PFGC - Earnings call transcript Q3 2020 | Performance Food Group Company

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Operator

Good day and welcome to PFG's Fiscal Year Q3 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Bill Marshall, Vice President, Investor Relations for PFG. Please go ahead, sir.

Bill Marshall

Thank you, Brandy and good morning. with PFG's morning Hope, and this CFO. PFG's here George CEO; Holm, Jim We're

press release. our these be results back release quarter a items. measures and issued We regarding can for adjusted to months call include the certain this of the non-GAAP this GAAP results and reconciliation XXXX the results morning. measures in found The of at discussed The will earnings GAAP non-GAAP nine third fiscal corresponding

the in Investor section can find release You earnings website our pfgc.com. Relations at our of

remarks contain projections. differ factors Our various review forward-looking and from materially projections and section in forward-looking in release statements to for cautionary filings that Please our forward-looking results. could statements our the earnings SEC earnings today's cause release of our and the statements results future actual

I'd turn to George. call to over like Now, the

George Holm

you Thanks joining and for our call Bill. everyone Good morning, thank today.

business. working we've protect As PFG's the COVID-XX the pandemic, and to with world hard to grapple been continues associates

results and have Before a our actions I to supply keep thank like have our to tirelessly the organization worked taken several up past nation's who all I months, you PFG business chain over heartfelt associates offer the running. to in would discuss and our food we

to support of all several past our These many appreciate not steps received gone and associates we other world, and keeping associates unnoticed. have safe healthy the organizations front keep on their over the lines months. taken have Like fed and Americans contribution has we across the the

doors whatever to stands customers, side and have had our disruption and by customer or is weather storm. their significant Many their help is with we'll to business primary our restaurant the close takeout side model. can do delivery. pivot to which we them channel, industry, The PFG to experiencing

new partnerships supply communities to flowing the added of we also the keep groceries to serve. have We

of has We've our the weeks products how begun PFG selling of proud new that adding few inventory platform drivers. just business not and organization the our also by a grocery was sharing channel, of adapted workers this are directly to We part landscape ago. to

sort grocery industry. to reality the I'm our our to this that important not has encouraging At material, we revenue point, grocery and see building the it certainly effort progress. is through is pleased and relationships The this channel make with the been a but logistics impressive, in to are challenges

this with agreements just We're weeks available not have to XX new locations. partners were ago. few Through to that effort, signed workforce assets shipped and our a approximately us X,XXX engaging and retail ways groceries and in new we also exciting

business quarter. results, start Looking at our third to our we strong had a fiscal

our In months of was fact, calendar year, expectations through line solid independent contribution. first two with case in growth business the our profit and the tracking with

of stay-at-home the final to as March deteriorate spread weeks as to quickly the across close, two orders quarter a the country. But came began

our Importantly, our associates, the our protect company possible. best to position help in moved our put customers, financial decisively business quickly and and

ways. world, add continued I'm that that that say sales through feel come through many period stronger we this time. significant of despite new being this will to also we the force pleased across experienced I'm accounts confident period to in disruption the proud our

two Foodservice I'm pleased continues external together. Reinhart, and track. see smooth, organizations Reinhart be similarities also the well integration Our business the to our between integration working made despite of The on have legacy to challenges the and

in the other planned. foreseeable concessions we we proud accelerated activities have Vistar. We future. business had to the being for We're several anticipate the synergy challenges work events, Reinhart continue and theater done at also the recent of Given originally

pay said, With store convenience Eby-Brown PFG other in our channel months continues pleased are sales from of sales bright XX% combined. excluding resulting and total X% several portfolio. to a Theater spot just total we of and that the Vistar PFG, for to year. about the of proven Vistar important acquisition in X% Eby-Brown have that the the was particular first of dividends PFG's channels Theater, with an channel or as to nine Eby-Brown both represents resilient; relative Vistar through

we As the consumers look relative to continue. minimize retail to would trips, expect outperformance

have While a from store in correction contribution the value smaller standpoint, weeks. performed in recent channels also

acknowledging like We a weeks, market of partial some and company the managing early for that uncertainty stable ahead. are see over will nearly settled have our to results our that the represent business months, recognize degree ahead. industry business that period, through high a months. pattern and the this dynamics suggests into of relatively has and trends, our started even provide the that third that only quarter next what indications view lies Still, quarters could industry we We every few

we've In our XX% XX, each week in week sales the last particular, fiscal for week performance March or moved restaurant April. after as through our declines XX, calendar channel has sequentially of improved week the

hit those outperformed period. larger with this delivery and Full up best in to have continue Directionally, the the are chains be that quick-service hardest during restaurants takeout set position. the for service

We and raises attention strengthening in sheet, of our to the successful turning confident With also and the including and the taken several both we're business strong our capital equity position. sheet, to have markets. customers steps our fortify balance balance a fixed market our income needs

share coupled will in activities with provide should in moment. a sheet details opportunities our our ahead. more customer-focused provide Our market financial sales months force the on balance Jim strong

like goes these calls, our who one to beyond we highlight Each serve customers quarter during associate and and colleagues. above to

Thanks our who have with their our proud keeping food This talented entire to in supply impossible chain engaged country's sales associates quarter, team to continued to embraced it's has person. very our strong. recognize be how one customers. just I'm role PFG's of

Thanks while working sheltered professional for stocked. the shelves road. to want in to were I help increased thank thank temporarily meeting and keeping our answering willingness safely warehouse place. for I your on them work our to our hard and especially site on want drivers and demand businesses those to associates call others

in of we New generous resources by spirit operating and need companies, those areas like the on families to get hard our hit lines to proudly associates other populations. our and front and vulnerable those are food helping in the Thanks support to York using

with and help takeout to partnering challenges from website their favorite promoting showmetheeats.com open. to of our a local delivery their and experts families adapt find through customers also their restaurants businesses manage are We're which help easily

be during a just creativity Right They're concern, I'm are the others now, the our unprecedented how heroes are of PFG’s and than to time. of hands. this team. I'm and team for associates is helping These more care, associates few many examples helping of are grateful the part delivering. honored

turn will who quarter more you going on to that, over things detail and With position. Jim to I'm financial give third our

Jim Hope

you, Thank George everyone. good and morning

to current financial businesses fortify the realities position, mentioned, PFG adjust pandemic weather of to current across and environment, to the George decisive business world. has our impacting As assets steps the utilize the our taken our

some like months review financial highlights, quarters our third liquidity, current ahead. I Before expectations our for to of quarter the discuss position, and I'd and financial

our quick our improve the built our through expectations. past as position of action March were well within to strong of took position tracking the pandemic COVID-XX balance actions over several business sheet We results financial ahead the already middle upon weeks. an These

than it However, prudent we given current economic any a us protect the thought our of reality, to like. depth uncertain of was duration the persists downturn against company would and longer that

pass debt equity a to end, capital included in we of this maximize instruments that did actions. structure. that took a and four To mix specific our We

cash the XX, prior $X First, This to $XXX our the reported on our March facility today. fiscal was and XXXX. $XXX money done on of sheet. we we put as drew that from and million the quarter is This our close in about balance million balance facility billion left credit cash reflected credit availability of to of

issuing gross equity proceeds markets, the new $XXX over accessed of million before for fees. under-writer we discounts XX Second, million and shares

a new we five-year $XXX of structured debt Third, at million issued X.XXX%. rate as of bonds

to finally, loan with several term additional $XXX a we lending agreed raising an million. institutions And XXX-day

We the inventory have have environment, which our also and to our process. market closely with cash worked to managed we a with capital business is lower generative levels, working align

future. pace the receivables taking there ample collecting of believe the have all foreseeable after will While of unknowns, we liquidity for actions, these many are we including

strong impacted that across significantly swept third Turning business to was before our mid-March, fiscal quarter the orders being shelter-in-place through country. the by our results,

net volume increased case to acquisitions, Reinhart reported and Still period. Eby-Brown Total profit compared our third for gross volume, and all quarter. the the sales case XX.X% quarter due during prior the double-digits year the increased to

XX.X% Underlying in organic declined fiscal the net for increase case prior Reinhart as retail, sales well Vistar, volume year the as and Eby-Brown to Net corrections, growth billion. in primarily the channels. to the quarter. compared quarter and The third sales period sales attributable $X third improved hospitality to XXXX in is particularly X.X% of in

taxes. the $X.X to $XXX net approximately related quarter, contributed $X.X contributed Reinhart million billion billion approximately quarter. tobacco Eby-Brown to acquisition The for in sales the of excise sales including to net

in due lesser meats. The also net quarter, produce increase X.X% and by driven inflation result sales food price was selling as cost the cheese, extent, Overall per in case to to inflation in mix. of third a inflation was approximately and a higher and

recent to the Gross million third to XX.X% acquisitions. increased due compared to profit prior year the for of $XXX.X period quarter fiscal XXXX

decline prior compared versus for net third profit by driven was for Gross The Eby-Brown, as the up the year Gross to of sales sales. $X.XX was gross the XX.X% profit due per year was prior quarter tobacco third lower quarter of which margin a case in period. margins XX.X% percentage period. margin addition the the has to

in to due in expenses. year on by primarily increase and to the Operating impact operational XX.X% expenses resulting volume rose variable $XXX.X The recent compared acquisitions period. quarter the expenses third and prior in increase was operating case to the million

The professional in increase by in $XX.X increase quarter. million expense quarter offset operating the items bad $XX.X million third debt in by an expense. in was acquisitions a increase decrease related also These expense driven the fees were and an in partially bonus in

$XXX.X million decreased adjusted third EBITDA the year $XX.X and quarter to to in EBITDA million period. $XX XX.X% to compared the prior rose

approximately third The the the prior in over $X.XX the period. per diluted year XX.X% share effective quarter quarter period. year was the diluted to EPS share in compared of $X.XX in prior third of to to diluted the $X.XX third in compared fiscal loss The per increased XX.X% tax rate XX.X% was quarter EPS XXXX. Adjusted

the hospitality, year third Eby-Brown Let's quarter the by strong channel. turn compared the sales for corrections, results to the to growth quarter driven to XXX.X% Net increase and This prior in was increased in our $X retail acquisition periods for our sales and billion. segments. Vistar two of third

of EBITDA Third Gross by quarter $XX.X the quarter fueled growth for XX% to was million in period. acquisition the year profit of versus the prior Eby-Brown. Vistar increased XX%

generated of X.X% driven by even third billion segment Our $X.X to in acquisition XX.X% growth decreased quarter quarter. the the third of Foodservice fiscal Foodservice net sales Reinhart.

nine first an operating PFG million generated operating for flow $XXX.X to the checks of activities. In Turning working $XXX.X and remaining cash from to by nine been operating of would million income months were flow. our capital. cash XXXX, flow offset months in that fiscal of excluding the cash cash Operating first fiscal $XX.X treated flow million XXXX, investments decrease activities outstanding cash. in was driven largely as from and The low have

an fiscal the PFG nine the For months invested versus prior XXXX, million of increase period. million first $XXX.X expenditures, of year in $X capital

Excluding free of would months in XXXX. outstanding the been the million impact $XXX.X nine have flow of the cash fiscal first checks,

world. we as our business the late uncertainty but customers, only and XXXX March our know, COVID-XX guidance to pandemic business you withdrew the not in As around our added fiscal the

that there next several we are significant encouraged restaurant sequentially, for the uncertainty trends While signs early still months. some have by is the stabilized

a reason, market For able our strengthen downturn. of to balance prolonged share opportunities be to advantage have any steps we and taken to take from protect prudent this sheet

we provide color becomes picture projections. will clear, the financial our As on more

look of health standing will the to For and take continue the We this protect now, appropriate and of communities, our we actions in ways. after our hope company. customers many and welfare emerge to from to serve associates, the stronger period financial

be And happy do take your any have with that, to we question? we'd questions. Operator

Operator

[Operator Yes. Instructions] sorry. I'm

from of Guggenheim comes the question line Heinbockel John first Securities. of Your

John Heinbockel

accelerating recently. up you new there, out here -- short-term? that some incoming And deal I I Hey me I think is customers, start and of pace the know but chain with you've pace it's up Is capacity very business know in to business think the let talk with have of pretty the that about, George inquiries new from picked it. pick potential -- disruptive maybe I

George Holm

to companies, public sort what route now, on of Yes, like just business actually the high us activity some There's ever have coming go our is. doing so going they're to what's and I that all out opportunity for spite They're news of through seen. of a in. would the in we figure and lot call for in them. cases; best pace to don't we best of as we're three announce kind I've as

going it was any opinion be what out of going I when make back. additional be board probably an think wise is to do pick there seems think business. some spread I sure independents, than seemed don't it across. to like to up to everything there knows are that expenses chains of just on But prudent the a to the fixed us that business these thing to for like got comes and us kind we business better

John Heinbockel

will chain capacity facilities? about as business how the And think maybe more you to then Because the how entire follow-up maybe a or through think And in assume not maybe to right, through you you about the if I you're then facilities? capacity, using run back going customized much that, you broadly, going do -- network? to independent do have

George Holm

Well, of coming the through be through broad and on, three customized. chains be we the have business one handled two handled our line will will

If account. you I say maybe customized would at we pre-coronavirus, for have look capacity the an our

things of kind better of, all decisions out make to as capacity, what the new we what come then can got we’ve coronavirus, will we kinds So, need During normal and there. from is, back right? figure be

John Heinbockel

we've week your one it, to bit like just a just relatively it's last commentary sounds a is like but it thing, sequential week, it hit and little of off that too sounds sound bottom variable Then improvement over improvement. huge It doesn't it's bounced it's -- but Okay. it's maybe about like week week or kind -- wrong?

George Holm

It's them to matter year every doesn't sequentially customers, last because at our I number And our place, much. which we it closely was I more improvement. sequential and follow of curbside, done so now week. lot look and took right that There takeout. not improved had -- can that follow that closely were that really so we we got business got the doing two got since A one some and of at than tend things better think customers better so before, into us

into them and time, kind started we takeout of period of get as And further got shelter-in-place more to of delivery. this into

deal of as I of lot house think staff, was that to the solidified so they come a had things a sure making that back-of-the-house around, only really front they with back.

John Heinbockel

you. Okay. Thank

Operator

Kelly comes from question next Your Edward Fargo. Wells the line of of

Edward Kelly

start Hi. guys. run have question, is as sense sales a can rate Hey, to Good know morning, us I follow-up you John's like to just each saying George, a give what you're as week. currently? to looking

you If forma now, troughed sort you call are XX, it running like it year-over-year? of pro how down,

George Holm

it's be going of We're And it's hesitant good the hesitant what's going mean, week, up. to see coming as as really week. other up. has doesn't place we each just us that comes throw kind that been gotten we that's good probably to a things there to and like because We're stick Ed, give to every improved what Are know delivery just We're and go going takeout better don't just and out are of take to sense we around. down numbers I Yes. we confidence to going have incremental be come business. see real don't improvement. to say, there, best it it light hasn't going it back,

Edward Kelly

to and you've I there's George, mean just play of what this, sort There's business, going in you an buying component, And there's you can And on like out? talking cash defensive Okay. that? component. lot talk not about about of right. raised assume you're been So the does the obviously form offensive a then right? out just right? by a and defense, a lot focus offensive of component this what then But

the What the up look does you're on I look of picking what that offense, the like? obviously, Any pricing gains timing benefit mean, of change, few playing does you're the and about color like? the share how timing? a talking

George Holm

to customer Well, now, for it's grow right base. our

really I important. think that's

through address, good gone long-term. to like, have sense are when when look structure have that we we're that's get really where when what we to our think capital this, with things a more we I of going

this Certainly, on if experts is get certainly such to second We're through that. potential wave, not there want thing. a

So, discount, way to that’s us the sure structures don't capital to we We being have going acquisitive. last want we through make all certainly that this.

I like out come think when an it's as out very hard what to look look part this. know of figure when going to acquisition of like us would we're don't what we we

pleased sales that us where two and really had so better both. period, in and they good had Eby-Brown January Reinhart, We we into the and just flat part they they February than had as as the nice in had company. we're that we've to where about acquisition. We're excellent has independent at done. with growth an And do EBITDA continued going of been with feel

we just it right but acquisitive, So, certainly want to the probably time. be isn't

Edward Kelly

lastly just you for George. Maybe

You sort like know, of follow-up. a it's

You clearly experience. obviously, you of it'd opinion really the the going what will your How I looks unprecedented, independent much And through on to we're units? get what be today is a industry be but like think to other industry of there this. side obviously have ton think on damage valuable

the But obviously. and of questions much confident competitors? dust us, business I amongst are will most the there you there's in than settles? power private How know better earnings what know be looks out your of a How you consolidation the like damage there. when lot of

it? just curious, kind how I'm thinking of you're about So

George Holm

to and needs I feel higher barely years back. that'd and And too did I'm for saying with few just think many going be good been we volume, I've for there less. the seats are unit If have come less industry. good come out be for average restaurants to sales, there back a there's don't -- unit a restaurants Yes, how many

We of we from what way to the that, what we it just did feel then -- and can do need maybe And the assess down quicker. a we looks we business it and But new there. have liked to good We the I it. world needed kind up. this done could go dialed little like bit that dial we

there's that open not through the of back. that coming a have businesses tough think time are to lot plug this. And aren't been open restaurants going and I pulled have a

have. that's openings. that. to what restaurant hard is a And opening call. lot to new a have very, difficult of just very going going It's And we're to a do We're

sit and work how as And see kind closely go. have So we with just can back to customers. those we of just as those

Edward Kelly

All right. Thank you.

George Holm

built would I too. month COVID-XX too -- half shares have we March to really judge, looked came two impact. would I NPD add we kind that more a does month. report when of the because we've add a of But for ever and it [ph] out full in that at weeks one is tough week than built we another March,

optimist gives in just but we sit go a I'm So, the feel us going of now feeling that to restaurant great. that in I be wait come don't the a how think one. could -- this, feel an lot right alone eternal to I as out come But don't restaurants as that people of out. we about because way. get we can't good know I we strong

Edward Kelly

George. Thanks,

Operator

comes question Mandeville the next of Your of Jeffries. line from Chris

Chris Mandeville

organic a bit being Maybe X.X%, sticking maybe market looking at down at trends least some what that's within good independence, the better morning. quite than guess sales the only fearing. cases that we'd Hey, here. I with were the argue George. just

relative then way trough rate overall week-on-week to of and to performance… improvement any independent the there speak is the organic So to

Edward Kelly

two-and-a-half I And into have yes, independent time. of a minus those were growth. going X% always that was that because slipped above weeks. that's for doing minus in couple we that taste aspired and minus really period be X.X. That of better to X.X But below know, we number we've a have quarters -- we last You that a than

through because can aren't good on improvement, that would now from get we we with idea variables. rather But this there's with a comfortable good -- we just the of think comment I too the week or normal get then we feel pretty we So, we're many and just trough is. it. what we if till affecting think normal And to

Chris Mandeville

closures is term. longer the we And Okay. the within some that of you If that the to having there itself, about maybe saw, numbers? look deployment? the overall thinking PFS at in performance possibly the resiliency the Italian then concerns Jim, just you speak just surrounding were Can gross how business, year-on-year kind independent in influence reference the to pizza any quarter way margin market

Edward Kelly

as And just with The it's has the business parts as our question I'll And similar decline. a started independent. other sequentially, you too. the Jim, that far other outperformed lesser there's improved, start pizza. to out much with the pizza business of a for then

Jim Hope

Chris. Yes,

you, you're a asking that. number our determine I is certainly, receivables difficult it. to can including working very think managing closures, very And predict difficult I close. of it we're if about to tell store capital

it track would sure And top details. our on expect, we're monitoring to that is you goal stay the daily. and of all that As with we're on make

time, reducing same tends cash levels certainly to risk closures, one. risk there's generate we're the though. attention paying a at to and a store that very with receivables with We're close inventory and Yes, which

Chris Mandeville

Okay. Yes.

-- of on in business, looking the so gross lines the in along performed? margin was the of Now, so -- side more or of light I I the Foodservice more just I of how independence focused decline guess, was rate

Jim Hope

bottom it's well. as line, doubt the good Yes, line margin helpful provide the look, and no top in independent overall, on improvement

If has margin. you profit large the a with sales, in which know improve Eby-Brown, tobacco of come amount overall

I have to a But get more any I probably That's tough to add it. one color don't So there. dissect.

Chris Mandeville

Okay. And then just last maybe my question.

that you way fair forward? capital statement? us working sizing I cash really of saw Is reduction at that be any benefit reflection could then in there the appear And Or a -- a forward? move drastic it flow they balance And little is we necessarily Just fact a from improvements of going in the the XXXX on a sheet, doesn't your that QX. is looking as true flexibility? guess, on cash that rate bit saw of you, fiscal up much CapEx more to that that really on front, of in also,

George Holm

things think end an Look, Yes. time, working we're build. of At quickly the inventory at March. happened I same the through

your the going cause cash that and calculating profile there, And And so things, results true analysis, the not both forward. flow that's as we good components would reduce know have three inventory capital and through of a And elasticity of we're generate will you're bash. of a we that, now, typically, of those. flexibility and those deal we picture managing all in working

Jim Hope

Yes, look important, digit in you in quarter Chris, I inventory. end in of the of normal. point it's had think We that the payable And the don't as accounts at accounts but the quarter, increases XX% and the increase that's time. at single end receivable

you you're would that then, are sudden I line now sudden I inventory. not that, right working think since in going in like but call come a and know, have sales something drop receiving you capitalists if our in If normal, to see a anything you mean, good. in drop But

Chris Mandeville

guys. for. looking That's was Okay. what I Thanks,

Operator

Your next line the from question comes Barclays. Bernstein of of Jeffrey

Jeffrey Bernstein

net in the much your like restaurant you a comments the investors Thank questions are lot of there George, then. Three very comparable. earlier data one, seems to we've in on about, It closures terms dozen Great. really of way the on wanted years just looking follow-up back back to wasn't independent like just a the of look much. recession great seems based unit seen,

actually you more these closures. And seem would time net see industry whatever why aren't to you to industry you fill could facing challenges that go thoughts players think new closures, around? around, more be That actually likely boxes is in compare there? there's does significant I'm be it challenges those just willing some the any maybe old would period? this that just Whereas for net like the wondering, this the and if

George Holm

not hard think of was we're it's don't reopening. different can. so to -- think and we don't those there's closings amount know a huge with are salespeople And not I I customers just say And events. contact two best this constant very are during happened know them think totally sudden our to we tell. hearing that they recession, or that as that, be we're great what I Yes, these keeping going

Jeffrey Bernstein

in right comment a or store grocery you XX then your And And and little terms partners over Yes. I X,XXX so distributing you distribution, past, to. have the what you're it just mentioned now why units now, you the hadn't of about talk you obviously, think about grocery or it's business or could is that extremely pursued the that maybe small, vision it? but be, in could might

out the a of Presumably, kind that business, seems wasn't few but target business you before do the margin lower how see Or more customer the chain now attractive? like playing over next years?

George Holm

this are going We've see is in we sure kind system. done touch know, A always food. inventory channel into We're lot some know, people. with all of had preparing perishable to We'll that where sales business, we of when keep over. they're that, the of that you particularly, to the that of wanted that make you out we get these

or We as long-term we business picking the new the most up through potential this time business. that to wanted part, going spend has term be our to and long really, is in is wheelhouse for know our that business

we've it So to it important thought help say huge given was a I we We that, wouldn't could. where effort.

many people from as certainly business So, we see we we many did just to supply in We that on but have will, as here, can. as much hang warehouse in drivers. to

Jeffrey Bernstein

people equity a Absolutely. comfortable, And Jim, then especially most the as hand offerings, from debt short then had maybe feel you about cash of you talk proceeds between burn lot a a question, restaurants you wondering you've terms my know, term, liquidity and just it's the But on defense, and I'm wondering, cash of have about seeing just to provided the got color all hold I'm on. Well, last rate. in

help less XX? well about or at how down terms there in terms weekly kind But, in of rate down now I'm or would that Any think presumably if monthly just to cash of had than color you great. XX. would billion in you qualitatively plus be sales -- stabilized Well, of wondering, any burn for sales level? how quantitatively they're your relative

Jim Hope

the what Yes. sorry. is I how give to you I'm pleased encouraged. question, We're But going certainly we the our color that, a rate. respect numeric I'm tell cash raise. not with but any No, around can are burn Look, markets responded, capital I

the We pump even company quite a we've flexibility. downturn. the well us It's believe a of really prolonged given done in we've bit for long-term, protected

think, there So in we think long-term. shape we the good we're very for

Jeffrey Bernstein

Understood.

cash current position giving feel balance? Your like downturn than with specifics, existing anticipate much you longer without could you your current this cash you go

Jim Hope

Correct.

Jeffrey Bernstein

Very helpful. Thank you guys very much.

Jim Hope

Thanks.

Operator

Judah Your next of question line Suisse. Credit of the Frommer comes from

Judah Frommer

for Thanks taking question. the guys. Hi, Yes.

back So wanted any of -- it one week that, for want give and you understand to versus kind can don't like progress versus color of kind to those which week you get first, better? on, of but And to independents chain? kind of have the you is to, trends. we Clearly, trough there give I just recovered sounds know,

of obviously, you've got the color some bad chain last growth states mean, seen of actually openings has never in from as did, any independent as then where recent which And couple but restaurant those I better weeks? curious weeks? kind seen in

George Holm

on independent trough the similar. to and they're some chain -- getting feedback the restaurants very from about today, on how The are -- doing. Yes. same, We're the

if to they're as distribution -- happening in contact of states. opened happen. to manage with appears A yet. it either we're to restaurants have ready and all, That's of people. as to We in getting is one have physically lot allowing obviously do not still constant state what we're that those not I of the have First mean, centers in

and they to that get if had full But people from full. XX% full were messages was were XX% I restaurants the very standpoint from did the weekend the they managing that, that guideline, over XX%

encouraging. be it I to So, found

the was press the general we I encouraging. might to not bit I that, press. think What be encouraging, maybe closer a then I little in But it's think heard but

there's think of of I and up kind demand. lot a fever pent cabin

Judah Frommer

you that's Okay, the then of change incremental makes exposure coming bit about kind new it maybe we and specifically, have better. helpful. to recession, last change a just you'll accounts And survive to think as mentioned, and the similar to probably sense the online,

business back kind Do of both piece independent independents offsetting think point kind you some of going of sales? Foodservice becoming that and of your you do getting pie? outsize How think is an proportion away about mix about know, it If chain the and margins? to you higher of total at balancing, the

George Holm

We come our opportunity back back we of do we to also with. we to that, you as what come from struggling if think we have think closely at to prudent and expense back our is of everybody an understand to we're at work But sure mix think chain, here get acceptable, but to business come want go what And and to lower back going back I to as got bring that. I people make very get also be know, look that that to we it with expense we be, come with higher with ratios. and mix that of we consider people a yes, back be Well, are I our we'll back that ratios the we margins mix mix was to fits we in can, business able you of what it see know, business. when course, that quick as

Judah Frommer

then lastly, changed sense. that Okay. with bit last but food obviously situation Jim facility weeks few just meat the in of maybe And help has kind closures. That inflationary, makes a was inflation, with

the flows kind cases? impacts of and and how through meat thoughts on us contracted independent both inflation Just that maybe the to business remind

Jim Hope

Yes.

going very from X% and customers a expected. as and it handful do would to is the expedient, forward. at to our came and So inflation around almost some a manage reasonability best our saw flows are it's flows as passing for some supply going straight of in inflation systems pricing cost our I impossible How the through that to in go simply describe we into We second in very categories that of to where others be serious predict the balance quarter, standpoint, it on fair through chain through inflation suppliers. goods as adept it's

Judah Frommer

Okay. Thank you.

Operator

Capital. line comes Kelly of the question from next Your of BMO Bania

Kelly Bania

about so equipment you business and help for and in I sanitization of the questions. just cost really -- and but not doing you're terms guess, just there operating safety expenses? give taking for about current Thanks I you're is -- us how guess? and and thinking is morning. the protective I forth how talking and you guidance customers, much your what really Good of now And Hi. any can giving trends,

George Holm

-- we're not sure want that very being to make we're uncertain. everybody to just We not trying evasive. Kelly, Yes. It's to understands. be

to around lot a we for things world for a types the of time the in industry of everybody different things. of spent We've masks, -- I'm and those sure around sanitizer type has need what

to hasn't for it's of easy use make a by our for been spent do. expensive and that, of lot customers that got been time own sure plenty to way, and we the that use and we’ve our So

that. from make work about we business you again, amount expense intent to people think we're an think that the expense as opportunity determine business with as as have when sure that we here we here the getting ask But I that for to the mix we to have many difficult have is sized But once sized I standpoint, we're ratios, can. and to we us to very of an of possibly of it back

Kelly Bania

Okay. just through I base, going or about that's in kind PPP helping that's of guess, of programs? in what customer resources managing hearing of terms That's how your them independent you just working around the them those for and the how and helpful. are terms

George Holm

can, as access Yes. received I'm I've to mixed. we as our very web tried much mean, it help Well, from customers our had these done and I as feedback have sure far that that we've for the well. is as competitors as we've

had people getting trouble have Some it.

debt. I'm at customers to Some need debt. have talked need more that it been is just look going this. the I it through I and plow say, just last more thing I've quickly. people don't able get That's pretty to to

think like mixed else I a with real bag. It's this. just So it's everything

just are people it. that Some to very touch happy to that don't and some people want get money just

our and takeout they out. I to I've think delivery, in find way such think a improvement they And lot times ways. a of business, seen that just figure just it people, so I In -- find that they'll

operators in find good be environment. the So this ways going successful to are to

Kelly Bania

Can maybe about for going And questions quarter? you're think debt. be That's helpful. How was And you thinking will help but I about forward? just the lot us the a had that what we've there? bad queue, about any in guess, that color this of

George Holm

recorded XX.X quarter. go bad in in periods. we debt being and in that the We of increase Look, think course, reserving million we're conservative, bad Yes. for debt may future bad

Operator

from Jefferies. line Your question comes of Karru Martinson next the of

Karru Martinson

Good morning.

the, that furlough, easier feel it you speed as are Or shut is things the With at down integration, out it the down? you look it's up be to guess, dragged I shut process going over now? Reinhart that and when call do process to

George Holm

processes the engaged. time. were We challenges No. It more We able get had people more was time the from and kept place had longer taken us that have day-to-day would who everybody We easier. IT our systems had full to if of business. in we

we've feel we another been we have can bit that, little to for around quarter time. us now from I So to like accelerate color helpful it's think but a been put able more that, that

Jim Hope

George. I with agree

were say, fit more folks has find us. advantage a helpful. it that really our acquisition good a certainly the to ever That I'd shown organization. was just looked Reinhart taken exceptional. synergies. been the acquisition, is it's we've those that as of And no group it great And and But business for in time than think also I really at we that

George Holm

coronavirus this If part you company. time that of think been have about it, by the would backdrop the end they in week, they've this been half of

where you when feel these through for period think forced I people go like around just kind than of lot time daily you're more a and contact quarter. having been this whole of one in I

Karru Martinson

at how COVID-XX that had, potential in you the of you then liquidity your looking supportive I coming you back the industry the from we raise look any in the guess, picture, term trends? at And that? fall? look are guys against how Necessarily. when certainly do And liquidity of at near the a bigger

George Holm

understand been you of in scenario they certainly than leave get. and folks fall, know that Well, the scientists are tuned that and possibly we piece the that is we that potential we us. to can that has first merit to and attention. it every given really the But come a of doctors in better that news back the And it

We're to back. come

I've and plan, we shape, As we were said are as successful the We the very conservative that. strong ability the earlier the And for and very raising earlier, execution, in we and in our to very to do liquidity. approach strategy mentioned took approach a very, long-term. project good

Karru Martinson

much, very Thanks guys. Appreciate it.

Operator

the line Bank America William of Reuter from next of Your of Securities. comes question

William Reuter

morning. Good

of spoilage for and something about I keep So you safely a can this some stored risk? periods here, are you extended investors your guess, if that's these time? ability have issues the of of brought to up is risks, talk goods And

George Holm

that Well, we the didn't had placed want on in we inbound perishable good to very need work product had not faith. to We quick. that orders accept we

perishable So with. we went some product we for had of a to had deal of We that it. lot to retailers

Some of we donated. that

margins end there froze, and at quicker. it. been that at able to discount. have now. things the a it of perishable things past affected that just move of the Some to are one of quarter, we of some out we're the that we We move done. These to because And we've don't froze, we That's sometimes we it moved had issues get that quick

early away people was and And find weekend. but it well, were you to in me. is several me, be me, we're we just worrying was -- another I'm a seem know Jim that, it and told I've couple having process in going was how with don't months of always Cinco sat it. worrying now people that. Mother's thing, I said week to we we're I de like, way find lunch Mayo about drivers real the it record and and don't to at happy And One a March from warehouse Day to handle he

and say because change. quick things change where call tough incredibly is a weeks or like this through and a month we're couple to best now just get and meat, worried do that be it's on fresh I'm to three seems we're instead fast, that from from going Well, changed weeks, when within produce just changed. of have things to we've things going were so what of we this been that, such all this now to with a saying this

don't you at we're we're think in what's ordering think of this product. product, any issues know also perishable we with more really it with I perishable point, if happening. deal to and So through about anticipation business But now

a but think issues, I wave, available. have don't have of so, perishable product going second be to second we a that we're So so there'll product wave

William Reuter

it of it's deal. tough. context the have That's all a mentioned, incredibly really put in sure would information million require to big expectations expense, and bad of receivables you've of around you've have or accounting the in and quarter information I'm that subsequent I Yes. your you GAAP your of $XX of end not receivables debt you that for paid is is an terms March which the you And getting does received those into just then, the take received that the guess, to as XXth?

Jim Hope

significant seen event in would change close, and we did time to information we we've be subsequent yes, the not. a If post since required we

William Reuter

workforce. than you more for I a your you a amount point think me, based had lastly feel Okay. where And of this are? that's just little you then upon furloughed, at Do XX% sufficient

Jim Hope

we we'll and George March will seeing demand watch we that saw just time that and earlier, manage closely. continue everything and indicated it closely bottoming managed is in point what at and we with we that were as out was payroll to did to the late resources continue Yes, we the

William Reuter

helpful. Thanks very so All much.

Operator

question next from Your Wells Fargo. is of Edward Instructions] [Operator Kelly

Edward Kelly

again. discussion down. I to wanted costs. variable it We Hi, some on had just going around follow-up Jim, and guys costs variable started

that you have we're taking forward as the go and you're we modeling costs P&L's curious as think on about, forward, how about within basis? Just should cases a now of the going information -- think on adjusting variable more component sort we

Jim Hope

typically, and truck drivers, XX% the warehouse QX look way for is best structure think to from at, back is me, in workforce the volume mostly lending workers the taken we've the other possible. channel, to and cost to XX% we've reduce reality then, QX or where it think go I about between that's is personnel. the instance Excuse grocery Yes, day furloughs, salesforce the our steps expenses for positions of and including and new employees to adjust eliminating adjusted since other the and

trucks, eliminating you of can additionally model back on back and know P&E from point efficiency you expenses, to quite calibrate and if what done that we've which bit including gave piled So, almost a rerouting us with there.

Edward Kelly

you and think more as just consolidation bit what than opportunity related can synergy And then, larger got we're we all I the about it there accelerated Okay. this and Reinhart on any what potential is little that about thinking a color to provide And expected because the change this then, for by to synergies, side? of forward, synergies opportunity be of on, accelerated? is, has the mean operational going

Jim Hope

synergies add. component Yes, of we've talked on procurement, across down headcount to about down also we've about how that put a a number we put synergies the market, years talked largest operational three we and some was and but be was there

paid we also in manage headcount three to going procurement the our attention we've and synergies moment, resource took of this as to that the but well, to year raise for target point I'm synergies, at change we and course don't we've don't -- is not What expect made sure target. done the I advantage

Edward Kelly

Okay. And checks I just you outstanding about then, this, issue. the can ask

take actual place accounting flow change that real now? And just why there's confirm to correct? So, does to impact I no guess, cash this, of

Jim Hope

right. That's Ed. question. Thanks, good a It's

down drew and The So, payables, normally on on sheet. outstanding to cash. sheet. the checks be on checks normally, ABL net the but we cash trade cash outstanding carry We we in would balance balance don't carried against required were carried because our

in out For that moves, generate move to reported. to in checks accounting the we clarify from was operations objective should change our release flow number commentary we flow cash free outstanding checks of cash the flow and outstanding that mechanics free cash to

Edward Kelly

just Okay, can great. George, more And one question? you I ask

George Holm

Sure.

Edward Kelly

be way business On on as moved your the this to am you've how the color for that it any -- that chain of it this the new up was point? picked business curious the up new at normal kind of or like thinking all customers are just like to environment? changing I your about just the bid business business, is why it is happened how is

George Holm

that do they're we of two accounts speaking today parts are those case, Well, other happened. some country and them and each trip actually last I doing in were Matter the the this were accounts fact, with in just the with did, this consolidation we of of seeing happened. them distributors of before before chain business

this So something all. process, that was it it at was in so relate wouldn't COVID-XX I to

Edward Kelly

Okay, great. Thanks, guys.

George Holm

that thought were understanding coming thanks we Yes, being here up we evasive. thank is and us what that's just thing that given see sign-off I you the now add information to difficult best great to before and We're any for color I now that it's to we you. wanted available on and I right last give weren't the just hope understand and the questions but

Operator

of the conclusion Q&A Thank you. That the session. is

turn I'll additional to Holm Now, back George including call the over comments. for

George Holm

for you our today. Thank joining call

If us please at you contact you. have follow-up Investor questions, Relations. any Thank

Performance Food (PFGC) 4 May 202020 Q3 Earnings call transcript