Performance Food (PFGC) 10-Q 2025 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 28, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to ___________

Commission File Number 001-37578

Performance Food Group Company

(Exact name of registrant as specified in its charter)

Delaware	43-1983182
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)
12500 West Creek Parkway Richmond, Virginia 23238	(804) 484-7700
(Address of principal executive offices)	(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PFGC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

156,216,487 shares of common stock were outstanding as of January 29, 2025.

TABLE OF CONTENTS

		Page
Special Note Regarding Forward-Looking Statements		3
PART I - FINANCIAL INFORMATION		5
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II - OTHER INFORMATION		37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		39

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q (this “Form 10-Q”) may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position, our business outlook, business trends and other information, and integration of our acquisition of Cheney Bros., Inc. (the “Cheney Brothers Acquisition”), are forward-looking statements. Words such as “estimates,” “expects,” “contemplates,” “will,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved, and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 29, 2024 (the “Form 10-K”), as such risk factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), and are accessible on the SEC’s website at www.sec.gov, and also include the following:

•

economic factors, including inflation or other adverse changes such as a downturn in economic conditions or a public health crisis, negatively affecting consumer confidence and discretionary spending;

•

our reliance on third-party suppliers;

•

labor relations and cost risks and availability of qualified labor;

•

costs and risks associated with a potential cybersecurity incident or other technology disruption;

•

our reliance on technology and risks associated with disruption or delay in implementation of new technology;

•

competition in our industry is intense, and we may not be able to compete successfully;

•

we operate in a low margin industry, which could increase the volatility of our results of operations;

•

we may not realize anticipated benefits from our operating cost reduction and productivity improvement efforts;

•

our profitability is directly affected by cost inflation and deflation, commodity volatility, and other factors;

•

we do not have long-term contracts with certain customers;

•

group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of these organizations;

•

changes in eating habits of consumers;

•

extreme weather conditions, including hurricane, earthquake and natural disaster damage;

•

volatility of fuel and other transportation costs;

•

our inability to adjust cost structure where one or more of our competitors successfully implement lower costs;

•

our inability to increase our sales in the highest margin portion of our business;

•

changes in pricing practices of our suppliers;

•

our growth strategy may not achieve the anticipated results;

•

risks relating to acquisitions, including the risk that we are not able to realize benefits of acquisitions or successfully integrate the businesses we acquire;

•

environmental, health, and safety costs, including compliance with current and future environmental laws and regulations relating to carbon emissions and climate change and related legal or market measures;

3

•

our inability to comply with requirements imposed by applicable law or government regulations, including increased regulation of e-vapor products and other alternative nicotine products;

•

a portion of our sales volume is dependent upon the distribution of cigarettes and other tobacco products, sales of which are generally declining;

•

the potential impact of product recalls and product liability claims relating to the products we distribute and other litigation;

•

adverse judgments or settlements or unexpected outcomes in legal proceedings;

•

negative media exposure and other events that damage our reputation;

•

impact of uncollectibility of accounts receivable;

•

increase in excise taxes or reduction in credit terms by taxing jurisdictions;

•

the cost and adequacy of insurance coverage and increases in the number or severity of insurance and claims expenses;

•

risks relating to our outstanding indebtedness, including the impact of interest rate increases on our variable rate debt

•

our ability to raise additional capital on commercially reasonable terms or at all; and

•

the following risks related to the Cheney Brothers Acquisition:

o

uncertainty as to the expected financial performance of the combined company as a result of the Cheney Brothers Acquisition;

o

the possibility that the expected synergies and value creation from the Cheney Brothers Acquisition will not be realized or will not be realized within the expected time period;

o

the risk that unexpected costs will be incurred in connection with the integration of the Cheney Brothers Acquisition or that the integration of Cheney Brothers’ foodservice business will be more difficult or time consuming than expected;

o

the inability to retain key personnel;

o

disruption from the Cheney Brothers Acquisition, including potential adverse reactions or changes to business relationships with customers, employees, suppliers, other business partners or regulators, making it more difficult to maintain business and operational relationships; and

o

the risk that, following the Cheney Brothers Acquisition, the combined company may not be able to effectively manage its expanded operations.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. We cannot assure you (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” or “PFG” as used in this Form 10-Q refer to Performance Food Group Company and its consolidated subsidiaries.

4

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except per share data)	As of December 28, 2024			As of June 29, 2024
ASSETS
Current assets:
Cash	$	10.7		$	20.0
Accounts receivable, less allowances of $68.2 and $55.2		2,587.5			2,478.9
Inventories, net		3,928.0			3,314.7
Income taxes receivable		104.4			71.6
Prepaid expenses and other current assets		255.1			268.1
Total current assets		6,885.7			6,153.3
Goodwill		3,407.5			2,418.3
Other intangible assets, net		1,823.5			971.1
Property, plant and equipment, net		3,861.3			2,788.5
Operating lease right-of-use assets		943.8			875.5
Other assets		175.2			186.2
Total assets	$	17,097.0		$	13,392.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable and outstanding checks in excess of deposits		2,916.1			2,594.4
Accrued expenses and other current liabilities		910.8			908.3
Finance lease obligations—current installments		195.1			147.2
Operating lease obligations—current installments		105.4			108.2
Total current liabilities		4,127.4			3,758.1
Long-term debt		5,691.2			3,198.5
Deferred income tax liability, net		841.9			497.9
Finance lease obligations, excluding current installments		966.3			703.2
Operating lease obligations, excluding current installments		902.9			819.3
Other long-term liabilities		310.1			289.0
Total liabilities		12,839.8			9,266.0
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common Stock: $0.01 par value per share, 1.0 billion shares authorized, 154.6 million shares issued and outstanding as of December 28, 2024; 154.2 million shares issued and outstanding as of June 29, 2024		1.5			1.5
Additional paid-in capital		2,806.2			2,818.5
Accumulated other comprehensive (loss) income, net of tax benefit (expense) of $1.1 and ($1.5)		(3.8	)		4.0
Retained earnings		1,453.3			1,302.9
Total shareholders’ equity		4,257.2			4,126.9
Total liabilities and shareholders’ equity	$	17,097.0		$	13,392.9

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

5

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share data)	Three Months Ended December 28, 2024		Three Months Ended December 30, 2023		Six Months Ended December 28, 2024		Six Months Ended December 30, 2023
Net sales	$	15,638.2	$	14,295.7	$	31,053.7	$	29,234.3
Cost of goods sold		13,810.4		12,697.6		27,461.7		25,973.3
Gross profit		1,827.8		1,598.1		3,592.0		3,261.0
Operating expenses		1,669.0		1,424.2		3,217.9		2,870.9
Operating profit		158.8		173.9		374.1		390.1
Other expense, net:
Interest expense		100.2		61.4		167.0		117.5
Other, net		1.9		0.8		3.5		(2.4	)
Other expense, net		102.1		62.2		170.5		115.1
Income before taxes		56.7		111.7		203.6		275.0
Income tax expense		14.3		33.4		53.2		76.0
Net income	$	42.4	$	78.3	$	150.4	$	199.0
Weighted-average common shares outstanding:
Basic		154.6		154.2		154.6		154.5
Diluted		156.3		155.7		156.3		156.2
Earnings per common share:
Basic	$	0.27	$	0.51	$	0.97	$	1.29
Diluted	$	0.27	$	0.50	$	0.96	$	1.27

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

6

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions)	Three Months Ended December 28, 2024			Three Months Ended December 30, 2023			Six Months Ended December 28, 2024			Six Months Ended December 30, 2023
Net income	$	42.4		$	78.3		$	150.4		$	199.0
Other comprehensive loss, net of tax:
Interest rate swaps:
Change in fair value, net of tax		3.1			(2.8	)		0.2			(0.6	)
Reclassification adjustment, net of tax		(2.3	)		(3.1	)		(5.3	)		(6.0	)
Foreign currency translation adjustment, net of tax		(3.2	)		1.0			(2.7	)		0.3
Other comprehensive loss		(2.4	)		(4.9	)		(7.8	)		(6.3	)
Total comprehensive income	$	40.0		$	73.4		$	142.6		$	192.7

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

7

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

						Additional			Accumulated Other					Total
	Common Stock					Paid-in			Comprehensive			Retained		Shareholders’
(In millions)	Shares			Amount		Capital			Income (Loss)			Earnings		Equity
Balance as of September 30, 2023		154.7		$	1.5	$	2,826.5		$	12.6		$	987.7	$	3,828.3
Net income		—			—		—			—			78.3		78.3
Interest rate swaps		—			—		—			(5.9	)		—		(5.9	)
Foreign currency translation adjustment		—			—		—			1.0			—		1.0
Issuance of common stock under stock-based compensation plans		—			—		0.1			—			—		0.1
Common stock repurchased		(0.8	)		—		(50.0	)		—			—		(50.0	)
Stock-based compensation expense		—			—		9.9			—			—		9.9
Balance as of December 30, 2023		153.9		$	1.5	$	2,786.5		$	7.7		$	1,066.0	$	3,861.7
Balance as of September 28, 2024		154.5		$	1.5	$	2,797.2		$	(1.4	)	$	1,410.9	$	4,208.2
Net income		—			—		—			—			42.4		42.4
Interest rate swaps		—			—		—			0.8			—		0.8
Foreign currency translation adjustment		—			—		—			(3.2	)		—		(3.2	)
Issuance of common stock under stock-based compensation plans		0.1			—		2.7			—			—		2.7
Common stock repurchased		—			—		(4.1	)		—			—		(4.1	)
Stock-based compensation expense		—			—		10.4			—			—		10.4
Balance as of December 28, 2024		154.6		$	1.5	$	2,806.2		$	(3.8	)	$	1,453.3	$	4,257.2

						Additional			Accumulated Other					Total
	Common Stock					Paid-in			Comprehensive			Retained		Shareholders’
(In millions)	Shares			Amount		Capital			Income (Loss)			Earnings		Equity
Balance as of July 1, 2023		154.5		$	1.5	$	2,863.0		$	14.0		$	867.0	$	3,745.5
Net income		—			—		—			—			199.0		199.0
Interest rate swaps		—			—		—			(6.6	)		—		(6.6	)
Foreign currency translation adjustment		—			—		—			0.3			—		0.3
Issuance of common stock under stock-based compensation plans		0.7			—		(17.8	)		—			—		(17.8	)
Common stock repurchased		(1.3	)		—		(78.1	)		—			—		(78.1	)
Stock-based compensation expense		—			—		19.4			—			—		19.4
Balance as of December 30, 2023		153.9		$	1.5	$	2,786.5		$	7.7		$	1,066.0	$	3,861.7
Balance as of June 29, 2024		154.2			1.5		2,818.5			4.0			1,302.9		4,126.9
Net income		—			—		—			—			150.4		150.4
Interest rate swaps		—			—		—			(5.1	)		—		(5.1	)
Foreign currency translation adjustment		—			—		—			(2.7	)		—		(2.7	)
Issuance of common stock under stock-based compensation plans		0.6			—		(14.0	)		—			—		(14.0	)
Issuance of common stock under employee stock purchase plan		0.2			—		15.0			—			—		15.0
Common stock repurchased		(0.4	)		—		(33.6	)		—			—		(33.6	)
Stock-based compensation expense		—			—		20.3			—			—		20.3
Balance as of December 28, 2024		154.6		$	1.5	$	2,806.2		$	(3.8	)	$	1,453.3	$	4,257.2

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

8

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ in millions)	Six Months Ended December 28, 2024			Six Months Ended December 30, 2023
Cash flows from operating activities:
Net income	$	150.4		$	199.0
Adjustments to reconcile net income to net cash provided    by operating activities
Depreciation		211.5			170.1
Amortization of intangible assets		123.9			102.5
Amortization of deferred financing costs		6.0			5.3
Provision for losses on accounts receivables		11.9			11.6
Change in LIFO reserve		30.5			41.0
Stock compensation expense		23.0			21.7
Deferred income tax benefit		(16.8	)		(14.5	)
Change in fair value of derivative assets and liabilities		0.2			(3.7	)
Other non-cash activities		1.4			(3.0	)
Changes in operating assets and liabilities, net
Accounts receivable		96.4			107.2
Inventories		(325.7	)		32.7
Income taxes receivable		(25.7	)		(20.7	)
Prepaid expenses and other assets		48.5			(40.9	)
Trade accounts payable and outstanding checks in excess of deposits		145.7			(46.9	)
Accrued expenses and other liabilities		(102.2	)		(7.4	)
Net cash provided by operating activities		379.0			554.0
Cash flows from investing activities:
Purchases of property, plant and equipment		(203.9	)		(147.1	)
Net cash paid for acquisitions		(2,535.5	)		(308.1	)
Proceeds from sale of property, plant and equipment and other		2.7			18.8
Net cash used in investing activities		(2,736.7	)		(436.4	)
Cash flows from financing activities:
Net borrowings under ABL Facility		1,499.9			39.0
Borrowing of Notes due 2032		1,000.0			—
Cash paid for debt issuance, extinguishment and modifications		(33.8	)		—
Payments under finance lease obligations		(84.8	)		(56.5	)
Proceeds from employee stock purchase plan		15.0			—
Proceeds from exercise of stock options		3.2			1.1
Cash paid for shares withheld to cover taxes		(17.2	)		(18.9	)
Repurchases of common stock		(33.6	)		(78.1	)
Other financing activities		—			(0.3	)
Net cash provided by (used in) financing activities		2,348.7			(113.7	)
Net (decrease) increase in cash and restricted cash		(9.0	)		3.9
Cash and restricted cash, beginning of period		27.7			20.0
Cash and restricted cash, end of period	$	18.7		$	23.9

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

(In millions)	As of December 28, 2024		As of June 29, 2024
Cash	$	10.7	$	20.0
Restricted cash(1)		8.0		7.7
Total cash and restricted cash	$	18.7	$	27.7

(1)

Restricted cash is reported within Other assets and represents the amounts required by insurers to collateralize a part of the deductibles for the Company’s workers’ compensation and liability claims.

9

Supplemental disclosures of cash flow information are as follows:

(In millions)	Six Months Ended December 28, 2024		Six Months Ended December 30, 2023
Cash paid during the year for:
Interest	$	146.3	$	122.3
Income tax payments net of refunds		84.1		109.0

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

10

PERFORMANCE FOOD GROUP COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Business Activities

Business Overview

Performance Food Group Company, through its subsidiaries, markets and distributes primarily national and Company-branded food and food-related products to customer locations across North America. The Company serves both of the major customer types in the restaurant industry: (i) independent customers, and (ii) multi-unit, or “Chain” customers, which include some of the most recognizable family and casual dining restaurant chains, as well as schools, business and industry locations, healthcare facilities, and retail establishments. The Company also specializes in distributing candy, snacks, beverages, cigarettes, other tobacco products, health and beauty care products and other items to vending distributors, big box retailers, theaters, convenience stores, drug stores, grocery stores, travel providers, and hospitality providers.

Share Repurchase Program

In November 2022, the Board of Directors of the Company authorized a share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The current share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. As of December 28, 2024, there remains approximately $177.0 million available for additional share repurchases.

During the three months ended December 28, 2024, the Company repurchased and subsequently retired less than 0.1 million shares of common stock, for a total of $4.0 million or an average cost of $79.05 per share. During the six months ended December 28, 2024, the Company repurchased and subsequently retired 0.4 million shares of common stock, for a total of $33.6 million or an average cost of $75.19 per share. During the three months ended December 30, 2023, the Company repurchased and subsequently retired 0.8 million shares of common stock, for a total of $50.0 million or an average cost of $58.01 per share. During the six months ended December 30, 2023, the Company repurchased and subsequently retired 1.3 million shares of common stock, for a total of $78.1 million or an average cost of $58.83 per share.

2. Summary of Significant Accounting Policies and Estimates

Basis of Presentation

The consolidated financial statements have been prepared by the Company, without audit, with the exception of the June 29, 2024 consolidated balance sheet, which was derived from the audited consolidated financial statements included in the Form 10-K. The financial statements include consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of shareholders’ equity, and consolidated statements of cash flows. Certain prior period amounts have been reclassified to conform to current period presentation. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, shareholders’ equity, and cash flows for all periods presented have been made.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates used by management are related to the accounting for the allowance for doubtful accounts, reserve for inventories, impairment testing of goodwill and other intangible assets, acquisition accounting, reserves for claims and recoveries under insurance programs, vendor rebates and other promotional incentives, bonus accruals, depreciation, amortization, determination of useful lives of tangible and intangible assets, leases, and income taxes. Actual results could differ from these estimates.

The results of operations are not necessarily indicative of the results to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K. Certain footnote disclosures included in annual financial statements prepared in accordance with GAAP have been condensed or omitted herein pursuant to applicable rules and regulations for interim financial statements.

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3. Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. It further requires disclosure of the amount and description of its composition for other segment items, and interim disclosures of both a reportable segment’s profit or loss and assets. The guidance requires disclosure of the title and position of the chief operating decision maker and how reported measures of segment profit or loss are used to assess performance and allocate resources. This pronouncement is effective for annual periods beginning after December 15, 2023, and interim periods within annual reporting periods beginning after December 15, 2024, with early adoption permitted. The amendments in this update will be adopted for the fiscal year ending June 28, 2025 (“fiscal 2025”), with annual reporting requirements effective for our fiscal 2025 Annual Report on Form 10-K and interim reporting requirements effective for our Quarterly Reports on Forms 10-Q within the fiscal year ending June 27, 2026 (“fiscal 2026”). The amendments in this update should be applied retrospectively to each period presented in the consolidated financial statements. The provisions of the new standard will not impact the Company’s results of operations, financial position, or cash flows but will require the Company to expand its current segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update expands public entities’ income tax disclosure requirements primarily by requiring disaggregation of specific categories and reconciling items that meet a quantitative threshold within the rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This pronouncement is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will adopt the new standard in fiscal 2026. The amendments in this update should be applied on a prospective basis, with retrospective application permitted. The Company is in the process of assessing the impact of this ASU on its future consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement--Reporting Comprehensive Income--Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The update improves the disclosures about a public entity’s expenses and addresses requests from investors for more detailed information about the types of expenses in commonly presented expense captions. In January 2025, the FASB released ASU 2025-01 to clarify ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The amendments in this update will be adopted for the fiscal year ending July 1, 2028 (“fiscal 2028”), with annual reporting requirements effective for our fiscal 2028 Annual Report on Form 10-K and interim reporting requirements effective for our Quarterly Reports on Forms 10-Q within the fiscal year ending June 30, 2029. The amendments in this update should be applied prospectively, however, retrospective application is permitted. The Company is in the process of assessing the impact of this ASU on its future consolidated financial statements.

4. Revenue Recognition

The Company markets and distributes primarily national and Company-branded food and food-related products to customer locations across North America. The Foodservice segment primarily services restaurants and supplies a “broad line” of products to its customers, including the Company’s Performance Brands and custom-cut meats and seafood, as well as products that are specific to each customer’s menu requirements. Vistar specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. The Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America. The Company disaggregates revenue by customer type and product offerings and determined that disaggregating revenue at the segment level achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 13. Segment Information for external revenue by reportable segment.

The Company has customer contracts in which incentives are paid upfront to certain customers. These payments have become industry practice and are not related to financing the customer’s business, nor are they associated with any distinct good or service to be received from the customer. These incentive payments are capitalized and amortized over the life of the contract or the expected life of the customer relationship on a straight-line basis. The Company’s contract asset for these incentives totaled $54.4 million and $55.4 million as of December 28, 2024 and June 29, 2024, respectively.

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5. Business Combinations

During the first six months of fiscal 2025, the Company paid cash of $2.5 billion, net of cash received, for two acquisitions reported in the Foodservice segment. During the first six months of fiscal 2024, the Company paid cash of $308.1 million, net of cash received, for two acquisitions. These acquisitions are reported in the Vistar and Corporate and All Other segments.

Assets acquired and liabilities assumed are recognized at their respective fair values as of the acquisition date. The following table summarizes the preliminary purchase price allocation for each major class of assets acquired and liabilities assumed for the two acquisitions in the first six months of fiscal 2025:

(In millions)	Cheney Brothers			Other			Fiscal 2025
Net working capital	$	247.2		$	37.4		$	284.6
Goodwill		691.9			302.3			994.2
Intangible assets with definite lives:								-
Customer relationships		485.0			230.0			715.0
Trade names		165.0			75.0			240.0
Property, plant and equipment		725.0			57.3			782.3
Operating lease right-of-use assets		6.3			-			6.3
Other assets		10.5			0.2			10.7
Deferred tax liabilities		(240.8	)		(127.6	)		(368.4	)
Finance lease obligations		(95.7	)		(0.3	)		(96.0	)
Operating lease obligations		(6.3	)		-			(6.3	)
Other long-term liabilities		(26.9	)		-			(26.9	)
Total purchase price	$	1,961.2		$	574.3		$	2,535.5

Intangible assets consist primarily of customer relationships and trade names with useful lives of ten to twelve years, and a total weighted-average useful life of 11.7 years. The excess of the estimated fair value of the assets acquired and the liabilities assumed over consideration paid was recorded as $994.2 million of goodwill.

The “Other” acquisition in fiscal 2025 and the fiscal 2024 acquisitions did not materially affect the Company’s results of operations.

Cheney Brothers Acquisition

On October 8, 2024, PFG acquired Cheney Bros., Inc. (“Cheney Brothers”) for $2.0 billion, consisting of $1,961.2 million of cash consideration paid at the time of the closing of the transaction, net of cash received, and $32.4 million of deferred consideration payable to the seller over the next five years. The cash consideration portion of the purchase price was financed with borrowings under the Company’s asset-based revolving credit facility.

The net sales and net loss related to Cheney Brothers recorded in the Company’s Consolidated Statements of Operations since the acquisition date of October 8, 2024 are $825.0 million and $28.4 million, respectively. The net loss related to Cheney Brothers was driven by depreciation and amortization of purchase accounting adjustments.

The following table summarizes the unaudited pro-forma consolidated financial information of the Company as if the acquisition had occurred on July 2, 2023:

	Three Months Ended				Six Months Ended
(in millions)	December 28, 2024		December 30, 2023		December 28, 2024		December 30, 2023
Net sales	$	15,716.4	$	15,102.2	$	31,945.5	$	30,782.2
Net income		74.1		59.7		169.0		91.1

These pro-forma results include nonrecurring pro-forma adjustments related to acquisition costs incurred, including the amortization of the step up in fair value of inventory acquired as products were sold. The pro-forma net income for the six months ended December 30, 2023 includes $69.1 million, after-tax, of acquisition costs assuming the acquisition had occurred on July 2, 2023. The recurring pro-forma adjustments include estimates of interest expense for the debt issued to finance the acquisition and estimates of depreciation and amortization associated with fair value adjustments for property, plant and equipment and intangible assets acquired.

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6. Debt

The Company is a holding company and conducts its operations through its subsidiaries, which have incurred or guaranteed indebtedness as described below.

Debt consisted of the following:

(In millions)	As of December 28, 2024			As of June 29, 2024
Credit Agreement	$	2,660.7		$	1,160.8
5.500% Notes due 2027, effective interest rate 5.930%		1,060.0			1,060.0
4.250% Notes due 2029, effective interest rate 4.439%		1,000.0			1,000.0
6.125% Notes due 2032, effective interest rate 6.287%		1,000.0			-
Less: Original issue discount and deferred financing costs		(29.5	)		(22.3	)
Long-term debt		5,691.2			3,198.5
Less: current installments		-			-
Total debt, excluding current installments	$	5,691.2		$	3,198.5

Credit Agreement

PFGC, Inc. (“PFGC”), a wholly-owned subsidiary of the Company, and Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, were parties to the Fifth Amended and Restated Credit Agreement dated September 17, 2021, as amended by the First Amendment to the Fifth Amended and Restated Credit Agreement, dated April 17, 2023 (as amended, the “Prior Credit Agreement”). The Prior Credit Agreement had an aggregate principal amount available of $4.0 billion and was scheduled to mature on September 17, 2026.

On September 9, 2024, PFGC and Performance Food Group, Inc. entered into the Sixth Amended and Restated Credit Agreement (the “ABL Facility”), with Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent, and the other lenders party thereto, which amends and restates the Prior Credit Agreement. The ABL Facility, among other things, (i) increases the total revolving commitments from $4.0 billion under the Prior Credit Agreement to $5.0 billion under the ABL Facility and (ii) extends the stated maturity date from September 17, 2026, under the Prior Credit Agreement to September 9, 2029, under the ABL Facility. The ABL Facility also provides for up to $1.0 billion of uncommitted incremental facilities. The terms of any such incremental facility shall be agreed between Performance Food Group, Inc. and the lenders providing the new commitments, subject to certain limitations set forth in the ABL Facility.

Performance Food Group, Inc. is the lead borrower under the ABL Facility, which is jointly and severally guaranteed by, and secured by the majority of the assets of, PFGC and all material domestic direct and indirect wholly-owned subsidiaries of PFGC (other than the captive insurance subsidiary and other excluded subsidiaries). Availability for loans and letters of credit under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including trade accounts receivable, inventory, owned real property, and owned transportation equipment. The borrowing base is reduced quarterly by a cumulative fraction of the real property and transportation equipment values. Advances on accounts receivable and inventory are subject to change based on periodic commercial finance examinations and appraisals, and the real property and transportation equipment values included in the borrowing base are subject to change based on periodic appraisals. Audits and appraisals are conducted at the direction of the administrative agent for the benefit and on behalf of all lenders.

Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the greatest of (i) a floor rate of 0.00%, (ii) the federal funds rate in effect on such date plus 0.5%, (iii) the prime rate on such day, or (iv) one month Term SOFR plus 1.0%) plus a spread or (b) Term SOFR plus a spread. The ABL Facility also provides for an unused commitment fee at a rate of 0.250% per annum based on average excess availability.

The following table summarizes outstanding borrowings, availability, and the average interest rate under the Company’s credit agreement:

(Dollars in millions)	As of December 28, 2024			As of June 29, 2024
Aggregate borrowings	$	2,660.7		$	1,160.8
Letters of credit		167.1			160.4
Excess availability, net of lenders’ reserves of $97.3 and $96.3		2,172.2			2,678.8
Average interest rate, excluding impact of interest rate swaps		6.05	%		6.79	%

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The ABL Facility contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if Alternate Availability (as defined in the ABL Facility) falls below the greater of (i) $375.0 million and (ii) 10% of the lessor of the borrowing base and the sum of (a) the aggregate commitments plus (b) any outstanding term loans for five consecutive business days. The ABL Facility also contains customary restrictive covenants that include, but are not limited to, restrictions on the loan parties' and their subsidiaries’ abilities to incur additional indebtedness, pay dividends, create liens, make investments, make prepayments, redemptions, or defeasances prior to the maturity of certain restricted debt and dispose of assets. The ABL Facility provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. If an event of default occurs and is continuing, amounts due under the ABL Facility may be accelerated and the rights and remedies of the lenders may be exercised, including rights with respect to the collateral securing the obligations under such agreement.

Senior Notes due 2032

On September 12, 2024, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its 6.125% Senior Notes due 2032 (the “Notes due 2032”). The Notes due 2032 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2032 are not guaranteed by the Company.

The Company intended to use the proceeds from the Notes due 2032, together with borrowings under the ABL Facility, to finance the cash consideration in connection with the acquisition of Cheney Brothers and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2032. However, since there was no requirement to hold the funds in escrow until the Cheney Brothers Acquisition closed, the net proceeds for the Notes due 2032 were initially used to pay down a portion of the outstanding balance of the ABL Facility. The Company subsequently funded the cash consideration for the Cheney Brothers Acquisition with borrowings under the ABL Facility.

The Notes due 2032 were issued at 100.0% of their par value. The Notes due 2032 mature on September 15, 2032, and bear interest at a rate of 6.125% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2032 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2032 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at any time prior to September 15, 2027, at a redemption price equal to 100% of the principal amount of the Notes due 2032 being redeemed plus a make-whole premium and accrued and unpaid interest. In addition, beginning on September 15, 2027, Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at a redemption price equal to 103.063% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.531% and 100% of the principal amount redeemed on September 15, 2028, and September 15, 2029, respectively. In addition, at any time prior to September 15, 2027, Performance Food Group, Inc. may redeem up to 40% of the Notes due 2032 from the proceeds of certain equity offerings at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest.

The indenture governing the Notes due 2032 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2032 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2032 to become or be declared due and payable.

The ABL Facility and the indentures governing the Company’s outstanding notes contain customary restrictive covenants under which all of the net assets of PFGC and its subsidiaries were restricted from distribution to Performance Food Group Company, except for approximately $1,428.4 million of restricted payment capacity available under such debt agreements, as of December 28, 2024. Such minimum estimated restricted payment capacity is calculated based on the most restrictive of our debt agreements and may fluctuate from period to period, which fluctuations may be material. Our restricted payment capacity under other debt instruments to which the Company is subject may be materially higher than the foregoing estimate.

7. Leases

The Company determines if an arrangement is a lease at inception and recognizes a financing or operating lease liability and right-of-use asset in the Company’s consolidated balance sheet. Right-of-use assets and lease liabilities for both operating and finance leases are recognized based on present value of lease payments over the lease term at commencement date. When the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at

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commencement date to determine the present value of lease payments. This rate was determined by using the yield curve based on the Company’s credit rating adjusted for the Company’s specific debt profile and secured debt risk. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease expenses for these short-term leases are recognized on a straight-line basis over the lease term. The Company has several lease agreements that contain lease and non-lease components, such as maintenance, taxes, and insurance, which are accounted for separately. The difference between the operating lease right-of-use assets and operating lease liabilities primarily relates to adjustments for deferred rent, favorable leases, and prepaid rent.

Subsidiaries of the Company have entered into numerous operating and finance leases for various warehouses, office facilities, equipment, tractors, and trailers. Our leases have remaining lease terms of 1 year to 25 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Certain full-service fleet lease agreements include variable lease payments associated with usage, which are recorded and paid as incurred. When calculating lease liabilities, lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Certain of the leases for tractors, trailers, and other vehicles and equipment provide for residual value guarantees to the lessors. Circumstances that would require the subsidiary to perform under the guarantees include either (1) default on the leases with the leased assets being sold for less than the specified residual values in the lease agreements, or (2) decisions not to purchase the assets at the end of the lease terms combined with the sale of the assets, with sales proceeds less than the residual value of the leased assets specified in the lease agreements. Residual value guarantees under these operating lease agreements typically range between 6% and 20% of the value of the leased assets at inception of the lease. These leases have original terms ranging from 5 to 10 years and are set to expire at various dates ranging from 2025 to 2032. As of December 28, 2024, the undiscounted maximum amount of potential future payments for lease residual value guarantees totaled approximately $8.6 million, which would be mitigated by the fair value of the leased assets at lease expiration.

The following table presents the location of the right-of-use assets and lease liabilities in the Company’s consolidated balance sheet as of December 28, 2024 and June 29, 2024 (in millions), as well as the weighted-average lease term and discount rate for the Company’s leases:

Leases	Consolidated Balance Sheet Location	As of December 28, 2024			As of June 29, 2024
Assets:
Operating	Operating lease right-of-use assets	$	943.8		$	875.5
Finance	Property, plant and equipment, net		1,178.9			868.8
Total lease assets		$	2,122.7		$	1,744.3
Liabilities:
Current
Operating	Operating lease obligations—current installments	$	105.4		$	108.2
Finance	Finance lease obligations—current installments		195.1			147.2
Non-current
Operating	Operating lease obligations, excluding current installments		902.9			819.3
Finance	Finance lease obligations, excluding current installments		966.3			703.2
Total lease liabilities		$	2,169.7		$	1,777.9
Weighted average remaining lease term
Operating leases		10.8 years			10.7 years
Finance leases		6.4 years			6.0 years
Weighted average discount rate
Operating leases			5.5	%		5.4	%
Finance leases			5.4	%		5.1	%

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The following table presents the location of lease costs in the Company’s consolidated statement of operations for the periods reported (in millions):

		Three Months Ended				Six Months Ended
Lease Cost	Statement of Operations Location	December 28, 2024		December 30, 2023		December 28, 2024		December 30, 2023
Finance lease cost:
Amortization of finance lease assets	Operating expenses	$	45.5	$	27.8	$	82.6	$	53.8
Interest on lease liabilities	Interest expense		14.8		7.6		26.7		14.5
Total finance lease cost		$	60.3	$	35.4	$	109.3	$	68.3
Operating lease cost	Operating expenses		43.7		41.8		85.8		80.3
Short-term lease cost	Operating expenses		13.1		16.5		25.9		32.8
Total lease cost		$	117.1	$	93.7	$	221.0	$	181.4

The following table presents the supplemental cash flow information related to leases for the periods reported (in millions):

	Six Months Ended
(In millions)	December 28, 2024		December 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	77.7	$	71.9
Operating cash flows from finance leases		26.7		14.5
Financing cash flows from finance leases		84.8		56.5
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		129.7		190.2
Finance leases		299.8		151.6

The following table presents the future minimum lease payments under non-cancelable leases as of December 28, 2024 (in millions):

Fiscal Year	Operating Leases		Finance Leases
2025	$	80.7	$	127.4
2026		152.6		248.9
2027		145.2		232.0
2028		133.7		202.9
2029		118.1		178.4
Thereafter		771.5		401.4
Total future minimum lease payments	$	1,401.8	$	1,391.0
Less: Interest		393.5		229.6
Present value of future minimum lease payments	$	1,008.3	$	1,161.4

As of December 28, 2024, the Company had additional operating and finance leases that had not yet commenced, which total $803.7 million in future minimum lease payments. These leases relate primarily to build-to-suit warehouse leases that will replace existing distribution centers and will commence upon building completion with terms of 25 years. In addition, these leases include vehicle leases expected to commence in fiscal 2025 with lease terms of 5 to 10 years.

8. Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, outstanding checks in excess of deposits, trade accounts payable, and accrued expenses approximate their fair values because of the relatively short maturities of those instruments. The derivative assets and liabilities are recorded at fair value on the balance sheet. The fair value of long-term debt, which has a carrying value of $5,691.2 million and $3,198.5 million, is $5,638.7 million and $3,104.5 million at December 28, 2024 and June 29, 2024, respectively, and is determined by reviewing current market pricing related to comparable debt issued at the time of the balance sheet date, and is considered a Level 2 measurement.

9. Income Taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state,

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and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

The Company’s effective tax rate was 25.2% for the three months ended December 28, 2024 and 29.9% for the three months ended December 30, 2023. The Company’s effective tax rate was 26.1% for the six months ended December 28, 2024 and 27.6% for the six months ended December 30, 2023. The effective tax rate varies from the 21% statutory rate primarily due to state taxes, federal credits, and other permanent items. The excess tax benefit of exercised and vested stock awards is treated as a discrete item. The effective tax rate for the three and six months ended December 28, 2024 differed from the prior year periods primarily due to an increase in deductible discrete items related to stock-based compensation, a decrease in state and foreign taxes, and an increase in federal credits, partially offset by an increase in non-deductible expenses.

As of December 28, 2024 and June 29, 2024, the Company had net deferred tax assets of $214.0 million and $196.1 million, respectively, and deferred tax liabilities of $1,055.9 million and $694.0 million, respectively. As of December 28, 2024 and June 29, 2024, the Company had established a valuation allowance of $1.7 million, net of federal benefit, against deferred tax assets related to certain net operating losses and certain other losses which are not likely to be realized due to limitations on utilization. The change in the deferred tax balances relates primarily to deferred taxes established in purchase accounting. The Company believes that it is more likely than not that the remaining deferred tax assets will be realized.

On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“Framework”), which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy (“Pillar Two”). Pillar Two includes an agreement on international tax reform, including rules to ensure that large corporations pay a minimum rate of corporate income tax. To mitigate the administrative burden in complying with the new rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor” (“Safe Harbor”). This transitional Safe Harbor applies for fiscal years beginning on or before December 31, 2026, but not including a fiscal year that ends after June 30, 2028. Under the Safe Harbor, the top-up tax for such jurisdiction is deemed to be zero, provided that at least one of the Safe Harbor tests is met for the jurisdiction. The Company is not subject to Pillar Two minimum tax in the first twenty-six weeks of fiscal 2025 under the Safe Harbor rules. Pillar Two minimum tax will be treated as a period cost in future periods when it is applicable. We are continuing to evaluate the potential impact to the second half of fiscal 2025 and future periods of the Framework pending legislative adoption by individual countries.

10. Commitments and Contingencies

Purchase Obligations

The Company had outstanding contracts and purchase orders of $269.8 million related to capital projects and services including purchases of compressed natural gas for its trucking fleet at December 28, 2024. Amounts due under these contracts were not included on the Company’s consolidated balance sheet as of December 28, 2024.

Guarantees

The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to: (i) certain real estate leases under which subsidiaries of the Company may be required to indemnify property owners for environmental and other liabilities and other claims arising from their use of the applicable premises; (ii) certain agreements with the Company’s officers, directors, and employees under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship; and (iii) customer agreements under which the Company may be required to indemnify customers for certain claims brought against them with respect to the supplied products. Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been required to make payments under these obligations and, therefore, no liabilities have been recorded for these obligations in the Company’s consolidated balance sheets.

Litigation

The Company is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss arising from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When losses are probable and reasonably estimable, they have been accrued. Based on estimates of the range of potential losses associated with these matters, management does not believe that the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the Company. However, the final results of legal proceedings cannot be predicted with certainty and, if the Company failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the Company’s current estimates of the range of potential losses, the Company’s consolidated financial position or results of operations could be materially adversely affected in future periods.

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JUUL Labs, Inc. Marketing Sales Practices, and Products Liability Litigation. In October 2019, a Multidistrict Litigation action (“MDL”) was initiated in order to centralize litigation against JUUL Labs, Inc. (“JUUL”) and other parties in connection with JUUL’s e-cigarettes and related devices and components in the United States District Court for the Northern District of California. On March 11, 2020, counsel for plaintiffs and the Plaintiffs’ Steering Committee filed a Master Complaint in the MDL (“Master Complaint”) naming, among several other entities and individuals including JUUL, Altria Group, Inc., Philip Morris USA, Inc., Altria Client Services LLC, Altria Group Distribution Company, Altria Enterprises LLC, certain members of management and/or individual investors in JUUL, various e-liquid manufacturers, and various retailers, including the Company’s subsidiaries Eby-Brown Company LLC (“Eby-Brown”) and Core-Mark Holding Company, Inc. (“Core-Mark”), as defendants. The Master Complaint also named additional distributors of JUUL products (collectively with Eby-Brown and Core-Mark, the “Distributor Defendants”). The Master Complaint contains various state law claims and alleges that the Distributor Defendants: (i) failed to disclose JUUL’s nicotine contents or the risks associated; (ii) pushed a product designed for a youth market; (iii) engaged with JUUL in planning and marketing its product in a manner designed to maximize the flow of JUUL products; (iv) met with JUUL management in San Francisco, California to further these business dealings; and (v) received incentives and business development funds for marketing and efficient sales. JUUL and Eby-Brown are parties to a Domestic Wholesale Distribution Agreement dated March 10, 2020 (the “Distribution Agreement”), and JUUL has agreed to defend and indemnify Eby-Brown under the terms of that agreement and is paying Eby-Brown’s outside counsel fees directly. In addition, Core-Mark and JUUL have entered into a Defense and Indemnity Agreement dated March 8, 2021 (the “Defense Agreement”) pursuant to which JUUL has agreed to defend and indemnify Core-Mark, and JUUL is paying Core-Mark’s outside counsel fees directly.

On December 6, 2022, JUUL announced that it had reached settlements with the plaintiffs in the MDL and related cases that had been consolidated in the U.S. District Court for Northern District of California (the “MDL Settlement”). Per the settlement agreement, the MDL Settlement encompasses the various personal injury, consumer class action, government entity, and Native American tribe claims made against JUUL and includes, among others, all of the Distributor Defendants (including Core-Mark and Eby-Brown) as released parties. The release applicable to the Distributor Defendants, as well as certain other defendants, took effect when JUUL made the first settlement payment on October 27, 2023. The MDL Settlement Master informed the parties that there are ten plaintiffs who opted out of the MDL Settlement; however, those opt-out plaintiffs have amended their individual complaints and have removed Eby-Brown and Core-Mark as defendants in their individual cases.

On September 10, 2021, Michael Lumpkins filed a parallel lawsuit in Illinois state court against several entities, including JUUL, e-liquid manufacturers, various retailers, and various distributors, including Eby-Brown and Core-Mark, alleging similar claims to the claims at issue in the MDL (the “Illinois Litigation”). Because there is no federal jurisdiction for this case, it will proceed in Illinois state court. Plaintiff alleges as damages that his use of JUUL products caused a brain injury that was later exacerbated by medical negligence. The court denied Eby-Brown and Core-Mark’s motion to dismiss, and the case has moved into the discovery phase. The trial date has been set for August 1, 2025. The defense and indemnity of Eby-Brown and Core-Mark for the Illinois Litigation is covered by the Distribution Agreement and the Defense Agreement, respectively. The Company will continue to vigorously defend itself.

On June 23, 2022, the U.S. Food and Drug Administration (“FDA”) announced it had issued marketing denial orders (“MDOs”) to JUUL for all of its products currently marketed and sold in the U.S. According to the FDA, the MDOs banned the distribution and sale of all JUUL products domestically. That same day, JUUL filed a petition for review of the MDOs with the United States Court of Appeals for the D.C. Circuit. On June 24, 2022, the court of appeals stayed the MDOs and issued a briefing schedule in the case. Thereafter, JUUL informed the FDA that per applicable regulations it would submit a request for supervisory review of the MDOs to the FDA. In response, the FDA notified JUUL that upon further review of the briefing JUUL made to the court of appeals, the FDA determined there are scientific issues unique to JUUL’s Pre-Market Tobacco Application (“PMTA”) that warrant additional review. Accordingly, the FDA entered an administrative stay of the MDOs. If the FDA ultimately decides to maintain or re-issue the MDOs, the administrative stay will remain in place for an additional thirty days to provide JUUL the opportunity to seek further judicial relief. JUUL and the FDA filed a joint motion with the court of appeals to hold the petition for review in abeyance on July 6, 2022, which the court of appeals granted on July 7, 2022.

At this time, the Company is unable to predict whether the FDA will approve JUUL’s PMTA or re-issue the MDOs, nor is the Company able to estimate any potential loss or range of loss in the event of an adverse finding against JUUL in any case that falls outside of the MDL Settlement.

Tax Liabilities

The Company is subject to customary audits by authorities in the jurisdictions where it conducts business in the United States and foreign countries, which may result in assessments of additional taxes. These additional taxes are accrued when probable and reasonably estimable.

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11. Related-Party Transactions

The Company participates in, and has an equity method investment in, a purchasing alliance that was formed to obtain better pricing, to expand product options, to reduce internal costs, and to achieve greater inventory turnover. The Company’s investment in the purchasing alliance was $13.9 million as of December 28, 2024 and $11.8 million as of June 29, 2024. For the three-month periods ended December 28, 2024 and December 30, 2023, the Company recorded purchases of $586.3 million and $521.1 million, respectively, through the purchasing alliance. For the six-month periods ended December 28, 2024 and December 30, 2023, the Company recorded purchases of $1,187.4 million and $1,070.6 million, respectively, through the purchasing alliance.

12. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. The Company’s potential common shares include outstanding stock-based compensation awards and expected issuable shares under the employee stock purchase plan. In computing diluted earnings per common share, the average closing stock price for the period is used in determining the number of shares assumed to be purchased with the assumed proceeds under the treasury stock method. No potential common shares were considered antidilutive for the three and six months ended December 28, 2024 and December 30, 2023.

A reconciliation of the numerators and denominators for the basic and diluted earnings per common share computations is as follows:

(In millions, except per share amounts)	Three Months Ended December 28, 2024		Three Months Ended December 30, 2023		Six Months Ended December 28, 2024		Six Months Ended December 30, 2023
Numerator:
Net income	$	42.4	$	78.3	$	150.4	$	199.0
Denominator:
Weighted-average common shares outstanding		154.6		154.2		154.6		154.5
Dilutive effect of potential common shares		1.7		1.5		1.7		1.7
Weighted-average dilutive common shares outstanding		156.3		155.7		156.3		156.2
Basic earnings per common share	$	0.27	$	0.51	$	0.97	$	1.29
Diluted earnings per common share	$	0.27	$	0.50	$	0.96	$	1.27

13. Segment Information

Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Vistar, and Convenience.

The Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “Performance Brands.” Foodservice sells to independent and multi-unit “Chain” restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our Chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Vistar segment specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America.

Corporate & All Other is comprised of corporate overhead and certain operations that are not considered separate reportable segments based on their size. This includes the operations of the Company’s internal logistics unit responsible for managing and allocating inbound logistics revenue and expense. Corporate & All Other may also include capital expenditures for certain information technology projects that are transferred to the segments once placed in service.

Intersegment sales represent sales between the segments, which are eliminated in consolidation.

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Management evaluates the performance of each operating segment based on various operating and financial metrics, including total sales and Segment Adjusted EBITDA, which is the Company’s GAAP measure of segment profit. Segment Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, and amortization and excludes certain items that the Company does not consider part of its segments’ core operating results, including stock-based compensation expense, changes in the last-in-first-out (“LIFO”) reserve, acquisition, integration and reorganization expenses, and gains and losses related to fuel derivatives.

(In millions)	Foodservice		Vistar		Convenience		Corporate & All Other		Eliminations			Consolidated
For the three months ended December 28, 2024
Net external sales	$	8,361.6	$	1,233.7	$	5,967.5	$	75.4	$	—		$	15,638.2
Inter-segment sales		6.7		0.9		—		164.8		(172.4	)		—
Total sales		8,368.3		1,234.6		5,967.5		240.2		(172.4	)		15,638.2
Depreciation and amortization		115.6		13.3		39.0		14.6		—			182.5
Capital expenditures		89.2		5.2		5.2		7.8		—			107.4
For the three months ended December 30, 2023
Net external sales	$	7,073.6	$	1,201.0	$	5,941.4	$	79.7	$	—		$	14,295.7
Inter-segment sales		5.7		0.9		—		148.0		(154.6	)		—
Total sales		7,079.3		1,201.9		5,941.4		227.7		(154.6	)		14,295.7
Depreciation and amortization		72.7		12.8		37.2		20.6		—			143.3
Capital expenditures		61.6		15.2		7.9		9.2		—			93.9

(In millions)	Foodservice		Vistar		Convenience		Corporate & All Other		Eliminations			Consolidated
For the Six Months Ended December 28, 2024
Net external sales	$	16,046.6	$	2,518.4	$	12,330.9	$	157.8	$	—		$	31,053.7
Inter-segment sales		13.8		1.9		0.3		338.5		(354.5	)		—
Total sales		16,060.4		2,520.3		12,331.2		496.3		(354.5	)		31,053.7
Depreciation and amortization		200.6		27.7		77.6		29.5		—			335.4
Capital expenditures		166.5		11.2		15.6		10.6		—			203.9
For the Six Months Ended December 30, 2023
Net external sales	$	14,345.3	$	2,450.6	$	12,278.4	$	160.0	$	—		$	29,234.3
Inter-segment sales		11.0		1.7		—		308.1		(320.8	)		—
Total sales		14,356.3		2,452.3		12,278.4		468.1		(320.8	)		29,234.3
Depreciation and amortization		143.3		23.2		74.9		31.2		—			272.6
Capital expenditures		92.6		18.6		11.9		24.0		—			147.1

Segment Adjusted EBITDA for each reportable segment and Corporate & All Other is presented below along with a reconciliation to consolidated income before taxes.

	Three Months Ended						Six Months Ended
	December 28, 2024			December 30, 2023			December 28, 2024			December 30, 2023
Foodservice Adjusted EBITDA	$	289.9		$	224.1		$	569.9		$	470.1
Vistar Adjusted EBITDA		93.9			93.6			177.1			182.2
Convenience Adjusted EBITDA		107.3			83.5			212.6			178.2
Corporate & All Other Adjusted EBITDA		(68.1	)		(55.8	)		(124.7	)		(101.3	)
Depreciation and amortization		(182.5	)		(143.3	)		(335.4	)		(272.6	)
Interest expense		(100.2	)		(61.4	)		(167.0	)		(117.5	)
Change in LIFO reserve		(17.8	)		(21.8	)		(30.5	)		(41.0	)
Stock-based compensation expense		(11.7	)		(11.0	)		(23.0	)		(21.7	)
Gain (loss) on fuel derivatives		0.8			(1.8	)		(0.6	)		1.7
Acquisition, integration & reorganization expenses		(51.3	)		(3.9	)		(70.4	)		(13.7	)
Other adjustments (1)		(3.6	)		9.5			(4.4	)		10.6
Income before taxes	$	56.7		$	111.7		$	203.6		$	275.0

(1)

Other adjustments include asset impairments, gains and losses on disposal of fixed assets, amounts related to favorable and unfavorable leases, foreign currency transaction gains and losses, and franchise tax expense.

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Total assets by reportable segment, excluding intercompany receivables between segments, are as follows:

(In millions)	As of December 28, 2024		As of June 29, 2024
Foodservice	$	10,543.7	$	6,996.8
Vistar		1,566.5		1,519.1
Convenience		4,182.2		4,080.9
Corporate & All Other		804.6		796.1
Total assets	$	17,097.0	$	13,392.9

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10-Q and the audited consolidated financial statements and the notes thereto included in the Form 10-K. In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Item 1A. Risk Factors” section of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

Our Company

We market and distribute food and food-related products to customers across North America from our over 150 locations to over 300,000 customer locations in the “food-away-from-home” industry. We offer our customers a broad assortment of products including our proprietary-branded products, nationally branded products, and products bearing our customers’ brands. Our product assortment ranges from “center-of-the-plate” items (such as beef, pork, poultry, and seafood), frozen foods, and groceries to candy, snacks, and beverages. We also sell disposables, cleaning and kitchen supplies, and related products used by our customers, as well as cigarettes and other tobacco products. In addition to the products we offer to our customers, we provide value-added services by allowing our customers to benefit from our industry knowledge, scale, and expertise in the areas of product selection and procurement, menu development, and operational strategy.

Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Vistar, and Convenience. Our Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “Performance Brands.” Foodservice sells to independent and multi-unit “Chain” restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our Chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Vistar segment specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America. We believe that there are substantial synergies across our segments. Cross-segment synergies include procurement, operational best practices such as the use of new productivity technologies, and supply chain and network optimization, as well as shared corporate functions such as accounting, treasury, tax, legal, information systems, and human resources.

On October 8, 2024, the Company acquired Cheney Bros., Inc. (“Cheney Brothers”), expanding its Foodservice operations in the Southeastern portion of the United States. Refer to Note 5. Business Combinations of the consolidated financial statements in the Form 10-Q for additional details regarding the acquisition of Cheney Brothers.

Key Factors Affecting Our Business

We believe that our long-term performance is principally affected by the following key factors:

•

Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, and changes in the rate of inflation and fuel prices, supply chain disruptions, and labor shortages.

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•

Food distribution market structure. The food distribution market consists of a wide spectrum of companies ranging from businesses selling a single category of product (e.g., produce) to large national and regional broadline distributors with many distribution centers and thousands of products across all categories. We believe our scale enables us to invest in our Performance Brands, to benefit from economies of scale in purchasing and procurement, and to drive supply chain efficiencies that enhance our customers’ satisfaction and profitability. We believe that the relative growth of larger foodservice distributors will continue to outpace that of smaller, independent players in our industry.

•

Our ability to successfully execute our segment strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our segment strategies and to implement our current and future initiatives. The key strategies include focusing on independent sales and Performance Brands, pursuing new customers for our three reportable segments, expansion of geographies, utilizing our infrastructure to gain further operating and purchasing efficiencies, and making strategic acquisitions.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on rounded numbers.

Net Sales

Net sales is equal to gross sales, plus excise taxes, minus sales returns; sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in case volumes and product inflation that is reflected in the pricing of our products and mix of products sold.

Gross Profit

Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration), inbound freight, and remittances of excise tax. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.

Adjusted EBITDA

Management measures operating performance based on our Adjusted EBITDA, defined as net income before interest expense, interest income, income and franchise taxes, and depreciation and amortization, further adjusted to exclude certain items that we do not consider part of our core operating results. Such adjustments include certain unusual, non-cash, non-recurring, cost reduction, and other adjustment items permitted in calculating covenant compliance under our ABL Facility and indentures (other than certain pro forma adjustments permitted under our ABL Facility and indentures governing the Notes due 2027, Notes due 2029, and Notes due 2032 relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under our ABL Facility and indentures, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the ABL Facility and indentures). Our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.

Adjusted EBITDA is not defined under GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with GAAP, and is subject to important limitations. We use this measure to evaluate the performance of our business on a consistent basis over time and for business planning purposes. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties, including our lenders under the ABL Facility and holders of our Notes due 2027, Notes due 2029, and Notes due 2032, in their evaluation of the operating performance of companies in industries similar to ours.

Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:

•

excludes certain tax payments that may represent a reduction in cash available to us;

•

does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•

does not reflect changes in, or cash requirements for, our working capital needs; and

•

does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.

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In calculating Adjusted EBITDA, we add back certain non-cash, non-recurring, and other items as permitted or required by our ABL Facility and indentures. Adjusted EBITDA among other things:

•

does not include non-cash stock-based employee compensation expense and other non-cash charges; and

•

does not include acquisition, restructuring, and other costs incurred to realize future cost savings and enhance our operations.

We have included the calculation of Adjusted EBITDA for the periods presented.

Results of Operations and Adjusted EBITDA

The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated (in millions, except per share data):

	Three Months Ended
	December 28, 2024		December 30, 2023		Change			%
Net sales	$	15,638.2	$	14,295.7	$	1,342.5			9.4
Cost of goods sold		13,810.4		12,697.6		1,112.8			8.8
Gross profit		1,827.8		1,598.1		229.7			14.4
Operating expenses		1,669.0		1,424.2		244.8			17.2
Operating profit		158.8		173.9		(15.1	)		(8.7	)
Other expense, net
Interest expense		100.2		61.4		38.8			63.2
Other, net		1.9		0.8		1.1			137.5
Other expense, net		102.1		62.2		39.9			64.1
Income before income taxes		56.7		111.7		(55.0	)		(49.2	)
Income tax expense		14.3		33.4		(19.1	)		(57.2	)
Net income (GAAP)	$	42.4	$	78.3	$	(35.9	)		(45.8	)
Adjusted EBITDA (Non-GAAP)	$	423.0	$	345.4	$	77.6			22.5
Weighted-average common shares outstanding:
Basic		154.6		154.2		0.4			0.3
Diluted		156.3		155.7		0.6			0.4
Earnings per common share:
Basic	$	0.27	$	0.51	$	(0.24	)		(47.1	)
Diluted	$	0.27	$	0.50	$	(0.23	)		(46.0	)

	For the Six Months Ended
	December 28, 2024		December 30, 2023			Change			%
Net sales	$	31,053.7	$	29,234.3		$	1,819.4			6.2
Cost of goods sold		27,461.7		25,973.3			1,488.4			5.7
Gross profit		3,592.0		3,261.0			331.0			10.2
Operating expenses		3,217.9		2,870.9			347.0			12.1
Operating profit		374.1		390.1			(16.0	)		(4.1	)
Other expense, net
Interest expense		167.0		117.5			49.5			42.1
Other, net		3.5		(2.4	)		5.9			245.8
Other expense, net		170.5		115.1			55.4			48.1
Income before income taxes		203.6		275.0			(71.4	)		(26.0	)
Income tax expense		53.2		76.0			(22.8	)		(30.0	)
Net income (GAAP)	$	150.4	$	199.0		$	(48.6	)		(24.4	)
Adjusted EBITDA (Non-GAAP)	$	834.9	$	729.2		$	105.7			14.5
Weighted-average common shares outstanding:
Basic		154.6		154.5			0.1			0.1
Diluted		156.3		156.2			0.1			0.1
Earnings per common share:
Basic	$	0.97	$	1.29		$	(0.32	)		(24.8	)
Diluted	$	0.96	$	1.27		$	(0.31	)		(24.4	)

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We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income. The following table reconciles Adjusted EBITDA to net income for the periods presented:

	Three Months Ended						Six Months Ended
	December 28, 2024			December 30, 2023			December 28, 2024		December 30, 2023
	(In millions)						(In millions)
Net income (GAAP)	$	42.4		$	78.3		$	150.4	$	199.0
Interest expense		100.2			61.4			167.0		117.5
Income tax expense		14.3			33.4			53.2		76.0
Depreciation		114.1			86.3			211.5		170.1
Amortization of intangible assets		68.4			57.0			123.9		102.5
Change in LIFO reserve (1)		17.8			21.8			30.5		41.0
Stock-based compensation expense		11.7			11.0			23.0		21.7
(Gain) loss on fuel derivatives		(0.8	)		1.8			0.6		(1.7	)
Acquisition, integration & reorganization expenses (2)		51.3			3.9			70.4		13.7
Other adjustments (3)		3.6			(9.5	)		4.4		(10.6	)
Adjusted EBITDA (Non-GAAP)	$	423.0		$	345.4		$	834.9	$	729.2

(1)

Includes a decrease in the LIFO reserve of $0.1 million for Foodservice and an increase of $17.9 million for Convenience for the second quarter of fiscal 2025 compared to a decrease of $1.1 million for Foodservice and an increase of $22.9 million for Convenience for the second quarter of fiscal 2024. The LIFO reserve increased $0.8 million for Foodservice and increased $29.7 million for Convenience for the first six months of fiscal 2025 compared to an increase of $0.6 million for Foodservice and an increase of $40.4 million for Convenience for the first six months of fiscal 2024.

(2)

Includes professional fees and other costs related to in-progress, completed, and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.

(3)

Includes an $8.1 million gain on the sale of a Foodservice warehouse facility for the three and six months ended December 30, 2023, as well as asset impairments, insurance proceeds due to hurricane and other weather related events, amounts related to favorable and unfavorable leases, foreign currency transaction gains and losses, franchise tax expense, and other adjustments permitted by our ABL Facility.

Consolidated Results of Operations

Three and six months ended December 28, 2024 compared to the three and six months ended December 30, 2023

Net Sales

Net sales growth is a function of acquisitions, case growth, pricing (which is primarily based on product inflation/deflation), and a changing mix of customers, channels, and product categories sold. Net sales increased $1,342.5 million, or 9.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, and net sales increased $1,819.4 million, or 6.2%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024.

The increase in net sales was driven by recent acquisitions, including the Cheney Brothers acquisition, 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. Total case volume increased 9.8% and 6.1% during the second quarter and first six months of fiscal 2025, respectively, compared to the same periods of fiscal 2024. Total organic case volume increased 2.1% in the second quarter of fiscal 2025 and increased 1.6% in the first six months of fiscal 2025, compared to the same periods of fiscal 2024. Total organic case volume benefited from an increase of 5.0% and 4.6% in organic independent cases sold during the second quarter and first six months of fiscal 2025, respectively, including growth in Performance Brands cases, and growth in cases sold to Foodservice’s Chain business. The overall rate of product cost inflation was approximately 4.6% and 4.8% for the second quarter and first six months of fiscal 2025, respectively.

Gross Profit

Gross profit increased $229.7 million, or 14.4%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 and increased $331.0 million, or 10.2%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. The increases in gross profit for the second quarter and the first six months of fiscal 2025 were primarily driven by recent acquisitions, including the Cheney Brothers acquisition, cost of goods sold optimization through procurement efficiencies, as well as a favorable shift in the mix of cases sold, including growth in the independent channel. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers.

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Operating Expenses

Operating expenses increased $244.8 million, or 17.2%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. The increase in operating expenses was primarily driven by recent acquisitions, including the Cheney Brothers acquisition, a $48.2 million increase in personnel expense primarily related to wages, commissions, and benefits, and a $7.8 million increase in professional fees primarily related to recent acquisitions, partially offset by a $12.6 million decrease in fuel expense primarily due to lower fuel prices in the second quarter of fiscal 2025 as compared to the prior year period.

Operating expenses increased $347.0 million, or 12.1%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. The increase in operating expenses for the first six months of fiscal 2025 was primarily driven by recent acquisitions, including the Cheney Brothers acquisition, a $90.1 million increase in personnel expenses primarily related to wages, commissions, and benefits, a $12.7 million increase in professional fees related to recent acquisitions, a $11.0 million increase in insurance expense primarily related to workers’ compensation, and a $6.3 million increase in repairs and maintenance expense primarily related to transportation equipment for the first six months of fiscal 2025 compared to the prior year period. These increases were partially offset by a $21.7 million decrease in fuel expense primarily due to lower fuel prices for the first six months of fiscal 2025 compared to the prior year period.

Depreciation and amortization of intangible assets increased from $143.3 million in the second quarter of fiscal 2024 to $182.5 million in the second quarter of fiscal 2025. Depreciation and amortization of intangible assets increased from $272.6 million in the first six months of fiscal 2024 to $335.4 million in the first six months of fiscal 2025. Depreciation and amortization of intangible assets increased 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

Net income decreased $35.9 million, or 45.8%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 driven by an increase in interest expense and decrease in operating profit, partially offset by a decrease in income tax expense. Net income decreased $48.6 million, or 24.4%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024 due to an increase in interest expense and decrease in operating profit, partially offset by a decrease in income tax expense. The increase in interest expense was primarily the result of an increase in the average borrowings, including finance lease obligations, during the second quarter and first six months of fiscal 2025 compared to the prior year periods.

The Company reported income tax expense of $14.3 million and $53.2 million for the second quarter and first six months of fiscal 2025, respectively, compared to income tax expense of $33.4 million and $76.0 million for the second quarter and first six months of fiscal 2024, respectively. Our effective tax rates for the second quarter and first six months of fiscal 2025 were 25.2% and 26.1%, respectively, compared to 29.9% and 27.6% for the second quarter and first six months of fiscal 2024, respectively. The effective tax rates for the periods ended December 28, 2024, differed from the prior year periods primarily due to an increase in deductible discrete items related to stock-based compensation, a decrease in state and foreign taxes, and an increase in federal credits, partially offset by an increase in non-deductible expenses.

Segment Results

The Company has three reportable segments: Foodservice, Vistar, and Convenience. Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Segment Adjusted EBITDA, which is the Company’s GAAP measure of segment profit. Segment Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, and amortization and excludes certain items that the Company does not consider part of its segments’ core operating results, including stock-based compensation expense, changes in the LIFO reserve, acquisition, integration, and reorganization expenses, and gains and losses related to fuel derivatives. Refer to Note 13. Segment Information of the consolidated financial statements in the Form 10-Q for additional information.

Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. This also includes the operations of our internal logistics unit responsible for managing and allocating inbound logistics revenue and expense.

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The following tables set forth net sales and Segment Adjusted EBITDA by segment for the periods indicated (dollars in millions):

Net Sales

	Three Months Ended
	December 28, 2024			December 30, 2023			Change			%
Foodservice	$	8,368.3		$	7,079.3		$	1,289.0			18.2
Vistar		1,234.6			1,201.9			32.7			2.7
Convenience		5,967.5			5,941.4			26.1			0.4
Corporate & All Other		240.2			227.7			12.5			5.5
Intersegment Eliminations		(172.4	)		(154.6	)		(17.8	)		(11.5	)
Total net sales	$	15,638.2		$	14,295.7		$	1,342.5			9.4

	Six Months Ended
	December 28, 2024			December 30, 2023			Change			%
Foodservice	$	16,060.4		$	14,356.3		$	1,704.1			11.9
Vistar		2,520.3			2,452.3			68.0			2.8
Convenience		12,331.2			12,278.4			52.8			0.4
Corporate & All Other		496.3			468.1			28.2			6.0
Intersegment Eliminations		(354.5	)		(320.8	)		(33.7	)		(10.5	)
Total net sales	$	31,053.7		$	29,234.3		$	1,819.4			6.2

Segment Adjusted EBITDA

	Three Months Ended
	December 28, 2024			December 30, 2023			Change			%
Foodservice	$	289.9		$	224.1		$	65.8			29.4
Vistar		93.9			93.6			0.3			0.3
Convenience		107.3			83.5			23.8			28.5
Corporate & All Other		(68.1	)		(55.8	)		(12.3	)		(22.0	)
Total Adjusted EBITDA	$	423.0		$	345.4		$	77.6			22.5

	Six Months Ended
	December 28, 2024			December 30, 2023			Change			%
Foodservice	$	569.9		$	470.1		$	99.8			21.2
Vistar		177.1			182.2			(5.1	)		(2.8	)
Convenience		212.6			178.2			34.4			19.3
Corporate & All Other		(124.7	)		(101.3	)		(23.4	)		(23.1	)
Total Adjusted EBITDA	$	834.9		$	729.2		$	105.7			14.5

Segment Results—Foodservice

Three and six months ended December 28, 2024, compared to the three and six months ended December 30, 2023

Net Sales

Net sales for Foodservice increased $1,289.0 million, or 18.2%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $1,704.1 million, or 11.9%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases in net sales were driven by recent acquisitions, an increase in selling price per case as a result of inflation, and case volume growth, including growth in our independent and Chain business. The acquisition of Cheney Brothers contributed $825.0 million to net sales in the second quarter and first six months of fiscal 2025. Total case growth for Foodservice was 15.0% in the second quarter of fiscal 2025 and 8.9% in the first six months of fiscal 2025, compared to the prior year periods. Securing new and expanding business with independent customers resulted in total independent case growth of 19.8% and 13.5% for the second quarter and first six months of fiscal 2025, respectively, compared to the prior year periods. Organic independent case growth was 5.0% and 4.6% in the second quarter and first six months of fiscal 2025, respectively, compared to the prior year periods. For the second quarter and first six months of fiscal 2025, independent sales as a percentage of total Foodservice sales were 40.1% and 40.9%, respectively.

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Segment Adjusted EBITDA

Adjusted EBITDA for Foodservice increased $65.8 million, or 29.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Adjusted EBITDA for Foodservice increased $99.8 million, or 21.2%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases were the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $223.0 million, or 22.8%, in the second quarter of fiscal 2025 and increased $288.7 million, or 14.4%, in the first six months of fiscal 2025, compared to the prior year periods. The increase in gross profit was driven by recent acquisitions, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to our independent customers. Cheney Brothers contributed $145.4 million to Foodservice’s gross profit impacting Adjusted EBITDA in the second quarter and first six months of fiscal 2025.

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $157.0 million, or 20.8%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Operating expenses increased primarily as a result of recent acquisitions, including the Cheney Brothers acquisition, and a $38.0 million increase in personnel expenses primarily related to salaries and wages, commissions, and benefits, partially offset by a $7.7 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period. Operating expenses impacting Foodservice’s Adjusted EBITDA were $110.2 million for Cheney Brothers.

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $188.8 million, or 12.3%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. Operating expenses increased primarily as a result of recent acquisitions, including the Cheney Brothers acquisition, a $60.9 million increase in personnel expenses primarily related to salaries and wages, commissions, and benefits, and a $5.4 million increase in insurance expense primarily related to workers’ compensation, partially offset by a $15.9 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period.

Depreciation and amortization of intangible assets recorded in this segment increased from $72.7 million in the second quarter of fiscal 2024 to $115.6 million in the second quarter of fiscal 2025 and increased from $143.3 million in the first six months of fiscal 2024 to $200.6 million in the first six months of fiscal 2025 as a result of recent acquisitions and an increase in transportation equipment under finance leases. Total depreciation and amortization related to Cheney Brothers was $26.5 million in the second quarter and first six months of fiscal 2025.

Segment Results—Vistar

Three and six months ended December 28, 2024, compared to the three and six months ended December 30, 2023

Net Sales

Net sales for Vistar increased $32.7 million, or 2.7%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $68.0 million, or 2.8%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. The increase in net sales for the second quarter of fiscal 2025 was primarily driven by case volume growth in the vending, office coffee service, theater, and corrections channels, as well as an increase in selling price per case due to a change in sales mix. The increase in net sales for the first six months of fiscal 2025 was driven primarily by an acquisition in the second quarter of fiscal 2024. Total organic case volume growth for Vistar for the first six months of fiscal 2025 was flat, as growth in the vending, office coffee service, and corrections channels was offset by declines in theater and retail cases sold compared to the prior year period.

Segment Adjusted EBITDA

Adjusted EBITDA for Vistar increased $0.3 million, or 0.3%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Vistar’s Adjusted EBITDA increased $2.7 million, or 1.2%, for the second quarter of fiscal 2025 primarily driven by inventory holding gains. Adjusted EBITDA for Vistar decreased $5.1 million, or 2.8%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. This decrease was the result of an increase in operating expenses, partially offset by an increase in gross profit. Gross profit contributing to Vistar’s Adjusted EBITDA increased $21.7 million, or 5.0%, for the first six months of fiscal 2025 compared to the prior year period primarily driven by an acquisition in the second quarter of fiscal 2024.

Operating expenses impacting Vistar’s Adjusted EBITDA increased $2.7 million, or 2.0%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 primarily due to an increase in personnel expenses. Operating expenses impacting Vistar’s Adjusted EBITDA increased $27.0 million, or 10.7%, from the first six months of fiscal 2024 to the first six months of fiscal 2025 primarily driven by $18.1 million in costs related to an acquisition in the second quarter of fiscal 2024, $4.5 million in variable operational expenses as a result of a shift in channel mix, and a $2.4 million increase in occupancy costs associated with building expansions compared to the prior year period.

Depreciation and amortization of intangible assets recorded in this segment increased from $12.8 million in the second quarter of fiscal 2024 to $13.3 million in the second quarter of fiscal 2025 and increased from $23.2 million in the first six months of fiscal 2024 to $27.7 million in the first six months of fiscal 2025 due primarily to an acquisition in the second quarter of fiscal 2024.

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Segment Results—Convenience

Three and six months ended December 28, 2024, compared to the three and six months ended December 30, 2023

Net Sales

Net sales for Convenience increased $26.1 million, or 0.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $52.8 million, or 0.4%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases in net sales for the second quarter and the first six months of fiscal 2025 were driven primarily by an increase in selling price per case as a result of continued inflation and growth in cases sold for food and foodservice related products, partially offset by a decline in cigarette carton sales.

Segment Adjusted EBITDA

Adjusted EBITDA for Convenience increased $23.8 million, or 28.5%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience’s Adjusted EBITDA increased $32.1 million, or 8.3%, for the second quarter of fiscal 2025 compared to the prior year period primarily due to an increase in pricing improvement from procurement efficiencies, inventory holding gains, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $8.1 million, or 2.7%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Operating expenses increased primarily as a result of an $8.3 million increase in personnel expenses, partially offset by a $3.0 million decrease in fuel expense primarily due to lower fuel prices compared to the prior year period.

Adjusted EBITDA for Convenience increased $34.4 million, or 19.3%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience’s Adjusted EBITDA increased $45.8 million, or 5.8%, for the first six months of fiscal 2025 compared to the prior year period primarily due to an increase in inventory holding gains, pricing improvement from procurement efficiencies, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $11.1 million, or 1.8%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. Operating expenses increased primarily as a result of a $10.1 million increase in personnel expenses and a $5.2 million increase in insurance expense, partially offset by a $4.8 million decrease in fuel expense driven by lower fuel prices compared to the prior year period.

Depreciation and amortization of intangible assets recorded in this segment increased from $37.2 million in the second quarter of fiscal 2024 to $39.0 million in the second quarter of fiscal 2025 and increased from $74.9 million in the first six months of fiscal 2024 to $77.6 million in the first six months of fiscal 2025.

Segment Results—Corporate & All Other

Three and six months ended December 28, 2024, compared to the three and six months ended December 30, 2023

Net Sales

Net sales for Corporate & All Other increased $12.5 million from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $28.2 million from the first six months of fiscal 2024 to the first six months of fiscal 2025. The increase was primarily attributable to an increase in products and services sold to our other segments.

Segment Adjusted EBITDA

Adjusted EBITDA for Corporate & All Other was a negative $68.1 million for the second quarter of fiscal 2025 compared to a negative $55.8 million for the second quarter of fiscal 2024 and was a negative $124.7 million for the first six months of fiscal 2025 compared to a negative $101.3 million for the first six months of fiscal 2024. The decline in Adjusted EBITDA was primarily driven by increases in corporate personnel expenses of $8.3 million and $13.2 million and increases in information technology maintenance expense primarily related to cloud-based services of $1.3 million and $3.9 million for the second quarter and first six months of fiscal 2025, respectively.

Depreciation and amortization of intangible assets recorded in this segment decreased from $20.6 million in the second quarter of fiscal 2024 to $14.6 million in the second quarter of fiscal 2025 and decreased from $31.2 million for the first six months of fiscal 2024 to $29.5 million for the first six months of fiscal 2025 due to prior period accelerated amortization of certain customer relationships and trade names.

Liquidity and Capital Resources

We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our credit facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our credit facility or net proceeds from the issuances of senior notes. Our working capital and borrowing levels are subject to seasonal fluctuations and the timing of procurement and acquisition activities. We borrow under our credit facility or pay it

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down regularly based on our cash flows from operating and investing activities. Our practice is to minimize interest expense while maintaining reasonable liquidity.

As market conditions warrant, we may from time to time seek to repurchase our securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such repurchases may be funded by incurring new debt, including additional borrowings under our credit facility. In addition, depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness, make investments or acquisitions or for other purposes. Any new debt may be secured debt.

We are exposed to interest rate risk related to changes in interest rates for borrowings under our ABL Facility. To add stability to interest expense and manage our exposure to interest rate movements, we enter into interest rate swap agreements. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments. As of December 28, 2024, $150.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 63% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.

In November 2022, the Board of Directors authorized a share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The current share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon marketplace conditions and other factors, including compliance with the covenants in the agreements governing our existing indebtedness. During the six months ended December 28, 2024, the Company repurchased and subsequently retired 0.4 million shares of the Company’s common stock for a total of $33.6 million or an average cost of $75.19 per share. During the six months ended December 30, 2023, the Company repurchased and subsequently retired 1.3 million shares of the Company’s common stock for a total of $78.1 million or an average cost of $58.83 per share. As of December 28, 2024, approximately $177.0 million remained available for share repurchases.

Our contractual cash requirements over the next 12 months and beyond relate to our long-term debt and associated interest payments, operating and finance leases, and purchase obligations. Refer to Note 6. Debt and Note 7. Leases of the consolidated financial statements in the Form 10-Q for information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, respectively. As of December 28, 2024, the Company had total purchase obligations of $269.8 million, which includes agreements for purchases related to capital projects and services in the normal course of business, for which all significant terms have been confirmed, as well as a minimum amount due for various Company meetings and conferences. Purchase obligations also include amounts committed to various capital projects in process or scheduled to be completed in the coming fiscal years. As of December 28, 2024, the Company had commitments of $176.1 million for capital projects related to warehouse expansion and improvements and warehouse equipment. The Company anticipates using cash flows from operations or borrowings under the ABL Facility to fulfill these commitments. Amounts due under these agreements were not included in the Company’s consolidated balance sheet as of December 28, 2024.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next 12 months and to maintain sufficient liquidity for normal operating purposes and to fund capital expenditures.

As of December 28, 2024, our cash balance totaled $18.7 million, including restricted cash of $8.0 million, as compared to a cash balance totaling $27.7 million, including restricted cash of $7.7 million, as of June 29, 2024.

Six months ended December 28, 2024, compared to the six months ended December 30, 2023

Operating Activities

During the first six months of fiscal 2025 and fiscal 2024, our operating activities provided cash flow of $379.0 million and $554.0 million, respectively. The decrease in cash flow provided by operating activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.

Investing Activities

Cash used in investing activities totaled $2,736.7 million in the first six months of fiscal 2025 compared to $436.4 million in the first six months of fiscal 2024. These investments consisted of cash paid for acquisitions of $2,535.5 million in the first six months of fiscal 2025 compared to $308.1 million in the first six months of fiscal 2024, along with capital purchases of property, plant, and equipment of $203.9 million and $147.1 million for the first six months of fiscal 2025 and the first six months of fiscal 2024,

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respectively. For the first six months of both fiscal 2025 and fiscal 2024, purchases of property, plant, and equipment primarily consisted of outlays for warehouse improvements and expansion, warehouse equipment, transportation equipment, and information technology. The following table presents the capital purchases of property, plant, and equipment by segment:

	Six Months Ended
(Dollars in millions)	December 28, 2024		December 30, 2023
Foodservice	$	166.5	$	92.6
Vistar		11.2		18.6
Convenience		15.6		11.9
Corporate & All Other		10.6		24.0
Total capital purchases of property, plant and equipment	$	203.9	$	147.1

Financing Activities

During the first six months of fiscal 2025, our financing activities provided cash flow of $2,348.7 million, which consisted primarily of $1,499.9 million in net borrowings under our ABL Facility and $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $84.8 million in payments under finance lease obligations.

During the first six months of fiscal 2024, our financing activities used cash flow of $113.7 million, which consisted primarily of $78.1 million in payments to repurchase common stock and $56.5 million in payments under finance lease obligations.

The following describes our financing arrangements as of December 28, 2024:

Credit Agreement: PFGC, Inc. (“PFGC”), a wholly-owned subsidiary of the Company, and Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, were parties to the Fifth Amended and Restated Credit Agreement dated September 17, 2021, as amended by the First Amendment to the Fifth Amended and Restated Credit Agreement, dated April 17, 2023 (as amended, the “Prior Credit Agreement”). The Prior Credit Agreement had an aggregate principal amount available of $4.0 billion and was scheduled to mature on September 17, 2026.

On September 9, 2024, PFGC and Performance Food Group, Inc. entered into the Sixth Amended and Restated Credit Agreement (the “ABL Facility”), with Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent, and the other lenders party thereto, which amends and restates the Prior Credit Agreement. The ABL Facility, among other things, (i) increases the total revolving commitments from $4.0 billion under the Prior Credit Agreement to $5.0 billion under the ABL Facility and (ii) extends the stated maturity date from September 17, 2026, under the Prior Credit Agreement to September 9, 2029, under the ABL Facility. The ABL Facility also provides for up to $1.0 billion of uncommitted incremental facilities. The terms of any such incremental facility shall be agreed between Performance Food Group, Inc. and the lenders providing the new commitments, subject to certain limitations set forth in the ABL Facility.

Performance Food Group, Inc. is the lead borrower under the ABL Facility, which is jointly and severally guaranteed by, and secured by the majority of the assets of, PFGC and all material domestic direct and indirect wholly-owned subsidiaries of PFGC (other than the captive insurance subsidiary and other excluded subsidiaries). Availability for loans and letters of credit under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including trade accounts receivable, inventory, owned real property, and owned transportation equipment. The borrowing base is reduced quarterly by a cumulative fraction of the real property and transportation equipment values. Advances on accounts receivable and inventory are subject to change based on periodic commercial finance examinations and appraisals, and the real property and transportation equipment values included in the borrowing base are subject to change based on periodic appraisals. Audits and appraisals are conducted at the direction of the administrative agent for the benefit and on behalf of all lenders.

Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the greatest of (i) a floor rate of 0.00%, (ii) the federal funds rate in effect on such date plus 0.5%, (iii) the prime rate on such day, or (iv) one month Term SOFR plus 1.0%) plus a spread or (b) Term SOFR plus a spread. The ABL Facility also provides for an unused commitment fee at a rate of 0.250% per annum based on average excess availability.

The following table summarizes outstanding borrowings, availability, and the average interest rate under the Company’s credit agreement:

(Dollars in millions)	As of December 28, 2024			As of June 29, 2024
Aggregate borrowings	$	2,660.7		$	1,160.8
Letters of credit		167.1			160.4
Excess availability, net of lenders’ reserves of $97.3 and $96.3		2,172.2			2,678.8
Average interest rate, excluding impact of interest rate swaps		6.05	%		6.79	%

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The ABL Facility contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if Alternate Availability (as defined in the ABL Facility) falls below the greater of (i) $375.0 million and (ii) 10% of the lesser of the borrowing base and the sum of (a) the aggregate commitments plus (b) any outstanding term loans for five consecutive business days. The ABL Facility also contains customary restrictive covenants that include, but are not limited to, restrictions on the loan parties' and their subsidiaries’ abilities to incur additional indebtedness, pay dividends, create liens, make investments, make prepayments, redemptions, or defeasances prior to the maturity of the certain restricted debt, and dispose of assets. The ABL Facility provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. If an event of default occurs and is continuing, amounts due under the ABL Facility may be accelerated and the rights and remedies of the lenders may be exercised, including rights with respect to the collateral securing the obligations under such agreement.

Senior Notes due 2027: On September 27, 2019, PFG Escrow Corporation (which merged with and into Performance Food Group, Inc.) issued and sold $1,060.0 million aggregate principal amount of its 5.500% Senior Notes due 2027 (the "Notes due 2027”). The Notes due 2027 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2027 are not guaranteed by the Company.

The proceeds from the Notes due 2027 along with an offering of shares of the Company’s common stock and borrowings under a prior credit agreement, were used to fund the cash consideration for the acquisition of Reinhart Foodservice, L.L.C and to pay related fees and expenses.

The Notes due 2027 were issued at 100.0% of their par value. The Notes due 2027 mature on October 15, 2027 and bear interest at a rate of 5.500% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2027 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2027 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2027 at a redemption price equal to 100.0% of the principal amount redeemed, plus accrued and unpaid interest.

The indenture governing the Notes due 2027 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2027 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2027 to become or be declared due and payable.

Senior Notes due 2029: On July 26, 2021, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its 4.250% Senior Notes due 2029 (the “Notes due 2029”). The Notes due 2029 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2029 are not guaranteed by the Company.

The proceeds from the Notes due 2029 were used to pay down the outstanding balance of the ABL Facility, to redeem the 5.500% Senior Notes due 2024, and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2029.

The Notes due 2029 were issued at 100.0% of their par value. The Notes due 2029 mature on August 1, 2029 and bear interest at a rate of 4.250% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2029 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2029 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at a redemption price equal to 102.125% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.163% and 100% of the principal amount redeemed on August 1, 2025, and August 1, 2026, respectively.

The indenture governing the Notes due 2029 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of

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PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2029 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2029 to become or be declared due and payable.

Senior Notes due 2032: On September 12, 2024, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its Notes due 2032. The Notes due 2032 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2032 are not guaranteed by the Company.

The Company intended to use the proceeds from the Notes due 2032, together with borrowings under the ABL Facility, to finance the cash consideration in connection with the acquisition of Cheney Brothers and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2032. However, since there was no requirement to hold the funds in escrow until the Cheney Brothers acquisition closed, the net proceeds from the Notes due 2032 were used to pay down a portion of the outstanding balance of the ABL Facility. The Company subsequently funded the cash consideration for the Cheney Brothers acquisition with borrowings under the ABL Facility.

The Notes due 2032 were issued at 100.0% of their par value. The Notes due 2032 mature on September 15, 2032, and bear interest at a rate of 6.125% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2032 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2032 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at any time prior to September 15, 2027, at a redemption price equal to 100% of the principal amount of the Notes due 2032 being redeemed plus a make-whole premium and accrued and unpaid interest. In addition, beginning on September 15, 2027, Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at a redemption price equal to 103.063% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.531% and 100% of the principal amount redeemed on September 15, 2028, and September 15, 2029, respectively. In addition, at any time prior to September 15, 2027, Performance Food Group, Inc. may redeem up to 40% of the Notes due 2032 from the proceeds of certain equity offerings at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest.

The indenture governing the Notes due 2032 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2032 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2032 to become or be declared due and payable.

The ABL Facility and the indentures governing the Notes due 2027, the Notes due 2029, and the Notes due 2032 contain customary restrictive covenants under which all of the net assets of PFGC and its subsidiaries were restricted from distribution to Performance Food Group Company, except for approximately $1,428.4 million of restricted payment capacity available under such debt agreements, as of December 28, 2024. Such minimum estimated restricted payment capacity is calculated based on the most restrictive of our debt agreements and may fluctuate from period to period, which fluctuations may be material. Our restricted payment capacity under other debt instruments to which the Company is subject may be materially higher than the foregoing estimate.

As of December 28, 2024, the Company was in compliance with all of the covenants under the ABL Facility and the indentures governing the Notes due 2027, the Notes due 2029, and the Notes due 2032.

Total Assets by Segment

Total assets by segment discussed below exclude intercompany receivables between segments.

Total assets for Foodservice increased $3,961.2 million from $6,582.5 million as of December 30, 2023 to $10,543.7 million as of December 28, 2024. Total assets for Foodservice increased $3,546.9 million from $6,996.8 million as of June 29, 2024 to $10,543.7 million as of December 28, 2024. During both time periods, Foodservice increased its assets primarily due to recent acquisitions within the segment.

Total assets for Vistar increased $131.6 million from $1,434.9 million as of December 30, 2023 to $1,566.5 million as of December 28, 2024. During this time period, this segment increased its inventory due to advanced purchases of certain products to take advantage of preferred pricing, increased its property, plant and equipment due to additional transportation equipment under

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finance leases, and increased its operating lease right-of-use assets due to warehouse expansion, partially offset by a decrease in intangible assets due to normal amortization. Total assets for Vistar increased $47.4 million from $1,519.1 million as of June 29, 2024 to $1,566.5 million as of December 28, 2024. During this time period, this segment increased its inventory due to advanced purchases of certain products to take advantage of preferred pricing and increased its operating lease right-of-use assets due to warehouse expansion, partially offset by a decrease in accounts receivable.

Total assets for Convenience increased $96.5 million from $4,085.7 million as of December 30, 2023 to $4,182.2 million as of December 28, 2024. During this time period, the segment increased its inventory due to advanced purchases of tobacco products to take advantage of preferred pricing, increased its property, plant and equipment due to additional transportation equipment under finance leases, and increased its operating lease right-of-use assets due to a new warehouse facility, partially offset by a decrease in intangible assets due to normal amortization and a decrease in accounts receivable. Total assets for Convenience increased $101.3 million from $4,080.9 million as of June 29, 2024 to $4,182.2 million as of December 28, 2024. During this time period, the segment increased its inventory due to advanced purchases of tobacco products to take advantage of preferred pricing and increased its operating lease right-of-use assets due to a new warehouse facility, partially offset by a decrease in accounts receivable due to seasonal fluctuations in sales, a decrease in prepaid expenses related to cigarette inventory, and a decrease in intangible assets due to normal amortization.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to portraying our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, inventory valuation, insurance programs, income taxes, vendor rebates and promotional incentives, leases, and goodwill and other intangible assets, which are described in the Form 10-K. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form 10-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk and fuel price risk. There have been no material changes to our market risks since June 29, 2024. However, due to the Cheney Brothers acquisition, our variable-rate debt has increased.

Assuming an average daily balance on our ABL Facility of approximately $2.7 billion, approximately $150.0 million of our outstanding long-term debt is fixed through interest rate swap agreements over the next twelve months and approximately $2.5 billion represents variable-rate debt. A hypothetical 100 bps increase in SOFR on our variable-rate debt would lead to an increase of approximately $25.1 million in annual interest expense.

For further discussion on our exposure to market risk, see Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Form 10-Q, were effective to accomplish their objectives at a reasonable assurance level.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act), that occurred during the fiscal quarter ended December 28, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As permitted by applicable SEC guidance, the scope of our evaluation regarding changes in our internal control over financial reporting during the fiscal quarter ended December 28, 2024 excluded internal control over financial reporting for Cheney Brothers, which was acquired on October 8, 2024.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various allegations, claims, and legal actions arising in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits, and claims, management believes that adequate provisions have been made or insurance secured for all currently pending proceedings so that the ultimate outcomes will not have a material adverse effect on our financial position. Refer to Note 10. Commitments and Contingencies of the consolidated financial statements in the Form 10-Q for disclosure of ongoing litigation.

Item 1A. Risk Factors

There have been no material changes to our principal risks that we believe are material to our business, results of operations, and financial condition from the risk factors previously disclosed in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information relating to our purchases of the Company’s common stock during the second quarter of fiscal 2025.

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan(2)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan (in millions)(2)
September 29, 2024—October 26, 2024		41,998	$	78.64		41,790	$	177.8
October 27, 2024—November 23, 2024		9,980	$	81.25		9,352	$	177.0
November 24, 2024—December 28, 2024		329	$	88.44		—	$	177.0
Total		52,307	$	79.20		51,142

(1)

During the second quarter of fiscal 2025, the Company repurchased 1,165 shares of the Company’s common stock via share withholding for payroll tax obligations due from employees in connection with the delivery of shares of the Company’s common stock under our incentive plans.

(2)

In November 2022, the Board of Directors authorized a share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The current share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon marketplace conditions and other factors, including compliance with the covenants under the ABL Facility and the indentures governing the Notes due 2027, Notes due 2029, and Notes due 2032. As of December 28, 2024, approximately $177.0 million remained available for additional share repurchases.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended December 28, 2024, no director or officer of the Company adopted or terminated a ‘Rule 10b5-1 trading arrangement’ or ‘non-Rule 10b5-1 trading arrangement,’ as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

Exhibit No.		Description
	10.1+	Performance Food Group Company 2024 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37578) filed with the Securities and Exchange Commission on November 20, 2024).
	10.2+*	Form of Time-Based Restricted Stock Agreement under the 2024 Omnibus Incentive Plan.
	10.3+*	Form of Performance-Based Restricted Stock Agreement under the 2024 Omnibus Incentive Plan.
	10.4+	Amendment No. 2 to Performance Food Group Company Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37578) filed with the Securities and Exchange Commission on November 6, 2024).
	31.1*	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2*	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1*	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2*	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	Inline XBRL Instance Document
	101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document
	104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

+ Identifies exhibits that consist of a management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PERFORMANCE FOOD GROUP COMPANY (Registrant)
Dated: February 5, 2025	By:	/s/ H. Patrick Hatcher
	Name:	H. Patrick Hatcher
	Title:	Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory)

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