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Sysco Corporation (SYY) Q1 2022 Earnings Call Transcript

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SYY earnings call for the period ending September 30, 2021.

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Sysco Corporation (SYY 0.59%)
Q1 2022 Earnings Call
Nov 9, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Sysco's First Quarter Fiscal 2022 Conference Call. [Operator Instructions] We will begin with opening remarks and introductions.

I would now like to turn the call over to Neil Russell, Senior Vice President of Corporate Affairs and Chief Communications Officer. Please go ahead.

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Neil Russell -- Senior Vice President-Corporate Affairs and Chief Communications Officer

Good morning, everyone, and welcome to Sysco's First Quarter Fiscal 2022 Earnings Call. On today's call, we have Kevin Hourican, our President and Chief Executive Officer; and Aaron Alt, our Chief Financial Officer. Before we begin, please note that statements made during this presentation, which states the company's or management's intentions, beliefs, expectations or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes but is not limited to risk factors contained in our annual report on Form 10-K for the year ended July 3, 2021, subsequent SEC filings and in the news release issued earlier this morning. A copy of these materials can be found in the Investors section at sysco.com. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures are included at the end of the presentation slides and can also be found in the Investors section of our website. [Operator Instructions]

At this time, I'd like to turn the call over to our President and Chief Executive Officer, Kevin Hourican.

Kevin Hourican -- President and Chief Executive Officer

Thank you, Neil. Good morning, everyone, and thank you for joining our call. This morning, I'll discuss Sysco's steadily improving financial results. I'll provide an update on our business transformation. And finally, I'll provide some color on the current state of our business environment. I'll then turn it over to Aaron who will discuss the details of Sysco's first quarter financial results. Let's get started with our financial results displayed on slide four. Earlier this morning, Sysco reported first quarter fiscal 2022 results that were fueled by substantial top line momentum that continues to exceed our expectations. Our top line results sequentially increased each month of the quarter despite the presence of the Delta variant and have continued to improve into October. Our sequential improvement in sales and volume is a clear statement of our supply chain strength and our ability to win meaningful market share in this climate. We are pleased with the top line results, and our flow-through to the bottom line exceeded our expectations for the quarter. This strong start gives us confidence in reaffirming our guidance for the full year. Key headlines for the quarter include a growing top line that improved sequentially throughout the quarter and continued growth through October, as seen on the right side of slide four.

Q1 represented another period of strong net new business wins for Sysco at both the national and local level. These customer wins will fuel our success in quarters and years to come. Customers are responding to Sysco's relative supply chain strength, our new purpose platform and our improving capabilities driven by our Recipe for Growth strategy. All told, we delivered sales growth of 8.2% versus 2019. We outperformed our fiscal 2022 growth goal of 1.2 times the market in the first quarter, delivering the strongest growth versus the market in the last 5-plus years. We believe additional growth is still in front of us at Sysco as our volume is yet to fully recover in certain segments, such as hospitality, business and industry, foodservice management and international. As these segments recover, additional momentum will be added to our business. We are preparing now for select segments to further recover in early 2022 by strategically placing inventory and bolstering our staffing levels. For example, we anticipate that our business and industry segment will see upward momentum in January as select customers plan to reopen their offices at that time. International travel restrictions are beginning to ease, which should benefit our hospitality sector in specific regions of our business. Our operational expenses for the quarter increased due to higher volumes, elevated overtime rates and in intentional expenditures that were targeted to improve our staffing health.

We invested in incremental marketing to advertise open positions. We provided new associates with sign-on bonuses and provided referral and retention bonuses to existing staff. We anticipate that these expenses will continue in our second quarter and that we can make progress in reducing the level of investment in the second half of our fiscal year. Our profit flow-through from the top to the bottom line should improve as a result in the second half. Gross margin for the quarter was impacted by a high rate of inflation, which increased to approximately 13%. We expect inflation to continue at a similar rate through the second quarter before beginning to taper later in the fiscal year. Given current trends in the industry, we expect the tapering will begin further into the fiscal year than we had initially modeled. Our international business continues to show strong improvement. We have improved from posting a loss in Q3 of 2021 to breaking even in Q4 to making more than $60 million of adjusted profit in our Q1 of fiscal 2022. It is important to note that our international business is skewed to large contract customers that are still heavily impacted by COVID. For example, we over-indexed in Europe in the business, industry and travel segments that remain constrained versus 2019 levels.

As such, the relative sales performance in the international sector still lags that of the U.S. segment. However, it also conveys that we have additional recovery still in front of us internationally. Our Recipe for Growth strategy will enable our international business segment to improve how we serve local customers over time. And we anticipate a shift in our customer mix to the more profitable local sector as we progress on our three-year strategic plan. In summary, we delivered very strong top line results, increased profit per case shipped and experienced elevated operating expenses that increased our cost to serve. The combination of these results delivered a strong adjusted operating income for the quarter of $685 million and adjusted earnings per share of $0.83. Both results exceeded our expectations for the quarter and position Sysco to deliver our full year guidance. Aaron will provide more details on our financials shortly, but we are pleased to be off to a strong start in the new fiscal year. Topic 2, let's turn to our business transformation, which is highlighted on slide five. As important as our strong quarterly financial results, our business transformation remains on track, and I will highlight a few examples of our progress this morning. Our pricing project implementation is now substantially complete.

The centralized pricing tool enables Sysco to strategically manage the high levels of inflation we are currently experiencing with disciplined and strategic control. We can determine, at the customer item level, exactly what level of inflation to pass through. We can optimize the pass-through to balance profitability and sales growth. There is no better time than the present to have this powerful capability. Longer term, the pricing tool will enable us to accelerate sales growth profitably as we optimize pricing to increase share of wallet and increase pricing trust with our customers. Our work on the personalization engine continues to advance. This innovative industry-leading program will enable Sysco to further penetrate lines and cases with existing customers and will improve our sales consultants' ability to win new accounts. We will supplement personalization with increased service levels for top customers through an innovative loyalty program that we will discuss more in future quarterly calls. Our sales transformation is proving to be very successful as our sales teams continue to win new business at record levels. As I mentioned in my financial narrative, our local and national sales teams delivered strong wins in the quarter that will help fuel our future growth profitably. Lastly, we are continuing to improve the efficiency of our organization as we further reduce our structural expenses to fund our strategic initiatives. Over the past few quarters, we regionalized the leadership structure of our specialty businesses, FreshPoint and SSMG, and we followed the playbook of our U.S. Broadline regionalization and have now implemented the more agile and efficient model for our two main specialty businesses.

As shown on slide six, during our first quarter, we successfully closed on the Greco and Sons transaction, which we expect to deliver over $1 billion in incremental sales to Sysco in fiscal 2022, ahead of our deal model expectations. More importantly, we plan to leverage the Greco business model to build a nationwide Italian platform that is the best in the industry, which will further deliver incremental sales beyond the $1 billion just mentioned. In addition to closing the Greco transaction, we acquired a produce distributor in October that will operate as a part of our FreshPoint business segment and will improve our ability to provide fresh produce and value-added fresh-cut capabilities to the Pennsylvania and Ohio markets. You may not realize that Sysco is the largest specialty produce distributor in the United States vis-a-vis our FreshPoint platform. Our produce business has a high-growth CAGR and attractive margins. Growing in the specialty sector is a priority for Sysco, enabling us to gain more share of wallet from customers by combining our Broadline capabilities with the premium service levels, selling skills and product assortment availability of specialty.

Our Recipe for Growth is still in the very early innings, but we can see the benefits of our developing capabilities and the new customers we are winning and the progress that we are making in market share gains. Importantly, our first quarter results exceeded our 1.2 times market share growth target for fiscal 2022. More importantly, as the Recipe for Growth matures, the impact on our top line growth will accelerate. As such, we remain committed to growing profitably 1.5 times the market as we exit our fiscal 2024. Topic three for today is an update on the state of the business. During our last earnings call, I highlighted the critical importance of staffing health due to the supply chain challenges that are well documented across all industries. As covered on bullets on slide seven, we have made progress throughout this quarter in improving our staffing levels. Our leadership team, top to bottom, has been extraordinarily focused on improving our staffing health. A good example of our efforts is the execution of our first-ever nationwide hiring event in the second week of October. We leveraged extensive digital marketing and a streamlined hiring process to net more than 1,000 new supply chain associates to bolster our troops. When coupled with our year-to-date hiring success, we are making solid progress on increasing our throughput capacity. Additionally, during the quarter, we opened our first Driver Academy, our first academy classes in session, as we say at Sysco, and we are training our next generation of Sysco drivers. We are bullish on expanding this program across the country in the coming year, and we are confident it will make a meaningful difference in generating a solid driver pipeline. From a product availability perspective, although our fill rates still lag our historical standards, we were able to deliver a higher fill rate to customers than the industry average.

We have strong relationships with our key suppliers and a merchant team that is extremely focused on finding and sourcing product substitutions. I have personally engaged with top suppliers to ensure a solid partnership with Sysco, and I am cautiously optimistic that our suppliers' performance will improve through the remainder of the year and into our fiscal 2023. Supplier improvement will be a key to improving customer fill rate and customer satisfaction. Lastly, you may have seen the recent announcement regarding the Department of Labor's Occupational Safety and Health Administration's requirements for employers with 100 or more employees. I am pleased to inform you that Sysco began a weekly COVID testing regimen in September, and as such, we are already compliant with the majority of the OSHA's stated guidelines. The safety of our associates and our customers is our #1 priority, and we remain steadfast in protecting our team. In summary, Sysco continues to lead the industry in how we are supporting our customers during this challenging supply chain environment. Our Net Promoter Scores are outperforming the Broadline distribution industry, and our ability to serve customers remains best-in-class. We remain the only national distributor without systemwide minimum orders, and we will endeavor to increase the flexibility and service that we provide our customers in the coming quarters and years.

The impact of our relative supply chain success can be seen in our results. We sequentially increased sales throughout the quarter and expanded our market share capture. We now have more than 10 consecutive months of gaining market share, and we are on track to deliver our stated goal for the year, growing 1.2 times the industry. And our Recipe for Growth strategy will enable us to accelerate, over the next three years, and grow at 1.5 times the industry by the end of our fiscal year 2024. I want to thank all of our associates for their tremendous hard work over the past quarter as Sysco experienced unprecedented growth and supply chain challenges. We are winning in the marketplace, and that would not have been possible without the dedication of our sales, logistics and merchandising teams. I'm honored to serve these associates and work by their side.

I'll now turn it over to Aaron who will provide additional details on our financial results for the quarter before we open it up for questions. Aaron, over to you.

Aaron Alt -- Executive Vice President and Chief Financial Officer

Thank you, Kevin, and good morning. Our strong first quarter fiscal 2022 financial headlines are: growing demand with sales exceeding Q1 fiscal 2019 by 8.2%; a profitable quarter, exceeding our plans with EBITDA comparable to pre-COVID 2019 levels; aggressive investment by Sysco against hiring a snapback, allowing Sysco to lead the industry in otherwise turbulent times; purposeful investments in working capital to continue to lead in product availability; a strong return to profitability by our international business; and great progress against our balanced capital allocation strategy, including continued investments against the five pillars of our Recipe for Growth and upgrade to BBB of our investment-grade rating by S&P the elimination of all debt covenant restrictions on our ability to repurchase shares or increase our dividend in the future; and a decision that we are announcing today, namely that we have satisfied our internal criteria to commence share repurchase. In the second quarter of fiscal 2022, we will begin our repurchase of up to $500 million of shares over the course of this fiscal year. During today's call, I'm going to cover the income statement and cash flow for the quarter, and then I will close with some observations on our guidance for fiscal 2022. First quarter sales were $16.5 billion, an increase of 39.7% from the same quarter in fiscal 2021 and an 8.2% increase from the same quarter in fiscal 2019. In the United States, sales in our largest segment, U.S. Foodservice, were up 46.5% versus the first quarter of fiscal 2021 and up 11.6% versus the same quarter in fiscal 2019. SYGMA was up 11.8% versus fiscal 2021 and up 5.1% versus the same quarter in fiscal 2019.

You will recall that in SYGMA, the increase in sales in the quarter is more modest because of the purposeful transition-out of an unprofitable customer, which we announced in our third quarter fiscal 2021 earnings call, and because during the quarter, some consumers are switching from their favorite QSR drive-up back to some of the excellent sit-down restaurants served by our more profitable U.S. Foodservice segment. Local case volume, within a subset of USFS, our U.S. Broadline operations, increased 23.8%, while total case volume within U.S. Broadline operations increased 28.1%. With respect to our international business, restrictions continue to ease across our international operations in the first quarter. International sales were up 34% versus fiscal 2021 while also improving sequentially over prior quarters to down less than 1% versus fiscal 2019, indicating that we have more upside to come. Foreign exchange rates had a positive impact of 1.1% on Sysco's sales results. Inflation continued to be a factor during the quarter at approximately 13%. The good news is that we continue to manage our profitability well in the inflationary environment. Let me call out a couple of numbers, and then we'll discuss inflation further. Gross profit for the enterprise was approximately $3 billion in the first quarter, increasing 33.9% versus the same quarter in fiscal 2021 and also exceeding gross profit in fiscal 2019 by 2%. The increase in gross profit was driven by year-over-year improvements in volume versus fiscal 2021 and, compared to both fiscal 2021 and fiscal 2019, increases in gross profit dollars per case across all four of our reporting segments.

That's a real sign of health in our business. While it is gross profit dollars that count, inflation did impact our gross margin rates for the enterprise during the quarter as it decreased 79 basis points versus the same period in fiscal 2021 and finished at a rate of 18.1%. The rate was flat sequentially with Q4 of fiscal 2021. The gross margin decline versus the prior year was driven by accelerating inflation and margin changes at our higher-margin U.S. businesses with the larger USFS businesses growing volume at lower margin rates. We continue to manage the inflationary pressures with both our suppliers and our customers and, thus far, have not seen much pushback on our ability to pass along pricing. In addition, the fact that we are now substantially complete in our rollout of our Periscope pricing system means that we have more tools than ever before to manage our profitability while being right on price. Turning back to the enterprise. Adjusted operating expense came in at $2.3 billion with expense increases from the prior year driven by three things: first, the variable costs associated with significantly increased volumes; second, more than $57 million of onetime and short-term transitory expenses associated with the snapback; and third, more than $24 million of operating expense investments for our Recipe for Growth.

Together, the snapback investments and the transformation costs totaled approximately $81 million of operating expense this quarter and negatively impacted our adjusted EPS by $0.12. Even with those significant snapback and transformation operating expense investments, we leveraged our adjusted operating expense structure and delivered expense as a percentage of sales of 13.9%, an almost 200 basis point improvement from fiscal 2021 and a 64 basis [point] improvement from the same quarter in fiscal 2019. Doing the simple math, if we removed the transitory snapback investments and the transformation investments I referenced earlier, total opex would have been at 13.4% of sales. That is a real sign of the power of our earlier cost-out efforts. To repeat what we said before, during fiscal 2022, our cost-out helps us to cover snapback and transformation costs. Finally, for the first fiscal quarter, adjusted operating income increased $320 million from last year to $685 million, putting us basically on par with adjusted operating income for fiscal 2019, even with the snapback investments and the transformation investments. This was primarily driven by a 58% improvement in U.S. Foodservice and strong profitability from international. Adjusted earnings per share increased $0.49 to $0.83 for the first quarter. Perhaps pointing out the obvious, if we extract the $51 million of incremental interest expense we are carrying in Q1 of fiscal 2022, resulting from the COVID-related precautionary bonds we issued in 2020, our adjusted EPS results for Q1 of fiscal 2022 would have been more in line with our pre-COVID adjusted EPS results for Q1 of fiscal 2019.

If you go a step further and exclude both the interest expense and the $81 million of snapback and transformation costs, you really begin to see why we believe that in the long term, Sysco has significant earnings potential. Now let me share a couple of comments on cash flow and the balance sheet. Cash flow from operations was $111 million during the first quarter as we responded to rising sales and purposely invested in inventory in support of managing product availability during the snapback better than the industry. We also purposely invested in longer-lead inventory to support customers such as K-12 schools and healthcare facilities during the snapback, consistent with Sysco's purpose statement. We also saw manageable changes in receivables levels that we expected to accompany rising sales and arising from the mix of business as Sysco executes its Recipe for Growth. Our net capex spend was $79.4 million and is ramping up as teams submit business cases for investments against the Recipe for Growth. We will manage those investments over the course of our three-year plan to ensure our growth. Free cash flow for the first quarter was $31 million. At the end of the first quarter, after our investments in the business, payments of the acquisition price for Greco and our dividend payments, we had $2.1 billion of cash and cash equivalents on hand.

In May, we committed to supporting a strong investment-grade credit rating with a targeted net debt to adjusted EBITDA leverage ratio of 2.5 times to 2.75 times, which we continue to expect to hit by the end of fiscal 2022. Later this year, we plan to pay off the $450 million of notes due in June of 2022 and may, should the circumstances warrant it, take further action against our debt portfolio. S&P recently acknowledged the progress against our leverage ratio by upgrading us to BBB flat. We also paid our increased dividend of $0.47 per share in July and again in October. Given that we paid our increased dividend starting in July, consistent with our status as a dividend aristocrat, we expect to next address decisions around our dividend per share sometime during calendar year 2022. As I mentioned earlier, we plan to commence share repurchase activity under the $5 billion share repurchase authority we announced in May at Investor Day beginning in the second quarter. As I stated a moment ago, that will take the form of the repurchase of up to $500 million of shares by the end of the fiscal year. That concludes my prepared remarks on the fiscal first quarter. Now before closing, I would like to provide you with some commentary on the outlook for fiscal 2022. As Kevin highlighted, we expect to continue to grow at or above 1.2 times the market in fiscal 2022. We are operating in a dynamic environment with significant inflation. While we do expect inflation to moderate by the fourth quarter of fiscal 2022, it may take longer to taper than originally anticipated, though it is hard to predict. We expect to pass through the vast majority of our COGS inflation.

We are assuming continued heavy snapback and transformation investments in Q2 at levels at least equal to the investments in Q1. We are reaffirming our EPS guidance for the year. Fiscal 2022 EPS will be in the range of $3.33 to $3.53, reflecting the $0.10 increase that we called out last quarter. As always, our EPS guidance does not assume changes to the federal tax rate. All in all, we have confidence for the rest of the year. In summary, we've had a solid quarter, and the fundamentals of our business remain strong. We are excited about the future as we continue to advance Sysco's Recipe for Growth.

Operator, we're now ready for questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Mark Carden of UBS.

Mark Carden -- UBS -- Analyst

Good morning. Thanks a lot for taking my questions. So it sounds like you've made some good progress on reaching your hiring targets, which is great to hear. One of your competitors recently noted that it started implementing some more base pay raises. Without necessarily commenting on that competitor, is this in line with what you've been seeing in the broader environment? Could we be seeing some more structural pressures here? Thanks.

Kevin Hourican -- President and Chief Executive Officer

Mark, it's Kevin. I'll start with the answer to your question, just macro, just where things are from a staffing health perspective. As I said in the prepared remarks, we've made a lot of progress in the quarter. We are definitely leading the industry from a health of staffing perspective and health of the supply chain, which is what's enabling us to win market share. And what I would say is the situation steadily improved through the quarter. August, I would submit, is probably our toughest spot of the calendar year from a staffing perspective as our volume was really recovering and our staffing needs were most significant. In September, 23 states opened up. The government supplemental benefits were retired, and we did see an increase in applicant flow. We actually weren't anticipating that because our base pay wages are well above the $15 per hour breakeven component. Our selectors get paid in the mid-$20s. Our drivers get paid in the mid-$30s. We weren't expecting an improvement tied to that, but we did experience an improvement in September tied to the retiring of those benefits. Most notably or even more importantly, we've gotten a lot better at recruiting, hiring and training of our staff. We're really pleased with the efforts to digitize our marketing efforts tied to our open jobs.

We've streamlined the hiring process. And as I mentioned in my prepared remarks, we conducted our first-ever nationwide, at every single site in the country, hiring event and netted over 1,000 people joining our team in just one week alone, which was a big progress for us. So we're doing really well from a recruitment perspective. To answer your question specifically, as I said in my remarks, we have not had to resort to "meaningful" base pay change. The vast majority of the expenses that we are putting forth are what we call transitory or 2-way doors. You can go through. You can turn around. You can come back. So what does that mean? Hiring bonuses, retention bonuses, referral bonuses, advertising. We are spending money in places like Facebook to advertise the awareness and creation of visibility to these jobs. Aaron called out that those expenditures will continue into Q2. And then we will have the opportunity to begin to taper some of those investments because they're transitory. We've had select locations, a very small number of them, that we did a wage review and needed to make some adjustments, but that was not meaningful or material for Sysco. Aaron wants to add something, tossing it to him.

Aaron Alt -- Executive Vice President and Chief Financial Officer

One quick add, which is, as Kevin called out, the vast majority of our Q1 and ultimately, Q2 snapback costs are transitory, and we have the opportunity to cover the rest through further productivity efforts that we already have underway.

Mark Carden -- UBS -- Analyst

Awesome. That's great. How do you guys think your fill rate currently compares to the broader industry? Presumably, you're still stronger than most, but any changes in the gap here?

Kevin Hourican -- President and Chief Executive Officer

Mark, thanks for the follow-up. So we use external reporting and internal reporting through Net Promoter Score to gauge our fill rate and how it's trending. Ours has been improving over the last quarter. Our merchant team has been working extremely hard for items that have what we call long-term out situations to find alternatives, find new suppliers, find alternative products that we can submit and suggest to our customers, provide those customers with suggestions on how to get those items cut into their menus, etc., etc. So our team has worked harder than ever before on ensuring we can improve fill rates. The answer to your question is, yes, our performance is stronger than the industry. And yes, that gap widened in the quarter. We believe it's one of the components of our market share capture. But it's not the only reason. It's three reasons. It's our throughput capacity is higher because of the staffing health. Yes, our fill rate is stronger. The third, though, is our sales teams are just doing an extraordinarily good job of being out in the market, acquiring new customers and winning more share of wallet with existing customers.

Mark Carden -- UBS -- Analyst

All right. Thanks so much. Good luck.

Aaron Alt -- Executive Vice President and Chief Financial Officer

Thanks, Mark.

Operator

And your next question comes from the line of Alex Slagle of Jefferies.

Alex Slagle -- Jefferies -- Analyst

Hi. Good morning. I may have missed something, but the local case growth on a two-year basis versus '19 seemed to decelerate more sequentially into the fiscal first quarter than the U.S. Broadline trend even as you adjust for the tougher compares. I wonder if we could discuss the dynamics you observed during the quarter, where the local case momentum. They have dragged a bit more, if I'm reading that right.

Kevin Hourican -- President and Chief Executive Officer

Yes. Our local business is performing really well, Alex. We're pleased with the progress that we're making. We continue to win new customers at the local level, partnering and supporting our existing local customers with menu expansion and the like. If it's a percent of total that you're referencing, we've had a lot of success winning net new business at the national level, within the education sector and within the healthcare sector. And perhaps in the percent of total component that you're seeing is actually fueled not because of deceleration in our local business. We accelerated our performance at the local level. It's the national sales and in new business, we've just done extraordinarily well with winning new business. And to be crystal clear, this isn't a guns or butter choice. One success at the national level does not hinder our ability over the long term to win at the local level. We are going to win at both national and local level. And again, our staffing health and supply chain strength is what's enabling us to be able to do that.

Alex Slagle -- Jefferies -- Analyst

That makes sense. And then if you could offer any color into the underlying trends of the various segments in October and just sort of some thoughts on potential for that progress relative to '19 to moderate as we get into the holiday period. Just some tougher compares, obviously, in many ways, as you get up against that.

Kevin Hourican -- President and Chief Executive Officer

Alex, thanks for the question. I'll start with the headline, which is, as you saw on our chart, October was continuation of acceleration of our total performance. So each month of our Q1 accelerated in October continued that strength, and that's despite the presence of the Delta variant during the quarter. So we're really pleased with top line, strong, compelling, continued growth fueled by a recovering market but even more fueled by our market share capture. As I said in my prepared remarks, we're growing at more than 1.2 times the market, which is the highest rate of growth at Sysco in more than five years. The sectors that are still constrained versus '19, that's the language that I would use: travel and hospitality, for sure; foodservice; management; international, as I called out on my prepared remarks; and there's some softness in healthcare vis-a-vis long-term care tied to COVID, which is the new starts or new bed patients, as they call them, are constrained. We're not concerned about healthcare for the long term. With the aging of America, they call this Silver Tsunami, we actually view healthcare as a growth opportunity for our company for the longer term.

We see the opposite of what you just said, Alex. We see our customers contacting us in the travel and industry, in business -- in travel and hospitality, excuse me, in business and industry sectors gearing up for what they believe to be a January step-up in volume. And mostly, that's driven by corporations that have been mostly working from home beginning the process of bringing their employees back to work in January. We do very well in that space, partnering with foodservice management companies. And we're working right now to preposition inventory to be prepared from a staffing perspective. As far as rolling over tough comp compares for holiday season, that's not something we're concerned about. Aaron wants to add something. Aaron, over to you.

Aaron Alt -- Executive Vice President and Chief Financial Officer

I would just add, you should take great note of our announcement of our results for October and understand that we are accelerating across our portfolio. And we have significant opportunity both in our fiscal Q2 and, as Kevin called out, particularly into Q3 and Q4.

Alex Slagle -- Jefferies -- Analyst

Great. Thanks. Congrats.

Aaron Alt -- Executive Vice President and Chief Financial Officer

Thanks, Alex.

Operator

Your next question comes from the line of Edward Kelly of Wells Fargo.

Edward Kelly -- Wells Fargo -- Analyst

Hi. Good morning guys.

Kevin Hourican -- President and Chief Executive Officer

Good morning.

Edward Kelly -- Wells Fargo -- Analyst

Kevin, I wanted to just sort of revisit one thing that's been talked about a little bit here. But I know you've talked about your fill rates beating competitors, but it does sound like, generally, there's still some headwind here related to sort of inventory or even labor. Is it possible to quantify what you think is being left on the table associated with that? And then that kind of gets into the second part of my question, which is that, is it also possible to talk about where some of the segments are kind of running versus 2019? And I ask all this because your case volume is still modestly below '19 in the U.S., which is obviously understandable. But I'm kind of curious as to what all of this is saying about where your case volume can be, let's call it, by the end of this fiscal year or so or early next year when life is obviously hopefully a lot more normal. So any color that you could add there would be super helpful, I think.

Kevin Hourican -- President and Chief Executive Officer

Ed, thank you for the questions. It's Kevin. I'll start with fill rate. My language that I used in the prepared remarks is we're performing better than the industry average, and that is the most accurate descriptor of our performance. We are below our historical fill rate standards. We set a very high bar for ourselves, ship on time and ship in full, and we are below our historical standards. The why is that our inbound fill rate from our suppliers to us is well below our historical standards. Our output to our customers is actually significantly higher than the inbound fill rate to Sysco, and the how and why behind that is the work we do to find substitutes to bridge customers to alternative products. And that's what's creating the relative strength of Sysco versus others is the good work our merchant teams are doing to find product substitutions. I think your question is more like, is there even more sales to be had if fill rates improve? I would say, yes. How long it will take for a fill rate to improve is subject for debate. So what we're doing, because we want to take ownership of what we can directly control, is to be even better at managing fill rate.

So we're improving our website to provide dynamic visibility to out-of-stocks and provide suggestions at point-of-sale to the customer on things that can be bought alternatively. And our sales teams and merchandising teams, when we find ourselves, as I mentioned earlier, in a situation of long-term outs, are being very proactive, providing quick selling bulletins to our sales teams, digital marketing pushes to our customers, including emails on suggesting to them alternatives and the like. So it's a core strength of our company. I meaningfully desire for the inbound fill rate to Sysco to improve. We're working very closely with our suppliers on that. And we think it will improve but not quickly. It's going to be kind of a sequential steady slow improvement in fill rate into our fiscal 2023. As it relates to volume, in the second part of your question, what I would say is we expect at the end of our fiscal Q3 to be back to 2019 from a volume perspective. And we have segments that will be at that level in Q2 of this fiscal year. So within our existing fiscal year, we will be back to 2019 volume levels. I'm not going to break it down by segment. It's not something I'm prepared to do this morning. But go ahead, please. Back to you.

Edward Kelly -- Wells Fargo -- Analyst

Yes. I got it. And when you say fiscal Q3, is that total company volume? Or is that U.S. Broadline volume?

Kevin Hourican -- President and Chief Executive Officer

It's total company. All Sysco combined at the end of our Q3 will be at 2019 volume levels.

Edward Kelly -- Wells Fargo -- Analyst

Great. And then just a quick follow-up for Aaron, I guess. Can you provide any additional color on the fiscal second quarter? Historically, you have a bit of a sort of like, I guess, a seasonal step-back versus Q1. Just kind of curious as if we're going to see that again here. If I look at the consensus number, it's not far off of what you just reported for Q2. So just any incremental thoughts there?

Aaron Alt -- Executive Vice President and Chief Financial Officer

I would offer two thoughts, which is we are enthusiastic about the continued positive trends we're seeing in the top line as we move into what historically pre-COVID may have been a seasonal period, but this is -- this year is like no other in that respect; but also then mitigated somewhat by your call-out around the fact that we do continue to expect to invest heavily against snapback and the transformation in the second quarter. For us, we have confidence in the year. We have confidence in the long term. And we are quite excited about the progress the operational teams are making in service of fiscal '22 in Q1 and certainly in Q2.

Edward Kelly -- Wells Fargo -- Analyst

Great. Thank you.

Kevin Hourican -- President and Chief Executive Officer

Thank you, Ed.

Operator

Your next question comes from the line of John Heinbockel of Guggenheim Partners.

John Heinbockel -- Guggenheim Partners -- Analyst

Hey guys. Let me start with, you had a nice pickup, right, in your performance versus the industry since the second half of last year, right? I think you're probably up 20 or 25 bps. Where is that coming from predominantly, right, new versus existing accounts, pieces per stop, lines per stop? What are the one or two biggest drivers in that acceleration in share gains?

Kevin Hourican -- President and Chief Executive Officer

John, it's Kevin. The predominant reason for the market share capture is net new customers served at Sysco, both at the national and local level. So we're winning more new business than at any other point in time in company history. The why breaks down to two pretty fundamentally basic things. First is the compensation model that we changed, as you know, June of last year. We are now compensating our associates to be more prospecting versus cultivating, and that is paying dividends. So they drive the behaviors that we expect, and we are seeing significant benefit in dividend from rewarding those associates for the good work they're doing in winning new business.

The second reason is the supply chain health. We have customers almost, on a daily basis, large and small, coming to us and asking for Sysco to take on their business. I won't name the state, but we had a very large education customer come to us this week actually and say, "We're not getting the support we need, and can Sysco take on our business?" And we're finalizing the details of the contract, which is why I'm not going to quote the where, but we expect that business to come onboard by Jan 1. So that is a signal of our strength, the confidence that large and small customers have and our ability to ship on time and full at rates greater than the market. John, specifically what competitor segment that's coming from? I think it's kind of all the above. But stronger players with broader access to inventory, clearly performing well. A fact to prove that point, we have more inventory on hand at this moment in time than we did pre-COVID. So are there select product shortages? Yes. But we've been able to invest in inventory.

We have more inventory on hand than pre-COVID, and our staffing levels are where we need them to be. But every time we bring on more people, our demand increases, and then we have to go even -- hire even more people, which is proving that there's continued runway, this was Aaron's point, a moment, ago on our ability to grow our top line as we continue to make progress on our staffing and throughput capacity. John, back to you for any follow-up.

John Heinbockel -- Guggenheim Partners -- Analyst

No. Then maybe the second question, right? If you think about look out to '24, '25 take a longer-term view, are you more confident in gross margin being better than it's been historically? Or that the cost structure of the business will be less, right, in light of some -- a lot of the macro dynamics we're seeing today? Which one of those two is more likely to drive higher long-term profit margins?

Kevin Hourican -- President and Chief Executive Officer

John, what we've articulated is we're really bullish on our EBIT margin expanding that we will move that needle. I do not believe that, that growth will come primarily from product margin expansion. It's going to come from continued disciplined expense optimization by taking structural costs out and investing in capabilities that drive the top line. So why the EBIT margin grows is, a, the top line will be accelerating; b, we'll be taking structural costs out of the business. And those two levers in combination is what expands the EBIT margin. But sales growth and cost reductions, not for margin rate growth. Aaron, I'll toss to you for any additional comments.

Aaron Alt -- Executive Vice President and Chief Financial Officer

I would just add, in support of Kevin's point, that I am also excited by elements of our merchandising and our supply chain transformation that, over time, as we work through this very inflationary period, should provide us with new opportunities. In particular, I'm excited with the work that's underway in connection with Sysco's private label brand and other elements that will be supportive of our overall financial profile. So to answer your question, while the short term certainly were challenged from a -- or it's lower than we would have hoped, from a gross margin perspective because of the impact of inflation over the longer term, the 24% and the 25%, we are quite bullish.

John Heinbockel -- Guggenheim Partners -- Analyst

Thank you.

Kevin Hourican -- President and Chief Executive Officer

Thanks, John.

Operator

Your next question comes from the line of Nicole Miller of Piper Sandler.

Nicole Miller -- Piper Sandler -- Analyst

Thank you. Good morning. First question is around the centralized pricing tool. So intuitively, I think about pricing power and price going up that you have a lot of commentary about taking market share with the pricing tool, which makes me think about the value proposition of maybe not price down but neutral. So how do you balance that tension?

Kevin Hourican -- President and Chief Executive Officer

Nicole, it's a great question. And you're right, that my recent narrative of our pricing software has been about managing inflation. It's just because of the unprecedented environment that we're currently in. Double-digit inflation is unique. And what the tool is helping us in the current period is being very strategic and thoughtful about how to pass through that inflation in a responsible way and being confident that when we make those decisions, that they're executed well. We used to do that work manually through a large sales force. We can now do that through a strategic pricing office. And when we make the decision, it's executed immediately. And we can monitor the impact of those decisions and update it on a daily basis, if need be. So the reason for my narrative on inflation is just because of the environment we're in. For the longer term, the goal of the pricing project is to be a pricing system, excuse me, is to move to strategic price optimization. I'm not going to name the category because I don't want to telegraph it, but we've got select categories where we are above market from a pricing perspective. We make decent -- very high-quality margins, and we're going to run price optimization tests. If we lower slightly our prices in that category, does the sales growth more than offset the margin dilution?

And with a pricing software, you can do test versus control, geography-based tests, to optimize for the right price. And how I've described that work is the following. We will make investments in certain items that are key value items, KVIs, and we will raise prices nominally in the tail of the inventory skew, which is less visible to the customers, which, therefore, results in flattish margin rates but growing top line as we are -- as my term is right on price at the item customer level, which allows us to win more market share. So that's the longer-term goal of the project. However, the system has been extremely useful during this early part of our fiscal 2022 and how we manage inflation.

Nicole Miller -- Piper Sandler -- Analyst

That's very helpful. Second and final question. It's very helpful to understand the hiring in that some of that is coming back. But I'm wondering about the underlying turnover, thinking that could be a leading indicator. Could you speak to how turnover is trending both like at the distribution facilities and for drivers as well?

Kevin Hourican -- President and Chief Executive Officer

Yes. Retention is extraordinarily important to our staffing health. And during the first quarter of this fiscal year, we were extremely focused on hiring because, again, the winning of the new business that we've been able to post over the last two years requires us to continue to increase our throughput capacity. We are spending an extensive amount of time on improving retention. Retention is lower than historical run rate averages, to answer your question, but it's getting better as we are putting even more focus on retention. The most important population for us is our driver population. It's a highly skilled job. It's a customer-facing role. And one of the investments that we've made, Aaron and I together, is in a driver retention bonus. We paid it in Q1. We're going to pay it again in Q2. And that retention bonus for our drivers is working. It had a noticeable and visible positive impact on retention. And that's the type of investment that I referred to as a transitory-type investment. We'll do that investment for as long as it takes. But we do expect, as we improve our overall staffing health, that the need for those types of investments will go down.

And here's why. Overtime rates are running very high currently at Sysco versus our historical standards. I called that out in my prepared remarks. Overtime is actually the thing that drives retention down, if we're spending -- or excuse me, providing our associates too much overtime daily. So we're working extremely aggressively to bolster our staffing troops such that we can have overtime back to historical standards and that we'll improve retention. It also improves the P&L because overtime rates are pretty punitive to the overall P&L. And I called that out in my prepared remarks where I said our second half of this fiscal year, we should expect to see improvements in overtime, reductions in some of the transitory expenses that I stated, which will help the P&L. Aaron, to you for any further comments.

Aaron Alt -- Executive Vice President and Chief Financial Officer

I have nothing further to add.

Kevin Hourican -- President and Chief Executive Officer

Okay.

Nicole Miller -- Piper Sandler -- Analyst

Thank you.

Kevin Hourican -- President and Chief Executive Officer

Thank you, Nicole.

Nicole Miller -- Piper Sandler -- Analyst

Thanks.

Operator

Your next question comes from the line of John Glass of Morgan Stanley.

John Glass -- Morgan Stanley -- Analyst

Thanks very much. Just first, back on gross margin, I understand your comments about gross margin dollars per case or gross margins per case are higher. Do you see demand destruction, though, within certain categories that maybe a factor in gross margin, prices are too high, so your consumers or your customers are switching?

Kevin Hourican -- President and Chief Executive Officer

So far, no.

John Glass -- Morgan Stanley -- Analyst

And Kevin, you opened the door on loyalty, and I know you want to talk about it in the future. But how do you think about loyalty in this business? Is it akin to what a consumer loyalty program is? Or is this more nuanced? Is it more about adding value-added services versus discounts? How would loyalty work in this industry, do you think, at a high level?

Kevin Hourican -- President and Chief Executive Officer

We've proven that a mom-and-pop independent restaurant operates similar to a consumer and retail. They decide based on value. They decide based on price. They decide based on the services that you mentioned a moment ago. The value and the unlock of the loyalty program that we're building is making that customer specific what the offers are to them and making it indelibly clear to them the value that's being brought to them by Sysco. We're going to talk about more in the future because it's in pilot as we speak, and we like to have actual factual results before we talk about things publicly. We are very pleased with the initial progress steps forward in our loyalty program. We are building the data and the plumbing from an IT perspective to execute against that effort nationwide. And we are piloting it currently in select geographies. And we will refine it, optimize it, iterate it, but it will be similar to the types of loyalty programs that you're familiar with as a customer. The data is in the cloud. We're able to use machine learning to optimize against the data. And yes, there are value-added services that we will provide to those customers that are a part of the program that they'll be able to take advantage of to improve their business results and outcomes. So we're excited about it. We're bullish on it, and we'll talk more about it in future quarters.

John Glass -- Morgan Stanley -- Analyst

Thank you.

Kevin Hourican -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Lauren Silberman of Credit Suisse.

Lauren Silberman -- Credit Suisse -- Analyst

Thanks for the question. Just first on capital allocation. You announced plans to resume share repurchases and I think up to about $500 million for the year. So can you just talk about your capital allocation priorities and how we should be thinking about the use of cash from here?

Aaron Alt -- Executive Vice President and Chief Financial Officer

Sure, happy to do so. We are remaining loyal to the capital allocation strategy we called out at our Investor Day in May, which is our first focus is on driving the growth, getting to the 1.2 to 1.5 times market growth. And so our first piece of cash is to invest in the business, either organically or inorganically as you recently saw with Greco and a couple of the other small deals that Kevin called out. Once we've invested against the business for the business cases that are in front of us, we are also very focused on maintaining a strong balance sheet. And the actions we took, particularly at the end of last year, have certainly facilitated that, and we're feeling good about the strong balance sheet that we have and the recent upgrade of the rating by S&P.

We have continued opportunities to improve that, of course, given the interest levels we're carrying versus prior years, but we're feeling good about our capital allocation against our debt portfolio so far. And that then leaves us with the return of capital to shareholders. We increased our dividend as you heard me call out. We've now paid that twice. We'll touch it again during calendar 2022. And with the benefit of cash on hand, we decided it was time to start returning capital to shareholders as well. And our first step there is to -- is the announcement of the $500 million share repurchase at the beginning this quarter. So all in, very consistent with what we had telegraphed we were going to do at Investor Day, and that's how we continue to manage the Recipe for Growth.

Kevin Hourican -- President and Chief Executive Officer

I think Aaron described it very well. I think the punchline is we're ahead of schedule on that activity, which is why Aaron updated our guidance on when we would begin the stock buyback to this quarter.

Lauren Silberman -- Credit Suisse -- Analyst

Great. And if I could just do a follow-up on the transitory nature of the elevated costs. Can you talk about what gives you the confidence that opex expenses and some of those investments can taper in the back half of the year? Is it primarily reflecting expectations that staffing levels are closer to target? And then within those incremental investments, snapback or transformation, what do you see as more transitory versus permanent? Can you expand on sort of any of those initiatives?

Aaron Alt -- Executive Vice President and Chief Financial Officer

Sure, happy to. Let me give you some visibility to what's in our bucket of snapback. And it is things like retention programs, hiring bonuses, sign-on bonuses, the incremental recruiting support for the massive hiring we're doing right now, the incremental marketing, third-party contractors we're bringing in to help on a temporary basis relative to staffing. Those things are transitory, onetime, well Q1, Q2, but are not permanent cost structures. What's not in there, for instance, is increased overtime costs. That's not onetime, but we also have the opportunity to bring it down over time and are actively working on that. So now you have a sense of what's in the bucket. Why do I have confidence that we can address it over time? It's twofold. First is we got started early relative to cost-out efforts. And so to a degree, we put some money in the bank in advance of need, and that effort will continue as we carry forward. Second element is, you heard Kevin and I alluded to this earlier, the benefit of all the investment we're doing against our supply chain transformation is incremental productivity, which helps us to manage the overall cost structure as we carry forward. And lastly and finally, if I can add one, which is just the nature of the categories I called out. They are, by definition, onetime or transitory.

Lauren Silberman -- Credit Suisse -- Analyst

Thank you.

Operator

Your next question comes from the line of Jeffrey Bernstein of Barclays.

Jeffrey Bernstein -- Barclays -- Analyst

Great. Thank you very much. Two questions. The first, just to follow on, it's been mentioned a few times, the sales momentum and the market share gains, which are ahead of the 1.2 times in the fiscal first quarter that you were targeting for the full year. It's harder, I guess, to assess from the outside. So I'm just wondering, how do you arrive at success on that front? Maybe you can share what you believe the industry growth is. I know some of your peers, large and even small, often make similar claims to growing faster than the industry. So just trying to gauge how you're able to assess that and maybe what the industry is growing relative to yours in the first quarter or if we should expect that type of commentary going forward on future quarterly calls.

Kevin Hourican -- President and Chief Executive Officer

Yes. Jeff, the 1.2 times statement is specifically tied to Technomic's data. So we get that data from them once per quarter, and that is a data point that I can only report upon once per quarter as a result of that. We can see on a weekly, monthly basis our relative growth. We can generally see the market's relative growth through other sources of data. But once per quarter, we get the legitimate data feed from Technomic, and that is where that data comes from, so.

Jeffrey Bernstein -- Barclays -- Analyst

Understood. And then the follow-up is just on the pricing, the margin percentage down but the dollars up, which, I guess, is what's important here. And I know you mentioned the ability to pass along inflation to customers, which I think has historically been the big benefit in the drawer for investors to foodservice distribution and obviously, with inflation right now, even more attractive. So just wondering your confidence in the ability to continue to pass through. I know I think there was some mention of maybe not much pushback. But wondering whether pushback is accelerating or you'd expect it to accelerate if the inflation is going to remain in the double digits or whether you're really confident in the ability to pass it on for however long the inflation lasts.

Kevin Hourican -- President and Chief Executive Officer

Jeff, I guess, the punchline is we are confident that we can pass on the inflation. Just however, an editorial comment, and then I'm going to provide some color comments. We don't think that double-digit inflation in perpetuity is good for the industry. It's not something we desire. It's not something we accept. And we are working very aggressively to push back on cost increases, find alternative suppliers, find alternative items that can lower the net landed cost for our customers. And we do believe that inflation will begin tapering. It's just going to take longer to begin tapering than what we originally expected back at the beginning of the year, which Aaron talked about accurately and clearly during his narrative. But with that said, we are not experiencing pushback from our customers. The primary reason is end consumers aren't slowing down in their consumption of food away from home. In fact. In fact, the opposite is true. We continue to see sequential improvement in our overall results tied to volume growth and also, obviously, inflation at high levels. Just to call out with the specificity what we do with our customers, we have built a proprietary inflation tool calculator where we can take an inbound raw material to us that is significantly elevated from a cost perspective.

And we can highlight for our customers what items on their menu are directly impacted by that inflationary item to then suggest to them the type of menu price changes that they should make. And that's what we mean when we say things like value-added services. And I'm not talking about an obvious thing like meat and poultry. I'm talking about things like fats. Shortenings and oils are highly inflationary right now, and there are many different products on the menu that are impacted by the particular raw ingredient cost increase. So our sales reps have been trained and equipped to be able to work with our end customers to educate them. If this raw material has increased, here's our suggestion to you on what you can do with your menu price. And it's for that reason that our customers aren't pushing back to the degree that you might suspect externally because they view us as a partner, and that's what we are. We're partnering with them to help them be successful and profitable. And the good news for this industry is that the end consumer has remained robust and strong. Jeff, back to you for any further comments.

Jeffrey Bernstein -- Barclays -- Analyst

No, very thorough. Thanks very much.

Aaron Alt -- Executive Vice President and Chief Financial Officer

Okay. Thanks Jeff.

Operator

And our last question comes from the line of Kelly Bania of BMO Capital.

Kelly Bania -- BMO Capital -- Analyst

Hi, good morning. Thanks for taking our questions. Just wanted to go back to the discussion of case volume, particularly versus 2019. Just where exactly was that for the quarter, I guess, focusing on U.S. Broadline? And within that, can you share any detail on the volume versus '19 for those core restaurant customers versus the non-restaurant hospitality business and industry segments?

Aaron Alt -- Executive Vice President and Chief Financial Officer

Kelly, it's Aaron. We're getting into an area that we don't typically disclose at that level of detail. I guess what I would offer up to you is that, as Kevin either alluded to or said out loud, we are not yet back to fiscal '19 levels within the enterprise or the U.S. business but quickly approaching it. And as we get into the back half of our year, starting in the U.S. or North America and then broadly beyond that, we do have confidence that the enterprise will be returning to positive volume levers across the portfolio. Now there will be some mix of that, right? We're talking aggregated numbers. I'm not -- we're not calling out one country or one class of customer in that respect. But in aggregate, we have confidence with the volume trends based on what we've seen so far, what we saw in October and how we expect this to carry out over the year.

Kevin Hourican -- President and Chief Executive Officer

And this is Kevin, just to bolster. Kelly, we're just -- we're not breaking it down by segment. We -- what we've been clear which segments remain behind. We have travel and hospitality business and industry as two notable examples that, from a volume perspective, remain down versus '19 levels. The good news is there's obviously significant offsets in strength within our restaurant sector, specifically independent local sector, which is our most profitable sector. So ultimately, that's the ultimate positive strength here is that the restaurant volume is the core strength at this point in time. And as Aaron said, the enterprise level will be at '19 levels by end of Q3.

Kelly Bania -- BMO Capital -- Analyst

Okay. That's helpful. And just wanted to also follow up on the comment that you've talked about for several quarters now with the 10% new local independent customers. Can you provide just an update on the penetration or share of wallet with these accounts and how that's progressing and the trajectory from here that you're expecting?

Kevin Hourican -- President and Chief Executive Officer

Yes. Thank you. John asked the question earlier, like which are the primary drivers of the growth. Share of wallet has been steadily improving, but it has not been the primary source of the growth. The primary source of the growth has been net new customer wins, Kelly, over the last, let's call it, two years. I believe that will pivot in the future where the personalization work, the pricing work we're doing, the work we're going to do on the loyalty program that I alluded to earlier, we will pivot to more of the growth coming from increased share of wallet. And mathematically, it's why we are confident that we will go from the 1.2 times market growth that we're currently delivering to the 1.5 times growth, which will be the growth target we have for the third year of our three-year strategy that we call the Recipe for Growth. So the percent contribution of the growth will pivot more toward share of wallet in the coming fiscal years.

Kelly Bania -- BMO Capital -- Analyst

Thank you.

Kevin Hourican -- President and Chief Executive Officer

Thank you Kelly.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Neil Russell -- Senior Vice President-Corporate Affairs and Chief Communications Officer

Kevin Hourican -- President and Chief Executive Officer

Aaron Alt -- Executive Vice President and Chief Financial Officer

Mark Carden -- UBS -- Analyst

Alex Slagle -- Jefferies -- Analyst

Edward Kelly -- Wells Fargo -- Analyst

John Heinbockel -- Guggenheim Partners -- Analyst

Nicole Miller -- Piper Sandler -- Analyst

John Glass -- Morgan Stanley -- Analyst

Lauren Silberman -- Credit Suisse -- Analyst

Jeffrey Bernstein -- Barclays -- Analyst

Kelly Bania -- BMO Capital -- Analyst

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