Good afternoon, John Heinbockel from Guggenheim. Very pleased to be hosting the Fireside Chat for US Foods today. I have with me Dave Flitman, the company's still relatively new CEO, Dirk Locascio, Chief Financial Officer, and Michael Neese and Adam Dobrowski here in the front row. I think before we start, Dave has a couple of comments, and then we'll get right into it. Thanks, John, for the introduction, and great to be with you, and thanks to ICR for the invitation to be here today. I just hit my one-year mark with the company last Friday, in fact, and I'm more excited about our future than the day I got here. This morning, you might have seen we issued a press release reaffirming our guidance for 2023. And we also posted a new investor presentation to our website, so I encourage you to take a look at that throughout the course of the day as you have time. You know, we've got a differentiated model. We've got national scale. I'm excited about the focus that we have in three specific customer types of independent restaurants, hospitality, and healthcare. We've been executing very well, driving outpace market share gains in each one of those. Importantly, ours is very much a self-help story. We've continued to drive gross profit expansion, we're driving productivity aggressively, and you've seen us get that to the bottom line. I believe that's fully sustainable, and we'll continue to drive that well into the future. I also like our sales model, and I like to talk about our sales model and the differentiation that we have there. We couple our outside territory managers with chefs and restaurant operation consultants and product specialists. As we go to market, it's important to penetrate the customers with those relationships. I think it differentiates us. And I think having that support around our TMs, along with our MOXē, our digital capability, enables our TMs to be maybe more productive than others in the industry, and we're seeing that play out as well. And then finally, you know, I just wanna be very clear, we'll give guidance around 2024 next month. And then we're excited to host our next Investor Day on June 5, and we'll lay out the next three years and what that means for the future of the company. You've heard me talk about being at or near $1.7 billion in 2024. We'll talk about our guidance next month, but I wanna be very clear, and I said this on our third quarter earnings call, that is not the limit for this company, and that's why I'm so excited about talking about the future on June fifth. So with that, John, I'll turn it over to you. Terrific. So, we have about 22 minutes. What I thought might be productive is to dive down onto three topics, all of which are important drivers of the P&L. So first, top line related sales force initiatives. So maybe talk about the expansion. You referenced the differentiated sales force, but how you think about expanding that group, what roles, where you wanna get them from. Obviously, you can get experienced people with non-competes or less experienced without non-competes, but how do you think about, you know, analytically going about growing that sales force? Right. Great question, and, you know, this is, we, we talked about this on the third quarter call, but that wasn't a start to something. That was just reaffirming what we've been doing. So I believe adding sales headcount regularly is a routine part of our algorithm and an important part of our growth trajectory going forward. You heard me talk about the productivity of our sales reps. I do believe we are more productive than average in our industry, but importantly, you know, you get route sizes to a certain size, it's important to split off a portion of your faster-growing, more experienced sellers, have them go build that, and then seed some new sales reps, give them something to start from so that they can hit the ground running and then become productive much faster. What I said on the third quarter call is we'll continue to add sales reps in the low to mid-single digit range. Likely when the dust settles in 2023, we'll be closer to that mid-single digit range. We're also, as you would expect, adding support around those TMs as time goes on. Have to add district managers as, as districts get so big. So we'll continue to add the support to those sales reps to make sure they're successful going forward. And to stay on that topic, right, so the other thing you've done is to restructure or alter, right, the org structure, right, for sales. Maybe talk a little bit about that in terms of the benefit that you derive from that, you know, whether it's mentoring, whether it's, you know, speed to market, decision making, what's that doing for the business? Right. It's wrapped in a very fundamental core belief I have, and that's putting your sales organization as close to the customer as possible. That was really the essence of the change I made. There was a lot inside the company that was centralized, including the reporting relationships for our local sellers. I just didn't feel like that was gonna afford us the right opportunity to have those folks focused on the customer all the time. It was really that simple. So moving that reporting relationship back in the field, I think drives further alignment and sends the message inside the company that we're very, very focused on growing profitably and supporting our sales reps. It was really that simple for me. It just made all sorts of sense, and so it's gone very well since we made that change, John, and I expect it to continue to go well. You know, third item on... As it relates to Sales force, so comp, right? So I think, you know, it's you got to be careful how you change somebody's comp, but on the other hand, it gives you an opportunity to incentivize behavior. Exactly. Right? So your thought process on what you wanna do with, with comp, directionally. Right. And, and I said, pretty thoughtfully and clearly that this is more a, an evolution than a revolution. I think the basic structure of our sales compensation process is the right one. In fact, there weren't really any key elements, but again, I always want to make sure they're aligned around driving profitable growth in the right areas. There's a fixed and a variable component. Shifting more of that to variable pay, I think, incents that hunger for growth inside the organization and making sure you're incenting things like our exclusive brands, as we've always done properly. Importantly, the other portion of change is, is we're being very thoughtful going into 2024 around tying the specifics of our business plan, our growth plan at the company level. down to specific targets through the districts at the TM level, and making sure that all that adds up, and there's enough support to achieve the outcome we intend for the company. I think, you know, we may have addressed this back on the third quarter call, but, you know, again, when you think about that leverage on the local sales force on local cases. Mm-hmm. Right? So I think, historically, right, I think, the way it's worked out is you should be able to grow your local cases maybe one and a half times the growth in the sales force. So your thought on that, or, you know, can it be better given. I don't know if you've underinvested in certain geographies, but, you think about the leverage factor on? Yeah, I think you're right. I think that 30%-50% leverage is probably the right number. Depends on the experience level of the sales rep, to your point, whether they come with industry experience or not. We're having good success of hiring reps that do have either direct, food service distribution experience or they come from a manufacturer, so they understand the industry, and they've been in sales. That's the kind of talent that we're looking for, versus someone who has come from outside the industry with no sales experience. We've had good success. I tell this story a lot. You know, I get the opportunity to talk to our incoming sales reps every month. We're hiring 30-40 on a routine basis. Increasingly, we've been getting competitive reps in that mix, but importantly, more and more that have industry experience, and so that gives me a lot of confidence that that growth will continue. So transitioning to another part of the P&L, which might be almost equally important, right? So, you know, COGS was a really big part of the path to $1.007 billion, right? It's a big bucket, but I want to focus most on procurement. I know there are other pieces of that, but so maybe the idea is to be 60% of the way through categories by the end of this year. When does the other 40% get addressed? And then I would think, right, that there are likely to be multiple waves. So you get through the 100%, now you go back and attack, you know, the first 60 again. That's right. So, thoughts on that, and, you know, where, where are we in that journey? I think you're thinking about it exactly right. So the 30% or 40% that's remaining, some portion of that is very, very small suppliers and what we- Yeah call the tail supplier base, and we're being thoughtful about how we address that portion, that maybe historically might not have been addressed as aggressively as it could have been. So I do expect some effort to drive some outcomes there. And then to your point, every three or four years, there's another wave of this. So this work, I think about this as continuous improvement, much like I think about safety. You know, the journey is never over with this work. We've got great relationships with our suppliers, and, you know, I just want to be clear, this is driving win-win outcomes. Yeah. Being thoughtful about, yes, sure, there's a pricing element to it, but being thoughtful about where we can drive outpace growth, and that's why our growth is so important to our suppliers, and we get a lot of positive feedback, be able to continue to take profitable market share because they're looking for that next element of growth, and we're providing market access they can't get for themselves, right? So it's a, it's a self-fulfilling prophecy. You're having that strong relationship and continuing to drive that, that growth algorithm together. So when you look at, you know, maybe give us a sense of the process, right? When you're looking at, you know, SKUs, categories, SKUs and vendors, what sort of analytics are you going through, right? I mean, you can certainly go by volume, but some items are important to important customers, so, you know, they maybe get special treatment. But what's There are always going to be some element of that. Yeah. But I think in general, the SKUs that we bring in, and we give our sales folks a lot of latitude- Yeah If there's a need for the customer, but then there's a process behind it. Those SKUs have to be productive. You've got to have a certain threshold of case movement. You know, we look at it on a weekly basis, and if the cases aren't moving to the extent they were supposed to, we start asking questions about that, and are we going to get there? And if not, you have to make a different decision. And so, you know, we're constantly looking at making sure that we have the right mix to support our customers, balanced with the productivity that we need in our distribution centers, to make sure that we're not tying up a lot of capacity with dead SKUs. Well, so you're going to bring in how many, on average, or how many new SKUs a year, and is it- is the idea to run- Thousands. Is the idea to run flat, right? 1,000 in, 1,000 out, or... I think the company's done a good job of trying to clean that up, and so the process has been, if you bring in a new one, you need to take a couple out. That's kind of the way we've looked at it, to try to clean that up. Whether that'll be the future look or not, but we've had some cleanup work that we've done in the organization, so that's where we've been for the last couple of years. And how do you think about SKU regionalization, right, of distribution, right? Slow move, fast move. So now you're consolidating SKUs in certain regional warehouses. Is that feasible or is that It's more a local play- Okay in the distribution centers, and so we give, you know, as I said earlier, we give our sales folks in the organization a lot of autonomy. We're not going to dictate if you need a product for a customer, you need it, and you've got the latitude to bring that in. But we do expect you to go sell that product- Right -and make it a productive SKU. So there is a, the way I like to describe it is there's a standardized business process and practice- Yeah that looks across, but we're going to, dictate those outcomes. What's your... I don't think I've ever asked you this, your take on Scoop and the importance of Scoop and any way in which you would change it from, you know, how it was originally designed? I think, you know, we're 12, 11 or 12 years into Scoop at this point. Yeah. I think it's been successful. The majority of those products we've launched are still being sold. Yep. So I think that speaks for itself. Really, it's the hallmark of our innovation process. Yep. And so that's what we use Scoop. We typically do a spring and a fall launch- Yeah on Scoop. And those, you know, there's a lot of built-up demand for that. You know, there's a lot of buzz around what's coming in Scoop, and we're thoughtful about that. I mean, we scan the globe on food trends, and so we're not just doing this in a vacuum in Chicago. We engage our customers all over the United States in terms of what problems they need solved, how can we help them be more productive in the kitchen? How can we help them with their menu productivity, in addition to having great products? So I like Scoop. I like the process of it. I like that is our innovation machine. So now I think we'll transition to the SG&A side of the business. And the two things that matter there, I mean, there's a lot of, you know, different items, including products not for resale, but labor productivity. So let's think about inside the warehouse. You know, what do you, w hat do you look at as the KPIs? You know, is it just sales per labor hour or, you know, other things are important as well? And then where are we versus 2019? Yeah. Specifically to the warehouse, we haven't gotten back to 2019 levels yet. Yep. You know, we've been pretty forthright with that. The warehouse has been more challenging than delivery, where we said we have gotten back to those- Yep - levels of turnover and productivity for our drivers. We're not quite there with the warehouse. Look, these are very difficult jobs, demanding hours, and so that's why things like automation- Yep ... as we think about, and we announced a replacement for our Bensenville operation in Chicago, that's gonna be in Aurora and start up in 2025. That will be a semi-automated facility, and we're thinking about exactly this issue. You know, it's not about wages and benefits exclusively for those jobs. That's not what you need to attract. It's more about work-life balance, and that's why flex scheduling and that work is so important, and we're having great success. And it's also, what can we do to make that work a bit easier for the selectors? Because these are very difficult jobs. And so I think that will all play into it. You know, looking at productivity through a cases per man-hour lens- Yep is kind of how we think about it, and being thoughtful and creative about how we get after that work-life balance issue, I think is going to pay great dividends going forward. Now, the warehouse in Chicago, you can do those every so often, right? If you think about putting automation back into an existing facility, talk about the challenge in that, in terms of disruptiveness and can you actually make enough of a difference to warrant the investment? I think it's more challenging for an existing facility. You know, many of those facilities are much older. They don't have the ceiling clearance- Yep ... that you need to have more fully automated facilities, but that doesn't mean there's nothing that we can do in those facilities. You know, to think about the selector work, you know, there's processes and capabilities to bring the selection process to a centralized location, where you stack the pallet and you wrap it, versus having everyone run all over the ware- There's thoughtful things that we can do, and that's why this semi-automation concept, I think, will be an important one for us going forward. You know, on the picking side, right? So I don't know, several years ago, right, people would put a in their ear, and they would pick to instructions. Is there a quantum leap forward in the picking process that's not, you know, truly automated, that's more process driven? I don't know that there's a game changer- Okay - that I can point to at the moment, but that technology continues to evolve as well. And maybe lastly, inside the warehouse, right? So you talked about, supply, demand, right? So I think supply is gonna be... There's demand for that labor. Supply is gonna be challenging, and so the answer, you think, is make the job easier and more rewarding. And now, is there, you know, incentives, right? I don't think most of that business, 'cause a lot—some of it's, or a lot of it, right, is teams are driven. I think there's a lot of incentives inside the warehouse. Is that something that they would want? Yeah, there's incentives for safety and quality of selection- Okay and all that, that they can make more money. But again, I think, and maybe COVID exacerbated this, John. I don't think it's. We're going to win that battle just by paying more. Okay. That's really not the game for the folks that are in that. It's really about, I don't want to work as hard. I don't wanna work these long hours. Yep. And so I really think this flexible scheduling that we're in the process of rolling out across the organization, we've been very encouraged in our safety results, the productivity, and the double-digit reduction in turnover that we've seen in the locations we've driven that flex scheduling, and that's why we're so excited about it. It's just trying to solve the same problem in a different way. You know, I tell this story, when I was at PFG years ago, driver turnover, selector turnover was the challenge. I leave for five years, I come back, driver turnover, selector turnover, still the same challenge. So that problem has not been solved in the industry yet, and that's why I'm so encouraged by the creativity the company is deploying to try to get after it. Now, on the driver side, right, so other than stem miles driven, right, so what are the metrics you're looking at there, you know, to determine success? And I guess now you are back to 19, but what's the opportunity? I mean, like, I've always thought the huge opportunity for all of you is to get drop size up, and yet that seems to... We'll get into that in a second, but, you know, maybe when you think about the opportunities on driver productivity, what would they be? You know, cases per mile. You know, we're- Okay and it plays into the way we route- Yeah - and trying to be more productive, get the average customer closer to you in terms of the customers you acquire and how you do that routing. You know, that's obviously an important one. Productivity of the drivers- Yeah ... right? That's always gonna be important. So those are the kind of metrics that you think about. There's different ways to get after solving that problem. So let's talk about drop size, which is a sales issue, but it's also, I think, a big SG&A opportunity in theory. In general, I assume it's growing, right? But everybody talks about, "Hey, we're adding a lot of new accounts, and that's driving the bulk of our growth in cases." So then drop size, I would think, has to be flattish, right? Maybe, you know, when there was inflation cases, you know, on a comp basis, it might have been down a little bit. Where do you think the drop size opportunity is? Because, again, you think about if you could increase that a little bit, the incremental margin on that is- There, there's clearly an opportunity. Yeah. And I think the work we're doing around real-time routing- Yeah with the cart and that process will enable and unlock in that area. But also penetrating our existing customers, you know, something I'm very passionate about. Yeah. To your point, a lot of our growth has been driven by new account generation. There's equal opportunity to penetrate those existing customers to a much higher level and help you with drop size and get that route density up. What do you think, in some general way, the average wallet share is with an independent, right? You hear different numbers, right? You hear 30%, 40%, and then you say, "Well, what's missing?" And a lot of times you hear what's missing is what the specialists are good at. Maybe it's center of the plate, right? So is that true? And then what's the unlock on center of the plate? Because I would think you cut your product, you know, against the specialists, and you're just as good. We are just as good. I think that number, that 30%-40%, it varies. You know, we have some accounts where we have all the business. Yeah. We have somewhere we're much lower penetrated, but on average, it's probably in that range. Dirk, I wouldn't say it's necessarily center of the plate. Okay. I think we do a good job with center of the plate, but even in that area, you know, I think there's opportunities for us to do better. 'Cause your point, we have great quality products. Stock Yards brand is well known. It's been around for a very, very long time. And just getting more penetration and more scale with that across the country is going to be important for us. We know we have opportunity to go yet, but, produce and proteins we find are good for the growth in those categories, but also the halo effect more broadly. So on the third quarter call, I think it was, you heard us talk about, produce has been a category we focused a lot on. Yep. Both from all the way out in the fields when it's being sourced, all the way through the quality processes that we've enhanced over the last few years, and that's been our fastest growing category. It's not just simply for the benefit of produce, but for the broader impact on the customer. It's showing those operators that the produce quality you're gonna get from us is gonna be as good or better than you'll get from a specialty provider. Well, it's interesting you bring up produce, right? Because Sysco's produce penetration is 2x, right? So 10%, you're at five. Now, some of that, they bought FreshPoint, and they made a lot of investments in the produce business over the years. When you think about that 5% of sales, where other than it can go up, you know, is there—Can it get to 10%? Yeah, I think we said we've taken 400 basis points of share- Okay In the past couple of years with the focus that Dirk described. Yeah. I don't think we're anywhere close to the limit. The organization has the right focus now on produce and center of the plate, and I think we'll continue to penetrate the market at a more aggressive rate going forward. So now we have three minutes left. I'll transition to a couple of other topics, but you know, it's interesting, maybe talk about your philosophy on M&A, right? Because you've done two deals in the last six months. They're very different, highly different. Sort of get not exactly the same place economically, but close. So what's your thought? You know, and I guess you'd like more Renzi's, but so what's your thought? Yeah. My thought is, first of all, and you've heard me say this before, we don't have to do any M&A. Yeah. We're gonna be thoughtful about M&A. We're not gonna overpay for M&A. In both cases, those deals solve problems for us in local markets that we were serving, not very efficiently, driving way too many miles to get there. In Renzi's case, well-known, Yep ... family brand, strong local presence, and high independent share, exactly the type we're looking for. In the case of Saladino's, it solved the problem of getting us capacity as a platform for growth for independents in the Central Valley, where us or none of our competitors were present, and we can take what was their chain business and put that into our different locations. So it solves the same problem in a different way. And John, I think there's a lot of opportunity for that around the country. Multiples are, you know, pre-COVID, you'd pay low double-digit EBITDA multiples. And then it was like, well, it's hard, it's hard to value an asset. We don't know what the EBITDA is, and/or they're asking for too much. Have we now gotten back to a point where a traditional broadliner, you can buy it for 10x or 11x and make the economics work? More reasonable. Yep, Dirk, you want to Yeah, it definitely is, and it depends on profitability- Yep ... the customer mix, et cetera, and that. But we're definitely seeing that in the line where you saw Renzi much more in line with our multiples, Saladino's lower- Yeah ... because of the mix of the business. It's been encouraging and, you know, our pipeline that we continue to look at is defined. You know, like Dave said, where it's the right deal for the right economics, we'll pursue them. If not, we've got three other capital priorities that we'll continue to focus on and put that cash to good use. Let's talk about that. Maybe we'll finish up with capital allocation. So I know people want you to delever. Of course, growing EBITDA does that, at least as an EBITDA debt to EBITDA. But your thought on how much do you want to dedicate to actual debt reduction versus buyback as, as a percent of your free cash? So we're pleased that we're within the range here at the end of the Third Quarter, and did use some of our excess cash this year to actually pay down debt. So we delevered through a combination of earnings growth and reduction. I would expect, as we go forward, more of that deleverage to come in the form of earnings growth, and probably not near as much debt pay down. First and foremost, we're going to continue to invest in the business for the right returns on projects. And then after that, it's if the right M&A opportunities arise, we'll pursue those. If not, we'll continue to likely devote additional cash to share repurchases. We'll be prudent with the cash and, you know, focus really on what generates the best shareholder returns. Excellent. We have 26 seconds to go, so, the timing worked out well. So thank you, guys. Appreciate it, John. Thanks. Thanks for the opportunity. Thanks, John.