RICHMOND, Va.–(BUSINESS WIRE)–Performance Food Group Company (NYSE: PFGC) today announced its first-quarter fiscal 2025 business results.
“PFG had a strong start to fiscal 2025, closing the first quarter with solid sales momentum and adjusted EBITDA growth,” said George Holm, PFG’s Chairman & Chief Executive Officer. “Our core business has continued to perform exceptionally well, and we expect this trend to continue. Additionally, I am very pleased with the progress we have made to integrate our recent acquisitions of Cheney Brothers and José Santiago into our Foodservice business. These additions are expected to drive significant profit growth and increase market share opportunity. I am excited about the considerable opportunities we have in fiscal 2025 and beyond.”
| 1 | This earnings release includes several metrics, including Adjusted EBITDA, Adjusted Diluted Earnings per Share, and Free Cash Flow, that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). Please see “Statement Regarding Non-GAAP Financial Measures” at the end of this release for the definitions of such non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP. |
First-Quarter Fiscal 2025 Financial Summary
Total case volume increased 2.6% for the first quarter of fiscal 2025 compared to the prior year period. Total organic case volume (defined as total case volume excluding case volume from recent acquisitions) increased 1.2% for the first quarter of fiscal 2025 compared to the prior year period. Total organic case volume benefited from a 4.3% increase in organic independent cases, including growth in Performance Brands cases, and growth in cases sold to Foodservice’s Chain business. Total independent case volume increased 7.8%.
Net sales for the first quarter of fiscal 2025 grew 3.2% to $15.4 billion compared to the prior year period. The increase in net sales was driven by recent acquisitions, an increase in cases sold including a favorable shift in mix of cases sold, and an increase in selling price per case as a result of inflation. Overall product cost inflation for the Company was approximately 5.0%.
Gross profit for the first quarter of fiscal 2025 grew 6.1% to $1.8 billion compared to the prior year period. The gross profit increase was primarily driven by recent acquisitions, cost of goods sold optimization through procurement efficiencies, a favorable shift in the mix of cases sold, and growth in cases sold.
Operating expenses rose 7.1% to $1.5 billion in the first quarter of fiscal 2025 compared to the prior year period. The increase in operating expenses were primarily driven by recent acquisitions and increases in personnel expense, primarily related to wages, commissions, benefits, and insurance expense, partially offset by a decrease in fuel expense. Depreciation and amortization increased $23.6 million primarily as a result of recent acquisitions, an increase in transportation equipment under finance leases, and accelerated amortization of certain customer relationships and trade names.
Net income for the first quarter of fiscal 2025 decreased $12.7 million, or 10.5%, year-over-year to $108.0 million. The decrease was primarily attributable to the increase in operating expenses, interest expense, and other expense, partially offset by the increase in gross profit and the decrease in income tax expense. The effective tax rate in the first quarter of fiscal 2025 was approximately 26.5% compared to 26.1% in the first quarter of fiscal 2024. The effective tax rate for the first quarter of fiscal 2025 differed from the prior year period primarily due to an increase in foreign taxes and a decrease in deductible discrete items related to stock-based compensation, partially offset by a decrease in state taxes and an increase in federal credits.
For the quarter, Adjusted EBITDA rose 7.3% to $411.9 million compared to the prior year period.
Diluted EPS decreased 10.4% to $0.69 per share in the first quarter of fiscal 2025 compared to the prior year period. Adjusted Diluted EPS increased 0.9% to $1.16 per share in the first quarter of fiscal 2025 compared to the prior year period.
Cash Flow and Capital Spending
In the first quarter of 2025, PFG provided $53.5 million in cash flow from operating activities compared to $87.1 million of cash flow provided by operating activities in the prior year period. The decrease in cash flow provided by operating activities in the first quarter of fiscal 2025 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.
In the first quarter of fiscal 2025, PFG invested $96.5 million in capital expenditures, an increase of $43.3 million versus the prior year period. PFG delivered negative free cash flow of $43.0 million compared to positive free cash flow of $33.9 million in the prior year.1
Share Repurchase Program
During the first quarter of fiscal 2025, the Company repurchased and subsequently retired 0.4 million shares of the Company’s common stock for a total of $29.5 million or an average cost of $74.69 per share. As of September 28, 2024, $181.1 million remained available for additional share repurchases under the Company’s $300 million share repurchase program authorized by the Board of Directors in November 2022.
First-Quarter Fiscal 2025 Segment Results
Foodservice
First-quarter fiscal 2025 net sales for Foodservice increased 5.7% to $7.7 billion compared to the prior year period. This increase in net sales was driven by a recent acquisition, an increase in selling price per case as a result of inflation, and case volume growth, including growth in our Independent and Chain businesses. Securing new and expanding business with independent customers resulted in total independent case growth of 7.8% and organic independent case growth of 4.3% for the first quarter of fiscal 2025 compared to the prior year period. For the first quarter of fiscal 2025, independent sales as a percentage of total segment sales were 41.7%.
First-quarter fiscal 2025 Adjusted EBITDA for Foodservice increased 13.8% to $280.0 million compared to the prior year period. The increase was the result of an increase in gross profit, partially offset by an increase in operating expenses for the first quarter of fiscal 2025 compared to the prior year period. Gross profit contributing to Foodservice’s Adjusted EBITDA increased 6.4% driven by a recent acquisition, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to independent customers. Operating expenses impacting Foodservice’s Adjusted EBITDA increased 4.1% primarily as a result of a recent acquisition, an increase in personnel expenses, and an increase in insurance expenses, partially offset by a decrease in fuel expense, as compared to the prior year period.
Vistar
For the first quarter of fiscal 2025, net sales for Vistar increased 2.8% to $1.3 billion compared to the prior year period. This increase was driven primarily by an acquisition in the second quarter of fiscal 2024. Organic case growth in the vending, office coffee service, and corrections channels was offset by declines in theater and retail cases sold in the first quarter of fiscal 2025 compared to the prior year period.
First-quarter fiscal 2025 Adjusted EBITDA for Vistar decreased 6.1% to $83.2 million versus the prior year period. The decrease was the result of a 20.2% increase in operating expenses for the first quarter of fiscal 2025 compared to the prior year period, partially offset by a 9.1% increase in gross profit. The increase in gross profit contributing to Vistar’s Adjusted EBITDA was driven by an acquisition in the second quarter of fiscal 2024. Operating expenses impacting Vistar’s Adjusted EBITDA increased primarily as a result of an acquisition in the second quarter of fiscal 2024, an increase in variable operational expenses as a result of a shift in channel mix, and an increase in occupancy costs associated with building expansions.
Convenience
First-quarter fiscal 2025 net sales for Convenience increased 0.4% to $6.4 billion compared to the prior year period. The increase in net sales was driven primarily by an increase in selling price per case as a result of continued inflation for food and foodservice related products and cigarette manufacturers’ price increases, as well as an increase in food and foodservice related cases sold, partially offset by a decline in cigarette carton sales.
First-quarter fiscal 2025 Adjusted EBITDA for Convenience increased 11.2% to $105.3 million compared to the prior year period. Gross profit contributing to Convenience’s Adjusted EBITDA increased 3.3% in the first quarter of fiscal 2025 compared to the prior year period primarily due to a favorable shift in mix of cases sold and growth in cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased 1.0% in the first quarter of fiscal 2025 compared to the prior year period primarily as a result of an increase in insurance expense primarily related to worker’s compensation, partially offset by a decrease in fuel expense.
Fiscal 2025 Outlook
For the second quarter of fiscal 2025, PFG expects net sales to be in a range of $15.2 billion to $15.6 billion. For the second quarter of fiscal 2025, PFG expects Adjusted EBITDA to be in a range of $400 million to $420 million.
For the full fiscal year 2025, PFG continues to expect net sales to be in a range of approximately $62.5 billion to $63.5 billion. For the full fiscal year 2025, PFG continues to expect Adjusted EBITDA to be in a $1.7 billion to $1.8 billion range.
As previously disclosed, PFG’s outlook for fiscal year 2025 includes expected business results for Cheney Bros., Inc. (“Cheney Brothers”) as of the close of the transaction.
PFG’s Adjusted EBITDA outlook excludes the impact of certain income and expense items that management believes are not part of underlying operations. These items may include, but are not limited to, loss on early extinguishment of debt, restructuring charges, certain tax items, and charges associated with non-recurring professional and legal fees associated with acquisitions. PFG’s management cannot estimate on a forward-looking basis the impact of these income and expense items on its reported net income, which could be significant, are difficult to predict, and may be highly variable. As a result, PFG does not provide a reconciliation to the closest corresponding GAAP financial measure for its Adjusted EBITDA outlook. Please see the “Forward-Looking Statements” section of this release for a discussion of certain risks to PFG’s outlook.
About Performance Food Group Company
Performance Food Group is an industry leader and one of the largest food and foodservice distribution companies in North America with more than 150 locations. Founded and headquartered in Richmond, Virginia, PFG and our family of companies market and deliver quality food and related products to over 300,000 locations including independent and chain restaurants; businesses, schools and healthcare facilities; vending and office coffee service distributors; and big box retailers, theaters and convenience stores. PFG’s success as a Fortune 100 company is achieved through our more than 40,000 dedicated associates committed to building strong relationships with the valued customers, suppliers and communities we serve. To learn more about PFG, visit pfgc.com.
