0:04 Good day, and welcome to PFG's Fiscal Year Q2 2022 Earnings Conference Call. I would now like to turn the call over to Bill Marshall, Vice President, Investor Relations for PFG. Please go ahead, sir.

0:28 Thank you, and good morning. We're here with George Holm, PFG's CEO; and Jim Hope, PFG's CFO. We issued a press release regarding our 2022 fiscal second quarter and six-month results this morning, which can be found in the Investor Relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the same period in our fiscal 2021 fiscal second quarter. 0:54 Additionally, occasionally during our call today, as noted, we are comparing results to the same period in our 2020 fiscal second quarter. The results discussed on this call will include GAAP and non-GAAP results adjusted for certain items. The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found at the back of the earnings release. Our remarks on this call and in the earnings release contain forward-looking statements and projections of future results. Please review the cautionary forward-looking statements section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. 1:32 Now I'd like to turn the call over to George.

1:35 Thanks, Bill. Good morning, everyone, and thank you for joining our call today. I'm pleased to be able to share PFG's outstanding second quarter results and discuss our strategic goals and objectives. We had another active quarter which included the announcement of a new management structure, continued integration of Core-Mark and the Foodservice acquisition in the Southeastern US. I will address each of these items in turn and provide additional color on the direction of our company and where we are headed. 2:07 Last quarter, we discussed our vision to transform PFG beyond a traditional foodservice distributor into a leader across a variety of channels and product offerings. During the past few months, we have aligned our operating management and report structures with this vision. We believe this new structure will increase our speed and agility capturing new lines of business and our cross-selling capabilities. We have already seen the cross-selling between foodservice and convenience bear fruit, which I will discuss in more detail shortly. 2:41 As you saw in this morning's earnings release, we have also realigned our reporting segments to reflect our strategy and management structure. We will now report 3 segments: Foodservice, Convenience and Vistar. The Convenience segment includes all the business that came with Eby-Brown and Core-Mark acquisitions. The Vistar segment will reflect the legacy Vistar channels, including theater, vending, office coffee, retail value stores and corrections. There were no changes to our Foodservice segment. This new reporting structure not only aligns our organization with our strategic vision but also gives our investors additional financial information and a deeper look into business trends across different units. 3:28 One of the units is our combined convenience store distribution operations. This includes the Core-Mark organization, which we acquired in September of last year and the Eby-Brown business,…

9:24 Thank you, George, and good morning, everyone. As George mentioned, we are very pleased with how our business has performed. Our associates have stepped up to the challenges and they continue to deliver for PFG and our customers. Our organization has thrived during the last two years, and we've taken advantage of multiple opportunities. We have reached the point where we have turned our attention to producing sizable sales and profit growth. Our financial position supports the investments we believe will produce these strong results. Let me provide an overview of how we stand financially before a quick review of our second quarter results. 10:03 I will then finish with our guidance for the third quarter and full year and the assumptions and expectations within those forecasts. We ended the quarter with $2.3 billion of total liquidity. Our liquidity position reflects the acquisition of Merchants, which we financed with our ABL and closed on December 31. While there's no financial results from Merchants to report on our income statement, the balance sheet and cash flow statement fully reflects the addition of that business in the final days of the fiscal quarter. 10:38 Turning to cash flow. In the first 6 months of fiscal 2022, we generated approximately $154 million of operating cash flow. The team continues to do a fantastic job managing our working capital position overall and the uptick in inventory in the quarter was a planned use of cash and the result of building consumer packaged goods inventory ahead of anticipated price increases. I'll talk more about the CPG procurement activity. and the impact on our financial results in a moment. 11:12 PFG invested $68.5 million of capital expenditures over the first six months of the year, resulting in positive free cash flow of $85.3 million. And…

18:17 We'll take a question from Mark Carden of UBS.

18:37 Good morning. Thank you for taking my question. So overall, it sounds like your efforts to grow your workforce are progressing quite nicely. When you think about your more permanent workforce, are you expecting structural wage pressures to be any steeper than what you may have expected three months ago? Or are you starting to see some stabilization there?

18:56 Yes, this is Jim. No, I don't expect them to be any steeper than we saw three months ago. We've done a whole lot of work, I'd say, appropriate work to get wages right market by market and make sure that we've done what we need to do to be able to recruit the right people. I really think now it's about given the new folks that we brought into our workforce time to learn the process, be trained and start to see some good solid productivity improvements. So we feel good about where we're headed. We've got good work to do, and I think we'll -- those things will all pay off.

19:30 Great. And then as a follow-up, how impactful has Omicron been to your business? And how does it compare to what you saw with Delta? And then related to that, how has it impacted your staffing both in 2Q and 3Q to date?

19:44 Yes, I would say that through the delta period of time, it probably had maybe a little less impact on labor and maybe a little bit less impact as well on the marketplace. But the Omicron is so quick. And what we saw was a good deal of absenteeism because of sickness. But fortunately, they were getting back faster also than before. And that helped to alleviate it. Also, it helped that it came in January, which is a lower volume time of year anyway.

20:30 Great. Thank you so much guys.

20:34 We'll take our next question from Alex Slagle of Jefferies.

20:40 Thanks. Good morning. Great to see things coming together, so weathering the storm. I was curious if you could provide some more color on how the foodservice sales within the convenience channel have trended recently more broadly and for you directly as we've kind of been progressed through this Omicron and emerge back to normalcy in some parts.

21:08 Well, we've seen a good surge in our foodservice business and the Convenience just really led by a couple of accounts. We still have a good bit of work to do. I did here from Scott McPherson that runs our convenience area that actually January was the highest increase in nontobacco sales for Core-Mark that he can remember, and he's been there close to 30 years. So it's going well. We just have a lot of work to do to get it where we need to go.

21:45 Okay. And the Core-Mark. I mean, anything surprising you about the integration and the business as you've had some more time to see them gel together with legacy businesses and see it an action. I know your initial thoughts were fairly positive, but curious if you've learned anything new or got any more color on that?

22:09 Well, culturally, they're doing really well. The two companies have come together with very few issues. And then unlike with Reinhart where there were probably more differences, certainly more product differences, we've been able to get the integration around HR, finance, procurement faster than we were able to do that with Reinhart where we really needed to take a little bit more care So we're very pleased, and we're also very pleased just with the staffing and the management at Core-Mark.

22:48 Got it. And follow-up for Jim, on whether on the productivity commentary that you provided earlier. I know that's definitely pressure. I don't know if you have anything on the magnitude of that impact, how we should think about that as we're building out our models.

23:08 I think it'd probably be as anyone would expect when you bring a large number of new people into the supply chain, there's -- we follow a lot of process. There's good discipline. We want everybody to work safe and be productive. And I think it's learning the process is what I'm talking about, that takes some time. We are right on track. I would say that I'm really pleased with how our supply chain leadership all the way down to supervisors on the dock and our truck drivers are doing. It's – I think the magnitude comment would be more about time that we're on track, and that was all contemplated in the guidance we provided.

23:49 Thank you very much.

23:54 We'll take our next question from Edward Kelly of Wells Fargo.

24:00 Hi, good morning, George and Jim, everybody. Congrats on a really solid quarter here. I wanted to ask you first, just a follow-up on the labor cost side. This is labor inflation generally right, is something that I think we've heard a lot of concern about from the investor base. We heard from one of your big competitors yesterday that they just don't believe underlying labor inflation is going to be that bad. But that doesn't really seem to jive with sort of like what you hear about, warehouse worker pay, driver pay, etc. And my question for you is, what are you seeing if we sort of like, forget about the temporary costs. But underneath of that, like what are you seeing from a wage inflation standpoint, in your workforce, how does that compare to what it has been historically? And where do you see that going? Like is this a headwind that we should be concerned about?

25:00 Yes. So Ed, thanks for the question. We have said all along that some of this would be structural and some of the increase would be transitory. We've never thought it would all eventually go away. And clearly, that's going to be the case. We think it's manageable. We think we found the right balance in how we pay our folks in our supply chain. I think the best way to quantify it for you is how we feel about it has been specifically quantified in our guidance and that's what informed our guidance. I'm not at a spot where I'd put out a number right now, but I think we've seen most of it, and we've absorbed it. But at the end of the day, we're going to keep up with where we need to be to make sure we're able to recruit, hire and retain good solid folks to work for PFG, and we're doing that right now.

25:59 Okay. And then I wanted to ask you about fill rates and where you stand currently with fill rates, particularly as we look to getting into what I think we all hope will be a very strong sort of spring summer period. Do you think the industry will remain challenged during this period? And do you think that you're in a position where you can continue to accelerate share gain during this period if the opportunity arises?

26:31 Yes, Ed, this is George. Of course, we always think we can continue to increase our share. We're seeing in the foodservice part of our business the inbound fill rates continue to get better. And it's been great to see. We're doing particularly well with the center of the plate, and we're well into the 90% for inbound fill rates. When you get to our Convenience business and our Vistar business and more with CPG companies, I guess, I would say, we're not seeing much in the way of improvement yet. And all we can give for guidance with that is what we're being told. And what we're being told is that it will gradually get better, but it's going to be around for a while, the shortages.

27:28 I guess I was really kind of asking, George, about your outbound rates. And where you stand from a like, yes, a labor perspective? And if we're going to have a good strong spring, summer, are you ready than others, I guess that's really where I was kind of asking.

27:47 Okay. Yes. As far as our outbound fill rates, they continue to improve. A little hard to track in our Convenience and Vistar business because customers will continue to order the same items that that aren't available. So it's hard to tell, but our Foodservice is definitely improving. And as far as from a labor standpoint to be ready, we continue to hire. We continue to train. We continue to see the turnover reduce, I guess, more of the churn reduced than the turnover. We don't really have an issue with longer-term employees. It was more around churn. And the biggest thing that we see is continued reduction in our dependency on temporary workers. That's been tough. You don't get the same commitment and quality from a temporary employee that you get from a full-time person.

28:52 Great. Thanks, guys.

28:56 Thanks, Ed.

28:58 We'll take our next question from Jeffrey Bernstein of Barclays.

29:04 Great. Thank you very much. I have two questions. One, just wondering if you could talk a little bit about market share gains, maybe your perspective on Performance Food versus the industry. stripping out the obvious M&A. But I think you mentioned independents, maybe market share accelerated. I'm just wondering, is that more from adding new accounts? Or is it further penetrating existing accounts, any big differential between change versus independent? How do you think about your market share, whether it’s recent your goal?

29:37 Yes. As far as share, we really only have one reporting that we get. That certainly has all the broad liners in it, not much in the specialty area. But we've done what we consider to be a great job of continuing to gain share and over months where we had gained a good bit of share last year. Our independent is really – within foodservice has driven all of our growth. We actually have been running behind the previous year in our chain business. We have a very large funnel in our chain business. But as we're determining kind of what our costs are going to be moving forward, we've been cautious there. 30:27 Sequentially, from fiscal Q1 to fiscal Q2, our growth got better for independent. And we're actually in a position now where all of our Performance Foodservice distribution centers are running above two years ago in independent case sales and much above in dollar sales because of the inflation that we're dealing with.

30:56 Understood. That's encouraging. And my other question is just -- and George, now that you do have three distinct operating segments, I guess, investors have to digest that. But how do you think about the long-term opportunity set for each, maybe the growth for each relative to kind of the overall Performance Food Group or which segments have the greatest opportunity, whether it's M&A or just more organic?

31:20 Well, our greatest opportunity sits in our largest area, and that's the Performance Foodservice, particularly with independent. Like I said, we've got some things to figure out with our chain business. But our independent continues to do well, and we don't see anything that would cause that to slow down. Vistar has two channels, in particular, that have not come back yet, and that's theater and office coffee. And I would call our value stores as somewhat challenged as well from a cost-to-serve standpoint. So great future there. I would say our three retail automated facilities where we do a good bit of retail and we do a good bit of Internet fulfillment are doing just fantastic. 32:11 I mean the improvement has been just great to watch. So I feel great about the future with Vistar. And Convenience, we talk a lot about convenience foodservice, and I feel that we're off to a great start, and we're going to do well there. But the biggest opportunity is still the Convenience business. I mean I think we're positioned well for it where it's got good synergies from a procurement standpoint with Vistar. And we have a robust funnel there as well. And we have new business that's coming on board in this quarter and in our fiscal fourth quarter that will be very helpful to the core business of Core-Mark.

33:03 Understood. Thank you very much.

33:05 Thanks.

33:09 We'll take our next question from John Heinbockel of Guggenheim.

33:13 George, I want to start by drilling into the Core-Mark pipeline, right, that you referenced? The bulk of that large multiyear contract business, right, as opposed to the independents, can you dimensionalize the size of that? Could that add 5% or 10% to the locations that Core-Mark serves? And then if it is the large piece, the large multiyear contract accounts, how much roughly – how much would you be giving away in margin price? Is that -- or is that margin pretty close, right, because the drop size is pretty close to an independent.

33:54 Well, yes, what I would say is that the independent is where we're growing the fastest and by a significant amount. And that's within both within Eby and Core-Mark and Eby has been doing that for a couple of years, and it's accelerating right now within Core-Mark. I give our people a great deal of credit with that. That is our focus. Then the new business that we have in the Core-Mark that's more sizable. One is a little bit under $0.25 billion a year, a traditional mix, maybe a little heavy tobacco. And the other one is in excess of $100 million a year and has potential beyond that. So it's about a $17 billion business. So it takes a lot to move the needle. But those two will help us move the needle. But the biggest thing is that we continue to grow that independent.

34:58 And then secondly, one of the comments I think you made recently, or last quarter was that you were not as aggressively looking for new business on the foodservice side because you were concerned about service levels. right? You don't want to disappoint. Have we gotten past that where you've ratcheted up the aggressive pursuit of new accounts in foodservice?

35:21 Definitely on the independent front. Like I said, when it comes to the chain, we've got a big pipeline. I would suspect everybody in the industry has got a big pipeline as with all disappointed customers. But the independent, we're going to be as aggressive as ever.

35:43 Okay. Thank you.

35:46 Thanks, John.

35:48 We'll take our next question from Lauren Silberman of Credit Suisse.

35:54 Thank you very much. So just first on pricing power. Can you talk about your confidence in pricing power and being able to push through the installation and remind us what you're generally comfortable pushing through in a normalized environment? And should we see a more challenging consumer backdrop? What are your expectations in your ability to push price? And then sorry, related to prior question follow-up, have you been able to price to cover underlying wage rate increases?

36:23 Well, we've – with this, what I would call, excessive inflation, we've done a great job of passing that on in the independent area, surprisingly. So we're not comfortable with this type of inflation, and we don't like to see that for our customers. We just don't. It's a lot for them to deal with, and we continue to encourage them to raise their menu prices, and most are doing that. They're also pretty true as to how they price and specials they run and what items to use. So that part of our business has gone well. When you get to the chain business, a lot of it is fee-based. We certainly have seen, no secret that labor is high. As Jim mentioned, some of it is transitory, but some of it is not. So we've had parts of our business there where we've been able to get that through even when we were under a contract, and we've had some that have been extremely resistant. And that's just our job to manage our way through that. But that story hasn't ended yet. It's one of the things that makes me feel real good about where we situated today because that part of our business, that national chain business is tough. And distribution centers where that's all we do, we are really having a tough go, and we've been able to overcome that as a company. And I do feel that labor is going to get back to a more normal state once we get through this past -- this last variant and high hopes that we'll be able to reach agreement with our customers as to what's fair.

38:18 Great. Thank you for that. And then you called out an increase in our Foodservice gross profit per case, driven by favorable mix shift, independence and private label. Can you talk about where your mix is with performance brand and how you think about the biggest opportunities to increase that going forward? Is it awareness, expanding the portfolio of options or is it primarily just growing independent .

38:43 Within our independent, we've had several weeks where we've gone over 50% our brand. It's something we always wanted to get to. And quite frankly, I will admit, I didn't think we'd get there by now. And then a bright spot with it is Reinhart, where we adopted many of their brands. We've kind of learned going through this process where those brands fit and where we need to get in legacy Performance brands to get us where we need to be, maybe from a quality standpoint or from a pricing standpoint. And we've left that for our Reinhart people in the field to make those decisions with a lot of direction from us, and I guess I would say a lot of coaxing but they're very close to 50% of their brand – and between their brand and our brand, okay, which I guess, I should say both our brands now. That's one of the encouraging things with Merchants as we bring them on board because they do use the same brand portfolio that Reinhart has. They will remember the same procurement group. And we've already been through this. And I think that we'll be effective quicker with them than we were with Rhinehart, albeit being much smaller, but we are in a position today where Reinhart is growing their independent business faster than Performance and doing extremely well against two years ago. And their brands, I just continue to see us grow the combination of those two brand portfolios.

40:27 Great. And just a final question on the Merchants and just your broader appetite for growth for Foodservice acquisitions in '22 as you think forward, whether you're seeing increased activity and interest in M&A?

40:43 Well, we always say the same thing that we're opportunistic. We're pretty serious about paying down debt right now. We're like any company, we've got certain ones that are priced, right. And if one of those became available, we wouldn't hesitate. But right now, we're pretty focused on paying down debt.

41:11 Great. Thank you guys.

41:14 Thanks.

41:16 We'll take our next question from Jake Bartlett of Truist Securities.

41:21 Thanks for taking the question. Just back on Omicron. In restaurants, most you talked about an impact of a deceleration in December into January. I'm wondering about in your case growth and specifically maybe independents, did you see the same sort of thing? Was there a slowdown in December into January, perhaps you're not seeing as much just with share gains, but any commentary out on just the cadence and the impact on the top line from Omicron.

41:58 Yes. We're trying to figure that out, actually, we certainly saw it in chains even in December, which we didn't see it in independent. We were pleased with the January we had. It was certainly a little bit softer in independent and a good bit softer in the chain business. We don't know how much was weather, how much was Omicron. It certainly gave us a chance to give a better level of service. And I guess I would say, get caught up and let our people work a little bit less. But it wasn't a big difference. I mean, we were really pleased with our results, both top and bottom line in the month of January.

42:47 Great. That's really helpful. And then also just in terms of the cost. You've broken out the impact of the temporary workers. But I'm wondering what else, what other costs might be temporary basis right now that that you'll eventually wrap. That would include sign-on and retention bonuses, maybe overtime costs, recruiting costs, what else is in the cost structure right now that maybe might go away?

43:15 Yes. I'll give you 1 that's worthy of thought, and we mentioned it a little bit earlier, but I think you made a very good list there. The one to add would be the productivity that as time goes by and the training kicks in, we'll see improvements in productivity. I can't give you a number. I can't quantify it. But I can tell you it will be helpful, and it's probably the most important one to add to your list.

43:40 Great. Great. And last question. In terms of the impact of being your processes, your sales systems, obviously, you've seen the impact on Reinhart and the acceleration of the independent sales growth there. I'm wondering about the opportunity at Core-Mark. What kind of a change in the sales growth just by being under your ownership and your processes, do you think can you expect? Should we expect kind of a similar acceleration of growth from that business versus what we saw when it was pre-acquisition. I'm just wondering the opportunity there.

44:22 Well, they're improving now, and I would contend that would have happened whether we merged with them or didn't. I think that we have a culture where we're really focused on the independent operator in our businesses in general. And I hope that, that culture will move into them as well. And I'm quite sure it will. We're seeing some real initial success in independent, but I do believe that would have happened anyway. Then when you get to the foodservice part of it, which sometimes gets lost in the huge volumes that they generate primarily because of tobacco sales. 45:12 We'll have the two sales forces working together closely without losing sight of the fact that their core business in both of them are the most important. But I think that that from a culture standpoint will help us, and I see that already. A big part of foodservice when you get to Convenience is pizza and chicken and Hispanic is pretty big. And that's our strength as a company. That's what we do the best in, in foodservice. So I think that -- I would say I don't see any reason that Core-Mark wouldn't be able to grow faster than they've grown in the past. They didn't have the tools in foodservice that they're able to get today. 46:05 And the great part of that is they recognize that. They recognize that in our early conversations. They saw it as a real positive for the companies to be together. So it's not like us saying we're going to show you how to do this. They know what they're doing. It's just they didn't have those capabilities and the inbound capabilities, and they didn't have the brand. They didn't have the volume in foodservice really to have a brand of their own. So it's exciting. I mean it's a great time for Core-Mark and for our organization with them.

46:42 Great. I appreciate.

46:46 We'll take our next question from Nicole Miller of Piper Sandler.

46:51 Thank you. Good morning. I wanted to ask about sales channels like by percentage. And the three reporting segments, we can obviously calculate at that level. But if you think about pre-pandemic and pre some of these acquisitions you've been discussing today. For example, within 66% foodservice, it used to be, I think, something like 30%, 40% national chain; and health care, hospitality, education, 12%. Those metrics, right, the restaurants within Foodservice, national chain, independent and the other business lines now that they're different and the recovery hasn't been same in like each channel, can you give us a little bit of an outline of where those stand today?

47:40 Not much different than in the past other than the addition of Core-Mark. The independent within Foodservice continues to be a bigger part of our business. But within the independent, we're still biggest in pizza and Italian and actually we're lapping some pretty big numbers from last year in pizza, and we're still running double-digit growth. So extremely pleased there. And then when it comes to contract feeding and lodging and healthcare, that's not really what we do, we do some of it. And then we've always been heavy chain as a company, and we like the chain restaurant business. And you'll see a bigger emphasis on that again as we have a real feel for where our costs are going to be going forward. But I still see us growing faster independent than we're growing chain. So I hope that answers your question or I guess as best as we can.

48:52 Yes. I think just the fact that it's relatively unchanged because where I'm going is trying to understand gross profit margin. And the idea, I think, if we hear you, is that you've acquired a lot of gross profit dollars, like massive dollar growth. Gross profit percentage is down for a number of reasons. Some of the businesses are different. But again, a lot of dollars in areas that aren't competitive for you, so you can have all of the share, and you've acquired growth. But how do you think ultimately about reconciling those gross profit dollars and growth opportunities you brought in against gross profit margin percentage. Like how much is there up for grabs to have that gross profit margin look more like it used to historically.

49:41Well, we look at things per case. So I got to address this. I'm going to answer it in the way in which you asked it. We probably, as a management team, don't spend five minutes a week on tobacco, but that's the difference. And you have a product that's less than 15% of the cube and close to 80% of the sales in Convenience. Now that's going to change over time. But what I will say is that our EBITDA margins, we've always grown them unless M&A took us into an area that was much lower. And our growth in that real low-margin category is only going to come with new accounts. There's not going to be any organic growth at all. And I guess our commitment would be that excluding that, I mean, we're going to continue to grow our EBITDA margins, and it's a business that we have to have to be in the businesses we're in. But we look at what percentage of the gross profit dollars make it to the bottom line, and we continue to improve.

51:08 That's fair. And then just the last one. It's really helpful to hear about labor, right, and you're talking about moving in the right direction overtime's down, it sounds like people are coming back to work permanently, I guess, right, in the field. Can you talk about turnover in terms of drivers and selectors and how that's been trending?

51:30 Yes. I think the short answer to that, the clear answer is turnover is improving. It's been a challenge. It's still a challenge. It's less of a challenge, and we expect it to improve across the next 6 months. I would say that backing up from that question a little bit broader. If you think about the factors that drove just a really great quarter for PFG, clearly, the independent growth, we've talked a lot about drive a super strong quarter for us, and we expect that to continue. It's always been important to us and it will continue to be important. Vistar's continued recovery has been very helpful and the progress they're making has really helped drive a great quarter and margin improvement and improvements in labor were another big area that we talked about, and they'll continue to improve across the next 6 months. And as part of the improvements in labor is an improvement in turnover. All of those things are what contributed to a powerful earnings quarter for PFG and the trend.

52:34 Thank you.

52:40 We’ll take our next question from Kelly Bania of BMO Capital. Q –Kelly Bania: 52:45 Hi, good morning. Thanks for taking my questions. So many questions. I guess maybe starting with just technology and digital. Some pretty big investments by some peers in the space. And I guess I always think those PF, particularly Foodservices is more of a people driven organization. But maybe can you just help us understand where you think you are in terms of technology and digital and sales force tools on that front? And if you think you need to make any investments there. I mean, the results clearly speak for themselves, but just thinking over the next several years.

53:28 Well, we continue to make investments, and we want to make sure that our people have all the tools that they need to address their customer. I do feel that over time the digital will be used by more and more customers. So we're making sure that we have what we need and we make those investments. I mean we always talk about the people first. We always speak that way to them, too, that we're going to give them the tools that they need. But the most important thing is that they're making the calls and that they're committed and they love their customer, and that's kind of what we preach. But don't confuse that with us not having the technology that we need, we certainly do.

54:22 No, that's helpful. And I guess just as it relates to Core, some questions and concerns from some investors, I guess, just in light of where C stores could be in light of the longer-term transition to electric vehicles. And just curious how you thought about that as you evaluated Core-Mark and as you think about Core-Mark much longer term?

54:47 Well, needless to say, we did a great deal of work, particularly our strategy person who actually came out of Altria. But we did a lot of work around that before doing the acquisition. And it just came back that – I mean, it could have an impact, but if did it would be nominal that convenience stores are part of people's lives, and it's habitual and it's not necessarily fuel that's driving that.

55:21 That's helpful. And then last one, I think – did you mention something about value stores being somewhat challenged from a cost-to-serve standpoint. Can you clarify what you meant by that?

55:36 Well, it's just the part of our Vistar business where the labor has had a larger impact. They're smaller deliveries. And we're just addressing that with our customer base, and it's going well.

55:50 Okay. Thank you.

55:54 We'll take a question from Peter Saleh of BTIG.

56:06 Great. Thank you. And congrats on a great quarter. I just wanted to ask, I mean, last quarter, you guys had mentioned that the vast majority, if not all of your growth was coming from existing customers versus new customers? I think you touched on this earlier, but could you just give us an update and elaborate a little bit more. Is that trend continuing or have you seen a little bit of a shift there and you're getting just more growth from new customers?

56:37 Yes, I will do that. Our growth within our customers has continued to be really strong. And the uptick from first quarter to second quarter was almost all driven by new customers. The difference between the two, but we still have just really done a much better job penetrating the accounts. And also, I think that with less accounts out there, those that are open are doing more business. So it's a combination of the two. But going out and pursuing new business is something we're going to be very aggressive with.

57:12 Thank you. Very helpful. And just on – coming back to inflation, it looks like food inflation, commodity inflation was about 140 basis points higher this quarter versus last quarter. We would have expected that to kind of maybe peak and start to come down. But what are your expectations here on food cost as we go through the balance of this year? Do you feel like we've peaked? Or are we just going to continue to see these elevated prices for a while?

57:43 I'm not sure we know, okay? Part of our increased inflation is, ironically, we're growing the fastest in those categories that have the highest rates of inflation. I think that's labor. And even where, I mean we have suppliers that the product that they sell. They have plenty of it and they can't get it to us because they don't have the packaging they use to get it to us. So a lot of this is – some of its upstream, some of it is downstream, but it's just going to take time, but we have seen great improvement in Foodservice. And it's very encouraging.

58:27 Great. Thank you very much.

58:33 And this does conclude our question-and-answer session for today. I'd be happy to return the call to Bill Marshall for any concluding remarks.

58:41 Thank you all for joining our call today. If you have any follow-up questions, please contact us at Investor Relations.

58:50 This does conclude today's conference. You may now disconnect your lines, and everyone, have a great day.