses are struggling to get the people they need to grow their business. It has been a challenge getting great people. There's going to be a natural total offering, if you will, that we have to consider. For example, we have to consider pay increases. I mentioned on the call a minute ago that for our frontline, our entry-level wages at retail, we executed recently a greater than 10% increase in those starting wages. We're looking at that for our warehouses right now. We usually do that work in the late summer. Wages will play in that. We think benefits plays as people look at what are the other benefits that they need in terms of their work experience. We think the work conditions play, and so we need to work on having predictable schedules and a great work environment. All those things work together to be what I call a top quartile employer. As I mentioned, we fully intend to win this war for talent, and we're going to look at all those things together. Thank you very much. The next question comes from Peter Saleh from BTIG. Please go ahead. Great. Thanks. Just first, Jason, wanted to ask on just overall capital structure. Any sort of changes you're anticipating over the coming years? I know you've been in the seat for a very short period of time, but anything we should be expecting on the capital structure changes to the dividend or the way you guys are thinking about capital structure? Good morning, Peter. Thanks for the question. At this stage, I don't anticipate any significant changes to the broader capital structure. We continue to focus on investments which improve the efficiency and productivity of our supply chain and our operations and present opportunities for incremental growth and performance in our retail environment. We'll continue to evaluate those alternatives and do so within our current capital structure, design, and strategies. Great. Can you guys give us an update on the partnership with Amazon? Is it meeting your expectations? Any sort of changes there now that new leadership is in place at this point? Yeah. We, as you know, we're just into a new contract with Amazon, and we think we're developing a really great partnership with Amazon. It's been a lot of change for us over the last several years. We've picked up additional business with this new agreement. As you may have seen, we also opened up a distribution center in Maryland that will be focused on Amazon business in the Northeast. We've got a lot going on with Amazon right now. I think we're still early in this new agreement and learning about how to grow into that. Again, it's an exciting part of our future. The new leadership team is obviously also very excited about their role in driving that business. All right. Thank you very much. The next question comes from Scott Mushkin from R5 Capital. Please go ahead. Hey, guys. Thanks for taking my questions. My first one is regarding inflation in the distribution business. Historically, that's been very good for distribution. As you see a lot of it coming through the pipeline, forward buying and that type of thing. Why shouldn't we think, as the year goes on, that the distribution business could really start putting up some solid results, even with the volume maybe coming in a little bit? Yeah, this is Tony. Scott, I think you're dead on. We have a history of being very effective in passing through inflation. Of course, it has positive leverage effects on the overall business. While we're still learning about that, what those inflationary measures will be, they are not insignificant, and we believe will be a net positive for the business. Adding to Tony's commentary there. One of the things I highlighted, and you've probably seen this in the broader marketplace, is many CPGs have announced or proposed increases. Some of those have exceeded 5% increases, which would be well ahead of the food CPI, which, as many of you know, has been running at kind of one-ish percent over the last 12 months. As a consequence, our outlook reflects an inflation factor of kind of 2%-3%, which we believe is taking a conservative approach and also reflects our historical ability to pass through that pricing onto our customers through our distribution model. That said, we will continue to look to capitalize on opportunities for margin enhancement through that change. Perfect. Then if I could have maybe two quick follow-ups. The Military business, obviously continues to be a real struggle. What can you do with that business? I think you've been putting some of the distribution together. Is there some de-leveraging if you were to exit or try to figure out how to get out? First and foremost, our primary focus is to make that business strong. We've taken some, I think, really encouraging steps late in the first quarter. You wouldn't see them in these current results, but what you'll see in the balance of the year is some improvements in efficiencies that'll make that business more profitable. That's our first play is to look to how do we make that a profitable and a sustainably profitable business. We've had sort of a rough go of it, as you've mentioned, in the last few years. I'm optimistic with some of the measures the team has taken here very recently that we're going to have a good outcome this year in the turnaround in the Military business. Actually, I'll yield. I have a couple more questions, but I'll yield and maybe take those offline. Thanks, guys. Great. Thanks, Scott. The next question comes from Matt Fishbein from Jefferies. Please go ahead. Hey, good morning. Thanks for taking the questions, and welcome aboard, Jason. Just wanted to ask about the food away from home channels reopening and how that impacts the Retail business going forward. What are some of the initiatives your retail unit and perhaps even the Food Distribution category managers are working on to kind of offset some of that reversal and keep some of the gain share that you've seen over the past year, maybe in terms of planogram changes or innovation upcoming? Thanks. Great. Matt, this is Tony. I think we have anticipated, as we've talked previously, that as the country reopens and people go back to restaurants and other elements of their previous habits, that will have a dampening of the growth that we saw in 2020. For starters, we're really pleased with the way things worked for us in the first quarter. I would conclude that many of those habits were stickier than we may have thought. Jason mentioned a moment ago, we beat our corporate retail number by about 1%. We think that in the midst of the timeframe when restaurants aren't even reopening, we're seeing a little bit slower return, I guess, in a way, to those habits. In the timeframe that we were in the midst of the pandemic, we worked pretty hard on improving our offering in our store as well, and we worked hard on our own brands penetration. We improved our assortment of our own brands and got a really nice lift there. As I mentioned a moment ago, we experienced better margins with those products, and we're still seeing good uptake on that. We're seeing people are still buying more online. Our e-commerce business is still doing very well. That's continued to do well, continued to grow, even in this period of time when the pandemic is waning, so to speak. Some of the things we did to strengthen our business in the midst of that pandemic are actually, we believe, will stick. Amongst them, as I mentioned, the own brands, our improved offering in the fresh part of our business, and some of the others like e-commerce. I think all those things will work together to help keep some of those habits, as I mentioned, a little stickier than we might have forecasted. All right. Thanks very much. The next question comes from Damon Polistina from Deutsche Bank. Please go ahead. Good morning. I was wondering if you could provide a little bit more color around the supply chain improvement initiatives that you're starting to put in place in 2Q. Where's your area to focus, the cadence around investment versus when you're going to start seeing benefit? Just around that would be helpful. Thanks. You bet. Tony again. The investments, we're just on the brink of making some of those investments. They're primarily around process. There will be some investments in IT upgrades, but a lot of the emphasis is going to be on strengthening our process and the way we go about that work. As we mentioned earlier, it'll cover transportation, it'll cover the way we think about our network, and it'll cover the way we think about inventory and we're creating a sales and operations planning process that's, we're strengthening that, I should say. We're looking hard at the way we demand our warehouse overall and think about how we make our warehouse labor more efficient and more effective in that space. Just getting on that. It is not something that we're going to push the button and it's done in a week or a month or even several months. We think this is going to be a multi-year endeavor. It's absolutely critical to what we do to having a strong business of being both efficient and effective in our overall supply chain. Adding to Tony's comments and, Damon, thank you for the question. I guess maybe to put a finer point on when the benefits should begin to accrue and to give you some color as you think about the outlook. We would expect that the benefits will commence in late 2021. That said, I expect those benefits will be more than offset by some of the initial investments in this project as Tony alluded to and as I highlighted in the outlook section of my comments earlier this morning. Kind of thinking about the savings impacts and where the savings goes from the network strategy work, the transportation efficiency, the warehouse operation work, and procurement. I would expect that longer term, we would generate somewhere between 25 and 50 basis points of improvement in our supply chain expense rate on our distribution businesses. We're confident in that, and we're excited about the transformation that we're about to kick off here, not only for the cost savings and efficiency benefits but becoming a more effective operator and better servicer to our customers. Thank you. The next question comes from Kelly Bania from BMO Capital Markets. Please go ahead. Hi, good morning. Kelly Bania here from BMO. Thanks for taking our questions. Curious if you could elaborate more on the pay raise at retail, what is the dollar impact of that on an annual basis? When does it take effect? Where do you think that puts you relative to competition? I believe you mentioned thinking about some on the distribution side. Just curious if you could help frame these investments and wages for us if that was already part of your guidance, or is that part of your guidance today? Yeah. This is Tony. The cost of those increases are contemplated fully in our guidance, so there'll be no change because of those investments. The total cost for retail is in the neighborhood of $7 million, and about 5 of that will be realized this year. We're still doing the work on supply chains. I don't have a number for you there, but we normally do our relook at our wages in the summertime, we're knee-deep into that exercise right now. I think that we're at a point in time now in this current phase of our economy and the labor market, where we have to be very serious about the way we think about wages and the way we think about people getting talented at multiple levels into the organization. This will be a really core part of our people-first offering is how we think about and make those offers for wages and benefits. Okay, that's helpful. Then going back to the comment on the savings from the supply chain initiative. 25-50 basis points, would that be across the Wholesale and Military businesses, or just Wholesale? Can you help us think about the cost for implementing these initiatives? I guess the cost and the benefits are outside the guidance at this point. Is there an expectation that those will be adjusted out? Are they one-time-ish, or is the magnitude just still not yet determined? Just help us understand how you're thinking about that. Sure. Thanks, Kelly. This is Jason again. I'll take these on one by one to make sure we answer all the questions here. I guess first and foremost, the 25 - 50 basis points is both on the Food Distribution and the Military business. You should think about that touching both pieces of the business. This program is also reflective of the change in management practice that we've had with the addition of Dave Petko to the team. Dave's responsibilities span all of our supply chain responsibilities across the warehousing businesses. As a result, we'll be focusing on both of those businesses there. With respect to the expense load and the impact to outlook, I would expect that the net impact in 2021 will be modestly dilutive. However, I don't expect that the impact will change the range of profitability that we guided earlier this morning. It'd be within that range, and it would be modestly dilutive. However, we're pretty early in the blueprinting process, and a few things may move around with respect to the timing and sequencing of the programs within this initiative. Net-net, we fully expect to be within the range of profitability that we guided today. Okay. That is helpful. I guess just another one on the inventory. I think you mentioned maybe building some of the inventory given the inflation and the benefits that you can see there. Just curious, are you still building inventory ahead of some of the price increases that you're hearing from your vendors? Is the benefit of what you anticipate from that already built into your guidance at this point? Yeah. If you think about the forward-looking inventory profile, I would expect that it'll be likely a little bit lumpy, in that we'll be targeting specific opportunities to create incremental margin through the distribution process. That said, at the same time, one of the pieces of work we'll be doing with respect to the supply chain improvement initiative is tightening our belts with respect to the inventory required for the ongoing operation of the business and pressure testing that. I expect we'll be pulling inventory out in some places and reinvesting in others. It may be a little lumpy as we go through this price increase cycle. Okay, and then just one last one from me, if you don't mind. In terms of the gross margin, that was quite strong for the quarter, and I believe that sounded like it was mostly driven by the Retail business, but that all channels, it sounded like, did contribute to that. Just curious if you could explain how at Military in particular, the gross margin is increasing and also at distribution, what's driving the increase in gross margin? Yeah, Kelly, happy to answer the question. Yes, gross margins are expanding in all three business units. We've talked a little bit about the Retail piece. Kind of speaking to Military and Food Distribution, we've been taking actions to enhance our margins by targeting specific sub-segments and growth areas which allow us to expand and widen our margin profile in those spaces. We've also taken initiatives in our businesses to create pricing opportunities where we can and capitalizing on those opportunities. I would expect going forward that we'll continue to target those while balancing it with growth needs of the business. Thank you. Again, if you have a question, please press star then one. The next question is a follow-up from Chuck Cerankosky from Northcoast Research. Please go ahead. Thanks, guys. I'd like to return to the comment you made about the stickiness of food at home dining. If you compare your retail stores in Michigan, where it seems the COVID restrictions lasted a little longer to, say, your stores in Greater Omaha, could you draw any conclusions from that? Were there great differences in the food away versus food at home trends? Yeah. Sure, Tony. You picked probably the two best endpoints in our business. We had a really strong performance in Michigan in the first quarter, and not quite as strong in Omaha. The rest of our geography, though, candidly was more mixed than that. There wasn't as clear of a correlation across the rest of SpartanNash between constrictions in restaurant service or other elements of the pandemic and the sales in our stores. Clearly, we performed better in Michigan, performed better in the northern part of Michigan in particular, where we serve a lot of smaller communities. That was where our business was strongest. Thank you. There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Tony Sarsam for any closing remarks. All right. Well, I just want to thank everybody for their participation today. I appreciate all the fine questions you've got. We look forward to speaking with you again for our second quarter results. We're looking forward to a great quarter. I wish you all a great day with that. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.