The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

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With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

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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.

The 300 companies on this list are transforming industries from the inside out.

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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

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

This year’s Fortune 500 marks the 68th running of the list.

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

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the US Foods Holding Corp. Q4 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Michael Neese, Senior Vice President, Investor Relations. Michael, please go ahead.

Thank you, Tiffany. Good morning, everyone, and welcome to US Foods fourth quarter and full year fiscal 2025 earnings call. On today's call, we have Dave Flitman, our CEO, and Dirk Locascio, our 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 2025 results to the same period in fiscal year 2024. 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-K 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 appendices to the presentation slides posted on our website. We are not providing reconciliations to forward-looking non-GAAP financial measures. Thank you. I'd like to turn the call over to Dave.

Thanks, Mike. Good morning, everyone, and thank you for joining us. Let's turn to today's agenda. I'll start by providing highlights from 2025, including our team's strong execution during the first year of our 2025 to 2027 long range plan. I'll then hand it over to Dirk to review our fourth quarter and full year financial results and provide our fiscal 2026 guidance. Starting on slide three, our 2025 earnings exceeded the long range plan we outlined at our June 2024 Investor Day. We delivered these strong results despite a softer macro environment by continuing to focus on controlling the controllables, something that we have been doing well for the past several years. These include capturing incremental market share across our target customer types and executing our operational excellence and productivity initiatives.

For the year, we grew adjusted EBITDA 11% to a record of more than $1.9 billion and expanded EBITDA margin by 30 basis points. At the same time, we delivered record adjusted earnings per share of $3.98. Our adjusted EPS growth of 26% led the industry and was more than twice our double-digit adjusted EBITDA growth rate. Now that we are one-third of the way through our long-range plan, I remain highly confident that we'll reach our 2027 goals. Highlights of our 2025 results, driven by the continued progress of our operational excellence and margin initiatives, include delivering share gains across independent restaurants, healthcare, and hospitality, our three target customer types.

Growing adjusted gross profit dollars 190 basis points faster than adjusted operating expenses, driving more than $150 million in cost of goods savings, expanding adjusted EBITDA margin by 30 basis points to a record 4.9%, extending our technology leadership position through new embedded AI capabilities, and executing our capital allocation strategy by repurchasing approximately $930 million of our shares and completing two small tuck-in acquisitions for more than $130 million. In short, 2025 was a strong start to our new long-range plan. Through the extraordinary dedication and focus of our 30,000 associates, we continue to execute our strategy, serve our customers well, capture profitable market share, and strengthen margins. The momentum we carried into 2026 is a testament to their tireless efforts to deliver excellence to our customers.

Let's turn to broader industry trends. Chain restaurant foot traffic, as published by Black Box, was down 2.8% for the fourth quarter and decelerated 230 basis points from the third quarter. Our chain business was down approximately 3.4%. Headwinds from the government shutdown, winter storms in December, and a challenged lower income and younger demographic affected industry demand. We were not immune to these events as they impacted the volume acceleration we were seeing coming out of the third quarter. While these headwinds created short-term pressure, we remain confident in continuing to grow the top line and capture profitable market share in what remains a highly fragmented industry.

Despite fourth quarter foot traffic being the slowest of the year, we grew independent restaurant case volume 4.1%, which accelerated from the third quarter and resulted in our 19th consecutive quarter of share gains. In the fourth quarter, we delivered our strongest net new independent account growth of the year, increasing approximately 4.7% over the prior year. This marks our best performance since the second quarter of 2023. Healthcare and hospitality, which together comprise more than 25% of our sales, grew 2.9% and 3.1%, respectively, in the fourth quarter. We continue to gain share in both customer types, and in fact, we just posted our 21st consecutive quarter of share gains in healthcare.

Our 2026 case growth was strong in January until the widespread storms and weather-related closures at the end of the month and beginning of February. Although the weather meaningfully impacted the industry's case volume, we were encouraged by our start to the year and are optimistic volume will recover as the weather moderates. Turning to slide four, let's review some of the key achievements our team delivered under our four strategic pillars in 2025. Our first pillar is culture. The safety of our associates is, and always will be, paramount. Our injury and accident frequency rates improved 16% from the prior year on top of our 20% improvement in 2024. I'm very proud of our team for these results, but we will not rest until we reach our goal of zero injuries and accidents.

Supporting our commitment to safety is the continued rollout of the center rider powered industrial equipment across our distribution centers. We are more than 60% through this deployment and expect to fully complete the rollout by the end of this year, dramatically reducing the potential for one of our most serious injury types. Finally, we also donated more than $12.5 million to hunger relief, culinary education, and disaster relief efforts last year. This contribution included more than 5 million pounds of food and supply donations, the equivalent of approximately 4 million meals. Turning to our service pillar. We are striving to differentiate our customer service platform and provide a best-in-class delivery experience. We made strong progress with our operations quality composite, which measures our ability to deliver products to our customers without errors, with performance improving by 15% for the full year.

These results reflect our ongoing commitment to improving our customer service experience, and we expect further improvements in 2026. We remain excited about our ability to improve routing efficiency through our enterprise routing initiatives, including market-led routing and Descartes. In 2025, we completed the deployment of Descartes across our distribution network and achieved an approximately 2% improvement in cases per mile across our broadline deliveries compared to the prior year. And while we are pleased with this early success, more opportunities remain to further increase our routing productivity. Also, in 2025, we made significant advancements in our MOXē platform, including additional AI capabilities. One example is the launch of our new AI-driven ordering feature, which enables customers and sellers to upload photos, PDFs, and even handwritten notes directly into MOXē and seamlessly translate them into an order, saving them both time and effort.

Now, let's turn to our growth pillar. In 2025, net sales grew 4.1% to $39.4 billion through continued market share gains. Our go-to-market strategy and consistent addition of new seller headcount, which was up nearly 7% in 2025, remain at the core of our growth plan. Pronto, our small truck delivery service, continues to expand and is now live in 46 markets, with plans to launch in 10-15 additional markets in 2026. We also see excellent traction from Pronto Next Day, formerly known as Pronto Penetration, which we introduced in mid-2024. This service is already live in 24 markets, and we expect to add approximately 10 markets in 2026. Last year, Pronto generated over $1 billion in sales, underscoring its importance as a long-term growth driver.

Additionally, we remain focused on enhancing our center-of-plate protein and fresh produce offerings. Several years ago, we upgraded our assortment and focus on quality in these key product categories. Last year, we grew our fresh produce and center-of-plate categories with independent restaurants, approximately 150 basis points faster than the industry, and nearly 400 basis points faster over the past two years. Moving now to our sales compensation change. As we discussed last quarter, we are transitioning to a 100% variable compensation structure for our local sales force, which we believe will be an additional long-term growth driver and enable higher earnings potential for our sellers. For context, currently, a seller enters our company at a 100% base salary.

From there, we execute a click down process at a pace specific to each individual that moves them to a 50/50 fixed and variable mix over time... Moving forward, we will transition our sellers to our new 100% variable commission plan following a similar individualized click down process. We believe that managing this transition well is more important than getting everyone to full commission by a date certain. As a result, while we plan to launch the new compensation plan in the middle of this year, it may take us 2-3 years to get the majority of our sales force to the 100% variable commission structure. We strongly believe this thoughtful transition plan will enable us to effectively and fully support each of our sellers through this important change.

We are currently piloting the plan in several areas across the company, and feedback thus far has been very positive. Recently, through our Sales Leadership Academy, we have trained all of our frontline sales leaders on the design and execution of the new compensation structure. Our sales leaders have given us great feedback and are excited for the launch of our new plan. Finally, we are highly confident the new compensation structure will drive stronger alignment to our business objectives and unleash our world-class sales force to help us further accelerate long-term growth. Finally, let's move to our profit pillar. Our strong execution and margin initiatives resulted in adjusted EBITDA margin expanding by 30 basis points to a record 4.9%. We continue to drive gross profit gains and offset a portion of operating expense inflation with supply chain and other productivity improvements.

I'd like to highlight four key drivers of our industry-leading margin expansion. We continue to make progress on cost of goods through our strategic vendor management efforts, realizing more than $150 million in savings last year. Our execution and our win-win collaboration with suppliers are delivering more than we expected. We now believe we can deliver at least $300 million of cost of goods savings over our three-year plan, compared to our original $260 million goal laid out at our 2024 Investor Day. We also remain focused on growing our private label brands, where our full year penetration was up approximately 90 basis points to nearly 54% with our core independent restaurant customers. Private label growth remains a significant opportunity for US Foods as we have ample room to drive penetration higher.

Our enhanced inventory management process to eliminate waste resulted in an approximately $40 million gross profit benefit, up from our prior $35 million estimate. We believe there's more to do in this area and expect to generate additional savings in 2026. Furthermore, we achieved approximately $45 million in indirect cost savings in 2025. This is another area where our initiatives are delivering greater benefits than we had originally anticipated. Based on the progress we've seen, we now expect to generate over $100 million in indirect savings by 2027. Finally, for 2025, we accelerated our overall operating expense productivity gains as we make progress toward our 3%-5% annual improvement goal. We remain committed to building a foundation that not only drives efficiency today, but also positions us for sustained growth and value creation in the years ahead.

Turning to slide five. As you can see, we are consistently driving sales growth, expanding margins, and delivering double-digit earnings growth. When combined with our capital allocation framework, we are compounding that earnings growth to an industry-leading adjusted EPS growth of more than 20%. We have been and will continue to be prudent stewards of capital, consistently increasing our return on invested capital year after year, which also underscores our commitment to creating long-term shareholder value. We remain confident in the earnings power of our operating model, and we believe we are well positioned to compound results for years to come, driving sustainable growth and reinforcing the strength, diversification, and resilience of our business model. Before I hand it over to Dirk, I'd like to recognize our inventory adjustments team, led by Jason Hall, our Senior Vice President of Transportation and Logistics.

Jason led a cross-functional team that worked together to develop a strategy and implement solutions to reduce waste and improve our inventory health. As I alluded to earlier, this team, along with our field teams and our distribution centers across the country, delivered more than $40 million in gross profit benefit in 2025. In addition to driving stronger profitability across the business, this team's efforts resulted in better in-stock performance, quality, and freshness for our customers to support sales growth. Thank you, Jason and team, for your commitment to delivering excellence through this important company-wide initiative. Let me now turn the call over to Dirk to discuss our fourth quarter results and our 2026 guidance.

Thank you, Dave, and good morning, everyone. Our fourth quarter performance capped off a solid 2025, underscoring the strength and resilience of our business model, profitable growth engine, and disciplined capital allocation framework. Starting on slide seven in our financial results. Fourth quarter net sales increased 3.3% to $9.8 billion, driven by total case volume growth of 0.8% and food cost inflation and mix impact of 2.5%. Excluding the Freshway divestiture, total case growth was 1.2%. Our independent restaurant volume continues to accelerate and grew 4.1%, including 40 basis points from acquisitions. Healthcare grew 2.9% and hospitality grew 3.1%.

Our chain restaurant volume was down 3.4%, primarily driven by slower industry traffic, as well as the strategic exit we discussed in the second quarter, largely offset by new business wins. Broadly speaking, our chain volume was in line with the industry. Moving to our financial performance, we again delivered strong earnings growth and margin expansion, driven by continued operating leverage gains. Fourth quarter adjusted EBITDA grew 11% from the prior year to $490 million, driven by continued volume growth with our target customer types, increased gross profit and operating expense productivity. Adjusted gross profit dollars grew 250 basis points faster than adjusted operating expenses. As a result, adjusted EBITDA margin expanded 35 basis points to 5%.

Finally, adjusted diluted EPS increased 24% to $1.04, demonstrating our continued ability to grow adjusted EPS significantly faster than adjusted EBITDA. We expect this trend to continue as we deploy our robust and growing cash flow towards share repurchases, which I will talk more about shortly. When we step back and look at the full year, our performance was strong. We grew adjusted EBITDA by 11% to more than $1.9 billion, expanded adjusted EBITDA margin by 30 basis points to 4.9%, and increased adjusted diluted EPS by 26% to $3.98, all while navigating a difficult macro environment. Turning to Slide 8, we continue to drive significant gains in operating leverage, and we again grew adjusted gross profit per case faster than adjusted operating expenses per case.

In the fourth quarter, adjusted gross profit per case increased by $0.23, or 2.9% compared to the prior year. We continue to gain leverage through improved cost of goods savings, reduced waste through better inventory management, and increased private label penetration. These focus areas led to success in 2025, and we expect further improvement in these areas for 2026. Adjusted operating expenses per case increased $0.02 or 0.3%. We continue to successfully mitigate a portion of operating cost inflation through disciplined cost management and initiatives focused on driving productivity gains. These include routing enhancements, greater process standardization in our operations, and increased savings through indirect spend procurement. As a result, fourth quarter adjusted EBITDA per case increased by $0.22 to $2.34.

Our fourth quarter and full year results demonstrate our ability to drive strong leverage through the P&L. For the full year, we grew adjusted gross profit per case 180 basis points faster than adjusted OpEx per case, which is above the 100-150 basis point annual target that we highlighted as part of our long-range plan. In 2025, our adjusted EBITDA per case increased nearly 10%. Importantly, since 2019, we have increased our adjusted EBITDA per case by $0.65, or approximately 40%, through continuous improvement across gross profit and operating expenses. Turning to slide nine our robust and growing cash flow, coupled with our strong balance sheet, enables us the financial flexibility to deliver on our capital allocation priorities.

In 2025, we generated nearly $1.4 billion in operating cash flow and deployed that capital to fund strong investments in our business, execute share buybacks, and pursue accretive tuck-in M&A. As Dave mentioned earlier, we are on track to deliver our 2025-2027 financial targets, including generating more than $4 billion of cumulative operating cash flow over that period. Over the past year, we invested $410 million in cash CapEx to support our business and enable organic growth, including enhancing our capacity and strengthening our technology leadership. Additionally, share repurchases and tuck-in M&A remain important components of our capital allocation strategy to drive shareholder value creation. In 2025, we repurchased 11.9 million shares for $934 million and completed two tuck-in acquisitions for $131 million.

We have approximately $1.1 billion remaining under share repurchase authorizations. Since 2022, we have repurchased 36.1 million shares for $2.2 billion. Finally, we ended the year at 2.7 times net leverage, well within our 2-3 times target range, and our leverage profile is the strongest within our industry. I'm also pleased to report another positive development related to our credit rating. Our corporate credit rating was recently upgraded 1 notch by Moody's to Ba1, based on our continued solid operating performance and credit metric improvement. Moving on to slide 10 and our guidance and modeling assumptions. Our fiscal year 2026 includes a 53rd week, which is expected to add approximately 1% to total case growth and adjusted EBITDA growth. This assumption is included in the fiscal year 2026 guidance we are providing today.

We expect to grow total company net sales by 4%-6% compared to the prior year, driven by total case growth of 2.5%-4.5%. We are projecting independent case growth of 4%-7% for the full year. We expect a lower inflationary environment than we had for much of 2025, with sales inflation mix impact of approximately 1.5%. We expect to grow adjusted EBITDA 9%-13% and adjusted diluted EPS 18%-24%. The midpoint of our outlook for the full year assumes the macro environment remains largely unchanged. Now let's look at our first quarter outlook.

Due to the severe and widespread weather-related issues that impacted the industry in January and February, many of our customers and our distribution centers in impacted areas experienced closures and other disruptions, particularly in the Southeast, which is our largest region. We have already had approximately 35% more distribution center closure days in 2026 than all of Q1 of last year, which negatively impacts our volume and cost. As a result, we expect first-quarter adjusted EBITDA will be upper single-digit growth over the prior year. We fully expect we will achieve our 2026 full-year guidance despite the weather-related disruptions we experienced in January and February. Last year, we started with weather-related slower EBITDA growth in Q1, yet we ultimately delivered our full-year adjusted EBITDA and EPS targets through strong execution in the remaining quarters, even against a softer macro backdrop.

I remain confident in our ability to deliver solid top-line performance and double-digit adjusted EBITDA growth. This isn't new for us. Over the past four years, we have consistently delivered strong, profitable growth while significantly improving our return on invested capital. While consumer sentiment remains cautious, we are optimistic about 2026. We operate in a resilient industry and continue to run our proven playbook. We are executing our strategy to enhance the customer experience, drive profitable volume growth, improve supply chain productivity, and return capital to shareholders, which enables our continued ability to compound double-digit earnings growth. In closing, I'm encouraged by our financial performance and the progress we've made completing the first year of our long-range plan. I'll now pass it back to Dave for his closing remarks.

Thanks, Dirk. At its core, our story is one of growth, operational excellence, and execution, with a long runway of top and bottom line growth ahead of us. We will continue to run our proven playbook, execute our strategy with discipline, and deploy capital in ways that maximize value creation. As we enter 2026, I have strong conviction that we will deliver the remaining two years of our long-range plan and hit our financial targets. We also believe we are positioning ourselves to deliver sustained growth well beyond 2027. Before we move into Q&A, I'd like to draw your attention to slide 11, which highlights what truly differentiates US Foods from our competition. A differentiated value proposition and meaningful scale across the three most profitable customer types in the industry: independent restaurants, healthcare, and hospitality.

An industry-leading digital ecosystem embedded with AI-powered features that enhances customer engagement, drives efficiency, and strengthens loyalty. Substantial opportunities ahead to drive sustained, profitable growth as we are in the early innings of our operational excellence journey. And finally, industry-leading adjusted EPS growth, supporting our confidence in remaining a double-digit earnings compounder through 2027 and beyond. With that, Tiffany, please open up the line for questions.

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Edward Kelly with Wells Fargo. Please go ahead.

Yeah. Hi, good morning, everyone, and congratulations.

On a good quarter and the choppy backdrop.

Dave, I wanted to ask you, I mean, things have been all over the place between shutdown and weather. Certainly seems like, you know, Q1, you know, is choppy to date. Could you just maybe, I guess, one, provide a little bit more color on, you know, quarter to date, you know, volumes and kind of what you're seeing? And then if you could parse out sort of like weeks without weather, and give us maybe your thoughts on what the underlying momentum of the business. And I'm hoping that you can tie all of this to your outlook for 4%-7% independent case growth for the year, because obviously, that's an acceleration.

Sure. Starting off with a great question here, Ed, I appreciate it. But, as I answer that, let me go back to the fourth quarter, because I was very encouraged with the momentum that we saw, as you recall, my prior remarks about the momentum coming out of Q3... until we hit the government shutdown and the weather and choppiness there in December. You know, we had a lot of good momentum there. The great news is we rebounded from that in the early part of January. Actually, the first several weeks were very strong, actually stronger than our exit from Q4, and then we hit the choppiness. The really good news is, since we've gotten past the weather, we're right back to where we were in early January.

So the rebound has been. It's taken a little bit, just with the cold weather and, you know, all the ice and snow, but I'm just really encouraged by the underlying momentum. You know, I'd point out also, Ed, that the fourth quarter was our strongest organic independent case growth in two years. And as we've been talking about for a while, the bellwether of our growth to come is that net new independent account generation, which was the strongest in the fourth quarter. Again, it beat Q3. It was the strongest also since the second quarter of 2023. So I give all the credit to our teams, their focus on execution and driving our capability into the marketplace. So I'm really encouraged. Ex-weather, none of us can control that.

It ebbs and flows, but we're controlling the things we can control, and we will continue to do that in 2026.

Great. And then maybe just a follow-up on the inflation guidance. I mean, obviously, we're seeing disinflation. Maybe you could talk a little bit more about, you know, your expectations there, you know, sort of key drivers. And I'm just curious, on the surface, you know, it seems like it would make it a little bit harder to grow gross profit per case, but the devil's always in the details. And I'm curious is that, how you think about that, and then have you needed to make any adjustments on the self-help side of the story, in that backdrop, or is the impact really just kind of minimal?

Good morning, Ed. It's overall, you know, as we've said many times, you're not going to hear us talk about that as a key driver. Our self-help initiatives are the large lion's share of our drivers of gross profits, pretty much every quarter. So unlike or like the rest of the industry, you know, disinflation had a bit of a negative impact in the fourth quarter, but again, we still put up strong results. I think the... You know, we are still seeing inflation year-over-year so far in the year, and it's going to be one where you're going to continue to see, I think, more of an impact on the top line and the bottom line, and we'll manage our way through it just as we have.

Your next question comes from the line of John Heinbockel with Guggenheim. Please go ahead.

So, Dave, 7% sales force expansion, what do you—which is a big number for you, high end of your range. Maybe, so talk about what you think about the maturation of that. You know, is that a key factor, 26 local case growth, maybe tail end of the year, right? So is there a cadence that's later in the year, is the sales force productivity from that 7% a key factor? And then maybe the last part of that would be when you think about improving net account growth, how much opportunity do you think is still left in lost accounts, right? Because I... It just strikes me that that's still low double digit, and that could be better.

Yeah, I appreciate the question. To the first part of it, you know, that 7% included some of the internal transfers that we talked about last quarter. So if you back that out, we were right in the middle of our range, you know, in that 4%-5% range in terms of external hires. So we executed exactly what we've been doing. To your point, I believe that the productivity of those sellers, particularly with the number that we've had internally shifted over, will ramp up and have a meaningful impact here in the back half of 2026. Not to mention the consistent sales force hiring we've done over the last three years. I think you're starting to see that pay off. You know, every quarter last year, we accelerated organic independent case growth.

We continue to accelerate net new, and I expect our growth will continue to accelerate, as we go forward here. The second, the second part of your question, for sure, you know, we, we run all parts of the NLP. We look at all that. We've talked a lot about the penetration, pressure that we've seen, just given the foot traffic. Lost is an opportunity. I will tell you that, lost is fairly stable to improving. It, it hasn't increased at all, and, the opportunity remains here to get that, you know, a bit lower. But again, given the pressure in the industry, our focus has really been on this net new, which is at the heart of our growth acceleration, and we're going to keep the team focused there.

Maybe as a follow-up, right? You did phenomenally well on OpEx per case in the fourth quarter, right? But there's still an opportunity to for Descartes to make a bigger impact in UMOS next year. So kind of what drove that in the fourth quarter, and I don't know how sustainable that is in your mind.

Yeah. Well, we had, you know, we, we talked about a lot of the initiatives there in the prepared remarks that are getting traction, and so it's really more of the same. To your point around UMOS, we continue to implement that. We're about 80% implemented across the company now in our key markets. We'll finish the UMOS rollout here by the middle of this year. And again, that's the template for consistency in roles and job functions in our operations, and it's had a meaningful impact. On Descartes specifically, you know, we, we commented on a 2% increase in cases per mile. We think there's at least that much opportunity again, now that we've got that fully deployed across the company going forward. So we're expecting continued and ongoing benefit from that rollout.

And, John, you know, just as we talked about last quarter, when OpEx was a little higher, you have shifts from year to year that can happen from quarter. So any given quarter, you can be higher or lower on costs. And really, I would think about if you look at all of 2025, we were up $0.10-$0.11. So you saw it really come to fruition where we offset a portion of our cost inflation with the productivity things that Dave's talked about.

Your next question comes from the line of Lauren Silberman with Deutsche Bank. Please go ahead.

Dave, you talked about strong net new biz, of course. You talked about strong net new business growth this quarter, which is accelerating. Is the net new business primarily driven by your headcount growth or your existing salespeople expanding their book of business? And then are you seeing any change in the competitive environment? Are things getting more promotional?

Yeah, Lauren, I would say that it's coming from both, you know, our existing sales force being increasingly productive as well as, and that's why I mentioned our consistency in hiring sellers over the past three years. You know, that productivity continues to ramp up across all of our cohorts. And so this is our model, right? A mid-single-digit headcount increase year after year, continuing to do route splits effectively as they make sense, seeding new sellers with business. They build from that. The sales reps that you take that business from, you pay them for that business for a while as well to encourage them to make sure those transitions are smooth, and then they go build a new book of business. And so that's the model, and it's working quite well for us, and I expect that to continue.

To your second question around promotional activity, it ebbs and flows, Lauren. I would say, you know, the promotional activity we've seen, and I think there's been some talked about publicly here recently, has been, you know, particularly at the QSR level and all that and some in chains, but I don't see that that's changed a lot here from the last quarter. I think we had saw similar effects, but I wouldn't see it increasing from here. We'll see what happens with foot traffic, but that promotional activity ebbs and flows. It's always there. I wouldn't point to anything significant right now.

Okay. And then just a follow-up on the sales comp change. I believe you mentioned it could take 2-3 years to transition everyone to the new structure. It sounds a little bit more gradual than I think what you were originally communicating. Is that a fair takeaway? And any sort of feedback or attrition that you may be seeing? Anything else that you could share? Thank you.

Yeah. So actually, it's not a change. And what I'm trying to do here, 'cause I know there were a lot of questions about it when we first began to talk about it, was just provide more clarity. And so the reason I commented specifically about how we bring people into the company today at 100% base is, you know, no, it takes a long time to get the majority of your sellers to the 50/50 commission today. It's very dynamic, as you would expect. You're always bringing new sellers in. We've always got retirements and all that. It's gonna be the same thing going forward. It is no change in our plan, it's just the reality of how we operate the business, and I wanted to provide some clarity on that.

So getting to 100% commission could take a couple of years for the majority of our sellers. That's fine. That's situation normal. It's the same game we've been playing for a long time. And then I'm very encouraged with the way the rollout's going, the feedback that we've gotten, particularly as I commented with our, our sales leaders who we've had in here over the past several weeks. There's a lot of buzz and a lot of excitement, but I guess I would say I'm most encouraged looking at our turnover. Actually, since we started, first started talking about this, all of our experienced cohorts, and we, you know, we have different, experienced cohorts in, in different buckets. They've all improved, since we've started to talk about this.

So that's a very encouraging sign, and we'll continue to watch that closely, and again, be very, very thoughtful about how we transition each individual here over time.

Your next question comes from the line of Kelly Bania with BMO. Please go ahead.

Good morning. Thanks for taking our questions, and congrats on a strong year. Wanted to-

Also dive into the outlook for the case growth for this year, the 2.5-4.5. Maybe just with a little deeper dive in the customer types and then the cadence. Are those all similar ranges that you outlined, kind of as part of your algorithm? Just kind of curious what you're assuming maybe within chains, if you're assuming that gets back to flat or slightly positive, and any comments with new business wins and healthcare and hospitality. And then also within the independent cases in particular, should we expect that to kind of ramp throughout the year? Because the comparisons are also tougher, as you pointed out. They've kind of really improved throughout this entire year. So just wondering if you had any comments on those points.

Yeah, so let me start with the IND guidance. You know that 4-7, Dirk talked about the 1% at the 53rd week adds. That takes it to 3-6. You add 200 basis points to that, that's right on the algorithm that we talked about in Investor Day, when the foot traffic gets to what the basis was for that, which, as you recall, was about 2%. And we haven't smelled 2% since we put that algorithm out there. It's been relatively flat to down. So it's right in the heart of what we committed to do. The total case growth takes into account healthcare and hospitality, and let me just talk about those for a second. You know, we're very encouraged by.

We talked last quarter about the $100 million of onboarding in both of those target customer types. We expect to have all of that fully onboarded by the end of the first quarter here. And I would also tell you that the pipelines for both of those have never been stronger, so we'd expect more through the course of time. And then to the last part of your question around independent case growth, sure, the comps get a bit more challenging, but we're not deterred by that. We've got a lot of really good momentum. Our sales force has never been more focused.... Our leadership knows what we need to achieve, and I give our team a lot of credit for the momentum that we've built thus far, and I would expect you would continue to see us ramp up our growth rate. That's the plan.

Thank you, Dave. That's very helpful. If I can just follow up on one more with the comp model change. It sounds like it's launching midway through the year, and so assuming maybe no real impact this year, maybe correct me if that's wrong, but just wondering if you could talk generally about the kind of magnitude of unlock that you think that this could drive for case growth over time, you know, over the next couple of years?

Yes, it's hard to quantify it, but I, I really believe, as I said in, in my prepared remarks, this is gonna really unleash our sales force through the course of time. I think this is the last major unlock. We've got all the process stuff right. We've got the organic growth going on. We've got our headcount plan, you know, consistent mid-single-digit headcount additions. This is the last piece that's been missing, and as I've talked about before, I'm contemplating this since the day I got here. I feel like with the underlying strength we've built in the business over the last three years, this is exactly the right time to launch this plan going forward, and I'm really excited about what it's gonna mean over time.

Your next question comes from the line of Jacob Aiken-Phillips with Melius Research. Please go ahead.

So on the comp transition, I'm curious how we should think about seller productivity throughout the three-year, multi-year transition. Would you expect it to dip a little bit towards the beginning and then, but then be heightened afterwards? Or should it be more neutral and then climbing over time?

Yeah, good, good question, Jacob. I think it'll be the latter more than the former. And the reason for that is, and that's why I emphasized it earlier, these are very individualized, tailored conversations. You know, when you make a change like this, you're gonna have some people out of the gate that do better and some people that are more challenged, and that's the piece that we're working through with each individual, and that's why we're taking a very thoughtful and deliberate approach on these pilots. There's a lot, you know, when you got a sales force of over 3,000 people, you wanna do this well, and you wanna have those individual conversations and make sure you're making the right decisions. So I would not expect us to step back.

I would expect us to be neutral to going, to going forward with this, you know, as we, as we implement it.

Got it. And then, separately, as you continue to layer in AI capabilities into MOXē and across your platform, should we think about that mainly as a cost productivity tool, or do you see revenue and wallet share upside as well?

Yeah, good question. I, I, I think it's both. And, you know, we've talked about since we implemented MOXē over three years ago, that we've seen that the customers that use MOXē buy more from us on average, and they stick with us longer. So there is growth upside to it as well. An important part of it is ease of doing business with us, kind of taking the friction out of the relationship with our customers, which we've gotten very good traction with. And importantly, also improving the sales force productivity because the things that the customer can now do self-serve in a very effective way within MOXē takes that burden off of our sales force and frees up time for them to go talk about our brands, find the next customer, you know, drive further penetration within those customers.

That's where we wanna see our sellers spending their time. So it's really both within MOXē.

Your next question comes from the line of Alex Slagle with Jefferies. Please go ahead.

All right, thanks. Good morning, and great work in 2025.

Yeah, the share gains, the execution, I mean, seemingly everything's been just so strong across so many initiatives. Is there anywhere that's not where you want it to be, where execution is just not ramping like you hoped and maybe it's an underappreciated opportunity that you wanna highlight?

Well, I'm glad our team's making it look easy, 'cause it's anything but. You know, this is hard work, and it takes consistency and focus and simplification in the journey, and that's what we've done here. We've, we've got a very focused team. I put our leadership team up against anybody, anywhere, in terms of knowing what we need to get done and ability to execute it. I'm one of these guys that's never satisfied in anything, and, you know, this theme of continuous improvement is real within our company and our organization. And so I, I just continue to see so much opportunity across the P&L for us to strengthen what we've got going on.

You know, we talk about all the good things that we have in the company, but there's plenty of opportunity to improve in areas that we've talked about this morning and in plenty of other areas of the company. You know, in a company of 30,000 people and 75 distribution centers and $40 billion in revenue, there's a lot that needs worked on every single day, and that's why I'm so bullish on this continuous improvement journey and our ability to hit our targets. Everywhere I look, there's more opportunity for us to get better.

That's great. And on the CapEx increase for 2026, how much of that is Pronto versus other initiatives that you're looking to do?

It is, it's a combination, so Pronto is a meaningful portion of that, and then the rest just comes from, you know, building spend, maintenance spends, just across the board. If you think of it, just as our business continues to get bigger and we continue to invest in capability and capacity, that's driving it.

Overall, you see, we still expect to have very strong EPS growth, so making sure that we're leveraging our investment into things that are paying off.

Your next question comes from the line of Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you very much. My first question is just on the M&A environment. I know you did a tuck-in with Shetakis in the fourth quarter, and I think two transactions for the year.

Both are relatively small compared to your business. I'm just wondering how you think about the opportunity for more sizable M&A in this challenged macro. Maybe any thoughts on what you've seen around availability or receptivity from potential targets, or where multiples are versus historical? Just wondering where you think the greatest opportunity are to enhance the US Foods platform that you could potentially consider pursuing.

US Foods Holding (USFD) Q4 2025 Earnings Call Transcript

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