Sysco Corporation (NYSE:SYY) Q2 2023 Earnings Call Transcript

Sysco Corporation (NYSE:SYY) Q2 2023 Earnings Call Transcript January 31, 2023

Operator: Welcome to Sysco’s Second Quarter Fiscal Year 2023 Conference Call. As a reminder, today’s call is being recorded. We will begin with opening remarks and introductions. I would now like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

Kevin Kim: Good morning, everyone, and welcome to Sysco’s Second Quarter Fiscal Year 2023 Earnings Call. On today’s call, we have Kevin Hourican, our President and Chief Executive Officer; and Neil Russell, our Interim Chief Financial Officer and SVP of Corporate Affairs. Before we begin, please note that statements made during this presentation that state the company’s or management’s intentions, beliefs, expectations or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company’s SEC.

This includes, but is not limited to, risk factors contained in our annual report on Form 10-K for the year ended July 2, 2022, subsequent SEC filings and in the news release issued earlier this morning. A copy of these materials can be found in the Investors section at sysco.com. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the Investors section of our website. To ensure that we have sufficient time to answer all questions, we’d like to ask each participant to limit their time today to one question. If you have a follow-up question, we ask that you reenter the queue.

At this time, I’d like to turn the call over to Kevin Hourican.

Kevin Hourican: Hello, everyone. Thank you for joining our call this morning. Our reported Q2 results, as displayed on Slide number 6, include positive case volume growth, continued share gains, strong double-digit sales and earnings growth year-over-year. This included operating income growth across each of our segments, including SYGMA and International. Importantly, gross profit growth this quarter outpaced operating expense, an important milestone that we expect to continue into the remainder of the year as we make progress in further improving our supply chain productivity. In addition, we continue to advance forward our Recipe for Growth strategy with continued progress in our digital tools, supply chain investments in sales and merchandising initiatives.

The progress that we are making will enable Sysco to better serve our customers and grow profitably for years to come. As you can see on Chart number 7, we continue to succeed versus the overall industry growing1.35x the market in the first half of 2023. I’ll break down the sales momentum versus the market further in a moment. Strong top and bottom line growth was delivered for the quarter with adjusted EPS in Q2 of $0.80. I’d like to provide you with some details on select items that impacted our results for the quarter. The first callout is within case volumes. We leveraged a third party to help with macro forecast of the industry’s growth. For the second quarter, the projection was that the industry in total, would realize nearly 5% case growth year-over-year.

In Q2, the actual industry case growth rate was only 1%, excluding Sysco. This 400 basis points of case volume variance was significant, especially within the local segment. A contributor to the softer volume result was the reality that the Omicron overlap did not lift the market growth rate in November and December as had been anticipated. With that said, it is important to note that we are seeing stronger volume growth in January. Additionally, a labor dispute that impacted three of our operating sites in the second quarter negatively impacted sales and case volumes during the October and November time frame. To be clear, the overall market growth rate is an industry-wide issue, while the labor dispute was a Sysco-specific challenge. The latter of the two issues is now firmly in the rearview mirror.

We will monitor the second half of the year case volume trends very closely and we are taking specific actions to accelerate new customer acquisition in the local segment for the second half of this fiscal year given the softer overall market. In addition to explaining the case volume dynamic, I would like to provide an update on operating expenses. As I mentioned, we are making solid progress with improving operating efficiency and we grew GP at a faster rate than expenses in the quarter, a sign of progress and a trend we expect to continue. We are making progress on improving supply chain productivity and I will discuss that further in a few minutes. With that said, the aforementioned labor dispute had a meaningful impact on our Q2 expenses.

During this disruption we prioritized deliveries for essential customers, especially in the healthcare and education segments. As a result, we took the actions required to ensure that we could continue operations in these three sites, including leveraging third-party resources when necessary. These customer service measures pressured our expenses for the quarter, negatively impacting operating income. Again, this challenge is in the rearview mirror. On the positive side of the ledger, our contract bid business is exceeding plan on the top and bottom line for the year. Our sales teams are doing an excellent job with customer retention, customer acquisition and profitability management within bid contracts. In addition for our total business, our gross profit per case was strong for the quarter.

Our sales and merchandizing teams are doing a solid job with inflation management and strategic sourcing. Additionally, our Sysco brand merchandizing team continues to do good work as we increased Sysco brand case penetration by 65 basis points in the quarter versus the prior year. As you know, each additional Sysco case adds to our profit rate and also positively impacts customer retention. From a sales and margin perspective, we continue to succeed by introducing higher-margin specialty products to our customers and we are winning new business in the higher growth produce segment. The success that we are having in GP per case is expected to continue into the second half of the year and that progress will help offset portions of the market volume softness.

Lastly, we are doing a good job of managing expenses at our Global Support Center or corporate expenses putting measures into place mid-Q2 to lower spending in these GSE cost centers. Those measures will stay in place for the remainder of the fiscal year to offset the lower marketplace growth and to mitigate a potential future recession. Turning to the second half, we remain resolute on continuing to drive profitable share gains and drive supply chain operations efficiency improvements. On the operating side of the business, we are making progress on improving our productivity. We are delivering improved retention rates and as a result, lower hiring rates. By hiring fewer people, we have been able to lower recruitment expenses, lower training expenses, and we are seeing increased productivity across warehouse and transportation roles.

These improvements will accelerate into the second half of the year. We are fully staffed domestically and internationally and we have detailed work in place to ensure our staffing levels match our daily, weekly and monthly volumes. Q3 is typically the softest volume quarter of the year. and we are improving our flexibility in managing staff levels to lower volume periods, all while preparing for the highest volume quarter of the year,Q4. These staffing planning efforts are built into our year-to-go forecast. There are four factors that influence our full year guidance. Number one, softer than originally budgeted market volumes in the local segment, partially offset by Sysco growing 1.35 times faster than the market in total; number two, higher than originally planned operating expenses, while steadily improving; number three, favorable GP per case and strong margin management; number four, favorable GSE or corporate expenses.

Given that we are now at the midpoint of the year and based upon the factors I just covered, we are adjusting our full year guidance. The full year is now guided to be a $0.15 range from $4 to $4.15, which represents year-over-year growth of approximately 23% to 28%, lapping the 126% growth from fiscal 2022. The midpoint of 407 represents a 15% growth rate versus 2019 levels. As is my custom on these calls, I plan to share a bit more color on a few key Sysco initiatives that are driving performance. First, let me start with sales growth. For the first half of the year, Sysco grew 1.35 times the industry and we are on track to deliver our sales growth goal for the year. Our Recipe for Growth strategy is winning in the marketplace. We are seeing solid growth in national restaurants, healthcare and our education segments.

At the local level, we are winning business through our specialty programs: Produce, protein and Italian and through our customer growth initiatives, Sysco Your Way and Perks. Altogether, these sales wins are delivering compelling share gains. In the most recent quarter, we advanced dozens of additional Sysco Your Way neighborhoods, introduced Sysco Perks to thousands of customers and began the integration of our latest Italian acquisition in Southern California. The Italian distributor we acquired in Los Angeles, Concord Foods will be converted to the Greco business model shortly. We are planning for compelling sales and profit growth from that acquisition located in the second largest Italian markets in the country. We will continue to expand the Greco platform across the country through a combination of both organic and inorganic activities.

Topic two for today I’d like to discuss the state of our supply chain and highlight the status of some important work. I’ll start by discussing our core operations environment and then I will highlight some of our strategic initiatives. During the first quarter of 2023, we achieved fully staffed status across our network. During the second quarter, we were able to focus on colleague training, productivity and retention. I am pleased to report and shown on Chart 9 that we are making progress on retention and as a result, we will need to hire far fewer colleagues in the second half of this year. We are seeing the green shoots of progress that come from the reality of less hiring, like lower recruitment costs, lower hiring costs, lower training expenses and lower overtime percentages.

We are also experiencing improved levels of productivity from our colleagues as they become more skilled in their roles. Our colleague workforce is still inexperienced versus our historical standards and therefore, productivity is still below historical standards. However, we are making solid progress. We expect to make even more progress in the second half, enabling better flow-through from the top to the bottom line. Importantly, we grew gross profit dollars in Q2 at a faster rate than our expenses grew, creating a favorable leverage ratio. We expect to make even more progress in the second half of the fiscal year. From a supply chain strategic initiatives perspective, we continued on our journey to enable profitable sales growth, improved service levels to customers and to be the most efficient distributor within the food service industry.

Our omni-channel initiative is now live in our first test region. We are able to share inventory across two Sysco houses and we have enabled the ability to proactively leverage stocking strategies to improve service levels while lowering our overall level of working capital within the region. As I have mentioned previously, this project will help us lower transportation expenses by ensuring that the last mile distribution to a customer comes from the most proximate DC location agnostic of where the inventory is staged or warehoused. Equally importantly, we continue to make progress with six day deliveries. We have moved meaningful business through Saturday delivery, enabling effective day balancing, increased flexibility and increased capacity utilization across each of our now six full shipping days.

The progress of this initiative will position us well for the upcoming peak fourth quarter shipping volume and will enable us to continue winning net new business at the national and local levels. We are pleased to have the implementation in the rearview mirror and we are now focused on efficiency leverage and customer acquisition. These two projects are perfect examples of how Sysco is transforming supply chain management within food service distribution. Our supply chain will enable us to grow profitably for years to come. I’ll now turn it over to Neil, who will provide additional financial details.

Neil Russell: Thank you, Kevin, and hello, everyone. It’s good to be with all of you, and I look forward to our ongoing discussions while I am in this interim role. During the second quarter, we delivered solid growth in both top and bottom line results and continued our balanced approach to capital allocation. All important elements of our Recipe for Growth as we further enhance competitive advantages for Sysco. I’ll start with a summary of our second quarter results. Sales grew 13.9% with U.S. food service growing at13.7% and continued positive momentum for our International segment, which grew at 17%. Volumes for the U.S. foodservice segment, which includes our Broadline, FreshPoint U.S. produce, U.S. Italian and other specialty businesses, grew 5.2% and local case volumes increased 3.2%.

Gross profit for the second quarter increased 15.9% to $3.3 billion versus last year with gross margin improving 29 basis points to 18%. Gross profit dollars per case grew in all four segments versus prior year marking the sixth consecutive quarter of such growth. Our gross profit and margin improvement during the second quarter reflected our ability to continue to effectively manage product inflation, which moderated to 8.3%, down sequentially from 9.7% during the first quarter at the total enterprise level. The improvement in gross profit per case was also driven by incremental progress from our strategic sourcing efforts as we continue to partner with our suppliers. Overall adjusted operating expenses were $2.7 billion for the quarter or 14.3% of sales, a 33 basis point improvement as a percentage of sales over the same quarter in the prior year.

Photo by Anna Pelzer on Unsplash

This quarter included transformation investments of $55 million and new colleague-related productivity costs of $22 million. This is an improvement compared to $63 million of transformational investments and $41 million of productivity costs in the first quarter. Snapback costs were reduced all the way down to zero during the second quarter. We are pleased with the sequential improvement we experienced in both snapback and productivity during the quarter. All four operating segments again showed increases in profitability year-over-year during our second quarter. As seen on Slide 15, adjusted operating income for the enterprise increased by 37.6% versus last year to $682 million. This is the highest adjusted operating income result for the second quarter in Sysco’s history.

Just a few years ago, our operating income was about one-third of the amount we achieved this year, an important signal of the progress being made at Sysco via our Recipe for Growth. It is worth noting that adjusted operating income for the quarter was generally in line with external expectations. Importantly, as Kevin shared in his introduction, this quarter marked an important milestone as gross profit dollar growth outpaced operating expense growth, illustrating the beginning of the anticipated leverage with more progress expected going forward. For the quarter, we grew adjusted EBITDA by 23.9% to $831 million. We are pleased with the continued top-line growth in the second quarter. Gross profit dollar growth outpaced operating expense growth and each of our segments generated substantial operating income growth.

Our results this quarter were also impacted by three items, including: One, the impact of the labor dispute during the quarter at Sysco. We estimate this impacted our results by approximately $26 million during the second quarter. Second, as just mentioned, a continuation of productivity cost of $22 million directly related to the higher volume of new colleagues we hired over the past couple of quarters. The first two items are included in adjusted operating income. The third item was below the operating income line in other income and expense, which showed adjusted expenses up $26 million over the prior year. This increase in expense was primarily due to increased pension expenses, which were a result of higher interest rates. Regarding pension, we also completed a transfer of a portion of our pension liabilities in the second quarter, decreasing Sysco’s plan size, risk and overall administrative costs while protecting retirees as they will now be in the hands of an A-rated insurance company.

This transaction resulted in a non-cash charge in the second quarter of $315 million. In regard to the balance sheet, our strong investment-grade rated balance sheet remains a competitive advantage for Sysco, and we ended the quarter at three times net debt to adjusted EBITDA. In the first half of the year, we returned $268 million to shareholders in the form of share repurchases and paid our increased quarterly dividend, in total, returning $766 million to shareholders. As a reminder, specific to our debt, we remain well positioned in the current rising interest rate environment with approximately 95% of Sysco’s debt being fixed rate at attractive rates. Let’s turn to cash. Year-to-date, cash flow from operations for the quarter was $503 million, a $126 million improvement over the prior year.

Net CapEx increased to $284 million as we continue to invest in our Recipe for Growth, particularly with respect to our planned investments in fleet and distribution facilities. Free cash flow increased to $219 million for the quarter. Working capital was a modest use of cash. We continue to monitor our inventory balances, as well as our accounts receivable given the economic environment. We ended the quarter with approximately $500 million in cash on hand and over $3 billion in total liquidity. Lastly, looking ahead to the remainder of the year and beyond, as Kevin mentioned earlier, we are adjusting our full year EPS guidance range to $4 to $4.15 per share for fiscal year 2023. The midpoint of this range reflects our current business plan, including the three items I described earlier.

The low end represents a further macroeconomic softness and potential subsequent reduction in food-away-from-home volume demand. The high end of the range represents an improved macro environment or outside Sysco performance. As we look toward the remainder of the fiscal year, we expect further improvements in productivity costs as the prior wave of new hires continues to ramp up in their roles. We also expect the second half of fiscal 2023 to reflect a similar trend of gross profit dollar growth outpacing operating expense growth. Now I would like to provide a brief update on the status of our sustainability and diversity, equity and inclusion work at Sysco. We issued our 2022 sustainability report and our DEI report in November. Sustainability is a key ingredient to our recipe for growth strategy to help ensure that we are growing responsibly and purposefully while leading our industry toward a more sustainable future.

We are proud of the actions we continue to take to build a more sustainable future for Sysco and for our industry. It is through these actions that during the second quarter, our MSCI ESG rating was upgraded from BBB to A in their latest ratings assessment. This is a reflection of our ongoing work in sustainability across Sysco’s three pillars of ESG: People, product and planet. Furthermore, Sysco aspires to create a global culture that is decidedly diverse, equitable and inclusive, one where we foster belonging as we care for one another and connect the world through food and trusted partnerships. Our recently issued DEI report takes a deeper look into our strategic approach to diversity, equity and inclusion at Sysco and our commitment to caring for people.

Since accelerating our DEI efforts in early 2020, we’ve developed a three year road map to guide our DEI journey, as we embed our strategic priorities throughout the business and achieve our DEI goals. Importantly, we recently achieved our current 2025 workforce representation goal and have now established a cross-functional task force to develop new workforce representation goals as we move forward. All of these efforts are consistent with our purpose of connecting the world to share food and care for one another. Both of these reports can be found on sysco.com. The focus on sustainability and DEI is not only the right thing to do, it will also be good for business in the long term. With that, I’ll turn the call back over to Kevin for his closing remarks.

Kevin Hourican: Thank you, Neil. I appreciate all that you are doing for Sysco. As we conclude, I’d like to provide a brief summary on Slide 20. The following are our key takeaways from today’s call: Our first half financial performance with a 15% increase in sales and a 26% increase in adjusted EPS displays the progress Sysco is making to win in the marketplace while we are transforming our business for the future. Our profit leverage improved in the second quarter and we expect that ratio to improve further in the second half of this fiscal year. We communicated today several factors that impacted Q2 profit results. Importantly, the labor dispute is behind us and we are making solid progress on improving our operating expenses.

On the sales and volume side of the ledger, our core growth initiatives are working as designed and we will focus on winning more new local customers in the second half of the year. Sysco has proven that we can win share when we make it a priority for our sales teams. Encouragingly, January volume growth is off to a strong start. Lastly, Sysco remains deeply committed to our strong and stable balance sheet, disciplined capital allocation and delivering continued returns to our shareholders. Our status as a dividend aristocrat remains a priority and we are proud to carry that distinction going into our 54th year. We look forward to keeping you posted on our progress as a company and look forward to highlighting more about our longer-term initiatives at the CAGNY conference in a few short weeks.

Lastly, I’d like to provide a brief update on the status of our CFO search. We are making solid progress. The interest level from highly qualified candidates has been very strong. We have a very compelling pool of talent to choose from and we are progressing along in the evaluation and selection process. I would like to thank Neil for the outstanding job he is doing as our interim CFO. He is a trusted partner and I greatly appreciate his leadership. Operator, you can now open the line for questions.

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Q&A Session

Operator: Your first question will come from Kelly Bania of BMO. Please go ahead.

Kelly Bania: Hi, good morning. This is Kelly Bania. Thanks for taking our question. I was wondering if we could just talk a little bit more about the plan for the second half. It sounds like the labor dispute is clearly isolated to the quarter, but the other factors that you called out as contributing to the guidance update. Maybe can you just help us understand what is in the plan for the second half as it relates to these factors, whether it’s the below-the-line pension, the productivity, the local growth and maybe just a little more color in general on the local growth, what you think impacted that customer base? What you attribute this to? And what you’re expecting in terms of market-based growth from independents in the back half? Thank you.

Kevin Hourican: Good morning, Kelly. Thank you for the questions. It’s Kevin. I’ll start with comments about the updated revised guidance. I’ll talk about the local growth specific question and then I’ll toss to Neil for the below the line components of your question. It’s a good question and a lot to it. So we’ll take it into each of those three parts. The forecast that we revised today is what we would call a middle-of-the-road, center of the fairway forecast. It’s our updated view given the conditions that we are operating within and the data that we have available to us. I’d like to start with the comment on overall market growth. We do leverage a third-party firm to provide us guidance on what the overall market will be and as I said on my prepared remarks, the expectation was that for the quarter that disclosed that the market in total will be up five and the market in total, excluding Sysco was up one.

Now we budgeted for and are delivering more growth than the market. So we layer on top of the market growth 1.35 times from Sysco’s specific performance. The good news is we are achieving that particular outcome. We are, in fact, delivering performance results greater than the market. It’s the reality that the market itself is performing softer or lower than what had been expected. I’ll come back to that in a minute to answer the second part of your question. So that needed to be adjusted for the full year, which we have done. I’m not going to quote a specific local case volume growth for the second half, just to point you to our total guidance includes our updated view on the second half of the year. Operating expenses, we’ve updated for the year to reflect the current rates of productivity, which are lower than what we had originally budgeted, but as I called out in my prepared remarks, we’re making steady progress, green shoots of improvement.

I call your attention to Slide 9 in our prepared slides, showing you the specific data that are the leading indicators of what will become cost per piece improvements and cost per piece reductions and we are making meaningful progress in supply chain productivity. So we updated point two, which was our cost per piece shipped for the year to go. And then the labor dispute happened already, but it needed to be incorporated into our full year because the guide we provided today is a full year. And it was a $26 million operating income hit for the quarter, that’s now closed. It is in the rearview mirror. It is behind us, and that will not be repeated in the second half of the year. And the other income component, I’m going to toss to Neil in just a moment for him to explain its portion impact on the full year.

Let me just address the softer growth rates, kind of what are the drivers of that? Why is it transpiring and then toss over to Neil. I think it’s a couple of factors, Kelly. Number one is 2022 actually ended up being stronger than what the third-party modeling component had expected. So my belief there is that some of the over delivery, if you will, on snapback of COVID recovery in 2022 soften some of the recovery in 2023. That’s point number one. Point number two is inflation as many of the restaurant names reported at ICR a couple of weeks ago. They are delivering strong top line results, but to put traffic in their own case volume metric, if you will, is flat to down nominally. And that, I believe, is reflective in the overall volume component, the impact of inflation.

Number three, consumer sentiment, mindset relative to everything that’s being written in the newspapers, et cetera, and how that impacts consumer behavior. Last but not least, and I mentioned this in my prepared remarks, is Omicron we had expected and anticipated a bump in November and December tied to that rolling over last year’s headwind and we didn’t see that bump in November and December. It is reported on my call earlier this morning, though, that we are seeing strong year-over-year performance in January and that is a positive. So when we put all of those things together, the best predictor of future outcomes are current outcomes, and we essentially took our current trends modeled them forward for the second half of the year, applied what we call center of the fairway view, loaded in our own views of risks and opportunities and the things that we can do to manage our business performance and therefore, updated our guidance and provide that clarity today.

I’ll toss to Neil for comments about the below-the-line elements that impacted EPS.

Neil Russell: Hey, Kelly, good morning. Good to hear from you. Just a couple of points from me here. First of all, talking about some of the operating expenses we had, as I alluded to in my prepared comments, first of all, snapback costs, which we’ve talked about for the past several quarters to remind you going back, we are originally about $35 million then they were reduced to $29 million then to $10 million and now very pleased for the second quarter to be down to zero in that. And similarly, for the productivity cost that we’ve talked about over the last few quarters, we had $41 million and then $41 million again and now down to $22 million for the second quarter. So we are seeing the reductions in both of those lines that we had previously alluded to and we feel like we’re very much at a turning point for some of these operating costs and we would expect that momentum to continue into the second half of the year.

Addressing the below-the-line item specifically, what you saw in the second quarter, which was expense of about $15 million, I think is a fair representation of what we should expect per quarter for the remainder of the fiscal year. That’s largely driven by pension expense, which has been influenced by interest rates. And we feel like that’s going to be a fairly stable number because, as you know, we transferred liabilities as part of a transfer plan that we did during the quarter. And as a result of doing that, we had to remeasure the plant and so because we remeasured the plan, we feel like that’s going to be a fairly stable number for us. We won’t remeasure the plan again until we get to the end of the year. So thanks very much for the question.

Hopefully, that helps.

Kevin Hourican: Mitchell, let’s go to our next question please.

Operator: Yes sir. Your next question will come from Mark Carden of UBS. Please go ahead.

Mark Carden: Good morning. Thanks so much for taking the question. So, I wanted to dig in a bit more on market share. You noted that you grew at 1.35x the market in 1H, which was a bit of a slowdown from last quarter’s 1.4x pace. What in your view was most impactful in driving the slowdown relative to the market? Was it mainly competitors having more access to supply? Do the labor issues have much of an impact and what gives you the most confidence that share trends can accelerate again in the back half of the year? Thanks.

Kevin Hourican: Mark, thank you for the question. In aggregate, again, we’re on track for the first half of the year. Our stated goal for the year is to grow 1.35 for the year and at the halfway point to be able to deliver that goal. You’re right to point out that Q1 was stronger than Q2. The honest straight talk there is the labor disruption, which impacted three of Sysco’s operating sites did, in fact, caused a disruption in the period of October and November from a market share perspective. We have cleared that hurdle. We have moved on from that hurdle and we are confident in our ability in the second half of the year to grow 1.35x the market. So that is the reason for Q2 versus Q1, just being direct and straight about it.

We are winning at the total level. We’re winning on the what we call contract bid business and our initiatives within the local segment are working. And those initiatives are the Italian platform that we are expanding, our growth in our specialty categories and that our customer-specific platforms of Sysco Your Way and Perks major initiatives are delivering the impact that we expect them to deliver and we’re very focused on them. As it relates to the second half of the year, what gives us confidence in our ability to deliver the full year. We’ve got the best trained sales associates in the industry, 5,000-plus strong in the U.S. alone, and they’re very focused on penetrating lines with existing customers, and we’re going to make new customer acquisition, a bigger priority for our sales reps in the second half of the year given the overall market conditions as we’re seeing them.

And our sales force is very responsive to their compensation program. And I believe I’ve shared on prior calls how that program works, the base plus bonus and the bonus is configurable by us. We can tweak it, and we can adjust it and we can make modifications to it. And one of those adjustments for the second half of the year will be to increase the weight on focusing on what we call prospecting or new customer penetration. So I answer the Q2, and we have confidence in our ability to win versus the marketplace. And in aggregate, what we’re looking for in the revised guidance €“ we provided today, the midpoint of 4.07%, just to keep in perspective is a 25% growth over prior year and it’s a 15% growth over 2019, which is the peak profitability year of the company.

So, all in, in aggregate, really strong year from Sysco in total.

Mark Carden: All right. Thanks so much and good luck.