Welcome to Sysco's Fourth Quarter Fiscal Year 2024 Conference Call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions. I would like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Sysco's fourth quarter fiscal year 2024 earnings call. On today's call, we have Kevin Hourican, our Chair of the Board and Chief Executive Officer; and Kenny Cheung, our Chief Financial Officer. Before we begin, please note that statements made during this presentation that state the Company's or management's intentions, beliefs, expectations or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the Company's SEC filings. This includes, but is not limited to, risk factors contained in our annual report on Form 10-K for the year ended July 1, 2023, subsequent SEC filings and in the news release issued earlier this morning. A copy of these materials can be found in the Investors section at sysco.com. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the Investors section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year. [Operator Instructions] At this time, I'd like to turn the call over to Kevin Hourican.

Good morning, everyone, and thank you for joining us today. During our call this morning, we will cover the following key topics. Food away from home volume trends, including foot traffic to restaurants, Sysco's performance for the quarter and the year relative to the overall market, and status updates on key topics of interest, including inflation, local case growth, supply chain productivity, and finally, Kenny will cover the financial details of our Q4 2024 as well as provide our fiscal 2025 guidance. Let's get started with key highlights of the business on Slide number 5. I'm pleased to report that Sysco delivered $79 billion of top-line revenue for the year, a growth of 3.3% versus fiscal 2023. The revenue growth was driven by USFS volume growth of 3.1% and USFS inflation of 0.5%. Sysco profitably took market share in fiscal 2024. I will speak more to this in a moment. Importantly, we delivered adjusted earnings per share of $1.39 for the quarter and $4.31 for the year. The full year performance was $0.01 higher than the midpoint of the guidance that we provided at the beginning of fiscal 2024. Kenny calls this our say-do ratio. And I'm pleased that we delivered above the midpoint of our initial guide for the year, despite a softer economic environment in the second half of the fiscal year. During our Q4, our team once again displayed agility and accountability, enabling a strong financial performance despite negative year-over-year foot traffic to restaurants. As I said in my intro, I would like to start by providing an update on the health of the food away from home industry. Traffic to restaurants was down approximately 3% year-over-year for the quarter. This is consistent with what you have heard from many restaurant names over the past couple of…

Thank you, Kevin, and good morning, everyone. I would like to start off by thanking our customers, colleagues, shareholders and partners. This quarter's results further demonstrates our ability to deliver solid financial performance in a relatively softer macro environment. Our focus on core performance drivers enhanced operational discipline. As we have said before, business plans don't always materialize the exact same way you draw them up on paper. This past year was no different. We focus on operational discipline and tighten the belt to deliver on our initial profit guidance. I'm confident these choices, however, difficult at the time, create long-term structural returns. There is muscle memory across the organization, helping develop a stronger operating model that positions us to grow share profitably as we look ahead. Q4 financials reflect positive sales and volume growth, as well as our seventh consecutive quarter of positive operating leverage, with gross profit growing faster than operating expenses and operating income growing faster than sales. Altogether, these rendered growth across adjusted operating income and EPS, with the full year coming in $0.01 higher than the midpoint of the guidance range. Given the multiple levers across our business, we improved efficiency both on gross profit and operating expenses. GP dollar growth of over 4% was driven by optimal pricing and sourcing improvements. Operating expenses included record levels of supply chain productivity improvements, coupled with our continued focus on managing corporate expenses, which were down 10% year-over-year. These efforts helped us deliver our profit growth, reinvest back into the business, and return over $2.2 billion back to shareholders in FY '24. Now, turning to a summary of our reported results for the quarter, starting on Slide 14. For the fourth quarter, our enterprise sales grew 4.2%, driven by U.S. Foodservice growing 4.9%, International growing 3.8% and…

Thank you. [Operator Instructions] We'll go first to Mark Carden with UBS. Please go ahead.

Great. Good morning. Thanks so much for taking the questions. So to start, I wanted to dig into some of your on-demand commentary a bit. Are you guys seeing trade down and trade out impacting a broader customer demographic, or is it still largely confined to the lower to middle end here? And then on top of economic concerns, would you expect for uncertainty around the election to have much incremental impact on food away from on-demand in the quarters ahead?

Good morning, Mark. It's Kevin. Thanks for the question. So relative to just what's happening with the macro, trade down, trade out, we're seeing reasonably consistent performance across all forms of restaurant types. It's not just QSR that's being impacted. So pretty consistent traffic declines, by segment. We have a tremendous amount of data, as you know, serving the highest end white tablecloth all the way down to QSR and everything in between. So I just start with traffic to restaurants down 3% for the quarter, as I mentioned in my prepared remarks. We don't anticipate that getting much better in the near term, probably through the election as you indicated. Kenny indicated in our fiscal 2025 guide, we anticipate some improvement in the macro backdrop starting in the second half of our fiscal year. So calendar beginning 2025, hopefully interest rates coming down will be a catalyst for that type of improvement. Why would traffic be down? We believe it's the cumulative impact of inflation over the past three years, while inflation has moderated significantly over the past year. It's still the cumulative impact over the past three years of price increases. As always, we at Sysco convert that into actions that we're taking. We can profitably grow our business even in a slower backdrop, as we did in this most recent quarter. I'm really pleased with our performance in the non-restaurant segment, specifically FSM and travel and hospitality. We're doing very well in those two spaces. Our international local business growing notably. And within local in the U.S., I communicated on today's call the actions that we're taking. We're not satisfied with our current rate of performance in local. We have a strong plan to improve throughout 2025.

Great. And then as a follow-up, you're now a few quarters into your new sales force hires. How is retention trending relative to your expectations? Does it become any tougher to hold on to new sales people and an increasingly challenging macro? And does the ramp become any tougher, for those with less direct foodservice sales experience?

Mark, thanks for the follow-up. We track our retention on a daily, weekly, monthly, quarterly basis. No notable call outs on turnover or retention. We have solid retention of colleagues. We don't anticipate the hiring of the new folks to change that dynamic. What the key to success for '25 will be is ramping up the productivity of that sales colleague workforce, providing them the training that they need. A lot of it is product training, to your point, depends on where they come from. If they come from a culinary background, if they were a sales rep at a competitor, we can ramp them up faster. If they're a good sales colleague, but they need to learn the food space, food business, there's a lot of product knowledge training that goes along with that. So the real key is that focus. Intense, meaningful focus on the training of those new cohorts, working them up the productivity curve. That's the real key to success. That's why we've communicated that the hiring that we did throughout 2024 will positively impact 2025, but more in the back half, the majority of the hiring that we did for that net 450 colleague population was in the second half of fiscal 2024. Related, tied to what you brought up, is we introduced a new compensation model. I'm sure we'll get some questions about that on today's call. We will monitor retention of colleagues very closely tied to that new comp model, but net-net, we're optimistic and confident that the new comp model will positively impact results.

Hi Mark, I think one thing to add on the compensation model, one is, as I mentioned earlier in the prepared remarks, we're shifting to a more variable incentive plan, which allows us to grow sales, and commensurate with expenses. So matching health flows and inflows of cash, which also helps working capital. The other thing is, this plan is the epitome of growing profitably, right. And what I mean by that is the construct of the plan, rewards growth and profit. Paying relatively more for example, a local case growth, Sysco brand and products, total team selling, specialty and the like. So, it's truly a win-win for our sales professional as they have the opportunity to win, to make more, and for our company to create value in the P&L.

Great. Best of luck guys.

Thank you, Mark.

Next, we'll hear from Lauren Silberman with Deutsche Bank.

Thank you for the question. I first wanted to ask about the promotional environment. Obviously, restaurant industry is challenged. Growth margin looked like it was down in the U.S. Foodservice business. Are you seeing an increase in promotional activity to drive customer acquisition more up front, or discounts? Then any discussion on gross margin would be helpful? Thank you.

Yes, Lauren, good question. With traffic down to restaurants, cases per operator would be negatively impacted by that fact. And therefore, distributors of all types and all sizes, are going to work hard to be able to get profitable cases to be put on their truck. So yes, it's a competitive environment and competitive intensity increases when traffic is down. We at Sysco, as you're well aware, operate at the highest profit margin rate in the industry. We are extremely disciplined in our process of evaluating pricing strategies for customers. We will not sell cases below cost. We are very disciplined in that regard. Our pricing system, pricing tool, and pricing process enables for our RCs to sell competitively in the marketplace, but within guardrails. So pleased with our performance in profit management, during the most recent quarter. It helped enable strong overall bottom line results. With that said, I'm going to toss to Kenny for further comment on gross margin. Kenny, over to you.

Hi, Lauren, this is Kenny. So on gross margins and gross profit, a few things here. I'll take a step back, gross profit for the quarter grew 4%, and gross profit per case grew 1% year-on-year. So for us, dollars really matter here. Now, to directly answer your question on the margin front, the key driver of margins slightly down year-on-year is, because of the mix. So if you take a step back, we continue to grow and take share in the CMU space profitably. And that action, while it's margin dollar accretive, it does dilute to some extent margin rate. So with that said, we'll continue to grow both CMU and local and take share, which we have tangible actions against. And the other piece is Sysco brand. It was slightly down year-over-year, as you may have seen in the press tables. And we have tangible actions in plan as well, to drive Sysco brand penetration for the remainder of the year. This includes additional product conversion opportunities, short-term incentives for targeted categories, and driving more product innovation as well. So I'm pretty confident that despite the fact that we already have roughly $22 billion of Sysco sales annually, we can continue to penetrate on the space and drive margin for our P&L.

Great. Very helpful. And then if I could just ask about some of the comments on case growth, the cadence throughout the quarter, restaurants have seen a slowdown in June and July. Any thoughts on if that's where we should expect trends are running to start fiscal 1Q, and if we should expect relatively similar trends in 1Q, to what you saw in 4Q? Thank you very much.

Yes, Lauren, thanks. We won't comment on July specifically, but I'd say Q1 macro environmental conditions are very similar to the exit velocity of Q4, and that's been factored into the guidance that we are providing today. And as I mentioned, we have the opportunity to grow our business profitably, and be successful in that softer environmental conditions. And we anticipate some improvement in the second half of this fiscal year. New customer prospecting is an increased focus for our Sysco sales colleagues. 50% of the restaurant doors are not currently served by Sysco, and we have a substantial opportunity to grow our customer count, and we're very focused on that. The new compensation model that Kenny talked about, one of the key elements of that program is to incent and motivate new customer acquisition in a profitable way. Kenny and additional thoughts?

Sure. So from a phasing standpoint, just to provide color, as Kevin said, I agree. We're seeing similar industry traffic patterns from last quarter into this quarter. So now as you think about the guidance for the year, the 4% to 5%, within that we have volume at low single-digits. And in particular, if you think about the pieces of that, most of the hires was completed in the back half of FY '24. And the new compensation program was just recently rolled out as well. So we start seeing the financial benefit from this investment in the back half of fiscal year.

Thank you very much. Very helpful.

Thank you, Lauren.

We'll go next to Jake Bartlett with Truist Securities.

Great. Thanks for taking my question. My question was on the sales force investments. And I understand you mentioned that retention has not changed materially, which is encouraging. I think there's some concern among investors that the changes that you're making, the large investments, would create some disruption. Maybe it's disruption of accounts switching sales people. And that provides opportunity for competitors to kind of come in and take them. So the question is, should we expect a disruption in the near term? I mean, is that one reason why sales might be a little bit kind of weaker as this initiative gains steam? Just wanted to get your comments on the near term impacts of these investments?

Okay. Jake, very good. It's Kevin. I'll start just macro commentary about the new sales colleagues, a little bit more color on the comp model. I'll then toss to Kenny, who can talk about how these two factors impact our guide for the year, and our confidence in delivering against the guidance that we provided for the year. So let's again go back to the sales colleagues, net 450 new SEs. Let's do a refresh on the why we're doing this. Our territory sizes have grown larger than we would like them to be over the past few years, given the growth in our business, the number of new customers that we're serving. And this is a relationships business. We desire for our SEs, to be in our customers' accounts on a weekly basis, having quality conversations about the business of that restaurant, helping them with challenges and issues that they're facing to help profitably grow their business and ours. And that can only happen if they're in the back room of the restaurant kitchen. So that's the net-net objective, increase boots on the ground in the restaurant, territory sizes have grown too large. So the positive yield of having increased base time outweighs the short-term disruption of the territory realignment that, Jake, your good question is alluding to. But let me just put that in a little bit of context. So existing SEs, they would give up approximately one current customer to this net new hire. It's not like an existing SE is giving up 10%, 20%, 30% of their business. They're probably giving up one new customer, excuse me, existing customers. We then expect that current SE to go backfill that, right, to grow their business. And then this new colleague who has a starter territory, the main…

Sure. Thanks, Kevin. So, the sales hires, as we said before, this is ROIC positive. That's the headline news. We are deliberate in terms of when and where we add, meaning investing in high growth markets, to ensure optimal return on investment. Now, Jake, kind of to double click on your question in terms of timing. Now, there is some timing, given early on the full return isn't rendered given timing of the ramp, as Kevin mentioned, Kevin mentioned not a flip of a switch. So, the good news is we have other levers in the P&L, to ensure we receive leverage from the enterprise standpoint, expand margin on the bottom line, which is on the guide. All in all, we are confident with the return for our sales consultants and we're confident in our guide.

Thank you.

We'll go now to John Heinbockel from Guggenheim. Apologies.

So, Kevin, I want to start with going back to U.S. gross margin, right? Because that was sort of an unusual decline versus, what we've seen from you and others. So, I guess as I understand it, the bulk of that, the bulk of the 32 basis points was mixed, both customer and product. So, is that fair? Do you think that is that a one-off or we, the idea we're sort of going to be in negative territory here for a little bit? And then I'm not sure what you put into your guide for '25 on U.S. gross. Did you sort of assume flattish and a rebound in the back half of the year?

Hi, John, good morning. I'll start, it's Kevin, I'll toss to Kenny for the comments on the '25 performance. So, it's customer mix and Sysco brand percentage mix are the two primary drivers. As Kenny said, we've profitably grown our CMU business. Key there is profitably grown. We've improved our profitability of CMU, and we have some real solid wins in that space. And we grew national CMU faster than local in the most recent quarter, which applied some margin rate pressure to the overall. We're pleased with our gross margin performance within the local business. It's a customer mix shift. See our comments on the need to improve our local performance that we're not satisfied, with our local case growth performance. We are going to grow our local business responsibly and profitably. We're not going to chase cases - to chase cases. We will be disciplined. We will be pragmatic and thoughtful, but we need to improve our local case performance, and we will and we anticipate that impacting positively, our 2025 business performance. The second part Sysco brand, Kenny did some key commentary early about that. If I could just add one piece of color to Sysco brand, one of the backdrops as to why Sysco brand was slightly down on a percent basis year-over-year, to be clear, Sysco pieces, Sysco brand pieces were up 2% year-over-year. Our GP dollars from Sysco brand was up 3.2%, but there was a minor percentage reduction of mix to national brand products. Here's the key point, our fill rates of national brand suppliers have improved on a year-over-year basis and a quarter-over-quarter basis. So there's less substitution happening from national brand out of stocks into Sysco brand. While that has a slight negative impact on margin rate, that's actually a good thing for our business. It's a good thing for our operations. We want our suppliers to fill on time and ship to Sysco, including our national suppliers, and it's a good thing that national supplier fill rate improvement has stepped up. In the meantime, it has a moderate impact. We are confident that we can increase Sysco brand penetration. Kenny talked to those hows, but by providing value to our customers, motivating our colleagues, through their performance evaluations to be focused upon it, and bringing product innovation to our customers through Sysco brand. So Kenny, over to you for any comments about the modeling for '25.

Yes John, so the way to think about the modeling is, as Kevin talked about, as we start realizing benefits from our sales consultants' investments, new compensation models, the Sysco brand actions that Kevin talked about, that should drive further leverage on the GP side. You should expect the GP dollar per case to expand for us, on a year-on-year basis for 2025. And the thing we haven't talked about is also specialty. Specialty is also a GP accretive action for us, and that business is growing very well for us as well. So both of the - all three things, Sysco brand in terms of, and then local sales and also - and specialty growth will all drive our GP dollar per case for us.

All right, maybe as a quick follow-up, just curious, going sort of going back to existing account opportunity, right, particularly as you free up some time here for existing sales consultants. I know there's a headwind, right, a macro headwind, but maybe touch on that opportunity, right, to make some improvement in existing wallet share. And then I guess, Kevin, when you think about local case growth, I mean, I think you want to get into the 2% to 3% range ultimately. What do you think is a reasonable target, or the target that you would have for sort of exit rate of fiscal '25? Is that a fair exit rate, or is that an optimistic one?

Yes, just the first part of your question first. I'll toss to Kenny. He's always going to be the one that talks about the guidance that, we have provided in case growth is a part of that guidance, so he'll do that part. The two main levers for existing customer case penetration improvement opportunity that I would highlight is the total team selling opportunity that Greg Bertrand covered at our Investor Day. We have a very large sample size now of customers that we have sold from a total team selling perspective, and when we can bring that specialty produce sales rep from FreshPoint into an existing broad line account, or bring a sales protein expert from our SSMG business, specialty meat business, into an account, that customer spends three times more with Sysco, and those are cases. Those are cases that are higher average ticket, and those are cases that are probably going on a specialty distributor's truck today, and getting them on the Sysco truck or on a FreshPoint truck is a meaningful positive. So, we are meaningfully focused on that total team selling opportunity. We have tremendous data, and we know exactly which customers, are using that type of product and not buying it from Sysco. We have prospect lists. We can track those prospect lists on an ongoing basis. Our compensation systems are properly calibrated to reward that behavior. We can track it by geography. We can track it by site. We are tremendously focused on moving the needle on winning with specialty. It's our number one opportunity to improve cases per operator within existing customers. The second vector, though, that just again has tremendous upside still despite multiple years of success is our Sysco Your Way neighborhoods. Those neighborhoods tended to be previously prior to Sysco Your Way neighborhoods, where we under penetrated both cases per operator and number of doors covered, most likely and most often, because these are urban areas where Sysco historically, has underrepresented from a market share perspective. Sysco Your Way, we've got internal goals. We've not quoted those statistics externally to increase our market share of existing customers. And we have many neighborhoods that are hitting those targets and many more that still have lots of growth potential. So those are the two things I'm most excited about, Sysco Your Way penetration opportunities and total team selling penetration opportunities. For your modeling question on how to think about local case growth, I'll toss it to Kenny. Kenny, over to you.

Hi, John. So you can expect local volume to be roughly low single-digits growth for the year. Again, for the entire company as well, low single-digits and as part of our guide, which we are confident as we believe these targets are achievable.

Thank you.

Thanks, John.

We'll go now to Edward Kelly with Wells Fargo.

Hi. Good morning, guys.

Good morning, Ed.

Kenny, I wanted to start with the guidance, and maybe some color on the cadence of how you're thinking about the guidance for the year. If I look at the volume, obviously, you're expecting a volume improvement through the year, both from the new associates as well as some market improvement in the back half. I'm not sure how meaningful that is. But then you have offsets, I guess, around things like corporate, which look like they may be down quite a bit early on. So how do we think about the cadence of the guidance? And specifically, are you comfortable with the Q1 consensus number, because consensus expectation have you up around the same amount each quarter?

Yes. So let me answer your last one first. So I am confident in the Q1 number, and I'm confident in the full year guidance number as well. Just to recap, before your guide for '25 is within the algo range that we talked about on Investor Day. So that's the point number one. And your second - your first question more around the cadence and the phasing of the forecast, Ed?

Yes, yes.

Yes. So from a phasing standpoint, we do - so let me take it in pieces here. From an industry traffic standpoint, as we mentioned, that will improve modestly in the back half of the year. That is our expectation. That's point number one. In terms of the benefits from the investments SEs, given those that were high in the back half, as well as the compensation model that Kevin rolled out - as we rolled out in July 1 that - we should see the benefit in the back half of the year as well. In terms of, call it, productivity, which is another folder of our P&L, that should be throughout the year, meaning we have good momentum from corporate this year down 10%, the assets that we took in Q3, and that rolls over into Q1 immediately. Therefore, we expect leverage in Q1. And that is the gift that keeps on giving, Ed, because it's not just a rollover. We also have robust productivity along, along the next four quarters as well. And then from a supply chain standpoint, we do expect as well continued progress on piece per labor hour and productivity. In fact, Q4 was the highest productivity month supply chain and across the past couple of years since COVID actually had. So we do expect that benefit to be more of a consistent throughout the year. Obviously, you have the inflation wage side, but from a productivity standpoint, that's our day one for us enter the new fiscal year. So productivity consistent throughout the year, volume we expect more back half, given the fact that we expect the industry to bounce back - in the second half of the year.

Got it. And then just a quick follow-up on international. Sales inflected in Q4. Obviously, you're still very optimistic about this business. I don't think the macro over there is anything special. So I'm just curious, maybe talk about momentum in the business and expectations for '25 there?

Yes, good question. Thank you for asking about international. You're right that the improvement in our performance, the growth year-over-year, the profit improvement year-over-year is not from a macro. One of your terms is self-help activities in international. Productivity improvement within our supply chain has helped the P&L tremendously, in Europe specifically. We're putting in improved technology to be more efficient, which is, again, helping with our productivity Sysco brand being introduced in countries that did not have it before, which is helping on gross profit expansion. The local case growth that I mentioned, which was 5% local case growth in international is from a concerted effort on running the Sysco play, as we call it. Which is Sysco Your Way being added, Perks being added, adding resources to the local sales force in international countries, several of our larger international countries, Ed, were over-indexed on CMU National. So we're going to maintain, retain and grow profitably in our CMU business with a real meaningful focus on improving local. We have a team that started in our U.S. business that's now leaning and helping with each of those international countries, with their local business. And we're really pleased with the results, and we expect that improvement to continue into 2025. Kenny, is there anything you'd like to say about international?

Yes. So for international, we have a global operating model that's working as we're replicating the success of recipe for growth, and it's working across international markets. I think if you look at the full year, we were top line 7% growth, bottom line, 24%. I do think one interesting fact is it's not just one market, if you look at across our portfolio, every market sitting within. For example, Europe and International Americas for the year, grew double-digit on operating income, every market, right, between Europe and international, America. So it's not just one market leading is. So the benefit that we're seeing is per-base across the board and we expect that to continue in 2025.

Thank you.

Thanks, Ed.

We'll move next to Brian Harbour with Morgan Stanley.

Yes, thanks. Good morning, guys. Kenny, just your comments on corporate costs. I know you took some actions in 3Q, right? So that's still kind of a benefit in the first half of the year. But are there ongoing actions just on the corporate cost side, specifically, do you still think you can see improvement there throughout the course of this fiscal year?

Hi, Brian, good to talk to you. Yes, the answer is a resounding yes, but let me take a back step on this one. So corporate expense for the quarter, $205 million. That was down 10% as we talked about. But I also think it's important to note, it was down 7% quarter-over-quarter, driven by the structural cost out we did in Q3. And Brian, to your question, we are looking for more, and we've done more. This includes digital, automation, shared service deployment, indirect third-party procurement savings as well. So the answer is, we've done $120 million-plus last year. Part of it carries over into the new fiscal, and we have a robust pipeline to ensure we continue to execute the product that play across the year.

Specifically in international, in particular, we have structural cost improvement opportunities international that we're very focused on. They've already done great work international, which is driving the outsized profit improvement versus domestic U.S., and we expect that to continue.

Okay. Your 2% inflation outlook, is that fairly even through the year? Is it kind of some of the same items driving that, that you called out most recently? Or could you elaborate on that?

Yes. Even throughout the year, this is Kevin. There will be ups and downs by category. Kenny always talks about, we have 13 different category baskets. Some will be up, some will be down. We expect that roughly approximately 2%, which, by the way, we're there right now. We are at that level right now, and we have modeled it, and we expect it to be reasonably consistent at that level throughout the year.

Thank you.

Thank you.

We'll move next to Kendall Toscano with Bank of America.

Hi, thanks for taking my question. Just curious, I know you talked last quarter a bit about maybe needing to see restaurants take down our investment prices a little in order to drive an improvement in industry volumes. So curious if you've seen kind of any of that starting to play out? And when you are assuming that the macro backdrop improves in the back half of next year, is that assuming that there is some price investment, by the restaurant operators? Thanks.

Kendall, it's Kevin. Thank you for the question. It's up to our customers to decide what to do with their menu prices, obviously. What we start with and what we focus on are things we, Sysco, can do to help them driving improved purchasing economics, sharing in the value of that purchasing economic favorability with our customers, advancing Sysco brand. Providing them with products that save them time, save them money, precooked products when it's appropriate for their menu, et cetera, et cetera. So those are the things we can do. Those are the things we will do. We're here to help. As it relates to - are we seeing movement? Yes, we're seeing movements, specifically within QSR. I think that has been a sector that has written a lot and said a lot about the lower-income customer and the impact that raised prices have had upon them. You're seeing a lot of value menu activity happening out there within the QSR space. I do believe it will help that activity. I believe for the other restaurant types, it is about the quality of the product that they're serving, the quality of that in-restaurant experience. And again, us, we being Sysco, providing them with value. As we thought about this year, we didn't model into the year lower menu prices as one of the change vectors within our guide. We expect for consumer confidence to be moderately better in the second half than the first half, mostly through interest rate reductions. Hopefully, they began later in this calendar year. Mortgage rates coming down, that has a psychological impact on consumers as you're well aware. So our second half more optimism is more tied to mortgage rates and interest rates than it is to menu price. And then my main point here, and this is what I want to end, we, Sysco can profitably grow our business in these market conditions. We have share we can take profitably. We have new customers that we can acquire. We have penetration opportunities, back to John Heinbockel's question, with produce and protein. And we are going to profitably grow this business in these market conditions. And all of that obviously was built into the guide that we have for year - excuse me, for the year. Kendall, I'll pass back to you if you have a follow-up.

Yes. Thank you. Just one quick - another question I had was, I know you mentioned a decline in private label penetration. Did you talk about what drove that?

Yes. The primary driver is improvement in national supplier fill rate inbound to Sysco. So when a national brand supplier isn't able to ship, we have substitute alternatives. And most often, that substitute alternative is a Sysco brand, because we do a great job of keeping our Sysco brand products in stock at our facilities. So overall, it's a good thing for the industry that national supplier fulfillment rates, have increased and improved. It is a good thing. Nobody likes substitutes. Customers don't like them. Our warehouse operations get their on curveballs, when we have to do substitute. So net-net, it's a good thing. It's a short-term small headwind on the percent of cases, Sysco brand. But again, we grew our pieces, Sysco brand. We grew our profit Sysco brand. Long-term, we are bullish on Sysco brand. We are working on providing trade management deals to all of our customer types. And as I mentioned earlier, we've increased the importance of Sysco brand penetration on our performance objectives for fiscal 2025.

Okay. Thanks again.

Thank you.

And ladies and gentlemen, due to time constraints, that will conclude our question-and-answer session and Sysco's fourth quarter conference call. Thank you for your participation. You may disconnect your lines at this time, and everyone have a wonderful day.