Sysco Corporation (SYY) Earnings Call Transcript & Summary

All right. Good morning, everyone. My name is Ed Kelly, I'm the Staples Retail and Food Service Analyst at Wells Fargo. And I just want to welcome you to the first meeting of the 7th Annual Wells Fargo Consumer Conference and Event that continues to build and I hope you all have a great couple of days out here. So kicking this off with Sysco, the leading food service company in U.S. in a sector that we [Technical Difficulty] and we have Chairman and CEO, Kevin Hourican, as well as CFO, Kenny Cheung. And I just want to thank the company for [Technical Difficulty] supporting us at the event. So before we dig into fireside chat questions, I think Kevin wanted to just kick it off with a few comments. So we'll start there and then dig into questions.

Great. Good morning, Ed. Thank you for having us this year again, and thank you to the broader Wells' team for hosting the conference. We're honored and privileged [Technical Difficulty]. I will be very, very brief on our prepared remarks. Just some quick thoughts. As Ed said, we're the leader in the food-away-from-home space, largest from a market share perspective, highest from a profitability rate perspective with what we would call some unique assets that are creating a defensible moat around the world that we [Technical Difficulty]. Start with number one, Broadline, which I just mentioned. We also have the largest and significantly growing specialty business, a large and growing, improved profitability from an international perspective and investments in technology that will pay dividends for years to come. These are competitive assets. As I said, the food-away-from-home industry is a good space, good business. It's a large space. It continues to consistently grow, taking market share from the food-at-home channel year-over-year-over-year. There have only been 3 years in the last 40 years where the food-away-from-home business didn't grow revenue, and that was in '08, '09 financial crisis, the beginning of that. And then obviously, when the world was told to go home and stay home and not leave their homes in the beginning of COVID, that was rough. You take those 3 years out and across the rest of the span of time, this industry has grown and consistently taken market share [indiscernible]. Sysco is taking market share from within that growing pie. So we talk about it as a growing pie, and we are growing our slice this most recent year, fiscal 2024. We grew our business 1.75x [Technical Difficulty] market. And if I could just talk about that very briefly and turn it over to Kenny. What we're proud of? We're proud of our national business, which is roughly 50% of Sysco's business. We call that national sales. We're doing very well in that space. We are the largest in that space. We are taking market share at an accelerating rate and our margin profitability within national [indiscernible] is expanding. We're doing very well in specialty. We have a $9 billion specialty business. [indiscernible] continue to add to that portfolio, both organically and inorganically growing that space, taking market share. And we're doing very well in international. Our international business is growing top and bottom line faster than the overall company. Where we have opportunity for improvement is in local sales. [indiscernible], our local sales business is a good business. So that we have the largest share and the highest profitability, but we're not satisfied with our volume growth in local and I'm sure we're going to talk about that today. With that, I'll turn it over to Kenny for a few comments from his [indiscernible].

Thanks, Kevin. Good morning, everyone. It's great to be here with all of you. Just one thing to add on top of what Kevin spoke about is ROIC. We are super focused on ROIC. If you take a step back, if you look at us versus the average for the consumer staples sector, we are 500 bps higher than the average and more than twice of our average core peer. ROIC is really embedded in everything that we do from looking at M&A, to CapEx deployment, to OpEx deployment, to even headcount hires, it's everything that we do. And we're also looking it from a portfolio optimization standpoint. Let me go a bit deeper on that one. Kevin and I and the management team, we look at the portfolio of assets that we have today and make sure that there's a proper growth and there's a proper return for the capital and resource deployed against that asset. This brings me to Mexico. So we are exiting and divesting our JV in Mexico for the following reason. One, growth hurdle is not there; and two, the returns are actually dilutive to the overall enterprise. Again, it's still under regulatory approvals and other closing conditions. Now my point of bringing this [indiscernible] is twofold. One, this is further conviction that we believe our international business is a growth sector. We are able now to redeploy resources and capital and double down on high-growth, high-performing, high-returning markets. That's point number one. And point number two is just ROIC in action, right? ROIC in action. We will continuously look at both ends of the spectrum. What asset can we invest in and [indiscernible] assets where we can better deploy our resources elsewhere, a very important point here. So as investors, [indiscernible] thinking about value, growth and income, it's a compelling opportunity. And you can rest assure that when you invest in Sysco, the rigor, the thoughtfulness around ROIC will always be the backdrop. With that said we're open for Q&A.

Yes. Great. So maybe let's start with a bit of a state of the union in Sysco. You gave a fairly robust presentation at your Investor Day, highlighted a lot of self-help. It's hard to judge the progress from the outside given the industry backdrop. So can you talk a little bit about how you think underlying momentum of the business is going? What's working? What needs a little bit more attention? Just thoughts on sort of like where you are on that journey that you laid out?

Completely understand the question. There's a lot going on at Sysco. I'll save comments on the macro backdrop for further questions. I'll focus on local sales. But before I do, we need to continue to run the play in national that's providing tremendous success at Sysco. So I just call that ride the fast towards faster. Our national business is doing incredibly well. Customer retention at all-time highs. Our win rate on the RFP circuit is incredibly strong at margin profiles that are above historical standards. So we need to continue to run that play. We need to continue to run the play in specialty because we're doing very well in specialty, and we need to continue to run the play in international because they are working. What we need to improve is local, and we're not satisfied with our volume growth in local. To sum it down to a 4-part plan, what we communicated at our Investor Day, here are the 4 key focus areas, and I'm happy to go deeper on any of that: Number one is sales headcount. Why are we adding to our sales force? Our territory sizes for the average sales rep grew to a place bigger than what we would like them to be. And the punch line there is we need that rep in the customer's account on a weekly basis. So we need to decrease territory size by adding sales headcount. Number two, and I'm sure we'll come back to this one, is our compensation model for RFP. We were higher in base pay than what we would like to have had, and weren't seeing the motivation that we needed to be driving with our sales population, and I can happily talk more about that in a moment. We need to remix our pay that just went live. That went live on July 1, and we're working through that transition as we speak. Number three, which is a drive a winning formula, it's something we call total team selling, which is getting our specialty business, sales reps and our Broadline sales reps to collaborate more at the specific customer account level to win the total basket of the purchasing ability of that restaurant, and we're really pleased with how that's going. And the fourth for us is something we call performance management. We have a large field leadership organization, scaling them up to be able to provide selling coaching, selling training, especially to new colleagues, to move them up their productivity curve. These 4 things together that we have confidence will improve our local business. I do want to be clear that this is not a light switch activity. It's not a flip a switch and all of a sudden, the business is going to be X percent better. These are slower, longer-term actions because that's the healthy way to improve. We can improve tomorrow if we wanted to lower prices to win share. That is not the view that Kenny and I take on this business. We take a longterm view on this business to ensure that the growth that we drive is profitable growth. Kenny, anything to add?

Yes. I'll pick up where you left off. This is a long game here. That's the name of the game. We're playing the long game, growing profitably. The other couple of things I'd say is that if you think about our company, our algo for growth, 90% is from the core and 10% is from growth initiatives. And what does core means? Kevin talked about, it is the local side, right? Continue to grow local business, continue to grow our CMU business, our specialty business and our international business. That's what we mean by the core business. Obviously, that's against the backdrop of supply chain efficiency, merchandising capabilities and also SG&A prudence. So that's what we mean by core. And our balance sheet allows us to invest, obviously, for today, the core and build for tomorrow. This is where the growth initiative comes in. This is where your Sysco Your Way comes in, perks, personalization, the 10 buildings we're building as we speak right now, which will come in laddering over the next few years. This is very, very exciting for Sysco. And the third thing I would say is that I know you read the papers and you look outside the window, it's dynamic [indiscernible] dynamic in the environment. The one thing to provide comfort is, we have a lot of levers in our business from a gross profit standpoint, from a supply chain standpoint as well as from an OpEx, SG&A standpoint. So just quick examples and then we can move off. On the merchandising side, we are the biggest buyers, right? We have scale and we have benefits to be had on the strategic sourcing side. Sysco brand is another piece as well. And then last but not least, as we grow local, as Kevin talked about, grow our specialty, grow international; you'll have that nice uplift from a mix standpoint, given they have a margin attachment rate that's higher than the traditional overall enterprise Broadline business. That's number one. Number two is supply chain. We are seeing retention improve quarter-over-quarter, month-over-month, year-over-year. In fact, last quarter, retention doubled, really, really good because that's the gift that keeps on giving. You have piece per labor hour, productivity and hiring costs, training costs, shrink, safety, workers' comp, auto liability, I think on and on. There's a benefit there as well. And then last but not least, as proven as last year, we have a nice [indiscernible] benefit on productivity implemented last year and a robust pipeline as well entering FY '25. So those are the levers we have in the P&L to mitigate any dynamics in the marketplace.

If we could just maybe zoom in on one of the things that you mentioned, Kevin, around change in sales force compensation. There's been a lot of questions, I think, in the market around those changes that you've talked about, maybe there is some noise around friction there. Can you maybe just talk a little bit more about what you did? And do you believe this is a headwind in your ability, at least in the near term to grow volume?

Sure. Good question. We understand the question. Any time you impact someone's pay, it's personal [Technical Difficulty] impacts them. So let's talk about where we were, where we are and where we're going. So pre-COVID, we were 100% commission model. COVID first hit, we pivoted to a base plus bonus model so that our colleagues have the ability to put food on the table and have a livable wage [indiscernible] as it turns. Over the last 3 years, we've been working on the bonus component of that pay to optimize their work focus. Kenny talks a lot about the things that they're being bonused on are win new customers profitably, drive Sysco brand penetration, win more [indiscernible] cases what we internally call local case growth versus alternative customer types because, as Kenny says, the mix favorability is positive. So those are the changes we've made over the last couple of years. Why we made the change in July? I'm just going to be really direct about it. Our base pay was too high as a percentage of total. Motivation was not sufficiently there to get the colleague to be out of their kitchen and [Technical Difficulty] customers something that we talk about [Technical Difficulty] relationship business, [Technical Difficulty] our sales colleague in the customer account on a weekly basis, [indiscernible] fighting for cases on the Sysco truck, having good conversations about how they can help that customer [Technical Difficulty]. I don't want to quote the internal stats, but we had too large of a percentage of our colleague population, Ed, that was making just their base pay, and they were good with it. Well, I'm not good with that. We need them to be hungry. We need them to be out driving. We need them to be out impacting positively [Technical Difficulty]. So we did this because we wanted to, not because we had to. We want to see impacts of this. It's a long-term decision. We have lowered base pay as a percentage of their total and we've put even more earnings potential in the bonus calc. To be clear, I'm going to normalize this math just to make it more digestible. We took $1 out of their base pay. We put $1.50 into bonus earnings [Technical Difficulty]. So every colleague [indiscernible] period has the opportunity to make more money in this new program than the prior program. It's completely uncapped, the more they grow, the more they make, Kenny always reinforces and oh, by the way, this extra $1.50 piece that we've put in is financially accretive to Sysco. If they succeed, we are succeeding along with the colleagues along the way. So this is the change we made. We lowered base, increased bonus. Many of our colleagues, Ed, they're thrilled about this change. Our best sellers actually are thrilled. It's like, yes, I get to bet on myself. I get to drive my own performance. I get to have the impact that I want to have and the more I grow, the more I make. For some of our colleagues, they have a choice to make. Do they want to change their behavior and improve their performance and earn more money or perhaps they don't want to work at Sysco, and here's what I'm saying for our long-term investors. And for me, as CEO, I intend to be here for a long time. This is a necessary change, and there will be some turnover. There will be, period. There will be turnover in Q1, perhaps into Q2. That turnover will have a short-term impact. We're going to manage through that. We've hired new colleagues, which we're going to talk about. That will help offset some of that. And that's why I said this isn't a light switch activity. Comp change is going to change behavior. We all know it takes time to change someone's behavior. And it is absolutely the right thing for our financials for the long term, and I actually think it's going to help create a higher growth profile for the company for the long term, and we're going to work through the transition. We're on top of it. We're having active conversations with our colleagues. We call it grow on the grid. There's this performance grid that they have. And our job as leaders is to help them be successful by giving them the skills to be able to succeed and also provide them technology tools that make it. Kenny, anything you want to add to that?

Yes. Just a couple of things. One, having the variable structure allows us to match the inflows and outflows of cash, period, right? If they sell, we pay. If they don't, we don't pay? That's point number one. I think the second point is, that often missed is, yes, there's 3 ways to grow if you really think about it. There's 3 ways to grow. The first is the new sales professionals with the updated compensation model. They're motivated and they take the transferred accounts and they grow those accounts. That's point number one. The second way to grow is, they grow new accounts, right? The third way to grow is the existing SC. Kevin is the existing experienced SC. He now has extra capacity as well. So day in and day out, Kevin and I are looking at both, ensuring that the new SCs are gearing up the learning curve efficiently because that way, they can bring in new business and making sure that our existing SC, who doesn't need any more training, can also fill in the capacity as well. So it's twofold as well as you think about the local side. And the last thing I'd say is that I know we threw out a number out there, 450 to 500 heads per year. And 2 things I'll say there. Well, Kevin and I will be very disciplined in terms of when and where we add. When [indiscernible] to the environment, making sure that we still drive operating leverage in our P&L for the full year and where in terms of territory, where do we actually add high-growth market and who do we add? Specialists? Is it generalists? Is it trainers, right? So we'll be very deliberate on the mix of people that we're bringing to the [indiscernible].

So just, I guess, dovetailing into that, you mentioned that local case growth and improving local case growth is not a light switch. You are making [Technical Difficulty] model. But at the same time, you're hiring. I think your hiring plan is, maybe, roughly around 20% increase in sales headcount, although that's probably gross net, I don't know. But how do you think about the return on hires? This transition period currently, right, that you're going through, when the market will see some improvement in organic growth [indiscernible] ?

Good question, I'll start with the why we're doing what we're doing. Kenny can talk about the financials of what we're doing [Technical Difficulty] and then we'll talk a little bit more about the macro environment that we're in, which was implied as a part of the question. So again, I'd like to do the where we were, where we are, where we're going. Why are we doing what we're doing? Back at the beginning of COVID, our business dropped 65%. It took significant expense out of our business model during that year. I want to be clear about one thing that we're proud of. We were the only profitable food service distributor that year. Even in a year when our business was down 65%, we were profitable that year. But the reality of what I just described is we reduced our headcount in the sales population pretty significantly back in 2020. At the same time, deployed a substantially improved customer ordering website [indiscernible] we had 35%-ish of our customers placing their own orders back in 2020. It's now north of 80-plus-percent. That single fact that I just described has decreased the amount of transactional volume that our SCs need to do and freed them up to do more selling activities, just as one discrete activity. So we haven't needed to hire back at the pace that we originally had from a colleague headcount perspective. Good news, bad news here, though. Good news is we've meaningfully grown our business over the past 4 years. That's a good thing. We've taken market share. We've grown profitably in each of those years. The bad news is our territory size, Ed, as I said, has grown larger than we would like. So each rep we currently have has a too big of a territory, and they're not, therefore, able to get in front of our customers as often as we wanted. So the net -- it's a net number. The net 450 that we hired last year [indiscernible] emphasize the point, most of the hiring was at the second half of the year is to reduce that territory size. Kenny just walked us through them. If I'm the new person who joins the company, we give them 5 customers to get them started, called seed accounts. So think of that as 5 other reps each donated 1 customer to Kevin, the new colleague. And then Kevin is then tasked to grow his business up through new customer prospecting activity. That's where the sales growth comes from. Add that person, they start with 5 accounts. They grow that book of business. Point two Kenny made, which was then that person who gave up an account is tasked with, replace that account, go out and get a new customer into your book of business. That's where the sales growth comes from, that's where the profit lift comes from. We are being cautious in managing people's expectations on this topic. That net 450 was in the second half of the year. It takes a while for Kevin, the new colleague, to work up the productivity curve. It's a 12-week training program that Kevin goes through. He then has time to be out on the street, one customer at a time, building that book of business. We haven't quoted externally the length of time to get to "our productivity standards," but it's not months. It takes time. So what we've articulated is that the second half of this fiscal year is when we will be [Technical Difficulty] benefit from that net hiring. And then the net hiring we do this year will benefit fiscal 2026. And Kenny mentioned this a second ago, we're going to be very purposeful about the hiring we do this year. Given the macro backdrop, we'll be thoughtful about the speed [Technical Difficulty] type of colleagues that we're hiring. Kenny, anything you would like to add?

Yes. So just to clarify, I agree with Kevin. The benefit will be in the back half, coupled with, we do believe there will be a moderate step-up on traffic in the back half. That's what's been modeled. And the second point I would make is that this year, they're -- right, the ones we hired last year will be showing benefit in the back half of this year. However, the ones we are hiring this year would be a P&L drag, right? Because the return isn't fully matched within the current period. The good news is that we have levers, as I talked about earlier, that we still drive leverage in the P&L, think about supply chain, not back in '19 levels yet in terms of productivity, right? Think about SG&A, lots of things in the pipeline. So you can rest assure that even though -- and we're turning on the spigot right now, as I'd like to call it, the spigot of the water faucet, if you will, of talent coming in. Once it continues, then you don't have the drag on the year. But right now, we have a class coming in. But with the levers we have, we can make sure that we can offset bill pay and still drive leverage margin expansion as well. And the other thing I would say is that it's not a binary switch, right, meaning it's not 0 to 100%. With every passing quarter, every passing period, the SC gets more productive. So there is a slightly -- we should start seeing a bigger spread between the market versus our performance.

So we've kind of danced around the industry a little bit here. So maybe we can dig in. There has been anxiety around restaurant traffic. You've acknowledged that the industry has been a little bit weaker than what we would all like at this stage. I think, when your outlook does assume some traffic improvement, as you mentioned. Can you maybe talk about what you're seeing in market currently? And then your expectation as you progress through your [Technical Difficulty].

Yes, great. So I'll start with macro backdrop. What we're seeing out in the industry. Kenny will then transition into the outlook for this year and our thoughts on the full year. We said on our Q4 earnings call that traffic in our last quarter, which was Q4, was down roughly 3% to restaurants. That was a very clear number that comes from Black Box. That's not a Sysco number. That's a global industry number. For the quarter we're now in, it's softened a bit. It's softer than that minus 3 said in the conference a couple of weeks ago that July was minus 5. We haven't quoted August, and we'll save that for our earnings call. But Q1, the quarter we're currently in is softer than the prior quarter. It softened a bit, not a major shift, but it has softened a bit. We're seeing it across all sectors. It's not just QSR, sector that's being written about the most. Because of the lower income, consumer being the most strained right now. Yes, QSR is being impacted, but we're seeing it across the industry right now. One thing we're clear about and our peers have said something similar, we can still grow our business in a negative foot traffic environment. The how [indiscernible] focus on net new customer prospecting, serve roughly 50%, 5-0 of the unique doors in the restaurant space across the countries that we compete in, but that 50% number is specifically to the U.S. We have an opportunity to grow our business by new customers prospecting. In fact, we will grow our business here even in that softer macro backdrop. Things we're seeing that are newer to report, we are beginning to see restaurants that take action on price, and I think it's necessary. Food cost inflation has normalized, yet menu prices were still going up. So we think it's a good positive sign that restaurants are beginning to provide more value on their menu. And what we always say is, we need to focus on what we can control. So we're leaning in hard on cost savings opportunities for our customers. Kenny talked about the fact that we buy more food than anyone in the industry. Take that purchasing scale, leverage that scale to provide value to our customers is point one. Point two is Sysco brand. Sysco Brand is a meaningful savings opportunity for our customers, providing what we call trade management deals to our customers, to give them incentive [Technical Difficulty] is good for the customers, and it's meaningfully good for Sysco. Point three and I'm only making 3 points and then tossing to Kenny is our specialty, specifically our protein business and our produce business. We can do even more to do what we call take knives out of the backroom of the kitchen [indiscernible] their prep. So think about a vegetable medley. We can produce the exact vegetable medley that a restaurant needs for their primary dishes, vacuum seal it, provide it to them in a cost-effective way. They can take labor out of their kitchen. The same thing on specialty meat. Our specialty meat business does hand cut, custom cut to the exact specs of the restaurant. They can take some of that skilled labor out of the back room. We vacuum seal it, provides more shelf life to them, and we've provided value. We've also saved them some money on their labor costs as part of it. So these are the things that we're leaning into. We focus on what we can control. Yes, the market is softer right now than it had been. We anticipate that will continue, Ed. We think that will continue through at least the end of this calendar year. We'll see what the Fed does today. We'll see what the election brings. Will we get past Fed lowering, we'll get past the election, we are projecting a bit of improvement in second half of the year, Ed. And if it doesn't materialize, we have actions that we can take to manage our P&L. And with that, I'll toss it to Kenny for additional comments.

Yes. You covered it well, Kevin. Just 2 things from my end. The bumper sticker is, we have full confidence in our 2025 guide full, full confidence in that guidance we provided on the earnings call. The second piece is, during tough times, you count on us to be very disciplined. During tough times, from a pricing standpoint, go-to-market standpoint, we will not grow for the sake of growing. Very, very important that I say that. So this is around pricing, making sure we look at the spread of margins. These are very, very important for us as well. And these are must wins as we hit our guidance for the year.

So as it pertains to that, the top distributors all are looking to grow case volumes, hiring sales force. Are you seeing any increase in competitive activity given that the backdrop [Technical Difficulty] softer. Just thoughts around what that backdrop [indiscernible] like today.

Sure. I'll start and toss it to Kenny. Again, let's break our business down into its components. 50% of our business is national sales that we continue to win meaningfully in national sales. Our customer retention rates that are at all-time highs and our close rate or win rate on that book of business continues to exceed our own internal expectations. Every one of those contracts are competitively bid. There are folks bidding on that business and our win rate there is accelerating. And the why is our supply chain capabilities are national and increasingly important in our national scale because many of these concepts we're serving have international business. For them, Sysco is a one-stop shop, click of an easy button for them to be able to partner with across the globe. On the local side, it's an efficient economy, Ed. Every case is not under contract. It's price for that item for that week. We're seeing a competitive environment. Ourselves and our competitors are looking to win new business, and it's a competitive environment. I would say, it's rational, but competitive environment. And Kenny just said it and I'll reemphasize it. We're not going to lead with price as the mechanism to get new customers for several reasons. One, it's not good for the health of the P&L for the long term. Two, we just reset the market if we do that. So what we do is we are very disciplined. We have a pricing software that helps us do this. We get to what's called the reference price for every item, for every customer, understanding their ZIP code, their cuisine that they are in, what items are known value for them and what items are more inelastic for them, and we price our book [Technical Difficulty]. So it's aggressive, but we are managing it. Kenny anything to add?

Yes, just one double click on what you said around half our business is national, half is local. Now within the national customers, 1/3 is actually what we call resilient segments. So these are your health care and education and the likes, right? So 1/3 -- so we have that portfolio of ours that we are very proud of, that we are growing, and we're growing very profitably. That's point one. Number two, as Kevin said, in terms of pricing, yes, when volume is tougher, but however, we are seeing rational pricing for the most part. The other thing I would say is that here at Sysco, we think about pricing as an output, not an input, let me explain what that means. So right on price, absolutely, right on price. And, and this is a very important and, and offer the maximum value to our customers as well. Because if you think about it, price is a reflection of value, right? That's what the value is. So as Kevin talked about, specialty, which is a competitive moat to our business, really hard to replicate, being able to help our customers during this time to take knives out of the kitchen and help reduce wage inflation for them, right, being able to find ways to help with their shrink and spoilage et cetera. So that's what we think about when we think about pricing. It's not an input. It's an output based on the value that we provide to our customers.

Just -- so switching gears to international, which obviously [Technical Difficulty] for you. Talk a bit about the international opportunity, what your goals are there? M&A [indiscernible] going forward within that business.

Kenny will start?

Sure. I can start. Two things here. International is a growth segment for us, period. So I talked about the Mexico, right? Mexico last year was approximately 3% of our top line for international. Again, margin dilutive from an enterprise standpoint, right? That's point number one. So again, it's a growth vector for us. Number two, the Sysco playbook that we started in the U.S., it's replicating very nicely to international, meaning Sysco Your Way, Perks, strategic sourcing, and we're seeing that in the P&L. Last year, I'll give you a few numbers: 7, 12, 24. Top line grew 7%, GP grew 12% and OI grew 24%. So we're definitely seeing that leverage and that scale kind of that One Sysco model that Greg Bertrand, our COO, believes. The third thing I would say is that there are no structural impediment or structural reasons, maybe that's we're seeing it, why the international market cannot be the same margins as the U.S. It'll take some time. It will take some time, I admit, it'll take some time. But there's nothing structurally on why we cannot be there as well. And we're -- every single quarter, we're growing double digit. In fact, last year, every market -- in every market last year, international grew double-digit OI, every market. It wasn't just Canada or GB. Every market grew double digit. And if you dip your toe into various markets, Canada, our largest market, double-digit growth, rightsizing the portfolio, healthy growth in the bottom line, right? We actually exit on profitable customers. GB indexing previously to national, they still are, but we're making a lot of grounds on growing local, for example. France, a little different, self-help there in France, right, where the past few years, they were more in the red. And because of new leadership that we put in place there, Remi is doing a fantastic job. We actually are in the green now. So it'll give you a flavor of the market. Now to answer your M&A question. Yes, the answer is yes. We will deploy capital to international. But let me clarify a couple of things here. From a strategic standpoint and just from the way we think about M&A, we were not keen to build. We understand the value of assets. We want to overpay as well. And not every market is created equally too, meaning, for example, in GB and in Canada, #1 market share, #1 in the space, right, solid foundation, okay? That feels like a pretty good -- again, not telegraphing anything. It feels like a good place to think through M&A, especially specialty Broadline, there's a compounding effect, if you will. But a place like France, we've got to continue to focus on the foundation to then bolt on M&A on top of it. So again, we'll be very, very deliberate on when and how we do M&A.

Kenny gave a super thorough answer. I would just say technology as well is something that globally is improving dramatically. What we're essentially doing is deploying great tech tools in the U.S. and then fast follow to Canada, fast follow to Europe. That's helping us sell more profitably. Customers are responding very favorably to the modern ordering web tool. And then we have a CRM that we deploy that helps [Technical Difficulty] perspective. So I'll just flush that up. And then just to reemphasize Kenny's point. So yes, the bank will be open now for M&A in select countries where we have a leading position, and we feel really good about the business, focused mostly on bolt-on capabilities that help us what we call Run the Sysco Play which is number one Broadline, adding produce, adding protein, adding equipment and supplies, et cetera... When we fill out that room, we can sell around the room, win greater market share with that customer and we have proven we covered this at Investor Day. When they buy from Broadline plus one of our specialty businesses, that customer spends 3x more per year. If they buy from two of our specialty businesses, they buy 6x more per year. So why is those specialty companies that they also sell Broadline products. So when we get a specialty player out of the account, we actually see a lift in specialty, we also see a lift in Broadline. So we're going to run that play internationally. [indiscernible] .

Well, with that, we're up against time. So again, just wanted to thank you for participating. And again, I hope you all have a great conference.

Thank you everyone. Appreciate it.