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

David Flitman : Really good progress in both areas. The turnover in the warehouse and on the outbound side continues to persist a little stronger than delivery. To your point, we’re not quite back to where we hope to be at this point in 2019 levels. However, we’ve got three quarters in a row now of continued reduction in turnover and improvement in productivity, both in delivery and warehouse and to our discussions around things like our flexible scheduling initiative and the significant ramp-up that we’ve got on that in the back half of the year being in more than half of our markets after this pilot phase here in the first half gives me a lot of confidence that we will continue to drive significant improvement there and at getting back to where we hope to be. So really good momentum and more to come.

Operator: [Operator Instructions] Your next question comes from the line of Andrew Wolf from CL King.

Andrew Wolf : Taking the — the market share you’re taking with independents, what are you facing that — could you share with us what your belief is the independent sector for foodservice distribution is growing or not growing? Like what are you comparing that to?

Dirk Locascio : Sure. Andrew, this is Dirk. So as we’ve talked about it externally, we relative to Technomic because that’s what you guys and many other investors have more access to. Internally, we use — on a month-to-month basis, we use an NPD data set because it’s much more granular and actionable. And so when we talk about the share gains, on a regular quarterly basis, that’s using NPD data. So 80% or 90% of the industry provides them. So we’re seeing share gains using that. So it’s an independent, they measure everybody the same and please to have followed that. If you look at Technomic, that Dave said, the Technomic outlook, I believe, for this year calls for independents to be down a couple of percent, and I think change to be flattish kind of overall restaurant yourself.

So if you think of where we are relative to that of the strong independents continuing to grow at 5% to 6%. And again, then in chain a little bit slower. But again, that hasn’t been our focus. And we will take all day continuing to grow at a much faster pace with independent healthcare and hospitality, and that remains the focus.

Andrew Wolf : Okay. On your sales associates, obviously, with an increase in — they’re selling more, they’re going to make more money. But could you talk about sales product — the associate sales associate productivity versus hiring new folks as the driver of the market share.

Dirk Locascio : So overall, the way we think about it when we look at market share, it’s overall just how we’re doing in markets, how we’re doing by categories, how are we doing by restaurant types. And then underneath there, there’s — as you expect, there would be — we have a performance management process of how individual sales reps are performing. But in parallel, we do continue to actively hire especially in those markets that are growing at a faster rate. So it really is a blend. And as we think about share gains, we expect that to be driven by both performance management, but definitely on continued adding of sellers in those markets that are growing faster.

Andrew Wolf : Okay. Well, I guess more of the same and it’s working right now. And lastly, following up on your lower cost per case and distribution. That includes fuel and mileage, right? So as we unpack different things, we look at from the warehouse to delivery, it sounds like it would be more on the delivery side, given some of the progress you’re already making on the routing, some income on bringing stuff back and obviously, fuel. Is that — on a dollar basis, is that the way to think about where most of this better results are coming versus not incrementally just sort of like for the quarter?