Good morning, and welcome to the SpartanNash first quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kayleigh Campbell, Head of Investor Relations. Please go ahead. Good morning, and welcome to the SpartanNash Company first quarter 2022 earnings conference call. On the call today from the company are President and Chief Executive Officer Tony Sarsam and Executive Vice President and Chief Financial Officer Jason Monaco. By now, everyone should have access to the earnings release, which was issued this morning at approximately 7 A.M. Eastern Time. For a copy of the earnings release, as well as the company's supplemental earnings presentation, 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. 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 this morning, 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 has included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. It's now my pleasure to turn the call over to Tony. Thank you, Kayleigh, and welcome to SpartanNash. We are glad to have you on board as Head of Investor Relations. Good morning, everyone. Thank you for joining us. On May 12th, we provided our preliminary earnings results, and today, I'm happy to walk you through additional highlights of the quarter. As part of our winning recipe, we're focused on transforming our supply chain, and this past quarter showed that our efforts are taking hold. We delivered an approximate 7% improvement in throughput year-over-year. We also secured more than $15 million in run rate cost savings, meeting our initial full year commitment of $15 million -$30 million in annual savings ahead of schedule. We reached this significant milestone by leveraging data and insights to create efficiencies throughout the distribution network. We now expect to achieve $25 million-$35 million run rate savings by the end of fiscal 2022. These two impressive accomplishments are a direct result of our supply chain transformation initiative, which is a foundational element for expanding our profitability, and we are just getting started. I wanted to thank our supply chain leaders for their hard work and dedication in making this possible. Moving to our retail segment. Our team of frontline store associates continue to deliver quality service to shoppers, resulting in comparable store sales that were up 7.2% in the quarter. We are building on strong momentum in our retail business, and we saw our market share grow. We are focused on providing exceptional service and market competitive pricing. This is helping us retain our current customers and shoppers who have recently discovered our stores. We remain committed to our mission of delivering the ingredients for a better life. To drive growth margin and create more value, we're expanding our private label brand penetration. Overall, our private label sales increased 13.7% year-over-year, outpacing the company's overall sales growth. That is really impressive. Now, turning to our military business. I'm proud to say sales increased over the prior year quarter for the first time since Q1 of 2020. Additionally, we achieved military adjusted EBITDA margins of 1.6%, exceeding our turnaround target of 1%. We are strategically positioning military for success through a variety of initiatives, and we continue to see opportunities to further increase the profitability of this business. One of these opportunities is around the recent extension of our private label contract with DeCA. Our military distribution network gives us the unique ability to service 160 commissaries and 400 exchanges worldwide. We are proud to continue providing America's military heroes and their families with great value and a taste from home. Speaking of our unique global supply chain, we are currently leveraging our military network to provide critical food and supplies to Ukraine refugees across Eastern Europe. Now, turning to the impact inflation had during the quarter. While inflation was a tailwind for us, our performance also reflects the continued execution of our winning recipe and our supply chain transformation initiative. Looking ahead to the remainder of the year, we expect to continue operating in a volatile and inflationary environment. Our teams are going above and beyond to effectively manage through these uncertainties. Additionally, the impact of inflation on our results should taper in the second half of the year. Turning to the labor environment. In order to attract and retain top talent in the labor market, we have taken several steps to enhance our associate experience. These include investments in wages, additional benefits, heightened focus on safety and training, associate recognition, and streamlined communication. We are seeing the benefit from these initiatives over the past two years, including 2.3 x higher than normal applicant flow and a 48% improvement in our safety incident rate. Turning to strategic growth. During the past couple of quarters, we introduced our winning recipe, defining who we are and where we are going. The formula is driven by our three core capabilities, people, operational excellence, and insights that drive solutions. If you visit the investor relations section of our corporate website, you can view the Q1 supplemental earnings presentation, which provides an overview of our winning recipe. Now, I'll get into some specifics illustrating how we're executing on our plan. Last month, as part of our e-commerce strategy, we announced a partnership with DoorDash. This partnership expands our grocery services and solutions across both our digital and physical platforms, and also enables us to empower our network of 2,100 independent retail customers. We're now providing them with additional tools and resources they need to grow their businesses and expand their digital footprints. Additionally, we'll be offering on-demand grocery delivery from more than 100 company-owned stores. Our customer-centric innovation is a key priority for driving growth. With this new omni-channel partnership, we will expand our customer base and capture more of the grocery retail market by rapidly scaling our digital offering. We also recently reached an agreement to acquire a three-store Michigan grocery chain, Shop-N-Save Food Centers. These stores will be converted into our popular Family Fare banner. Our focus right now is ensuring a smooth transition for our new team members and the customers they serve. We're also expanding shopper offerings through our robust loyalty programs. I'm also pleased to announce that the Stockton, California Distribution Center has been integrated into our network. Through our partnership with the Coastal Pacific Food Distributors, the 500,000 sq ft multi-temperature facility is now fully servicing customers after a phased-in launch. Having a West Coast presence allows us to provide faster, fresher, and more cost-effective deliveries to our customers. The arrangement will also save roughly 1 million gal of diesel fuel annually while helping us reduce our fleet mileage by 10% or more than 7 million mi. This agreement further advances our progressive work in ESG by reducing our carbon footprint. We anticipate lowering our greenhouse gas emissions by an estimated 10,000 metric tons this year, and we are not done yet. If you have not seen the document, I highly encourage you to review our inaugural ESG report, which is available under the corporate responsibility section of our website at spartannash.com. Now, let's talk about long-term targets. We have built a strong foundation based on our winning recipe, and our momentum gives us confidence in the growth targets we recently announced on May 12th. As a reminder, by 2025, we expect to grow net sales by at least 12% from fiscal 2021 to more than $10 billion. We expect to increase adjusted EBITDA by at least 40% from fiscal year 2021 to more than $300 million, and we expect to expand our adjusted EBITDA margin to 3% of net sales, an increase of 25% from fiscal year 2021. We are very pleased with the actions the current executive leadership team has taken, which is reflected in our performance. We believe our strategy provides a clear path for long-term growth and increased shareholder value. Before I turn the call over to Jason, I'd like to extend one more heartfelt thank you to our SpartanNash associates, whose operational excellence and keen focus on winning has made these results possible. Your hard work and dedication is transforming our company. On behalf of the SpartanNash executive leadership team, thank you for being our customer's unsung heroes. With that, I'll now turn the call over to Jason to walk you through the first quarter financial performance in great detail. Thanks, Tony, and welcome to everyone joining us on today's call. Let's jump into the detailed results. Net sales for the first quarter increased 4% or about $106 million to $2.76 billion compared to 2021's first quarter sales of $2.66 billion. This growth can be attributed to positive sales in all three business segments. Our GAAP EPS came in at $0.53 per diluted share in the quarter, compared to $0.54 per share in the first quarter of 2021. On an adjusted basis, diluted EPS for the quarter was $0.83, compared to $0.59 in the first quarter of 2021. On an adjusted basis, the increase in profitability from the prior year quarter was due primarily to improvements in the gross profit rate, where we saw an increase to 16.3% compared to 15.7% in the prior year quarter. Gross profit margin growth was driven by improvements within the food distribution and military segments. Inflation during the first quarter led to higher LIFO expense, which increased $8.5 million over the prior year's first quarter. This incremental expense is included in gross margin but is excluded from adjusted earnings. The increase in gross margin was partially offset by higher SG&A costs, including higher costs in retail store and supply chain labor, increased fuel prices, and higher incentive compensation related to strong company performance. In addition, our reported GAAP results also include $3.5 million of costs related to shareholder activism. The labor market conditions continue to drive higher wages, additional use of overtime, and reliance on costly third-party contractors within our supply chain. Despite these headwinds, we've made significant progress on our supply chain transformation initiative during the quarter. This includes achieving more than $15 million in run rate cost savings, reaching the range of our original full year 2022 commitment ahead of schedule. Turning to our segments. Net sales and food distribution increased by about $37 million, or almost 3% to $1.37 billion in the first quarter, driven primarily by the favorable impact of inflation on pricing. We continued to see an upward trend in inflation as the quarter progressed. In fact, inflation exceeded 10% by the end of the quarter, while certain categories, including proteins and dairy, continue to see the largest overall increases. Looking forward, our outlook assumes continued inflation for the remainder of 2022, with the impact on results tapering in the second half of the year. Reported operating earnings for food distribution in the first quarter totaled $26.7 million, compared to $21.1 million in the prior year quarter. The increase in reported operating earnings for the segment was driven by higher gross margins, partially offset by an increase in incentive compensation and higher supply chain wages. Adjusted operating earnings totaled $34.6 million in the quarter versus the prior year's first quarter adjusted operating earnings of $22.3 million. Military net sales of $612 million in the first quarter increased by 4.7% compared to prior year sales of $584 million. The increase was driven by inflationary pricing, partially offset by reduced case volumes. Notably, though military case volumes declined in the first quarter, the rate of decline slowed compared to the trends experienced over the previous year. The first quarter reported operating earnings in the military business of $1.4 million compared to a loss of $5.1 million in 2021's first quarter. This reflects improvements in the gross margin rate. These benefits were partially offset by increased incentive compensation as well as increased supply chain labor expenses. The segment's adjusted operating earnings of $4.7 million for the quarter is up $9.3 million from 2021's first quarter loss of $4.6 million. Retail's net sales came in at $781 million for the quarter, compared to $739 million in the first quarter of 2021, an increase of 5.7%. Our comparable store sales momentum remains strong at 7.2% for the first quarter. First quarter reported operating earnings in the retail segment were $0.03 million compared to $14.2 million in the prior year quarter. The decrease was driven largely by market competitive pricing, higher utility and supply costs, investments in wages made throughout the course of 2021, and increased expenses. Retail adjusted operating earnings were $4 million for the quarter, compared to $14.8 million in 2021's first quarter. Each of the segment's adjusted operating results exclude the impact of LIFO expense in both years and the costs related to shareholder activism in the current year. Overall, we achieved a first quarter record adjusted EBITDA of $76.6 million, compared to $64.8 million last year. The company's ratio of net long-term debt to adjusted EBITDA increased slightly to 1.9 x, compared to 1.8 x at prior year-end. The increase was due to strategic inventory purchases in the current quarter in anticipation of further product cost inflation and to maximize service to our customers. For the quarter, we generated $10 million of cash from operating activities, compared to using $31.8 million of cash in operating activities in the prior year quarter. The increase in cash from operating activities compared to the prior year is due primarily to these changes in inventory. During the quarter, the company declared $7.7 million in cash dividends, equal to $0.21 per common share. The company did not repurchase shares during the quarter. We currently have approximately $80 million remaining on our current share repurchase authorization and are committed to returning value to our shareholders through share repurchases as well as continued regular dividends. As announced on May 12th, we raised our fiscal 2022 guidance. The adjusted EBITDA range was increased by $10 million and is now expected to range from $224 million-$239 million. Adjusted EPS is now expected to range from $2.17-$2.32 per diluted share. These updates to our EBITDA and EPS ranges recognize the strong start to the year across our operating segments. Improved gross margins in the food distribution and military segments and ahead of plan supply chain transformation results, partially tempered by economic headwinds, gives us confidence in the improved outlook. These headwinds include the impact of limited labor availability and rising wages, as well as expectations of future interest rate increases. We also raised our fiscal 2022 guidance as it relates to consolidated net sales with an updated range of $9 billion -$9.3 billion. Our outlook now reflects improvements in all three reporting segments. With the continuation of positive results in the military business, we now expect military full year sales will be -4% to flat as compared to the prior year. We also expect that food distribution sales will now be up 3%-5% from the prior year, and that retail comparable sales will range from + 1% to 3%. We are delivering on our turnaround goals and are executing on our winning recipe while being focused on managing through volatile conditions to create sustainable shareholder value. Now I'd like to turn the call back over to Tony. Thank you, Jason. We are very pleased with the continued momentum of our performance, which is a direct reflection on the actions we've taken across our business. We believe our strategy provides a clear path for long-term growth and increased shareholder value. Now, Kayleigh will make a brief statement before we open the line up for Q&A. Thank you, Tony. As a reminder, the purpose of today's call is to discuss our first quarter results and the progress we're making through the execution of our strategy. Please keep our conversation focused on these topics. As it relates to matters involving our annual meeting, we remain in dialogue with our shareholders, and we'll continue to ensure our actions are in the best interest of all shareholders. I encourage you to visit our spartannashtransformation.com website for more information and updates. Additionally, we have filed a definitive proxy statement, a white proxy card, and other relevant documents with the SEC in connection with the solicitation of proxies for the annual meeting. Shareholders are strongly encouraged to read our definitive proxy statement and all other documents filed with the SEC carefully and in their entirety because they will contain important information. Shareholders may obtain a copy of any documents filed by the company with the SEC at no charge at the SEC's website or on our spartannashtransformation.com website. Now, I'd like to turn the call back over to the operator and open it up for your questions. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Chuck Cerankosky with Northcoast Research. Please go ahead. Good morning, everyone. Great quarter. Could you talk about the retail sales a little bit with gas? I'm not sure you excluded gas from the comps, but could you give some commentary on what the numbers look like with and without gas and how profitable gas was in the quarter and how gallons trended, please? Yeah. Good morning, Chuck. This is Jason Monaco. Thanks for joining this morning. On fuel itself, we saw fuel dollars naturally rise significantly with the higher price points. Gallons were up marginally in the quarter and profit margins themselves on a per gallon basis were about flat to last year. To your first question, is it in comps? It's excluded from our comps. Our comp sales of 7.2% and the continued momentum on that front. Okay. That's great. Now those strong comps, does that include anything you can tell that's left over from the pandemic, or is it mostly just inflation? Because those are pretty strong numbers. Yeah. They're great numbers. Hey, Chuck, this is Tony. The pandemic has waned obviously. What we look at now is there are some habits from the pandemic that we think are gonna be sticky for the long haul. I don't think it's temporary anymore at this point. We have with the inflation rising, we think we had almost about 10% inflation during the quarter overall. Naturally, just as it follows with that, there's a little bit slight unit decline. The team has done a great job overall of kind of managing the price for the consumer. It's difficult, as you know, in the retail space, to find a way to make sure that you get pricing that the consumers can manage in their budgets. We've done, I think, a really good job of managing our key value items to that. As I mentioned a moment ago, our own brands have done really well. We think with our own brand performance, we're seeing great growth there. They're good quality products. They're historically and currently at slightly lower price points than national brands, and the availability's been good. I think the fact we have great partnerships and solid availability on the own brands has also been a component of driving our comps. Are you able to comment, please, on what you're seeing in terms of changes in product mix as a result of the acceleration in inflation and how fuel costs might be affecting in-store purchasing habits? Sure. Chuck, this is Jason again. A couple of things I'd highlight. If you step back and look at our business performance, as I noted before, fuel prices are up significantly. Kind of the first order impact we're seeing is, as Tony mentioned, the performance in own brands. Our own brands and private label portfolio is growing at about twice the rate of our non-private label portfolio. We're seeing consumer shifts on that front. Secondarily, just as a reminder, our store footprint and the products and the offerings that we have in our retail business really cater to these sorts of needs. For example, we're winning with those consumers that are loyal to our stores, but we're also winning on what we characterize as kind of fill-in in smaller shops as well. Consumers have perhaps less money in their pocket, and they need to buy a smaller basket. The convenience that we offer with our supermarket formats is really winning, and we're seeing strong growth and performance on that front. Finally with this Coastal Pacific facility in Stockton, California, you say it's been fully phased in. Is there an option for Spartan to purchase that? Are you leasing it in any way? What are sort of the mechanics of how it fits in with your logistics network? Great question. I'd characterize it as a partnership, really from start to finish. We've had a long partnership with Coastal Pacific on the military side. The way that this arrangement works is that we are leveraging Coastal's operations. They're operating the site. We have a presence there to ensure we have quality and service to our consumers, or to our customers out of that site. But it's on a kind of a fee basis, if you will. If you think about this program, what it's allowed us to do is to take about 10% of the miles out of our network by being located closer to our customers. It's allowed us to have fresher deliveries to our customers on the West Coast. Last but not least, it's allowed us to take over 1 million gal of diesel fuel out of our consumption and 10,000 tons of carbon out of our carbon footprint. We're proud of the arrangement and the creative way that our teams have found an access to the West Coast that's really been a win-win for the environment, for our customers and ourselves. Thank you. The next question comes from Greg Badishkanian with Wolfe Research. Please go ahead. Good morning. This is Spencer Hanus, on for Greg. Maybe if we can just take a step back for a minute, could you talk about how you're thinking about the synergies between your three segments? When we look at the military segment's performance in the quarter, generating almost $10 million of EBITDA, what is driving the inflection and profitability there? Is there an opportunity to spin that business now that you've seen sort of the improvement in profitability there? Thanks. Great. Thank you, Spencer. This is Tony. Our business, if you go back to the winning recipe and that we shared our corporate identity and how we think about our business and the difference we make for our customers and our shoppers, we have a unique way to leverage those business segments. We're fundamentally a wholesaler, a grocer wholesaler, 71% of our business. We have a segment of our business that is retail, at 29%. Because of those stores are, you know, full-scale business, they are larger on average than our customer stores, the 2,100 independent grocers that we serve. We have an opportunity to really really understand what makes a difference with those folks. We can model that and show them that. It allows us to provide services and generate those services. Everything from human resource services to IT services, to category management, to how to think about pricing in different geographies. All that works together very nicely between the retail part of our business and, again, the larger part of business, which is grocery wholesale. We continue to leverage that. We're getting great feedback as we're taking the next step on that and mining the insights that can make a difference and drive solutions for our customers. We're delighted where we are right now. We're getting really good feedback from our customers about how that is all working together. We're also delighted about the performance of our military. We had a great quarter. We've had a great, a nice, run. You may remember back to when I first got started here, I had job one with the military to figure out how we can make it better and to be a good operator and provide the ingredients for a better life to our military and men and women all across the globe. We've done that. We've made operational changes. We've made improvements to our facilities, improvements to our network, and worked directly with DeCA to improve the network efficiency there. We have made improvements in our dray arrangements with our manufacturing suppliers. All that is coming together, and we have some great growth there on the profitability as you've seen. We are still focused exclusively on making that a great business. That's the focus of the team. That's the focus of the overall organization. Certainly, I think your question was, are we in a better position to sell it now? It's certainly better to sell something that's making more profit than something that's not. That's not our focus at all. Our focus right now is actually continuing the path of improving the operations, improving the service, and we think that's gonna be a fine business, and we don't see any reason why it can't be the same profitability as the balance of our portfolio. Got it. That's really helpful. Maybe if we could pivot to the cost savings target, you raised that from $25 million-$35 million for this year from $15 million. What's driving that change in outlook? How much of those savings do you expect to contribute to the long-term $300 million EBITDA target that you guys have put out there? I'll start and then maybe Jason pick up a little bit here too. We've had really great success. Very proud of the work we've done in the transformation of our supply chain and the focus on operational excellence overall by the supply chain team. Our throughput progress has been terrific. We're ahead of schedule there. We're ahead of schedule on some of the network changes that we've made. All that has delivered, you know, savings and productivity that's ahead of schedule. We felt bullish on taking our number up for the year, and that number increase will carry over. The $25 million-$35 million that we've quoted for this year will continue and continue to grow. Our team has the next wave of ideas on how the supply chain gets transformed, and it'll be a significant player within that $300 million. I would say roughly in the range of a quarter of the overall profitability on the way to $300 million will come from supply chain improvements. Thanks, Tony. Kind of building that out, maybe putting a little more detail on the performance thus far and where we're headed. Just as a reminder, you may pick this up, Spencer, in the notes. There's a 7% increase in throughput, and that throughput reflects pretty closely. To our cost performance in the warehouse and in warehouse operations. Beyond that, as you kind of step back and think about the supply chain transformation as we've talked about before, you've got the warehouse operations. We also have network optimization, where we've executed both the addition and the subtraction of sites over the last 12-15 months to ensure we've got the right locations and the right inventory at the right place. That together with transportation and route improvements and with improvements in the way that we manage our inventory have all delivered and frankly delivered ahead of schedule. What we've done is taken that $15 million -$30 million run rate, and we've brought the bottom end of that forward by three quarters and raised the total guidance, so for the exit of this year to that $25 million -$35 million range. We feel good about it, and that's also playing a role in the raised guidance for the overall company performance. The +10 EBITDA at both the bottom and top end of the range. Got it. Really helpful and nice job at quarter. Thanks. The next question comes from Scott Mushkin with R5. Please go ahead. Hey, guys. Thanks for taking my questions. There's just a lot to unpack here. One of the things I wanted. You guys said this is more macro, I'm gonna start there, that you expect, and we've heard this from other companies, and I guess I would push back a little bit, that inflation is gonna somehow decrease as we move through the year. I don't believe, at least our research would say the Ukraine war is actually not even reflected in prices yet, and of course, diesel continues to move up. I was just wondering what gives you that confidence, and how much of your, you know, your guidance is dependent on this idea that things will get better? Yeah, working backwards, our guidance is not tied to things getting better on the inflation front. When we say that we expect the inflation to wane, we're looking at things like what we saw in the last month where inflation may go from 11% to 10%. We're not talking about, you know, a quick retreat there. We agree that we think inflation is gonna be around for a long time. I think you're right. I think the disturbances in the Ukraine have not fully hit yet. There's a whole 'nother wave of missed agricultural cycle that's gonna be very significant from the war in the Ukraine. There are a number of other things on the horizon in our own country around labor contracts and shipping ports and railroads and all kinds of other things that, you know, we may be looking at more supply chain disruptions and we may be looking at inflation rates that are more extended. That's when we talk about them declining, we're talking about, you know, we don't think it's gonna be double digits the balance of the year. We may, if I see some, you know, some contraction on that rate as we hit some of the overlaps from the end of last year. We tend to agree, and we were early on this dialogue that inflation is not at all transitory. It's gonna be here for a while. We're in a cycle now that the underlying causes of the inflation are not quick fixes, and they're gonna be around for a couple of years, we think at least. That's great color. Really great color. So then the other question I had, and you guys went into this in your kind of monologue, but I do wanna push a little bit on the idea that it does seem, you know, maybe a kind of naysayer would say, "Hey, gosh, this military business and the distribution business almost looks like it turned on a dime from a profitability perspective." What would you say to that, someone pushing back that way? They're pushing back that it turned on a dime? Yeah, that it turned so fast that it's gotta be more temporary than permanent. Oh, I see. You're not arguing that we should be slower. Look, I think there are some things. You know, I've got a team here of seasoned operators that I've brought in, and there are some things that they saw that we could do very quickly. There were some things that came fast. The things that we have done and the changes we're making right now in our warehouse and our network are permanent changes. We're changing the delivery schedules to our commissaries in a way that is more profitable for us and maintains great effectiveness for the commissaries. We are, you know, working with our manufacturing suppliers to, you know, re-look at our agreements with them, and those are changes that are baked into contracts and they'll be around. I think we acted quickly because we had to act quickly. We had a business that was not doing so well when I first got here, and we had to make very quick changes, and we found some really good productive ones to make. Okay, my final one before I yield, and this is real quick. Fill rates from manufacturers to you guys and then your fill rates to your customers. Great. Great question. Fill rates for manufacturers, as I've mentioned in the last couple of calls, have remained disappointing. Manufacturers are suffering from the same types of problems that a lot of businesses are around staffing and other disruptions that come from the staffing issues. Our fill rates have been sort of kind of stagnant. They're improving modestly from our suppliers. We're making better headway candidly internally in terms of the gap between what we've received and what gets shipped out. We are now right now we are performing internally better than we were pre-pandemic in terms of here's the portfolio of goods we got versus what we ordered, here's what we're gonna fulfill on the way out of our business. That gap, you know, historically has been about eight or nine points. It's down to just around six-seven points right now for us. We feel great about our performance in a circumstance where we're still receiving really tough numbers from our manufacturing community. All right, guys, thank you. Obviously a lot of heavy lifting done during the quarter, so congratulations to the team on that. Good work, guys. Thanks so much. The next question comes from Peter Saleh with BTIG. Please go ahead. Great. Thanks, and congrats on the quarter. Tony, I think you mentioned that inflation was up about 10% in the quarter. I was hoping you could give us a little bit more color on the retail comps, you know, the really strong 7.2% number in the quarter. Can you break down a little bit how much of that was actual pricing or basket increases versus maybe transaction growth? Just trying to understand how the consumer trended in the quarter. Yeah. Well, great question. Right now we're seeing an increase in trips to our stores. I think, and this is my opinion, there's a little bit of an oddity going on here where you have the scenario where people are getting out more, as they're getting more comfortable after the pandemic, at a time when you might expect them to be making fewer trips while gas prices are increasing. We have these kind of competing effects. We saw a pretty significant uptick in our trips. The basket size is smaller. The net of that was modestly negative, roughly, close to zero. We're seeing more trips, slight decline in units and of course, then we have higher rings overall because of the inflation. That's a little bit of the mix of what's going on. We're encouraged by the fact that people are coming in. We're also seeing the mix of our customers. More shoppers. We're adopting more shoppers into the loyalty category and more of them and we're seeing more of them come in routinely for their fill-in trips. We're seeing some really good things around the visits to the stores. We're seeing on the overall basket, we think is sort of what you'd expect, slightly lower units and of course, higher prices. Mm. Absolutely, Pete, this is Jason. I'd just add modestly to that discussion. Just if you kind of back up and look at the same store comps of 7.2%, as Tony said, it's largely inflation driven, but there's some moving parts beneath the surface as you pull back the cover with trips and basket size. You know, the other thing I'd point you to is that this retail business is performing what I would characterize as kind of at or better than the median for the general retail grocery space. So there's a lot of moving parts, but we think we comp well relative to the many of the other players in the space. Thank you for that. Just maybe one more on the retail segment. You know, can you just talk about what you're seeing on wages and the impact there? It sounded like you're starting to see some more applicant flow, but yet maybe wages took another leg up. Just trying to understand your comments on that this morning. Yeah, great. We are seeing better applicant flow, about almost 2.5 x sort of the normal applicant flow that we saw in sort of right around just pre-pandemic and during the pandemic. We believe that's a combination of effects. We've taken our entry-level wages up, as you know. We took them up just almost 11% in 2021. We will probably take them up close to that same number here in 2022. There's a big change with entry-level wages. The combination of wage improvements, benefit improvements and what we've done with our overall culture of the organization around training, around communications, all those things woven together, we think have led to not just better applicant flow, but better stickability once people get here as well. They find a home that they can stay at. We're not out of the woods yet. We think that overall, there's a real tough shortage of good quality talent for all businesses. We have to compete. We know that we have to compete on all those fronts. The opening offer has to be a solid entry-level pay, and that's why we made those big changes. Great. Just lastly, nice improvement in the military segment in terms of the margins there. Should we expect this going forward, or is there any seasonality that we should be aware of or anything that, you know, would preclude you from kind of hitting these targets on a go-forward basis? Yeah, great question. We see ourselves as being past and in the 1% EBITDA margin range going forward. As Tony said when he first got here, there was a challenge in that business. We've applied operational performance improvements. We've applied enhanced customer engagement practices. We've reached the 1% goal, and I expect that going forward, we're gonna be continuing to run at or above that 1% level. Great. Thanks, and congratulations. Thank you. The next question comes from Andrew Wolf with C.L. King. Please go ahead. Thanks. Good morning. On the distribution side, you know, you just sort of went through on retail, you know, kind of a real sales growth exercise. If your sales are up almost 3%, 2.8% versus 10% inflation, you know, simple math says cases, not mix adjusted, but cases would be down around 7%. If there's something else going on like mix or something, maybe you can help us understand that. But also, you know, why is that? Is there some big customer that, you know, left the business we don't know about? Or is it just, you know, the typical independent customer is not ordering as much at this juncture? Hey, good morning. This is Jason Monaco. Good to hear from you, Andy. I think the one thing I'd call out here, and we've mentioned this on some of the prior calls, is we're still in the process of lapping the insourcing of some of the business that we used to do with DG. We've expected that to carry over through into the third quarter. We're on the kind of the phase down. It's all out of the network, but you're seeing the positive or the negative comps in this case from prior year. Okay. That's the DG Fresh stuff. Can you say how much that is so we can ourselves get a sense of how much is, you know, not gonna go away. You know, how much better your cases will get. What I'd suggest is that I would characterize the rest of our business looks a lot like the retail business in our wholesale kind of core independent space. Okay. That's helpful. Back to retail, you did mention, you know, competitive pricing. I assume for you guys that was a response to something in the market. Was that response, you know, your customers just naturally seeing inflation and going to discounters? Or are there other supermarket chains already starting to or, you know, do something with their pricing? Like, what is the dynamic that, you know, cause you guys to get more sharp on your pricing? Sure. I'd characterize it kind of if you step back and think about the context that we're operating in. We had been in an accelerating inflationary environment. When you think about competitive pricing, it doesn't necessarily mean that we are taking prices down. It may mean the pace at which prices are going up to match the inflationary pressures on the back end. As we think about understanding what our consumers need and managing through those price changes, what we wanna do is ensure that we're sensitive to those consumer needs. We're pricing properly. We're focused on the key value items in the stores, and we feel good about the outcome and that we've, you know, we drove the 7%+ comps, the flat-ish volumes in a rising price environment, and maintained or grew share in many instances. Okay. Lastly, Jason, just, when you were answering one or two times on, you know, the cost savings, supply chain, I think you referenced productivity or throughput. Is that the main driver? You know, I mean, product throughput being up 7% seems like quite an improvement. At this juncture, is that the main driver of what's, you know, what you're realizing in your results? Yeah. I would characterize it as about half of the benefit, the remainder coming from transportation efficiencies, route efficiencies, network optimization, inventory management practices and the like. It's a significant portion and that throughput flows right to the bottom line. Great. That's it for me. Thank you. The next question comes from Krisztina Katai with Deutsche Bank. Please go ahead. Great. Good morning and congrats on a very nice quarter. I wanted to go back to inflation. I mean, you did mention sort of 10% or higher exiting the quarter, from a food inflation perspective. Can you just talk about what you are seeing specifically in retail stores regarding consumer behavior? I know you said that private label is growing at double the rate, which I would imagine means that there is some trade down happening. But are you seeing any resistance to these higher prices? Do you think we have reached the ceiling? How best to think if inflation remains this high for a prolonged period of time? Yeah, it's a great question. First and foremost, we remain very vigilant in the study of this because there's not a playbook that exists for the last 40 years on how consumers will behave. We haven't had the advent of prolonged double-digit food inflation in this country since the 1970s, and the world was quite different back then. We're learning along the way as well. We're seeing some things that look like stuff we might expect, though. We're seeing. I mentioned earlier the you know, a little bit of flight to the private label and looking for ways to get a great experience at a lower price through those vehicles. We obviously have mentioned that, and you mentioned that just a second ago. We're also seeing really strong growth in fresh, and fresh is a higher, you know, typically higher cost, higher margin part of the store. I think that what we'll see is that people will look for ways to save money on key value items that are sort of everyday items for them, and look for ways to actually maintain some element of indulgence and find a way to again explore the continued joys of living through food at home. I think there'll be a little bit of a bifurcation, and we're certainly seeing that. As an example, we'd say, you know, inflationary market, you know, flowers might not be seen as a really important staple, but our floral business is up, and we're doing quite well with floral. We're doing well with our deli business, which is doing well. It's the prepared meals that again people still are seeking convenience and an easy way to get a solution. And our deli business is doing quite well in that regard. Again, what I should note is that it's also a bit of a complicated analysis. Our deli business might be doing well because people are not going to the restaurant. We don't know the precise reason why people are making those choices. We're seeing, again, really strong growth in fresh, strong growth on a lot of those higher cost, higher margin items. At the same time, people being very aggressive in center store, trying to find their way to lower priced items. Yeah, Krisztina, this is Jason. I would say, just adding to that, demand for, you know, food at home trends is likely to continue as this food inflation plagues consumers and we're here to bring solutions to those consumers with whether it's prepared meals or a private label offering to ease the budget. You know, we believe price sensitive behaviors are gonna continue to strengthen as we continue to work through this inflationary cycle, which, as Tony said, is. I won't characterize as unprecedented, but unprecedented in the business lives of probably everybody on the phone today. Yep, that makes sense. Thank you for that. I guess just one question on the supply chain, which obviously remains very challenging. I think you mentioned the ongoing tightness in the labor market, although it sounds like it is improving. Can you just talk a bit more about some of the improvements that you are seeing, especially from a logistics operations perspective, to really overcome some of these challenges as we think about supply chains essentially remaining dislocated for longer than we initially thought? Yeah. We have certainly dialed up our focus on improving the overall logistics part of our business or the transportation part of our business. You know, we obviously mentioned that piece about [audio distortion]. That was a big hit that we've talked about already today. Additionally to that, we're looking at ways that we can actually reposition and get closer to, you know, our stores or to our consumers, our customers through our network DC. There's a lot of great tools and new science that allows you to be more efficient in that regard. We're just wrapping up a transportation management system that went live here just recently, and it's giving us some great insight about how we can maintain the overall effectiveness in the network and be more efficient. That will continue to be a big focus for us. It's cost in an area that's escalating faster because of the fuel pricing and diesel pricing. We've certainly. As Jason mentioned earlier, we've seen some of that here in this last quarter. Some of those improvements in productivity came from that area. It's a significant part of our future growth and that pathway to 2025 as well. It'll continue to be a focus for us. Great. Thank you so much, and congrats again on the good quarter. Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Tony Sarsam for any closing remarks. All right. Well, I'd like to start by just thanking everyone for their participation in today's call. We certainly look forward to speaking with you again when we report our second quarter of 2022 results. With that, I wish everybody a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.