Financial Data and Key Metrics Changes - The company reported sales of $21.1 billion, an increase of 2.8% on a reported basis and 3.7% excluding the divestiture of the Mexican business [7][8] - Adjusted operating income was $1.1 billion, up 1.1% year-over-year, and adjusted EPS grew to $1.48, reflecting a 6.5% increase compared to the previous year [8][27] - Gross profit increased by 3.9%, leading to a gross margin expansion of 19 basis points [28][33] Business Line Data and Key Metrics Changes - The international segment achieved 3.6% top-line growth on a reported basis and 8.3% excluding the divestiture of Mexico, with local case growth of 4% [9][30] - The U.S. Foodservice segment saw a 1.3% volume growth, with gross profit growing almost three times faster than volume [10][30] - The Sigma business reported top-line growth of 8.3% and bottom-line growth of 12.5%, marking a record year [11] Market Data and Key Metrics Changes - Restaurant traffic improved throughout the quarter, with a decline of 1.1% overall, which was an improvement of approximately 190 basis points compared to Q3 [6][30] - The company noted that the industry traffic trends were stabilizing after a rocky start to the year, with April down 1.5%, May down 1%, and June down approximately 0.9% [6][30] Company Strategy and Development Direction - The company is focused on improving local case volume growth through strategic initiatives and investments in sales resources [14][16] - The introduction of the Perks 2.0 customer loyalty program aims to enhance service for top customers, while an AI-powered sales tool is expected to improve sales productivity [20][22][105] - The company plans to continue expanding its international supply chain capacity and enhance customer engagement through technology improvements [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver profitable local volume growth in 2026, driven by stabilized colleague retention and improved productivity [18][44] - The company anticipates that the positive momentum from Q4 will carry into 2026, with expectations for improved financial results [24][48] - Management highlighted the importance of colleague retention and productivity as key drivers for future growth [18][44] Other Important Information - The company repurchased $1.3 billion in shares and paid out $1 billion in dividends during fiscal year 2025 [29] - The balance sheet remains robust with approximately $3.8 billion in total liquidity and a net debt leverage ratio of 2.85 times [36] Q&A Session Summary Question: On local case growth momentum and market share - Management noted that while Q4 showed progress, the stabilization of colleague retention will have a significant positive impact as they enter 2026, with a notable gap between new customer wins and losses [51][54][56] Question: Broader industry trends and sustaining momentum - Management attributed the recent improvement in industry traffic to a stabilization of consumer confidence and expects to sustain growth through market share gains despite a flat macro environment [65][67][70] Question: International growth momentum - Management expects continued strength in the international segment, driven by increased sales resources and strategic sourcing initiatives [81][82][87] Question: Sales force growth and local case growth relationship - Management anticipates a 4% increase in sales professional headcount for fiscal 2026, emphasizing the importance of colleague retention and productivity in driving positive local case growth [92][94][96] Question: Price agility initiative and financial implications - Management clarified that the goal of the price agility initiative is to improve volume profitably without sacrificing margin percentage, with a careful rollout based on colleague readiness [100][102][105]

Financial Data and Key Metrics Changes - Full year 2024 consolidated revenues decreased by 20% and industrial net sales fell by 23% compared to 2023 [11] - Industrial adjusted EBIT margin for the full year was 8.2%, down 370 basis points from 2023, primarily due to lower volumes [11] - Q4 net sales of industrial activities were down 31% year over year to $4.1 billion, driven by decreased equipment deliveries [16] - Full year net income was $1.3 billion with EPS at $1.05, down from $0.39 in Q4 2023 [16] Business Line Data and Key Metrics Changes - In agriculture, net sales decreased by 31% in Q4 and 23% for the full year, with production hours down 34% year over year in Q4 [17][18] - Construction segment saw a 33% drop in Q4 net sales, but gross margins remained flat year over year [21] - Financial Services net income for Q4 was $92 million, a decrease of $21 million compared to Q4 2023, but full year net income increased to $379 million [22][24] Market Data and Key Metrics Changes - Global industry demand is expected to decline by 5% to 10% from 2024, with a more significant decline of 10% to 15% anticipated for the company due to high exposure to cash crop equipment in North America [31] - Dealer inventories in North America are still above target levels, with about 1.5 months of new equipment inventory above expectations [31][93] Company Strategy and Development Direction - The company is focused on reducing channel inventories and maintaining pricing discipline, planning to underproduce to retail demand at least through the first half of 2025 [8][10] - A significant emphasis is placed on quality improvements and operational efficiencies, with a run rate savings of about $600 million achieved by the end of 2024 [9][25] - The company aims to maintain a healthy balance sheet while investing in product and technology advancements [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2024 was a challenging year due to depressed commodity prices affecting farm income and equipment demand [11][10] - The outlook for 2025 includes expectations of continued low production levels and a focus on upgrading production lines and processes [32] - Management remains cautious about geopolitical uncertainties and their potential impact on the business [26][39] Other Important Information - The company plans to maintain its annual dividend and share repurchase program in 2025, returning approximately $1.3 billion to shareholders in 2024 [28] - R&D expenses are expected to be slightly lower in 2025, around €800 million, benefiting from structural efficiencies [36] Q&A Session Summary Question: Pricing expectations for the two segments in 2025 - Management expects full year pricing to be flat to slightly positive, with the first half being flat to slightly down and the second half showing low to mid-single-digit price increases [43][44] Question: Impact of trade tariffs and production options - Management is analyzing the potential impact of tariffs on imports and is considering reshoring some assembly processes to the U.S. [46][48] Question: Core decremental margins and production versus retail plans - Management indicated that they expect to recover warranty costs throughout 2025, impacting decremental margins positively [57][58] - Production is expected to be down 10% to 15% in the first half of 2025, with a potential recovery in the second half [62] Question: Margin cadence within agriculture for 2025 - Management anticipates lower margins in the first half of 2025, with a recovery expected in the second half, returning to double-digit margins [77][79] Question: Targeted incentive programs for 2025 - The company plans to continue targeted commercial actions to reduce aged inventory and align inventory levels with market demand [86][88]