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The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are diversified, electronics, and food and grocery.

Fortune Sector Leaders: Wholesalers

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

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This year’s Fortune 500 marks the 67th running of the list.

The foodservice distributor partners with approximately 300,000 restaurants and foodservice operators to distribute fresh, frozen, and dry food as well as non-food products. Even through net sales decreased by 0.7% from the prior year, CEO Pietro Satriano said the company was seeing "meaningful recovery" after posting first quarter results for 2021.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

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Supplier of food and kitchen equipment to many restaurants, the company operates in more than 70 locations nationwide.

This year's Fortune 500 marks the 66th running of the list.

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This year's Fortune 500 marks the 65th running of the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

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US Foods Holding distributes fresh, frozen, and dry food products, as well as nonfood products, to food-service customers, including restaurants, hospitals, nursing homes, and hotels. The company, which was previously known as USF Holding Corp., was incorporated in 2007.

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Q4 2024

US Foods Holding (USFD): Company Profile, Stock Price, News, Rankings

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US Foods Holding

us foods holding

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's U. S. Foods Holding Corporation Q4 twenty twenty four Earnings Call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Session. Thank you. I would now like to turn the call over to Mike Nies, Senior Vice President and Head of Investor Relations.

is yours. Thank you, Greg. Good morning, everyone, and welcome to the U. S. Foods' fourth quarter and full year fiscal twenty twenty four earnings call.

On today's call, we have Dave Flitman, CEO and Dirk Locascio, CFO. We will take your questions after our prepared remarks conclude. Please limit yourself to one question and one follow-up. Our earnings release issued earlier this morning and today's presentation can be found on the Investor Relations page of our website at ir.usfoods.com. During today's call, unless otherwise stated, we're comparing our fourth quarter and full year twenty twenty four results to the same period in fiscal year twenty twenty three.

In addition to historical information, certain statements made during today's call are considered forward looking statements. Please review the risk factors in our Form 10 ks for a detailed discussion of the potential factors that could cause our actual results to differ materially from those anticipated in forward looking statements. Lastly, during today's call, we will refer to certain non GAAP financial measures. All reconciliations to the most comparable GAAP financial measures are included in the schedules on our earnings press release as well as in the presentation slides posted on our website. We are now providing reconciliations to forward looking non GAAP financial measures.

With that, thank you, and I'll turn the call over to Dave.

Thanks, Mike. Good morning, everyone, and thank you for joining us today. Before we turn to today's agenda, I want to take a moment to acknowledge the devastating fires in the Los Angeles area. Our thoughts are with everyone impacted by this tragedy. I'm relieved to share that all of our associates in the LA area are safe.

We eagerly supported the critical work of first responders, including CAL FIRE by providing food and hydration, and we are very thankful for their brave and tireless efforts. Now let's turn to today's agenda. I'll start by recapping our 2022 to 2024 long range plan. Then I'll share highlights from 2024, including the significant progress our team made executing our strategy. I'll then hand it over to Dirk to review our fourth quarter and full year 2024 financial results as well as our fiscal twenty twenty five guidance.

We delivered another strong quarter, which resulted in record 2024 full year earnings of $1,740,000,000 capping off the final year of our long range plan. We are proud to have overachieved our original commitment, which was all underpinned by the focused execution of our strategy. The fact that we didn't get there exactly the way we originally planned three years ago demonstrates our ability to adjust to any macro environment and our team's relentless focus on controlling the controllables to ensure we reached our target. During the past three years, we accelerated our work on key initiatives, including delivering consistent share gains with our three target customer types, driving more than $230,000,000 in cost of goods savings, extending our technology leadership position, reducing net leverage ending 2024 at 2.8 times within our two to three times target range and expanding adjusted EBITDA margin by 100 basis points to 4.6%. I am equally excited about starting our new long range plan, continuing to execute our strategic initiatives to drive sustained growth and return capital to shareholders.

Our future is bright and our current momentum gives us confidence in achieving a 5% sales CAGR, a 10% adjusted EBITDA CAGR, at least 20 basis points of annual adjusted EBITDA margin expansion in a 20% adjusted diluted EPS CAGR through twenty twenty seven. I am highly confident in our ability to continue to outpace industry volume growth over the long term and expand margins through our extensive portfolio of self help initiatives, while driving long term value creation for our shareholders. As we turn the page on a momentous chapter for U. S. Foods, I thank our 30,000 associates for their extraordinary effort, dedication and sharp focus to deliver excellence and help our customers make it every day.

This next chapter will be even more exciting. Turning to Slide four. Our strong fourth quarter results finished a year in which we achieved record adjusted EBITDA of $1,740,000,000 while we expanded adjusted EBITDA margin by 22 basis points. We also delivered record adjusted EPS of $3.15 which was 20% growth and we grew adjusted EPS eight percentage points faster than we grew adjusted EBITDA. Importantly, we deployed our strong cash flow through our $220,000,000 acquisition of IWC and nearly $1,000,000,000 of share repurchases in 2024.

Let's turn to the broader macro environment. Chain restaurant foot traffic as published by Black Box was down a little less than 2% for the fourth quarter and while still negative, it showed sequential improvement from the third quarter. Independent restaurant industry volume per Surcona was down less than 1% in the fourth quarter and in line with last quarter's year over year results. Our ability to outperform the market was again demonstrated in the fourth quarter as we posted a 3.2% increase in total independent case volume and our fifteenth consecutive quarter of share gains with independent restaurants. Also, case volumes in Healthcare and Hospitality, which together comprise more than 25 of our sales, grew 4.72.4% respectively.

We continue to gain share in both customer types and in fact, we just posted our seventeenth consecutive quarter of share gains in healthcare. These two high growth customer types are an important part of our differentiated go to market strategy. The fourth quarter was noisy due to the impact of the devastating hurricanes that hit near the end of the third quarter and early in the fourth quarter, affecting industry volumes specifically in the Southeast, where we have a larger portion of our independent business. In addition to storms, the election and a holiday calendar shift also impacted restaurant foot traffic. These impacts translated to an estimated 150 to 200 basis point headwind to our independent and hospitality case growth.

Despite these external factors, we continue to capture profitable market share, grow volumes and expand our margins. And in the fourth quarter, we improved our share gains with independent restaurants compared to the prior year and we also grew our new independent accounts at the fastest rate of the year in December. Moving to Slide five. Let's take a look at some of the key achievements in 2024 that our team delivered under our four strategic pillars. 2024 was another strong year for U.

S. Foods. As I reflect on my two years here, I am now even more confident in delivering our new long range plan and our ability to consistently gain profitable market share in our three target customer types of independent restaurants, healthcare and hospitality, the three most profitable segments of the food service industry. We also have line of sight to continued productivity gains of 3% to 5% and further gross margin expansion. Now, let's move to some highlights in each of our pillars.

Our first pillar is culture. The safety of our associates continues to be and always will remain our number one priority. Our injury and accident frequency rates improved 19% from the prior year on top of our 23% improvement in 2023. The safety results are our best in many years, but we still have more work to get to our ultimate goal of zero. As we look to further reduce associated injuries, the rollout of Centeride Power Industrial Equipment is a key initiative that is underway across the network.

We are nearly 50% through this deployment and importantly, where this equipment has been already rolled out, we have not had a single injury. In 2024, we donated more than $14,500,000 to support hunger relief, culinary education and disaster relief efforts. This contribution included nearly 7,000,000 pounds of food and supply donations, the equivalent of approximately 6,000,000 meals

than two sixty truckloads of product. Turning to our service pillar, we're striving to differentiate our service platform to our customers to provide a best in class delivery experience. In 2024, we deployed the cart, a leading routing technology in 25 markets, resulting in nearly 50% of our routed miles on the system at year end. It enabled us to route more dynamically and drive even greater delivery efficiency, while also providing a better customer experience by delivering their orders within a more precise time window. We improved distribution productivity in 2024 by delivering our best cases per mile performance in our company's history.

This was driven through our market led routing initiative combined with a more than 2% productivity uplift in markets where Descartes has been deployed. We are making continued progress with the rollout of Descartes and expect to complete it by the end of this year. We are also transforming the experience for our customers through our continued enhancements to our Moxie digital solutions platform that enables customers to easily place orders, manage inventory and pay their bills. We have been and will continue to be the e commerce leader in our industry. We closed the year at 77% e commerce penetration for our independent customers and 87% for the total company.

The 77% is an all time high for our independent customers and represents a 4.5 percentage point improvement versus 2023 and then 11 percentage point improvement versus 2021. Now, let's turn to our growth pillar. In 2024, net sales grew 6.4% to $37,900,000,000 through continued market share gains in all three of our target customer types. Our differentiated team based selling model and consistent addition of new seller headcount over time, which was up 5% in 2024, remain at the core of our growth plan. We continue to invest in our Hungry for Better program with three distinct product portfolios of over 4,000 products, Serv U, Serv Good and Serve Local.

Hungry for Better makes it easy for our customers to help meet diners preferences for delicious on trend meals from clean ingredients that support individual dietary and lifestyle needs to sustainably sourced products. In fact, in 2024, our responsibly sourced Served Good portfolio of private label products achieved record breaking sales, surpassing $1,000,000,000 for the first time. Pronto, our small truck delivery service continues to grow and is live in 40 markets. We remain excited about this growth opportunity and its ability to reach hard to service customers in best geographies. Pronto provides these previously untapped independent restaurant customers with smaller, more frequent deliveries and later cut off times.

In addition, we launched Pronto Penetration in the middle of twenty twenty four in two pilot markets and expanded that to six later in the year with the goal to launch 15 to 20 more markets in 2025. This service fills in non routine delivery days for our existing independent restaurant customers, leading to the potential for further wallet share for U. S. Foods. In our first two pilot markets, we are seeing an approximate 20% uplift in our overall case growth from customers in the program.

As expected, Pronto exited 2024 with approximately seven thirty million dollars

annualized run rate sales and we expect it to grow double digits this year. Turning to M and A, we completed one tuck in acquisition last year by purchasing IWC Foodservice, which serves the Greater Nashville area. More recently in January, we acquired Jake's finer foods in Houston, our fourth acquisition over the last two years. Jake's also includes a quality meat cutting facility, which will fit in nicely with our stockyards network. With more than $160,000,000 in annual revenue, this acquisition increases our local capacity and expands our presence in South Texas.

Finally, let's move to our profit pillar. Adjusted gross profit grew 7.3% in 2024 to $6,600,000,000 We continue to make additional progress on cost of goods through our strategic vendor management efforts, realizing more than $70,000,000 in savings last year. We also remain focused on growing our private label brands, where our full year penetration was up nearly 50 basis points to 52% with our core independent restaurant customers. Our momentum accelerated throughout the year with penetration nearing 53% by the end of twenty twenty four. And we see no near term ceiling with our ability to further increase our private label brand penetration.

Finally, as part of our ongoing goal of achieving 3% to 5% annual productivity improvement, we made significant progress in 2024 to streamline administrative processes and costs and achieve $120,000,000 in annualized operating expense savings. Regarding Chef Store, we are nearing the conclusion of exploring the sale of this business and expect that we will have more to say about that by the end of this quarter or early in the second quarter. We remain fully committed to supporting the business, our associates and our customers throughout the process. As we have previously said, in the event of a sale, we would expect to deploy the majority of the proceeds to repurchasing shares. Before I hand it over to Dirk, I would like to recognize two associates who have gone above and beyond during the wildfires that raged across California.

Two of our associates, Danny Moore and Paul Wheeler, dedicated their personal time to serving the approximately 10,000 firefighters in the area. With Danny supporting the Pacific Palisades fire and Paul supporting the Eaton fire, both were on-site daily to coordinate the delivery of over 75 truckloads of product and were in the kitchens preparing food for first responders. Both have made incredible personal sacrifices being away from their families, and I thank them and all of our associates for their service to support those who are on the front line during this tragedy. Let me now turn the call over to Dirk to discuss our fourth quarter results and our 2025 guidance.

Thanks, Dave, and good morning, everyone. Our fourth quarter performance finished off strong twenty twenty four. We continue to execute our strategy of driving healthy balanced growth through the P and L, which resulted in margin expansion and double digit earnings growth. Turning to Slide seven, fourth quarter net sales increased 6.2% to $9,500,000,000 driven by total case volume growth of 3.5% and food cost inflation and mix impact of 2.7%. Our independent restaurant volume grew 3.2%, including 140 basis points from acquisitions.

Healthcare growth remains strong at 4.7% and hospitality grew 2.4%. As Dave mentioned earlier, industry case volumes were impacted by storms, the election and timing of the holiday season. Despite the noise in the quarter, we continue to focus on the outcomes that we can control and we again drove healthy share gains in all three of our target customer types. We remain encouraged that 2025 will produce a stronger macro backdrop than 2024 and when combined with our focus on share gains will enable us to accelerate organic case growth. January growth rates in independent cases, although significantly impacted by weather in the California fires showed signs of strengthening over Q4.

Fourth quarter adjusted EBITDA grew 13.7% from the prior year to $441,000,000 through a balance of profitable volume growth, gross profit gains and operating expense productivity. Our actions to drive profitable growth resulted in 30 basis points of adjusted EBITDA margin expansion to 4.6%. Importantly, adjusted gross profit dollars grew two forty basis points faster than adjusted operating expense dollars. Finally, adjusted diluted EPS increased 31.3% to $0.84 We again grew adjusted EPS significantly faster than adjusted EBITDA and we expect this to continue as we execute our share repurchase plan on top of strong adjusted EBITDA growth. Zooming out to the full year, we delivered record profitability as we grew adjusted EBITDA by 11.7% to 1,740,000,000 expanded adjusted EBITDA margin by 22 basis points to 4.6% and increased adjusted diluted EPS by 19.8% to $3.15 despite the macro challenges that persisted throughout 2024.

Our results are a testament to the focused execution of our self help initiatives and our ability to control the controllables. This performance gives us confidence that we have the right strategy and initiatives in place to achieve our new long range plan. Moving on to Slide eight, we continue to drive significant gains in operating leverage. We again grew adjusted gross profit per case faster than adjusted operating expense per case. In the fourth quarter, adjusted gross profit per case grew by $0.28 or 3.6% compared to the prior year, while adjusted operating expense per case increased by 0.08 or 1.4%.

Fourth quarter adjusted EBITDA per case was $2.12 up $0.19 from the prior year as we grew adjusted gross profit per case 3.5 times fast as operating adjusted operating expense per case. The full year result was very similar as we increased adjusted EBITDA per case $0.14 to $2.07 We continue to drive gross profit gains and offset a significant portion of operating expense inflation with supply chain productivity improvement and other efficiency gains, including streamlining administrative processes and costs and realizing indirect procurement spend savings. Specific to indirect spend, we achieved more than $30,000,000 in savings for full year 2024 above the $20,000,000 estimate I discussed on the last earnings call. And we remain on track for $60,000,000 by 2027. Our fourth quarter and full year results demonstrate our ability to drive strong leverage through the P and L.

We expect to maintain that operational discipline in 2025 and beyond. Turning to Slide nine, we are growing our business in a responsible and sustainable way to drive earnings, cash flow and improve return on invested capital. Over the past three years, we delivered significant profit growth from a balance of top line growth and EBITDA margin expansion, including an 18% adjusted EBITDA CAGR and a 27% adjusted diluted EPS CAGR. As a result, we increased ROIC by 1,300 basis points to 31%. Turning to Slide 10, our strong cash flow combined with our healthy leverage profile enables us to deliver on our capital allocation priorities of investing in the business for growth, returning capital to shareholders and executing accretive tuck in M and A.

We ended the year at 2.8 times net leverage within our two to three times target range. Our net leverage remains in line with 2023 even with repurchasing 16,400,000.0 shares for $958,000,000 and closing on the $220,000,000 acquisition of IWC. In 2024, we invested $341,000,000 in cash CapEx as we continue to focus on projects to enable organic growth, including expanding our fleet, investing in capacity as well as enhancing our technology lead. So far in 2025, we completed the acquisition of James Feiner Foods for $92,000,000 and repurchased $23,000,000 of shares. We are disciplined in our capital deployment and we remain committed to returning capital to shareholders.

We expect to return to more meaningful share repurchases in the second quarter and balance of the year and we'll adjust based on future tuck in M and A opportunities. As a reminder, we expect to generate more than $4,000,000,000 of cash flow over our new long range plan period of 2025 through 2027 and expect to deploy approximately half of these proceeds or $2,000,000,000 towards share repurchases. Additionally, we expect to reduce net leverage due to earnings growth. Moving on to Slide 11 and our guidance and modeling assumptions for fiscal year twenty twenty five. We expect to grow total company net sales by 4% to 6% compared to prior year, driven by total case growth of 2% to 4%, which includes faster independent restaurant case growth of 4% to 7%.

The lower end of our range assumes a slower macro environment persists. We expect a normal inflationary environment with sales inflation and mix impact of approximately 2%. We expect to grow adjusted EBITDA 8% to 12% and adjusted diluted EPS 17% to 23%. Our expected double digit earnings growth will be driven by the combination of profitable volume growth and margin expansion as a result of adjusted gross profit per case continuing to grow faster than adjusted operating expense. In closing, I am very pleased with our financial performance as we delivered record adjusted EBITDA for 2024 and achieved a long range plan that we presented in early twenty twenty two.

We did this by staying focused on executing our strategy, being agile and controlling the controllables during times of macro uncertainties. I am excited about the opportunity in front of us as we embark on our new long range plan and we are confident in our ability to achieve it given the momentum we are generating. I'll now pass it back to Dave for his closing remarks. Thanks, Dirk.

You've heard about the great progress that we made last year. We are extremely pleased with how we successfully completed our prior long range plan and are very optimistic about our momentum heading into 2025 and beyond. Ours is very much a self help and execution story with a long runway of top and bottom line growth in front of us. We will continue to run our playbook, execute our strategy and effectively deploy capital. I'd like to quickly draw your attention to Slide 12 and what differentiates U.

S. Foods versus our competition. We are the only pure play U. S. Focused foodservice distributor with national scale.

We have a differentiated value proposition and significant scale with the three most profitable customer types in the industry, independent restaurants, healthcare and hospitality. We have the industry leading digital ecosystem. We're in the early innings of self help initiatives that will drive sustained profitable growth for many years to come. We believe we have the fastest P and L growth algorithm in the industry underpinned by accretive capital allocation, which will enable us to grow adjusted EPS faster than adjusted EBITDA over the next several years. And finally, we are accelerating cash flow generation, which will result in more than $4,000,000,000 to deploy over the next three years.

We are much stronger today than we were several years ago and we are just getting started. We have sustainable competitive advantages to outperform the market well into the future and we will continue to drive shareholder value for many years to come. With that, Greg, please open up the line for questions.

Great. Thanks, Dave. Okay. It looks like our first question today comes from the line of Mark Carden with UBS. Mark, please go ahead.

Great. Good morning. Thanks so much for taking the question. So to start, it seems like there's new tariff news every day, including today with reciprocal tariffs. What percentage of your offerings you import overall?

And then if tariffs on food products end up occurring, would you expect to pivot sourcing or with industry simply be able to pass through the pricing?

Good morning, Mark, and thanks for the question. I would just point out that, majority overwhelming majority of our products are produced and distributed in The United States. We have a low sync to mid single digit importing from the various countries that have been mentioned. And just recall that the majority of our customer interactions and our agreements are passed through in nature. But having said all of that, at the heart of our work with our customers is helping them handle inflation.

And I would wrap the tariff issue into just more inflationary pressures on our customers. So how we go to market the way our restaurant operation consultants work to help take cost and waste out of the back office of our operators, our SCOOP products, our private label brands that end up being cheaper for our customers and help them save time and money in the kitchens. That's at the heart of what we do every day and we'll continue to work hard to help support our customers.

That's great. Thank you. And then as you think about your independent case growth assumptions in the year ahead, how are you thinking about the balance of new account growth versus penetration growth and how that can progress really throughout the year?

Yes. So penetration has been a challenge given the foot traffic challenges really all throughout 2024, especially in the back half of the year. But just over time, the overwhelming majority of our growth comes from new account generation. That's why I pointed out, we had the highest new account generation of the year in December, even with all the calendar and foot traffic challenges. I am very encouraged.

We also had one of our strongest monthly year over year share gains in the month of December. And all that positions us very well for growth going forward, especially when that foot traffic environment improves, which we expect to happen throughout the course of 2025.

All right. Thanks for the question, Mark. And our next question comes from the line of Edward Kelly with Wells Fargo. Ed, please go ahead.

Yes. Hi. Good morning, everyone. I wanted to maybe just start with double clicking on the independent case growth. I mean, you're clearly taking share.

There's no doubt about that. But you're below the 5% to 8% algo, right, that you've kind of talked about. I mean, guidance seems to be that because you're talking about the 2% to 4% total organic case growth that you see a sharp improvement in the independent side. Could you just maybe talk about the expectation for the year, your confidence, the visibility, how maybe you think about bridging back to that target? And how we should be thinking about the cadence of the year, if that occurs?

Well, let me just start by just reframing that 5% to 8% case growth as we did at Investor Day. And recall that the underlying assumption there was a normalized plus 2% foot traffic environment, which we did not see in 2024. So I'd start with that. And if you just bridge the performance that we had there in the fourth quarter, that 1.8% organic growth, You had the 2% foot traffic back and that 150 to 200 basis point impact that we had from the storms weather calendar. That all puts us right in the heart of low to upper fives, even in that environment.

So I'm confident in what we put forward. And then as you heard Dirk comment, we saw some improved traffic trends in January in the way kind of we're looking at the month of January. If you take the impact of the strike that we had last year in the weather, it back offsets completely the weather, which was much more significant this year. So I would call that year over year for U. S.

Foods a wash. And then underneath that we saw strengthening from December to January. So as Dirk pointed out, the low end of that range assumes that the foot traffic environment doesn't improve. We're confident that it will, it's just at what rate that happens in 2025. But we've got a lot of confidence based on the underlying momentum that we've seen the share gains that we're taking to put forward that guidance range for the year.

Maybe just a follow-up to that, Dave. I mean, you've pretty consistently talked about that you can adjust to the macro and controlling the controllables. And I think '24 obviously proved that. But you're exiting the year with a lot of momentum and profit per case, like the self help side of the profitability equation. So does the same mentality applies as you're thinking about '25 guidance?

Just curious as to how you would size the self help opportunity in '25 versus what you accomplished in '24?

Yes, I would say we feel really good about the momentum. And as I pointed out, Ed, and I really believe this, we're in the early innings of all the work that you see us doing, on the top line continuing to take share. There's a lot more share for us to be had in all three of our targeted customer types. I feel really good around the way the teams aligned around our mission there and the numbers that we're putting up, but there's more to do. And then as you think about the gross profit per case work that we have going on, and our margin improvement work, our strategic vendor management work, that $260,000,000 target we've had over the next three years, the momentum we're exiting the year with in that area, our exclusive brands, nearing 53% at the end of the year.

There's a lot more for us to do and to be had. And then supply chain productivity with all the framing that we've done and the structurally structural improvement work overlaying things like the cart, we're going to just get continued momentum as we roll that out across the rest of this year. Our turnover continues to reduce in both selectors and drivers. I'm confident that our delivery and outbound productivity will continue to improve throughout the year. So just feel really good about the execution story that we have in front of us and the way the team is driving the outcomes.

I think, Ed, the other thing to not forget is the benefit that we have from not just from a growth, not just independence, but the strong base, as Dave mentioned, it's more than a quarter of our business in healthcare and hospitality, which both were growing at a significant rate with healthcare at almost 5% for the fourth quarter, hospitality at 2.4% despite having the same headwinds basically as independents had. And both of those have come out of the gate in January well within our guidance range. So that's another good growth engine for us as we talk about that, our EBITDA growth and EPS growth coming from a balance of top line growth and margin expansion.

All right. Thanks for the question, Ed. And our next question comes from the line of Jeffrey Bernstein with Barclays. Jeffrey, please go ahead.

Great. Thank you very much. My first question is just kind of bigger picture. I think you guys mentioned you're assuming or suggesting a stronger macro backdrop in 'twenty five versus 'twenty four. I was wondering what metrics gives you that confidence?

I know there are some that are concerned that the consumer environment isn't getting much better, especially around that because you talk about the long term algo for case growth 5% to 8%, which assumes positive 2% industry traffic. There's definitely a question as to whether or not the industry will ever get back to positive 2% traffic. It just seems like it's year after year, there are always challenges there. So just wondering your kind of broader view on the macro backdrop and the confidence you have in getting back to that 2% positive industry traffic.

Sure. Good morning, Jeff. It's Dirk. Technomic is one source that we use that is calling for a healthy improvement in 2025 over 2024. Also, when you had decline last year, sort of reset a base and not expect further declines again versus some improvement we have, likely more some more stability with the election behind.

So, you know, those all give us the, the optimism that the traffic environment will continue to get better. It's another thing that, we say focus on that, but the other thing that's not new that you've heard us talk a lot about is things that we can't control around the share gains and all three of our target customer types for it continue to drive that. And this, self help control the controllables, however you wanna talk about it, That is at the heart of how we're thinking about it, whether it's top line growth or just bottom line earnings growth.

Got it. And then my follow-up is just on, Dave, you mentioned the independent customer gains, something about the fastest growth was just in the month of December and that January is on a strong start. I was wondering is there anything that you view as the key driver of that acceleration and maybe what's your expectation is that sustainable throughout 2025 specific to that independent customer gain metric? Thank you.

Yes, thanks, Chip. I think the focus that we've had in independents, 15 quarters of share gains, running our playbook. The way we use this Arcana data to target customer growth by market, by zip code, our team is on it. You augment that with our continued hiring of sellers. Some of them are maturing over the last twelve to eighteen months.

We'll continue to hire in that low to mid single digit range as we committed to as we did the last two years. And it's just continuing to run our playbook. And, I remind our team all the time, given our share position, regardless of the macro, there's plenty of volume to be had in the industry and specifically with independent customers. And our job is to go get those cases and that's what our team continues to do.

All right. Thanks, Jeff. And our next question comes from the line of Lauren Silverman with Deutsche Bank. Lauren, please go ahead.

Thanks so much. So I wanted to ask if you can expand a bit more on what you saw in terms of cadence in 4Q and into January. It's good to hear growth accelerated in January. I guess, you are in striking distance of the 4% to 7% independent case growth target for the year. Just trying to understand whether the guide implies industry trends improve from here.

Good morning, Lauren. This is Dirk. So in the fourth quarter, we saw more growth in October, November, just like the rest of the industry and peers have talked about is December with the shift in the holiday timing, you saw slower growth overall. We did see some acceleration in January. I think with the weather and the fires made it pretty noisy.

So I think for the, when you think of the first quarter, just a reminder kind of January and early February, lower volume periods relative to overall. So, our expectation is that we will accelerate throughout the year and have that confidence for the reasons Dave talked about earlier that we you know, we achieved that 4% to 7% independent case growth as well as our overall 2% to 4% case growth.

to 4% case growth, I want to confirm what's organic versus whether there's any M and A contribution embedded and just more broadly how you're thinking about the M and A environment for '25?

That is in, incorporates anything that we've transacted already. So, it would be included, IWC and the small contribution from Jake's which is relatively small as I mentioned. Our pipeline continues to be, to be worked and we continue to, look for opportunities out there and we'll continue to be opportunistic with the right businesses. And, Jake's is a good example of, fit the network very well, doubled our capacity in the Houston area, allow for continued growth as Dave mentioned, a very good meat cutting facility that fits well into our network. So I would say the environment remains healthy and we continue to work our pipeline and engage with people.

And as you've heard us say plenty of times, the thing you can't determine is when they're ready. And so our, but our work continues on that front.

All right. Thank you, Lauren. And our next question comes from the line of John Heinbockel with Guggenheim Partners. John, please go ahead.

Hey, guys. I want to start with, can you discuss what you're seeing, you sort of take out weather and calendar trend line on lines per account and cases per line, right? And obviously, cases per line, right, as we see the macro impact. Is it possible could that be down 5% or mid single digit with the bulk of that being macro?

Yes. The cases per line has been the challenge, John. I think lines are relatively stable. Obviously, we continue to look for those penetration opportunities. But it's just particularly in the back half of the year, it's been kind of overwhelmed by the foot traffic challenges.

Maybe a totally different topic. Where are we if you think about the rest of this year, the rollout of Descartes and UMass, right, rollout on that. And then I think last quarter you talked about productivity was up 3.5%. I don't know what that was for the full year. Maybe it was similar.

Do you think is could that be higher, right, in 25% because of the rollout of those programs? Do you think it's about

Good morning, John. It's Dirk. I think so with Descartes, expect to be fully rolled off by the end of this year, Hamas continues to deploy to more markets. I would say that our expectation is the productivity impact is pretty similar to what it was last year, these are rolling off some older ones that lap and then continue to add new ones. But as we come into 2025, we're still very pleased with the outcomes that both of those are offering.

And then, for Descartes, the opportunities that it will continue to afford us in the coming years by having a more advanced routing platform.

Thanks for the question, John. And our next question comes from the line of Peter Sala with BTIG. Peter, please go ahead.

Great. Thanks. Just a couple of questions. First, I wanted to come back to the conversation around tariffs. I think Dave you mentioned low to mid single digit imports from the countries that may be affected.

Just curious if the private label brands that you guys have, are they more or less exposed to those countries versus the branded? That's my first question.

I'd say it's about equal there, Peter. No plus or minus on a relative basis.

Okay. That's very helpful. And then just on the Moxie rollout, I know you gave some metrics there. Are you still seeing the case count growth there? I think maybe several quarters ago, you were mentioning about a case and a half more per order.

Just any update on that would be helpful. Thank you.

Yes, Peter, it's relatively the same that case and a half in that one to two cases is where we continue to land with Moxie and we're confident in that and we expect that will continue.

Okay. Thank you for the question, Peter. And our next question comes from the line of Brian Harbour with Morgan Stanley. Brian, please go ahead.

US Foods Holding (USFD) Q4 2024 Earnings Call Transcript

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