We kind of ripped that band-aid off and made it really clear on what our expectations are of visit frequency. That’s the wheel side of the job. Get out there, pound the street be in front of our customers. This is a relationship business. We’re being in front of the customer every week matters, and we have moved the needle meaningfully in the last quarter on the number of visits being completed per week for our SEs. Point two, though, that you brought up is that’s only worthwhile if it’s a quality visit. So how do we measure quality? We have visited a purpose. And in our CRM tool, it will prompt our SEs with jobs to be done that day, introduce the Sysco brand case, win back the case that was lost over the last x period of time. Sell a category you’ve not sold before.
Those are just three examples of jobs to be done. The CRM data rich understands what’s being purchased, what should be purchased. And it essentially prompts the SEs with things to sell. And how do I measure quality? I measure quality by close rate against those jobs to be done and we can track it. We have a scorecard that ranks every one of our sales people from top to bottom, and then we do performance managing against the quality side of the visit. Recognize the top performers, coach the move the middle and hold accountable those that aren’t getting the job done and everything in between. John, back to you for any follow-up.
John Heinbockel: The follow-up would be, right, so you talked about growing GP dollars above SG&A. So, if you take the US, right, the delta was 200 basis points this quarter. I mean what’s your thought as to the right general level? And lately, it was gross margin-driven, right, gross profit driven as opposed to SG&A. We now shifted back, right, to an environment where it’s more SG&A-driven than gross profit.
Kevin Hourican: So, here’s my — how we think about it. It’s both, right? It is the gross profit line and the operating income line. If you look at Q2, you can see that our topline growth was 4%. If you just do the math, the cost of goods, if you will, between sales and gross profit was up 3%. So, you had a nice leverage driven by strategic sourcing, our partnership with suppliers driven by mix of business, growth in specialty, local brand penetration. And as a result, GP actually grew 5%. So, we had a nice leverage between sales and GP. Now to Europe on SG&A, we’re working extremely hard, driving productivity out. The good news is, is the $100 million of cost out that we talked about at the beginning of the year, that is being seen through the P&L and we’re working through a pipeline that’s going to render success for us in outer period.
And that is — and you can see GP growing, call it, 5%, and then net earnings growing close to double-digit for the prior year. So, you’re getting the leverage, John, on both the cost of good line and the OpEx line and we have initiatives back to both sides of the house.
John Heinbockel: Thank you.
Kevin Hourican: Thanks John.
Operator: The next question comes from Edward Kelly with Wells Fargo.
Edward Kelly: Hi, guys. Good morning. Nice quarter. I wanted to just follow-up on the case line growth. I mean the Q2 result was clearly an inflection around what’s the last quarter and the last couple of quarters. Can you maybe just help us understand how we should be thinking about the back half of the year from here? So, you talked about January off to a slower start. I don’t think industry growth is all that spectacular at the moment. I’m just trying to make sure that we’re in the right place from an expectation standpoint, just given how strong Q2 was? And then just a clarification on Edward Don, I know it’s not in the case volume numbers currently. Does that mean it will not be going forward as well?
Kevin Hourican: Yes, Ed, good question. Thank you. We’re confident in our ability to profitably grow the local business and not kind of regress back to the mean on where we were in Q1. That’s one of the main messages from today’s call. We’ve built momentum local performance, very strong. Exit velocity was strong. Unfortunately, the industry as I did a speed bump, I talked about the W word, which I hate talking about. There’s also a two-year stack thing going on in January where because of very, very strong growth a year ago. tied to the prior year being Omicron. There’s a two-year stack phenomenon on January that normalizes itself by mid-February, which we’ll get through. And as you know, March is the most important month. But we’re not going to quote a number on today’s call vis-à-vis what you should expect from a local case volume growth other than what we are seeing and what we predict is built into the guidance for the year, and we’re confident in our ability to deliver the midpoint of the guidance that we point out today.
Kenny touched to for any additional comments.
Kenny Cheung: Yes. On local growth, as Kevin said, our assumptions are baked into the guidance. We are always focused on profitable growth. That’s really important for our company. And you can see that’s the reason why that the cash conversion and not leverage was so strong in Q2. In terms of Edward Don, so in our volume number, just to clarify, BIX is in our volume year-over-year, it’s immaterial. From a Don side, it is in our total number, just not in the volume number given the different product attributes.
Edward Kelly: And that’s going to be the case going forward. And I’m just curious as to why Edward Don does not included in volume?
Kevin Hourican: I mean — this is Kevin. We don’t include SSMG in our volumes because the business is measured through pounds. And just getting to a common denominator is difficult. The way Don measures their business is today not the same as how we measure the business cases versus pallets versus eaches. And we want to make sure that we get that right before we include it in our metrics, and that’s something that we’re working on as a part of our integration planning.
Edward Kelly: Okay. Thank you.
Kevin Hourican: Thank you, Ed. Have a good day.
Operator: The next question comes from Joshua Long with Stephens.
Joshua Long: Great. Thank you taking my question. Was curious if you could further contextualize the strength of the local case growth in terms of the opportunity to further penetrate kind of existing consumers and then also execute against new customer wins, which I know has been a target and a goal over the last couple of calls that we’ve talked about
Kevin Hourican: Yes. Josh, thanks. On the existing customers, I’ll bridge back. I didn’t talk a lot today on the prepared remarks about our Recipe for Growth. I was trying to really keep it narrow and focused on drive local case performance through selling effectiveness and supply chain. We’re really pleased with our Recipe for Growth strategy and the impact of our growth programs on our business. And I’d point you to Sysco Your Way and Perks as two very, very important programs that are increasing penetration with existing customers. They’re continuing to do well at our Investor Day in May. We’re going to talk about the longer-term plans for those two growth programs. And then the third is our total team selling effort, which is we over-index in broadline.
