GE HealthCare Technologies (NasdaqGS:GEHC) FY Conference January 13, 2026 01:30 PM ET Company ParticipantsJay Saccaro - CFOPeter Arduini - CEOConference Call ParticipantsRobbie Marcus - AnalystRobbie MarcusGood morning, everyone. I'm Robbie Marcus, the MedTech Analyst at JPMorgan. Very happy to have our next session led by CEO of GE HealthCare, Peter Arduini. Peter will do a presentation, followed by some Q&A. Pete.Peter ArduiniThanks, Robbie. I guess it's still good morning, good afternoon for those on the ...

Summary of United Natural Foods (UNFI) 2025 Investor Day Company Overview - **Company**: United Natural Foods, Inc. (NYSE: UNFI) - **Industry**: Food Distribution - **Revenue**: Generated just under $32 billion in fiscal 2025 with over $550 million of adjusted EBITDA at a 1.7% margin [14][10][25] - **Distribution Network**: Operates 49 distribution centers with 28 million sq ft of warehouse space, delivering approximately 230,000 unique products to over 30,000 retail locations across the U.S. and Canada [14][10] Core Points and Arguments - **Long-term Strategy**: UNFI aims to become the most valued partner to grocery retailers and suppliers, focusing on adding value through unique products, competitive pricing, and enhanced services [9][10][18] - **Market Focus**: Targeting a $90 billion market, with a significant portion driven by natural, organic, and specialty products, which account for nearly half of sales and over 70% of EBITDA [15][13] - **Financial Commitments**: Projecting low single-digit top-line growth and low double-digit Adjusted EBITDA growth on average annually through fiscal 2028, with an aim to deliver $300 million in annual Free Cash Flow [10][25] Key Segments 1. **Natural Products Segment**: Accounts for nearly half of sales and over 70% of EBITDA, driven by consumer demand for health and wellness products [13] 2. **Conventional Products Segment**: Represents 44% of sales and nearly 30% of profitability, distributing well-known brands [13] 3. **Retail Segment**: Includes two retail banners, Cub and Shoppers, with opportunities for improvement and innovation [13] Strategic Initiatives - **Value Creation Strategy**: Focused on two components: adding value for customers and suppliers, and improving operational effectiveness and efficiency [18][28] - **Customer Stewardship**: Revamping commercial organization to better understand customer strategies and enhance tailored execution [19][29] - **Merchandising and Supplier Support**: Building a broad assortment and data-driven merchandising capabilities to help retailers compete effectively [20][32] - **Professional and Digital Services**: Offering scalable services to help customers save money and drive profitable growth [20][36] - **Private Brands**: Aiming to grow private brands in the mid-single-digit range, enhancing differentiation for retailers [38][39] Operational Improvements - **Technology and Innovation**: Investing in AI-powered solutions and a new ERP system to enhance operational efficiency and decision-making [40][47] - **Supply Chain Enhancements**: Implementing RELEX software for better demand planning and inventory management, leading to improved fill rates and customer service [41][42] - **Lean Management**: Adopting Lean Daily Management practices to drive continuous improvement in safety, quality, delivery, and cost [49][52] Leadership and Talent Development - **Leadership Team**: Composed of experienced industry veterans focused on transformation and growth [55][56] - **Talent Development**: Emphasizing continuous learning and leadership programs to cultivate the next generation of leaders [63][64] Financial Outlook - **Adjusted EBITDA Growth**: Expected to reach around $800 million by fiscal 2028, with an approximate margin of 2.4% [25] - **Net Leverage Reduction**: Aiming to reduce net leverage to less than 2.5 times by the end of fiscal 2026 and under 2 times by the end of fiscal 2027 [25][26] Conclusion - UNFI is positioned for sustained growth through strategic initiatives focused on customer value, operational efficiency, and a strong leadership team, with a clear path to enhancing shareholder value and market position [26][27]

Financial Performance & Targets - FY25 Net Sales were approximately $32 billion[21], with Natural, Conventional, and Retail segments contributing 49%, 44%, and 7% respectively[21] - FY25 Adjusted EBITDA was approximately $552 million[21], resulting in a 1.7% Adjusted EBITDA Margin Rate[21] - The company aims for Low-Single Digit (LSD) Average Annual Net Sales Growth and Low-Double Digit (LDD) Average Annual Adjusted EBITDA Growth through FY28[13] - The company targets approximately $33 billion in Net Sales and approximately $800 million in Adjusted EBITDA by FY28[34] - The company projects approximately $300 million in annual Free Cash Flow through FY28[13] - The company aims to increase the Adjusted EBITDA Margin Rate to approximately 2.4% by FY28, a +65 bps increase[34] Operational Improvements & Strategy - The company reduced its net leverage ratio from 4x to 3.3x in FY25[31] - The company is implementing Lean practices across the business to improve effectiveness and efficiency[31] - The company is focused on adding value for customers and suppliers while improving effectiveness and efficiency[25] - The company is working to improve throughput in distribution centers, projecting a >13% increase from FY24 to FY26E[223]

Financial Data and Key Metrics Changes - In Q1 fiscal 2026, the company reported net sales of $7.8 billion, roughly flat compared to the previous year, with adjusted EBITDA of $167 million, up nearly 25% year-over-year [14][16][20] - The adjusted EBITDA margin was 2.1% of net sales, an increase of 40 basis points year-over-year, while adjusted EPS rose to $0.56 from $0.16 last year [17][20] - Free cash flow was a use of $54 million, an improvement of about $105 million compared to the previous year, with net leverage ratio decreasing to 3.2 times, down one full turn from the prior year [18][20] Business Line Data and Key Metrics Changes - The natural product segment grew by 11%, driven by strong unit growth and new business projects, while the conventional product segment saw a decline of about 12% due to the transition out of the Allentown distribution center [14][15] - Retail sales fell by 5%, with same-store sales declining by 3%, attributed to store closures and strategic decisions to strengthen the store network [15][20] Market Data and Key Metrics Changes - Wholesale inflation was approximately 3%, with unit volumes declining about 5%, primarily due to network optimization efforts [15] - The company operates in a $90 billion target market, focusing on improving service levels and long-term profitability [4][6] Company Strategy and Development Direction - The company aims to enhance its merchandising capabilities as a competitive advantage, focusing on tailored merchandising and competitive pricing [8] - A new leader for the private brands portfolio has been appointed to drive differentiation and value for consumers [8][72] - The company is implementing advanced supply chain technologies and Lean Daily Management to improve operational effectiveness and efficiency [10][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year outlooks, emphasizing the importance of customer service and operational excellence [7][21] - The competitive environment remains challenging, particularly for traditional grocers, but there are opportunities for innovation and differentiation [8][36] - The company anticipates continued growth in the natural segment, projecting it as a mid-single digit grower in the long term [40][54] Other Important Information - The company is focused on reducing net debt and improving its net leverage ratio to below 2.5 times by the end of the fiscal year [20][21] - The upcoming Investor Day will provide further insights into the company's capabilities and strategies [13][69] Q&A Session Summary Question: Can you talk about drop size or new account distribution versus existing growth in the natural segment? - Management noted that growth has been strong, particularly with larger customers, leading to increased efficiency and positive trends in drop sizes [24][25] Question: How sustainable is the gross margin strength observed in Q1? - Management indicated that gross margin improvements were driven by strong natural growth and supplier programs, with expectations for continued sustainability [33][34] Question: What is the competitive environment like for both conventional and natural segments? - Management highlighted that the competitive landscape is very dynamic, with innovative retailers outperforming, and emphasized the need for strategic partnerships to help customers succeed [35][36] Question: How does the company view the health of the consumer in both segments? - Management acknowledged challenges in the conventional segment due to consumer sentiment but noted strong growth in the natural segment [39][40] Question: What is the capital allocation strategy moving forward? - Management confirmed that the focus remains on deleveraging and reducing debt, with plans to reach a net leverage ratio of 2.5 times or lower [89]

Financial Data and Key Metrics Changes - In Q1 2026, the company reported net sales of $7.8 billion, roughly flat compared to the previous year, with adjusted EBITDA of $167 million, up nearly 25% year over year [14][16][20] - The adjusted EPS for Q1 was $0.56, compared to $0.16 in the prior year, driven by higher profitability and lower net interest and depreciation expenses [17][20] - Free cash flow improved by over $100 million compared to last year's first quarter, resulting in a use of $54 million [17][18] Business Line Data and Key Metrics Changes - The natural product segment grew by 11%, driven by strong unit growth and new business projects, while the conventional product segment saw a decline of about 12% due to the transition out of the Allentown distribution center [14][15] - Gross margin rate increased to 13.4%, up 20 basis points year over year, reflecting improved execution and supplier programs [16][20] - Operating expense rate improved to 12.7% of net sales from 12.9% last year, benefiting from efficiency initiatives [16] Market Data and Key Metrics Changes - The company operates in a $90 billion target market, focusing on improving service levels and long-term profitability [5][12] - Retail sales in the conventional segment fell by 5%, partly due to store closures, while same-store sales declined by 3% [15][20] Company Strategy and Development Direction - The company is focused on enhancing its merchandising capabilities and private brands portfolio to help retailers differentiate themselves in a competitive environment [8][12] - Continued investment in supply chain technologies and lean management practices is aimed at improving operational efficiency and customer service [10][19] - The company aims to reduce net leverage to below 2.5 times by the end of the fiscal year, with a long-term goal of achieving sustainable value creation [22][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year outlook, emphasizing the importance of customer service and operational excellence [6][22] - The competitive environment remains challenging, particularly for traditional grocers, but there are opportunities for innovation and differentiation [36][41] - The company anticipates continued growth in the natural segment, projecting it to be a mid-single digit grower in the long term [41][55] Other Important Information - The company has ramped operations at a new automated natural product distribution center in Sarasota, Florida, to address strong demand [12] - The management team is preparing to share more insights on capabilities and strategies at the upcoming Investor Day [12][68] Q&A Session Summary Question: Can you talk about drop size or new account distribution versus existing growth? - Management noted that growth has been positive, largely driven by larger customers giving more business, which enhances efficiency [25] Question: How sustainable is the gross margin strength in the quarter? - Management indicated that gross margin improvements were driven by strong natural growth and supplier programs, but some procurement gains are viewed as temporary [33] Question: What is the competitive environment at retail for both conventional and natural? - Management highlighted that the retail environment is very competitive, with many retailers innovating to differentiate themselves [36] Question: How has the Allentown transition impacted conventional sales? - The transition was a significant factor in the decline of conventional sales, but management remains optimistic about future performance [40] Question: What is the company's capital allocation strategy going forward? - The focus remains on deleveraging and reducing debt, with plans to reach a net leverage ratio of 2.5 times or lower [90]

Financial Performance - Q1 FY26 - Net sales decreased slightly by 0.4% to $7,840 million compared to $7,871 million in Q1 FY25 [14] - Adjusted EBITDA increased significantly by 24.6% to $167 million from $134 million in Q1 FY25 [14] - Adjusted EPS grew substantially by 250% to $0.56 from $0.16 in Q1 FY25 [14] - Free cash flow improved from $(159) million to $(54) million [14] Strategic Initiatives and Operational Efficiency - Network optimization actions reduced total net sales growth by approximately 3% [15, 24] - Net leverage ratio decreased to 3.2x, down 1.0x year-over-year [30] - Net debt decreased by $331 million year-over-year to $1,897 million [30] - Lean daily management was deployed at 34 out of 49 distribution centers by the end of the quarter [19] - New item setup time was reduced by 50% at the Chesterfield, NH Distribution Center [44] Fiscal Year 2026 Outlook - The company affirmed its fiscal 2026 outlook, including net sales of $31.6 - $32.0 billion and adjusted EBITDA of $630 - $700 million [36]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $7.7 billion, down from $8.2 billion in the previous year, reflecting a 1.6% growth when excluding the $582 million benefit from an extra week in last year's quarter [37][38] - Full-year net sales rose 4.6% on a comparable 52-week basis, with volumes growing 1.4% and inflation at about 1.8% [39] - Adjusted EBITDA for Q4 was $116 million, compared to $133 million in the prior year, with full-year adjusted EBITDA at $552 million, slightly above the midpoint of the outlook [42][43] - Free cash flow in Q4 was $86 million, bringing the full-year total to around $240 million, a significant improvement from a cash use of approximately $90 million in fiscal 2024 [43][44] - Net debt was reduced to approximately $1.8 billion, the lowest level since 2018, with net leverage decreasing by around 0.7 turns from the end of the last fiscal year [23][44] Business Line Data and Key Metrics Changes - The natural segment experienced a growth of 9% on a comparable 13-week basis, outperforming the market, while conventional segment sales declined by 6% [38] - The company is focusing on improving category merchandising and account management capabilities, which includes realigning sales and merchandising teams [26][28] Market Data and Key Metrics Changes - The company is targeting a $90 billion addressable market that includes natural, organic, specialty, multicultural, and conventional grocery retailers [25] - The growth in the natural segment is supported by enduring consumer trends towards health and wellness [33][120] Company Strategy and Development Direction - The company aims to become the food industry's most valued partner by providing innovative products and services to help retailers and suppliers grow profitably [24] - The refresh strategy focuses on creating more value for customers and suppliers while becoming a more effective and efficient business [25][31] - The company expects to achieve net sales growth in the low single digits on average from fiscal 2024 to 2027, reflecting better-than-projected organic growth [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory and ability to create sustainable long-term value despite challenges faced during the cyber incident [35] - The company anticipates continued execution of its strategy and another year of profitable growth while further strengthening its balance sheet [31][49] Other Important Information - The company has implemented lean daily management in 28 of its 52 distribution centers, which is expected to enhance operational efficiency [45] - The fiscal 2026 outlook includes expected net sales in the range of $31.6 billion to $32 billion, with adjusted EBITDA projected between $630 million and $700 million [47][48] Q&A Session Summary Question: Opportunities in natural merchandising initiatives - Management highlighted three key areas for growth in natural merchandising, focusing on innovation, simplifying the experience for emerging suppliers, and deepening involvement in categories for conventional retailers [52][56] Question: Improving conventional profitability - Management acknowledged that conventional products have lower margins and emphasized the need for thoughtful business shrinkage while focusing on improving product mix and operational efficiency [58][62] Question: Updated three-year guidance and customer attrition - Management noted solid growth in the customer file and emphasized that the strategy remains unchanged, with better-than-expected organic growth in natural and organic segments [67][68] Question: Industry promotional backdrop - Management observed a disciplined increase in promotional activities but noted that the share of volume sold on deal remains below 2019 levels [69] Question: Volume metrics and cyber incident impact - Management clarified that volume growth for the full year was about 1.5%, with a more significant impact from the cyber incident on conventional sales [70][71] Question: Adjusted EBITDA algorithm changes - Management attributed the improved adjusted EBITDA outlook to better-than-expected organic growth, continuous shrink reduction, and productivity efforts [72][73] Question: Relationship with Amazon - Management refrained from commenting on specific customers but emphasized a tailored strategy for enterprise accounts and a segmented approach to support customers of all sizes [78][79] Question: Capital investment and facility expansion - Management indicated that ongoing rationalization and expansion of distribution centers are part of their strategy, with a focus on automation and modernization [80][84] Question: Margin gain distribution in 2026 - Management outlined several factors contributing to EBITDA growth, including the exit of unprofitable contracts and continuous productivity improvements [90][93] Question: Tariff impact - Management is closely monitoring tariff developments and working with suppliers and customers to navigate challenges while keeping prices competitive [96] Question: Sales outlook for 2026 - Management expects organic sales growth led by the natural business, offset by the impact of distribution center optimization [110][111]

Company Strategy & Philosophy - The company views crises not as inherently negative, but as opportunities for continuous improvement, drawing inspiration from Toyota's "Kaizen" and "Kiki" philosophy, where "Kiki" represents both danger and opportunity [5][6][7] - The company emphasizes proactive creation of self-induced crises to accelerate growth and avoid the prolonged negative phases associated with exogenous crises [9][13][15] - The company aims to change its DNA to embrace self-induced crises, viewing growth as a continuous upward trajectory rather than a summit to be reached [15] Leadership & Execution - The company values a "T-profile" in its employees, balancing general knowledge with specialized expertise, using lean management as a core competency [18][19] - The company prioritizes simple, less complex strategies to facilitate easier implementation and reduce organizational complexity [22][23] - The company believes that execution is paramount, even more so than strategy, and emphasizes preparation, rapid action, and reflection in its execution plan [24][25] Restructuring & Growth - The company underwent a restructuring, viewing it as a chance for transformation rather than solely a crisis [4][5] - The company aims to shift from a restructuring-focused approach to a culture of continuous improvement [28][29] - The company's CEO embraced the position as a self-induced crisis to stimulate personal and organizational growth [29] Financial Context - The company invested over €500 million into the German startup ecosystem [2] - The company's largest holding underwent a €28 billion tech private equity transaction [3] - The company IPOed at a valuation of approximately €750 million, but later faced challenges leading to a share price of €1 [4]

Johnson Controls International (JCI) 2025 Conference Summary Company Overview - **Company**: Johnson Controls International (JCI) - **Event**: 2025 Conference - **Date**: May 14, 2025 Key Points Industry and Company Restructuring - **Resegmentation**: JCI is restructuring its operating model by combining its building solutions and global products divisions to eliminate inefficiencies and better serve customer needs [3][4][5] - **Market Focus**: The new model aims to be more market-focused, addressing specific customer requirements across different verticals such as healthcare and higher education [5] Financial Performance and Cash Conversion - **Cash Conversion**: JCI is approaching a cash conversion rate of 100%, driven by improvements in cash management, supply chain simplification, and procurement processes [6][7] - **Inventory Management**: Future improvements in cash conversion will depend on better inventory management and lean manufacturing practices [8][9] Strategic Review and M&A Outlook - **Portfolio Review**: The CEO is conducting a comprehensive review of the company's portfolio to optimize operations and identify underperforming assets [15][16][18] - **M&A Strategy**: JCI has a healthy pipeline of M&A targets, focusing on acquiring complementary technologies rather than transformative deals [20][21] Data Center Market Insights - **Data Center Growth**: JCI's data center business is experiencing high double-digit growth, with a significant portion of revenue coming from this segment [23][25] - **Customer Base**: The company has strong relationships with hyperscalers and colocation providers, with North America being the most successful region [26][27] - **Market Challenges**: Regulatory complexities in Europe and power availability issues are impacting growth in that region [28] Vertical Market Performance - **Healthcare**: The healthcare sector is shifting towards smaller facilities, with JCI focusing on servicing multiple smaller hospitals rather than large mega-hospitals [60][61] - **Commercial Real Estate**: The Class A office market is performing well, while Class B and C offices are struggling with high vacancy rates [57][58] - **Fire and Security**: The fire and security market in Europe is strong, while North America is experiencing low single-digit growth due to reliance on new construction [64][65] Operational Improvements - **Lean Management**: JCI is implementing lean management practices to improve operational efficiency and reduce waste, aiming for significant margin improvements [48][67] Future Outlook - **Market Indicators**: JCI is monitoring quoting activity in biopharma and warehousing as indicators of future demand, though conversion to orders remains a challenge [49][54] - **Geopolitical Factors**: The company is cautious about the impact of geopolitical dynamics on market conditions and demand [52] Additional Insights - **Customer-Centric Approach**: JCI emphasizes a customer needs-based segmentation strategy to enhance service and product delivery [66] - **Technological Differentiation**: The company is focused on developing differentiated solutions in the data center market, particularly in thermal management [32][33] This summary encapsulates the key insights and strategic directions discussed during the Johnson Controls International conference, highlighting the company's focus on operational efficiency, market responsiveness, and growth opportunities in various sectors.

Financial Data and Key Metrics Changes - Organic sales grew 7%, segment margins expanded 180 basis points to 16.7%, and adjusted EPS increased 19% [4][16] - Adjusted EPS of $0.82 exceeded the high end of guidance [16] - Net debt decreased to 2.4 times, within the long-term target range of 2 to 2.5 times [16] - Adjusted free cash flow for the quarter was strong, resulting in an increase of approximately $1,100,000,000 year to date [16][23] Business Line Data and Key Metrics Changes - Building Solutions region saw orders grow 5%, with North America orders up 4%, EMEA orders up 10%, and Asia Pacific orders flat [17][18] - Organic sales in Building Solutions increased 7%, with high single-digit growth in both systems and service [19] - Global Products reported organic sales growth of 8%, with Applied HVAC growing more than 20% [21] Market Data and Key Metrics Changes - Orders in North America increased 4%, EMEA orders were up 10%, and Asia Pacific orders were flat [18] - Service orders in Asia Pacific grew nearly 20% [18] - Building Solutions backlog grew 12% to $14,000,000,000 [20] Company Strategy and Development Direction - The company is focusing on a new organizational model to enhance customer centricity and operational performance [10][11] - The strategy includes prioritizing customer needs and simplifying product offerings to improve operational efficiency [12][13] - The company aims to redefine building performance and drive the next era of smart, safe, sustainable, and autonomous buildings [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth due to strong performance in recent quarters and a record backlog [4][24] - The company is raising full-year guidance for margins, adjusted EPS, and free cash flow conversion [22][23] - Management acknowledged the impact of tariffs but emphasized strategies to mitigate risks [24] Other Important Information - The company is undergoing a pending sale of its residential and light commercial HVAC business [10] - The organizational model aims to improve customer intimacy and market reach while delivering profitable growth [11] Q&A Session Summary Question: How does the company plan to implement lean in such a large organization? - Management acknowledged that there are remnants of lean in some areas and expressed excitement about the opportunities for improvement [34][35] Question: What is the margin entitlement of the business? - Management believes there are significant opportunities for margin expansion and does not see a ceiling on margin growth compared to peers [44][45] Question: What is the outlook for free cash flow? - Management raised guidance to approximately 100% for the year and sees good signs for maintaining strong free cash flow conversion [50][51] Question: How does the company manage pricing in contracts amid inflation? - Management has implemented strong contractual terms to manage pricing and recover costs due to inflation [61][62] Question: What are the growth drivers in the Applied segment? - Management noted broad-based good growth across most verticals and does not see any slowdown in leading indicators [112]