United Natural Foods, Inc.

answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Steve Bloomquist. Steve Bloomquist, you may begin your conference.

Good morning, everyone, and thank you for joining us on UNFI's second quarter fiscal 2024 earnings conference call. By now, you should have received a copy of the earnings release issued this morning. The press release and earnings presentation, which management will speak to, are available under the investors section of the company's website at www.unfi.com. We've also included a supplemental disclosure file in Microsoft Excel with key financial information. Joining me for today's call are Sandy Douglas, our Chief Executive Officer, and John Howard, our Chief Financial Officer. Sandy and John will provide a business update, after which we'll take your questions. Before we begin, I'd like to remind everyone that comments made by management during today's call may contain forward-looking statements. These forward-looking statements include plans, expectations, estimates, and projections that might involve significant risk and uncertainties. These risks are discussed in the company's earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements. And lastly, I'd like to point out that during today's call, management will refer to certain non-GAAP financial measures. Definitions and reconciliations to the most comparable GAAP financial measures are included in our press release and the end of our earnings presentation. I'd ask you to turn to slide six of our presentation as I turn the call over to Sandy.

Thanks, Steve. We appreciate everyone joining us for our second quarter call. In my remarks this morning, I'll provide a brief review of our results, the operating environment, and the progress we're making resetting and restoring our profitability and driving sustainable value creation for our customers, suppliers, and our shareholders. I'll also discuss this morning's other release in which we announced that Matteo Tarditi will be joining UNFI later this spring as our new president and CFO. Our second quarter results again exceeded expectations and reflected a sequential improvement in adjusted EBITDA. This resulted from continued improvements in operational execution, progress on our near-term value creation initiatives, and some seasonality benefits. We accomplished this despite an industry backdrop that continues to be challenging. Inflation rates continue to decline sequentially with some category specific deflation occurring. Despite this trend, overall unit volumes remain under pressure and increased competition in food retail persists. Following a prolonged period of high inflation, consumers are continuing to buy less and are shifting some purchases away from the traditional grocery channel. This has led to negative volumes across the retail food industry and share gains by mass merchandisers and discounters. Given these challenges, we are focused on strengthening and adding new capabilities in addition to driving increased efficiency across our business so that we can help our customers remain as competitive as possible. Many of our customers are performing well, even in this environment, especially those with differentiated go-to-market propositions. Importantly, we see successful food retailers positioned across the value spectrum in both large and small markets and in natural and conventional channels. No matter how our customers are positioned in their markets, we're focused in supporting them and their unique strategies with improved efficiency, service levels, and market intelligence, as well as with the introduction of new products, well-executed promotions, merchandising expertise, and professional services. Similar to how our customers are setting themselves apart and creating significant value for consumers in their communities, UNFI continues to differentiate itself through continuous improvement. This includes refining operational execution, maintaining a broad diversified assortment, providing value-added services that drive cost savings and help generate growth for retailers, and driving supply chain efficiencies that are optimized with industry scale. We're working to realize this potential by embedding a transformation mindset across our business focused on driving improved profitability, cost management, innovation, and service levels across the short and long term. Over the last several months, we've actioned approximately $150 million in cumulative annualized savings from the near-term efficiency initiatives. and we see opportunities to further refine and lower our cost structure. We realized additional incremental SG&A efficiencies, which are expected to benefit future profitability, while also improving our service levels and making it easier to do business with UNFI by streamlining our business. We're continuing to review our organizational composition to ensure that we are structured in a way that allows us to be focused with the needed skill sets, technology, and insights to best drive profitability and growth for UNFI customers and suppliers. We've also continued to embed improved supply chain processes and management disciplines to drive significant improvement. For example, we've achieved significant reduction in shrink. Net shrink as a percentage of sales declined both sequentially from the first quarter as well as compared to the prior year period. with shrink reduction meaningfully surpassing our prior expectations in the quarter. Importantly, we believe there's still room for further improvement. In addition to these improvements aimed at delivering near-term profitability gains, we are working to improve our commercial go-to-market programs to better connect suppliers and enhance their ability to see, invest in, and rapidly capture win-win merchandising opportunities with our shared customers. These program improvements are expected to significantly reduce operational friction, and over time we believe it will help maximize supplier investment in our customers, which should enable them to accelerate their own profitable growth while helping UNFI to simplify our business model, drive savings, and ultimately support sustainable, profitable growth. We've continued to progress on key transformation investments, that are expected to structurally increase our efficiency and service levels. The automation project at our Centralia Distribution Center remains on track to go live later this fiscal year, as does the realignment and optimization of our northeastern distribution network currently in progress. These projects are expected to drive operational savings, increase fulfillment accuracy, and create higher capacity in these geographies. We're also continuing to evaluate paths to reduce the near-term and long-term capital intensity of our distribution centers and will continue to be focused on optimizing the free cash flow profile of our network. Additionally, we've also driven significant improvement to the online tools our customers use, which is creating a more seamless ordering experience. We remain focused on the path to driving compelling long-term value creation by transforming the efficiency, profitability, and service levels of our business. We plan to build on the progress we've made so far this year as we move into the second half of fiscal 2024. I remain confident in the opportunities that we've already begun to action to create enduring value for all our stakeholders, especially our shareholders. Importantly, while the external environment remains challenging, it continues to gradually become less volatile. which provides us a clearer look at the long-term trajectory of our industry and our business. And this provides a productive backdrop for our management and board-led finance review that we announced on our fourth quarter call, which remains ongoing. The group of directors leading the review on behalf of the broader board includes our chairman, the chair of our audit committee, and the three newest members of our board who joined last September. This group brings strong backgrounds and experience in finance, business transformation, and strategic planning, and are actively involved with our management team in assessing a broad range of potential opportunities for meaningful value creation. We'll plan to provide timely updates as the process moves forward. Before I turn the call over to John, let me take a moment to thank him for his years of service and leadership. John helped UNIFI navigate the challenges of a global pandemic, and I have appreciated his counsel and partnership during my time at the company. I know he will be a helpful partner to Matteo, too, as he works to enable a quick and smooth transition during his onboarding. As I've said several times in the past, our philosophy is to recruit talented leaders who can help us execute our strategy and move the business forward. Mateo is a proven and experienced finance executive who has served as CFO of several of the largest reportable segments at GE. He has extensive operating company experience and has consistently delivered results and proven to be adaptable to different businesses. He has also previously executed several transformations. I believe this experience, combined with his strong background in process excellence, is an important complement to the existing efforts that we have put in place to reset and improve our profitability. It also positions him well to augment the momentum we are building in our customer and merchandising capabilities across our existing organization. John will remain with UNFI until the end of May to help onboard Mateo and ensure a smooth transition. With that, let me now turn the call over to John for his remarks. John?