Performance Food Group Company, please go ahead, sir. Thank you, and good morning.

We are here with George Holm, PFG's CEO; Patrick Hatcher, PFG's CFO; and Scott McPherson, PFG's COO. We issued a press release this morning regarding our 2025 fiscal second quarter results, which can be found in the investor relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the results in the same period in fiscal 2024. The results discussed on this call will include GAAP and non-GAAP results adjusted for certain items. Reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found in the back of the earnings release. Our remarks on this call and in the earnings release contain forward-looking statements and projections. Please review the cautionary forward-looking statement section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. I will now turn the call over to George.

Thanks, Bill. Good morning, everyone, and thank you for joining our call today. Our company remained active during the fiscal second quarter, continuing to build upon our underlying business momentum while adding new avenues for growth through targeted acquisitions. I'm very pleased with the results and believe we are well-positioned to accelerate our growth through the back half of the fiscal year. This morning, I will review some of the high-level trends in our business and industry, and touch upon our early accomplishments integrating both Jose Santiago and Cheney Brothers. I will then turn the call over to Scott, who will review details of our segment results for the quarter. Finally, Patrick will review our financial position, key priorities, and guidance for the balance of fiscal 2025. Let's begin with an overview of our second quarter results and the industry factors influencing performance. We are pleased to see an acceleration in our underlying organic growth in the fiscal second quarter. Through a combination of steady market share gains and an improving consumer backdrop. In particular, our organic independent restaurant case volume grew 5% in the quarter, stepping up from the 4.3% we reported in the fiscal first quarter. Keep in mind, this result includes a difficult year-over-year comparison in December primarily due to calendar differences compared to the prior year. In October and November combined, our organic independent restaurant case volume was up over 7%. As we moved through January, our case volume reaccelerated, part due to easier comparisons, but also reflecting the strength of our underlying business. I continue to believe we can achieve fiscal year 2025 6% independent case growth with some help from the macro. My confidence is underpinned by several factors including the excellent work of our food service teams. We continue to build our organization…

Thank you, George, and good morning, everyone. I'm excited to join today's call and share some insights into our performance, the broader market, and some of the initiatives that will help PFG maintain our long track record of growth and operational execution. Before I jump in, I want to reflect on my journey to the COO role over the past three years. Coming to a company through acquisition is not always the easiest transition, but it quickly became evident why PFG excels in this space. We target well-run companies and leverage the talent and knowledge they possess for the betterment of the broader organization. This approach has created a culture that embraces growth, welcomes change, and inspires people to go the extra mile. During the past year, I've had the opportunity to interact with PFG associates across our entire business platform. I've seen firsthand the dedication that our associates bring to work every day, which is instrumental in our ability to exceed the high expectations we set for ourselves. I want to highlight a few examples of the talented and dedicated associates that make PFG different. In our Vistar segment, Jose Luis Arias started as a sanitation specialist with our organization over fifty years ago, advancing to become a CDL driver, and this year will eclipse the three million mile mark accident-free. Our former SVP of HR, Ali Marciano, was named as a top woman in Convenience, one of the industry's top honors. And at PFS, Jasmine Dan was the recipient of the 2025 Women's Foodservice Forum Changemaker Award. It's individuals like Jose, Ali, and Jasmine that inspire our forty thousand associates to come to work every day with a passion to succeed. Now let's take a deeper look into our three operating segments, starting with our foodservice business. Foodservice…

Thank you, Scott. I'm excited to share some of the financial details from our second quarter and first half of fiscal 2025. As George and Scott have detailed, our business is executing well, driving strong operational results. This translated into another quarter of robust financial performance. Both our sales and adjusted EBITDA came in above the upper end of our guidance ranges we laid out three months ago. Furthermore, we continue to use our cash flow and balance sheet to drive long-term shareholder value. Let's review some highlights from our fiscal second quarter. PFG's total net sales grew 9.4% in the quarter. Our result was aided by the addition of both Jose Santiago and Cheney Brothers. However, excluding the acquisition benefits, all three of our segments produced positive organic case growth in the quarter. In particular, total independent restaurant cases were up 19.8% in the period. Excluding the acquisition benefit, organic independent cases were up 5% for the quarter. We are pleased with our organic independent case growth result, which was an acceleration from the prior two quarters despite a very difficult December, which due to calendar differences. As George described, combining October and November, our organic independent case growth was more than 7%. Early in the fiscal third quarter, we saw faster underlying case growth in our independent restaurant business. We remain optimistic with respect to our growth. Though we would note that January was impacted by a number of factors, including an easy comparison due to tough weather last year somewhat offset by a choppy start to calendar 2025 due to unusual weather across various regions of the United States. Looking past the January noise, which is typically the smallest volume month of the year, we are optimistic for the balance of fiscal 2025. Total company cost inflation…

We will now open for questions. We will take our first question from Kelly Bania with BMO Capital. Please go ahead.

Good morning. Thanks for taking our questions. Just curious if you could comment a little bit more in-depth about which segments are contributing to the higher sales outlook. Is that kind of broad-based across the three segments of the M&A? And maybe you can fold into that just more specifics on the comments you made about signs of stabilization for the consumer and some signs in regard to food service.

Morning, Kelly. This is Scott. Yeah, on the second sales piece, obviously, really happy with how our trends look on independent growth. You know, we are up in AM headcount about 7%. We're up in new accounts about 5%. The other thing we feel really good about is our lines per order on our existing accounts continue to go up. So, you know, we feel like if the macro, you know, swings back a little bit, we're in a really good position. The other thing I said was optimistic in the food space was our chain accounts, our national chains were up as well, which is a little bit of a rebound from what we've seen in the past. On the convenience side, I would say, you know, we just continue to take share and outperform the macro in convenience, and we expect that to continue. We feel like really, in both of those, we have a solid pipe as we finish out the back half of the year.

I would say that we're going to see some continued challenges in Vistar the rest of this fiscal year. Although we're up against some easier comparisons, we see several of the channels that will show some good growth, but that will be kind of our laggard from a sales growth standpoint for the rest of this fiscal.

Okay. That makes sense. And there was a comment about cost of goods optimization and procure beneficiary efficiencies. Can you just elaborate on that? It doesn't seem like that has been a focus of the organization as much in the past. Maybe I am wrong, but can you just tell us about the work you're doing on cost of goods optimization and also which segments that should impact?

Kelly, this is Scott. Yes. I would say it has been something that has always been maybe something we haven't talked about as much. But always something's been in play. I would say that we worked a lot harder in collaborating across the segments over the past twelve to eighteen months, which has helped us gain some traction, both in driving sales growth but also in cost of goods optimization. So, definitely something we're focused on, we'll continue to focus on, and it's just part of our strategy around growing margins.

Alright. Thank you.

Thank you. We will take our next question from Edward Kelly with Wells Fargo. Please go ahead.

Hi. Morning, everybody. I wanted to start on the food service business and just your thoughts on sort of like underlying momentum of the business. You grew EBITDA obviously very well this quarter. I was curious if you could help us with underlying EBITDA growth of the business. I think if you take out the deals, kind of thinking like maybe mid-single digit, organic case growth was about 3%. Just curious if that's right and how you think about that. And then looking forward, to get the 6% organic growth for the year, you probably need to do 7 to 8 in the back half. Just any color on your confidence in that outlook?

Yeah. You're correct. It's going to, you know, 7 to 8% increase in the back half. At least our internal measurements, how we look at the marketplace and what information we get from outside of our company, it appears there was probably a 1% reduction in traffic. Which is probably about where independent was. So if that got just back to normal, we would be running in that 7 to 8% increase in cases. We do expect that to get better. Have not seen that yet. We thought we would have easier comparisons in January, and our January growth looks pretty similar to Q2, and we thought it would be better. But we had bad weather in both years. So just the fact that this year, we were able to do a little better job of overcoming that bad weather, I think bodes well for us also. But I would say for us to get to that 6% for the year, we're probably going to need some help from the industry and, you know, see a little better macro backdrop than what we see today. But we just see signs that that's coming. Also, the other thing that gives us a lot of confidence is that we're growing our SKUs or our line items at a much faster rate than we're growing our cases. So we're penetrating better within the accounts. They're just not buying as much of the product as they were a year ago. So that gives us some confidence too, should the industry get a little bit more vibrant. And then, I would call our EBITDA, we were very close to double digit, but not quite without Jose Santiago and without Cheney.

By the way, as mentioned by Patrick, those two are performing well. And I would say that Cheney is really performing exceptional.

Great. Thanks. And then just a quick follow-up. I wanted to ask you about inventory holding gains. Just curious if you could provide any color on the second quarter and year-over-year change there. Was that a material benefit at all? And then, in terms of the guidance, you said that I think this is what you said, that there's not, you're not anticipating in candy and tobacco inventory, you know, material holding in the back half. But then I think after you said you invested had a price increases. So is that an opportunity, I guess, versus guidance if those price increases happen?

Yeah. Thanks, Ed. This is Patrick. I will address those questions. So in the second quarter, we did see some benefit of inventory holding gains as we mentioned. But I want to stress, all of these gains are manageable. There's nothing extravagant about them. We did invest in inventory, but for the back half of the year, we do not expect substantial holding gains. And for the full year, Q3 and Q4, we expect the total holding gains to be very minimal. So it's really immaterial and relatively manageable.

Alright. Thanks, guys.

Thank you. We'll take our next question from John Heinbockel with Guggenheim. Please go ahead.

A couple of things on the independent case growth. Right? So the penetration in lines is that more center store not center of the plate, right? The non-fresh? Or are you sort of eating into specialty competitor market share? I'm curious because that seemed like a big opportunity. Then when you think about, let's say, if you pick up another two or three hundred basis points in case growth, you think that's more new accounts, lines, or actually cases per line? Where do you think that comes from? Where are you most optimistic?

Part of the upside for us would be if they start buying more cases, the market has to get a little stronger. I think we'll continue to do well from a line standpoint. We'll continue to do well with new accounts. I'm also going to have Scott make a couple of comments there.

No. I agree, George. I think, you know, I look at the new accounts as right now being primarily the driver of our growth. You know, I think we've done really, really well with same-store penetration. And as we see the macro pick up, we feel like that's positioned us extremely well.

Then maybe for you, Scott, since you know the convenience store business so well. I'm curious, you look out over the next, I don't know, three to five years, maybe talk to the opportunity to win a lot of these RFPs. It would just seem like your product lineup lines up really well with what most C stores want. So I would think there's an opportunity to meaningfully move the dial on top line as those RFPs come up.

No. I think you make some great points, John. And we worked really hard to combine our strength in foodservice and convenience to create an offer that's really compelling to our national chain customers, but also to the independents as well. So your point on top line drivers, most of our contracts are three years, some of them are five years. We feel like we have a really strong pipeline. We worked really hard jointly across our segments to create a compelling offer, and we feel like we're going to win our fair share as those come available.

I just also mentioned that, you know, we're doing well within Core Mark in the foodservice business, but we're actually growing even faster in Performance Foodservice where that operator is using a broader assortment of items than we can handle on Performance Foodservice trucks and show up in our Performance Foodservice sales.

Thank you, guys.

Thank you. We'll take our next question from Mark Carden with UBS. Please go ahead.

Great. Good morning. Thanks so much for taking the questions. So to start, how are you thinking about the inflation outlook at this point over the next few quarters in foodservice? We've seen egg prices really tick off recently, for example. And then how do you think about the potential impact if tariffs ultimately go into effect on Mexico or Canada?

Yeah. Mark, this is Patrick. On inflation, we're really thinking what we saw in Q2 is what we're expecting to experience by segment going forward and for the latter half of the year. So again, just very similar for foodservice to be in those low to mid single digits. Vistar in the low single digits and convenience more on those mid single digits. Naturally, what we're projecting for the back half of the year, and that's for us, that's a really good place to be. We can manage this inflation, and we think it's good for the industry. Now on the question of tariffs, there's a lot of discussion obviously going on around this. We certainly can't predict what's going to happen, which countries, which products, those type of things. But I think if you take a step back and think about this just holistically, we kind of view tariffs similar to inflation. It's going to potentially increase the cost of goods, but we're largely a pass-through organization. So it's a little bit of a simplistic view, but right now, that's how we're viewing it because we don't have any details on it. So just like inflation, we'll manage it, and that's pretty much how we're going to handle it.

Great. That's helpful. And then you guys talked about acceleration in vending case volume in January. Understand it's a small month, but are you able to quantify at least for January the impact of the winter storms? And then just how did Cheney hold up given its southeastern footprint?

Yeah. January is not a very important month in the year. Certainly, the least important as far as how it impacts sales results. So I think for us, it's going to be more about February and March as far as the third quarter goes. Now Cheney was obviously impacted by the hurricanes but recovered very quickly. There's still some impact on the West Coast, primarily of Florida, where we have many restaurants that are still closed down. But all in all, their sales growth has been great, and they just seem to work their way through this. They're very experienced dealing with hurricanes and they did a great job.

Great. Thanks so much. Good luck, guys.

Thank you. We will take our next question from Alex Slagle with Jefferies. Please go ahead.

Alright. Thanks. Good morning. Had a follow-up. It's sort of along the lines of what Mark was getting to, and maybe the potential implications for the industry and PFG specifically related to maybe the potential immigration enforcement actions under the new administration. I mean, again, a lot of unknowns there, but just curious your initial views there.

Yeah. Hey, Alex. It's Patrick again. I think, you know, obviously very important, all of our employees are documented, and, you know, we can't really speak on what's going to go on with immigration as well. But, you know, we don't see it impact our company. But there...

And we're in a position right now where we've got kind of record low overtime and temp expense. Our workforce is in great shape. Safety performance is really strong. We feel like we've kind of created a work culture where people want to be. So we feel really good about being able to navigate in a tough environment.

Thanks for that. Also wanted to ask your views on new customer acquisitions, new restaurant formation and, I guess, the focus on new.

Yeah. There continues to be new restaurants. Obviously, coming around. I think the effect of COVID is pretty much gone. I think that most of those restaurants have gone from dark to, maybe not vibrant, but open. And there's been a considerable amount of closings of particularly casual dining chain restaurants. So I think those buildings are single-purpose as well and will eventually be occupied by restaurants. So I see continued increase in particularly independent restaurants, and there are some chains that are growing fast right now and are putting up units at a brisk pace. And, you know, we're selling some of those.

Thanks.

Thank you. We'll take our next question from Jacob Bartlett with Truist Securities. Please go ahead.

Hi. Thanks for the question. Congrats, Scott. So I wanted to ask a little bit more about Cheney last quarter. You raised guidance, like, a hundred million, which seems a little low when you prorate, like, the hundred and sixty million trailing twelve months, the same as you were last quarter?

Yeah. Jacob, this is Patrick. On the guidance, I mean, again, we felt really good about how we performed in the first half of the year. And as we mentioned, we took up, you know, the sales guidance by five hundred million, both on the top and bottom end. I would say that that was the area where we were maybe a little more conservative because we're looking at a lot of different factors, and we've seen things improve as we mentioned on the call with our earlier comments. And then on EBITDA, we brought up the bottom end by twenty-five million. So again, a beat-and-raise. It's a very clean beat-and-raise. And we were probably feeling we had the EBITDA numbers a little tighter, but, you know, we feel comfortable about the improvement in the guidance. And it's still a little early in the year in terms of we've got another six months or as you mentioned, there's been some choppiness to January. There's a few other things. So we feel good about our results, and we'll continue to adjust accordingly.

Yeah. I should add with Cheney that they're being very aggressive around hiring. And I think they're making some wise investments in people, particularly in salespeople. And we want that to continue. For that said, you know, obviously, we're going to be running higher expense ratios than they were running because of that. But that said, they're still performing very, very well on that EBITDA line. And we don't see anything that gives us any concern moving forward with Cheney.

Thanks. And then could you talk about any updates you have on the private label pertaining? I know it's pretty underpenetrated compared to, like, the PHS legacy business. I think you said fifteen percent last quarter. And that you're maybe looking into what products you want to keep and which PSG products you want to implement there.

Yeah. The number that we gave for our percentage of that was our organic number without the two acquisitions. I would suspect that for a while, both of those acquisitions are going to be a lower percentage. You know, there's good reason for that. Part of it is Cheney's go-to-market strategy that they've had, and we certainly want to do well with our brands there. But we also don't want to disrupt how they go to market. They also have some brands of their own, and we're in the process of determining which of those we're going to consider to be our brands and move forward with those. Then when you get to Jose Santiago, it's a different structure. In Puerto Rico, there's exclusivity that is part of its a law where you can have exclusivity on a national branded product. They're doing well with those items. And I envision us continuing to market ourselves in Puerto Rico the way Jose Santiago has always marketed themselves.

Thanks. Congrats on the quarter.

Thank you. And we will take our next question from Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you very much. Two questions. The first one, just on the broader consumer outlook. I'm just keen to clarify your view. I think you mentioned October and November trends were encouraging, and you seem confident in improvement to come for the rest of the year. But I think you mentioned that you're maybe not seeing it yet. So I'm just wondering what has you confident whether there are some metrics that you view as leading indicators or otherwise? But the consumer doesn't improve as you're anticipating; know, your level of confidence in that guidance because it does seem like you mentioned needing a little help from the consumer. Then I had one follow-up.

Yeah. I'm going to look backward a little bit here before I answer the question going forward. If you look at October and November, you know, it was encouraging. But because where December had difficult comparisons, November had easy comparisons. Thanksgiving changed from year to year, and that's a low month. So October is probably more effective number to use to project forward. But it's also a ways back. January, I think, is a real hard month to use because last year was heavily affected by weather and so was this year. But if we look at October's number, which we think is more reflective of the marketplace. And we put some improvement in there, which we're expecting from the market. I don't know that we have clear reasons that we can give for that. It's just something that we feel today. And that gives us encouragement for the second half of the year. The other thing with it too is we've got more people coming off non-competes. We've continued to hire aggressively in this marketplace. And then on the national account area, we got some business going out. But we have much more coming in in the rest of this fiscal year. So you just put those things together. We feel good with it. Then when we look at the convenience part of the business, that's a challenged segment today. We continue to do well. We've added several new accounts. We have some coming on board. And some that are sizable. So we feel good about the growth there. Now in that business, a couple percentage points in growth when you consider what's happening in the tobacco world, that's great growth. And we can leverage a couple of points in growth to good earnings growth. And we feel we're on a path to get to that couple points and we'll continue to look at this closely and adjust accordingly.

Understood. And then just following up on the M&A commentary, clearly, it's been a busy year or so. And, Scott, I think you mentioned the pipeline is very robust. But at the same time, I know you mentioned your leverage levels are elevated, and you're looking to pay that down. So wondering first if you could share what that leverage level is and does it temper the appetite for further M&A in the near term, especially with the big West Coast opportunity. Just trying to gauge how you think about that if an opportunity were to present itself. Thank you.

Yeah, Jeffrey. It's Patrick. Leverage, as we mentioned, our goal is to be between two and a half and three and a half times, and we're outside that range. And we expect to be back within that range within the next several quarters. In terms of additional M&A, George can comment on this as well. We did comment that it's active, but for right now, our focus is on reducing that leverage.

Yeah. And we talk about this because we have many opportunities today. We would certainly like to have lower leverage. I think it makes M&A more appealing to us when our leverage is lower. I don't think that as an organization, you should ever pass up an opportunity like Jose Santiago and an opportunity like Cheney don't come along very often. At the same time, we want to keep our pipeline growing. We want to handle our debt responsibly. We're trying to balance those things. I think that you'll see continued M&A from us, but we'll be cautious about how we're handling our capital structure. I should add that we've now been a public company for ten years, but we've dealt with higher levels of leverage than we have today, and we've dealt with that effectively. Now, I'm not sending a signal that we're going to get our leverage higher, but I just want to make sure that people understand that this is not a high leverage for the type of business that we're in and the type of company that we are.

Can you clarify just what that leverage level is today versus the two and a half to three and a half?

Yeah. It's in the high threes.

Gotcha. Thank you very much.

Hello. Hello? Good morning.

Hello.

Yeah. I didn't hear the introduction.

Thank you. We need you too. Go ahead. Thanks.

So I wanted to do a couple of follow-ups, if you will, on the increased, it seems, pace of hiring of salespeople. Is that kind of opportunistic? Or is it more intentional, like, you know, putting the Reinhart playbook into Cheney Brothers? How should we think about why you increased the sales personnel?

Right. Hi, Andrew. This is Scott. I'll take that. Let me start by saying I just came back a couple of weeks ago from our VP of sales meeting that we have nationally every year. The focus of that meeting was fine-tuning our hiring process, our training process, and I walked away from that. You know, highly encouraged with what we have on the street as far as the availability of hiring great AMs and bringing those people to the company. Historically, we've always been in that mid to high single-digit hiring target range, and we're right now about 7%. If you look at, you know, we feel good about that. And, really, that's what's fueling our growth right now. Same-store comps are basically flat. Our AM headcount's up 7%, but our new stores are up 5%. That's really what's driving our case growth. So we'll continue to be opportunistic and look to hire great AMs on the street and get them trained up and continue to drive case growth.

I'll also say that we try hard to have consistent growth in the number of salespeople and have a consistent cadence there. We didn't get those. So we have companies that I would say today if I were managing it, I would be tapping the brakes a little bit on the number of salespeople. And, you know, they need to dig into who they have. And then we have people that are behind and should have more salespeople. So we nudge and talk to them, and we try to have a good cadence. But these decisions are made in the field, and we don't have any desire to change that. Yes. We can train better. So when you're trying to get some commonality there, doing it across a big organization around what we do. Some of our people operate where they bring in four, five larger companies, maybe as many as eight, at one time to make it more collaborative type of training. And you get to our legacy Roma companies and know; they're probably seldom going to hire more than one person at a time. So there aren't any ground rules, I guess, with this.

Right. Thank you. Do you have a sense of whether that's the sort of the proportion of folks coming from the industry versus, you know, folks you gotta really train up? Is that shifted at all?

Yeah. Right now, it's almost entirely people that are from the industry.

Okay. Thanks. Just one more follow-up, sounds like a nice uptick in foodservice sales into the convenience channel. I just want to underline that because I know you've had fits and starts. Is that driven by salespeople and just more effective selling, or do you have, like, newer, better foodservice programs that are gaining traction?

Yeah. Andrew, we have two pathways into convenience. One of those is through our convenience channel. I think the biggest advantage that came with the acquisition of Core Mark is PFG's ability to bring turnkey boot solutions and food supply to convenience. And so our convenience channel, that's our fastest-growing category in convenience, and they continue to do a good job, but I think we're still in the early innings there. And then, the second pathway in the convenience is through our traditional broadline, and that's growing significantly. Again, that's just that capability of having turnkey solutions, having a broad array of products, and really making it a focus. And so we're kind of hitting them from both sides and having nice success. And I still think it's early on.

That's good. So it's, and I'm sure the vendors and everybody's focused in that direction. So it just sounds like it's a lot of incremental movement.

Yep. No. There's been a lot of focus on it.

Great. Thank you.

Thank you. We'll take our next question from Brian Harbour with Morgan Stanley. Please go ahead.

Yeah. Thanks. Good morning, guys. Just maybe as a cleanup question, I think people aren't necessarily calibrated right on, like, interest expense and maybe just on depreciation, amortization. Do you think the prior quarter rate is good? Do you have sort of a range that you'd expect near term for interest expense?

Yeah. Hey, Brian. It's Patrick. It's a great question, and I know this has come up a couple of times. Obviously, as we mentioned, we closed the acquisition on Cheney Brothers on October 8th after the end of our first quarter. That's when we drew down the ABL $2 billion. That's what's really driving the change in interest expense, and I would say the Q2 numbers are definitely a good baseline to use going forward for both interest expense and depreciation.

Okay. Sounds good. When I look at sort of inorganic versus organic independent case growth also. Is that kind of the gap we should expect going forward? Or is there anything unusual about sort of the contribution that those two drove in the second quarter? Could you just sort of comment on that?

Yeah. There may be a little bit more of a spread in Q3 with both Jose Santiago and Cheney. February and March are big months for them. And then the spread will probably narrow again in Q4. And, of course, as we get into next fiscal year, we would have lapped the Jose Santiago right at the beginning of the fiscal year, and we will still have another fourteen weeks of Cheney's impact in Q1. It will really narrow quite a bit. That's not the time of year for Cheney.

Okay. Thanks.

Thank you. We'll take our next question from Jake Bartlett with Truist Securities. Please go ahead.

Great. Thanks for taking the question. Mine was just on the 2025 guidance, and sales were increased by more than the beat from the midpoint in the second quarter, but EBITDA was raised by the same amount. So essentially, you beat included that beat, but really didn't raise the back half of the year on EBITDA. So I'm just trying to understand what drove that. Is there are some incremental factors, maybe some less profit to flow through that we should expect, you know, for some reason in the back half.

Yeah, Jake. Thanks for the question. When we look at what we raised on the top line, we're confident in how the segments are performing in their sales performance. That gives us a lot of confidence to raise it by $500 million, both on top and bottom. When you look at the $25 million increase to the bottom on the EBITDA, again, we felt more confident in our EBITDA numbers. Again, we saw the opportunity, but at the same time, there are some macro things out there that always leave us to make sure we're more prudent and then also we saw a little choppiness in January. So again, lots of confidence in our numbers. We'll continue to look at this closely and, at the end of the next quarter, if we'll hopefully come up with some updated guidance for you.

Got it. And then when you said a question as well on just the drivers of the top line increasing guidance. And I guess, versus your prior expectations, is your product cost inflation expectations, has that gone up? It seems like it probably likely did. So I'm just wondering to what extent the increase top line guidance is really product cost inflation being higher than expected or whether it's kind of underlying case growth.

No. It's really the latter. It's really the underlying case growth. Each of the segments performed well. We saw a strong performance in foodservice that we've talked about quite a bit, and obviously, Chaney and Jose continue to perform. But it was really, and then as Scott alluded to, we have a strong pipeline both in foodservice with national accounts and convenience. So all these things are giving us, not only have we seen great results year to date but also giving us confidence in the balance of the year.

Alright. And then just building on the question it was asked before, but you give us a sense as to what percentage of sales and EBITDA for Zhao Santiago come in the third quarter? You've mentioned it's a big quarter for them. Trying to frame it out just so we can kind of understand the organic versus growth drivers in the third quarter.

Yeah. I'm sorry. We don't have that number at our fingertips. It's probably something we should have calculated.

Yeah. What I can tell you, Jake, it's their largest quarter is Q3. Where typically, historically, it would have been one of our smallest quarters for performance.

Got it. Thanks a lot. I appreciate it.

Thank you. And we will take our next question from Peter Saleh with BTIG. Please go ahead.

Hey. Great. Most of my questions were asked and answered, but I didn't want to ask on the chain business. I think you've seen some improvement there. Can you just elaborate on what you're seeing in chains and maybe what's changed recently?

Yeah. So, Peter, this is Scott. So, definitely, we have a couple of things going on with chains. One is we have three or four chains that are performing well. Seeing double-digit growth out of them and really helping to drive our national account business. I'd say the other thing is, we've had a little bit of a shift where we've had some national account business that wasn't great performing that we've traded out for national account business that is much better performing. So a little shift in our mix of customers across the national portfolio. I feel good about how that's progressing. You said you got a second one?

Yeah. And then just a follow-up. I know you commented a little bit on the seasonality of Cheney and Jose Santiago, but just curious, on the synergies that were laid out maybe several quarters ago, when should we expect to start to see some of those synergies come to fruition, particularly on the Cheney Brothers side?

Thanks. Yeah. And, Peter, it's Patrick. It's obviously early since we just recently purchased, Cheney Brothers, but I can tell you the integration efforts are in full swing, and they are doing an excellent job. Both teams are working well together. We did announce that we'd have $50 million of synergies at the end of the third year post-acquisition. So I would expect that the synergies will come later in this in the cadence. So we'll see some synergies in the first year, but we'll see more synergies in your end two and three. But that's all the detail we have for you right now.

You very much.

Thank you. And once again, as a reminder, that is star one for your questions. Alright. And we will take our final question from Carla Casella with JPMorgan. Please go ahead.

Hi. Just a couple of quick follow-ups. You talked about debt pay-down being the focus And it looks to me like there's over a couple billion drawn on the revolver. So is that what you're focusing on paying down, or would you be taking out twenty-seven bonds, which are now callable at par ahead of maturity?

Yeah. Carlos, it's a great question. Our initial focus will be right now to pay down the ABL, but we'll certainly look at the twenty-seven bonds as well. But we tend to use the ABL as our main focus.

Okay. Great. And then, I may have missed it, did you disclose how much Performance Brands products represent now of your foodservice business, and if it's kind of at a target level, there's still more opportunity there?

Well, the number we give is what our brands are as a percentage of our independent business, and that's the overwhelming percentage of our brands when you get outside of our independent restaurant business. Most all of our business are chain restaurants that typically don't use many of the distributor brands. We've made some progress there, but not what I would call meaningful. So we do very little business in health care and lodging or in contract feeding. That tend to use the distributor brand. So it runs right around 53%. I think it was 52.9% last quarter. We think that's a good number. We do see that being reduced as we add in Cheney Brothers and Jose Santiago. But once it recalibrates for that, we think we can march up from there. We do have several of our companies that are over 60% right now. So we do see that there's room for improvement. And if you get into our legacy Roma company, many of those are over 60%.

Okay. Great. And that's all 60% to 52.9% of the independent business?

That's correct.

Okay. Great. Super helpful. Thank you.

There are no further questions at this time. I'll turn the call back to Bill for any closing remarks.

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