We continue to actively manage working capital and expect to drive further improvements in 2024 from initiatives targeted in inventory and payables. We expect operating cash flow growth over 2023 for the full year. We will continue to invest in the business for growth and remain focused on our capital allocation priorities to maintain net leverage within our target range of 2.5x to 3x, return capital to shareholders via share buybacks and opportunistically pursue accretive tuck-in. We repurchased $13 million of shares during the first quarter. Repurchases were muted as we were in the process of acquiring IWC. We’re excited to welcome the IWC team to US Foods as we closed on the acquisition in April, [indiscernible] price of approximately $220 million, which was funded through operating cash flow.
Turning to Slide 13. We ended the quarter with net leverage of 2.8x, which is a 0.4 turn reduction versus the same period last year and consistent with where we ended 2023. In February, we successfully repriced our term loan through 2028 and reduced the interest rate margins by 50 basis points. As a reminder, we do not have any debt maturities until 2026. Now turning to guidance on Slide 14. Given our performance for the first quarter and outlook for the balance of the year, we are reaffirming our fiscal year 2024 guidance. We continue to expect adjusted EBITDA to be in the range of $1.69 billion to $1.74 billion and adjusted diluted EPS between $3 and $3.20. The macro remains a little softer than we and many anticipated going into the year.
But as you heard from Dave, we continue to outpace the growing broadline distribution channel. Our industry is resilient and US Foods is well positioned for above-market growth with our differentiation, diverse customer base and customer-focused strategy to drive share gains. As a result, we continue to expect our full year case volume growth to be within our guidance range of 4% to 6%. In addition to continued volume growth, we have the right strategies in place and are expanding gross margins through initiatives such as cost of goods management and driving OpEx productivity through improved routing administrative process streamlining and indirect spend management. With that, I’ll pass it back to Dave for his closing remarks.
Dave Flitman: Thanks, Dirk. Looking ahead, we remain intensely focused on executing our strategy, and we’ll maintain our disciplined approach to capital deployment to drive long-term shareholder value. We see tremendous opportunities ahead as we focus on what we can control and continue to deliver on our commitments regardless of the operating environment. Our future is promising, and I am highly confident in our ability to continue to outpace industry growth over the long term, and to leverage that growth effectively to the bottom line. Finally, we are excited about our upcoming Investor Day on June 5, where we will share our new long-range plan targets and why we believe we have the right strategy and the best associates in the business to execute that plan. We hope you can join us here at our company headquarters or via the webcast. With that, Krista, please open up the call for questions.
Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your next question comes from the line of Alex Slagle with Jefferies. Please go ahead.
Alexander Slagle: Thanks. Good morning. I guess a question more on the macro, just high level. I mean in some segments, the management teams, companies we cover have ratcheted down their growth expectations because of the softer traffic environment. Just trying to figure out, I mean, has this impacted your internal targets to certain degrees, and maybe you could talk to some of the incremental offsets that you’re seeing that allow you to reiterate your outlook?
Dirk Locascio: Yes. Alex. So look, I think it’s well documented that there have been some foot traffic challenges in the industry. But as I continue to say to you all and I say to our team internally, we have so much opportunity to continue to focus on the things we can control, like gaining profitable market share. And look, I couldn’t be more pleased or proud of our team on the performance in the first quarter. Obviously, the well-documented weather situation was out there. On top of that, we had a labor disruption that lasted for the majority of the month of January. And still, we outperformed the market, accelerated share gains. And so that is what gives me confidence in our ability to continue to outpace the market growth regardless of what’s going on in the workaround is.
And then secondly, you heard a lot this morning from both me and Dirk about our continued work around self-help, and there’s so much of that going on. And again, with all the distractions we had in January, our team’s ability to stay focused and put up the productivity numbers that we talked about here this morning. just gives me great confidence that, that momentum will continue a strong pipeline of initiatives as you heard, and we’re continuing to stay focused.
Alexander Slagle: Congrats on the progress.
Dirk Locascio: Thanks a lot, Alex.
Operator: Your next question comes from the line of John Heinbockel with Guggenheim Securities. Please go ahead.
John Heinbockel: Hey guys, I want to start with because a lot of noise, right, on the — unusual amount of noise in the first quarter. Where do you think the trend line on independent case growth is? I know it was the organic piece, right? So that was 2.9%, impacted by weather and strike. Do you think we’re 4% to 5% and wherever we are, is all of that coming from new account growth. right? And so penetration for everybody, right, is kind of stalled out. Is that kind of where we are composition-wise?
Dirk Locascio: Yes. I think in that mid-single-digit range, John, kind of as you framed it, is probably the right trajectory. We were relatively flattish in January year-over-year, which I thought was a win for the team given the challenges that we had and then it accelerated from there. as we flipped into the second quarter, it’s roughly on par with the way we exited the first quarter. And so yes, the foot traffic is a challenge, but our ability to generate new business is key to our success. Penetration is a challenge just with the foot traffic piece of it, but we also have an opportunity to shore up lost business, which hasn’t been a problem for us, but there’s always opportunity to do a better job there. So that combination of net new account generation, that difference between new accounts and shoring up the loss is where our team stays focused and obviously, continue to look for every penetration opportunity we can.
You heard about this morning about [indiscernible] penetration opportunity. That’s new for us. We’re excited about it to take that offering to our existing customer base. And we think that’s going to mean good things on the penetration front, as we ramp that up across the company.
Dave Flitman: I think, John, the other thing that shows through in our first quarter results was our 1.4% organic total case growth, which is sort of faster than the industry and others is really, I think it highlights the diverse mix of customers that we have. And so it’s about our target customer types in that overall smart profitable growth.
John Heinbockel: And maybe the follow-up, right? The — I think you maybe size for the first time, the 60% of the product base that you’ve gone through $120 million of savings. So when you think about the next 40%, I assume that’s not as productive as the first 60, which may be wrong. And then you’ll go back around again. So when you think about on a go-forward basis, in aggregate, is there a lot more than $120 million to go over a multiyear period or no, do you think?
Dirk Locascio: Well, I think you’re thinking about it right. The 40% won’t likely be as large as the 60 just to size that a little bit for you, John? But there is a lot to do going forward. And to your point, around cycling back. I think there’ll be existing more momentum than we’ve had on the existing side. And look, the beauty is, in a month, we’re going to lay all this out for you at our Investor Day on June 5 and talk about that contribution and where it comes from over the next three-year time horizon.
John Heinbockel: Thank you.
Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Please go ahead.
Brian Harbour: Yes, thanks. Good morning. I’m sure I’ll talk about this next month, too, but just what’s the source of some of the additional kind of cost savings opportunities that you mentioned in your comments, Dave?
Dirk Locascio: Well, I’d point to. One, I commented on and the other one, I didn’t. But the work that we’ve done around replenishment yield is $15 million of expense reduction. That’s been an ongoing piece of work. I think there’s likely still more to come there as we ramp up technology in that part of the business. And so we’re excited about that. The team has worked hard to achieve the numbers that I spoke about. But importantly, also, Brian, you’ve heard me talk over the course of the last year about shifting our focus and our resource back into the field, given the responsibility to the P&L owners and unwinding a bit of the centralization that has been done over the company over a number of years. And with that move back to the field comes efficiency gains.
And I’m a firm believer that the folks that own the P&L are going to determine whether they need the headcount, whether it’s adding value or not. You’ve seen some of that initially pop out from the work that we’ve done here, particularly over the last 6 months, and there’s likely more to come on that journey as well.
Brian Harbour: Okay. Just on the health care and hospitality side, too, how quickly do you expect some of this new business to pick up on the hospitality side? Is health care sort of outsized still? Or do you think a similar pace can sustain? How do those pieces sort of factor into your case growth outlook for the year?
Dave Flitman: Yes. I think let me take hospitality first. We’re a little over-indexed in our hospitality mix around lodging. I think that was challenged a bit with same-store sales and foot traffic. Even in spring break, we didn’t see the uplift that you normally see. I think there’s probably some more international travel that’s happened this spring break versus prior years coming out of Kovan things like that going on. But look, we’ve got line of sight to a very strong pipeline and not just in health care and hospitality, but also in our independent business, and we’re in the process of ramping up that business here in the second quarter. And that’s what I point to when I shared the confidence in the earlier question about the momentum continuing here, really good progress, lots of momentum, strong pipeline that we expect to convert in the second quarter and beyond here.
Operator: Your next question comes from the line of Edward Kelly with Wells Fargo. Please go ahead.
Edward Kelly: Yes, good morning everyone. Nice quarter in a tough environment. I wanted to ask you about the spread between gross profit per case and OpEx per case slightly negative in Q1, which is obviously on car touristic for you and there was a strike issue. Maybe tease out Q1 performance a bit more. And then what I’m really interested in is looking ahead, There’s obviously a ton of self-help that you’ve been talking about, mix benefits, inflation is coming back. Can you just maybe talk about how you see that spread evolving? And what’s a realistic target for the remainder of the year?
Dirk Locascio: This is Dirk. So overall, we do — I’m not going to give a specific number, but we do expect to continue to have that healthy spread as part of our balanced growth strategy I think the overall inflation, although it’s picked up some, it’s still pretty modest at 1.5% for the first quarter. So as you’ve heard me say a number of times, when it’s like that, it’s going to be a small contributor, but it’s not going to be the key thing you hear us talk about driving the overall growth. I expect continued improvement in GP expect continued productivity to offset a good portion of inflation. And each of those impacts really to come from the things that we’re doing within our 4 walls on the different activities and initiatives. But we do continue to expect adjusted EBITDA per case to continue to increase.
