Performance Food Group Company (PFGC) Earnings Call Transcript & Summary

Good morning, and thank you for joining PFG's 2025 Investor Day. I'm Bill Marshall, Senior Vice President of Investor Relations. We have a great lineup of presentations for you today. But before we get started, a few remarks and housekeeping items. Our program will run for about 3 hours, which includes plenty of time for questions following our prepared remarks. We will try to address as many questions as possible during the Q&A session before breaking for lunch. On that note, I want to thank the team of chefs who have been busy preparing the wonderful menu for our breakfast and lunch today. We're excited to share some of the delicious food that our company provides. During the lunch, you will also be able to see a live demonstration of our customer-first online ordering platform. Our company's strategy is to be a leading distributor across the food-away-from-home industry. Our three segments work together on a range of initiatives to generate top and bottom line growth. We believe this sets PFG apart and provides a competitive advantage. We have branded this collaboration as PFG One. This is a theme you should hear throughout the day. We are excited to share how the PFG One platform is already creating new sales opportunities and making our company more efficient. And before turning it over to George, just a few reminders from our lawyers. During our presentation today, we will discuss GAAP and non-GAAP measures adjusted for certain items. The reconciliations of these non-GAAP measures to the corresponding GAAP measures can be found at the back of the presentation materials. During the Q&A, at the end of today's presentation, we may refer to our third quarter results, including GAAP and non-GAAP measures adjusted for certain items. The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found in our earnings release posted on our website. Our presentation will also contain forward-looking statements and projections of future results. Please review the cautionary forward-looking statements section in today's release or our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. Now I'd like to turn it over to George.

Good morning, everyone, and thanks for joining us today. Before I get started, I'm just going to do a quick introduction of the people who are going to speak today, starting with Liz Mountjoy. Liz is our Senior VP of Strategy and M&A, and she's been with us since December -- no, November of 2019. So she had the privilege of coming in one month before we closed on Reinhart and a good introduction to the job; and three months before COVID hit, and then she went through the purchase of Core-Mark and Cheney, the two big ones and several smaller ones. And she came to us with a great background in both consulting and M&A. Secondly, Scott [ Barnewolt ], he's back here. Scott McPherson, who's our President and COO. Scott came to us from Core-Mark, a great background, obviously, in convenience, but has had the responsibility for three years for Vistar, two years for Performance Foodservice. So he's really learned our industry and is a big believer in the strategy that we have, particularly in Foodservice. And then Erika Davis, she's our Executive Vice President, Chief Human Resources Officer. She also came in 2019. So a little ahead of Liz and didn't quite come in just before COVID, but had to deal with that, and you can imagine running HR and having to deal with that. But she came to us with a background in distribution for several years. I think the biggest contribution is that she does a tremendous job of handling our centralized HR functions. And at the same time, she has a great respect for the autonomy we give our businesses and our operating people. And then Patrick Hatcher, he's much more long term. He's been with us since 2010, started out as the CFO of our Vistar business in Denver. Once we saw the talent that we had there, we decided we've got to give him some different opportunities, so he learned a little bit more about how we do things. So he was the Senior VP of Sales and Marketing, which he did a great job. Move from that to President of Vistar and then came to corporate as our CFO. And I said to him, he had big shoes to fill two times in a row, as he became the President of Vistar and the EVP and CFO. So you can see from this chart, these are our three main businesses. We have some smaller businesses. They're all very separate businesses, but they have much in common from a customer standpoint and from a supplier standpoint. As you can see, there are -- financial parts of the businesses are very different. Performance Foodservice, we have several broad line companies. They're our most profitable within that division, and they run a little bit over 5% EBITDA. Then we have on the total opposite side, we have our chain-only distribution centers, our legacy customized from Performance; and then Reinhart has three of those as well. And they are very low EBITDA margins, but excellent return on capital and return of the gross profit dollars to the bottom line. And then we have companies that are kind of a combination of special -- specialty, primarily pizza, some Hispanic, and then we have chain business in those as well. Convenience is -- it is pretty purely convenience, and we do have a Canadian part of that. And Vistar, which we now call Specialty, it is truly that. It's in so many different channels. I think it's about 11 right now. I'm probably wrong. It may be 12 by now, but a great business. And it's characterized by many very low-cost items that are pick and pack all the way up to very expensive items. So the EBITDA margins are very different by business. But when you put it all together, it runs between that 6.5% and 7% range. This here, I think, just gives you an idea of our scale. We've gained a lot over the last few years. We've had three big acquisitions. You'll hear more about procurement from Scott and from Patrick. But we feel like with the scale that we've added that we're in a little different position from a procurement standpoint, and we have some real specific goals around that area. Also, we do have customers in common between each of those three businesses. As a matter of fact, I met a couple of weeks ago with one that is going to give us an opportunity to give them a program on their foodservice. But today, they buy from convenience through Core-Mark and they buy from Vistar as well. Okay. So this is our map, and that shows our corporate headquarters. And this is our Foodservice business. So it has those companies that are strictly national account. And if you look in the West, we have a small broad liner that's in the Bay Area. And other than Texas, everything west of the Mississippi are in that category of being partly pizza or pizza Hispanic and then chain business. So we have a lot of white space in the west, and Liz will comment on that later. All right. So this shows our Convenience business in there as well. And we do have national coverage in Convenience; as I said, we didn't in Performance Foodservice, especially from an independent standpoint. But we also have a part of Canada covered, strictly, the English-speaking part of Canada. Actually, it's been a good growth vehicle for us in the last year. And then Vistar, also, we have national coverage there. We have the Green Rabbit facilities as part of it. There's six of those pick-and-pack facilities. There, we don't have what we would call national coverage. We need to have more to get to next-day service, but that's in our plan as well. I think this is a great one here. It just shows the size of our available market. At $787 billion, I think the biggest thing I would like to say with that is that we are in our early stages of growth. Obviously, at the size we're at now, it's much more difficult to be a double-digit top line grower. But with our mix of business and where our growth has been running, we see the ability to continue to run double-digit EBITDA growth. And this gives a little bit more detail. You can see that in Convenience and in Specialty, our available market today is not as big as the addressable market. And even in foodservice, we are really not a company today that spends any real amount of time on healthcare business, hospitals, nursing homes, contract feeders other than within Vistar. And we don't hit much on the lodging area. So if you take those three areas, which are very large, it's about 8% of our business. So we have a great opportunity there from a foodservice standpoint. In Convenience, what we did is we took out the alcohol DSD even though we feel that we have a future as it gets more and more expensive to do that DSD and get some of those products onto our truck. And -- also, there's several of the large ones, large chains that are self-distribution. Foodservice was like that many years ago, and we hope that's an opportunity for us in the future as well. But even when you take those things out, it's a $560 billion addressable available market. So it's quite an industry we're in. And I'll say it one more time, we're in the early stages of our growth. As far as kind of our strategic road map goes, it's not much different than it's been before, not much different than what we talked about three years ago at Investor Day. But it's driving sales growth. We're fanatic about making sure that we're growing our business and growing it profitably. People and culture, real important to us, and you'll hear more from Erika about that. And then technology. Not something that we're known for. You'll hear a little bit from Scott about that as well, but we take it very serious. We've made some great progress from a point-of-sale material and a digital way for customers to place their orders. But here, with technology, we're talking more about the things that we do from a warehousing and delivery standpoint, and Scott will touch on that as well. So I look forward to, when we all get done, answering some questions, and I'm going to have Liz come up.

All right. Hello, everyone. Thanks, George. Great to be here with you all this morning. I'll just start here with PFG One. So Bill referenced this. And you'll hear us talk about PFG One throughout the course of the day to day. And it represents the opportunity that we see for PFG to lead in food away from home. And so my role here is to talk to you about our M&A strategy. I wanted to put this slide up because our M&A strategy goes to support this broader enterprise strategy. And I think that the acquisitions that we've made over the past 5 years have gone a long way to strengthen this operating model. Today, as far as the topics I'll cover, and I have just a brief presentation, but I'm going to talk to you about our M&A priorities, the approach that we take, and I think the advantages of our approach, as well as some specific examples of our success. So going into the priorities. First and foremost, we'll continue to focus on our core foodservice business. We think that we have a long runway for continued inorganic growth. George just said we're just getting started. And he showed you that map. And I think that map highlights the fact that we continue to have a lot of white space in key markets, including the western half of the U.S. Secondly, we also have a long history of opportunistically pursuing targets that go to further our operational or financial objectives. And some of these are smaller acquisitions that we've made in the foodservice space that we haven't talked about or even outside of foodservice in some of our other business segments. But they've always given us some kind of operational or financial advantage. A couple of the ones I want to highlight for you and George referenced Green Rabbit, that gave us better access, I think, to the growing e-com space, which is an exciting new growth channel. We have a lot more, I think, we can do there, and Scott is, I know, going to highlight that for all of you. And then we've also made some acquisitions in what we call our manufacturing group. And within manufacturing, the acquisitions we've made have brought new capabilities to PFG. A couple of examples to share. We have a coffee roasting business now. We also have the capability to do oil blending, which is pretty exciting. And both of those are just examples of where we have new capabilities that have helped us to capture more of the margin in some of our big spend categories across the business. Lastly, I want to make sure that I share with you that we're always keeping an eye out on the longer term. While we have a lot of close-in opportunities, we're always thinking about what are the adjacencies that are close into what we do, what would make sense for PFG over the long-term? And making sure that as a team, we're consistently evaluating the landscape and who the potential targets could be in some of those close-in adjacencies, so that if the right opportunity comes along, we're ready and prepared to act quickly. As far as our M&A approach, when we're thinking through those priorities, we're always looking at targets that are growth-oriented, line up to things that are going on in the market and are a good fit for our business. And I know I shared this slide with you all three years ago. It continues to be the lens that we use to look at potential acquisitions. And to me, I think, stepping back and making sure we're always checking in on these three areas helps to ensure that the acquisitions we make are the right ones for us, we're paying the right price and we're setting ourselves up for acquisition or for integration success, making sure that it's going to be a good fit and that it's going to work with the PFG family over the long term. I said I would talk to you a little bit about the advantages, I think, of our approach. So I do want to share that with you. Our deal sourcing, to me, has been an advantage. We have a seasoned and highly connected team. George mentioned that when he introduced the speakers, some of them are experienced. We also have a great group of folks in the back that I hope you all get a chance to interact with, with a lot of experience, deep ties within the industry. And in addition to the people in this room, the people all across our business in the field are so connected, and that's very helpful in having the relationships that I think are necessary to making sure that when someone is ready to sell their business, PFG is going to get a call. As far as our diligence process, we -- I've been here 5.5 years. We have been using a pretty consistent process to evaluate the different targets that we look at. With each different acquisition we do, we learn a little something, we refine our process a bit. But we've really applied a consistent approach. And I think that helps to make sure that the people we bring into our business from the different functional areas, they know what's coming. They know how to evaluate the different businesses we're looking at. And we're going into any acquisition, once we close, we're eyes wide open to what the challenges are going to be, as well as the upside opportunity that we're going to have as we integrate the business, which then takes me to integration. And I like the word balance here. That's really the approach we take. We're buying these businesses for a reason. We like the strength that they're bringing to PFG. And so we're really trying to balance the appreciation for that with the resources and tools that we can offer as a big company to these businesses. And striking the right balance there is important. I think of it a little bit like a pull approach. So we're giving you these resources, the company as we're integrating them. And they can pull those resources or tools in a way that feels appropriate for them. We're always keeping an eye out for the commitments we've made as far as the financial targets with any acquisition, but we're doing it in a balanced way. And that sort of brings me back full circle to deal sourcing. I think the companies that we've acquired would have good things to say about becoming a part of the PFG family, and that's helped us have a good reputation in the industry as an attractive acquirer. Okay. Cheney Brothers and Jose Santiago. I know you all have heard us talk about these two, we're super proud of these acquisitions. And the thing I wanted to highlight for you all is that, to me, both of these illustrate what I just talked about as far as the lens that we're considering when we're thinking about different acquisitions and our particular strengths. So as far as the lens that we look at, I talked about we're always wanting to find acquisitions that support our growth story. Both of these businesses have really attractive financial profiles and had continued to grow. And for us, they're filling in really nice white space in growing markets, which goes to that meeting of what's going on from a market dynamic perspective, both geographies are very strong geographies for us to fill in. Additionally, both Cheney Brothers and Jose Santiago have strong sales-oriented cultures. And I know you all have heard us talk about how oriented we are around growth and our sales force, and both of these companies felt the same way. So it was a good fit from the start. As far as the strengths I said regarding our process, both of these companies, while they came in to us in different ways, José Santiago was part of a formal process and Cheney Brothers came in through -- directly through our relationships. I think while they came in different -- from different ways, both companies would say that the relationships that they had with the PFG team, both before we went into the diligence process and the relationships that we've built throughout diligence, were a key factor in their decision to ultimately go with PFG as the buyer. We brought our subject-matter experts in early to study both of these businesses and get to know them, and we built our forecast model from the ground up for both of these businesses. Really just, again, that whole idea of going in eyes wide open, following the consistent process that we use to evaluate businesses. So I think we did a great job on diligence with both of these two. And then from an integration perspective, I'm really -- we're off to a great start with both companies. Happy to say that it's the same management team in place today as existed -- was there before they became a PFG company. And so that business continuity is important. And it goes to the value of the relationships again and how important it is that the people in both of these companies see their management team is still there and can trust that this is going to be a comfortable integration process, and they're going to be valued members of the PFG family. We're offering both of these companies the resources that PFG brings to bear and balancing that with a respect for the strengths that they have, the customer relationships that they already have in place and the reputation they've built in their markets. All right. A couple of success proof points. There are some fun facts here that I think you'll enjoy that. A 108 is the number of new locations that we've added through acquisitions over the past 5.5 year period. That is a 146% increase in that same time period. So to me, that talks a lot to scale. It also, I think, speaks to our success with integration. Those are a lot of businesses to integrate and we've done that, and I think continue to deliver the strong financial results that you all see. The next two metrics highlight some of the new capabilities that we've added in our growth opportunities within PFG. So 19.5% is the CAGR in dollar for Foodservice cases sold into Convenience, that's since 2020. 2.6 million is the annualized volume for 2025 for cases PFG has purchased from our manufacturing group. That's a 50% CAGR since 2021. So a lot of growth happening with food into Convenience as well as some of those manufacturing businesses that I mentioned earlier. Finally, the last 2 metrics on the page showcase the strong execution we have once we've closed on a target. We always set a three-year synergy target when we're evaluating the businesses and thinking through the financial models. And José Santiago is a really recent example. With the three-year synergy target we have there, we've already captured 40% of our procurement synergy, and it's just been under a year. So you can see we're tracking ahead of schedule for capturing our synergies with Jose Santiago as one example. And I have under three years here because any time we've publicly announced synergies, we have always delivered. Even when we set a three-year synergy target, we've always delivered within that time frame, usually ahead of schedule. Okay. So in conclusion, we've added attractive businesses to the PFG family. You'll see some of them listed here on the left-hand side of your screen within that PFG One framework. They've brought us strong category opportunities and share growth, new capabilities and valued leaders and employees. The message I want to leave you with is that we have a proven track record. We'll continue to follow our successful formula and we're excited about the many opportunities ahead. I'm going to pass it to Scott to talk about our business segments.

All right. Good morning, everybody. I was thinking about Liz's last 2 slides. I think those are bragging slides. She's done a great job with our M&A practice since she has been here. As Liz mentioned, I'm going to talk about our three business segments in this first section, and then I'm going to be back on stage talking about five really key strategic levers that we think differentiate our company and our business. So I'm going to jump right in, and really thinking about our business segments, I know Bill mentioned PFG One and what does that mean to us. And I think back 3 years ago, we had an Investor Day. And I was new to the company by way of acquisition. So I have a unique perspective on how we handle M&A. And it was an incredible experience. And I think what makes PFG great in the M&A space is really how we approach targets, looking for companies that are like-minded, that have great leadership teams. We go through an incredible diligence process. I've experienced it, but Liz does an incredible job at diligence to really take out the surprises and make sure we understand what we're buying. But I think the real secret sauce in how we approach M&A is we realize when it's time to get out of the way and let those management teams really lead those companies. We try and support them, help them with growth initiatives. But at the end of the day, they become the fabric of PFG. And that was really my experience over my first year. And over the last 2 years, I've had the opportunity to run our three business segments. And that's obviously Vistar, our PFS segment and then Convenience. And it's been a great journey. So jumping into that and thinking about PFG One and the food away-from-home space, the first thing I think about is just how do we leverage those business segments? And that's a lot of what I'm going to talk about today is how we've leveraged those segments to make it a more powerful company. The second icon there is really about growth. And when people talk about PFG, a lot of times, you hear the word growth. And in our company, a lot of people refer to George as somebody that's maniacal about growth. And that's true. George, whether it's an independent customer, a chain customer, whether it's M&A, George, is the first one to say I'll be there and ask them for their business. And that really filters down through our organization. All of our segment leaders, they're really growth-focused people. The other thing I'm really proud about is the efficiencies we've created across our segments. It's something we've really worked on not just on the logistics side of the business, but also our interaction with our customers. And then the last thing I would say is value. When I think about value, I think about our customer and that value proposition that we bring to our customers. We feel really great across all three segments about the value proposition that we've created. And the last one is just positioning. When I think about companies, sometimes it's hard not to look at day ahead or a week ahead, and get caught up in that minutia. And I think we do a great job, and George really has a great perspective on this. But thinking out a year, thinking out three years, thinking out five years, and we feel like positioning our company in that way is a great return for our investors. So this next slide, before I click the button here, I want to take you on a little journey and I want you to think about the food away-from-home space. So if you look at the top right of this slide, you're going to see Foodservices represented by a red shaded icon; Convenience, orange; and Specialty, green. And you look across the slide there, you see a lot of reds, a lot of greens, and some that have mixed shades in there as well. So I want you to think about a family of four. So you got two working parents, you've got a child at home and you got a child off to college. So a typical Monday morning, one of the parents is headed to the airport, they've got a business trip. So they go to the airport, they get there early and they go into a restaurant there and they have breakfast. Before they jump on the plane, they go into a convenience store in the airport and they grab a bottled water for that flight. So they fly halfway across the country. Flights are always on time, so they landed on time, they got to the hotel. They put their stuff away in the room and then they went to a dinner with a coworker. So had a great dinner, come back to that hotel. And what do you do when you come back to the hotel? You go into the micro market in the hotel, you grab a water to have on the bedstand. Next day comes, they're up early. They're headed to the corporate office, and they got to start with some caffeine. So they got coffee at the hotel. They head to the corporate office. They have a couple of meetings and then midday, they head down to the office micro market. They grab a little lunch, they grab a soda. And then throughout the day, they got to fuel back up on the caffeine, so more coffee in the office, finish their day in a restaurant somewhere. So if you think about that, that's eight touch points, two days across three of our business segments. I want to take you through a couple more days. So we've got another parent that's at home with the child. And they decided on a Wednesday night, they're going to go to a theater. Great time to talk about theater. Theater set a record weekend this last weekend in the box office. So a huge weekend in the box office, which was great for us. What you think about the parent and the child, they finished work, they finished school, and they head out to a QSR to grab a snack, a little dinner before they go to the movie. So we walk in the movie and what do we all do, we smell popcorn, we decided we're going to grab a bucket of popcorn, we're going to grab some candy and we're going to grab a soda. Well, right there, we touched you three times in the Vistar segment. But then what you don't think about is the oil that popcorn was fried in, as Liz mentioned earlier, that came from our oil manufacturing facility. So we're touching that with manufacturing. A lot of people don't know and hear that we have a popcorn manufacturing facility, does 20% of the popcorn in the U.S. So that popcorn was vertically integrated as well. So another set of touch points, multiple segments across that day. I'm going to go one more day for you, and then you -- I think you get the picture. Well, I've got to get this last day in because I've got two college students. So you've got the college students and it's off to school. Of course, as a parent, you're paying for the meal plan. And so they get up in the morning, they have some breakfast on the meal plan, they head out to class. Mid-day, they stop in the bookstore, grab some snacks. And then at the end of the day, like my two kids, they're home and they're studying so hard that they don't have time to make dinner or to go back out on the meal plan. So they order DoorDash, Uber, Uber Eats, and they have the meal brought to them, and you find that on the credit card later. Again, you get the picture that the food away-from-home space, this company has created a great dynamic. And we feel like we've got a lot of runway in the food away-from-home space. So I'm going to shift gears and really dig into our segments. I want to make sure that you all have a great understanding of what our segments look like, and I'm going to start with Foodservice. So when I think about our Foodservice segment, you can see the mix there. It's kind of a 60-40-ish mix. And I'll start with Independent. That's kind of the calling card of our company and really because we're really proud of our sales organization, and they really are the ones that drive that independent growth for us. The reason we focus in the independent space in all of our segments is it tends to be a little more profitable. And so that's been a real calling card in the foodservice space, but also really proud of what we're doing with the Chain segment as well. If you think about our last quarter, we grew Chain cases in a macro that's really tough. And that's because we've really top-sided our partnerships with chains. We have some of the more progressive and growing chains in the space. When you drop down to the bottom left there, you think about our mix. So obviously, family and casual is a big share at 26%. Pizza and Italian. Since inception, we've been really known as a powerhouse in pizza and Italian, representing 23%. When we get to Hispanic and Bar and Grill, two of our faster-growing segments, really all about our brands. We have great stickiness and great brands in those two spaces, and that's really fueling the growth. And then a couple of emerging ones down at the bottom, there are Retail and Convenience, both segments that are growing very well. When you think about the scale of foodservice, $32.1 billion, that's not what I'm proud of on that slide. What I'm proud of is the next number, $7.4 billion are our proprietary brands. When you think about those revenues, a lot of that is from the independent space. And then 175,000 customers are across the U.S. and Puerto Rico, and 82% of those sales come from restaurants, so primarily in the restaurant space. Thinking about a summary here, it's really -- we're the independent growth leader, and the reason for that is we invest in our sales organization. We're really proud of that sales organization. And I'm really proud of what our chain group has done around rounding out that chain portfolio and driving growth. My next slide on Foodservice, I'm really going to kind of dig into strategic pathways, what we're doing strategically in the segment. So number one, growth focus. And how are we driving growth, how are we performing in growth? And I think a lot of it comes from a commission structure we've had in place for a couple of decades. And it's really a commission structure where our salespeople can write their own paycheck. And we're proud that we have a lot of our salespeople that are well into the six figures. They understand how to write their paycheck when they work for us. Training, huge thing in Foodservice. I want you to think about a restaurant. We went to a couple of incredible restaurants while we're here. And you think about the chef in the back of that restaurant, they're the expert when it comes to food, product knowledge about their restaurant. And we're sending a sales rep in there to discuss with them what food products they should be carrying and how they should change their menu. So we have to have highly trained salespeople, and we feel really good about where we're at from a training standpoint. Local decision-making. We talked a little bit about being decentralized. So when you think about us in the food space, but even in Convenience and Specialty, when it comes to pricing, when it comes to products, when it comes to promotions, it's all done at the OpCo. We're as close to the customer as we can get, and we feel that that's a big competitive advantage for us. 25,000 proprietary SKUs. All I think about when I say that is stickiness. That makes us sticky to our customer. And then Erika Davis is going to come up here in a little bit, our CHRO, but we really value our #1 asset, which is our people. And the biggest portion of our workforce is in the Foodservice segment, 27,000 people, and that is, by far, our #1 asset in the company. And then George mentioned, when you think about technology levers. We're not a company that pounds our chest about technology much, but I'm really proud of what we do. I think we are really efficient in how we use technology across all three of our segments. So I'm going to shift to Convenience now. And so you think about convenience, you've got a little closer to a 50-50 mix. You've got independents at 53%. The independent definition is a little different. So in Convenience, the independent definition is 50 stores or less. And we like that balance. We like that balanced mix of customers. When you go to product mix, obviously, there's a couple of things that jump off the page there. When you look at combustibles and other nicotine products, you see that 74% of the revenues come from nicotine products. A lot of that, as most of you know, is taxation, a good portion of that. But what I want to point out here is you think of that 74% of the revenues, look off to the right and look at the 32% of our gross profit. So 74% of the revenue only represents 32% of the gross profit. And that's why we focus so hard on those other categories because it's 68% of the profit, and it's really the lion's share of the growth. And so we spend a lot of time in that food, foodservice category, even in the candy and beverage categories as well. From a scale standpoint, we're $24.3 billion in the convenience space. We have 51,000 customers. I already touched on the gross profit. We're the largest convenience store player in the space today in North America. We feel like this partnership with PFS and falling under the PFG umbrella and having that that core competency of foodservice is a big differentiator for us in Convenience. And then the last thing I'll say here is really, we were able to announce on our last earnings call that we've picked up three sizable chains. And these are great industry-leading chains in the space. And so we just feel really good about the quality of our portfolio of customers in the convenience space. So strategic pathways. I'm going to give you a hint. The first one in all three segments is going to be growth. And when I think about share growth in convenience, this has been a really tough macro. Convenience has been a negative macro for two years, and we're growing in convenience. So we've gained share consistently over the past 2 years. When I think about our sales organization, one of the things we recognized when we made the purchase of Core-Mark was we had a commission structure that probably was stale. And everybody knows, super sensitive to changing anybody's comp. But we had a little bit of a secret weapon in the fact that we had a foodservice company that had, had a commission structure for the last 2 decades that was very successful. And so we essentially lifted and shifted our foodservice commission structure into convenience. And it's been incredibly powerful for us. It's had exactly the result we expected, which was the change behavior, drive growth, and we've started to see really great impacts from that. Turnkey foodservice solutions. When you think about that, it's really the capabilities we have as a company, and we've created great turnkey solutions, and I'm going to dig into that later. Best-in-class operational performance. So if I think about our three segments over the last 3 years, I think Convenience has been the most consistent from a productivity standpoint and from a customer order quality standpoint. All the segments are performing well, but I'd say this is the one segment that's really created a reputation in the industry of being best-in-class from a service standpoint. Proprietary brands. When you think about convenience, what do we think about? Snicker bars, Doritos, Pepsi, Coke. We think there's an opportunity to change that thinking. And that is we feel like with our capabilities and brands to really bring brands to the convenience channel. And I'm going to talk about that one opportunity that we've capitalized on in my second segment. And then customer-facing technology. So when you think about technology and the convenience space, the digital connection to the customer is incredibly important, more so than the other two channels. It's been in place for a long time. And I can say, without a doubt, I feel like we have the best tech stack from a customer-facing standpoint in the convenience arena of anybody around. And that's a big part of us attracting customers. So I'm going to now move on to Specialty. I love this segment. Talk about a diverse segment. You look at the bar across the top, it looks very different than the other ones. And as George mentioned, we're probably in 12 segments. I'm highlighting 10 here, but he's right, and we continue to look for new segments. But when you look at that, you first look at vending. Vending, 41%. A lot of people say, "Wow, it's a big chunk." You got to kind of deconstruct vending. When we think about vending -- and when I think about it, I thought -- I used to think about vending machines. That's not really what vending is. Vending is vending machines, unattended retail, micro markets. It's a dynamic space. I was in an airport last week and in the vending machine, they have high-quality salads, produce, proteins, so even the vending machine has come a long way. So really dynamic space that we're playing in there. We see a big opportunity for Foodservice in that space. E-commerce. I'm going to talk a lot about e-commerce and have a dedicated slide to that here in a couple of slides. But that's a platform that we see a huge growth opportunity in. And I could go through the rest of the value, office coffee, theater, corrections, concessions. So very diverse mix of customers across this segment. And then when you look at the mix of products, obviously, candy and snack are two of the big drivers. The thing -- the categories that are really interesting to me is the fresh and frozen food because that's where the foodservice is starting to emerge and really emerging in that vending space in particular, but also emerging in theater and other channels. And we're also shipping some of that through our e-com platform because we do have frozen and chill capability. So $4.8 billion in total revenue, over 75,000 customers. So you might say, "Well, that's a lot of customers for only $4.8 billion in revenues." You got to go back to that e-commerce platform. Our small parcel shipments across the country really are able to expand our reach, and we can get to households and customers across the U.S. We talked about -- we haven't talked about return to work, but I can't tell you how incredibly positive that's been for us. The return to work across many of our segments plays a big part in us growing revenues and kind of getting back on track from a growth standpoint. And then we think the e-commerce platform has a long runway. Strategic pathways, probably don't have to guess what the first one is talking about, growth. And really, it's a little different in this segment. We've had a couple of headwinds. Obviously, theater has been a headwind. Those that follow the value channel know that's been a headwind. Outside of that, we're really doing a nice job of growing share in the rest of our segments and feel like we have a great pipeline. The diversity of customers and the diversity of segments creates complexity. And the one thing I'd say about our specialty segment is it's a high-touch, high-service model. It's a very complex model, and that sales organization is they have to be very flexible to be able to keep customers happy in that space. And we think that's great because it creates a little bit of insulation. And then the next two here, I'd say supplier solutions and the e-commerce platform. I'm going to kind of bucket those together. So when you think about supplier solutions, I think about a manufacturing company. Think about a big confection company, a big snack company. And so basically, when they have things on their website, if they have a new product launch, if they have a seasonal product that's out, you might go to their website and say, "Oh, I'm going to order that new candy bar or that new snack item." You think that comes from that manufacturer, it doesn't. Many times, that comes from us and through our e-commerce platform. So we're doing a lot of manufacturer fulfillment through our e-com platform. We're also doing a lot of big box retail. So if you think about check stands and big box retail, a good portion that you go to, if they're snacking candy, that's coming through our e-commerce platform. So we see that as a really dynamic opportunity for us to grow. We also do third-party fulfillment for Amazon as well. So I'm going to have one more slide on that. Proprietary brands. I talked about it in the Convenience segment, those same items apply in the Specialty segment. So we see a big opportunity to continue to expand our proprietary portfolio in these segments. And then lastly, I'll touch on operational technology in this segment. When I think about our Specialty segment or Vistar in particular, the thing that they've done exceptionally well is leverage their technology, really leveraging engineered standards, how they lay out their buildings to make them more efficient. And I think about their last quarter performance and really, what I saw there was in a pressured macro where they had some sales headwinds, they had a really nice EBITDA gain, and it was really because they've become very efficient operationally. So I've been teeing this up, but here's our e-commerce network. So when you think about over 1 million square feet across six distribution centers spread kind of equally across the U.S. And that 1 million square feet is tri-temperature, so we have frozen, chill and ambient. We're shipping over 9 million packages today or we will in 2025, and that continues to grow. And we have a really, really high on-time delivery. And so basically, we have a proprietary algorithm that uses UPS, USPS and FedEx. And so we are able to optimize delivery time and obviously, cost, to get the product to customers really efficiently. And we average about 1.5 shipping days. So if you look at the bottom there, we can reach 96% of the U.S. population and that's B2B and B2C in two days, and we can reach 54% in one day. We have capacity in that network today. I don't plan to have capacity there for long, so we're going to have to grow capacity eventually, but really feel like there's a big springboard there. So I'm going to kind of completely shift gears on you and talk about a couple of collaborations that we've done. Kind of call it case studies, but this is a real-life example of a customer that when the acquisition of Core-Mark took place by PFG, Rutter's -- and anybody that's in the Northeast should have probably been in a Rutter's. If you haven't, you should go to one. Rutter's is an incredible retailer. Their latest store is 14,000 square feet with really high-quality food offering. It's got gaming, it's got basically a bar in there. They're very progressive, one of the leaders in our industry. And they came to us and said, "Hey, this acquisition is interesting to us because we're big in the foodservice space, but we're also big in the convenience space." So how does that benefit us? So essentially four years ago, we sat down with Rutter's, our PFS side, our convenience side and said, "What does a great partnership look like here?" We signed a three-year agreement, and basically, if you go to the bottom there, you got 7.5%, three-year sales CAGR for our Foodservice segment. So think about that. This is in a pressure convenience macro, and we're growing 7.5% three-year CAGR in Foodservice. We're growing 6.9% three-year CAGR in Convenience. And at the bottom of that, there's a number there that is off the chart. It's a 19.8% increase in non-cigarette growth, that's talking about outperforming the industry by a mile. Three-year sales CAGR overall is 7%. What I'm most proud about is we just signed a five-year extension. So to think about that continued growth for another five years makes us really proud. And they love this partnership. And we're really, really connected to them as a customer. The next one is a completely different collaboration. So I talked a little bit about manufacturing. And so you think about manufacturing, I talked about popcorn. 20% of the popcorn consumed in the U.S. is something that we supply. We haven't talked at all about our cheese facility. We have a cheese facility that processes millions of pounds of cheese, specializing in shreds and blends and diced cheese to support our pizza efforts. And then we have OLM, which is essentially pizza manufacturing as well as sandwich construction, so they basically make sandwiches. We also have an oil manufacturing facility and a couple of other smaller ones. This isn't a big part of our business. We think of it as a kind of a little secret weapon where we can create unique brands and unique value for our customers and for our company. So here's the situation: We had a retailer partner, a convenience partner of ours come to us and say, "Hey, here's what we want. We want you to create a retail pizza that we can sell in a frozen case." A lot of you have been into a convenience store probably late at night and bought -- went in and bought a pizza that you're going to take home and cook. And it was probably $10.99 or $12.99. And they said, "We want to have a high-quality pizza that's much more competitive retail," and you can see that retail. It was $4.99, and it's a great product. And we had our specialists, some of the chefs in the back worked on this project. And so we had -- we created a great product. But then they said, there's a catch here. "We don't just want it to be a frozen pizza that goes in a retail case. In our stores that are able to cook products, we want to be able to sell it by the pie and by the slice." Well, for foodies in here, you would know that that's really tough, to have the same cost work in both applications. And we created a great product that they launched, and a year into it, they've sold 2 million pizzas. So thinking about creating value and stickiness to a customer. And then a little different scenario, Hot Take, where some of them are in the back there. Anybody had a Hot Take sandwich this morning? Thank you. Well, two of them. Okay, I feel better now. If you've been in the convenience store space for a long time, I mean, breakfast sandwich is probably not the highest quality thing that you eat when it's wrapped and in a warmer. We set out to create a full line and really replace that kind of old tired breakfast sandwich, much higher quality starch products or either a biscuit or a bread on there, much higher quality sausage product than any product. And the traction we've had has been fantastic. We've sold 1 million sandwiches in our first year. But what's really interesting is this was designed for the Convenience store segment and now it's being sold in our Foodservice segment and now it's being sold in our Specialty segment. So we're starting to see that attraction across our segments. So this last slide, there's a lot going on here. This is the last one I have in this section. On the left-hand side, I'm really going to try and hammer home our diversified business model. And how pulling these three segments together really benefits our company, our shareholders, our customers. And on the right side, I'm kind of teeing up my second section today, just talking about competitive advantages, things that we think we do that are different that create differentiation for our company. So the first one here is segment collaboration driving growth. I just gave you that example. That Rutter's example is a prime example of that. We talked about our sales compensation model, being able to lift and shift and leverage that in two different segments. The complementary vendor portfolios, George touched on this, Patrick is going to kind of hammer the point home later. But we feel like we have great partnerships with our vendors, and that's really a big value to us. But the other thing we think we bring when you think about that food away-from-home space, who in the industry, nobody has the touch of the food away-from-home space that we can bring to a vendor. So we bring what we think is a unique value proposition. And we think that there's an opportunity -- a win-win opportunity for our vendors and us to both make more money there. I think about our logistics footprint. So when I think about logistics or any of us in here, we think about outbound. We think about what we ship from our warehouses to the distribution -- or to the customer. What I'm thinking about here is all the stuff that comes into our warehouses, comes from the vendor, the manufacturer, a re-distributor, you name it. How do we make that more efficient? I'm going to talk about a technology later that we're really keen on and focused in on. Customer connectivity. We're going to talk about our customer-first platform. There's a demo out in the lobby. But really thinking about our omni-channel ordering platform across all segments. And then lastly, like I said, we don't pound our chest about technology much, but we've done a great job of leveraging technology to bring better outcomes for our customers, for our employees and for our facilities. So shifting to the competitive advantage side, that decentralization thing. We're unique there. And there's a lot of people in our space that think, "Oh, I'm going to centralize, it's more efficient," and they lose touch with the customer. And we are close to the customer in all three of our segments. Like I said, pricing, products, promotion, those decisions are made in the field at the OpCos. Growth focused. The hardest thing to do in any business is to grow consistently, trust me. And I just feel like having that from the top of our organization to the bottom is really important, and it's something that we start every meeting, every conversation is about growth. I think about e-commerce platform. I think I touched on that enough. But one thing I want you to think about is we kind of talked about shipping to customers in that segment, in that Specialty segment. But think about this: I'm a restaurant customer. I have a beach location. I'm on New Jersey Shore somewhere and I've got a great location where if I could sell sunglasses, I could sell suntan lotion. But I'm a chef, I don't know where you get that stuff. You've got an ordering platform that can do that seamlessly, and you can get it through the e-commerce distribution network within 1.5 days; a lot of times, it would be next day. So to me, again, a very powerful opportunity for us to leverage our e-commerce platform across our segments. Redistribution. A lot of people probably haven't heard much about that in our company. And we think that, again, it's a little bit of a secret weapon that I'm going to highlight in my next segment, but really, it's a way that we think brings value to our customer and our vendors. Our manufacturing capabilities, I think we touched on that enough, but we also feel, like I said, they're not a big part of our business, but again, a little bit of a secret weapon to create great brands to create value for our customers. And then I always like to finish with operational execution because at the end of the day, if you don't operate efficiently, you're not going to be able to grow. And we've done a great job of really pulling our segments together, operating efficiently and just really proud of how the organization has responded there. So with that, I'm going to invite up Erika Davis. So Erika Davis is a great friend and partner of mine. Erika is our CHRO, leads the people effort for our company, and she does a great job of making PFG a great place to work.

Thank you so much, Scott. Good morning, everyone. How's everybody doing today? It's a pleasure to be with you today. I've been in distribution for most of my career, but I have to tell you, the last 6 years that I've been in food distribution, it's been the most fun. I also have to tell you the other side of it. It isn't kind to your waistline, but it is fine. As Chief Human Resources Officer, I'm really excited to be able to share with you today what positions us for success and what fuels our growth at PFG. And it's our people and culture. You've heard from Liz talk about mergers and acquisitions, you talked about -- you've heard Scott, talk about our businesses. But I'm here to tell you what's most important are our people and our culture. They make it happen, right? At PFG, our people are not just associates, they are the force behind our success. Now our talent directly fuels our growth and our industry leadership. So I'm going to share with you how our people and culture strategy strengthens our business impact. First, we're a company that others seek out. Our reputation speaks for itself. And I'm going to share with you a few examples of that. Our customers, they tell others about us, they tell others about Performance Food Group. Now earlier this year, we gained some significant new business from an operator that sells hot and cold sandwiches. That operator had been with a competitor for a while. And when they decided to shop around and do their due diligence, they spoke with other operators to see what type of experience they had with their current food distributors. And after they were complete -- after the process was completed, they reached out to us to let us know that they had selected us to be their partner. And of course, we were elated, excited. I think you know we're really close knit team, so we were doing our usual high fives, right? But we always try to learn from these experiences, right? Because our goal is to get better. So we always ask the question, why? Why did you select PFG? And they said, you know, when we spoke to operators that are currently using Performance Food Group, they said you provide reliable service, exceptional support, you take the utmost care of the customers' products. But most importantly, they said the operators really appreciate the relationship that they have with their local sales team. Talent. They want to work for us, they want to work for PFG. A crucial element of our sales success lies in our ability to attract and hire exceptional sales professionals who act as trusted advisers for our customers, right? Recently, we welcomed an associate who was highly successful at a major competitor. He transitioned to our company, was very excited about our culture, said he fit in. He was so inspired that he recruited his brother, who was also working at this competitor and who was also known as an exceptional sales professional. And you're going to follow this along, you're going to know that we always ask the question why because our goal is to get better and to improve the process and the experience of our associates and our customers. So we asked this person, why did you want to join Performance Food Group? And he said, "You know what? It's simple. It's really two reasons why I wanted to join." He said, "First, PFG has a culture that prioritizes the customer, making it easy for sales professionals to secure the win." And he said, "You know, I'm all about winning, so that was important to me." Then he said, "Number two, Performance Foodservice sales compensation strategy empowers sales professionals to control their destinies through hard work and determination." And he said, "You know, I can control how hard I work and I can control my determination." He said, "So those two things are very important and here I am, and that's why I thought it was important to bring my brother along." Acquisitions. They choose us. They choose Performance Food Group. Liz mentioned, Jose Santiago Inc. We recently acquired them. They're the largest broadline food distributor in Puerto Rico. And when the four Santiago brothers decided that it was time for them to sell, they were interested in selling the business, they entertain several offers, they went through their due diligence process and they notified us, they reached out to us and said, "You know what we want to be a part of Performance Food Group," right? And just like my earlier stories, we asked the question, why? But when we ask the question why this time, my colleagues and I were having dinner with the four Santiago brothers in Puerto Rico. Again, we're high-fiving, celebrating, enjoying this moment. We said, "Why did you select us? Why did you select Performance Food Group?" And they said, "You know, throughout the process, every PFG associate that we interacted with, we felt comfortable with, we felt like we fit in." And they said, "We felt like we had known you for years." Our strong reputation isn't just an asset, it's a competitive advantage. Building and sustaining a reputation like ours requires a deliberate strategy, commitment and a culture that prioritizes both excellence and a sense of belonging. You heard the story about the Santiago brothers. They said they fit in with PFG. They felt like they belong and they had known us for years, right? To meet and exceed our customers' expectations, we hire talent that understands our customer needs. Customer needs are constantly evolving, and we have to make sure that our talent understands those needs. This means investing in inclusive hiring practices, continuous learning and providing career growth opportunities for our associates. The goal is to empower our people to innovate, collaborate and drive meaningful impact. And empowered associates create exceptional customer experiences. We have a culture of autonomy and accountability. Our approach to both acquisition integrations and talent development is rooted in the same philosophy. We recognize and build on the strengths of individuals and organizations. We provide them with the freedom to operate independently. This strategy has proven successful for us time and time again. We've integrated over 22,000 associates through acquisitions since 2020, demonstrating our ability to unify teams while preserving the cultural strength that make them thrive. Our goal is to try to keep intact the very reason we acquired them. It's very important to us. 63% of our leaders; yes, 63% of our leaders have been with PFG for 5 or more years. It truly is a testament to the environment we've built, one that keeps talent engaged, growing and committed to our shared mission. For us, it's simple: When our people thrive, our customers succeed. A key driver of our long-term success is the investment we make in our talent pipeline. We don't just hire talent, we cultivate it, nurture it and we create pathways for growth. We attract top entrepreneurial talent by valuing experience and offering a decentralized business model that empowers individuals to make an impact. I shared with you earlier that I have a background in distribution. But when I was interviewing for this role with George and several of my colleagues, I noticed every single one of them asked the question, do you feel comfortable working in a decentralized matrix environment? And to be honest, I thought that was kind of odd because I'm like, "I'm coming from distribution, I'm coming from a decentralized environment." And it was only after I had been working for 60 days that I realize that many companies say that they're decentralized, but we truly are decentralized. Whether you're starting from the top of your career or leading -- or starting -- just starting your career or leading at the top, our leadership and sales programs empower you to grow and shape your career at PFG. Our succession planning programs and cross-segment assignments ensure that we are developing future leaders who can navigate complexity and drive success. By building a strong talent pipeline today, we secure our ability to lead and innovate tomorrow. Finally, we know that performance thrives in a culture of ownership, recognition and reward. Our people don't just contribute, they take ownership of our success. When I first arrived at PFG for -- I spent the first 90 to 120 days in the field. I spent time riding on trucks with our drivers, riding in cars with our account managers, meeting customers, spend time with our OpCo presidents and talk to our associates, doing first and second shift at the warehouse because it's really important that your HR leaders understand the business, right? But it was interesting, there was one common theme across all of those conversations, regardless of who you were talking to, whether it was a warehouse associate or an OpCo president, it was one thing. They all wanted an employee stock purchase plan, right? They did. It was interesting. And apparently, they had wanted one for a while. The reason why they wanted an employee stock purchase plan is because they believe in the success and the future of Performance Food Group. So you better believe when I got back to our corporate office, one of the first things that we did in my early tenure was to implement an employee stock purchase plan. Our folks want to be owners. They believe in PFG. At Performance Food Group, top performance isn't just encouraged, it's recognized, rewarded and celebrated. When our people think and act like owners, we all win. So let me wrap up with this: Our people and culture strategy fuels our industry reputation, our customer focus, our talent pipeline and performance. We will continue to invest in leadership and culture initiatives that enhance both the associate and the customers' experiences, ensuring our competitive advantage for years to come. At Performance Food Group, investing in people isn't a human resources initiative, it's a business growth strategy. Thank you so much for your time today, and I'll turn it over to Bill Marshall.

Great. Thanks, Erika. So we're going to take a little break. We'll take about a 15-, 20-minute break. We're going to start the webcast right back at 10:30. There are snacks and refreshments in the lobby area, and we'll be back with Scott McPherson. Thanks. [Break]

Okay. Everybody is back. Hopefully, you did not eat too much. I saw somebody with two cookies. So I don't want them going to sleep. I did hear that we've got -- I think we have, like, fillet at lunch, so you're going to be in a food coma after that. So I'm glad I get up here now. So as I talked about, I'm going to really kind of hone in on five really strategic pathways that we focused on as a company that we think bring value to our company, to our customers. And no surprise to anybody in the room, I'm going to start off with sales, it is something that drives growth, and just kind of double-click on what we're doing from a sales standpoint across our segments. So when I think about foodservice, what are we doing in Performance Foodservice that creates differentiation in sales? And the answer is consistency to me. It's -- we've made consistent investments in our sales organization, consistent investments in training, consistent compensation program for a couple of decades. So that consistency has brought us great value, and it makes us a place where sales reps in the industry know what they get when they come to work for us. The other thing I think we've done really well is we've got a great focus on the independent customer, but we've built out a great chain organization, and we've attracted some of the top chains in the foodservice industry to our company. And that's why we're growing cases and chains in a macro that's negative. So really proud of the sales efforts across our Foodservice segment. When I think about the Convenience segment, I think about stealing with pride. We stole the commission structure, stole the training structure, but are leveraging that and doing a great job with it. And really, it's kind of been a springboard for them to get on track and really create that growth momentum. I think about our customer tech stack that I talked about in Convenience. And our salespeople know that tech stack really well, and they leverage that against our competition to sell. And our customers -- if you come to the Center of Excellence, some of you who were there 3 years ago, it looks very different today. That place is transforming all the time, and our technology in that segment is really powerful. And then turnkey foodservice solutions, I've touched on it a couple of times, I've got a slide on it later and I'll really dig into what that looks like. When I think about the Vistar segment, this is a segment that we talked about, had a little sales pressure in the first couple of quarters really around theater and value. But this is a segment that I think was really smart in how they invested in the sales organization. They identified this e-commerce platform and said, "We've got to have a separate selling effort against that." And you can't have the same sales rep that is out there calling on a theater really focused on the e-com environment. So we've invested in that e-commerce sales organization, also invested in our street sales force on the Vistar side. As I mentioned, I think Foodservice is going to be a big lever for our sales organization. And the last thing I'd touch on there is just the complexity of our Specialty segment. When you think about the high touch, high service that we provide and we think it creates insulation, and we're really well-positioned in that segment. And this next slide is just at a really high level, like you make that investment, we talk about that continuous investment in our sales organization. So you look at the kind of post-COVID CAGR, we've made an 8% investment in our sales organization headcount. What's that given us? Just a couple of facts. We look at a bunch of different metrics, but it's given us 7% account growth. That's the CAGR over the last 4 years. And it's given us 10% compounded proprietary performance brand case growth and independents. So 10% proprietary brand growth in our independent customers. So that investment in the sales force has paid off for us, and we're going to continue to make those investments. When I think about brands, first off, I get a sense of pride when I start talking about our brands. I talked about the 25,000-plus brands that we're leveraging across the entire enterprise, primarily in Foodservice, but starting to see that spill into the other segments. That, to me, is stickiness. The $7.4 billion, to me, is our independent customers telling us that they believe in our brands. $7.4 billion of our revenues come from Performance Brands. That 10% compounded that I just talked about since 2021, again, that's our customers telling us they believe in our brands. And lastly, 53% of the sales that we make to our independent customers is our brands. Again, our customer is saying we believe in your brands. Then we take those brands and we make turnkey solutions out of them. So you think about a turnkey solution that's leveraging our brand products. That creates a unique offer in the convenience space that nobody else can replicate in the convenience space. Nobody else has 25,000 brands that they can leverage to make turnkey solutions in that arena. And then I think about the manufacturing. I gave you examples of what we're doing with pizza manufacturing, I think about what we can do in the pre-pop space in convenience and in the Specialty segment. So we're going to continue to leverage manufacturing to create brands. Before I get away from this slide, I just want to mention a few brands that -- you'll be on the road, and you'll see Roma trucks, you'll see the Piancone brand, you'll see Bacio Cheese out there, those are brands that really support our pizza and Italian efforts, and they're best in class. For me, I look at my own fridge, and I promise you, you can look at my fridge, you're going to see Braveheart beef. Unfortunately, my college-age son thinks that the fillets are just everyday consumables. And then I see the Contigo Mexican products. Contigo Mexican line is fantastic. And I spent a lot of time in Texas, and they've got great Mexican food there, but our Contigo line is second to none. So really proud of what we do in the brand space. And I think about what does that do for us when I think about turnkey solutions? So first off, what's a turnkey solution? Turnkey solution means in a convenience store, we provide the equipment, we provide the avenue to get it installed and have it in your store, provide all the ingredients, the nutritionals, the SOPs and training, the menu boards. I can go on, but I think you get the picture. Turnkey solutions, and those are leveraging our brands. So again, creating differentiation. The other thing we don't have is royalties or initiation fees. They have the power of PFG One over the top of these turnkey solutions. And then I look at these solutions individually and I think what's the biggest obstacle of getting food into a convenience store, is labor and shrink. Those are the two things convenience store operators are really concerned about. And every one of these solutions is scalable. When I look at Red Seal pizza, we have a Red Seal Express, where you can have one piece of equipment and make a high-quality pizza in a store, one person can man all of that, all the way up to a full -- your stretch and dough, topping on pizzas and making a really high-quality restaurant pizza. I think about Tru Q BBQ, probably the ease of entry there is it's a very simple program. You can be making high-quality brisket products, pulled pork products through that program. We have a lot of people that are using that as their entree into foodservice. When I think about chicken strips, I think about my wife. My wife is a Texan, and she is a chicken strip connoisseur. And I'm not kidding. I can't even argue that this isn't the best chicken strip because she knows it is. But we have a great chicken program with Perfectly Southern, and we do a great job leveraging that in the convenience space. And I already talked about Contigo. The thing that's interesting is we built these for convenience. And what's happening? We're seeing them spill in the bar and grill, we're seeing them spill into specialty retail, we're seeing them spill into our Specialty Vistar segment. So we're starting to see that kind of move into our other segments, which we feel great about. We love that. That turnkey solution is really powerful. So when I think about all these collaborations that are going on, I'm going to throw some numbers at you. So the first one on the top left, 17%. So what does that represent? That is our Performance Foodservice share into convenience. We have a 17% share now. That's been growing consistently when you think about it for the last 5 years. Why is that? Because our sales growth CAGR, Foodservice and Convenience is 12%. So we've been growing our cases at a rate of 12% in Convenience over the last 5 years. So obviously, our share of Foodservice into Convenience is growing up. The next one down here is the 30%, that's actually our Convenience segment selling into convenience. So Convenience selling Foodservice into convenience. And we measure that, that 30% represents our sales of non-nicotine products. So 30% of what we sell in Convenience of our non-nicotine goods is Foodservice. And that continues to grow. It's grown for five years. So again, really powerful in how we leverage margin and how we leverage our customers in convenience. And then I think about the turnkey programs, I just showed you. We've sold 1,500 turnkey programs. Really, these programs have been in place for a couple of years. And probably close to 1,000 of those have been placed in the last year. So really seeing great growth there. We've got a long runway. When you think about our number of customers, we talked about 50,000 in Convenience and 75,000 in Specialty and 175,000 in Foodservice. So there's a long runway, but we feel like we're gaining a lot of traction there. The last 2 lines, I'm going to share with you together. So right now, we have a lot of collaboration going on between Foodservice and Convenience. Think about Rutter's, when I talk about Rutter's. Think about the two chains we just picked up and how we're leveraging that partnership. Right now, we have 10 collaborations going on where we're bidding on convenience customers jointly with food service and convenience. So 10 of those that represent about $400 million in food service sales and Convenience. So really impactful numbers when we are collaborating across our segments. So I'm going to shift gears, and I think everybody saw in the lobby there, we have our customer-first digital platform kind of on display. But why did we create this, what I call it as, an omni-channel platform for all of our customers and all of our salespeople to order. One platform that we can leverage across our universe. And we wanted it to be simple, easy to use. We wanted to build it on an architecture that we're going to use for a number of years going forward, modern architecture, and we wanted to be able to create a great digital connection to our customers. That was kind of what we set out to do and something that would also help us drive growth. So you think about that, we've created this digital omni-channel infrastructure, and how is that working for us, I guess, is the question, right? And so I think this next slide is really powerful. And when you think about our digital connection to our customers. So 67% of our customers have a digital connection to PFG. That represents 76% of the total sales that we make is through that digital connection. So you think, well, that's a pretty good portion, 3/4 of your sales are coming through a digital connection. The 15%, I think, is a really interesting one. Because that is essentially we have an AI-enabled solution within customer first that essentially looks at a customer's order history, order patterns and makes suggested orders saying, "You probably forgot this." Beyond that, it's also looking at the segment that they have. If they're a Mexican restaurant, it's saying, here are the items that are being sold in your market area that you probably want to add to your order. We've had a 15% take rate on that technology, and so again, very powerful. And we leverage that and feel like that will continue to get smarter and create more sales. So now I'm at the 5% down in the middle there. So what does that represent? The 5% is essentially saying, very simple: if you have a digital connection with PFG, your sales are 5% higher. So everybody in the room is saying, "Well, why wouldn't you try and have a 100% digital connection, you'll have an immediate boost in sales growth, right?" And that's not exactly true. And I'm going to tell you why. We like that digital connection. But we also like to meet our customers where they're at. We're not a company that tries to push that digital connection on every customer. And we have customers that like our sales reps to write the orders. We have customers that like to -- no fax anymore, but e-mail their orders in, call their orders in. So again, I think those digital numbers will go up over time. But again, we meet the customers where they're at. But the two numbers at the bottom of the slide, I think, are the most powerful and most telling of anything on here. So what does that 8% represent? So we have customers that have a digital-only connection with us. So essentially, we don't really have a sales rep that's is in there co-writing orders, working with that customer on pricing and sending orders in jointly with the digital connection. And then we have the other scenario. We have a sales rep in there and we have the digital connection. There's an 8% differential there. So digital-only, we're actually losing volume. We have a digital-only connection. But if we have the digital and our sales reps in there, we're getting an 8% growth differential. And off to the right there, exact same thing. And that one-off to the right is essentially penetration, it's lines. We've got an 8% growth in lines, and that's the differential between online -- or a digital connection only and then our sales rep and that digital connection. So what does all that mean? That means we believe in our salespeople. We believe that our salespeople really truly make a difference, and we are not in a digital-only world. If you do, I think you're going to lose sales. And so we think that's a really powerful connection that we're building with our customers. So I've been talking a lot about kind of sales, sales enablement. This is kind of a shifting gears into redistribution. And I think kind of we just intuitively know redistribution, what that is. But before I get into that, I really want to talk about the value that we think it creates. You think about what is the value of redistribution to a customer? Well, first off, it allows them to get a wider selection of items. So we're able to expand our item selection in an OpCo. Secondly, fill rates. More frequent delivery means better fill rates. So we're getting deliveries through our OpCos on a more frequent basis, so the customer gets better fill rates. Also, we have customers that want to run a limited time offer, have proprietary goods. And how are they going to get those distributed throughout the OpCos that service their locations? Redistribution is a great way to do it. So great value to the customer. And when you think about the vendor, it falls in line, right? The vendor is like a one-stop shop. It takes out the administrative burden. They can get their products distributed across our three segments through all kinds of distribution centers across the U.S. And the value to the OpCo again becomes obvious. For us, it's product selection. It's being able to have great fill rates for our customers and also being able to lower our inventories in our buildings, which Patrick likes. So what does a distribution network look like without redi? So this is just your standard distribution network. Off to the left, supplier ABC, that's essentially your supplier or manufacturer. And most manufacturers or suppliers, they don't ship directly to thousands of distribution centers across the U.S. They're shipping to some kind of consolidation facility. And so every one of those is shipping to some other consolidation facility. This is just an example of three suppliers, and you see how complex that gets. So essentially, what we've done with our redistribution network is create a simple model where our customer or our suppliers and manufacturers can essentially ship to our redistribution facilities. We have five of those across the U.S. And those essentially are supplying all three of our segments, the largest portion in Convenience today, really expanding into the Foodservice and into the Specialty segment. But that's just kind of a simple depiction. When you think about the volume, $4 billion of volume shipped in 2025, 10,500 deliveries. So think about that frequency of delivery to those OpCos. And we have another expansion planned in our Stockton facility in Northern California. That's going to allow us to take brands and a wider selection of items to the West. And George talked about us being subscale in a lot of buildings in the West. And this really helps us create that item selection that can get us to scale. So I've got two more slides here, after we get past redistribution. The last thing I'd say about redistribution is we see an opportunity to really scale that and continue to grow that. And so I think you'll see that continue to expand. And it's really not meant for the big truckload items, it's meant for those long-tail specialty items that really allows us to expand the product selection. So in the last couple of slides here, transportation. So when I think about transportation, there's one thing that every customer wants to know, what's your on-time delivery? And really proud to say that we run right now, across our three segments on average, a 90-plus percent on-time delivery. So that's great service to our customer. One of the other things we've done with our fleet is we've installed Samsara camera systems in 95% of our trucks. What does that mean? We have a forward-facing or road-facing camera and a driver-facing camera. Essentially, what that's allowed us to do is it's a great training tool for drivers, and it's a great safety tool. And we've had huge safety improvements since we've installed those, and it's represented in that next number there, that 18%. That's our reduction in accidents per million miles, which is essentially the metric we use for safety and transportation. 18% reduction, and we're well under the industry standard of two. So when I think about transportation technology, a lot of people will talk about their routing technologies. Anybody in logistics is going to have a routing technology. We use two primarily across our network, Descartes and Roadnet, have used those for a number of years. I talked about Samsara, having those integrated cameras is a great tool. And then I want to spend a second on Crossbow. If you remember in my first presentation, I talked a little bit about inbound logistics. So think about all the products that come to our OpCos. Crossbow essentially sits above all three of our segments and can look at every inbound load that we have coming in. And right now, we use that technology pretty well to manage segment to segment, but we don't do a good job managing across the segments. So think about leveraging that technology to piggyback loads and really do a better job managing inbound freight. So we see that as a huge opportunity. A couple of others that we use on our fleet, Truck Builder, Territory Planner. Truck Builder essentially make sure that we build great loads for our drivers that are out there. And Territory Planner allows us, when we have new customers, when we want to shift business, it allows us to do that seamlessly. The bottom of that slide, when you think about delivery solutions, I'm just going to touch on two. I'm going to touch on ACAT and PACE. The main reason I'm touching on these is because these are huge investments that we've made in training our drivers. And we spend a ton of time and effort training drivers to make sure that they're safe on the road. They're great stewards of our customers and provide great customer service. I mean you can see that in the results of above, a 90% on-time delivery and 18% reduction in accidents. Off to the right, just I'll hit on two things here. Temperature monitoring. You think about a cold chain. We monitor temperature from the dock to the customer, to the next customer, and all the way back to the dock again in every cold zone real-time. So we are really, really cold chain compliant and make sure that our products are arriving in great condition. And then Track My Order. Everybody's got Track My Order, right? That's a solution that -- it's on your phone for everything that you order, you know when it's coming. What I'd say is different here is we've started to use some AI enablement that as the day goes on, we get progressively narrower in our window and we're able to look at things like weather, accidents, traffic patterns. So we're getting much smarter in providing great data to our customers in our on-time arrival, which for restaurant customers, convenience customers, it's really important that you're there on time or they know when you're going to be there. So shifting to warehouse. The most important metric in warehouse, they want to know the quality of their order. So 99.7%, what does that mean? It means we're 99.7% accurate, which means we make less than 3 errors per 1,000 units picked. That's the best we've been as a company in a long time, and it's a really powerful metric and it gives our customers a lot of confidence that they're going to get what they order. The next two metrics, also very proud about. When you think about safety and warehouse, the metric is recordable accidents, recordable case rate. We had a 14% reduction this year in a recordable case rate. And we also had a 14% reduction in turnover. And I don't think that's a coincidence. I think that a more tenured organization is going to be safer, they're going to be more efficient, and that's what we're seeing in our business. When I think about warehouse technologies, I think table stakes is essentially radio frequency with multiple different handheld configurations. We use a lot of pick to voice and a lot of pick to light in different applications. The most progressive thing that we're seeing in our space and we're using it across all three segments right now is called goods to person. So we use Exotec and Dematic. Essentially, what that is, is a high-density pick module. So you could have 5,000 items in a pick module, it's all picked robotically. So every level has a robot that selects those items and it brings those goods to the person. So we have those now installed in Convenience, in the Specialty segment and the Foodservice segment. And really looking at that return on investment now and making sure that we're getting that return. But I do think from what I'm seeing today, we're going to continue to expand that technology throughout other facilities. Inventory accuracy, on the bottom left there. All I would say is you have to have a very accurate inventory to have a really good quality of order for your customer. And we do all that digitally from cycle counting to inventory checks. I mean it's all digital, all highly efficient. And then bottom right, I'd say these are just some fun things. Robotic wrappers. We use that throughout all of our facilities and all of our segments. Scrubbers. Automated scrubber. Think of a Zamboni machine, for hockey fans in here. It's essentially a Zamboni machine running around your warehouse, but nobody on it. At the end of the day, the floors are clean. And they're actually fantastic and work great. And they don't run into anything either, so -- which is good. And then robotic palletization is another one that we're testing right now in a couple of our segments, which was essentially a robotic arm that picks up totes and boxes and palletizes for you automatically. So like I've said throughout this, we don't pound our chest about technology, but I think we do a great job in effectively using technology. We're constantly looking for opportunities in technology. But at the end of the day, we've got to have a return on investment to provide value to our shareholders. So I'm going to finish up with this slide right here. Again, no surprise that I'm going to start with the sales organization and say that's something we're incredibly proud of, something we really focus on and work really hard on. Our brands, that's stickiness in our business. And we think those brands create value, something that our salespeople can sell and something that our customers believe in. I think I've hammered on technology a little bit, but I think we leverage it very effectively, both across our transportation and warehouse, but also for our customers as well. Redistribution. I look at that as kind of like our e-commerce platform, maybe a little secret weapon that we're continuing to expand and we see that it brings value to us. And lastly, I always like to finish with operational efficiency because at the end of the day that's the blocking and tackling that allows us to grow our business. And right now across all three segments, I'm really, really happy with that performance, and I think we are very well-positioned to continue to grow this company. So with that our CFO, Patrick Hatcher, is coming up. Patrick is going to share some financial metrics and our three-year plan.

All right. Thank you, Scott, and good morning, everyone. And I just want to again thank you all for joining us here today and thank everyone that's on the webcast. I also want to thank the 40,000 associates that Scott and Erika talked about and all their hard work that allows us to talk about our great results and our targets today with you. So I will walk through three things. First, our financial track record we have delivered and provide details on how we'll reach our next three-year targets, and then I'll discuss the targets themselves. We're excited to talk to you about our performance and our achievements over the last 3 years. I believe our past results are exceptional, and we feel like we're just getting started. We believe that the momentum we have as a company will allow us to continue to deliver outsized shareholder returns. I want to go back to where George laid out our three-year plan, our three-year strategy. This is our road map to success. He spoke about driving top line growth, outperforming with our people and culture and leveraging operational efficiencies to technology. These strategies cascade up to a strong adjusted EBITDA growth, and they are the items that are underpinning our operating model. I'd like to highlight our financial priorities that support the operating strategy. This slide should look familiar, as it's largely consistent with what we discussed at Investor Day in 2022. Specifically, we are focused on consistent organic sales growth, adjusted EBITDA margin expansion and capital allocation to drive shareholder value. We believe these are the right measures and believe it's important that we've maintained this consistency over the years. These priorities are intact because they have proven to be successful, and we expect this success to continue. We believe these financial strategies will continue to drive outsized gains and provide strong shareholder value. As you can see on this slide, we've been very successful over the past 3 years on what we regard as the key performance indicators of financial success. Starting with sales. As you can see, we have delivered very strong net sales growth. As you heard us discuss many times in the past, our focus on independent restaurants, growing Performance Brands, food and Foodservice and Convenience and growing Specialty has created positive mix that has helped drive outsized gross profit growth with a three-year CAGR of 11%. That, coupled with our focus on driving efficiencies and operations, that Scott highlighted, generated an adjusted EBITDA CAGR growth of 18%. Finally, adjusted diluted EPS growth of 19%. We are very proud of the success that the organization has been able to deliver such strong numbers over the past 3 years. One of our focus areas has been and will continue to be to drive gross profit margin growth. We have a history of achieving gross margin expansion through the natural mix shift to higher-margin channels and products, which we expect will continue to be a tailwind to our performance going forward. Today, we're excited to talk about another area of opportunity to enhance our margin through a $100 million to $125 million in procurement savings over the next 3 years. Our strategy with our procurement partners has always been to provide consistent, high-quality value products that our customers love. Our company has grown substantially, and we're now a significant buyer in the marketplace across our three segments. This provides a unique opportunity to look at our partnerships and identify where we have stronger opportunities or avenues for collaboration with key manufacturers. We feel this goal is achievable, and the work is already underway. Finally, we're also looking at adjusted EBITDA margin. We've increased our adjusted EBITDA dollars by over 18% CAGR since fiscal 2022, and we expect to continue in the next 3 years to expand adjusted EBITDA margin by an additional 50 to 60 basis points. We have identified areas down the P&L to enhance our profitability. On the revenue line, Scott has described upside on segment cross-selling. Our customers are looking for a one-stop shop where they can get all the SKUs they need from a CPG manufacturer from turnkey food programs or, in some cases, ingredients that a broad line food service distributor can deliver. Only PFG, with its diverse segments, can meet the customer where they are and deliver their needs. We build value-driven partnerships where we align our growth strategies with our customers. We expect this to produce profitable sales and revenue growth over the long term. Another area where we expect to drive margin expansion is redistribution. Again, we believe unique -- PFG is uniquely positioned to implement and expand on redistribution. It drives efficiencies with our supplier partners, it increases fill rates and provides a larger SKU assortment. It is a unique strategy focusing on the customer better and driving PFG profits. Finally, procurement efficiencies. As discussed, we believe this initiative will also enhance our adjusted EBITDA margin expansion. Now let's talk about our capital allocation strategy. We see four levers here: capital expenditures, leverage reduction, share repurchases and M&A. We'll take each of these in turn. Our first priority when deploying capital is CapEx. This is an investment directly back into our business. The majority of our capital spend is directed towards infrastructure to support our growth through warehouse capacity expansion and increased fleet. These investments generate a high return, and they are the lifeblood of our growth objectives. Let's review how we deploy our capital for capacity. We have a very disciplined use of capital for CapEx. We are continuing to build for growth, and that is new buildings or expanding buildings. Most of the dollars spent here has been in Foodservice. You can see on this slide our 2025 growth expansion projects as a percent of total dollars by segment, and we will continue to invest in growth. About 2/3 of our spend will be around growth and productivity and 1/3 around maintenance. We have a spend target of 70 basis points of revenue for CapEx. The next area is leverage reduction. We continue to target a range of 2.5x to 3.5x. We have recently incurred debt to fund our acquisitions of Cheney Brothers and Jose Santiago, pushing our leverage above the upper end of that range. Our current priority is to deleverage, bring our balance sheet back within the target range over the next several quarters. We believe the strength of our balance sheet allows us to look at other investment opportunities. This shows our annual leverage going back to right after we acquired Reinhart. You can see our success at reducing leverage and how quickly we were able to reduce that leverage to 2.7x. Currently, we're sitting at approximately 3.8x leverage, already one tick down from the previous quarter, and we'll continue to see nice progress over the next several quarters with the goal of being back within the established target range of 2.5x to 3.5x. Next, share repurchases. Today, we announced a new $500 million share repurchase authorization from our Board. This replaces the prior $300 million authorization and extends over the next 4 years. We have a disciplined approach to share repurchases, which we believe allows us to take advantage of market dislocations while allowing for our other capital allocation priorities. We believe share repurchases is an important part of our overall capital allocation strategy. And finally, M&A. As Liz shared, we've been very successful with our M&A, and we have lots of proof points to show that success. We will continue to look at strategic acquisitions in a variety of areas, including geographic opportunities and broader capabilities. Our focus has been and will continue to be on Foodservice, but we will consider Convenience and Specialty strategic M&A opportunities. We've been very pleased with our last 3 years. Our previous three-year sales guidance was $62 billion to $64 billion, and we're within that range. For adjusted EBITDA, it's an even stronger growth story. We gave guidance of $1.5 billion to $1.7 billion. And with our most recent guidance, we're expecting to beat that range. It's a testament to our strong execution of our strategy. Finally, let's look at our guidance for our next 3-year plan. For net sales, we expect to be in the range of $73 billion to $75 billion by the year 2028. And for adjusted EBITDA, in the next 3 years, we expect to be in the range of $2.3 billion to $2.5 billion. Using our current '25 guidance as a base, this implies a CAGR of over 5% growth in sales and over 11% growth in adjusted EBITDA. This plan has strong growth initiatives, coupled with positive mix changes, operational efficiencies and procurement savings to generate a 50 to 60 basis points of adjusted EBITDA margin improvement from the midpoint of the new 3-year guidance. It is important to note we are not including any material M&A in these numbers. We continue to be a strong acquirer of strategic well-run assets, and we'll continue to focus on this, as Liz and I have highlighted. And with that, we're excited about your interest in Performance Food Group. I welcome the rest of the speakers back to stage to take your questions. Thank you.

[Operator Instructions]. Okay. We'll start with John, and then we'll go to Ed.

John Heinbockel, Guggenheim. So maybe a two-part question relating to distribution efficiencies. Number one, how do you think about wage inflation over the next several years? And how are you measuring labor productivity, right? And is there a formal labor productivity target against that? And then just lastly, on redistribution, how expansive is that effort going to be? And how much -- I guess that won't impact labor efficiency as much as margin, but how do you look at that -- the importance of that within the context of the plan?

Okay. Well, he's been doing all the heavy lifting. So I was going to cut him a break. It's not going to happen. He'll handle the inflation and he'll talk about the labor and the redistribution.

Yes, I'll start on the inflation question, John. Thank you. First of all, I mean, the labor market, as we see it today, has been very normalized. So when we think of our plan, again, when we give you this guidance and this range, we kind of take the status quo. But we've seen a very much improved labor market, and we think the efficiencies that Scott highlighted will help offset any wage inflation.

Yes. I would just echo that. I think one of our goals every year, John, is to create efficiency to offset that wage inflation. Obviously, when it was ticking up a lot faster, you couldn't do that. In this environment today, we're doing a pretty good job of that, leveraging technology. And so we see that as largely an offset, maybe not 100%, but that's the goal. Redistribution, I would say it's a pay-for-performance thing. Right now, it's been very effective. It's been a great investment for the company to expand that. We've been able to do it without a ton of capital spend. But I would also say that we're not afraid to put in new facilities if that provides our shareholders a great return. And we see it as a unique competitive advantage that we've already kind of got in place across the three segments.

Yes, I'll add. One of the areas that we see in the future of some great labor savings is today, we cross a lot of geography with more than one distribution center. Actually, we have a couple of areas where we have three that touch on them because of acquisitions. But if you go back with the amount of those that we've done starting with Reinhart and particularly Foodservice, it was not the time to build facilities, that's for sure. They were hard to get up at that time. They're very expensive today. And we have very different product offerings. But over time, our plan is to get those product offerings with cooperation of the customer. More alike, Scott mentioned Dematic. We're actually testing doing some of that in a freezer area. That gives us the ability to carry many more SKUs in a distribution center. Because I was saying in our business to change SKUs to change customers, and that is what happens. You cannot make their product decisions for themselves. So this is a multiyear journey that we would go through. We also don't want to lose people as we go through that. And it's hard to find people that can run one of these distribution centers and do a great job. We're fortunate to have a lot of them. We don't want to give them up by consolidating facilities. But over time, we'll get that done. And that's going to bring some significant savings to this company.

Let's go ahead. Ed Kelly, and then we'll go to Jeff Bernstein.

Ed Kelly, Wells Fargo. Two questions, actually. First, you expressed some optimism around April and I think early May on the last call, but the industry is still, let's just call it maybe, softish. I'm just curious as to what you're baking in for the industry and the three-year outlook? And then the specific question, I think, is really probably maybe for Scott. As we think about the convenience channel, you talked about three new customer wins. Curious as to what you think were the big drivers of those wins? And then as you think about the opportunity in the C-store channel, specifically as it relates to selling foodservice cases into that channel and growing that channel, where do you think you are in terms of leveraging relationships, allowing the foodservice salespeople access to those relationships, that coordination to drive that? And how does all that work its way into how you think about the convenience channel's ability to grow EBITDA over the next few years?

I'll take the first one, and then we'll obviously have Scott take the second one. We do as good a job, I think, as you can do to get a large group of people to give you three-year projections. Those are always hard to do. I think a lot of it depends on where their geography is and what they kind of know they have coming. So I can't say that we took any specific macro in to effect when we did this. We've seen -- at least the numbers we get, we really only have one that's a reliable, I guess, source would be our Circana numbers. We're seeing a slight -- slightly better marketplace. But we've been -- as we mentioned in our earnings call, we've been pretty significantly better for an independent standpoint. So I don't know that independents are outperforming the chains to that degree. That's something we don't really know at this point. But we've taken into consideration that we're going to stay in that 6% range as far as case growth goes for independent. And this will be because there's not enough time left to get to 6%. But this will be the first year that we did not get to that number. And then the chain business, also, it's hard to go out three years, but we feel like we've got a real good group of people put together. We've had some opportunities that we couldn't take because of capacity constraints, and we're working diligently to get past those capacity constraints. So that's what gives us kind of the confidence to handle it. And then I'll go ahead and give the Convenience to Scott.

Yes. Ed, on all three of those customers, I'd say different but similar scenarios. We actually were sharing the business. We had a small portion of the business in two of those customers. The lion's share was held by somebody else. And in all three situations, they made the decision to award 100% of their business to us. I would say this: I think in that business, a lot of it's relationship. I think we've built great relationships there. But at the end of the day, it comes back to the service that we're providing in convenience, and I talked about the operational efficiency and quality of order and our flexibility there, I think, was a big player in that. And then I think the foodservice element for all three of them has been a big factor, just our capabilities. And maybe the third thing would be that tech stack I talked about earlier. So I think we just -- we've been performing really well. We had business with them. They felt like it was a great partnership that they wanted to expand in all three cases. Your second question is a little tougher. I think about foodservice and that evolution, the baseball analogy would -- I'd probably say we're in the third inning. But I would also say this, the complexity of getting our facilities equipped with the right food products and getting scale there, also getting salespeople in the right training, it was a longer runway than I think George and I anticipated. It's a challenge. The hard -- the tough part about that is it's a slow go. The great part is, it's a barrier to entry for others. It's going to be a slow go for anybody that tries to do it. And I do think that right now, everything I read in the convenience space -- you read articles in there, it's talking about foodservice in every article and people are saying, that's really going to be the driver of success for convenience stores. So I think there's a general momentum that will help us. But just getting our facilities equipped with the right items, the right training, the right equipment, that's been a slower process than I think we anticipated.

Jeff Bernstein? And then Peter.

Jeff Bernstein from Barclays. Two questions to continue the tradition. The first one is just on the three-year targets you talked about. Patrick, you mentioned in the last 3 years, you achieved 6.5% revenue and I think 18% EBITDA growth. The next 3, you're talking about at least 5% and at least 11%. So the 6.5% going to 5%, not that material a difference. The EBITDA going from 18% to 11%. Can you just talk about maybe what drove the outsized EBITDA in your mind over the past few years and whether or not you view that guidance for the next 3 years as conservatism? Or maybe there were some unique things going on over the past few years, but just trying to get a gauge for the EBITDA upside opportunity relative to revenue? And then I had one follow-up question.

Yes. I mean when we look at the next 3 years, I mean, we -- as George mentioned, we spend a lot of time on this, and we see a lot of positive momentum with all the things that Scott has shared. If you look specifically to sales, we feel really confident about those numbers that we've provided you today. As we look down the P&L to the adjusted EBITDA, we shared that we're going to have 50 to 60 basis points of margin expansion coming from, again, the mix changes, coming again from these operational efficiencies, the procurement savings that we shared today. So I think we have a lot of confidence in the range. And in my humble opinion, I think 11% is a pretty good CAGR for us.

And keep in mind, too, that with Reinhart, we've doubled the EBITDA in Reinhart, in this five-year period of time. Actually, we did it in four years. That's pretty hard to duplicate. And then a significant increase in EBITDA between the Core-Mark and EB at the time of our purchase until today. And I think we're going to do great in Core-Mark, but I don't think you make a three-year projection that gives you that kind of an increase.

Great, which actually feeds into my follow-up question, which is on M&A, just because it's hard to forecast a Core-Mark or a Reinhart because [indiscernible] those opportunities are out there. I think on the slide, and maybe this is more for Liz, but the slide showed half the country that doesn't have a lot of dots. And I know you get this question all the time. But I'm just wondering, and Patrick's guidance was that there's really not much M&A assumed, is there not much M&A assumed because you don't anticipate it to happen or because it's hard to forecast it, but you'd expect in three years that there will be a lot more dots on the west side of the U.S.?

Yes, I'll take that and then also have Liz make some comments. We're really active. We're very patient. And I think that deals work out well when you're patient getting to the right price and getting the deal done and they work out even better if you're patient once you have it and you give them time. I think Reinhart was somewhat of a unique situation because we knew the business real well. And I think that with Core-Mark and EB, you had synergies on top of synergies when you do something like that. So those are unique situations, and we really don't want to plan for unique situations. We don't have anything of the size of those, the three big ones that we did that's available right now. But we have plenty of opportunities. As a matter of fact, Liz's title is Senior VP of Strategy and M&A. We haven't given her much time to do strategy because we've kept her extraordinarily busy in the M&A front. But I'll let Liz speak to it, but I think that the funnel is about as big as it's been.

It's always been a big funnel. I've been busy since I started. But the only thing I'd add to that path west that you asked about is there are a couple of different scenarios or several different scenarios that we've thought through on how you do fill in that western half of the map. So some of that's in our control and some of it's not. But the fact that we have multiple, I think, different pathways to get there is part of why we haven't necessarily modeled it into our three-year plan because we don't know ultimately what path will make the most sense based on the pieces of the puzzle that are out of our control.

Yes. And we -- it's something we should be really open about. We do want to pay down debt right now. We went back to the public markets a little bit with the Reinhart, and we did Core-Mark with some stock obviously involved. And I don't know that it's a great time to go to the public markets. And I don't know that our shareholders would exactly be thrilled with that. So those are things that we need to work on, and we'd like to do it from a lower leverage base. And then I guess, strategically, I mean, we want to be in the west. We want -- we've got a lot of business that we think would be available to us, some things we could do nationally as well. We've spent some money in the west. We've put a new distribution facility in Denver. We put a new one in Houston, I guess, if you want to call that west. We about doubled the size of our facility in Phoenix. And similar to where we wanted, we felt Florida was a great place that we needed to get. We're real careful from what we did with our very specialized distribution centers there. We didn't want regulatory issues. Our people kept coming to me wanting to build something in Florida, and I think they were disappointed that I consistently said no, but we didn't want to run into those problems, and we felt that one day, we would have an operation -- an opportunity with Cheney. So it's kind of the same in the west. We've got to make those decisions as to what we want to do on our own or what we'd want to do from an M&A and you just have to have a willing party and they have to have the right timing.

Okay. Peter, and then we'll come up to Lauren Silberman.

Peter Saleh, BTIG. I also have two questions. The first one, restaurant labor, the availability has been pretty tight since COVID. Wondering if you're seeing an increase in demand in frozen food and prepared foods, and how that plays into the margin outlook for you? Is that margin-accretive? Is that margin-dilutive? And then just secondly, on the CapEx guide going forward, can you just elaborate a little bit on what the productivity CapEx is, 14%. Is that more IT? Or is -- just a little bit more color on that would be helpful.

Once again, I'll take the first question and then Patrick is going to take the second question. We spent a lot of time. We got some great chefs here. They spend a lot of time on it, working on, I would call it, value-added or further prepared product. I don't see the traction. I mean, we're doing -- there's some things we've done that have surprised us. I mean, we did prepared tamales and they did great and panadas and they've done well. But for the most part, I think it's the consumer that still wants a product that's prepared. And Scott mentioned that some of these turnkey programs have turned into good foodservice items for us, particularly the Perfectly Southern. So some, but I can't say it's getting a lot of traction. And the labor issues, by the way, are definitely there. I think the labor issues in the front of the house are going to go away if this no tax on tips goes through, that's for sure. They'll be lined up for those jobs. I might try to get one myself. It looks pretty good.

And on CapEx, obviously, the lion's share is going to the capacity. The productivity is a lot -- think about it as automation. It could be systems generated. We just carved that out because we want to keep track of how we're investing in those type of -- in that type of equipment. And sometimes that equipment is going into an older building that doesn't require any CapEx for capacity reasons, but we're tracking the productivity spend into that building.

Lauren and then we'll go to Kelly.

So if I could -- I'll ask a couple also. If I could start with the Foodservice side of the business, 8% growth in headcount, 7% growth in independent accounts over the last few years. How are you thinking about that growth in headcount, how that translates to account growth? George, I know you mentioned 6% independent case growth. Just trying to understand those components, how you're thinking through that.

Yes. Well, we went -- we started -- and really, if you go all the way back and it's long way back, we started in 2008, we were averaging about $28,000 per week per salesperson. And we were getting about twice the case growth as we added people. And of course, we -- still five years later, we're still talking about COVID, but we did really well through that from a market share standpoint. But it wasn't the right environment to hire and train people, and you just didn't have that attachment that you need going through that. So we got out of COVID, and I mean our average person, suddenly, we wake up and it's like $98,000 a week, and that's very hard to grow when you have that kind of customer responsibility. So we got behind on people. We don't force our salespeople to take any type of a cut in their territory or reduce customers, but there's incentives for them to do it. That took a while to really get going. And we found ourselves in a position where we wanted to add people. The market was certainly not as robust as it had been. And we may be in that period right now. One thing I can assure you is that we're going to continue to grow our people at a good rate from a sales standpoint. So we may see maybe even another year where our cases don't grow as fast as the number of salespeople grow. Because I think right now, when you're so dependent on new accounts to get growth and there really isn't that same-store growth, you got to add the people, you got to have them out there and you have to have them calling on customers and that's what we're going to continue to do.

And then I just wanted to build off Ed's question earlier. I think you guys spoke about the foodservice side. But just as we think about volume growth in Convenience and Vistar, do you expect that to be better over the next few years relative to what we've seen this year, just given your visibility into the pipeline from a new business perspective?

Yes. I'll give kind of a top line answer to that, but I should have Scott give you a little bit more detail. But he mentioned 3 large customers that we have in Convenience. Now those don't start tomorrow. I know one is September. I think one is November. I'm not sure when the other one is.

December-January.

December-January?

Yes.

Okay. So it's going to be a little while, but we've got -- and we've got good growth built in for next year. Vistar had a tough period that they went through. Scott mentioned it was pretty much value in theater. They've been doing exceptionally well of late. So I have a lot of confidence in both of those businesses, a tremendous confidence in our people. Go ahead.

I would just say kind of back to Foodservice and Convenience, Foodservice and Specialty. Specialty is just scratching the surface. I'd say they're right now where Convenience was 2 years ago. And so we see a ton of opportunity. We have a ton of customer interest. We're starting to add those items into the OpCos, starting to train people. We've got a foodservice specialist that's focused on the Specialty segment. So I think we'll start seeing them grow exponentially, but it's on a small base, right? But we see a lot of runway there and it's really nice margin in that space. Like I said in Convenience, I think we're in inning 3 but I think we're in a position where we can start to accelerate a little bit, too. And those collaborations I talked about, some of those chain wins, I mean, they come with some foodservice. We've got a bunch more conversations going on. So I think you'll see a little bit of an acceleration in the Convenience channel.

Let's go there. Kelly Bania, then we'll come over here, Jacob.

Kelly Bania from BMO. Patrick, one question about the 3-year EBITDA targets. Any discussion you can share with us at the segment level? Will all 3 segments kind of be in that range? Or is there maybe a different slope for Vistar over the next couple of years? Anything we could think about as we model this out over the next few years?

Yes. I mean I'm not going to share any numbers at the segment level today. But I can tell you, as Scott was just describing and George, we have a lot of great sales opportunities across all 3 segments. And then all those other things that we talked about today that will drive margin expansion. We expect to see all of our segments to grow at a very nice clip that cascades up to that number. I don't know, Scott, if you want to add anything to that or...

No. I mean, I think the only -- obviously, we had some nice customer wins in Convenience. So in the short run, obviously, we -- from a sales standpoint, that will be a nice pickup. But we have a lot of investment to get those onboarded too in the short run. So -- but yes, outside of that, I think they -- all 3 of them are in a really good position to grow both top and bottom line.

Okay. That's helpful. Also just wanted to ask about the $100 million to $125 million in procurement savings target. What's your visibility there? It doesn't seem like that's been a major focus of PFG in the past few years. Maybe it has, but maybe it hasn't been communicated in the same way as it is today. So just curious on your visibility and if that is just an area of low-hanging fruit maybe as you've grown and consolidated over the years? And then similar question, which segments does that impact?

Well, I don't think there's ever what I would call low-hanging fruit. I wish there was. We're in a different stage, I think, of our development. And we have been a very loyal customer and we've got very loyal suppliers. We tend to rarely change. I think our procurement people have been a little bit handcuffed by that. And I guess maybe to some degree, we're taking some of those handcuffs off of them, but we're going to make sure that we're not doing anything that's disruptive for our customer. And we have a very large base of brands and it's because we pretty much kept all of Reinhart's as our brands and we'll do some of that with brands that Cheney has. But over time, I think the consolidation of that and we're not going to do anything drastic, it doesn't work, is going to give us some opportunity to buy better. And it will probably be more in foodservice than it will be in the other 2 areas of our business just because the opportunities are greater today in that area.

And Kelly, the only thing I'll add to that is, I think Scott said it really well, because we have this really broad breadth of food away-from-home touch points that he took us through on that slide, we just offer a very unique value proposition to our suppliers. So this is very much about being a partner with our suppliers.

And you can be very effective with that from a procurement standpoint, but Scott, a couple of times used the word consistency. And our customers are looking for consistency, too. They don't want to get surprised on the product being different. So the $100 million to $125 million, I think, is a good number over a 3-year period of time, but it will be carefully executed.

Yes, we go to Jacob, then we'll go to Mark, then I'll get you in the back and then move over.

Jacob Aiken-Phillips from Melius Research. So one on Vistar and one on Convenience. For Vistar, can you level-set us on the current profitability or relative profitability of the different subsegments? I know e-commerce is probably highest. And then for Convenience, there's been a lot of ongoing consolidation, including like a big recent headline consolidation. So I'm just curious if you think that type of activity is beneficial to you or agnostic, et cetera?

Yes, I'll take the Vistar question and Scott will take the Convenience one. As far as the relative profitability of the channels, they're all delivered on the same trucks. It's a little bit more centralized business than our Performance Foodservice. So how do you spread that? So I guess, all in all, I'm going to tell you, we don't know. We certainly do with the e-commerce and that's a very profitable part of our business. Part of that EBITDA margin profitability is that we don't take physical possession of all the product. Some of it is consigned product and our total revenues are the fee in which we get to handle that business for that manufacturer. We have big differences in case sell prices where you get singles -- candy singles are way over $100, you're not going to run 6.5%, 7% EBITDA margins like they do as a company there. That's why we're always hesitant to some degree around discussing EBITDA margin because we have great businesses that have very low EBITDA margins and very low investment and great return on capital. And it's a lot of it's where that growth takes place. I would say that as a return on sales, theater is probably our lowest of it and our highest being the pick and pack or the e-commerce type business and everything else falls in between.

Yes. Makes sense.

Just to make sure I got your second question right. It's really on the consolidation in the convenience space?

Customer level.

Yes. Yes, I mean, obviously, if you're reading news about convenience right now, I mean, the 2 big gorillas in the space are talking about some form of a merger, that being Couche-Tard and 7-Eleven. That's interesting to us. We see that really as not a bad scenario for us. We're -- they're both customers of ours. We have a great relationship there. But it's interesting, if you look at the industry space as a whole, most of the consolidation has taken place at the top 25th quartile -- or the top 25%, right? It's the bigger chains getting bigger. It's still a very fragmented industry. 60% of the stores are still single-store owners. And when you see those big chains merge, they divest. And those all of a sudden create more single store owners or more small chain owners. So yes, the big one is very interesting. I mean you got the #1 and #2 player in the space. So it will be interesting to see how that plays out. But so far, I think our partnership with some of the more progressive players in the space, it's been a big benefit to us because they've been more on the acquisition side of the business.

We'll go to Mark and then we'll go back to Jake and I'll come over to Brian.

Mark Carden from UBS. I wanted to start off with the Convenience channel sales force. Scott, you talked a bit about how you've been taking some best practices from what you guys have done in Foodservice. How are you thinking about the right pace of growth for the sales force in this channel? And do you guys ultimately see, I guess, an algorithm between case growth and sales force growth similar to what you have -- well, not similar but you guys have one for, the Foodservice business is the one that you guys would envision for Convenience? And the second question is on health care and hospitality. You guys outlined it's an area under [indiscernible]. It's an area for potential expansion. Just the implications of expanding out West, what that could do for those channels?

Do you want to take the health care and hospitality one first?

You go for it.

Well, yes, I mean -- you mean to take the both of them?

Yes, go ahead.

Okay.

I'll comment.

I thought he was taking the heavy lifting on that.

You're on a right track, so...

Well, I mean, health care and hospitality, really, it comes down to product mix and complexity of that business. We're clearly not big in that space. We do some long-term care today. It's definitely an area that we're evaluating and looking to expand, but not something I think we're going to jump into on a large scale. That's a big hurdle and we feel like we've got a long runway. And you look at our market shares today and what we're doing, we've got a long runway there. So feel good about how we're positioned, and we may look at some long-term care expansion, but -- anything you want to add to that?

No, that's right on.

All right. Now remind me of your first question. I got a little sidetracked there.

All good. Just in terms of the pace of growth for the Convenience channel sales force and if there's an algorithm in place for case growth versus sales force?

Yes, that's a great question. First off, in Convenience, we don't look at cases the same way because there's so many each picks. So it's very different. Right now, what we're really focused on, as we shifted that commission structure over, is the number of people that we have converting into full commission is growing at a really fast clip. And once we get to that kind of position where we are in Foodservice, where greater than 50% of them are on full commission, then we start feeling really good about adding headcount and thinking about what that algorithm looks like. But I would say we're just finishing our first full year. We're really happy with how it's performed. But I agree with you, at some point, we'll probably have some kind of an algorithm that makes sense on adding headcount. I'm not sure if we'll share that publicly. I'll leave that up to Bill and others. But yes, I think it's a great question, and we feel just good about how we're performing with that program today.

Now we go back to Jake, then I come over to Brian.

Jake Bartlett, Truist Securities. My question -- my first question is on just the PFG One position that you're talking about today. And I guess I want to better understand how that's evolved and what the message we should be taking away? It sounds like something -- it's always been a part of the company, always been a focus. I'm wondering what has changed, what is changing and what might drive some different outcomes in the future? And I have a follow-up.

You want to take that. Go ahead.

Yes. Really, I think it's something that started organically. It wasn't something that we came up with a tagline and said we're going to create this new PFG One thing. It's really what I talked about most of the day today is, we really, I think, historically had let our segments operate kind of as independent units when I think about Foodservice and Convenience and our Specialty segment. I think over the last 2 years, there's 4 people sitting in the back that really run those segments day-to-day. And we're constantly meeting and collaborating. And I really think, like I said, it really kind of bubbled up organically like, we've got to think about this as one company in a lot of ways. And so when you think about procurement synergies, when you think about what we're doing around logistics and looking at inbound logistics, we feel like, in some ways, operating as one organization brings value. But at the same time, we're still committed in the field to be a decentralized company that's close to the customer.

Yes. It's very important that our people understand and they do, I mean they get along great and they're operating on a lot of things and they work together well. But they all got their day job. It's the most important and that's the business that they run today. And we're not doing this to grab a lot of time away from that. And they're very productive people and they're productive within their own business. But we're -- I would use the word we're foolish not to take advantage of the opportunity that we have. And we saw it, the big show is called NACS for convenience and we did a huge food display there. Our people did fantastic with it. And it brought a lot of interest and it brought a lot of business to us. Those are the kind of things we need to do. But for our management people to spend an inordinate amount of time on that, that's not what it's all about. It's just picking and choosing those right opportunities. And obviously, the biggest one is the foodservice people and the convenience people working well together because often, it comes down to both trucks going to that account because they don't -- the Core-Mark facility, which Scott mentioned earlier, they don't have the kind of freezers and coolers you need for a convenience store that is fully committed to being in the foodservice business.

Great. And my follow-up, is on the digital face -- the consumer-facing digital and how that's evolved over the last few years? The number of sales going through, the amount of sales is impressive, it's really high. I'm curious what that was 3 years ago, say? And then how the offering has changed, how your capabilities on the e-commerce side and the customer-facing has changed over the last couple of years?

I'll start. Yes. So jake just -- it's been an evolution as always and we've had systems out there. Some of our segments had pretty robust systems like Scott talked about earlier. Core-Mark had this really robust tech stack. Some of the other segments, maybe not so much. But when we came up with the idea of doing this CustomerFirst platform, it just -- immediately, just like all the other things we've been talking about, just brought a lot of power because not only were we're going to give our customers a much more modern tool to use, but we're also going to give them a tool that they can use across all the segments. And then I'll maybe let Scott finish that.

Yes. I think it's interesting when you asked what did it look like 3 years ago? I can't give you exact numbers but I can tell you that the Convenience segment was probably 95% digital. And we're probably -- if you saw the data that I showed, if you have a digital-only connection, that's not necessarily a great thing. And so in the Convenience segment, especially as we expand foodservice, I wouldn't be surprised to see that backtrack a little bit and have more of a sales rep interface there. Where it's really grown is in foodservice because I would say that we had a digital connection that wasn't up to speed. And so now we have customers that are able to go on there to research products, to get menu and ingredients. And so it's really become a research tool and an ordering platform for them. So I think you'll continue to see it grow in the Foodservice segment, probably not grow and maybe even fall back a smidge in the Convenience segment. And then I would say Specialty, Patrick, you probably know as much or better than I. But I would say a lot of digital connection there, a little more chain business. So they're primarily connected digitally. So I would say that, that will stay pretty static to where it was but definitely enhanced what they were doing prior.

Brian Harbour from Morgan Stanley. The comment you just made about health care and hospitality and I guess, just broader non-restaurant business is -- in the plan, is there no -- you're not assuming any material change to that business, so there's no new efforts to target some of that? Is that my understanding? And is that sort of mainly because of capacity or you would need to fill in some of those -- the geographical white space to go after that? Could you just elaborate on that?

Yes. Well, we have some of our, what we call, OpCos that do a fair amount of health care business, actually mostly legacy Reinhart ones. We see an opportunity. I think that for us to spend a lot of time on that, we wouldn't get the return that we would get by continuing to do what we do today. So I wouldn't call it a big priority. I think that we get to national coverage, that's a different story. I mean when we've picked up a chain business that didn't necessarily fit for us in certain markets in the West but it fit in its entirety for us. It's not a huge SKU count and it doesn't take any real salesmanship to do that, right? I mean you've got a commitment from the customer. When you get to health care, particularly, it's a commitment and you've got to be providing a very high level of service. So it's not a huge priority but I do believe that we'll do better than we do today. And we're getting that group of people that are in it -- successfully in it, even though not on a large scale, we're getting them working together, which will help.

What's the advantage of owning some of those manufacturing businesses that you talked about? Do you have more of that in-house than some of your big competitors?

Maybe we made too much of it. It's not real large for us and it's been fairly opportunistic and it fit in with the businesses that we have. It really came out of Vistar other than our cheese plant and they've done a great job with it. We're still getting our arms around parts of it. We're not aggressive right now around buying into any more manufacturing. The popcorn was an obvious. We're big in the channels that are big in popcorn and it was -- quite frankly, it was just opportunistic. And I love what they've done. I love what they put together. We have somebody new overseeing that, and you don't want to get out there aggressive when you have someone new. But it's a good part of our business today that brings us some other things.

Alex?

Alex Slagle from Jefferies. I guess a question, maybe if you could talk about the new business pipeline across the 3 segments a little bit more and kind of cadence we should expect. And then on the comp structure and sales force strategy going into convenience. I mean, it sounds still very new. You said fiscal '25 just rolling out. So I know it was a pretty big piece and driver for foodservice. So just trying to think about how that -- the early wins you could maybe highlight from that, that you've seen and what early signs give you confidence that it will be a big driver for the Convenience?

Sorry, I just -- it was hard to hear your first part. So you're just asking about the pipeline?

Yes.

Yes, I would say right now, as I look at -- I'll just kind of go each one. I mean, the Specialty segment, we feel great about the e-commerce pipeline. And over the last -- we talked about coming out of our last earnings call, we felt great about the momentum we had with theater and what's happening in that space. Value has shown some signs of life. But overall, I feel really, really good about the pipeline in Specialty. Right now, I hope Convenience doesn't pick anything up in the next couple of months because their pipeline is saturated. They've got a lot to digest over the next 4, 5 months. But obviously, I say that kind of tongue in cheek. I mean, we feel like the pipeline in Convenience is kind of crazy right now. We feel like there's great opportunities. And then in the foodservice space, I feel really well about how we're positioned. When we talk about the investment we're making in salespeople and that training, I think our pipeline in independents is -- we're just kind of waiting for the market to give us a little help. It's been a little bit challenged in the independent restaurant space. And the chain pipeline, I mean, I think you see the fact that -- and I talked about it a lot today, the fact that we've got really nice chain growth wins. We've partnered with some of the more progressive chains, and we don't have all their business in all the markets they serve, so we feel like there's definitely upside there. On the commission piece, yes, we really started parallel commissions well over a year ago. So this is our first full year in place. And we're getting -- pretty close to 50% of our folks are on full commission, which has been ratcheting up really fast. So that -- we're really happy with how that program has performed. And I think the difference or the advantage we had is we knew that program was going to work. And we knew how to monitor it, execute it. And so it's been a home run. It's -- obviously, it creates friction when you change comp structures. But I'd say this is a little different in the sense that we knew we had one that would work. And our salespeople are hearing from all their peers across the segments that this is a great way to write your own paycheck. And so I think that really benefited us as we implemented that. So I feel really good about how that's positioned right now.

When you change people's pay, the change management is difficult. If you do it twice, is really difficult. So we -- our people have been careful and it's working. So...

Ed Kelly?

Patrick, I wanted to ask you, your algo is sales and EBITDA, but you don't talk about EPS. It seems like given the fact that you don't have much M&A in the EBITDA outlook, you're either going to be taking debt down and getting benefit of interest or buying back stock or doing accretive M&A. I guess my question is, why wouldn't -- or would -- why would it be wrong to assume that EPS just grows meaningfully faster than EBITDA? And as part of that, why not talk about EPS growth within the algo?

Yes. Thanks, Ed. You're right, we haven't given any guidance on EPS. And as you've seen with the recent acquisitions, obviously, we saw our depreciation and interest expense increase quite a bit. And there was a period where -- but what I really appreciate is last quarter, it looks like the analysts were really dialed in on what that looks like. Going forward, we do expect to pay down debt. And so you would naturally see some of those things like interest expense to go down. And -- but we haven't planned on giving any guidance around EPS, to be honest with you.

Any final questions? Okay, well, thank you, everyone, for joining us today. I think that will end our program. Again, thank you for all on the webcast. For those who were able to join us in person, as we said, please join us in the lobby. We got some great food from our chefs, interact with CustomerFirst. And again, just thanks so much.