US Foods Holding Corp. (NYSE:USFD) Q2 2023 Earnings Call Transcript

Kelly Bania : Okay. That’s helpful. And maybe just to follow up. I don’t think we have your sales outlook for this year or have had that. But I guess, just curious if or to what magnitude deflation has impacted the outlook for this year and next? Or is that really was already in your expectation for the year? Or if you kind of had to internally make any changes to your outlook given kind of where food pricing is? Help us kind of understand how that evolved into your expectations for this year and next?

David Flitman : Sure. I think that just because inflation and deflation have been harder to predict. So it may impact the sales dollars, but it doesn’t really impact overall given it’s come primarily in the protein categories our strategy and what we’ve executed against. So there’s not been a whole lot we’ve had to adjust. What we are focused on, as you know, is really the case growth and the strong case growth that we have and continue to have across the business. I think that we do watch the different categories very closely and where we may see inflation and deflation is showing up. But in the current environment, we’re going to stay the course and we think that will generate the continued momentum that you’ve seen over the last four or five quarters.

Operator: And your next question comes from the line of John Heinbockel from Guggenheim Securities.

John Heinbockel : I wanted to start with the broadline independent growth, right? If you think about growth in distribution points, right, growth in locations served versus drop size. I’m curious how they relate to each other? Which one is bigger? And then maybe, Dave, your thought on wallet share. And we’re not giving numbers, I guess, but thoughts on how high is up? Because it still seems that for you and others, it’s way too low versus what it should be.

Dirk Locascio : Yes. John, we feel good about it, again, with the backdrop of the health of the operator that I mentioned earlier. Our ability to take share is strong. I’m pleased with our rate currently of new account generation. But I do believe there’s an ample opportunity for us to continue to penetrate our existing customers while we’re bringing on new ones. And then ramp up the penetration of those new customers through the course of time. Our team gets that algorithm very, very well and is extremely focused on it. And in the quarter, I would say the new account generation was a bit stronger in that penetration to the first part of your question, but we’re squarely focused on both and have a lot of confidence in both going forward.

John Heinbockel : And then maybe a totally different topic. Obviously, gross margin was healthy when we had inflation, it should be also right healthy with deflation. But if I look at the vendor management or procurement that set of opportunities versus mix, both product and customer, which one do you think is bigger, let’s say, looking out 12 to 18 months, is not vendor management piece larger? Or you think they’re equally sized?

David Flitman : I’m not sure I’ve given not to either one of those at this point. To your point, John, we’ve got a lot of activity going on in both areas and there’s still a lot of room for improvement in both.

Dirk Locascio : And I think, John, if you think about — you think of both really a continuous journey. And that’s — when you think about the customer mix piece, that’s why we have relentlessly been focused on outgrowing with these target customer types because of the value add. And we think we can bring the overall profitability mix that comes with that.