Performance Food Group | 12500 West Creek Parkway |
Richmond, VA 23238 | |
Phone (804) 484-7700 | |
FAX (804) 484-7701 | |
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FOR MORE INFORMATION, CONTACT: | Kevin P. Collier |
PERFORMANCE FOOD GROUP REPORTS NET SALES INCREASE
OF 15% TO $1.5 BILLION
RICHMOND, Va. (May 4, 2004)- Performance Food Group (Nasdaq/NM:PFGC) today announced results for the first quarter ended April 3, 2004.
Sales for the first quarter of 2004 grew to $1.5 billion, up 15% from $1.3 billion in the year-earlier period. Net earnings and net earnings per share declined 54% to $7.5 million and $0.16 respectively, as a result of previously disclosed operational challenges in 2003 that were expected to impact first quarter results. Inflation for the quarter was approximately 4%.
Bob Sledd, chairman and chief executive officer noted, "The first quarter results represent the 37th consecutive period in which net sales have increased compared to the prior-year period. Our first quarter sales growth of 15% consisted solely of internal growth in each of our business segments. We remain focused on driving improvements in our operations to address the challenges we faced in 2003."
"Our Broadline sales continued to grow, increasing 13% versus the same period last year. Inflation was approximately 5% for the quarter. We are also pleased at the progress we've made in our Quality Foods operation, which did not meet our expectations in 2003. Sales at Quality for the first quarter of 2004 exceeded sales from the same period last year and sales per delivery continue to increase. We will maintain our focus on driving incremental improvements in Quality's results of operations. While our long term focus in the Broadline division continues to be growing our mix of street sales, we will be opportunistic in adding new chain business that makes sense. Our Broadline division will begin servicing an additional $50 million in annualized new multi-unit business that will begin to roll-out in the third quarter of 2004. During the first quarter, we also continued to show solid gains in sales per delivery, gross profit per delivery and proprietary brand sales throughout the Broadline segment."
Mr. Sledd added, "Our Customized division recorded a strong 21% increase in first quarter sales driven by the expansion of new product categories with existing customers and by the new business added in the first and second quarters of 2003. The increase in sales also reflected higher inflation, which amounted to approximately 5% for the quarter. The Customized division's results were impacted by the incremental costs of approximately $1.8 million, associated with a labor dispute that began late in 2003. We continue to negotiate in good faith with the local bargaining unit to reach a mutually satisfactory agreement. While these incremental costs are decreasing, we expect them to continue into the second quarter of 2004."
"Our Fresh-cut sales grew 13% for the first quarter. Inflation was nominal for the quarter. Growth of our packaged salad products in retail continues its solid growth trend, as evidenced by continued improvement in market share, driven particularly by our Blends and Garden Plus categories. In our fresh-cut fruit business, we are excited about McDonald's roll-out of the Apple Dipper product and the test of the new Fruit 'n Walnut Salad. We are continuing to add production capacity and increase the overall efficiency of our production network by improving the throughput of our existing processing lines and by adding new lines."
Mr. Sledd concluded, "We are very pleased with our strong internal sales growth of 15% for the quarter. We remain focused on continuing to execute on our strategies to improve the efficiency and profitability of each of our business segments. Our balance sheet remains strong with a debt-to-capital ratio of 28%, which excludes interests in accounts receivable sold under our receivables purchase facility of $110 million. While the second quarter anticipates a significant continued improvement in our business, we continue to expect earnings per share to be in the range of $0.50 to $0.54 for the second quarter of 2004."
Performance Food Group markets and distributes more than 64,000 national and private label food and food-related products to approximately 48,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions. Our Fresh Express line is the industry leader and pioneer of fresh packaged salads. For more information on Performance Food Group, visitwww.pfgc.com.
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are based on current expectations and management's estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to, general economic condition; the relatively low margins and economic sensitivity of the foodservice business; the Company's reliance on major customers; the ability to identify and successfully complete acquisitions of other foodservice distributors; the Company's ability to successfully develop, market and meet demand for new products; and management of the Company's planned growth, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission.
Performance Food Group Company | ||||||
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Three Months Ended | ||||||
April 3, |
| March 29, | ||||
Net sales | $ | 1,465,067,000 |
| $ | 1,269,105,000 | |
Net earnings | $ | 7,476,000 |
| $ | 16,420,000 | |
Net earnings per share: |
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Basic | $ | 0.16 |
| $ | 0.36 | |
Diluted | $ | 0.16 |
| $ | 0.35 | |
Weighted average number of shares outstanding: |
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Basic | 45,999,000 |
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| 45,345,000 | ||
Diluted | 47,067,000 |
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| 52,452,000 | ||
Performance Food Group Company | ||||||
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Assets | April 3, 2004 |
| January 3, 2004 | |||
Cash and cash equivalents | $ | 51,514 | $ | 38,916 | ||
Accounts and notes receivable, net, including |
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| retained interest in securitized receivables |
| 247,872 |
| 242,340 | |
Inventories |
| 280,556 |
| 257,198 | ||
Other current assets |
| 33,510 |
| 43,421 | ||
| Total current assets |
| 613,452 |
| 581,875 | |
Property, plant and equipment, net |
| 372,168 |
| 363,052 | ||
Goodwill, net |
| 582,668 |
| 582,966 | ||
Other intangible assets, net |
| 194,419 |
| 196,814 | ||
Other assets |
| 12,230 |
| 11,761 | ||
| Total assets | $ | 1,774,937 | $ | 1,736,468 | |
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Checks in excess of deposits | $ | 103,456 | $ | 81,797 | ||
Trade accounts payable |
| 282,263 |
| 235,392 | ||
Current installments of long-term debt |
| 1,232 |
| 1,358 | ||
Other current liabilities |
| 154,172 |
| 150,377 | ||
| Total current liabilities |
| 541,123 |
| 468,924 | |
Long-term debt, excluding current installments |
| 310,528 |
| 353,919 | ||
Deferred income taxes |
| 106,978 |
| 109,810 | ||
Shareholders' equity |
| 816,308 |
| 803,815 | ||
| Total liabilities and shareholders' equity | $ | 1,774,937 | $ | 1,736,468 | |
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Three Months Ended | ||||||||||||||
April 3, 2004 | March 29, 2003 | |||||||||||||
Net sales | $ | 1,465,067 |
| 100.0 | % | $ | 1,269,105 | 100.0 | % | |||||
Cost of goods sold |
| 1,246,549 | 85.1 | % | 1,069,767 | 84.3 | % | |||||||
| Gross profit |
| 218,518 | 14.9 | % | 199,338 | 15.7 | % | ||||||
Operating expenses |
| 201,763 | 13.8 | % | 168,934 | 13.3 | % | |||||||
| Operating profit |
| 16,755 | 1.1 | % | 30,404 | 2.4 | % | ||||||
Other income (expense): |
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| Interest expense | (4,749 | ) | (4,790 | ) | |||||||||
Loss on sale of receivables | (468 | ) | (324 | ) | ||||||||||
Other, net | 520 | 1,193 | ||||||||||||
Other expense, net | (4,697 | ) | -0.3 | % | (3,921 | ) | -0.3 | % | ||||||
Earnings before income taxes | 12,058 | 0.8 | % | 26,483 | 2.1 | % | ||||||||
Income taxes |
| 4,582 | 0.3 | % |
| 10,063 | 0.8 | % | ||||||
Net earnings | $ | 7,476 | 0.5 | % | $ | 16,420 | 1.3 | % | ||||||
Weighted average common shares outstanding |
| 45,999 |
| 45,345 | ||||||||||
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Basic net earnings per common share | $ | 0.16 | $ | 0.36 | ||||||||||
Weighted average common shares and dilutive | ||||||||||||||
potential common shares outstanding | 47,067 | 52,452 | ||||||||||||
Diluted net earnings per common share | $ | 0.16 | $ | 0.35 | ||||||||||
Performance Food Group Company | ||||||||||||||||||
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2004 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | |||||||||||||
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First Quarter | ||||||||||||||||||
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Net external sales | $ | 723,651 |
| $ | 500,886 |
| $ | 240,530 |
| $ | - |
| $ | 1,465,067 |
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Intersegment sales |
| 267 |
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| 77 |
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| 4,194 |
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| (4,538 | ) |
| - |
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Operating profit |
| 10,318 |
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| 3,470 |
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| 11,043 |
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| (8,076 | ) |
| 16,755 |
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| Operating profit margin |
| 1.43 | % |
| 0.69 | % |
| 4.51 | % |
| - |
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| 1.14 | % | ||
Total assets |
| 817,616 |
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| 146,847 |
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| 668,812 |
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| 141,662 |
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| 1,774,937 |
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Interest expense (income) |
| 3,080 |
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| 171 |
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| 4,682 |
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| (3,184 | ) |
| 4,749 |
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Loss (gain) on sale of receivables |
| 1,950 |
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| 650 |
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| - |
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| (2,132 | ) |
| 468 |
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Depreciation |
| 3,365 |
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| 1,071 |
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| 6,778 |
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| 739 |
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| 11,953 |
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Amortization |
| 900 |
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| - |
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| 1,131 |
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| - |
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| 2,031 |
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Capital expenditures |
| 2,304 |
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| 1,449 |
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| 15,713 |
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| 1,668 |
| 21,134 |
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2003 | Broadline | Customized | Fresh-Cut | Corporate & | Consolidated | ||||||||||||
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First Quarter | |||||||||||||||||
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Net external sales | $ | 642,683 |
| $ | 412,942 |
| $ | 213,480 |
| $ | - |
| $ | 1,269,105 |
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Intersegment sales |
| 213 |
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| 94 |
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| 3,798 |
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| (4,105 | ) |
| - |
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Operating profit |
| 11,962 |
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| 4,875 |
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| 18,226 |
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| (4,659 | ) |
| 30,404 |
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| Operating profit margin |
| 1.86 | % |
| 1.18 | % |
| 8.39 | % |
| - |
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| 2.40 | % | |
Total assets |
| 777,532 |
| 122,732 |
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| 635,930 |
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| 109,847 |
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| 1,646,041 |
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Interest expense (income) |
| 3,821 |
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| 65 |
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| 4,682 |
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| (3,778 | ) |
| 4,790 |
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Loss (gain) on sale of receivables |
| 1,032 |
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| 502 |
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| - |
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| (1,210 | ) |
| 324 |
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Depreciation |
| 3,574 |
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| 850 |
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| 5,363 |
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| 368 |
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| 10,155 |
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Amortization |
| 943 |
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| - |
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| 1,135 |
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| - |
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| 2,078 |
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Capital expenditures |
| 1,627 |
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| 2,662 |
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| 14,874 |
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| 1,045 |
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| 20,208 |
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