Sysco Corporation (SYY) Earnings Call Transcript & Summary

I'm Alex Slagle from Jefferies. And to welcome Sysco to the conference, with us we have President and CEO, Kevin Hourican; CFO, Aaron Alt; as well as SVP of Corporate Affairs and Chief Communications Officer, Neil Russell; and VP of Investor Relations, Kevin Kim. CEO Kevin Hourican joined Sysco just before the pandemic and over the last 2-plus years has helped drive an ongoing transformation at the company, which has already started to show considerable market share gains and record profitability.

I'd like to hand it over to Kevin to start with some opening remarks to highlight the nature of the transformation going on at Sysco and what you can tell investors about the strategy and opportunity ahead, [ show us a ] sense for what inning we're in.

Great. Thank you, Alex. Appreciate you having us and happy to talk about Sysco. And as you said, the transformation, that is underway. A little over 2.5 years ago, I joined the company. And at that time, we're the largest in the industry. The company had expanded operating income on the prior 4 to 5 years, about $1 billion, which is an impressive focus on profit growth. But we really needed to focus more on the customer, become more agile and become a growth company. I stood on stage at a meeting back then and talked about that, we are making that pivot to put the customer at the center of everything that we do and to become more agile and growth focused. So we're pleased to be able to report how we're doing in that regard. In May of 2021, we communicated publicly to our investor population, what we call our recipe for growth strategy, which is focused upon leveraging core strengths of Sysco and bringing net new capabilities forward to our customers to drive growth. One of the things that we're pleased with is -- as I said, the center of the strategy is the customer and also our associates. We've learned very clearly that if we can serve our delivery partner -- we currently call our drivers delivery partner population. We serve them better, they can, in fact, serve our customers better, and I'll talk more about that. So the 5 progresses we regard, you can see in front of you on the screen. Each of these 5 things works together with one another to deliver a growth algorithm for our company. What we respectfully submit is only Sysco has the ability to leverage with excellence each of these 5 things. There are some companies out there that can maybe do 1 or 2 of them, 2 or 3, we're uniquely positioned to have the ability to execute with excellence against all 5. It starts with digital. Making Sysco an easier company to do business with, to digitize the interface with our company, to reduce the administrative tasks that have been previously put on the plate of our sales reps and our key account representatives. It's not about reducing the headcount of our sales force, it's about enabling our sales force to spend more time with our customers on consultative selling and helping solve problems for our customers. Again, automating manual tasks, administrative duties and to be easier to do business with. Our customers have responded really well to our improved website. And we've automated pricing, so we now item-, customer-specific pricing run through a very, very capable automated system that, again, allows us to be more efficient to be what we call right on price and to allow our sales reps to spend more time with customers. That's the first part. The second part we call products and solutions, which is increasing the capabilities of our sales, marketing and merchandising teams to provide tailored service offerings for our customers that better meet their needs. A great example of that work is what we've done through our purchase of -- acquisition of Greco and Sons to improve our Italian product offering, to be able to have a full go-to-market strategy to serve that Italian customer that is more effective than what we had in the past. And we're really pleased with the work we've done in the Italian sector. But also in network is providing tailored, customized selling solutions to our customers. And we've launched a loyalty program called Sysco Perks as an example only, that is providing the best of our capabilities to select high-importance customers to get even more share of wallet from those customers. The third box is our supply chain. We are a supply chain company, we'll be abundantly clear in that regard. I like to say to our internal associates that we are equal parts, 50%, a food-selling organization, and we are at 50% a supply chain organization. So we've been working hard in the last 2.5 years to modernize our supply chain with 2 primary goals in mind, make the jobs themselves better jobs, and that is essentially important in a world where unemployment rates are low and the great resignation is upon us. When we make our jobs more effective jobs, we will improve retention, we will improve Net Promoter Score to our customers, and we will drive sales growth through having a better and more efficient supply chain. That's job #1. And we're doing a lot of compelling work like the Driver Academy that we publicly announced to make these jobs better jobs. Upscale our employees from our warehouse job to the driver role, increasing their lifetime earning potential, allowing them to raise their family on $100,000 per year-type wage and stay with Sysco longer as a part of that ecosystem. I could talk more about it but for time's sake, I'll stop there. That's job 1. Job 2 is to meet our customer where they are. Our customers told us they want no order minimums and they want increased delivery flexibility. Sometimes that means increased delivery frequency. We've done a lot of work to be more efficient in our delivery process. And then we've taken those savings, and we've invested them back into our customers by increasing delivery frequency and by eliminating order minimums. We remain the only national food service distributor without an order minimum. That's meeting our customer where they are. Next on the list is our new horizons tranche. And within new horizons -- I'm sorry, customer teams. I apologize. Our customer teams tranche is about leveraging something that we call team-based selling. We have the largest sales organization in the industry. We also have an increasing specialist sales force in product categories like produce and protein and even things like European imports, one of our businesses in Supplies on the Fly, which is an equipment and supplies business. We need to do a better job of harnessing that team of selling experts to deploy those associates where it matters most to the customers with highest purchase potential and be more strategic about an account rep who owns the relationship with the account and when they bring their friend along for the ride that is an absolute [ expert importing ] so we can sell more center of plate, which tends to be a higher-margin, higher-ticket product where we can increase profitability of that customer. We're being more scientific and more strategic about how we deploy that sales team effectively. And we've removed historical barriers of compensation that got in the way of those associates working collaboratively and cooperatively. And our customers are benefiting from that. Last but not least is our new horizons bucket. This is equal parts taking cost out of our business model, which Aaron can talk more about today, to allow us to have the opportunity to invest in new capabilities and also looking at our long-term business portfolio to identify opportunities to either add capabilities that we've not had before or to fill in white space on the geographic map of coverage to increase our effectiveness in how we serve customers. And we're pleased over the last year to have acquired the Greco and Sons Corporation and then most recently, Coastal Companies, which is a produce entity that was based in Washington, D.C., 2 nice wins that we're able to put onto the board. So to answer your question in summary, we're pleased that in aggregate, these 5 things are delivering what we said we would do. This year, we said we would grow at least 1.2x the industry. And we most recently communicated that we will exceed that 1.2x growth figure when we publicly announce our results in August. We will declare the number, but we will exceed that 1.2x growth. And we're very pleased with the overall output of this program. And as I said, it's the aggregate of all 5 of them working together that is unique, that is differentiating. And to be clear, scale matters meaningfully in this industry. Our ability to leverage our purchasing scale, leverage our supply chain and leverage our balance sheet to be to make investments in building capabilities that will create durable, competitive advantage. Alex, to directly answer the last part of your question, I think we're probably inning 2 of a 9-inning game, so we're still at the very early innings, but we're very pleased with the score that we put on the board, thus far, and we're confident that we can put even more points on the board in the coming quarters and years.

Great, a ways to go. Yes, maybe we could turn to the operating environment. They -- set the stage there. Some commentary on kind of what you're seeing on a few fronts. First, consumer spending concerns as the inflationary cost pressures seem to be driving some shifts in consumer spending. And then second, the inflationary cost pressures and supply chain challenges you see in your business and just kind of what you're seeing most recently on these fronts and what kind of progress you've seen?

Now I'm happy to get started on the discussion and I'll toss to Aaron for any additional comments. First, what I want the investors to know and to understand is we have positive momentum at Sysco, positive momentum. Our most recent quarter, we exceeded our internal expectations. We actually raised our guide for the full fiscal year based upon that success, and we announced that in the first month of our existing quarter that our business trends have continued. That it was robust and that was strong and that we have positive momentum, and we are confident in our ability to deliver upon our fourth quarter implied guidance for this fiscal year and as we call spring-through the finish line to the end of fiscal 2022. So a robust business, positive momentum, and we're confident in our business trajectory. With that said, as you indicated, consumers are being pinched at the pump, for sure. The high cost of fuel is something that we are keeping a very close eye upon. What I would also submit though is there's a counterforce, and that counterforce is the customer's desire and interest to go back out to eat. And as more people have become immunized the more people have grown, willing and able to accept that COVID is a part of our environment and have fewer restrictions, we're expecting healthy robust customer dynamics as people the summer desire to be out of their homes, point one. Point two, the cost relationship between food away from home and food at home is actually tilted favorable to food away from home over the past couple of quarters. In fact, that relationship is at its most favorable if you look at it over the last few years. So while food inflation is real relative to the grocery store and through that home, eating out was actually from a cost basis, reasonably affordable versus what that purchase at home has been. High cost of fuel is obviously something that all of us should be concerned about. We are working aggressively to be able to provide value to our customers through a fair and appropriate price by managing cost inflation as closely as we can. Last point, and it's my third point is remember to our investors, we have business sectors that have still been pretty held back by COVID and we expect to see progress in those sectors in the coming months. And that is what we call business and industry, so office buildings, more and more employees are announcing the return to work. And then the travel and hospitality industry, if you listen to the airline CEOs and even Secretary Pete Buttigieg today announced to expect record travel this summer. Those things bode well for Sysco's business in aggregate. So we've got a headwind, if you will, tied to high fuel. We've also got some tailwinds in our business tied to those 2 business sectors that I just mentioned. So Aaron, I'll toss over to you for any additional comments you'd like to make.

Thank you, Kevin. I'd offer just a couple of quick thoughts. The first is, as Kevin said, we are very upbeat about our business despite everything going on in the world around us. And why are we so upbeat? Because we've got the team, we've got the scale unlike anyone else, and we have the balance sheet to support the investment for the long term. And Sysco, as we have been for the last 2 years, we are investing for the long term and driving through the current environment. You asked earlier about inflation. And look, there's no way to escape the fact that inflation has been significant for us, for our customers and indeed the consumers. And our fourth quarter, not much has changed from our third quarter and that inflation is elevated. Similarly, we have been able to and continue to be able to pass through our product cost inflation to our customers, and they are increasingly finding ways to pass them through to their consumers as well. We're confident that will continue to be the case certainly in the here and now. And you can see the proof point of that in that during our third quarter, we were able to announce that our GP dollars per case actually increased. Of course, that's us passing through our product cost inflation, but not necessarily all of our operating cost inflation below the line. Now why are we also so upbeat? We're so upbeat because of our scale and because the tools that under Kevin's leadership we've built over the last 2 years. We're partly able to respond to the environment and inflation because of the pricing tool that we implemented with respect to many of our employer -- rather many of our customers, right? We're able to actively manage in a way that we never could before the input costs and how it's impacting our pricing, that's leading to a science-based resolution of our inflation. Now it's also the case, we've been doubling down with our relationships with our customers that aren't part of the system. And we've got great partnership with them on what it was -- takes to be successful, not just for Sysco, but for our customer set as well. And this is where I want to go back to the scale that is Sysco. If you think about the assets we have, there's the technology owned certainly out there, but there's also the Sysco brand. Sysco has been investing for years in high-quality product that has better economics for our customers. And what better environment in which to really roll out further Sysco brand opportunities than an inflationary environment in which we're in. Which leads me to my last point, which is because of our scale, we're able to partner with our suppliers in ways which are different from others. The scale of our ordering, the tactical nature of our decisions, we can help our suppliers to be successful while helping our customers to be successful, and that's part of the magic of being Sysco and why we're so upbeat notwithstanding the environment that we're all operating in. Thank you.

Thanks, Aaron. Yes, maybe we could talk a little bit more about what enables the growth and transformation investments, which is these permanent cost-reduction efforts and the fortified balance sheet. In many ways, it's -- I mean, that's the key foundational driver behind Sysco's competitive advantage, like you mentioned earlier, but how many plans? It'd be great if you could talk through the actions you've taken here, and I think that would be helpful.

Sure, happy to do that. Look, our capital allocation strategy is simple. It starts with invest for growth, right? We knew when Kevin stood in front of the investors last May that we were going to have to invest substantial dollars to drive the growth, the investment in our technology, investments in our distribution nodes, investments in fleet, the investments in ESG as we carry it forward. And we are blessed with a strong balance sheet with -- which supports our ability to do that. And so every decision we take around where we're investing starts with how do we need to invest to drive the growth, to meet the long-term commitment of growing 1.5x in the marketplace? And we've been very successful both with the cash on hand and our balance sheet, on being able to fund every dollar of high ROI investment that we've needed to really set ourselves up for success over the long term because we're not investing for just today, we're investing for the medium term and the long term as well. And of course, how do you preserve that? To preserve that dry powder, you have to have a strong balance sheet, and we were blessed with a large cash balance resulting from our borrowing at the start of COVID. We've actually been able to pay down the debt. We've been able to signal to our stakeholders, we're serious. We're investing for growth, but we're doing it smartly. Because at the same time, we're investing for growth, we're preserving that strong investment-grade rating. We're the only investment-grade rated company in the industry, by the way. And so I've been really pleased with the progress the team has made on managing that balance sheet, while also keeping an eye on our stakeholders. We had committed that we weren't going to sit on a large cash balance. Notwithstanding everything going on in the world, that isn't our strategy. And so at the same time, we're investing hundreds of millions of dollars in capital. At the same time, we're investing significant amounts in M&A. At the same time, we are also paying down billions of dollars of debt. We're also doing things like the recently announced increase to our dividend, which effectively raises our dividend by $0.08 for our fiscal year '23 and repurchasing shares. And you may have heard us say during our last earnings call that we had made a substantial effort against getting to the $500 million repurchase that we announced earlier this year. Well, one piece of good news, new news is that we've actually now completed that effort during our Q4, and we have now repurchased $500 million of shares during our fiscal year '22. Thank you.

Great. Maybe moving over to Neil and ESG. Maybe you could talk about your goals around people and products and planet. This can be a real differentiator for Sysco and a positive contributor for the business in many ways. Just sort of building upon having the best people, best products, driving growth. And so what excites you most here? And what do you think investors need to know?

A good question, and thanks for asking about the importance of ESG. Alex, I think probably like you, I'm sure we're hearing more and more from our investors about how important this work is for them. And we're also hearing it from our customers and our associates, too. So as you know as the leader in our industry, we're proud really to be the first and only U.S. food service distributor with a science-based climate change goal. And research from The World Economic Forum suggests that companies who make progress in these important areas drive improved TSR over time compared to their peers. Why? Because the work allows you to focus on the right long-term strategies, which drive value over time. And so at Sysco, we're all in on this work. And the work we are doing is the right thing to do. And we strongly believe that it is also good for our business. Our customers need distributors to be able to provide this type of service for them, which we're doing and in turn, will benefit them. So there's a supply chain downline impact, which is beneficial. And that's subsequently going to be good for our investors as well. So as just some quick background for everyone. Our goal states that we're going to reduce the emissions we generate through our own operations at Scopes 1 and 2, 27.5% over the next decade. So to achieve this, we've added 2 bold commitments to our portfolio. One is to transition to 100% renewable energy, and the other is to electrify 35% of our U.S. Broadline fleet. And we're also going to work with our suppliers across Scope 3 to encourage them to set their own emissions reduction goals by 2026. So we invite them to join us on this important journey to benefit the entire food supply chain. So I'm really excited, Alex, about our commitment to change and the benefit this is going to bring to Sysco and across the entire food supply chain. So back to you.

Great. Maybe we could talk about some of the fundamental drivers and people. People is really important. Aaron, if you could talk about the snapback investments, investing in recruiting, training, retention, having competitive wages and just discuss these investments here and the outlook on how these might moderate over coming quarters?

Happy to do so. And look, I'm stating the obvious, which is in order to be successful, we have to have the right team, and we have to have them in the right place and at the right time. And Sysco's been very focused on investing in what it takes to be leading the industry in the context of the recovery relative to ensuring we've got the right customer service to our customers. And that means that we've been doubling down on our investments in recruiting, really training our associates, retaining our associates, providing competitive wages really across the network. And we've called that the snapback investing. And the practical reality is it has been tailing down over time. And the snapback cost did decline by 50% for us during the last quarter to $35 million. Now at the same time, we've been investing in the snapback to do what it takes to be ready to be the best -- have the best customer service in the industry. We've also been very focused on productivity because we all know that when you have a large number of new associates coming into any enterprise, their productivity is lower until you get them trained up. And so in service of the long term, we've been investing in driving that very productivity. And that's an effort that will continue as we carry forward. Now we're expecting that the snapback costs and indeed, the incremental investments in productivity will continue to come down over time. I'm not prepared today to announce our Q4 numbers in that way, but we are pleased with the results we're seeing on the efforts that have come before and are really looking forward to being the best service provider to our customers out there in the industry.

Productivity, is that another item maybe we could talk about? Initially, there's been a lot of the headwinds with all the new hires, but I think you've seen those moderate a little bit. Could you update us on that front?

Sure. I would comment that the -- yes, the productivity is something we're extremely focused on with our drivers -- with our delivery partners, rather, I should say, as well as in our buildings. And I'll turn it over to Kevin to talk about some of the key initiatives that we have underway in that respect. As we work to make the job easier as we work to really drive that engagement of our associates with our customers as we carry it forward. But the message I want you to take away is that we're investing now for the future success, and we're seeing the dividends paid internally as a result of doing that, and our productivity costs are coming down. Kevin, do you want to highlight a couple of the initiatives?

Yes, happy to, Aaron. As Aaron said and has said on recent calls, our emerging expenses, they do remain elevated versus pre-COVID levels, but we are seeing improvement in those performance indices. And we articulated that we anticipate continued improvement into our Q4, and we would anticipate further improvement into our next fiscal year, which we'll talk about in August. But it's driven by the initiatives that I'd like to spend a couple of minutes talking about. As I mentioned earlier, we need to make the job itself a better job. Fundamentally, we have 2 different problems. Problem number one is on the driver ranks. More people are retiring from driving a truck each year than are coming into the pipeline, such an environmental condition. I'll say the lazy way of addressing that problem would just be pay more, pay more, pay more. We already pay a very fair and competitive market wage to drive a truck at Sysco. Over $100,000 a year in most locations, as I mentioned earlier. That's a high-quality wage for a good job. The challenge is the job itself is a physically demanding job. A Sysco driver unloads about 30,000 pounds in a given day. And yes, that's a real number, 30,000 pounds in a given day. And the wear and tear on their physical bodies is not immaterial. So again, we can describe that as an environmental condition or we could do something about both of these challenges. Too few people coming into the role and in the physicality of the role. So at Sysco, we don't like to have rhetoric-based conversations, we like to have action-based conversations. So the action for topic 1, which is to increase the pipeline, we have plenty of people that work for Sysco, who love Sysco, would like the type of work we do, but they have a hard time taking their leap historically from warehouse selector to driver. And the why is just pure economics. Many of these folks live paycheck to paycheck. And for them to become certified to become a driver, they would have to, a, stop working, b, pay a third party a fee to become certified and c, pay for a test to become licensed and therefore, become a certified driver. That opportunity cost of lost wages plus the out-of-pocket costs to become a certified CDL driver is something we've eliminated as a problem. We've eliminated it by becoming certified ourselves as driver instructors. We continued to pay our employees that we select as selectors to go into this program. And oh, by the way, we select the best of employees. We select the people that have been with us for 3 to 4 years because, Alex, not unique to Sysco is the vast majority of turnover in supply chain jobs as you would not be surprised happens in the first 90 days and almost all of it happens within the first year. So think about this based on premise. If you get that person through the turnover curve, they've been a selector working for you for 3 to 4 years. They've got good customer service scores. They come to work on time every day and work hard. Who better for us to train to become a delivery partner than that individual. We're eliminating the barrier for that person from an economics perspective, and they get trained on site, on the grounds at a Sysco property. Our prediction for these associates graduating from our Academy was that their retention with Sysco 5 years from now, 10 years from now, will be multiple standard deviations from the mean, better than the historical retention of drivers. And just frankly, we need many more of them. So it's solving multiple challenges all at once. We will be nationwide with our Driver Academy by the end of this calendar year, and that's something we announced on our most recent earnings call. So this isn't a pet project. This isn't a small endeavor. This is a meaningful, at-scale endeavor for Sysco by the end of this calendar year. But topic 2 is we can have all the drivers we want if the job itself was too physically demanding, people age out of the job. Also, we're limiting the population of people eligible for the job. One of the challenges is because of the job being so physical, we don't have enough women in the workforce driving trucks for Sysco. And that's something we want to improve upon because we believe there should be a seat for everyone at the table at Sysco. And by making the job an easier physical job to do, we will increase diversity inclusion and we will increase [ African folk ]. So we're not going to today announce the how we're doing that, but we are experimenting with our industrial engineers, new equipment that we can put on the back of the truck and new picking methods at our warehouses that make that equipment efficient and scalable for our drivers. This industry, Alex, not to get too [ geeked out ] from a supply chain perspective, but to be clear, this industry historically has optimized for the wrong associates. And it's not a Sysco thing, this industry has done that. We've optimized for the warehouse associates. And we humbly and respectfully submit, we need to optimize for the driver. Why? It's a higher pay job -- paying job, excuse me, it's a customer-facing job, we're in the backroom of our customers, and it's a job that's a higher wage position overall. So when you put all those things together, we need to do things in our warehouses to create a load for the driver that is easier to process, and we need to provide them with some physical equipment that make it less of a physical job. We've got multiple pilots underway. We're very pleased with the progress that we're making on those pilots, and we think they're going to make a big impact for our customers, for our P&L, but most importantly, for our associates.

That's helpful. We're coming up on time, but I do want to make sure we talk about the new growth verticals. And if you could just talk about the opportunity in cuisine-focused verticals, expanding the pilot of Sysco Your Way and then the opportunity for further geographic expansion in specialty and new capabilities.

Yes, I'll rob the question, I think it's a perfect one to end on. Why don't -- I'll start to address the first and then I'll toss to Aaron for any comments on the geographic expansion, he'll cover for that piece. Go back to what I said 20 minutes ago, we are equal parts a food-selling organization, and we are equal parts a supply chain, it's a 50-50 balance. So I just put a lot of energy and commentary into the supply chain inside that we're making concerted efforts to improve our supply chain. We're just as excited about the work that we're doing with our product assortment and our selling capabilities to improve our ability to serve customers and drive growth. And the results are clear. We're growing meaningfully faster than the market, and we're going to exceed the target for the year, which is to grow 1.2. And this chart shows, and Aaron said earlier, the 1.5. Just to be clear, that's our fiscal 2024 goal. We said in the first year, which is '22, we'd grow out 1.2. And in the third year, we'd grow at 1.5. And we are increasingly confident in our ability because of the positive momentum that we're driving to deliver that. So I'll pick 2 that you mentioned a second ago, Alex, and then I'll toss to Aaron. Sysco Your Way, we prefer not to get into the finite details of what it is because it's a competitive advantage for Sysco, but what it is in aggregate is serving a neighborhood more effectively than we have in the past, not individual door of customer location, the neighborhood. So these are restaurant-dense neighborhoods. There are hundreds of them around the country, where there could be 50, 60, even 70 restaurants in a very dense trade area. And we've completely rethought of how we, Sysco, engage with that neighborhood. Not treating each individual door as a twice per week delivery. No, when you aggregate the volume from the neighborhood, we should be there twice a day, 6 days a week with the late in the evening cutoff. And that's exactly what we're doing in these neighborhoods, and that's what Sysco Your Way is. It's focusing on high restaurant dense, independent restaurants, neighborhoods, and providing those neighborhoods with a differentiated service offering that's very cost effective to Sysco because of the aggregate volume of those customers. And our -- what we're experiencing and seeing is exceeding our expectations. More customers in that neighborhood are signing up for Sysco service. Why wouldn't they? We're there 6 days a week, twice a day with a late evening cutoff, and we're increasing penetration with the existing customers that we serve. We couldn't be more pleased with the results, and we're expanding the footprint of that program. We're not going to quote the number of neighborhoods served because, again, we believe this is a competitive advantage and something that we are very focused on. Topic 2, as I mentioned, is the Italian platform. It started with the Greco acquisition. Greco, by itself, we've communicated, will produce about $1 billion in sales for the company, which is great, and it's important and it's profitable. More important for Sysco was to take that platform and expand it to the rest of the company because Greco is mostly Illinois. They've got a couple of other sites around the country, but the vast majority of their business was in the upper Midwest. In their assortment, their go-to-market selling strategy and their pricing strategy is to quintessentially focus upon that unique Italian customer, and it's a winning home run formula. So we're in the process of taking that formula, expanding some of their best items out around the country and working thoughtfully with their supply chain team on where we can replicate and stand up that record model. And I do want to be clear about that. It would be a Greco business entity because we believe it's a specialty offering. They want increased delivery frequency. They want late in the evening cutoffs. And they want a customer rep who clearly understands their needs and oftentimes speaks Italian. So we will run this as an independent specialty business along with our produce and protein specialty businesses that we have today. And we're very pleased with the work that's happening with Italian. We under-indexed with that customer profile prior to this acquisition, and just closing that gap along from our Italian share to our overall book of business share is meaningfully compelling for Sysco. Aaron, I'll toss to you for any additional comments that you'd like to make on future horizons.

Great. Thanks, Kevin. Look, in order to comment further, I want to go back and just call out a couple of stats. We have 17% market share. And we're the largest operator in the industry, right? We have 30% penetration. And we serve less than 50% or approximately 50% of independent customers. We also own what we call SSMG, which is our specialty meats business, which is one of the largest specialty value-added processor meat companies in the country. And we're the owner of FreshPoint, right, which, of course, is our specialty produce business, which is one of the largest specialty produce operators in the country. We have white space everywhere we look, the same way we have opportunity everywhere we look because as we take the scale, the strengths of the Broadline business, the very capabilities that Kevin highlighted that are being built to the rescue for growth, and we apply them not just to Broadline, but to the great specialty meats business, to fill in the white space, build the capabilities and go to the first produce business, fill in the white space, build up the capabilities and go to the Italian business. And then we partner the 3 of those, plus a couple of others in the Broadline business, it's an incredibly powerful combination of business that we're still working on. Kevin said earlier, we're in the second inning, but we're in a great place as we carry forward. And oh, by the way, don't forget, we have a large international operation as well, which we're very focused on, driving continued success that we were pleased to see the turnaround in that business over the last couple of quarters as well.

All right. Great. Thank you. Great way to wrap it up. I appreciate the time today, and thank you, Kevin, Aaron, Neil, Kevin Kim for joining us, and thanks for everyone listening in and enjoy the conference this week.

Thank you.

Great. Thank you, Alex. Best of luck to your conference. Appreciate it.