US Foods Holding Corp. (USFD) Q4 2022 Earnings Call Transcript

US Foods Holding Corp. (NYSE:USFD) Q4 2022 Earnings Conference Call February 16, 2023 10:00 AM ET

Company Participants

Adam Dabrowski - Director, Investor Relations

Dave Flitman - Chief Executive Officer

Andrew Iacobucci - Chief Transition Officer

Dirk Locascio - Chief Financial Officer

Conference Call Participants

John Heinbockel - Guggenheim Securities

Jeffrey Bernstein - Barclays

Mark Carden - UBS

Alex Slagle - Jefferies

John Ivankoe - JPMorgan

Kelly Bania - BMO Capital

Brian Harbour - Morgan Stanley

Edward Kelly - Wells Fargo

Lauren Silberman - Credit Suisse

Jake Bartlett - Truist Securities

Peter Ssaleh - BTIG

Andrew Wolf - CL King

Operator

Thank you for opinionated by. At this time, I would for illustration to invited everyone to nan US Foods Q4 2022 Earnings Call. All lines person been placed connected shut up to forestall immoderate inheritance noise. After nan speaker remarks, location will beryllium a question-and-answer session. [Operator Instructions] Thank you.

Adam Dabrowski, Director of Investor Relations. You whitethorn statesman your conference.

Adam Dabrowski

Thank you, Cheryl. Good greeting everyone and invited to US Foods 4th fourth and afloat twelvemonth fiscal 2022 net call. Speaking connected nan telephone today, we person Dave Flitman, Chief Executive Officer; Andrew Iacobucci, Chief Transition Officer; and Dirk Locascio Chief Financial Officer. We will return your questions aft our prepared remarks conclude. Please supply your name, your firm, and limit yourself to 1 question.

Our net merchandise issued earlier this greeting and today's position slides tin beryllium accessed connected nan Investor Relations page of our website. During today's telephone and unless different stated, we're comparing our 4th fourth and afloat twelvemonth results to nan aforesaid play successful fiscal twelvemonth 2021.

In summation to humanities information, definite statements made during today's telephone are considered forward-looking statements. Please reappraisal nan consequence factors successful our 2022 Form 10-K that will beryllium filed later coming for a elaborate chat of these imaginable factors that could origin our existent results to disagree materially from those anticipated successful those statements.

Lastly, during today's call, we will mention to definite non-GAAP financial measures. All reconciliations to nan astir comparable GAAP financial measures are included successful nan schedules connected our net property merchandise arsenic good arsenic successful nan appendices of this position slides posted connected our website that we are not providing reconciliations to forward-looking non-GAAP financial measures arsenic indicated therein.

Thank you for your liking successful US Foods, and I’ll now move complete nan telephone to Dave.

Dave Flitman

Thanks Adam. Good morning, everyone, and convey you for joining america today. I americium thrilled to beryllium present arsenic nan caller CEO of US Foods. I joined this awesome institution because of its beardown reputation, important early maturation opportunity, beardown civilization and talented squad of 29,000 associates. I look guardant to moving pinch our squad to build upon our accomplishments from past twelvemonth successful executing our long-range plan.

Since I joined successful early January, I've spent overmuch of my first period touring our distribution centers successful six of our larger markets crossed nan country, listening to customers and associates and diving heavy to understand nan US Foods business much thoroughly.

While connected nan road, I met immoderate talented and dedicated associates, galore of them semipermanent veterans astatine US Foods. In Oklahoma City, for example, I met Randy Koller who's been a transportation driver for our institution for much than 29 years. Randy expects excellence and teams up to lead our information backing courses and is simply a celebrated driver trainer. He's truthful bully that he's been named a section driver of nan twelvemonth 4 times. His customers perpetually rave astir his professionalism and nan other mile with, which he goes to service them, which I was capable to witnesser firsthand while riding pinch him connected a seven-hour transportation route. Associates for illustration Randy are 1 of nan galore reasons I americium proud to beryllium portion of this awesome company.

I besides look guardant to gathering galore of our investors and analysts soon. I scheme to walk my first 3 months, formulating my views astir our strengths and opportunities successful further detail, aft which I expect to statesman sharing much circumstantial thoughts. That said I'm surely starting to shape immoderate early opinions and perspectives astatine nan six-week point.

One early and important conclusion I've drawn is that US Foods long-range scheme and nan pillars wrong it are broadly nan correct areas of attraction to guarantee success. I would expect that immoderate changes I will person successful nan near-term would beryllium adjustments aimed astatine accelerating execution versus immoderate wholesale overhaul of nan plan.

Earnings maturation from a operation of separator description and profitable measurement maturation outlined successful our long-range scheme is simply a bully mix. The squad has made awesome advancement this past year. However, overmuch opportunity remains particularly successful proviso chain. I expect that my much than 35 years of acquisition successful distribution businesses crossed aggregate industries will position maine very good for nan unthinkable opportunity to lead US Foods and to thief build upon and accelerate nan tremendous advancement nan institution has made this past year.

Let maine stock immoderate cardinal highlights of that advancement connected page 4. First our squad has been intensely focused connected executing nan US Foods long-range scheme and it is shown successful our results each quarter. Throughout 2022, we grew profitable share, further optimized gross margins and improved operational efficiencies. We drove marketplace stock gains successful each of our target customer types.

We expanded gross margins pinch important and durable gains successful gross profit per case, while managing done a very challenging operating situation wherever US Foods and nan broader manufacture look proviso concatenation staffing and turnover challenges.

While nan advancement we made against our operating ratio pillar is somewhat masked by a challenging macro environment, we person precocious captious initiatives successful a number of areas which Andrew and Dirk will item shortly.

Second, we drove continued maturation passim nan year, acknowledgment to nan awesome activity of our associates. Our 4th fourth results intelligibly show beardown execution pinch adjusted EBITDA expanding 34%, attributable to a operation of accelerating year-over-year lawsuit maturation and continued separator description .

Our advancement successful 2022 gives maine immense confidence, successful our trajectory. Lastly, we stay focused connected creating worth for shareholders and allocating our superior prudently by continuing to put successful nan business, reducing leverage to our target range, returning superior to shareholders done our stock repurchase programme and opportunistically pursuing accretive tuck-in acquisitions.

Andrew will locomotion done immoderate of these advancement points successful much detail. Before I move nan telephone complete to him, I want to convey him for stepping successful arsenic Interim CEO past twelvemonth for his activity to get nan business connected a beardown trajectory heading into 2023, and for nan support he's providing me, arsenic I onboard.

A people of a awesome institution is its expertise to present connected its commitments. Essentially doing what you opportunity you're going to do. US Foods did precisely that successful nan first twelvemonth of our long-range plan.

We vanished 2022 pinch a beardown 4th quarter, building connected our achievements successful nan first 3 quarters and exceeding nan high-end of our adjusted EBITDA guidance, for 2022. My anticipation is that we will proceed to build upon that momentum, successful 2023.

With that, fto maine move nan telephone complete to Andrew to stock a spot more, connected our progress.

Andrew Iacobucci

Thanks Dave. And fto maine opportunity really terrific it is to person Dave connected board. My colleagues connected nan executive activity squad and I, look guardant to moving pinch him, arsenic we proceed to build connected our beardown results successful 2022.

Now, turning to page 5, I'll locomotion done our 4th fourth highlights. We delivered beardown financial results again this quarter, capping disconnected nan twelvemonth pinch beardown marketplace stock maturation and separator description and in-turn important net maturation successful a challenging macro environment.

Net income for nan 4th fourth grew 11%, compared to nan aforesaid play successful 2021. Year-over-year measurement maturation strengthened from Q3 to Q4, which we spot arsenic a affirmative for US Foods and our customers arsenic their betterment continues.

Adjusted EBITDA grew 34% for nan 4th representing an, acceleration from our Q3 maturation complaint contempt fundamentally zero sequential ostentation successful nan 4th quarter. Our adjusted EBITDA margins besides accrued 70 ground points from nan anterior year, arsenic we gained further operating leverage.

I cannot convey our associates enough, for their unthinkable activity to thrust advancement against our long-range plan. A twelvemonth agone we group retired to present $1.3 cardinal successful adjusted EBITDA successful 2022 and we exceeded nan high-end of our guidance, acknowledgment to their dedication.

Turning to our customer experience, we proceed to summation stock successful target customer types via our differentiation strategy and customer focus. We further leveraged our omnichannel capabilities for profitable maturation by CHEF'STORE, Pronto and US Foods Direct successful addition, to continuing to fortify our halfway integer customer level by expanding customer usage of MOXē.

We besides made advancement connected our proviso concatenation operations successful nan 4th quarter. The affirmative trends we saw successful Q3 turnover continued successful Q4, pinch driver turnover nearing pre-COVID levels and storage turnover showing sustained improvement. We aren't yet wherever we want to be, but we are encouraged by nan continued advancement and beardown grounds that nan actions we are taking are yielding results.

As mentioned connected our Q3 telephone we piloted elastic worker scheduling and seven-day transportation successful 1 of our cardinal markets. The results to-date person exceeded our expectations pinch important reductions successful turnover, affirmative worker feedback and improved information results. We are continuing nan aviator astatine that location and are adding 2 further locations successful Q1.

Assuming we replicate these outcomes successful these further markets, we expect to importantly grow nan elastic scheduling information of this inaugural successful 2023.

As we person done successful nan past fewer quarters, we proceed to fortify our inbound logistics capabilities, resulting successful further improved financial results and third-party partner collaboration. This activity is good up of scheme and a important contributor to our beardown results successful 2022.

We proceed to amended our superior building and prudently allocate superior during nan 4th quarter. Each of these actions reenforce our committedness to being responsible stewards of shareholder value, which Dirk will talk successful much item shortly.

Turning to page six, we are pleased pinch nan important advancement we person made against each 3 pillars of our long-range plan. Starting pinch our first pillar, profitable marketplace stock growth. We exceeded our measurement goals comparative to nan marketplace for nan afloat twelvemonth 2022. In fact, we outperformed nan marketplace by astir 150 ground points arsenic our edifice volumes, excluding our targeted exits, accrued by astir 1%, while nan latest study from our third-party supplier showed a marketplace diminution of astir 0.5%.

Specifically wrong restaurants, our independent lawsuit maturation was 4.3%, while nan third-party estimates that nan marketplace declined by 1.2%.

Our attraction connected increasing pinch nan correct customers is yielding sizable benefits by allowing america to service those customers much efficaciously and create longer-term relationships. This attraction connected our target customer types grows EBITDA dollars and expands our margins.

We opened six CHEF'STORES successful 2022 and are moving to summation nan number of openings to astatine slightest 8 successful 2023, which intends we will person a robust web of astir 100 CHEF'STORES by nan extremity of nan year.

We are rather pleased pinch our marketplace stock gains successful 2022 and expect further stock gains successful 2023 arsenic we leverage our differentiated income support strategy our industry-leading MOXē level and our omnichannel options, arsenic good arsenic different income maturation initiatives.

Moving to nan separator optimization pillar, we implemented a number of initiatives to amended gross profit per lawsuit sloppy of marketplace conditions. Those achieved fantabulous results successful 2022. Our 3 cardinal attraction areas are nan aforesaid I talked astir past 4th and person been important contributors to our results connected nan year.

First, our squad very efficaciously managed important ostentation earlier successful nan twelvemonth and immoderate commodity deflation later successful nan twelvemonth done our established pricing and procurement processes. We besides optimized margins pinch a number of customers to amended bespeak nan progressively challenging costs situation facing our industry.

Second, we achieved our agelong extremity of collaborating pinch vendors representing astir 40% of our walk to amended our costs of equipment and expect an further 20% of walk to beryllium addressed successful 2023.

And third, our inbound logistics squad focused intensively each twelvemonth connected moving pinch vendors to guarantee improved process and economics aligned pinch nan market. We besides achieved $70 cardinal of full synergies successful 2022 related to our Food Group acquisition, which is supra our antecedently stated $65 cardinal target.

These initiatives on pinch a number of others together delivered nan beardown gross profit per lawsuit we saw successful 2022 and we expect to build further connected that capacity successful 2023.

We made advancement connected operational efficiencies contempt a very challenging macro environment. Our routing optimization resulted successful important miles simplification and drove cases per mile good supra 2019 levels, contempt lawsuit measurement being little than 2019.

Our activity connected retention and worker engagement besides yielded benefits arsenic we saw continued betterment successful turnover and result productivity successful nan 2nd half. We further improved productivity done a operation of network-wide initiatives and targeted optimization efforts successful prime markets pinch nan top opportunities.

US Foods is advancing captious initiatives that thrust our long-range scheme and we'll execute against each 3 pillars pinch a extremity of further enhancing nan customer acquisition and our operational instauration arsenic good arsenic continuing to build connected our advancement into 2023 and beyond.

We've made important advancement passim 2022. And while we are pleased pinch our progress, it's important to admit that overmuch opportunity remains present and we expect to build connected our 2nd half momentum successful 2023.

Now, I'd for illustration to manus it complete to Dirk to spell complete our financial capacity successful much detail.

Dirk Locascio

Thanks Andrew and bully greeting everyone. Let's move to page eight. We are highly pleased pinch what we accomplished during nan 4th fourth and successful fiscal 2022 and really that is translating into our financial results. In nan 4th quarter, adjusted EBITDA grew 34% from nan anterior twelvemonth to $350 million. In summation to beardown EBITDA dollars, our adjusted EBITDA per lawsuit remained beardown and was accordant pinch Q4 of 2019. Adjusted diluted EPS accrued 45% complete nan anterior twelvemonth 4th fourth to $0.55. Net income were $8.5 cardinal successful nan 4th quarter, an summation of 11% complete nan anterior year.

Total lawsuit measurement accrued 2.6% from nan anterior twelvemonth and nutrient costs ostentation was astir 8%. Independent lawsuit maturation was astir 6% complete nan anterior year. We continued our beardown gross profit maturation from nan 4th fourth -- done nan 4th quarter, which we're rather pleased pinch arsenic location was fundamentally nary sequential ostentation successful nan quarter. Our adjusted gross profit dollars accrued 16% from nan anterior twelvemonth and arsenic a result, we generated beardown adjusted gross profit per case.

OpEx remained elevated. However, we saw continued betterment successful turnover during nan 4th signifying further betterment from Q3 results. The improved turnover and impacts from our different initiatives drove accrued productivity successful nan 4th quarter. We still spot important opportunity successful our proviso concatenation operations. For nan afloat twelvemonth 2022, nett income were $34 billion. This is an summation of 15% pinch a measurement summation of 2% and costs ostentation of 13%.

Adjusted EBITDA was $1.3 billion, an summation of much than $250 million, a 24% summation complete nan anterior twelvemonth and supra our afloat twelvemonth guidance owed to a beardown 4th quarter. Adjusted EBITDA separator besides expanded 20 ground points complete nan anterior twelvemonth and our adjusted EBITDA per lawsuit was supra 2019. Adjusted diluted EPS was $2.14 per share, an summation of 38%. We made bully advancement against each pillars of our scheme successful 2022 and we are excited astir what we tin execute successful 2023.

Let's look astatine measurement connected Page 9. Independent cases accrued 6% complete nan anterior twelvemonth successful Q4, which is an acceleration from nan 3% we reported past quarter. Hospitality grew 19% and healthcare grew 6%, offset by 6% little concatenation volume. Our concatenation diminution was mostly driven this 4th by nan strategical exit of a mini number of little profitable and much analyzable customers, accordant pinch what we shared successful Q3.

So acold successful 2023, we are continuing to spot measurement betterment complete nan anterior twelvemonth and person not seen signs of softening demand. Year-over-year lawsuit maturation crossed almost each customer types was stronger successful Q4 than Q3. Additionally, we delivered stock gains successful target customer types again this quarter.

Our keen attraction connected profitably increasing these customer types and opportunistically increasing different customer types is resulting successful profitable growth, beardown gross profit and EBITDA separator description . For nan afloat year, we exceeded our extremity of increasing lawsuit measurement excluding strategical exits by 1.5x nan marketplace for restaurants and 1x for each other.

I will attraction for a infinitesimal connected maturation comparative to 2019. Fourth 4th independent lawsuit maturation was astir 5% supra 2019. We still person embedded COVID betterment tailwinds, arsenic wellness attraction cases were 4% beneath Q4 of 2019 and hospitality was 11% beneath 2019. For each other, nan diminution was related chiefly to nan strategical exits discussed. As we move into 2023, we will nary longer comparison results against 2019.

Moving to Page 10. We made continued advancement successful nan 4th fourth to further fortify our superior building and trim leverage. We reduced our nett leverage compared to some nan extremity of fiscal 2021 and 3rd 4th 2022. Our nett leverage ratio was 3.5x astatine nan extremity of nan 4th fourth successful statement pinch our guidance, which was a 1.1 move simplification from a twelvemonth agone and a 2 turns simplification from Q3 of this year.

During nan 4th quarter, we prepaid an further $200 cardinal of word loan, which intends successful fiscal 2022, we reduced nett indebtedness by astir $220 million. Leverage simplification remains a attraction area of our superior allocation strategy. I americium happy pinch nan advancement we've made this past twelvemonth to further fortify our superior building and present connected our privilege of leverage reduction.

At nan aforesaid time, we announced US Foods' first stock repurchase programme for $500 cardinal and repurchased $31 cardinal of shares successful nan 4th fourth of 2022 and January 2023.

Turning now to our guidance for 2023. We expect continued increases successful measurement and net done nan execution of nan 3 pillars of our long-range plan, to turn marketplace share, grow margins and amended operational efficiencies. We expect to turn measurement astatine 1.5 times nan marketplace for restaurants and turn astatine marketplace for nan remaining customer types. We besides expect to present $1.45 cardinal to $1.51 cardinal of adjusted EBITDA and $2.45 to $2.65 adjusted diluted net per stock successful fiscal 2023.

The higher extremity of nan EBITDA scope assumes continued coagulated macro request improvement, while nan little extremity assumes a mild measurement slowdown successful nan 2nd half. We besides expect continued EBITDA separator description successful 2023 arsenic we accrued gross profit per lawsuit supra 2022 and execute much OpEx ratio done improved turnover and initiatives. We're besides providing guidance connected liking disbursal and full CapEx.

As we proceed to importantly summation net and trim full indebtedness successful 2023, we expect nett indebtedness to beryllium beneath 3 times leverage by year-end, inclusive of immoderate stock repurchases.

In summary US Foods made very beardown progress, against our long-range scheme during 2022 successful position of advancing capabilities, achieving grounds adjusted EBITDA and strengthening our superior building and superior allocation.

Every 1 of america astatine US Foods is squarely focused connected building connected nan momentum we created successful 2022, and our advancement to day is successful ample portion acknowledgment to these efforts. 2022 was conscionable nan beginning. We are focused connected creating a best-in-class acquisition for our customers and associates and generating important worth creation for our shareholders.

With that, I'll walk it backmost to Dave for his closing remarks.

Dave Flitman

Thanks, Dirk. In closing, I couldn't beryllium much excited to beryllium here, and I look guardant to importantly building connected nan advancement our squad has made against nan company's long-range plan. Our strategy is moving and we will stay focused connected driving profitable stock gains expanding gross margins and improving operational efficiencies to accelerate our advancement successful nan twelvemonth ahead. We are winning.

I americium proud of nan activity our associates person done to execute nan results we achieved successful 2022, and expect we will proceed to build connected that awesome activity successful 2023 to service our customers amended and position nan institution to present compounded shareholder worth complete nan agelong term.

With that, Cheryl, please unfastened up nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first mobility is from John Heinbockel of Guggenheim Securities. Please spell ahead. Your statement is open.

John Heinbockel

So fto maine commencement guys pinch possibly much strategical question. I deliberation nan independent lawsuit maturation this 4th was nan champion since 2018, right? So if I deliberation astir that possibly reside capacity successful nan warehouses, really overmuch you're moving up against capacity successful definite places capacity pinch nan income force, right? I deliberation is location a request to put successful either 1 correct to turn astatine nan complaint that you want to turn astatine nan adjacent mates of years?

Dirk Locascio

Good morning, John, this is Dirk. I'll commencement and past Andrew whitethorn adhd in. But I think, conscionable to commencement with, your mobility connected nan capacity 1 of nan things and nan logic our attraction really a logic our attraction is connected independent wellness attraction and hospitality is really from a capacity, we tin get overmuch much capacity retired of our buildings, because you person customers that are mostly utilizing nan aforesaid SKUs you already person successful your warehouse. And truthful from that perspective, we don't spot immoderate issues there.

Now that's portion of pinch different customer types why we proceed to opportunistically grow. We want to make judge that we're putting nan correct customers successful our warehouses. And past erstwhile nan correct clip is there, we will proceed to adhd capacity. We opened benignant of a installation this twelvemonth successful Sacramento California, and successful New Orleans. But again, we're going to beryllium really smart pinch that capital. And I think, arsenic acold arsenic sales, we person continued and will proceed to adhd sellers. Andrew, do you want to?

Andrew Iacobucci

Yeah. A mates of things connected that, John. On nan income front, we perfectly scheme to proceed to grow our income force. They are an incredibly important portion of nan narration pinch nan customer. We will really beryllium focusing connected areas of peculiarly beardown maturation arsenic opportunities to possibly moreover double down connected that description . But I should besides mention, 1 of nan things that we've been very happy pinch was nan measurement successful which we've been capable to leverage team-based trading and those -- nan specialists of rocks food-fanatic chefs that are coming successful each marketplace person been an important portion of our maturation trajectory and we will proceed to some leverage those and grow those arsenic appropriate.

Dave Flitman

Yes. And this is Dave. I'll conscionable piggyback connected to what Andrew said. I've had nan opportunity to witnesser that team-based trading attack successful respective of our markets pinch our food-fanatic chefs and our edifice operations consultants. I judge that is simply a existent differentiator for america arsenic Andrew said, and we'll proceed to put successful that.

John Heinbockel

And past possibly arsenic a follow-up for Dirk, right? I cognize you talked astir nan 1.5 times nan market. But possibly immoderate colour connected erstwhile you deliberation astir apical statement possibly much granularly, right? And lawsuit maturation versus wherever you exited nan 4th fourth ostentation thoughts for 2023, right? Do you deliberation ostentation and lawsuit maturation are adjacent contributors successful 2023? Just benignant of immoderate colour trying to span nan apical statement to nan EBITDA guide.

Dirk Locascio

Sure. So we deliberation that much comes -- truthful you person nan wrap of inflation. But I deliberation we expect much continued maturation to travel from lawsuit measurement and we expect beautiful patient lawsuit measurement crossed our target customer types and past again opportunistically from immoderate of nan different types. We deliberation arsenic Andrew touched upon, nan momentum we person coming retired of 2022, we deliberation sets america up really good for bully maturation pinch nan correct customer types and continuing to summation stock arsenic we did past year. So we consciousness bully astir that.

I deliberation from an ostentation perspective, arsenic you saw this 4th benignant of connected a year-over-year, it continues to activity its measurement down. In nan 4th quarter, we really saw immoderate sequential deflation. We're seeing a halfway of nan sheet person immoderate deflation. Grocery still showing immoderate humble ostentation sequentially quarter-to-quarter and that's remaining rather sticky. So I deliberation that's -- we're not counting connected a batch of ostentation complete nan people of adjacent twelvemonth and really, I'll benignant of travel backmost to what I've talked a batch astir this past twelvemonth is, we're really focusing connected what we tin control, which is taking stock and really nan different initiatives that are driving our wide apical statement successful nan correct customers.

John Heinbockel

Okay. Thank you.

Operator

Your adjacent mobility is from Jeffrey Bernstein of Barclays. Please spell ahead. Your statement is open.

Jeffrey Bernstein

Great. Thank you very much. And congrats to Dave connected nan caller position, and Andrew, awesome occupation during nan transition.

Dave Flitman

Thanks a lot.

Andrew Iacobucci

Thanks, Jeff.

Jeffrey Bernstein

Sure. I had 1 mobility and past 1 follow-up. The question, Dave, I conjecture is connected nan marketplace stock summation opportunity. We perceive a batch astir opportunities to further penetrate existing accounts, adding caller accounts. And arsenic you mentioned, possibly further tuck-in M&A. Just wondering from your spot and your position and inheritance for illustration really would you prioritize nan attraction going guardant among those 3 opportunities, aliases do you spot moreover further opportunities beyond that successful position of specifically gaining marketplace stock comparative to ample and mini peers? And past I had 1 follow-up.

Dave Flitman

Sure. And I would conscionable item that nan squad sequentially done nan backmost half of past twelvemonth continued to summation marketplace share. As we said successful our prepared remarks, we person really bully momentum. Our squad is focused in, peculiarly successful those 3 customer segments that we said about, nan independent restaurants, hospitality and healthcare. And I've seen laser focus, arsenic I've visited successful nan field, really bully momentum. I deliberation we person -- and I would conscionable item that's profitable measurement growth. And I deliberation we person nan correct attraction successful those segments. So I deliberation there's tremendous opportunity for integrated lawsuit growth.

To your mobility astir M&A this is still a very highly fragmented industry. And we will done nan people of clip look opportunistically for tuck-ins that will either springiness america a continued advantage successful definite geographies aliases possibly adhd merchandise aliases thing to our portfolio but we'll beryllium opportunistic astir that going forward. But I'm incredibly excited astir our expertise to proceed to turn organically.

Jeffrey Bernstein

Understood. And past conscionable to follow-up. I deliberation you mentioned successful your commentary astir 2023 guidance. EBITDA margins proceed to expand, which I deliberation has been a cardinal area of attraction for investors, arsenic Dave, I'm judge you've already astir apt heard. And I cognize US Foods is often compared to your largest peers.

I'm conscionable wondering what do you deliberation is simply a realistic target whether it's short aliases semipermanent successful position of specifically EBITDA margins wherever they could spell to patient levels versus what would you opportunity is conscionable unrealistic? Just trying to get a gauge conscionable because it's been specified a celebrated taxable of speech complete nan past number of years? Thank you.

Dave Flitman

Yes I admit nan question. It's early days for me. I'm six weeks in. I've sewage a bully consciousness of nan attraction that we have. I deliberation it's successful nan correct areas. I'll show you 100%. Our squad is focused connected this and focused connected accelerating nan results successful our business. There's a batch of differences betwixt america and our competitors successful position of nan P&L and really that's constructed and each that, but our attraction is continuing to grow those margins successful a measurement that makes consciousness for america and provides nan ratio that we request for our customers.

And arsenic excited arsenic I americium astir nan momentum, you besides heard maine opportunity that there's tremendous upside opportunity successful this business everyplace I look, we talked astir maturation already, productivity and efficiency. We've sewage bully momentum but there's tremendous upside to spell and our squad is laser-focused connected it.

I would expect continued description of profitability done nan people of time.

Jeffrey Bernstein

Great. Thank you.

Dave Flitman

Thank you.

Operator

Your adjacent mobility is from Mark Carden of UBS. Please spell ahead. Your statement is open.

Mark Carden

Good morning. Thanks a batch for taking my questions. And Dave congrats connected nan caller position. So to commencement and I cognize it's still early. But joining connected to US Foods, it's an statement that's system successful a spot of a much centralized manner comparative to performance. So I'd emotion to get your return connected immoderate of nan opportunities and challenges you spot pinch building and implementing strategies conscionable fixed nan quality successful backdrop.

Dave Flitman

Yes. I mean you're correct to constituent that retired successful nan difference. But I'm not really hung up connected immoderate peculiar statement structure. I deliberation yet our occurrence comes down to group and having nan correct processes successful spot and executing highly well. Our squad is intelligibly focused connected that. Obviously, I'm making assessments connected things for illustration group and statement building and each that benignant of worldly and I'll person much to opportunity astir that successful time. But arsenic I highlighted, I don't expect immoderate wholesale changes. I deliberation we've sewage nan correct attraction and really bully momentum. You commencement playing astir pinch statement structure, you thin to do a batch of soul navel-gazing and suffer a batch of efficiencies and get distracted. I don't consciousness immoderate request to do that here. We've sewage awesome momentum. We're going to proceed to build connected that.

Mark Carden

That's great. And past connected nan coagulated independent lawsuit maturation during nan quarter, conscionable funny astir immoderate of nan cadence. One of your largest competitors saw immoderate labour disruptions early successful nan 4th for work immoderate underground sound conscionable successful position of nan consistency did you spot bumps successful immoderate months comparative to others? Your wide return that would beryllium great.

Andrew Iacobucci

Yes. Thanks for nan mobility Mark. It's Andrew. I deliberation we were beautiful overmuch successful statement pinch what we expected nan 4th played retired beautiful overmuch precisely arsenic we had anticipated pinch continued momentum, peculiarly successful independent restaurants. We saw a small spot of bumpiness successful position of nan measurement nan holidays fell this past year. But different than that I wouldn't opportunity location was thing location that was of immoderate concern. And indeed, we've continued to spot really beardown momentum coming into nan New Year, wherever we're astatine aliases somewhat supra our forecast successful January. So we really consciousness bully astir nan stableness of that. We've been paying very adjacent attraction evidently to that lawsuit statement to conscionable look for signs of softness. And truthful acold we've really not seen that.

Mark Carden

Great. Thanks truthful much. Good luck, guys.

Dave Flitman

Thank you, Mark.

Operator

Your adjacent mobility is from Alex Slagle of Jefferies. Please spell ahead. Your statement is open.

Alex Slagle

Hey, thanks. Welcome, Dave. And congrats, Andrew, Dirk and squad for each nan occurrence successful caller quarters, moving things forward. I conscionable wanted to inquire astir CHEF'STORE and you added caller locations successful 2022 and accelerating it successful 2023. I conscionable wondered if you could connection immoderate further position connected really that's performing. Just benignant of funny pinch nan same-store income look for illustration comparative to 2019? And if you're still seeing nan synergistic customer gains arsenic it rolls retired to further markets and allowing you to really leverage nan powerfulness of combining those 2 channels and wherever you spot that heading complete nan future.

Andrew Iacobucci

Yes. Thanks for nan question, Alex. It's Andrew. We consciousness very bully astir CHEF'STORE's progress, arsenic we've continued to integrate. The acquisition strategy integration is fundamentally nearing completion now which will really put america successful a awesome position to thrust nan maturation of that portion of our business.

In position of caller shop openings and really they've benignant of played retired successful position of our exemplary of driving that apical statement synergy betwixt broadline and nan stores, they're playing retired precisely arsenic we had anticipated. We person a awesome squad successful spot that is busily moving done a measurement to importantly accelerate our complaint of shop builds. And they've besides made immoderate really bully advancement astir clip to break moreover successful those caller shop openings some of which will guidelines america successful very bully stead arsenic we look to rotation those retired much quickly crossed nan business.

So generally, I deliberation we're emotion rather bully astir delivering nan synergies that we had planned to, and besides emotion bully astir nan continued rollout arsenic we talked astir this year, trying to accelerate from six past twelvemonth to 8 aliases moreover much this year.

Alex Slagle

I conscionable want to travel up connected nan inbound freight income. It's been a really bully tailwind successful caller quarters, and it's each nan activity you've done optimizing nan vendor allowances and carriers. Kind of curious, really overmuch this use successful nan 4th fourth and benignant of what comparative to what you've seen successful erstwhile quarters and to nan degree, you deliberation there's still room present to spell and astir of nan low-hanging fruits possibly past picked astatine this point?

Dirk Locascio

Sure. Good morning, this is Dirk. Benefit successful Q4 was beautiful akin to what we saw successful Q3, truthful not a full batch different than I would telephone out. I deliberation that nan 1 point successful summation to, nan beardown vendor collaboration, that squad has done a really bully occupation is staying very adjacent to nan marketplace and making judge that arsenic marketplace rates are going up and down that we're adjusting our benignant of third-party cost, being progressive astatine that, they're up of aliases successful statement with.

The squad continues to do that this year. So I would expect that, a batch of nan bigger summation is location and it's already embedded successful our P&L. But pinch that said, location remains opportunity to proceed to person immoderate cases to america managing them, whether it's our ain trucks picking them up aliases ranging there. So a batch of nan use there, but still immoderate opportunity up and expect a batch of those gains to beryllium beautiful durable.

Alex Slagle

Great. Thank you

Dirk Locascio

Thanks.

Operator

Your adjacent mobility is from John Ivankoe of JPMorgan. Please spell ahead. Your statement is open.

John Ivankoe

Hi. Thank you very much. There are comments made conscionable astir important proviso concatenation opportunities. And evidently proviso concatenation is benignant of what drives your full company, truthful that's a very large category. A batch of nan speech has been astir inbound freight and your expertise to negociate that overmuch better. But I was wondering, if we could conscionable get a small spot much penetration whether it's astatine nan storage level aliases nan driver level, your SKU assortment immoderate that whitethorn beryllium I mean, what awesome buckets that you spot Dave, arsenic you travel into nan institution of opportunities of making it a much businesslike business. Thanks.

Dave Flitman

Yes, absolutely, John. I admit that. Look, we -- arsenic you've heard connected nan call, we made a batch of advancement successful proviso chain. But arsenic I highlighted successful my comments, I spot that arsenic a immense opportunity to proceed to thrust ratio and productivity for nan company. As I deliberation astir excellence successful proviso chain, we request to person predictable on-time capacity astatine nan lowest imaginable costs and that's clearly, what nan institution is aimed astatine driving. We beryllium that to ourselves, we beryllium it to our customers and we surely beryllium it to our shareholders, to beryllium arsenic businesslike arsenic we perchance tin be.

And arsenic I deliberation astir nan activity that's going connected I guess, I would put it successful 4 benignant of cardinal buckets. You've heard a batch astir about of that this morning. This aviator that we've had successful nan Southeast, nan seven-day transportation and elastic scheduling, has tremendous imaginable to thief america proceed to thrust ratio and trim turnover crossed nan company.

In fact, I'll conscionable springiness you 1 small anecdotal story, erstwhile I was visiting that market. I had nan opportunity to person immoderate municipality -- not municipality halls, but small roundtables pinch drivers and selectors. In nan selector roundtable I had, I conscionable started asking them what they thought astir nan flex scheduling that we had.

And we had an 11-year storage veteran, has been moving days, who opted to return a play schedule. And truthful I said, well, why would you do that? You're 1 of nan much elder folks successful nan warehouse. He said, "Look my wife, has a catering business, she needs thief during nan week and this gives maine nan chance to thin successful and thief her and do what we request to do and equilibrium my profession and thief my woman retired connected nan individual front". So, I deliberation we are scratching nan surface, arsenic thing present that will besides thief our labor and associates arsenic good arsenic thrust ratio for nan company.

The 2nd one, we've talked astir it present is inbound logistics. We still person a batch of opportunity successful that area awesome momentum beardown attraction successful nan company. And then, there's really 2 others, I deliberation successful proviso concatenation that will salary dividends agelong term. One is, process optimization, standardizing our attack being accordant crossed nan institution and really we deliberation astir thing from onboarding to training storage associates, and really we do our activity done nan people of nan evening.

Then nan last one, I'll constituent to is immoderate early opportunities successful proviso chain, not nan slightest of which is -- and you've heard astir this nan routing package going to a starring level that will execute passim nan people of this year, will besides salary immoderate semipermanent benefits. So, I deliberation there's immoderate near-term things. There are surely immoderate semipermanent opportunities for nan company. I'm excited astir nan momentum, but tremendous upside present connected --

John Ivankoe

Thank you.

Dave Flitman

Sure. Thank you.

Operator

Your adjacent mobility is from Kelly Bania of BMO Capital Markets. Please spell ahead. Your statement is open.

Kelly Bania

Hi, bully morning. Thanks for taking our questions.

Dave Flitman

Good morning.

Kelly Bania

Good morning. I conscionable want to spell backmost to nan guidance and nan outlook for nan year. I admit nan colour connected nan expected maturation comparative to nan market. But I conjecture I was conscionable funny if you're consenting to remark astatine each connected a circumstantial lawsuit maturation scope embedded successful nan guidance.

We were benignant of reasoning debased single-digit, but if you tin conscionable thief america possibly deliberation astir nan wide strokes successful position of nan different customer types betwixt independent wellness attraction hospitality and each other, arsenic good arsenic I deliberation location was a remark that nan debased extremity of nan guidance assumes a slowdown successful nan 2nd half. Can you thief america understand nan magnitude of what you mightiness beryllium embedding successful position of nan imaginable softness location successful nan 2nd half?

Dirk Locascio

Sure. Hi Kelly, this is Dirk. I deliberation erstwhile we deliberation astir nan guidance for nan twelvemonth akin to past twelvemonth we ever will look internally really we comparison to nan market. But conscionable since location still is immoderate macro uncertainty retired location that's really why we focused connected this maturation comparative to nan market.

I deliberation erstwhile we attraction connected nan outer information that our third-party is calling for it's debased single-digits of maturation and we would expect to beryllium benignant of again supra that. And I deliberation what you should expect to spot is that stronger lawsuit maturation travel from nan bully momentum we've built successful our target customer types and past conscionable remembering that we proceed to person tailwinds successful nan wellness attraction and hospitality space. So, that's not precisely an reply but that's really wherever we expect to spot continued growth.

And I deliberation nan -- to your 2nd portion astir nan 2nd half yes we do -- did embed immoderate benignant of humble aliases mild slowdown truthful deliberation of it arsenic successful past recessions you're talking astir telephone it a fewer constituent simplification successful benignant of wide maturation rates. So, we looked astatine a fewer ranges and really we thought astir that. But -- truthful it's very humble retired location and I deliberation nan important portion is we person nan squad internally focusing connected what we tin power and that's nan portion that if nan situation stays stable, we are focusing connected delivering benignant of astatine nan precocious extremity of that range.

Andrew Iacobucci

Yes. And conscionable to piggyback connected that I deliberation and Dirk has said this a mates of times we are 100% focused connected nan things that we tin power and sloppy of nan macro, I person a batch of assurance we will proceed to return stock successful those targeted segments conscionable for illustration we did past year.

Kelly Bania

Thank you. And possibly conscionable a follow-up -- and I whitethorn person missed this are you capable to stock immoderate figures aliases metrics connected wherever you are successful position of staffing, turnover complete time, immoderate figures you tin stock pinch america to benignant of measurement that progress? And possibly conscionable broadly erstwhile you expect that to get backmost to normalized levels?

Dirk Locascio

Sure. So, Kelly, this is Dirk again. From a staffing position we've been benignant of mostly staffed for a number of quarters. So, that really isn't nan challenge. There's ever going to beryllium a marketplace aliases 2 present and location wherever you person benignant of a staffing challenge. But we've been successful bully style there.

If I comparison -- though we haven't shared circumstantial numbers erstwhile we deliberation astir benignant of transportation driver turnover that is telephone it up astir 1 and a half times to wherever it was benignant of successful 2019 astatine its worse. And we've gotten overmuch person arsenic Andrew said now to 2019. So, important advancement there.

On nan warehouse, we were astatine almost 2x and we've closed almost half of that gap. So, bully progress. We proceed to make advancement there. And I deliberation immoderate of nan things that you've heard Dave and Andrew talk astir springiness america continued assurance that we'll get there.

I deliberation that nan portion that we can't power arsenic overmuch arsenic nan macro still remains a comparatively tight labour environment. But I usage elastic spending that Dave talked astir we deliberation is simply a cardinal unlock wherever it's a thief for our associates and a thief for nan business. And those are nan things we emotion erstwhile it really either helps some nan customer and nan business aliases nan subordinate connected nan business.

Kelly Bania

Thank you.

Operator

Your adjacent mobility is from Brian Harbour of Morgan Stanley. Please spell ahead, your statement is open.

Brian Harbour

Yes, convey you. Good greeting guys and invited Dave. Maybe conscionable to inquire connected -- you called retired benignant of nan resistance from exiting immoderate customers. And I cognize that's ever a changeless process. But do you deliberation that you're benignant of past astir of nan resistance from that, aliases do you deliberation there's still much activity to do conscionable connected benignant of nan customer optimization side?

Dirk Locascio

So, bully greeting Brian, this is Dirk. We've said that we expect to thigh benignant of nan remaining exits successful Q1. With that said I deliberation that nan point that we've been beautiful accordant is we're going to proceed to benignant of person bully hygiene. In immoderate business you would want america to beryllium continuing to look astatine our base.

So, what wouldn't expect is immoderate significant, benignant of, cleansing et cetera arsenic opposed to it's really astir continuing to make judge we're increasing and attraction connected nan correct customers. And hopefully what you spot is by america doing that that's showing up successful our gross profit and showing up successful our marketplace stock and it's really -- and it's intelligibly showing up successful our results.

Brian Harbour

Okay. Great. Thanks. Maybe conscionable connected nan indebtedness side. You evidently person EBITDA maturation that helps leverage. Do you expect to salary down indebtedness astatine a akin aliases possibly higher rates what you did successful 2022? And is that benignant of factored into nan liking disbursal outlook?

Dirk Locascio

We do expect to proceed to salary down debt. We haven't been specific. So we would expect to proceed to salary down indebtedness and besides opportunistically repurchase shares. And those will beryllium depending connected nan marketplace conditions, but nan continued simplification successful leverage and being opportunistic pinch what we deliberation is an undervalued stock value are 2 things we'll proceed to attraction on. And, yes, we've contemplated a level of that successful our EPS outlook.

Brian Harbour

Okay. Thank you.

Operator

Your adjacent mobility is from Edward Kelly of Wells Fargo. Please spell ahead. Your statement is open.

Edward Kelly

Hi, guys. Good greeting and David, welcome.

Dave Flitman

Thanks, Ed.

Edward Kelly

Question is really for you Dave. I mean evidently you support nan scheme that has been successful spot present and that's very bully to hear. But arsenic an outsider pinch your own, benignant of, position there's astir apt besides things that you spot arsenic further opportunity. And I deliberation you alluded to that erstwhile you said astir accelerating nan execution of nan plan. Could you conscionable possibly talk a spot much astir what you mean by that? And past really does that, benignant of, rotation into nan extremity that nan institution has had astir nan $1.7 cardinal successful EBITDA successful 2024?

Dave Flitman

Yes. Let maine return nan 2nd portion of that mobility first Ed and past I'll travel backmost to nan first part. I haven't said thing astir nan 2024 target, but that's purely an rumor of process and timing for me. I've been spending my clip learning nan business and digging successful and knowing nan outlook for this year.

I haven't seen thing that gives maine logic to judge we're disconnected way for 2024. It's conscionable early days. In truth it's conscionable nan opposite. You've heard astir my assurance successful nan momentum successful nan company. And truthful backmost to your first portion of your question, for maine I for illustration to activity pinch teams to execute, execute good and accelerate momentum.

We person truthful overmuch going connected successful nan institution each rightfully aimed astatine improving nan results. If there's 1 thing, I think, I tin thief nan squad do is really attraction connected nan captious position and get them done and do them good and past move connected to nan adjacent pieces of it. So that's purely what I meant. I'm moving intimately pinch nan squad astir that now. Let's activity connected nan needle movers, nan correct ones arsenic you heard Dirk opportunity that thief our business arsenic good arsenic our associates and support moving ahead.

Edward Kelly

Okay. And past Dirk conscionable a follow-up for you. Your guidance implies gross profit per lawsuit improving successful 2023 versus 2024, but you besides mentioned sequentially a small spot of deflation. I think, there's been questions amongst investors astir things for illustration procurement gains and lapping those. So I deliberation this is an important rumor arsenic we're seeing this inflation. Can you possibly conscionable talk a spot much astir your assurance successful increasing gross profit per lawsuit adjacent twelvemonth and nan drivers of that contempt that backdrop?

Dirk Locascio

Sure. Good morning, Ed. So we do consciousness bully astir gross profit per lawsuit continuing to amended successful 2023 supra 2022. And I deliberation that it comes backmost to what we've talked astir is that nan lion's stock of our gross profit per lawsuit betterment has been our ain four-wall initiatives and nan bully activity that our squad has done and really making judge that we're passing those done and reflecting moreover pinch customers wherever we've optimized immoderate pricing reflecting nan higher costs operating situation that we're operating in. So we expect it to beryllium beautiful durable. Yes, early successful nan twelvemonth we'll person immoderate portions of onetime benignant of procurement gains that we'll beryllium lapping. But our squad done each nan bully activity past twelvemonth that we've done we consciousness very bully astir continuing to person beardown gross profit and we deliberation it will beryllium a bully durable gross profit arsenic we look ahead.

Edward Kelly

Great. Thanks, guys.

Dirk Locascio

Thanks, Ed.

Dave Flitman

Thanks, Ed.

Operator

Your adjacent mobility is from Lauren Silberman of Credit Suisse. Please spell ahead. Your statement is open.

Lauren Silberman

Thank you very overmuch and I besides echo my congrats, Dave. And this is simply a small spot of a follow-up to a anterior mobility connected 2024. But I cognize it's still early days. How are you reasoning astir nan level of incremental investments that mightiness beryllium basal arsenic you look to execute nan scheme and past adhd your own, benignant of, rotation connected nan plan?

Dave Flitman

Yes, you're correct Lauren. It would beryllium premature for maine to really deliberation astir those investments. Now I deliberation nan institution is making nan correct investments. You heard america talk astir nan things that we're doing successful proviso concatenation astir of which requires immoderate level of investment. The excitement we person astir nan income squad and making nan due targeted investments location opening of nan CHEF'STORES I deliberation we'll proceed connected nan scheme that we've had. And past I'll beryllium assessing present complete nan adjacent fewer months what I deliberation it's going to return beyond 2023 into 2024 and beyond.

Lauren Silberman

Thank you for that. And past conscionable connected near-term, are you guys consenting to supply immoderate further colour connected what you're seeing quarter-to-date? I cognize broadly nan manufacture is seeing immoderate betterment -- immoderate of it's Omicron conscionable trying to understand nan underlying trends? Thank you.

Dirk Locascio

Sure. Good morning, Lauren. This is Dirk. So wide Andrew commented and I commented connected successful nan prepared comments that we've seen request clasp up rather good present done nan early portion of nan 4th and really haven't seen signs of softening. I deliberation wide nan momentum that we expected to participate nan twelvemonth pinch we are seeing that. So really not a full batch to stock beyond that different than builds connected our optimism arsenic we proceed to participate nan twelvemonth and what we expect to present done nan year.

Lauren Silberman

Thank you. Congrats.

Dave Flitman

Thank you.

Andrew Iacobucci

Thanks, Lauren.

Operator

Your adjacent mobility is from Jake Bartlett of Truist Securities. Please spell ahead. Your statement is open.

Jake Bartlett

Great. Thanks for taking nan question. Mine was a follow-up connected nan 2023 guidance. It was maintained for EBITDA and EPS, but you did deed nan higher extremity connected nan 2022 you're talking astir accelerating momentum. So I'm wondering whether there's immoderate offset. It seems for illustration you started a amended spot. Are you building successful much macro pressure? Just trying to understand possibly really blimpish that 2023 guidance mightiness be?

Dirk Locascio

Sure. Good morning, Jake. This is Dirk. I will -- I deliberation erstwhile you deliberation of we're very pleased pinch nan measurement 2022 ended again a small spot supra our guidance, which we're pleased pinch and shows nan bully momentum successful nan business. I deliberation erstwhile you pivot that to 2023 I deliberation successful nan bid of magnitude conscionable knowing nan macro uncertainty retired location we've tried to do is really bespeak a scope that illustrates much spot pinch a considered continued macro betterment perchance still very bully progress, but not rather arsenic speedy if nan system slows down. But I deliberation nan connection you should return retired of location is very bully momentum. We consciousness bully astir wherever we're entering it. And past arsenic nan twelvemonth plays retired and we spot really things play retired we'll proceed to update arsenic you would expect america to do.

Jake Bartlett

Great. And past I had a mobility astir nan -- really nan drivers of nan independent lawsuit maturation that you're putting up. We've heard from others that it's really been driven by caller account, whereas, postulation individual accounts mightiness beryllium down conscionable because of nan precocious pricing that for lawsuit restaurants are having to take. Is that nan lawsuit pinch US Foods that nan lawsuit maturation -- independent lawsuit maturation is really being exclusively driven by caller relationship growth?

And past if that is nan case, I'm wondering astir nan expertise to build connected that caller relationship growth. It seems for illustration nan larger players are each accomplishing that. My anticipation was that nan marketplace would get -- would beryllium -- get a small much difficult to penetrate caller accounts arsenic proviso chains eased and different smaller competitors were capable to work those accounts better. Maybe conscionable firstly nan reply of what is driving nan lawsuit growth? And 2nd conscionable nan competitory dynamics and whether you deliberation that nan larger players are still really successful nan catbird spot here?

Andrew Iacobucci

Thanks Jake, it's Andrew. Yeah. So I deliberation arsenic we talked astir past 4th arsenic well, we're very pleased pinch nan equilibrium successful our I&D growth. We're seeing a bully operation of driving caller relationship acquisitions, arsenic good arsenic focusing connected penetrating those caller accounts. And that's really been portion of a benignant of a systematic attack we've been taking astatine a marketplace level to attraction -- ore connected nan paper types that are seeing nan top maturation to target those successful a very focused way. And past erstwhile connected boarded, we spent a awesome woody of power looking for opportunities to grow our stock of wallet pinch those customers. So, some are important and both, I would say, will continue.

As acold arsenic what we're seeing wrong our customers themselves, arsenic I mentioned successful my remarks, we are seeing bully betterment successful those customers for nan astir part. And that's thing that again, we salary very adjacent attraction to, because it typically will beryllium an early motion of a imaginable looming slowdown. And arsenic I said previously, we really person not seen immoderate motion of that astatine this point.

Dave Flitman

And I'll conscionable say, nan different thing, I'm excited astir is our exclusive brands, and we've been capable to penetrate nan independent information of that northbound of 50%, but I'm excited astir our continued momentum location and nan team's attraction connected accelerating that marque penetration. Our customers emotion it. They're really good, and it makes consciousness for them arsenic good arsenic nan company.

Jake Bartlett

Great. I admit it.

Operator

Your adjacent mobility is from Peter Saleh of BTIG. Please spell ahead. Your statement is open.

Peter Saleh

Great. Thanks for taking nan question, and I want to echo my congrats to nan squad arsenic well. I conscionable wanted to inquire astir nan seven-day transportation aviator and nan elastic scheduling. Can you conscionable elaborate a small spot connected nan costs use of this initiative? And conscionable if it does beryllium retired successful nan pilot, really quickly do you deliberation you tin rotation this retired to nan remainder of nan system?

Andrew Iacobucci

Yes. Pete, acknowledgment for nan question. It's Andrew. We've really -- we've learned a mates of different things from nan pilot, which really had some elements to a seven-day transportation and a elastic scheduling. And what we've learned on nan measurement is nan elastic scheduling is thing we tin do rather quickly beautiful overmuch everyplace that it will beryllium a benefit. In different words, it does -- you don't request to spell to 7 days successful bid to beryllium capable to get a ample measurement of nan benefits from a elastic scheduling. Just fixed that prime that it gives our selectors and nan effect that has connected their willingness to enactment pinch us.

Seven time transportation takes a small much activity to displacement deliveries onto nan weekend. That has played retired successful a very promising measurement successful nan aviator market, and we are looking to spot that replicated successful nan 2 further markets that we're testing arsenic we speak. And depending connected really that plays out, we will look to do that successful markets, wherever that will present meaningful benefit, peculiarly ones wherever capacity mightiness beryllium a small much constrained because those other 2 days that it gives those markets, takes a awesome woody of unit disconnected their expertise to service customers. So, some are being looked astatine successful operation aliases separately arsenic nan lawsuit whitethorn be, and we spot a existent opportunity this twelvemonth to rotation retired nan flex scheduling information to a important number of our markets and apt beryllium much selective pinch seven-day transportation elsewhere.

Dirk Locascio

And what we really for illustration astir nan elastic scheduling portion of it is, that it really, arsenic Dave commented earlier, it gives labor that opportunity to find schedules that activity for them, which erstwhile you person little turnover, little hiring costs, that reduces your costs and summation productivity. We've seen, again, nan affirmative worker relations, affirmative worker feedback and besides improved information results. So, each those things are benignant of bully reasons to do it, because they thief nan subordinate and they use nan company.

Peter Saleh

Great. Thanks. And past conscionable lastly, Dave, immoderate different low-hanging consequence that you spot -- that you're focused connected for 2023 strategically?

Dave Flitman

No. I spot a batch of low-hanging consequence and continuing to execute good and keeping nan squad focused connected nan things that matter successful moving nan needle. Like I said earlier, location mightiness beryllium an opportunity present to thief pinch that attraction and accelerate results, but extracurricular of that I'll person much to opportunity done nan people of time, if I spot different opportunities.

Peter Saleh

Great. Thank you very much.

Dave Flitman

Thank you.

Operator

Your adjacent mobility is from Andrew Wolf of CL King. Please spell ahead. Your statement is open.

Andrew Wolf

Hi. Good greeting and welcome, Dave.

Dave Flitman

Good morning.

Andrew Wolf

Question for you connected strategical acquisitions. I deliberation nan institution has benignant of been successful nan timeout play some during nan CEO modulation shape and launching a scheme into 2024. But historically, 1 of nan highlights of this manufacture is creating worth done acquisitions for shareholders. Just tin you springiness america a consciousness benignant of wherever you guidelines connected that? Is that thing either successful your question and reply conversations pinch nan Board aliases conscionable really you consciousness astir it wherever nan institution will could yet -- is apt to yet get backmost to acquisitions, aliases is it conscionable consecutive up pinch nan scheme for 2024?

Dave Flitman

Look I deliberation we person nan correct superior allocation plan. And successful bid of priority, we'll put successful nan company. We'll salary down debt. We'll return superior to shareholders. And finally, we'll beryllium opportunistic connected M&A. We're not going to do M&A for M&A's sake. There's going to beryllium worth that we request to create either successful geographies aliases portfolio reasons for that. But arsenic you cognize I mean this is still a highly fragmented manufacture pinch Big 3 possibly having 35% of nan market, still highly fragmented, still opportunities for maturation done inorganic acquisitions and we'll beryllium opportunistic connected that and do nan things that make consciousness wherever we've sewage nan correct valuation.

Andrew Wolf

Okay. Thank you for that. Andrew, I wanted to inquire you astir nan income unit acceleration. Would you -- is location immoderate measurement you tin quantify for illustration either nan complaint of additions aliases thing for illustration that? And besides wherever you would beryllium sourcing them from? Are they from different nutrient work distribution competitors and they're benignant of bringing a book of business, aliases is it folks extracurricular nan manufacture who are either bully astatine income aliases chefs who want to do this type of activity small colour connected that would beryllium great.

Andrew Iacobucci

Yeah. Thanks for nan question. Yeah, Andrew. I deliberation nan measurement we're reasoning astir this is we will beryllium targeting to beryllium astatine aliases somewhat supra 2019 levels by nan extremity of nan year. And we will beryllium arsenic I opportunity doubling down successful markets pinch peculiar maturation opportunities successful doing so. So we are still very overmuch successful hiring mode and will proceed to beryllium so. And successful position of wherever talent is coming from, nan operation hasn't changed dramatically. We typically look for group pinch a culinary inheritance arsenic good arsenic folks that person worked successful our industry. And that operation if thing is astir apt tilted a small spot much toward sourcing from group pinch manufacture experience. Of late, we've been having we deliberation rather bully occurrence attracting really high-quality income reps from our competition, and we deliberation that's thing that is really opinionated america successful bully stead, peculiarly successful those markets pinch large maturation opportunities.

Dave Flitman

I deliberation Andrew is conscionable -- it's an important point to remember. So arsenic Andrew said earlier, we've been -- nan ads person been and will proceed to beryllium benignant of outsized successful those markets and much maturation opportunity is headcount and adding seller hasn't been and will not beryllium an inhibitor to our growth, but we are continuing to do that wherever there's nan need.

Andrew Wolf

Great. Thanks for that color. Appreciate it.

Operator

We person completed nan allotted clip for questions. I will now move nan telephone complete to Dave Flitman for closing remarks.

Dave Flitman

Thank you each for joining america today. I'm incredibly excited to beryllium present and nan momentum that nan institution has. I admit your time. We'll talk to you each soon. Take care.

Operator

This concludes today's convention call. Thank you for your participation. You whitethorn now disconnect.