US Foods Holding Corp.

Good morning and welcome to U.S. Food's second quarter 2026 earnings conference call. At this time, all participants have been placed in a listen-only mode. A question-and-answer session will follow the speaker's prepared remarks. In order to ask a question, please press star followed by the number one at any time. We ask that you please limit yourself to one question and a follow-up. I will now turn the conference over to Mike Neese. Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to U.S. Food's second quarter fiscal 2026 earnings call. On today's call, we have Dave Flitman, Chair of the Board and CEO, and Dirk Locascio, our CFO. We will take your questions after our prepared remarks conclude. Please limit yourself to one question and one follow-up. Our earnings release issued earlier this morning and today's presentation can be found on the Investor Relations page of our website at ir.usfoods.com. During today's call, unless otherwise stated, we're comparing our second quarter fiscal 2026 results to the same period in fiscal year 2025. 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, are the potential factors that could cause our actual results to differ materially from those anticipated in forward-looking statements. Lastly, during today's call, we will refer to certain non-GAAP financial measures. All reconciliations to the most comparable GAAP financial measures are included in the schedule's owner earnings press release as well as in the presentation slides posted on our website. We are not providing reconciliations Thank you. I'd like to turn the call over to Dave.

Thanks, Mike. Good morning, everyone, and thank you for joining us. Before we begin, our thoughts are with our associates, customers, and communities impacted by the devastating wildfires in Spokane, Washington. While our operating facilities were thankfully not impacted, we have three associates who tragically lost all or a portion of their homes. The U.S. Foods family is rallying to support them, our customers, the affected communities, and the brave firefighters and first responders serving on the front lines. At the same time, we remain focused on the safety of our associates while actively supporting our customers through our business continuity plans. With that, let me turn to our second quarter performance. Starting on slide three, we delivered a strong quarter. with record adjusted EBITDA and adjusted EBITDA margins, and another quarter of double-digit adjusted EPS growth. Importantly, independent restaurant case growth of 5.1% was the strongest since the fourth quarter of 2023 and marks our fifth consecutive quarter of acceleration, despite persistent pressure on industry foot traffic. Additionally, healthcare grew 3.5% and hospitality grew 4.4%. We also gained share with our target customer sites, marking our 21st consecutive quarter of shared gains with independent restaurants and our 23rd consecutive quarter of shared gains with healthcare. Within independent restaurants, our momentum is strengthening, supported by healthy new account growth and improved penetration with existing customers. This top line momentum translated into strong financial performance. We grew adjusted EBITDA 10%, and adjusted diluted EPS 21% through a combination of volume growth and 29 basis points of margin expansion to a record 5.7%. Our strong and accelerating cash flow generation provides substantial financial flexibility and during the quarter, we invested in key growth initiatives while repurchasing more than $370 million of shares. underscoring our commitment to creating long-term shareholder value. Just as important as our financial results is how we are achieving them. Across the business, our teams are applying a continuous improvement mindset while leveraging investments in technology, including artificial intelligence, to raise customer service levels, improve productivity, and create a stronger foundation for sustainable long-term growth. These efforts are strengthening our competitive position and creating additional opportunities to deliver value. I'll provide more details on our AI capabilities a bit later. This quarter represents one of our strongest since I joined US Foods three and a half years ago. As we navigated a dynamic and volatile environment during the second quarter, our team stayed focused on controlling what we could control while acting decisively in response to what we could not. I am incredibly proud of our team for delivering these results through outstanding execution in what remains a challenging operating environment. As we look to the balance of 2026, we will remain grounded in disciplined execution and focused on the actions that will strengthen our business. We are also committed to further strengthening the competitive advantages that differentiate our business while delivering consistent volume growth, double-digit earnings growth, and long-term value creation for our shareholders. I thank our 30,000 associates for their unwavering commitment to delivering excellence in serving our customers and to pursuing our ambition to become the undisputed best in our industry. The strength of our team is what reinforces my confidence in our continued success. I'll now highlight the progress we made in the second quarter under each of our four strategic pillars. Dirk will then provide additional detail on our second quarter financial performance and full year guidance. Turning to slide four, our strong culture is a competitive differentiator. We remain focused on keeping our people safe, investing in their development, and building an empowered workforce that supports our long-term growth. Taki remains our top priority, and we are making meaningful progress in protecting our associates while strengthening our operations. In fact, we have improved our injury and accident rates by over 50% over the last three and a half years. Aiding this improvement is the deployment of approximately 2,500 center-ride pallet jacks across our distribution network. Our rollout is now 87% complete, and we anticipate full deployment by the end of this year. This investment is reducing exposure to one of our most serious workplace hazards and reflects our ongoing commitment to providing a safer work environment for our associates. Where we have converted to center-ride pallet jacks, the most serious injuries associated with this type of equipment have essentially been eliminated. Our commitment to building a strong culture also extends to talent acquisition and development. During the second quarter, we launched our Valor campaign to advance our Mission 2030 goal of hiring 3,000 military veterans by the end of the decade. Through Valor, we are expanding our veteran recruiting efforts with a dedicated webpage, new strategic partnerships, and ongoing investments to recognize and support the more than 1,500 and growing number of veteran associates already contributing to our business. Veterans bring proven leadership, a strong work ethic, discipline, and teamwork to U.S. foods, and we are honored to support those who have served while strengthening our workforce for the future. Our focus on people is also reflected in our recently published 2025 Sustainability Report, which highlights our progress across key focus areas and our commitment to building a stronger and more sustainable business. In 2025, we invested 1.2 million hours in training to build critical skills, develop leaders, and equip our teams to execute at a high level. I encourage you to read the report on our website to learn more about our sustainability journey and the initiatives we have underway across the business. Moving to slide five in our service pillar, we strive to deliver a best-in-class customer experience by continuously improving the consistency of our service reliability across our network. A key measure of that progress is Operations Quality Composite, or OpsQC, which tracks our ability to deliver accurate, error-free orders to customers. In the second quarter, OpsQC improved 13% compared to the prior year, and over the last two years, it has improved 37%, Reflecting disciplined execution and ongoing improvement work in this important customer experience metric. Additionally, earlier this year we began testing autonomous inventory scanning robotics in one of our warehouses and the early results have been encouraging. We believe this technology will help to further improve inventory accuracy and warehouse efficiency. Based upon the results of the pilot, we plan to expand testing to six additional locations by year end. Our focus on operating discipline is improving our efficiency and strengthening our customer value proposition by helping us deliver the reliable, consistent service our customers count on and deserve every day. Now, let's turn to our growth pillar on slide six. We are consistently accelerating profitable growth and Danny MarketShare across our target customer types, highlighting the durability of our model during times of macro uncertainty. I'm very pleased with the progress we've made over the last five quarters in accelerating our independent restaurant case volume growth. Pronto, our small truck delivery service, is a key enabler of that growth and remains a powerful competitive differentiator. Through Pronto, we provide customers with greater convenience and flexibility including later cutoff times, smaller order sizes, and more frequent deliveries. This opens up our addressable market by enabling us to compete more effectively with local and specialty distributors. We're expanding the reach of Pronto, which is now live in 52 markets. At the same time, Pronto Next Day, which extends the service to our existing independent customers, is now live in 35 markets, with plans to add an additional eight markets this year. The overall Pronto program is growing at strong double-digit rates. After delivering $1 billion in sales in 2025, we estimate Pronto will deliver approximately $1.3 billion in sales this year. Based on our recent success, we now believe Pronto can generate more than $1.7 billion in sales in 2027, up from our prior estimate of $1.5 billion. Moving now to our sales compensation change. Our new seller compensation plan successfully went live across the company in June, an important milestone to further align our sales force incentives with our business strategy and long-term growth objectives. Early results are very encouraging. We are already seeing positive indicators in seller engagement that are consistent with our strategy and key growth priorities. Sellers understand how to maximize their earnings, have confidence in the plan and their leaders, and are moving quickly to align their actions and behaviors in ways that will accelerate long-term profitable growth. Year-over-year attrition remains flat, which we believe reflects our robust investment in seller training, sales leader preparation, and clear, ongoing communication and support over the last year and throughout implementation. As we have previously discussed, we've taken a very thoughtful approach to this transition, and it may take two to three years for the majority of our local sales force to fully transition to 100% variable compensation. Together, Ponto and our seller compensation change underscore our confidence in our ability to accelerate profitable growth and drive further share gains with independent restaurants. Finally, our healthcare and hospitality businesses, which represent over 25% of total sales, continue to deliver strong performance. Backed by a strong pipeline and the success of our vitals and signature programs, we see meaningful opportunities to drive growth through the remainder of 2026 and into the years ahead. Now let's move to our profit pillar on slide seven. Our disciplined execution and self-help initiatives drove another quarter of possible growth and margin expansion. Adjusted EBITDA grew over 10% to a record $604 million, and EBITDA margin expanded by 29 basis points to a record 5.7%. Strategic vendor management remains a key contributor to margin expansion and a clear example of our self-help initiatives delivering measurable value. During the first half of the year, We generated more than $50 million in additional cost of goods savings, and we are highly confident in our ability to deliver more than $300 million over the three-year long-range plan ending in 2027. We are also driving measurable value from our initiatives in inventory management and indirect spend. For inventory management, we expect to generate an additional $10 million of gross profit benefit in 2026. Building on the $35 million realized last year. Importantly, this work is also improving in-stock performance, product quality, and service levels for our customers. In the area of indirect spend, we completed the baseline deployment of our new indirect procurement system during the first half of this year, creating a stronger platform to capture additional savings. Here to date, we generated more than $20 million in incremental savings, and we expect this initiative to deliver more than $75 million of benefit this year. We remain on track for over $100 million of savings in 2027. Next on slide eight, I'll highlight the ways we are leveraging AI to further widen our competitive moat. AI is embedded in the way we serve our customers, enable our sales force, optimize our supply chain and manage core enterprise functions. Our approach remains focused on deploying AI against the highest return opportunities and tying those initiatives to measurable business outcomes. The key area of focus is Salesforce productivity. Visit Assistant Insights is an internally developed AI-enabled tool that provides sellers with customer-specific insights to identify priority opportunities Improve sales call preparation and make those visits more productive. By streamlining the preparation work that sellers would otherwise do on their own, Visit Assistant allows them to spend more time engaging with customers. In the first six weeks, the tool delivered more than 700,000 actionable insights to our sellers across independent restaurant accounts. As the AI model continues to learn and scale, we expect these insights to become increasingly valuable, supporting stronger sales execution, deeper customer engagement, and sustained growth over time. In parallel, we are piloting our AI Sales Assistant, known internally as SUE AI Assistant, which is a generative AI-powered chatbot that enables sellers to ask questions and receive real-time answers, insights, and recommendations directly within their daily workflow. We are also applying AI across our supply chain. AI-driven product demand forecasting, labor planning and Descartes routing are helping improve service and productivity while reducing working capital. Better forecasting supports stronger in-stock performance and less waste while more efficient routing enables better delivery execution and fewer miles driven. When we talk about AI, we are talking about practical capabilities embedded in our core business processes that are already improving how we operate. While we are still in the early innings, we see meaningful opportunities to deepen our differentiation, accelerate volume growth, and improve our supply chain productivity. Of course, technology and stronger processes only create value when paired with talented associates who bring them to life every day. I saw that firsthand at my third annual CEO award ceremony where we celebrate associates who ignited excellence across U.S. foods while exemplifying our cultural beliefs. One of those outstanding associates was Lori Miracle, who is the manager of inventory control in Tampa and received a CEO award. Lori and her team streamlined South Florida's inventory tracking efforts by getting to the root cause of over shipment occurrences and building a new system for tracking inventory discrepancies that enabled real-time selector coaching to stop future errors. Her work optimized product recovery, reduced excess stock, and improved receiving accuracy, generating $4 million in annual inventory adjustment savings in her area. Her processes have been scaled company-wide and are now used across all markets. Thank you, Lori, for your commitment to embracing our cultural beliefs of deliver excellence and stop waste to drive meaningful cost savings. With that, let me now turn the call over to Dirk to discuss our second quarter financial performance and 2026 guidance.