US Foods Holding Corp.

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 a second time. Thank you, and I will now turn the conference over to Mike Neese, Senior Vice President of Investor Relations. You may begin.

Thank you, Abby. Good morning, everyone, and welcome to U.S. Foods' third quarter fiscal 2025 earnings column. On today's call, we have Dave Flipman, 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 in today's presentation can be found on the IR page of our website at ir.usfoods.com. During today's call, unless otherwise stated, we're comparing our third quarter of fiscal year 2025 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 reconciliation to the most comparable GAAP financial measures are included in the schedules on our press release, as well as in 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 with our third quarter and first nine months results. I'll then hand it over to Dirk to review our third quarter financial results and our updated fiscal 2025 guidance. Turning to slide three, we delivered strong financial results for both the third quarter and year to date. Our performance aligns with our long range plan algorithms, underscoring the strength of our execution. For the first nine months, we delivered 4.4% net sales growth, 10.9% adjusted EBITDA growth, 29 basis points of adjusted EBITDA margin expansion, and 26.7% adjusted EPS growth. These results reflect our team's focus on and ability to consistently deliver sustainable growth, which is a testament to our operational rigor and long-term value creation. I thank our associates for their commitment to our customer success and to serving them with excellence. Moving to slide four, we delivered a double-digit adjusted EBITDA increase this quarter alongside a notable acceleration in independent case growth. These results demonstrate our continued ability to deliver earnings growth through consistent share gain and margin expansion. Now that we're a quarter of the way into our three-year long-range plan, I'm even more confident in achieving our algorithm. We're focused on delivering long-term shareholder value and disciplined capital allocation, investing for growth while executing share repurchases, and targeted tuck-in M&A. Today, we announced an agreement to acquire Shitakis, an independent food distributor based in Las Vegas with strong market share in casinos and independent restaurants. This is our fifth acquisition in two and a half years and aligns perfectly with our Tekken M&A strategy. Now let's turn to our case growth and the industry backdrop. We gained share with independent restaurants again this quarter as case volume grew 3.9% in line with our full year guidance range of 2 to 5%. Notably, we gained share each month of the third quarter. Independent case growth accelerated by 120 basis points from Q2 to Q3, reflecting strong momentum and outperforming the broader market. We exited the quarter on a high note as we grew approximately 4% on an organic basis in September, and that momentum carried through October. During the third quarter, we achieved our strongest performance of the year in net new independent account wins. which grew approximately 4.4% over the prior year. This was our highest net new account growth rate since the second quarter of 2023, and we expect this momentum will continue. Additionally, healthcare and hospitality are helping to drive our overall volume growth with 3.9% and 2.4% case growth, respectively. We have new business wins in both customer types coming on board throughout the fourth quarter, supporting further growth. We continue to gain market share with our target customer types of independent restaurants, healthcare, and hospitality. This is our 18th consecutive quarter of market share gains with independent restaurants and the 20th consecutive quarter with healthcare. Turning to our chain business, volume declined by 2.4%, a 160 basis point sequential improvement over the second quarter. That acceleration was ahead of restaurant industry foot traffic, as reported by Black Box, which improved roughly 60 basis points, but was still down half a percent in the third quarter. Turning to our strategy, we are guided by our four strategic pillars, and I will discuss progress on each over the next several slides. Moving to slide five, our first pillar is culture. We remain committed to achieving zero injuries and accidents for our associates. In the third quarter, our injury and accident rates improved by 16% compared to the same period last year. And over the past two years, we have improved our safety performance by 35%. There is still work to be done, and we will keep pushing forward to ensure every associate goes home safely every day. We're proud to announce a new partnership between U.S. Foods and Hiring Our Heroes, a nationwide initiative of the U.S. Chamber of Commerce Foundation dedicated to connecting transitioning service members, veterans, and military spouses with meaningful career opportunities. This partnership will accelerate military hiring and reflects our deep commitment to honoring military service and strengthening our workforce with the talent leadership, and dedication that veterans and military families bring to companies like U.S. Foods. Turning to slide six, our second pillar, service. We remain focused on providing reliable, on-time deliveries that customers can count on. Our commitment to service excellence is reinforced by our flagship MOXIE e-commerce platform, which enables us to deliver a transparent, best-in-class experience tailored to the evolving needs of our customers. Broadly, we are deploying AI across our business to enhance the experience of both our customers and our associates. This includes within Moxie, where this quarter we launched AI-powered search, a significant upgrade that's already delivering measurable results. Customers are finding products faster and more intuitively, leading to a 3% higher conversion rate of products added to their cart and purchased. resulting in approximately 1.3 million incremental cases on an annualized basis. Importantly, this upgrade is also improving seller productivity by surfacing more relevant and higher quality search results. Turning to supply chain, we are improving routing productivity through the Descartes rollout across our distribution network. We are now live or actively deploying in all markets. In Q3, we achieved a 2.3% improvement in cases per mile compared to last year. Our UMass deployment is delivering value across our safety, service, and profitability key results. We continue to make meaningful progress on our operations quality composite, which measures our ability to deliver products to our customers without errors, with performance improving by 24% compared to the prior year. These results reflect our commitment to improving our customer service experience. Turning to slide seven, growth. We're accelerating profitable growth and expanding market share across our target customer types. A key driver of this growth is our Pronto small truck delivery service. The Pronto program is now expected to deliver approximately $950 million in sales this year in more than a $1 billion run rate. by year-end. Pronto Legacy is now live in 46 markets, with plans to expand into three more markets next year. Significant growth opportunity remains as we add more trucks to many of these markets. In parallel, we expanded Pronto Penetration to more than 20 markets, deepening our share of wallet with current customers. This initiative doubled delivered a double-digit percent uplift in overall case growth among participating customers during the third quarter. Given the success of Pronto, we plan to make our largest annual investment in the program in 2026 to fuel future growth. In addition to Pronto, we continue to invest in the business to support growth and drive operational efficiencies. As we discussed last quarter, We began limited shipping from our first new semi-automated facility in Aurora, Illinois, and we continue to ramp up volume served out of this facility. To date, we have transitioned approximately 50% of the volume out of our former facility into Aurora and expect to be fully operational over the next several months. We will leverage our early learnings and use these insights to help guide our approach as we plan and execute future semi-automation rollouts in select distribution centers. In August, we held our Food Fanatics Live Show, which was our largest customer event ever. We hosted more than 3,500 customers and prospects over two days, showcasing each area of our customer value proposition. We expect more than $150 million in potential new customer wins coming out of this event, with nearly half of that realized to date. Additionally, we're in the process of onboarding more than $100 million of annualized new business wins in healthcare and hospitality by leveraging our expertise, differentiated model, and unique digital capabilities. Our tools and technology, like our vitals program, which is our proprietary technology suite that helps healthcare operators solve some of their biggest challenges, are easy to use and generate real results. For example, this year we're on track to complete approximately 4,500 individual customer interactions leveraging tools within Vitals, which helps our customers save 5% of their total costs on average. Looking ahead, we believe that we will further accelerate our profitable growth and share gain momentum through two important changes. One to our seller's compensation structure and one to our team-based selling approach. Starting with sales compensation. In January of 2024, we returned to a 50-50 split between base salary and variable compensation for our local sellers, reinstating the structure we had in place prior to COVID. Otherwise, the core sales compensation framework has remained largely unchanged for the past eight years. Over the past year, we've conducted a thoughtful review of our sales compensation model through the lens of further accelerating growth while fueling seller success. We're excited to announce that we will be transitioning to a 100% variable compensation structure for our local sellers. The new incentive structure will continue to be based on gross profit dollar growth with their total compensation uncapped. Additionally, The new compensation model will reward sellers for accelerating independent case growth, private label penetration, and pronto volume growth. We're conducting pilots in several markets during the fourth quarter, and we will use those learnings to inform our full deployment in early 2026. We believe these changes will accelerate profitable volume growth while creating greater earnings potential for our sales force. In parallel, we've streamlined our team-based selling model to better reflect what customers value most from U.S. foods and where we truly differentiate quality products, excellent service, and industry-leading technology. As part of this change, we've transitioned individuals in some sales support roles into customer-facing seller positions, bringing our expertise closer to the customer. Initial feedback from our sales team has been positive on both the compensation change and the role realignment. Moving to slide eight, our profit pillar. Our consistently strong execution resulted in adjusted gross profit growth in the third quarter and across the first nine months of the year. Third quarter, adjusted gross profit reached $1.8 billion, a 6.4% increase over the prior year. This growth was fueled by increased volume, improved cost of goods, and inventory management. Our strategic vendor management initiative is now on track to deliver more than $120 million in cost of goods savings for 2025. These results reflect our disciplined approach to sourcing and supplier partnerships. As we realize these benefits, we're reinvesting a portion of the savings to fuel growth by supporting innovation, expanding customer relationships, and strengthening our competitive position in the market. Private label penetration among our core independent restaurant customers grew again this quarter and was over 53%. By helping customers offset inflationary pressures with lower costs, our private label offerings continue to strengthen loyalty and differentiate U.S. foods in a highly competitive market. We are also improving operating expense productivity through UMOS and our enterprise routing initiatives, including market-led routing and our Descartes deployment. These initiatives help support our ongoing commitment to driving 3% to 5% annual productivity well into the future. In summary, I am pleased with the progress we made in the first nine months against the four pillars of our strategy and remain confident in our ability to deliver on our long-range growth algorithm. Before I pass it to Dirk, I want to recognize one of our outstanding associates, a veteran of the U.S. Marine Corps, Kevin Connolly. As warehouse manager at our Albany, New York distribution center, Kevin has been instrumental in driving operational excellence. Since stepping into the role nearly a year ago, he's led improvements in cross-functional communication and execution across sales, inventory replenishment, and operations. By elevating key frontline deliverables of operational quality composite and inventory accuracy, Kevin and his team have successfully reduced errors and delivered year-over-year improvement in shrink, a testament to disciplined leadership and a commitment to continuous improvement. As a result, the team successfully reduced errors per thousand and delivered a significant improvement in inventory management within the Albany facility. As Veterans Day approaches next week, we pause to honor and recognize the members of our team who have served in the U.S. Armed Forces. We are incredibly grateful for your selfless service and your personal sacrifice for our country. Thank you, Kevin, and thank you to every veteran, past and present. Your courage and dedication inspire us all. Let me now turn the call over to Dirk to discuss our third quarter results and our updated 2025 guidance.