PFGC Q4 2025 Earnings Call Transcript

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DATE

Wednesday, August 13, 2025 at 9 a.m. ET

CALL PARTICIPANTS

Chairman & Chief Executive Officer — George Holm

President & Chief Operating Officer — Scott McPherson

Chief Financial Officer — Patrick Hatcher

Vice President, Investor Relations — Bill Marshall

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TAKEAWAYS

Total Net Sales-- $63 billion in net sales for FY2025, with net sales in Q4 FY2025 up 11.5% year over year, aided by contributions from the Jose Santiago and Cheney Brothers acquisitions in Q4 FY2025.

Organic Independent Case Growth (Q4)-- 5.9% organic independent case growth in Q4 FY2025, with consistent results throughout the final three months of Q4 FY2025.

Full-Year Organic Independent Case Growth-- 4.6%, reaching 5% organic independent case growth for FY2025 when excluding the weather-impacted performance in February.

Chain Case Growth (Q4)-- 4.5% case growth in Q4 FY2025, with full-year chain growth at 2.2% in FY2025.

Adjusted EBITDA (Q4)-- $546.9 million in adjusted EBITDA for FY2025, a 19.9% year-over-year increase in adjusted EBITDA for FY2025, exceeding the previous guidance range for adjusted EBITDA in FY2025.

Gross Profit (Q4)-- Gross profit increased 14.6% in Q4 FY2025, with gross profit per case up $0.17 in Q4 FY2025 over the prior-year period.

Segment Performance-- All three segments—Foodservice, Convenience, and Specialty—accelerated growth in Q4 FY2025; Convenience and Specialty delivered sequential improvement through the end of FY2025, and double-digit profit growth in Convenience in FY2025.

Cost Inflation-- 4.3% total company cost inflation in Q4 FY2025, with Foodservice product cost inflation at 2.5% in Q4 FY2025, Specialty segment cost inflation was 3.3% year over year in Q4 FY2025, and Convenience cost inflation was 6.5% in Q4 FY2025.

Adjusted Diluted EPS (Q4)-- $1.55 in adjusted diluted earnings per share for Q4 FY2025, representing a 6.9% year-over-year increase in Q4 FY2025; Diluted EPS (GAAP) was $0.84 in Q4 FY2025.

Operating Cash Flow-- $1.2 billion in operating cash flow generated in FY2025; free cash flow totaled approximately $704 million after $506 million in capital expenditures in FY2025.

Salesforce Investment-- 8.8% increase in foodservice sales representative headcount by the end of FY2025; Q4 marked the strongest hiring quarter of the year.

Guidance (Fiscal 2026)-- Projected net sales of $67 billion to $68 billion in FY2026; adjusted EBITDA guidance of $1.9 billion to $2 billion in FY2026, with Q1 FY2026 net sales expected in the $16.6 billion to $16.9 billion range and adjusted EBITDA of $465 million to $485 million in Q1 FY2026.

Share Repurchases-- 177,000 shares repurchased in Q4 FY2025 for $13.4 million at an average price of $75.39 per share.

Capital Allocation-- Balanced approach focusing on capital spending, debt reduction, share repurchases, and M&A, with infrastructure investment primarily targeting warehouse capacity and fleet expansion.

M&A Update-- Board declined US Foods' request for information sharing regarding a potential business combination, citing focus on existing growth and strategy.

SUMMARY

The call highlighted continued margin improvement in FY2025, driven by a favorable business mix and operational discipline across all segments. Management signaled confidence in reaching the targeted 6% independent case growth in FY2026, attributing momentum in Q4 FY2025 to substantial investment in Salesforce capacity and successful new account wins. Incremental contributions from recent acquisitions are expected to phase out after Q2 FY2026 as those integrations are fully lapped, which will impact year-over-year comparability. Ongoing investments in capacity expansion and onboarding of new convenience customers are expected to generate near-term costs that may moderate segment-level EBITDA margins in Q2 FY2026, before trends normalize in the back half of the year. Strategic capital deployment remains anchored on disciplined infrastructure investment and selective M&A.

Management reported, "The quarterly tax rate in Q4 FY2025 benefited from an increase in stock-based compensation and income tax credits." but expects the tax rate in FY2026 to return to historical norms.

Current guidance assumes industry macro conditions remain largely unchanged, with performance driven by internal business execution and recent customer wins rather than market recovery.

Retail foot traffic trends improved sequentially into July and August FY2026, particularly in the independent restaurant channel, supporting confidence in guidance.

Core-Mark signed several new customer agreements encompassing over a thousand stores, with onboarding scheduled throughout Q2 and Q3 FY2026, which are projected to contribute meaningfully in future quarters following onboarding and initial start-up costs.

Specialty and e-commerce channels reported accelerated net sales and adjusted EBITDA growth in Q4 FY2025, especially from vending, office coffee, and value channels.

Foodservice experienced higher penetration within existing accounts, as organic case growth outpaced new account additions for the first time in FY2025.

INDUSTRY GLOSSARY

Lines per Drop: The number of unique products delivered per customer drop-off, often used as a measure of sales penetration or account depth.

Case Growth: The percentage increase in units (cases) delivered, typically referenced for volume expansion in food distribution.

Core-Mark: Performance Food Group's convenience distribution segment focused on serving convenience stores and similar retail outlets.

Vistar: The Specialty segment of Performance Food Group, primarily distributing products to vending, office coffee, theater, and retail channels.

Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring or non-cash items as defined by company management.

OpCo: Abbreviation for "operating company," referring to PFGC's decentralized business units.

Incumbency: The status of being an existing, primary supplier to a customer, significant for customer retention in distribution contracts.

Full Conference Call Transcript

George Holm: Thanks, Bill. Good morning, everyone, and thank you for joining our call today. I am excited to review our company's progress through fiscal 2025 and provide our current thoughts on the industry and external environment. Performance Food Group Company finished the fiscal year with excellent results and momentum to set us up for a strong 2026. While the food away from home industry is still not quite operating at a level we would like, our company has executed our strategy to take market share and win new business while improving our margins. In 2025, we grew our top line and have now exceeded the $63 billion mark.

Importantly, we grew our bottom line even faster through a combination of improving business mix and diligent focus on our gross and operating margins. As we highlighted at our Investor Day in May, Performance Food Group Company has carved out a unique niche in the food away from home market. Our range of capabilities allows our associates to aggressively pursue new business anywhere that consumers purchase food away from home, with little restriction on where we can grow. At the same time, there is still ample white space for us to grow into over time, which we believe provides a runway of strong top and bottom line performance for many years to come.

We would not be in this position without the cooperation across our three segments: Foodservice, Convenience, and Specialty. At Investor Day, we described our Performance Food Group Company One strategy, which is focused on capturing top and bottom line opportunities across the entire Performance Food Group Company platform. As we closed out the fiscal year, all our business units were contributing to our performance. Through a volatile market, each business gained momentum. We are excited about Performance Food Group Company's potential in 2026, as we expect to propel our results to new highs. In a moment, Patrick will provide a detailed review of our financial outlook.

We are often asked how we were able to outperform and win market share at such a consistent clip. The simple answer is it starts with our 43,000 dedicated associates. We hire the best in the industry and give them the autonomy to build and grow business. In the fourth quarter, we continued to hire foodservice sales reps at a very aggressive rate, ending the year with an 8.8% increase compared to the prior year. We are not slowing down this important investment in our business. As I mentioned earlier, the industry backdrop has room to improve, and I am confident that we will see better trends in the future.

The investments we are making in our people now will enable us to significantly accelerate growth as the industry finds its footing. Our efforts are producing results. As you know, our organization targets 6% independent restaurant case growth or better. While we were not quite at that level in 2025, I am proud of what we were able to achieve. For the full year, we grew organic independent cases by 4.6% despite facing several difficult periods. If we exclude just the February result, which was heavily impacted by severe weather, independent case growth would have been 5%.

In the fourth quarter, our independent cases were up 5.9% organically, with consistent results in each of the final three months of the fiscal year. This is encouraging as we enter 2026, and we believe we will be right around the 6% growth level for the full year. We have also seen success growing our chain business profitably. Over the past several years, we have shifted our portfolio of chain restaurants towards high-performing customers who are growing. We are excited to have partnered with several new accounts through the year, generating 2.2% case growth over the full year and 4.5% case growth in the fourth quarter.

We still have a robust pipeline of potential new accounts the team is working diligently to secure, which will provide additional growth. Overall, our foodservice segment had an outstanding 2025, and we believe it is poised to produce an even better 2026. Despite several casual chains experiencing sales declines, we also closed the year strong in our convenience and specialty segments. Both organizations executed their strategic plans and saw sequential improvement into the end of the year. In convenience, the total industry continues to see mid-single-digit sales declines across many of the key categories.

By adding new accounts, broadening our foodservice offerings, and partnering with strong customers, convenience produced positive case growth in each of the four quarters, with a stronger performance in the second half of the fiscal year. It is hard to overstate what an accomplishment this is in the current environment. A strong focus on procurement opportunities and cost management generated double-digit profit growth for the convenience segment over the full year. Even with a very difficult fourth quarter comparison, convenience grew adjusted EBITDA and is entering 2026 with a great deal of momentum. Our specialty business faced historically high prices across the candy and snack industry, high competition in the theater channel, and financial struggles for several customers in 2020.

The organization rose to the occasion by securing new business, identifying efficiency gains, and fostering collaboration across our broader organization. These concerted efforts led to continuous improvement throughout the fiscal year. As we enter fiscal 2026, our financial position is strong, and we are continuing to execute our balanced capital allocation plan, bringing our balance sheet back within our target range over the next several quarters. We will also continue to look at disciplined M&A, where we have a track record of delivering sustainable growth across our three business segments. Before I turn the call over to Scott, I want to take a moment to address US Foods' statements from last week.

Performance Food Group Company's board has a track record of regularly evaluating a range of potential paths to generate shareholder value. We are committed to taking actions that are in the best interests of Performance Food Group Company shareholders, and we will continue to focus on ways to deliver further growth and value creation. The outreach from US Foods was a request for information sharing to explore regulatory considerations and potential synergies related to a possible business combination. We have a clear strategy in place to effectively build upon the company's position as a leading North American food and foodservice distributor in the food away from home market.

We are executing at a high level, continuing to make progress on our three-year plan, and advancing toward the targets we outlined at Investor Day in May. We are doing this by aggressively pursuing new business and capitalizing on additional opportunities in the market while continuing to invest in our people. We expect to be well-positioned to accelerate growth. Performance Food Group Company is building a formidable organization that is set up to grow and win for many years to come.

Because of the successful execution of our strategy and our confidence in the path forward, any transaction would need to clear a high bar on all fronts: value, speed, and certainty to completion, taking into consideration associated risks, including regulatory, synergy, and integration risks. After careful consideration, the Performance Food Group Company board determined that there was no basis to engage in the information sharing requested by US Foods. We have demonstrated Performance Food Group Company's powerful value proposition across our three business segments, have strong momentum underway, and have conviction in the value-creating potential of our strategy. That is all we have to share today on this subject.

And when we get to Q&A, we would ask that you keep questions focused on our results and outlook. I would like to conclude my remarks by highlighting how proud I am of our team's efforts throughout the year and how excited I am about what lies ahead in 2026 and beyond. With that, I will turn it over to Scott.

Scott McPherson: Thank you, George, and good morning, everyone. I am excited to take you through our recent performance and discuss how we plan to continue our success in 2026. As George mentioned, we had a strong finish to 2025, picking up momentum into the summer months and maintaining strong growth in the early days of fiscal 2026. Despite an imperfect backdrop, our team is executing at a high level, which is reflected in our results and outlook. We plan on building upon this momentum in the months ahead. Let's walk through a number of areas where we have had success due to the strategic actions we have taken.

Starting with our foodservice business, as George described, we were able to accelerate our performance in the quarter through a combination of strong execution and broader market improvement. Restaurant foot traffic has improved month by month. While it declined year over year during the quarter, our foodservice organization was able to offset this headwind with new accounts and increased penetration into existing accounts, driving our nearly 6% organic independent case growth for the quarter. Our commitment to adding high-quality Salesforce talent is unwavering and a key component to our growth.

In Q4, our total organic independent case growth accelerated 250 basis points sequentially, which was faster than the rate of industry foot traffic improvement, showing our consistent ability to take market share. Several factors underpinning this success include the growth of new independent accounts by 5.3%, the highest level in 2025. It is also the first time in 2025 that total organic case growth was greater than new account additions, which translates to increased penetration within existing accounts. We also saw our lines per drop increase in the quarter, which has been a consistent component of our success.

Our ability to increase penetration and grow lines per drop despite industry-wide foot traffic declines is a very positive sign for our long-term growth potential. We believe that the industry will continue to recover, at which point Performance Food Group Company will be very well-positioned to accelerate total case growth. In addition, our chain business performed extremely well in the quarter. While our independent business and its contributions to profitability often get the headlines, our chain business continues to be a valuable contributor to our overall performance. Over the past few years, we have slowly transformed our chain business portfolio to align with our goal of faster and more profitable growth.

The results of these actions are apparent in our fourth quarter, as we not only saw case and volume growth but higher margin contribution. This success was achieved by winning new chain business with strong and growing partners supported by long-term contracts that are beneficial to both Performance Food Group Company and our customers. We are also seeing positive signs from some of our legacy chain accounts, particularly in the casual dining space. Some casual dining chains continue to struggle, but there is a subset that has seen success by creating a value proposition to attract foot traffic from consumers who are increasingly selective in their restaurant choices.

We are thrilled to be partnering with several of these chains and are excited to see their growth in the months ahead. Overall, our foodservice organization is seeing accelerating results in both independent and chain business with higher profit contribution, setting the stage for a strong 2026. Turning to our convenience segment, while the backdrop for the total C-store industry remains consistently difficult, our organization was able to outperform and finish 2025 in a strong position. In fact, through 2025, our convenience segment sales growth accelerated in each of the four quarters. Core-Mark continues to grow case volume while facing an environment of total industry case declines.

In key areas like foodservice and snacks, Core-Mark saw cases up low single digits despite low to mid-single-digit total industry category decline. This is through a combination of increased foodservice programs to existing customers and new account wins. I point you to our Investor Day presentation for more details on some of these key initiatives. Looking ahead, we are even more excited about what is in store. As we discussed briefly on our third-quarter call, Core-Mark has signed agreements with several new customers representing over a thousand additional stores. We will be onboarding these stores through our fiscal 2026 second and third quarters.

While there will be startup costs associated with onboarding this new business, we expect a nice contribution to our sales and profit growth in 2026. Finishing up our segment commentary with Specialty, both net sales and adjusted EBITDA growth for the Specialty segment saw a nice acceleration in the fourth quarter. Total net sales for Specialty increased 4.1% in the quarter, an excellent recovery. Notably, the vending, office coffee services, retail, and value channels all experienced an upswing in sales performance during the quarter. Our e-commerce platform, while still small, also continues to grow at a double-digit clip. We have very high expectations for this area of the business over the long term.

Overall, we are very optimistic about the future of Specialty despite some of the persistent growth hurdles and believe 2026 will build on this momentum. In summary, all three of Performance Food Group Company's operating segments accelerated their growth in the final quarter of the year and are well-positioned entering 2026. I will now turn it over to Patrick, who will review our financial performance and outlook.

Patrick Hatcher: Thank you, Scott, and good morning, everyone. This morning, I will review our financial results from our fourth quarter and full year, provide color on our financial position, and review the guidance we announced for 2026. We are pleased with our 2025 performance, ending the period in a strong financial position with momentum into 2026. In fiscal 2025, we achieved net sales above the midpoint of the long-term target range we announced in 2022, with adjusted EBITDA above the high end of the target range. The financial priorities we outlined at our Investor Day in May support our operating strategy and new three-year sales and adjusted EBITDA targets.

We are focused on translating our profit into strong and stable cash flow, which we then look to deploy in value-creating investments and cash return to shareholders. We believe that these initiatives have put us on a path to deliver strong returns over the next three years. Some financial highlights from the quarter and year: Performance Food Group Company's total net sales grew 11.5% in the fourth quarter as strong underlying trends in all three of our operating segments were boosted by the addition of Jose Santiago and Cheney Brothers. As a reminder, we will begin lapping the Jose Santiago acquisition in 2026.

We have one more quarter of incremental acquisition contribution from Cheney Brothers and will begin lapping these results in the second week of the second quarter. Total company cost inflation was about 4.3% for the fourth quarter, a slight sequential slowdown from the third quarter. The main driver of the lower inflation was in the foodservice area, which experienced product cost inflation of 2.5% in the quarter, more than a point lower than the third quarter. The deceleration in foodservice inflation was largely the result of lower year-over-year increases in poultry and dairy, somewhat offset by cost increases in other proteins, including beef and seafood. Specialty segment cost inflation was up 3.3% year over year, and convenience costs increased 6.5%.

We are closely watching product cost inflation. At this time, we are continuing to model low single to mid-single-digit inflation in 2026. As a reminder, we source the majority of our inventory from domestic suppliers and therefore do not expect a material impact from tariff increases. Still, we are remaining vigilant and in close communication with suppliers and customers to be able to adjust, if necessary, as the situation evolves. We have historically been able to manage price swings, including both inflation and deflation, and expect to use a similar playbook going forward.

Moving down the P&L, total company gross profit increased 14.6% in the fourth quarter, representing a gross profit per case increase of $0.17 as compared to the prior year's period. In 2025, Performance Food Group Company reported net income of $131.5 million. Adjusted EBITDA increased 19.9% to $546.9 million, topping our previously stated guidance range. All three operating segments contributed to our strong adjusted EBITDA performance. In particular, Specialty saw a nice rebound to 9% segment adjusted EBITDA growth in the period. We are also particularly pleased with the convenience segment profit performance, which saw adjusted EBITDA growth of 4.8% in the quarter.

This result was despite a difficult year-over-year comparison due to both a strong underlying performance and a large accrual true-up in the prior year period. Over the full year, the convenience segment increased adjusted EBITDA margins by 20 basis points. Diluted earnings per share in the fiscal fourth quarter was $0.84, while adjusted diluted earnings per share was $1.55, representing a 6.9% increase year over year. Our effective tax rate was 25.6% in the fourth quarter. Our quarterly tax rate benefited from an increase in stock-based compensation and income tax credits. At this time, we expect our 2026 tax rate to be closer to our historical range.

Turning to our financial position and cash flow performance, in fiscal 2025, Performance Food Group Company generated $1.2 billion of operating cash flow. We invested $506 million in capital expenditures during 2025, resulting in free cash flow of about $704 million. As we described last quarter, our capital expenditure level has increased due to investments to support capacity expansion at Cheney Brothers. We are currently expecting a full-year CapEx number in fiscal 2026 in line with our long-term outlook of 70 basis points on total net sales as we continue to invest in growth projects, including warehouse expansions and increasing our fleet. These are high-return projects that will support our long-term growth goals.

During the fourth quarter, we also repurchased about 177,000 shares of our stock at an average cost of $75.39 per share, totaling $13.4 million. While share repurchases are a key component of our capital allocation strategy, we are currently prioritizing debt reduction. As you heard us discuss, our capital allocation strategy focuses on four key levers: capital expenditures, leverage reduction, share repurchases, and M&A. Most of our capital spend is directed towards infrastructure to support our growth through warehouse capacity expansion and increased fleet. At the same time, our strong balance sheet enables us to explore new investment opportunities. We will continue to take various marketplace conditions into account when determining our capital deployment.

As George said earlier, we will maintain our balanced capital allocation strategy to best position the company to capitalize on opportunities in the market and drive shareholder value. The M&A pipeline remains robust, and we continue to evaluate strategic M&A. Performance Food Group Company has a history of successful acquisitions to drive growth and shareholder value, and we expect that to continue. At the same time, we will apply our typical high standards and robust due diligence to evaluate high-quality acquisition opportunities. Turning to our guidance, today we announced guidance for the first quarter and full year 2026.

For the first quarter, we expect net sales to be in the range of $16.6 billion to $16.9 billion and adjusted EBITDA between $465 million and $485 million. For the full fiscal year, we project net sales between $67 billion and $68 billion and adjusted EBITDA between $1.9 billion and $2 billion. As previously mentioned, the first fiscal quarter will include the incremental results from Cheney Brothers, which we will begin lapping during the second week of the second quarter in fiscal 2026. These targets are aligned with our three-year projections we announced at Investor Day, with sales in the range of $73 billion to $75 billion and adjusted EBITDA between $2.3 billion and $2.5 billion in fiscal 2028.

When building your models, keep in mind that fiscal 2027 will include a fifty-third week. To summarize, Performance Food Group Company closed 2025 with strong results and solid momentum into 2026. All three of our operating segments are performing well and contributing to our overall results. We are in a solid financial position, supporting our growth investments and capital return to our shareholders. We are excited about the future and believe we are well-positioned to continue to win business within the US food away from home market. Thank you for your time today. We appreciate your interest in Performance Food Group Company. And with that, George, Scott, and I would be happy to take your questions.

Operator: At this time, if you would like to ask a question, please press 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing 2. Once again, that is 1 to ask a question. Our first question comes from Mark Carden with UBS. Your line is open. Please go ahead.

Mark Carden: Good morning. Thanks so much for taking the questions. So to start, it sounds like the overall industry backdrop continues to slowly improve. How are you feeling about your July and August to date? And as you think about your guidance for the year ahead, what kind of traffic backdrop were you building it on?

George Holm: Well, so far, this is George. So far, July and the first couple of weeks of August, we have seen an uptick primarily in our independent foodservice business. I am going to have Scott kind of comment on the other channels. I guess when you just go to our prepared remarks, I think there is a lot of confidence around here that we will be able to achieve that 6% number this year. But we are off to a start that gives us that type of confidence.

Scott McPherson: Yeah. I think the other comment I would make there is if you look at Black Box results over the quarter, they continue to improve over the fourth quarter. And we actually saw our first positive result in July. So really, you know, really positive trends around traffic and restaurant. Looking at the other two segments, you know, the convenience segment continues to be pressured. But what gives us a lot of confidence in convenience is we continue to grow share and outperform there. And we talked about in the remarks a couple of really nice wins that we will add on over the next couple of quarters. That will really contribute to our growth and profitability in convenience.

And then when I think about the specialty segment, you know, we have got a couple of channels that are still pressured. But overall, we had a really nice fourth quarter, you know, have a lot of momentum in our e-commerce space and a couple of our other segments. The return to work really helps us across all three of our segments. So, you know, feel really good about the landscape.

Patrick Hatcher: And Mark, this is Patrick. I will just add on to the last part of your question around how we are looking at our outlook. Obviously, we are really confident in our full-year numbers. We obviously use a range, and that range is based on current economic trends and how we are performing. And then that is kind of how we built that outlook for it, but we definitely have some confidence in those numbers.

Mark Carden: That's great. Thanks. And then, just my follow-up, a two-part question just on Salesforce. First, just with one of your larger competitors moving past some of the Salesforce issues from a year ago, are you seeing any changes in the availability of quality talent? And then second, any anticipated changes in your pace of hiring over the course of the year ahead with the improving traffic backdrop?

Scott McPherson: Yeah. Mark, this is Scott. You know, in the fourth quarter, we saw great availability of talent. The fourth quarter was actually our strongest hiring quarter of the year. And for the year, we finished in a high 8% range as far as new salespeople that we have hired over the course of the year. We are a decentralized company. We allow our opcos to make those decisions. You know, we have some that are hiring at a clip greater than eight or 9% and some that are a little lower than that. But when we look at that, you know, we have got 6% case growth. Feel really good about that momentum.

And even with that, you know, we have really good leverage in the foodservice space. So, you know, we feel really good about the landscape of hiring. We have got great talent available to us. I feel like we are a great place for them to land.

George Holm: Yeah. I will make a couple of other comments there. I mean, on paper, it looks like we are, you know, we are hiring, you know, I guess, beyond the pace that we typically do. The restaurant business has been challenged for quite a while. Where we get our numbers as far as market share and the best information we can get shows that our foodservice business, where about 82% of our business is restaurants, where the rest of the industry is about 57%. So, you know, we are really dependent on the growth of restaurants.

I think when you go through as many quarters as we went through where it was challenged, you end up spending a lot of time on when, you know, we like to go out and aggressively pursue business. So for us, to get that people count up, to get our salespeople in a position where they voluntarily take some territory splits, and we have got the people to let that happen, has been very good for us. We will probably, you know, down the road, come down a little bit. Like Scott says, it is their decisions. I would suspect that is what will happen.

But having what our average salesperson does a week in business come down has been good for us. We look back all the way back to that COVID period, and we were not hiring, and we did not realize the level to which our people were improving until the rebound from COVID. And then, you know, you wake up one day, and the average person is doing probably more business than what you would want to have to put out consistent growth. I mean, there are only so many hours in a day for them. And when we have our calls with our people, Scott ends every call, every single call, encouraging our people to add salespeople.

And for the most part, that is what they are doing. Some of them are in a little different position. They have already done that. But we are getting good response from our people. And an 8.8% number for us today is a big expense to handle, but it is the right move for us to make.

Mark Carden: Makes sense. Thanks so much. Good luck, guys.

Bill Marshall: Thanks, Mark.

Operator: And we will go next to Kelly Bania with BMO Capital. Your line is open. Please go ahead.

Kelly Bania: Good morning. Just wanted to talk about the procurement savings target that you outlined at the Analyst Day. And how much progress there does that contribute to the fiscal 2026 outlook specifically?

Scott McPherson: Hi, Kelly. This is Scott. So we talked a lot about that at Investor Day. We feel really good about our progress. And just to take a step back, you know, we are always constantly working with our vendors and working on procurement opportunities. But as we looked at the landscape, we made the acquisitions of Cheney Brothers and Jose Santiago, and we continue to do a much better job working together between our segments. You know, we saw an opportunity to create, you know, win-win scenarios with our vendors, which is what we are doing today. I think as I look at the spread over our three-year guidance, I think that spread of procurement synergy will be pretty balanced.

And we are well on pace in this first year to achieve that.

Kelly Bania: Okay. That is helpful. And just wanted to also ask a couple of questions about convenience. Obviously, the broader restaurant traffic is really improving here, but the convenience division remains kind of pressured. Obviously, you have some new business wins. But was just curious maybe, Scott, what do you think needs to happen here? It looks like maybe easier comparisons were starting to help in the industry. But just when do you think that will start to turn, if at all? Is it in your outlook? What do you think the operators need to do? And just any color on the foodservice kind of sales and where that is tracking in that division.

Scott McPherson: Sure, Kelly. When I look at the landscape of convenience overall, one of the things that really hurt convenience was, you know, the work from home. And as we have seen that increase and I have seen nationally numbers where people are back in the office three and a half days a week, a lot of people are four and five. You think about that commuter traffic, that morning traffic that is getting coffee and breakfast, that was a big part of where convenience lost. And so, you know, definitely, I think the macro is improving a little bit.

We have talked a little bit about the illicit vape issue in the country, and I think that this administration is looking a little more favorable on that, meaning that they are going to enforce it. That is a big upside for our convenience segment as well. And then I think the other thing that gives me, you know, great confidence is we continue to grow share. And, you know, not just the big customer wins that we have talked about, but, you know, our street folks are out there. Our independent performance is getting better. And so I think we are going to fare well even if the macro remains pretty challenged.

Patrick Hatcher: Yeah. And, Kelly, to that last point on the outlook, we really did not plan for the macro to improve. Really, what is in the outlook as far as convenience goes is just the excellent business wins that Scott talked about earlier in his remarks. They have just a lot of momentum. They are executing extremely well. So and just as you look at how they finished up Q4, really more of that than, say, that the macro is going to improve as far as the outlook goes.

Operator: Thank you. We will go next to Lauren Silberman with Deutsche Bank. Your line is open. Please go ahead.

Lauren Silberman: Thanks so much and congrats. I wanted just to ask on the independent case growth side. The independent account growth, the 5.3%, does that growth compound over as presumably new accounts come in with smaller basket sizes and then build? Can you just talk about that dynamic as you have seen such strong new account growth and how that translates to increased penetration in future quarters?

George Holm: We look real close at the average customer within our new business versus existing business. And there is not much difference. I mean, it is certainly less, but it is not much less. That is attributed to our salespeople. When they pick up an account, they, you know, they get a big piece of that business right away. The other thing that has been a positive for us is that we have been growing our lines all through this tough period of time. But so far this fiscal year and really most of last quarter, we have been seeing our sales grow as fast as our lines have grown.

Which before we have seen that because they were not buying as much of the product that we sold to them both years. So that has been a real positive for us as well. And then by further beefing up our salespeople, what we found and this is normal, I think, in any environment. It gets really competitive. And the actual channel is not growing. You know, people get more aggressive. And by having the people out there and having our existing people calling on new accounts as we do some splits of the territories. You know, what we found is we are not losing accounts at the rate we were before.

I mean, we feel like we have always been good with that, but when we have single-digit reductions in accounts from the previous year in an industry that has got the kind of turnover that we have, that is a good sign for us. And we have been able to get that accomplished.

Lauren Silberman: Great. Thanks. And then if I could just shift and ask about what you are seeing in the M&A landscape. How your pipeline looks, willingness of potential targets to make deals come to the table? And anything you are considering for '26, or how we should think about that?

George Holm: We feel good about what we have going on right now. We have some nice conversations, some that are actionable. Nothing that I would call in our history, that I would call significant in size. But it is a great market today. I mean, there is a great amount of opportunity.

Patrick Hatcher: And, Lauren, just going back to Investor Day, we talked a lot about our strategy, and I would say our strategy has not changed.

Operator: Great. Thank you, guys. We will go next to Edward Kelly with Wells Fargo. Your line is open. Please go ahead.

Edward Kelly: Hi. Good morning, everyone. Nice quarter. George, I wanted to ask you to maybe just kind of like take a step back on the industry. You have got more, I think, experience here than probably anybody. Things have gotten better. But if we look out, we have tariff pricing that is starting to come in. That is followed by a large refund cycle. I am just kind of curious as to whether you think some of the volatility that we have seen continues? And is your confidence really just around your own ability to, you know, execute against that? But just any color on the bigger picture and how you are thinking about this backdrop would be helpful.

George Holm: Well, the improvement is nice to see. It is still negative. You know, we got mixed today, you know, with a couple of chains that announced. Real mixed results. We have, you know, a lot of casual dining and a lot of them that are really suffering, but there is a couple that have made one a good comeback, one an incredible comeback. So it can still be done out there. But for us to rely on the industry to grow right now, I would not want to do that. I think a lot of it is around pricing. You know, our customers are dealing with a lot of increased costs. And, you know, they had to pass that on.

And I think that is one of the things that, you know, keeps the industry a little lid on it. If it stays as it is now, with what we got going on, I have got a high level of confidence that we will be in that 6% number or better because that is what we are doing today. And I just I mean, it could get worse, I guess. I do not think so. I think that we are going to continue to see just a little better all the time, but I do not see a big jump. And I do not see it in convenience either.

We are very, very large in candy and snacks as an organization. Those prices are up significantly, and, you know, it looks like there will be more and more states that are going to take that out of the SNAP card. So I think that is going to impact us. But if you just throw it all in a bucket and look at it in entirety, I think that we are in the right channels, Ed, and I think it is going to go real well for us.

Edward Kelly: Great. And then I just wanted to follow-up. Maybe for Scott, maybe for Patrick. I am not sure. But on the convenience side, you have some new customer wins coming in. How significant in size is that? And then you mentioned some startup costs sort of early on. So I am kind of curious as to how you are thinking about the cadence of EBITDA growth in convenience as the year progresses and what is a good target in terms of EBITDA growth in that business for the year?

Scott McPherson: Yes, Ed. This is Scott. Obviously, we have called out that, you know, one of those chains will roll on starting in September, the other one in December. It kind of gives you a timing. You know, they will probably roll on over a handful of weeks. We are obviously, for the September one, we are hiring right now. So we are obviously investing in labor and fleet and some facility modification to prepare for all of that. So, you know, we feel like we are in a great position there.

But, obviously, you know, in this, I think our, you know, our profits will be a little bit moderated just, you know, probably Q2, because of the investment that we are making, but I think they will normalize into Q3 and four. You know, we are not going to give a specific target on EBITDA growth for convenience. But, you know, feel really good about their performance in the quarter in 2025 and also in 2026. Feel really good about how they are going to perform.

Edward Kelly: Great. Thanks, guys.

Operator: We will go next to Alex Slagle with Jefferies. Your line is open. Please go ahead.

Alex Slagle: Thanks, and congrats. And I guess just more on the EBITDA margins, which are sort of record across basically all the divisions, and we have talked to a little bit of it. But maybe you could touch on some of the incremental drivers we have not touched so far yet. Is the overall sales mix continuing? Talked a little bit about procurement wins. I do not know if there are any inventory holding gains near term that we saw, but you could kind of touch on some of the other pieces, the profitability.

Scott McPherson: Yeah. I will start there, and maybe Patrick will tag on to this. When I think about margins, you know, across the three segments, you know, mix is probably the number one theme. We had really nice, you know, mix performance in the foodservice segment, obviously, with our 6% independent case growth, that really helps margins. In the food or in the convenience space, it is really about the commodities that we are selling, you know, much more in the foodservice, snack, and candy area, where we are seeing nice growth, nice profit growth. So, really, it is kind of a commodity mix shift there and very similar in the specialty segment as well.

So mix across all three segments was really good. The other thing I would say is we had really nice OpEx leverage across all three segments as well. So all of them are performing well from an operating standpoint, warehouse transportation. Hiring, you know, has been really good. Retention of employees, you know, overtime, safety, you know, feel really good about that landscape. You mentioned the procurement savings. As I mentioned earlier, we feel like that is definitely a part of it. And feel good about the pathway that we are on here.

Patrick Hatcher: Yeah. I will just touch on a couple of things, Alex. One, yes, we are really pleased with the margin improvement we saw in Q4 and full-year fiscal '25. And, you know, are looking forward to continuing that in '26. You brought up inventory gains. Inventory gains were a slight benefit in Q4. But as we look out over 2026, quarter by quarter, we do not expect to see much in terms of gains, and that is what we modeled in our guidance both for Q1 and the full fiscal year.

Alex Slagle: Okay. Great. And just a follow-up. You talked about stability in trends. Which I guess you are seeing that continuing. I mean, that comes at the same time it looks like a good deal of uncertainty and variability with the operators and brands lately. So maybe you can kind of clarify what you are seeing in terms of the stability.

Scott McPherson: Yeah. Alex, I would say, you know, first off, I go to Black Box and just look at traffic. You know, we saw traffic improve sequentially over Q4. And then, as I mentioned, July was really the first positive month. But to your comment, when I look at the QSR segment, when I look at the fast-casual segment, it is a little bit the haves and the have-nots. As George mentioned, you know, those that created a value proposition with, you know, price to value seem to be performing really well. And then we have some other chains that are really struggling in that space. So, you know, that is kind of a blend. We have been very fortunate.

As we mentioned, our chain growth was really strong. We have been very fortunate to partner with some of those more progressive restaurateurs out there, and it has really paid off for us.

George Holm: Yeah. I do a call out for our chain people, both within our broad line and within our opcos that are strictly chain. We gave them, you know, a pretty big challenge. We have some chains that have really dropped off. And, you know, we tend to be very loyal to them, and we hang in there and hope that they come back as we have seen others that have come back. But we challenge them to get themselves in a position where they could handle more SKUs than what they are handling today.

And to go out and get a different type of customer and customers that are in a growth mode, and they have been able to do that. And there is no small feat that took some courage to get done what they got done. And in a real good spot, it was good for Q4. We have got a good bit of time ahead of us where we have some good business in place that does not have sales histories. And they will be a big contributor for us this year.

Alex Slagle: That's great. Thank you.

Operator: We will go next to Brian Harbour with Morgan Stanley. Your line is open. Please go ahead.

Brian Harbour: Yes. Thanks. Good morning, guys. Maybe on that topic, not to make this too macro-focused, but I think you have pretty good perspective. Right? I would say, it is sort of a Black Box comment, but I would say quick service has actually been pretty, you know, uninspiring lately. I know it is kind of better quarter over quarter, but it seems like that is the part of the industry that is a little more challenged. So I am curious, I guess, you like, on the independent side, do you see full service kind of doing better than quick service? Is that, you know, sort of similar to what is going on with chains?

Do you think this is sort of demographics that explain this? Do you think it is just sort of, you know, experiences that are still holding up better? I mean, what would you conclude just kind of looking across your customer base?

George Holm: Just ours been an because where we are doing well and we are not huge in that category, but we certainly have our share. And where we are doing well, it is actually at the top of the market in the higher-priced QSRs. Particularly one in the burger area that is doing great. We have got a couple in chicken that are really, really doing well. But I think that what may be here to stay, there is kind of a what is hot, and if somebody is resonating with the consumer, everybody knows it very quick. Because social media is such a big part of what happens in the chain restaurant business.

And sometimes it is just an item that will bring somebody up to a different level from where they were before. I would agree that if you want to call it casual dining, family dining, sit-down type restaurants. Of late, they appear to be coming back. Not everybody, of course. You know, like I said, social media is a big component here. But it seems like people are doing a little less takeout. Delivery seems to still be big, but not I do not know that it is growing fast. I think people are wanting to get out again and enjoy themselves.

And even with the kind of growth that we are running now, and we do not see that kind of growth in our takeout programs. So I think people are coming back to the restaurants a bit.

Brian Harbour: Okay. Thanks. Can you comment maybe just on, you know, integration of Santiago and Cheney Brothers? You know, is that kind of on track? Is it perhaps ahead of schedule? You know, could you comment on sort of organic growth in those businesses since you have acquired them?

George Holm: Well, we do not do much in the way of integration early with acquisitions. Because we want them to be the ones that drive what type of integration that we do. You know, there are some obvious things that we get done early on that have to be done. But I would say with both of them, that it is moving at a pace that we typically do see. I mean, it is really been for us. Year three just seems to be the year that we tend to take off. We saw that with Reinhart. We are seeing it today with merchants. The legacy merchants companies are just on fire right now, and it took three years.

Cheney and Jose Santiago are both extremely well-managed businesses. I think that after our purchase of Cheney, we saw that market get a lot more competitive, particularly the Florida part of that market. And that is probably, you know, normal in that type of situation. And they did not, for a while there, put out the kind of growth, but now they are back, and they are getting that done again. So we are just so confident in those two companies. But I cannot speak to any significant amount of integration that we have done at this point.

Operator: And we will take our next question from John Heinbockel with Guggenheim.

John Heinbockel: Hey, George, I have a question on your creating Salesforce capacity. Like, individual salesperson capacity, which is great. How do you want them spending their time? And I know this is decentralized. And I wonder because there is such a big opportunity, right, in lines per account penetration. You know, are there some opcos that are doing phenomenally well and thus there are best practices? Because it has been an opportunity that, you know, all of you have kind of struggled with. I wonder, you know, if the Salesforce capacity is put toward penetration, you know, can you guys finally move the needle on in a significant way? Or do you really want them to prioritize new accounts?

George Holm: I think, you know, the additional people that we have added, I think, is helping our penetration, but I think it will help it more as we move forward. Training always, we are going to a lot more online training. But it is very decentralized, and we do a lot of things around best practice. But that is between them or maybe some coaching that comes from Scott or from Steve Broad as to, you know, who to go talk to.

But they run their businesses, and I think that things move in trends within our company, and the trend has been to beef it up to get the more experienced people calling on new accounts and get our people where they have more time to work on penetration because it is certainly the most difficult part of our business today. You know, people are busy. A lot of ordering is done online. And it is less of an opportunity to penetrate better or to pull SKUs from your competitor. This getting time freed up and getting the real experienced talented people out there, I think that is where we are headed.

And I think that would be in just about every company. I think, Scott, you would look at it that way too.

Scott McPherson: Agree.

John Heinbockel: Yeah. Alright. Maybe for Scott, what does the RFP landscape look like, right, on the Core-Mark side? Right? Obviously, that comes in over time. But is that now, you know, sort of is that much larger, right, over the next couple of years? And, you know, I would not think you would lose many of those, particularly, you know, new ones, not ones that you have. How do you think about preparing capacity, you know, for those wins? You do not want to do it too far ahead of time. But where do you stand with that?

Scott McPherson: Well, I can tell you, John, that the most recent wins that we have, we did a great job participating in capacity. We expanded into two new facilities far in advance of getting those customer wins. And had we not done that, we probably would have had to turn that business away. So we are constantly looking at, you know, our capacity across the network of where we think new, you know, new business opportunities may come. And we base that on our relationships with customers and where we think we are going to make the most progress. And to your point, you know, in the convenience landscape, incumbency is pretty powerful.

And so, you know, that is why we are so proud that we have gotten, you know, what I call a handful of really prominent retailers, you know, to choose us as their primary supplier across the country. So feel really good about how the convenience group is performing and how they are servicing their customers.

Patrick Hatcher: And, John, as you know, we have talked about this for several quarters. We continue to invest in CapEx to continue to expand buildings, get new buildings across all three segments. Primarily our focus, as we have said, has been foodservice. But as Scott just alluded to, we have done this in convenience and even in specialty as well.

George Holm: Yeah. I want to make a couple of comments there. You know, we are in three different businesses. We certainly do not have any intention to get any more complicated than we are. It looks complicated, but the people that manage each one of those businesses live and die those businesses. When we say our priority is foodservice, it certainly is. I have a tremendous amount of confidence in how Core-Mark is managed today and the same for Vistar. And when they need CapEx, it is not like they are fighting for CapEx because we are it in another direction. If they have something compelling, we have the confidence in them that they will make good use of it.

And that is what our people in Core-Mark did. I mean, we put two places in exactly the right places in anticipation of the two pieces of business that we got. So once again, I will use that word. That took a lot of courage and a lot of commitment. We have always, in the past, we have also been careful to spend money where we had a tremendous amount of confidence that it was going to get a return. So early on, we replaced almost every Vistar facility. That was our best-run business at the time. Still is extraordinarily well-run and the most profitable.

Then we spent a lot of money where we have big broadliners, and we have gotten a great payback from that. Now what we have done is we have gone in the West where we are very subscale, and we have built new buildings. We have done big additions. That is part of why we have 8.8% more people. We are gearing up there. And I think that we have been so successful with our CapEx that those people have confidence, and we are going to support them. So I have made a comment that I think our CapEx is going to get more back to that pretty consistent seven-tenths of a point of sales.

But if we have opportunities, we will take it higher than that. And if we do not have the opportunities, we are not going to throw money away and invest just for the sake of investing. But I feel real good about what we are doing around gaining capacity.

Operator: Thank you. Our next question comes from Jeffrey Bernstein with Barclays. Your line is open. Please go ahead.

Jeffrey Bernstein: Great. Thank you very much. First question is just on following up on the M&A. Obviously, a macro perspective, still somewhat difficult. I would think it is more challenged for your smaller foodservice distribution peers. I think you mentioned you have a good M&A pipeline, but nothing of significant size. And I think that has been a consistent message. So as an alternative, George, how do you feel about your organic growth specifically as you think about the West Coast, whether you go full speed ahead organic? Or do you prefer to wait for the M&A?

It seems like it is a difficult dance to decide whether to wait versus just pursue the organic, which will presumably take a little bit more time. How do you think about balancing that? And then I had one follow-up.

George Holm: Well, you know, basically, we are betting on organic right now. And I think it is a good bet. Scott, you might want to comment on it as well. But Scott has been very involved with what we have done in the West. But we feel encouraged.

Scott McPherson: Yeah. I would say structurally, we talked a little bit at Investor Day. You know, one of the big challenges in the West of achieving, you know, broader outside of capacity is just our brands. And, you know, that is one of our most powerful tools on the street. And, you know, just having that critical mass in the West has been a challenge. So we have invested in a redistribution facility in the West that will allow us to take brands much more broadly to those opcos. So just, you know, another lever that we can pull as we kind of march that direction.

George Holm: And probably goes without saying. That does not mean that if we had the right opportunity from an M&A standpoint that we would not take advantage of that. And you mentioned smaller ones. I mean, if our people were really committed to some type of fold-in, I guess I would be there. But I have never found that to be a successful route to go. You tend to not hold on to the right percentage of the business. And, you know, we like to do acquisitions where we feel we can hold on to all the business and then grow it from there.

And if you are buying somebody that is a fold-in or, you know, whatever you want to call them, and their SKU base is significantly different, change SKUs, change customers is typically what happens. So we do not have a huge appetite for that. Maybe no appetite at all.

Jeffrey Bernstein: Got it. And my follow-up is more specific to the first quarter. Looks like your guidance for sales and EBITDA was below at least consensus expectations. I am wondering whether we perhaps just mismodeled or there are some unusuals or noise that are impacting results on your end. I know you still have a favorable benefit from both acquisitions before they get lapped. But is there any segment expected to be below the kind of longer-term run rate or any unusuals we should be aware of for the fiscal first quarter? Or perhaps was it just a mismodeling on the street part? Thank you.

Patrick Hatcher: Yeah. No. It is a great question. I appreciate it. So as you look, as you know, the reason we give you the quarterly cadence is exactly for that reason is we want you to better understand the cadence in Q1. And so a couple of things. We actually have lapped the Jose Santiago, but both for Jose Santiago and Cheney, which we will lap in the second quarter, this is their slower period of sales. The summer months are. So the September would be a slower period for them. In fact, for Cheney, July is similar to what January is for the rest of foodservice.

So we just we wanted to definitely give you that Q1 look to help you understand just that cadence. But we really are anchored on the full year. And we feel, like I said before, really confident in our full-year guidance. And, again, it is August, so just starting the year, but we want to give that outlook both for the Q1 and the full year obviously.

George Holm: And, also, want to remind you, and these are both very positive things, but we needed to keep them take them into account with Q1. One is, you know, we are investing very heavily right now in salespeople, and when we do that, we make sure that the compensation to our existing people that suffer because of that and that they are totally on board with moving some accounts and so we, you know, we keep that into account, and that is going to taper off some as we get further into the year. And then we had those startup costs.

I mean, we feel like we are going to have a great year in Core-Mark, but there are very definite startup costs when you are bringing on that amount of business over a fairly short period of time. And we want to be able to, day one, service them as if we have always had the business. So we have got to get those people trained, ready to go, and go through a period of overstaffing in our Core-Mark opco. So those two things we had to take into consideration, and they are good problems to have.

Operator: Thank you. Our next question comes from Peter Saleh with BTIG. Your line is open. Please go ahead.

Peter Saleh: Great. Thanks for taking the question. A little over a year ago, I think you guys were talking about how the breakfast daypart was coming back, particularly, I think, you know, Mondays and Fridays, expected to come back a little bit stronger. Can you just talk a little bit about what you are seeing? Because it seems that daypart continues to lag, at least from what we see from the restaurant space. Just curious as to your perspective and the go-forward expectations on that daypart.

George Holm: Well, I think that Mondays are lunches are, for the most part, back. Friday, no. I would say no. The other thing that happened is a lot of people did not open back up seven days a week if that is what they used to do, you know, when COVID came. A lot of them, I know some personally that found that, you know what? You know, I never made any money Sunday night or Monday night. So why was I open? So, you know, I think that is still having a little bit of a drag because I have seen some of them go back from five days to six days. Not many to seven, at least.

In the non-metro, you know, big metro markets. Would you have some comments beyond that, Scott?

Scott McPherson: I would just add to what you said, I think Monday and Friday are still pressure days. And if you look nationally, return to work, I think the average is somewhere in the, you know, 3.2 to 3.5 range. And people tend to make Monday and Friday the days they are not coming in. So those days are still very pressured, and it tends to be that morning daypart is still the most pressured. Because work hours have also changed a little bit. We see people, you know, across the country coming in a little later. So maybe they are having their coffee at home, doing some things at home before they come to the office.

So still some pressure there, but certainly has improved. And I think that is part of what has helped our independent case growth and helped, you know, to some extent, the macro and convenience and specialty.

George Holm: I look at this every day, and it is I think it is a barometer. But you can tell by our sale of coffee in the convenience that morning daypart traffic is not back to normal. It is still not at 2019 levels.

Peter Saleh: Thank you. Very helpful. Just a follow-up on the new account growth this quarter or maybe just this year. Was there anything specific on the type of cuisine or geographies you are seeing?

Scott McPherson: The only thing I would say about type of cuisine and geography, you know, cuisine-wise, you know, we have performed as we have said on prior calls. Really well in the Mexican space, really well in the foodservice and the convenience space. We have had some success in the Asian space as well. And pizza and Italian, we are holding our own and continue to, you know, that is a big part of our business, continue to do well there. So really, seeing it broadly across the segments.

Peter Saleh: Thank you very much.

Operator: And as a reminder, if you would like to ask a question, you may do so by pressing star one. We will go next to Jake Bartlett with Truist Securities. Your line is open. Please go ahead.

Jake Bartlett: Great. Thanks for taking the question. Mine was on EBITDA margin guidance. I think you are at the midpoint of the '26 guidance, a little bit of less expansion than you saw in '25. And then I believe you are reiterating your three-year targets that you expect a reacceleration or kind of your widening EBITDA margin expansion the next two years. So can you just help us understand that dynamic, whether it is being driven, you know, purely by investments in the Salesforce near term or some of the convenience, you know, investments to bring on those accounts? Any drivers there of the kind of the cadence of the EBITDA margin?

Patrick Hatcher: Yeah. Jake, I will start and see if anyone else wants to contribute. I mean, if you look at it again, we exited '25 with some really nice margin improvement. As we go into '26, we do have some investments as we talked about. We also have some onboarding costs. And then those new accounts that we talked about might have some margin shift as well. Overall, we feel really strongly that, again, it is August. We are looking at the numbers. We are very anchored to them. They are strong numbers in terms of growth. And I would expect that, you know, there is still some room for upside there.

But it does have to do with some of the onboarding new customers and the mix shift.

Jake Bartlett: Okay. And then to follow-up on comments on recent trends. And George, I believe you said that July, there was an uptick, but you are also talking about 6% independent organic case growth similar to the second quarter. So maybe just kind of clarify or you expect a slight deceleration from July or maybe the July uptick was not too material? Just trying to understand the cadence of what you are expecting going forward.

George Holm: No. I think we are just being cautious. July and the first two weeks of August are a good bit better than Q4 was. And the two weeks of August are even better than what July was. But we are cautious. You know, it has been a volatile market. But all in all, we feel good. I will make a couple of comments back to the EBITDA margin too. You know, we are bringing on two significant convenience accounts. And the product makeup of convenience is totally different. And that affects us in entirety. And if you go back to where we started, without having convenience, we were less than a 2% EBITDA.

And we have reworked this business over several years. If you took out convenience, we were at three and a half, and we still have a substantial chain business. Get outside of our chains, we do not have noncommercial business, which, you know, is for the most part better business, and it is not something that is our focus today. It will be anytime in the near future. But if you take out convenience, but you leave all of the corporate overhead in there, we are above three and a half. And that is huge progress for us, particularly with the kind of mix of business that we have.

Our big broadliners, of which we have many, they are over five. We do not look at it that close, but we are going to continue to put a bigger portion of our gross profit dollars to the bottom line, but we are not maniacally focused on that. A lot is just where our mix of business comes in effect. Now we have always grown it, but we have always had a better mix of business. Can we count on that forever? I am not sure. It just depends on what opportunities lay out there.

Jake Bartlett: Great. I really appreciate it. Thanks.

Operator: This does conclude today's question and answer period. I will now turn the program back over to Bill Marshall for closing remarks.

Bill Marshall: Thank you for joining our call today. If you have any follow-up, please reach out to Investor Relations.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

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