Good day and welcome to the PFG’s Fiscal Year Q4 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.

Thank you and good morning. We are here with George Holm, PFG’s CEO; Jim Hope, PFG’s CFO; and Patrick Hatcher, Vistar President and Chief Operating Officer. We issued a press release regarding our 2022 fiscal fourth quarter and full year 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 2021 fiscal fourth quarter and full year. As a reminder, in the second quarter, we changed our operating segments to reflect how we manage the business. Amounts for the 2021 fiscal fourth quarter and full year have been restated to reflect the segment changes. 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. Now, I’d like to turn the call over to George.

Thanks, Bill. Good morning, everyone and thank you for joining our call today. I am excited to share our results for the 2022 fiscal fourth quarter and discuss some of the recent trends we have observed in the market. It is a dynamic time for our industry and economy, but we believe we are very well positioned to continue to produce strong results and maintain the momentum we saw as we closed out the fiscal year. Our organization is operating at a high level and the dedication of our workforce has made this performance possible. Importantly, as we shared with you just over a month ago at our Investor Day, we believe our company is uniquely constructed to do well and create value for our shareholders in a range of economic climates. Our company has been resilient during challenging times in the past and our recent strategic activity, including the Core-Mark acquisition, have only increased our ability to weather various challenges. But as you saw in our press release earlier today, we have not yet seen significant impact from what some believe may continue to be a more difficult environment for the consumer. Our fourth quarter results show how our company is balanced across a range of channels and categories. In particular, the continued rebound of our Vistar business, which experienced strength in the movie theater and vending channels along with consistent performance from our convenience segment, helped offset modest slowing in some of our chain restaurant business. We are seeing the benefit of return to more normal activities, including vacations, business travel and family outings to the movies, sporting events and other group activities. For several quarters, we have discussed how certain areas of our business, particularly at Vistar, would extend our recovery and build upon the strength we…

Thank you, George and good morning everyone. As George mentioned, we had a strong close to our fiscal 2022 and we entered fiscal 2023 with solid momentum and a strong capital position. As a result, we were able to set solid financial targets for 2023. These measures keep us on track for the 3-year goals we discussed with you during our Investor Day in June. Our cash flow and balance sheet position is strong and allows us to maintain the flexibility to invest behind the organic and inorganic growth. We finished fiscal 2022 by generating about $277 million in cash from operating activities and positive free cash flow of $61 million both substantially higher than our 2021 results. Our cash flow success came despite necessary increases in working capital to keep pace with demand and advanced purchases to take advantage of preferred pricing on certain products. We also increased inventory from one of our tobacco suppliers ahead of that supplier’s planned manufacturing shutdown for their system conversion. We closed the fiscal year with $4.3 billion of net debt, which is a leverage ratio of 4.0x trailing 12-month pro forma adjusted EBITDA. About 72% of our debt is fixed rate representing very attractive financing levels. As we highlighted in June, reducing our leverage is a key financial priority for the company and we have made significant strides both by growing our EBITDA along with targeted reduction in our outstanding debt balances. In the absence of accretive M&A opportunities, we continue to target a leverage range of 2.5x to 3.5x. At the end of the fiscal year, we had $2.2 billion of available liquidity. I am proud of our team’s efforts to maximize our balance sheet and financial position, while continuing to invest behind growth opportunities. We have also continued to make…

Thank you. Our first question will come from Edward Kelly with Wells Fargo. Your line is now open.

Hi, good morning, everybody. And Jim, I just wanted to say that you will absolutely be missed by the investment community. Congrats on a great career, and we wish you all the best and congrats, Patrick, as well on the promotion. The first thing that I wanted to ask about is on the cost side. And just around OpEx per case, labor productivity. Could you provide a little bit more color on productivity, the outlook, how turnover is impacting you? And as we think about the progress through fiscal ‘23, how do we think about the trend in OpEx per case year-over-year?

Yes. Ed, this is George. Turnover is certainly a problem. I think it is for our company, our industry, probably most industries. So we’re dealing with that. It’s getting better. We have a lot of people that are on a learning curve more than we normally would, and they are climb in that curve and our productivity is getting better. We have a ways to go. We have some markets where we’re just back to kind of normal pre-COVID era, and we have some markets where we’ve got a long way to go yet. I think in some respects, that’s encouraging for the future because we know we will get there. And we see our OpEx per case as something that’s a nice tailwind for us going into this fiscal year.

Okay. And then just a follow-up, and this is for Jim, I guess, you can’t get off the call, Jim, without answer some questions. As we think about free cash flow, you made investments in inventory that’s been kind of a drag on free cash flow in the past year. But how do we think about 2023? I mean, because it does look like you could see a nice bounce back in free cash flow, but I’m not sure if I’m missing anything as it relates to that.

Hey, Ed, yes, thanks for the question. And no, I don’t think you’re missing anything. I think you’re right on. This was an important year for Performance Food Group as we saw really multiple years of really strong come back in revenue and top line, a lot of growth, really positive developments in market share gains. So we had to build inventory, invest in working capital to support that. And I think the field actually did a very good job managing inventory, but we’re getting close to the point where we’ve got inventory calibrated with sales and revenue growth and I think we’ve been through the hardest part of that cash burn, so to speak, related to that. And yes, I would think that part of the pressure on free cash flow would start to subside.

Great Thanks, guys.

Thank you. Our next question comes from Alex Slagle with Jefferies. Your line is now open.

Thank you. Good morning. I just want to echo my congrats to Jim and Patrick as well. Question on I guess, a follow-up from Ed’s question on the contract labor costs and kind of walking through how you’re thinking about the year-over-year benefit from this as you – some of these direct costs come down, but you’re offsetting with more of the full-time labor and training and you talked about the significant headwind in June or I guess the significant headcount increase in June and the training that comes with that? Just trying to think through that a little bit.

Yes. The simplest way to think through it is if – and I know you’ve seen across the last four quarters, we made a point of giving you the contract labor premium costs so you could see how much more of an increase there was that we had in contract labor. And now we’re saying, as we expected, that number is really now below last year. So contract labor isn’t the issue that it once was. And as we’ve talked about in the past, we would see contract labor improve, which has had, which it has. And we start to see over time increase, that’s happened, and then we would expect over time to start to come down to a more normal rate. It’s nice to see us building staff, and we need to work on reducing turnover, as George mentioned. But I think we’re at the spot where contract labor and that excessive premium is no longer part of the picture as we move forward.

Got it. And wanted to follow-up on comments on the July, August trends and just color on the progression of sales maybe through the quarter and into that as consumers face the higher levels of inflation and fuel costs, but then a pretty dramatic in decline on the gas prices, I guess, through July and into August and curious how this impacted demand across the businesses that especially convenience?

Well, we do feel that the cost of fuel has had a negative impact on the business. Even in convenience, where typically people will be in more frequently, people that buy a certain amount of gas at a time and purchase more product, but we haven’t experienced this kind of increase in fuel before, and we’ve actually seen less traffic in convenience but a higher ticket. As far as the trending goes on the Foodservice side, we have seen some uptick in July and early August on a comparison standpoint to the previous year. But I think if you look at our fiscal fourth quarter, calendar second quarter. The anomaly was really more last year than this year. The reason I say that is, first of all, we had mid-50s independent case growth last year versus the previous year. But if we go back to 2019, which is I think the last time we saw anything which approached normalcy, our fiscal 2022, each quarter was very similar in that mid to high teen case growth over 2019. But quarter four, we were only, I believe, 4.7% was the number. So if you go back and you look at the fourth quarter of last fiscal year, you had a lot of things going on. First of all, you have many markets opening up and coming back very strong, you had stimulus money that ended up a lot of that became discretionary income and a lot of it went into restaurants, and people wanted to get out that continued in July and August of last year, and then it started to taper. So I think we’re going to have easier comparisons provided we don’t go into a big recession. I think we’re going to have easier comparisons later in the year. And we’ve particularly seen it in some of our chain business that has been very slow versus last year.

That’s helpful. Thank you.

Thank you. Our next question will come from Jake Bartlett with Truist Securities. Your line is now open.

Great. Thanks for taking the question. My first is on the 2023 guidance and when you gave the ‘25 guidance at the Investor Day, you kind of qualified that in the low end with a mild recession. Is that the case for your 2023 guidance? I just want to kind of understand what kind of macro backdrop really are included in that guidance?

Yes. Certainly, with Q1, we’re clearly a little closer to that time period now than we were with the 3-year guidance, where we’re giving something way out in the future, and we wanted to caveat it with thoughts around the macroeconomic environment. With Q1, what you see is probably a little more of a traditional high and a low end of a range. We’re already into that quarter a little bit. So it’s not as heavily impacted by changes in the economy as the 3-year outlook would be. I would kind of wrap that comment up with I think you know us, we feel very confident about the guidance we’re providing today.

Okay. Great. And the other question is just there is some kind of modest EBITDA margin expansion buildings in the ‘23 guidance. So I’m wondering if you could help us understand the sources of the margin expansion or whether you should see – we should see gross margins expand a little bit, contribute to that to the overall margin expansion or is that mostly just on the operating expense leverage that you’re expecting?

Yes. This is George. I’ll go ahead take that one. In the gross margin area, we’ve been doing very well. And the bulk of that continues as it has for several years to come from our change in mix of business. Our gross profit per case is at all-time highs and I think our industry appears to be probably at all-time highs. But with that type of inflation for us to get margin growth as well has been a bright spot for us because we do have several large customers that are on a fee per case and increased inflation only drags the margins down. We’ve also experienced in our Vistar business, a great change in mix of business more towards where we get a higher margin. And then when you go to convenience, it’s just the same story. The tobacco has been on a decline close to 3.5% last quarter. And we had over 17% growth in the food and kind of food-related area and particularly good in food service. So I don’t see our margins being a big challenge for us as we get into next year. I think those trends will continue. Now we’ve done real well as far as making money on the existing inventory that we have. And we’ve modeled in for that to slow down. But we’ve also had unusually high, as we talked about with Ed’s question, we’ve had unusually high labor costs, particularly in warehouse and delivery. And if that continues the trend that it’s on now, those two, the one headwind and the one tailwind will kind of offset each other.

Great. Thank you very much. I appreciate it.

Thank you. Our next question will come from Mark Carden with UBS. Your line is now open.

Good morning. Thanks a lot for taking my questions. Jim, I’d also like to extend my congratulations on your retirement. And also Patrick and Scott, congratulations on your promotions. Maybe to start on market share with gains they are pretty solid across the board. Are you seeing any indications that it’s coming more from wallet share growth with existing customers or from new customers being onboarded, and then has this balance been shifting at all in recent quarters?

We look at that extremely close. And what we’ve seen is that our new business is real stable, the percentage of our business that’s accounts that we didn’t sell the previous year. And our lost businesses continued to gradually go down. So we’re real pleased there. We’re seeing the big change is in penetration as our penetration has gone from a pretty good positive to a negative. And I think that’s understandable. There is more restaurants open. So it’s more competitive. And the ones that are opened when that’s higher, you’re going to have more options and people are going to see some decline in traffic. What gives us encouragement there that, that is temporary and more to do with the big volumes last year is that our line is really up. So we’re selling more items to the customers that we’ve had this year and last year, and they are just not buying as many cases per line item. It just shows that that their business is down. So we know that we can do a good job with new business that hasn’t been the focus that we needed it to be for a while as we were struggling from an operational standpoint. We expect that to get better and we’re just encouraged.

Great. And then on cross-selling, you talked about the pipeline remaining quite strong. has the mix been in line with what you were anticipating? And by this is interest still skewing more heavily from convenience stores looking to cross-sell food service? Or have you perhaps been surprised by the degree of Foodservice customers in the convenience side that are looking to add center store?

Yes. For us, those sales show up partially in Foodservice and partially in convenience, depending on the level of commitment that the convenience store has from service and the number of SKUs that, that involves. So I think what I would be comfortable saying is that both are growing and growing well. And our approach to the marketplace, I think we’re refining that, and we’re getting a better and better feel of which one of our businesses should be pursuing that business. But when we see these kind of declines, which are a little bit unusual in tobacco, a little more than normal, I just look at that, that it just takes these convenience customers where our Core-Mark and EV people have great relationships. And it makes food and food-related product, more important to their future success. And I think that, that just bodes well for us.

Makes sense. Thanks so much and good luck.

Thank you. Our next question will come from John Heinbockel with Guggenheim Partners. Your line is now open.

Thanks. Also, congratulations, Jim and Patrick. I’m going to start with a short-term tactical question then maybe one longer-term. But George, when you think about the average ticket, casual dining, obviously quite a bit different than pizza I mean when you sort of dissect your business, is there any sign yet – well, how much of your business would be higher ticket, meaning average check maybe for family, right, higher than $50? And is there any sign yet that maybe starting to see a little bit of pressure relative to lower ticket, right? Because it is expensive to eat out the experience isn’t what it used to be. Any sign of that any concern on your end that that part of the business may weaken here over the next few quarters?

Well, that’s really a good question. And we’re always careful as to how we comment because we – it’s kind of our customers’ job. But I would tell you that we see casual dining as not all of them, okay? So I don’t want to imply that, but that has been weaker for us, and we’re seeing a little bit more success kind of in that fast casual and better lower-priced menu casual diners. I would say that, that is already happening. Now that’s just our customer base and – but that’s what we see.

Okay. And maybe longer term, right, so – and I maybe over-thinking this, but – when I look at the implied second half of ‘23, right, at the midpoint, right? So, that’s about 10% EBITDA growth or so. To get to the midpoint, the $1.6 billion by ‘25 requires a step up from that. So, I am curious, what do you – it’s not revenue driven, right? It looks like it’s more margin. What drives that? Is that a normalization in labor? Is that a step up in mix? What do you think drives that improvement in the out years?

Yes. It’s definitely both of those. It’s continued improvement in mix, continued improvement in labor. Really, we expect every division to continue the positive momentum that they have already shown. And I will tell you, we are basing our projections internally based on trends that we already see today that we feel confident in.

Okay. Thank you.

Thank you. Our next question will come from John Glass with Morgan Stanley. Your line is now open.

Thanks. Good morning everyone. Congratulations, Patrick and Jim. I wanted to see if you could maybe just unpack a little bit in terms of your overall revenue growth for this year, the 12%, I think at the midpoint. How do you think in particular the convenience and Vistar channels contribute to that? I assume below, but maybe some insight on how you are thinking about those businesses growing. Do you think the Vistar business was an anomaly quarter just given box office, or do you think that’s more of a durable run rate for revenues right now? Thanks.

Well, the Cedar business has always been kind of choppy because it’s so dependent on the quality of the content. We see a little bit of a lull period right now, but there is some great content coming out and we expect to have a real good kind of late fall and early winter season. Theaters just made a great come back. Vistar still has some business that haven’t come back entirely that office coffee being one that we are not sure will come back entirely, but it’s certainly going to improve from the levels it’s at now. And then our retail business, it’s been quite strong, and we don’t see anything that’s going to reduce the performance there. So, we look at the next couple of quarters as this start being a good grower for us. When you get to convenience, that business tends to come in chunks. There is a longer sales cycle with it. We have got a good funnel. We have got some new business that we know for sure is coming on. So, we feel good about that being a growth business for us. And then when it comes to our food service business, if you look at our national account business, we were actually for fiscal ‘22, we were negative for the year. And obviously, it helped a great deal in margins, but we have got a good funnel there. We have got some business that we know is coming on as well. So, we are confident that we are going to have a better growth year in Foodservice in ‘23 than we did in ‘22.

Okay. That’s helpful. Thanks. And then, Jim, on inflation, what is the – I know you talked about inflation broadly, but what is the embedded overall inflation number or range for 2023, please?

Yes. We didn’t provide a number as part of guidance, but we certainly added some commentary and color that we expect it to slowly subside, but we do expect continued inflation in 2023.

Okay. Thank you.

Thank you. Our next question will come from Fred Wightman with Wolfe Research. Your line is now open.

Hey guys. Good morning. Thanks for the question and Jim all the best on retirement. I was hoping you could sort of touch on the – there was a comment about having the highest fill rates that you have seen in over a year. I am wondering if you could just connect the dots with what you think that might mean for targeting or ultimately securing new customer growth. It sounds like that new customer add lines has been relatively steady. But with fill rates where they are, do you think you can sort of lead into that going forward?

Well, we have seen a continued improvement in our inbound fill rate, and we have always been able to provide a higher fill rate to our customers than we are getting from our supplier just through experienced purchasing people and running higher inventories as we are today. I don’t know how much of an advantage that gives us in the marketplace. We don’t have a great feel for our competition and what kind of fill rates that they are operating with. But I would imagine that it’s somewhat similar. When you get to our convenience and our Vistar business, it has been more difficult. Our inbound rates have not improved to the level that anywhere near actually the level that our Foodservice has. And I think that’s because so much of its packaged product that has several ingredients and the more ingredients there are, the more likely that there is something that’s not available at the time. And we don’t know – we just don’t have a good feel for how much business that is costing us. That’s one of the tough things in determining where you feel sales are going to go. Sometimes the customer in both of those businesses just put something else into that slot and you are not necessarily losing a sale. But in Foodservice, we do believe that having higher available product is going to help us.

Makes sense. And then if we just think about the guidance, I mean giving two quarters has been something that you guys usually do. Did the Street just have the seasonality wrong and you wanted to flag the timing of some of these inventory benefits, or is there something that’s on the horizon, maybe some of that trade down from the lower end casual that’s making you a little bit more cautious?

No, it was primarily the inventory benefits and we wanted to provide the Street a little more clarity on the inventory gains that we are very confident in and happening in Q1, and make sure that folks had the calibration between the two quarters and they saw it in a manner consistent with us. That’s all. Just trying to help.

Perfect. Yes. That’s very helpful. Thank you.

Thank you. Our next question will come from Jeffrey Bernstein with Barclays. Your line is now open.

Great. Thank you. Two questions. One, just following up on the inflation, I know the past couple of quarters, it’s been stable in that 13% to 14% range. And I think you mentioned you expect it to slowly subside, but nothing too crazy. I am just wondering if you can maybe walk us through high level, the implications of if it stayed at double-digit versus the potential for your basket to be down to single-digit, or some people dream of potential deflation. I am just wondering if you could share some high-level thoughts on how you think about it as a business in terms of the margin impact by your segment level? And then I had one follow-up.

Yes. We feel that we are benefiting from the inflation actually because the way we have been handling our inventories and we have made some good income there. We certainly don’t want to see inflation rates continue to be where they are at today, and we didn’t model in this type of inflation into how we are planning out this next year. I think that there is still some price increases that need to happen on the part of our customers who have been behind that price increase curve. And I think it’s given some advantages to our industry versus retail that seems to be right on the market with their price increases. And I do feel that it’s going to advantage people that are a better price value that are kind of on the lower end as far as our customers go. That’s really all we can say at this point. We just don’t have a great feel for that, but we don’t expect to see a deflationary period of time.

Understood. And then just more broadly in terms of the market share. I know Jim, you mentioned earlier, big gains in recent years. Just wondering how do you quantify that for some perspective from the outside? I know some of your peers talk about what level of growth they expect as a multiple to the broader market. Just wondering whether you can share any metrics in terms of what you believe your market share was and is or maybe you have some internal targets in terms of the growth rate versus the market, just trying to level set across the big players? Thank you.

Yes. We have not quantified the market share gains. We haven’t put a target out there to-date. But we feel confident that we have taken market share and we continue to grow in a very healthy manner, both from an organic as well as an inorganic perspective.

Yes, I think it’s difficult to determine the size of the market in our business. We have one set of numbers that we use and that doesn’t have every distributor in it. It has all the large broad-line distributors. So, that’s what we look at. It doesn’t have the specialty guys in there. But we have very consistently been gaining share across pretty much all restaurant types. And the restaurant types that we are the largest in and we have the largest shares have also been where we have been gaining the most share. So, that’s how we report. But I don’t want anybody to think that we know what our market share is with the total market that involves everybody in distribution, we do not.

Understood. Congrats Jim and good luck Patrick and Scott. Thank you.

Thank you. Our next question will come from Peter Saleh with BTIG. Your line is now open.

Great. Thank you and thanks for taking the question. I also wanted to echo my congrats to Jim, Patrick and Scott. George, at the Investor Day, I think you indicated that sales in Foodservice were still pretty healthy, but you were seeing a significant amount of volatility week-to-week, a lot more than usual. How would you describe the current environment? I know you guys gave some color on July and early August seems to be more in line with June. Just trying to understand if that volatility has improved and things are more normal or if that has continued.

Things have been very stable, not at the level we would like to see that, but it’s been very stable. But once again, I go back to what I said earlier, if you compare fiscal ‘22 to fiscal ‘19, the increases were pretty much the same all four quarters. So, that tells me that when you go back to that stable period of time pre-COVID, that we are at that same kind of level of stability. And I think that Q4 of last year and into part of this year is the anomaly. That’s when things were extremely high. And I think we are heading into a much more normal environment in the restaurant part of our business.

Thank you for that. And then just on the inflation, just coming back to that, are there any categories or products that you feel are – we could see some more modest inflation or maybe even deflation as we head into ‘23, where other categories we may see some more inflation? Just trying to parse out some of your comments here on the outlook for inflation in ‘23.

Well, let me – first of all, just talk Vistar and Core-Mark. They have seen a good bit of inflation. They have seen suppliers that have had two price increases instead of one in a year. Those type of packaged goods, in all my years in the business, I have never seen them lower prices, okay. That just doesn’t happen. They may pass on a price increase for a year. I have seen candy do it once for 3 years. So, kind of set that aside. When you get into Foodservice, the commodity items, they change prices and they change prices regularly. And I think that we will get to maybe a more normalized environment where it’s pretty much controlled by supply and demand. But today, there is still labor factors. There, there could be deflationary periods of time. We have seen some meat deflation in certain products here of late. But when you look at the amount of cattle out there, we know that we get into next year, probably even this fall, there is going to be some fairly significant price increases. So, I don’t think anybody really knows, but we follow it close. We have people that follow it much closer than we as a management team do that we get advice from, and I think it’s going to continue to be inflationary. I just don’t think we are going to see these mid-teen type inflation numbers for any lengthy period of time.

Thank you very much.

Thank you. Our next question will come from Andrew Wolf with C.L. King. Your line is now open.

Thank you. Jim, congratulations on your career and best of luck in your retirement, I wanted to ask about the cadence. I know people have asked about this, but you did reference how July and August are doing with respect to June. Is that because June is more normal as you have been kind of talking about, George, or is it – was June slight – was June a lot different than the rest of the quarter, or am I reading too much into that?

No, not really a lot different, but I wouldn’t call June normal from a comparison standpoint. I think it was a fairly normal month, but the comparison versus last year was very difficult. And I will reiterate this. But our June, like the quarter, the increase over 2019 was pretty consistent with what it’s been all year long. We have seen a slight uptick in our case growth in July and early August, but I still look at last year in that period of time as being a very strong period of time, tough comparisons, I guess is what I am saying.

Sure. No, that’s really helpful in my understanding. What about Reinhart, is it also driving the results there in, or more of the divisions also starting to pick up their growth relative to…?

Yes. Reinhart is doing terrific. Just really performing well. I couldn’t be more pleased.

Thank you. So, Jim, you mentioned inorganic investments and the use of free cash flow, and that’s a pretty broad place to put a brush. But could you guys just sort of talk about maybe some of the key areas of focus, either for ‘23 or beyond, whether it’s hiring more salespeople or where are you at with just personnel in general. It sounds like you had a nice step up, but there is still a lot of job vacancies. So, it’s a pretty open-ended question, but where do you want to invest in the business to really start getting your labor rates where you wanted to get and so on?

Yes. Look, what we are referring to is we are going to continue to invest back into the business to support growth. We will do that in multiple ways, none more important than CapEx to continue to build our supply chain infrastructure. But I feel like we are in very good shape, of course, from the standpoint of the balance sheet and our ability to invest back into the business.

Got it. And I don’t know if you are – just a couple of modeling questions here kind of a little bigger than – so the last few quarters, you had a couple like both quarters had showed $11 million, it looks like other income. Is that a new component in the business, or was that just some flow through that is not going to continue?

Yes. No, that’s not a new component. We do quite a bit of probably an appropriate amount of fuel hedging to offset the rising cost of diesel fuel, and that’s what you are seeing there, the cost covers that we were on.

Alright. And one other one for you, Jim, before we go to kind of badger here. Could you give us the holding gains maybe for the first half, like what the swing might be? I know Core-Mark used to break that out, kind of as a useful number to see what the rest of the business is doing?

Yes, Andy. Certainly appreciate and respect that question, falls under the category of one that we are not going to share at this time. But it was helpful and I appreciate the question.

Would you say it’s more of an intra-quarter swing, which is why you showed us the two quarters, or is it an absolute kind of boost to the EBITDA for the year?

Yes. So, as I mentioned earlier, that’s one of the main reasons we provided two quarters to show you there was a little more heavier mix of the inventory gains in Q1. You are correct.

Alright. Thank you. That’s it from me. Appreciate it.

Thank you. Our next question will come from Kelly Bania with BMO Capital. Your line is now open.

Good morning and congratulations from us as well, Jim. Just a question on the margins, I recall from the Analyst Day in June, I believe, Jim, you expected all three segments to contribute to the margin expansion over the 3-year period. But as you look at this year aside from the inventory gains which you called out, which is helpful. Just any color on the segments that contribute to this? And just any discussion of kind of the upside or downside to those margin expansion assumptions?

Yes. All three businesses today are running margin growth. All three.

Look, we have good momentum.

Perfect. That’s helpful. And then just – I apologize if I missed this number, but in terms of growth from Q2 on an organic basis relative to 2019, can you give us those figures for Foodservice and Vistar?

Right now, I don’t have those numbers here with me. And, no, I am not sure we are going to disclose anymore than we have. But happy to help you work through what we have disclosed.

Okay. Thank you.

Thank you. It appears we have no further questions at this time. I would now like to turn the program back over to Bill Marshall for any additional or closing remarks.

Thank you for joining our call this morning. If you have any follow-up questions, please contact us at Investor Relations. Have a great day. Bye.

Thank you. Ladies and gentlemen, this concludes today’s event. You may now disconnect.