Earnings call transcript Q4 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to PFG's Fiscal Year Q4 2023 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 and good morning. Holm, and George CFO. Hatcher, with here PFG's Patrick CEO; PFG's We're found Relations issued morning pfgc.com. full-year quarter be this press results, the our can We release fourth regarding a website of section our XXXX fiscal which in at Investor and

our discussed stated, comparing of on non-GAAP will GAAP the unless this results back in fiscal results otherwise same to earnings the can measures of measures in and certain non-GAAP reconciliation in call these the period today, items. adjusted XXXX. call to During GAAP we're the result The The release. found for results include corresponding be the

Accordingly, As this quarter change. quarter been metrics the of for reflect a the segment of first restated from reporting to fiscal to our in reminder, XXXX, adjusted XXXX we metric. the have segment fourth the results fiscal updated EBITDA EBITDA prior

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

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

George Holm

for morning, are fiscal joining Good thank an we accomplish. with call everyone, Bill. were had and what XXXX today. PFG Thanks, proud our we you outstanding and able to

success and financial upcoming which we year, continued about our believe fiscal we additional importantly, the as include growth just More opportunities excited are company. will for

Convenience building upon businesses As independent and share to strengths market this we in pick in you morning, are growing can see continuing and our highest-margin our from release press restaurants, Vistar. our up

cash position while and us focus enabled invest continue stockholders. Our disciplined returning behind to have growth controls our to on financial opportunities to cost

our have plan we prospects. we saw, have highlight to share details are excited to company's to I activity reward will our of confidence long-term this more success fourth As we business as We shareholders during our about Patrick in and the wanted vote repurchase program, fiscal to future. but buyback as a began about shares quarter. the you to continue financial

over Investor laid just a targets. for out set financial are We removed when from the Day future our three-year we year and vision our

were confident as today just as we are then. We

progressed that originally In to range At XXXX our this favorably at and than to was discussed we billion ability net times environment. milestones set sales of original included result year proud of EBITDA report midpoint the was sales we navigate and and operating fact, and these billion. accomplish of even range XXXX billion $XXX I last of year, to midpoint fiscal million adjusted above billion last came more outlook, organization's the the difficult our the anticipated. $XX a had I'm we adjusted that time our net in above pleased $XX between EBITDA year. $X.XX am a $X.XX which what target

also This a confident we targets. reiterated projections, fiscal our strong We morning, XXXX. previously-announced after such in remain particularly these long-term

our fiscal XXXX already EBITDA of target. the the As XXXX top-end in earnings our release, you adjusted low our guidance of is at fiscal end saw

Let's driving components strong key discuss results. the these that are

period. from excellent an increase X.X% This Foodservice XXXX for year. independent given fiscal comparisons the X.X% fiscal footing. Our prior is on case the and result, fiscal growth business fourth We is of a with difficult more especially full quarter finished outstanding year

is sales of about coming of investment at the case at the start in X% independent few XXXX, our to off. continued force fiscal in in quarter. weeks the first our paying Importantly, The growth accelerate

for hit We far, our a members as first cases restaurants So to new team of fiscal long we independent independent XXXX, of increases in salesperson. sales is our believe tail continue the have growth quarter particularly during consistent in seen there their per stride.

XX% approximately of were organization restaurants, the independent and products. again, total in brands showing our sales, Within our lead strength Performance

the case our and the foot in of traffic weakness chain business, performance. side underlying volume some remains resulting On

mild our bit the where growth, approximately to experienced In due X.X%, of strong However, independent case expected. deflation below were up we total had cases a Foodservice quarter, Foodservice year-over-year.

grew did EBITDA impact top-line this to segment. that high an While the all-time performance, million, Foodservice but adjusted for $XXX

or mechanics normalize While grow allow and including field XXXX we to successfully fee-based to low as of expect our inflation should profit progresses, in to the a contracts us structure fiscal our continue business, deflationary the inflation environment. pricing even in

year. results the restaurant trends positive in Foodservice per metrics. compared important channel, are independent prior several strong our In Underpinning increased to cases drop

improves cases in per As customer penetration we volume seeing result, growth our week overall as are and a improvements accelerates.

we As we growth, to accounts for add new case periods. of This resulting our independent is keeping gains pipeline channel. our total a to highlighted similar independent share for strong continue in new quarter, at the business last rate independent future

delivery by continued driven year-over-year, top-line are stable workers on through and operating per labor particularly We expense down personnel Combined trends improvements expense. lower these contract costs for were and focus leveraging in overtime control, warehouse case labor. in expense

We finish are these particularly case force, fiscal is factors simultaneously to All strong driving independent our XXXX, combined the independent in sales investing space. in produced which restaurant growth. our a strong

We are for fiscal store what in our for Foodservice has operations. excited XXXX

very adjusted a Vistar the fiscal Vistar had quarter, gain increased another fiscal outstanding in inventory EBITDA finishing XXXX. strong comparisons, challenging XX.X% quarter. fourth off Despite

continued the The strength office of was and case increases result value, and from benefit increases sales a of case volume growth year-over-year the result services. and top-line theater, rates XX% higher were Solid inflation. of

performance given pipeline of We are of strong the about new the Vistar business opportunities. excited particularly

anticipate fiscal delivery was per Vistar especially lap year. coming by price in the fourth rate lower stellar prior Inflation the from XXXX excited freight in a elevated inflation three remains year fiscal quarters. to the are its prospects and inflation at at Vistar and favorability. fuel boosted cost had slight a as prior we period. Lower results, from fiscal bottom-line helped Vistar prices case cost for decline we in and XX% warehouse the deceleration a We and begin which roughly increases was in mid-teen the quarter,

performed Our in fiscal Convenience headwinds. significant despite the inventory fourth gain quarter, holding well business

one As we've Convenience typical discussed quarter earnings to higher continue gains. more experience of calls, will than holding on past the inventory segment

confident in the Convenience its feel business prospects. and our we underlying of momentum However, long-term

to Let's in Convenience the to acquired XXXX, we a significant structure their proximity customer in and share becoming our and store on discuss industry. of and entry XXX,XXX in one their more we the leverage Convenience largest to and footprints a convenience store under Eby-Brown has then The the and After one a detail. Core-Mark retailers miles moment vision Foodservice base. to capabilities. market opportunity with manufacturing to XXXX, for reliance fuel $XXX channel outlets, grow two billion led of with successful mix, This lessening our approximately their across with located operate total within Core-Mark, tobacco. mile take the addressable providers unified provides a product Today, one PFG, expand brand, most of

believe at foodservice We our something to to exciting these to convenience the play bring PFG trends with work the channel. we as vast strength our to resources expertise combine

of over paying in chain we with Our along are the U.S. Canada. efforts small representing with off and independents across engaged countless operators as store XX locations retail thousands find foodservice mid-size to ourselves discussions

that that we foodservice, to across food Core-Mark, evolving is are growth PFG supporting our foodservice capture channel opportunity. is concepts The efforts heart innovation. convenience. at advanced also is at and the through here Beyond of channel growing Performance the

the is believe impressive Our progress has we been this and just beginning.

of had particularly we business and business with returns. outstanding that In our in the XXXX believe our enters areas closing, PFG our an momentum well-positioned to the units. fiscal market, continue XXXX across high We and in generate profit are success

customer types, Our exposure to and a provides channels, products, economic resiliency wide scenarios. various in range of

presented ability produce our are foreseeable long-term As in strong confident and to for outlook, results the future. in guidance we our

call provide on additional who and performance Patrick? will now Patrick I'll over detail our the to financial outlook. turn

Patrick Hatcher

and review and for Thank morning, morning, operating financial you, results review XXXX additional good and fourth capital finish summary our start I'll PFG's some outlook the the and provide with with George, a detail of XXXX everyone. allocation beyond. fiscal on will priorities fiscal our and environment. then quarter of I position This

profit posting range of case guidance position, fiscal and for fiscal This above PFG the a inflation double-digit previously-announced quarter. record EBITDA gross growth the year-over-year adjusted end finished net solid through resulted XXXX. improvement in despite revenue in XXXX our slowing upper strong and

model insulation advantage structure and this with with strong segments, over In resiliency, and in goods inflationary areas an our three caused across believe through its the unique competition. by impact exposure consumer more space. We high the products showing of particular from business the by to that results each. our volatile channels volume packaged some is of Convenience, our Our sold strength provide of provide Convenience and dynamics foodservice in particular, Vistar Vistar the

cheese. believe as discuss and our pressure quarter by in I said, fourth in for categories, in With fiscal XXXX of business job in our in organization beef can more detail through and a beyond fantastic a in Still, have expect that scenarios negative. year succeed of signs is the long-cycle seen some inflation demonstrated Foodservice seen range not We like Foodservice executing fiscal stabilization quarter. our which proteins of fourth Foodservice the deflationary outlook a and including This we the swung shortly. fiscal did particularly do will when

and growth, key discussing by profitable capital leverage reduction. at flow, profit strategic Day, we specifics year cash priorities. margin leverage, on few our Investor EBITDA a adjusted consistent start expansion, three Let's our allocation top-line Last our and announced priorities;

made leverage significant the in item, I progress would on to third like have one We reduction. but areas, -- three all on focus

of finishing approach I X.X now adjusted balance know, fiscal our the very have a sheet quarter, disciplined to the X.X debt that believe we to range. debt this target are the end fiscal at And am of comfortable we we proud EBITDA. As net quarter, leverage. times we level to of times and adjusted X.X net By further progress, times EBITDA. at the had leverage you our achieved of organization's of year to midpoint made third a stated

we said, priorities. in capital going additional What will our current to this allocation First, maintain for our forward. position provided that financial continue sheet With balance does leverage healthy position PFG? to focus a mean on flexibility our has

Board As press previously-announced repurchasing began this morning's the of by the you $XXX our shares fiscal share we during as November. last release, quarter part saw plan, repurchase fourth authorized million in

repurchases future share plan, anticipate to pursuant conditions. to strategic this marketplace We making subject

in investments capital and behind the technology. we Additionally, continue to will growth through business expenditures invest

intend price a value-creating value that and if our believe continue area will presents stockholders. in We deal the to M&A at the this itself. of have right history to be these to areas long-term continue active drive executing We right for

the cash All of million million past $XXX XX approximately our of operating because generates. over fiscal this the the cash generated $XXX XX million of $XXX expenditures, accounting XXXX, PFG capital months business for free possible of months. of flow generated strong After is Through cash flow. of flow PFG

quickly With review fiscal increased from let's that, total fourth in quarter. our to company $XX.X net sales billion. quarter PFG X.X% fourth some highlights the

including X% Our net sales year-over-year growth, restaurant driven improvement and performance channels, offset approximately growth, organic was of by independent case levels strong X.X% in lower by Vistar inflation. case

case Total adjusted per about prior fourth in PFG year's gross year's quarter. the to was net In million. compared to compared of profit XX% quarter, up and Gross to reported prior $X.XX increased PFG million X% period. the $XXX EBITDA the increased profit fourth income quarter $XXX.X the

historical quarter but the rates by time Inflation Foodservice for fourth of last fourth Total the year. during elevated also segment, cost below remained inflation was X.X% inflation quarter to due experienced fourth in which slowed to dipped, fiscal moderate the increasing driven XX% deceleration to Foodservice inflation quarter. quarter. at deflation in moving segment the was level. in since a The first relative Vistar the the segment. company X.X% a Convenience Total low-teen the in deflation company bit continued our

is shown levels as our is gross continue expect in of by improvement case inflation that to which We embedded XXXX, believe rate most quarter. during We in our decelerating recent outlook. the profit fiscal per of assumption lower inflation the in manageable

was Diluted was $X.XX adjusted $X.XX. the fourth per earnings earnings per in diluted share share quarter and

announced saw for fiscal guidance we year in earnings you full the of first and fiscal our XXXX the quarter. release, As

of of EBITDA quarter first fiscal the comparisons, gain adjusted more XXXX despite $XXX comparison. between then one we holding have reach inventory to $XX.X quarter and which billion anticipate net holding sales $XXX will gain and range quarter. normalize fiscal when million the inventory the during we We higher-than-normal aware, are the in you second million XXXX, $XX.X As will billion

Let's the full review year XXXX. fiscal for our targets specific

of billion expected range full the is For in to to billion. Adjusted net anticipate billion. in $XX we year, the sales $XX to range the $X.X be of EBITDA billion $X.XX

EBITDA $XX fiscal of the also net XXXX. and long-term have between which billion $XX We in adjusted our billion range reiterated $X.X billion includes billion $X.X sales outlook, to in and

strong suggest by fiscal outlook. underlying long-term our As coupled the with for George fiscal EBITDA possible adjusted end year XXXX, business is momentum our of a that range early, lower XXXX indicated mentioned, our XXXX as results

how To fiscal XXXX summarize, have for we year. fiscal are very high we pleased expectations with the and finished upcoming

We make and value-creating growth, lower strength and us begin sales repurchasing cash on profitable business areas; enabled sustained margin generation, shareholders. our flow healthy results, to to focus shares, balance of continue expansion, cash progress our adjusted three solid has another our leverage. sheet EBITDA for use of The

organization is strategy and stockholders well-positioned create are our Our for over believe and success long the executing we term. continue our we value our to

to Food your with We interest questions. in Thank you take we'd Group. your today. for Performance your appreciate be time And happy that,

Operator

with Wells Thank you. our first And will question Kelly [Operator Edward Fargo. from Instructions] come

Edward Kelly

with you per quarter to case profit is bit the mix deflation a the with gains. deceleration continued in think morning profit that Good this of you in growth the inflation? little volumes. a we How start case performance how lot of gross how And good about the dollar guys. the should relative versus obviously Hi, and about gross of thinking of profit of strong there's know George, XXXX we do business. gross quarter. Another Could volume about be segment, a could case? Foodservice But, in talk positive dollars lapping growth just maybe nice of and procurement relationship? with I -- relationship

George Holm

our big national the through a well in that a rate, the year. issue. mode Well, now, declining of do right accounts at I mix good think with the and growing independent is will rest Particularly

is from thing. Vistar yet that gross profit. are and overcoming Foodservice back excellent, getting strong, our feeding has really and when and business. mentioned had You of a you not you're done contract business Convenience that same part those, the think inventory businesses sold, strong micro-market, additional they the that's really outside gains, the And about in that cases is the other really of

then And And large tobacco margins food to business gains still that's Core-Mark -- very know, our were is is run good and when they margins customer very, the higher get where you are. that our to good. you business, the reason able their were the

again, of once So it's customer. than mix getting more from kind more the

Edward Kelly

more at you seem to capital this M&A to just then emphasize call you a that It's good follow-up. very And a Okay. little as bit historically. been today. It's have something related guys And guys on allocation.

Your trough trading, a stock pretty is I think also to close historical EBITDA multiple.

of talk is stock how trade-off this, You more to the a you appetite is? the also could your bit buy how a given about valuation where point? opportunity more. maybe with about thinking And Could of do at all the the you your today, where of where strategic think maybe value is bit about but being the M&A you're stock this price

Patrick Hatcher

question. the Thanks Yeah. Patrick. This for is

we're how EBITDA to managing what when we look debt, pay we really the we reducing the X.X gives leverage, times past to this goal with with you and on As times we've hitting we've multiple in leverage. out, allocation guidance at our And X.X to pointed it projected and quarter, our and feel ability confidence times continue leverage. and good to of of X.X about a outwards leverage are lot times where about for strategy our talked our capital our that down

of for look program our So on the allowed million was that fourth authorized you pillar, capital execute us. repurchase us which share that the Board that to if at to really strategy, had $XXX will, allocation

at quarter. and in as will to market have very times did at made I at we based as several in my on appropriate reported, continue, look activity the comments, that just we and be factors. the strategically this strategic, We some as look we this So,

Edward Kelly

a lot. Okay. Thanks

George Holm

And that I'll -- will George. we add yeah, continue this is to also I'd acquisitive. be

future real as quite for not just and acquisitive we out of We more but there And confident haven't late. effort, feel for a today, in that's been opportunities of what's M&A. lack

Edward Kelly

Okay. Thank you.

George Holm

Thanks, Ed.

Operator

you. Thank

will come from Securities. next with Heinbockel Our Guggenheim question John

John Heinbockel

with right. I Foodservice want on start thoughts to George. your growth, Hey,

growth? thought force right That if that some opportunity. get a we size up a account the growth bit. are do to size that maybe you sooner? going XXXX, inflations it, still the drop XXXX, has lap What's are X% back And units that about about big What's a a Is X.X% sales like Do see while? When of seems kind flat, equally on point force? to your X%, where and be important drop or rate think with pushed I point sales annual -- out growing case to is or that we growth here. think little rapidly. So, been then very up you'll in

George Holm

Yeah, those are good questions.

the growth we've where particularly people. is a to continued our quarter have are take as accounts got point we to actually salespeople, to far get growth able about in XXXX. As our And we fiscal of We've and that a we fourth about as growth sales. been as the independent as equal also in in company up, into growth shy of we're in

And going get back think when because give bode some for much fuel all We're So say, system we'll going those penetration. all, sizes. softness think these macro we've I going to in think road. would well, And help opportunity I us drop to got That's is to better I things training it will, and that good in that down more standpoint people from base the and customer there is a comes probably get good having I that there. new feel a just that productivity increased us like place. we that from

I think in right things have going direction. the these we

John Heinbockel

then right. c-store talk a Maybe follow-up. And the Okay. pipeline, about

account still of their account is I when case, into is out size size, non-tobacco growth much versus or their you double-digits. drops well If growth growth bigger bulk parse think, probably or their is growth contributor? So the the what, of that, sort their a drop we think that's that about in

George Holm

we as the number double-digit so comes good to on business. macro to what don't More account a looks large. good growth. pick We're continuing -- with Convenience. Not pipeline growth. as when about But business we it very And Foodservice the get up like the is feel

that mentioned a that of pipeline point got We know I as in we've cycle, a our that contracts things long have coming sales the were we It But in business their current things coming we and I kind where expire. to we've got we think work. when accounts reached down of have lot is and with company, before.

So feel macro part where we we'll growth, that that just good the about and goes. see of

John Heinbockel

Okay. Thank you.

Operator

you. Thank

will next Our with come from Long Stephens. question Joshua

Joshua Long

Thank momentum Great. and underlying the my could wins out you the maybe some gain share for opportunity, into Was you're then taking you curious and on particularly that side independent dig of question. we talked new about wallet that of account if parse strength seeing.

George Holm

but think beginning also accounts that from year. similar uptick new an dependent there. great total seen call would case or doing I we're we've our our seen what a Well, accounts, to on growth, QX here number our I we've in previous of a in QX, still versus we're of the new job uptick And somewhat where the accounts

bit Wallet see instances, to selling do and to it We tell. share that there slight selling a products customer in we year now a a most is were them that ago decline. is little harder that we're

think we're out business. getting we're issues continue mentioned we're and pretty difficult. getting out to going there some new push training and long simple not them So I That's there good I math. as people as are and to going that as It's through would macro that there, earlier, and they're well, those say I

Joshua Long

horizon? that noted in in current could Thank a prepared categories, you new areas or Curious of in That's new that of deeper you. you're the if particularly Vistar on the George, dig little business I could And more your be channel. that bit maybe opportunities mentioned terms into you about a comments, excited pipeline looking for anything going helpful. think into we

George Holm

markets fulfill that people, surprisingly pick-and-pack Theater -- other rate. strong, are Well, at fast to is Micro improving where and business our and for go we well. business retail theater are a seeing we're at And work. while. week days going come coffee maybe make office a the a a four back for been as days from three at to work people continues week has

would value too. probably as areas would So -- quite area be those strongest The store as growth. the be we're the category, I would in far that say dollar is right well now areas doing

Joshua Long

you. Thank Great.

Operator

Thank you.

question Harbour Our Brian Stanley. comes next Morgan with from

Brian Harbour

morning. about Good I ask just performance you. to the thank Yeah, brands. wanted

independent seen perhaps of by the macro also have supported see case kind obviously continued of I'm that brands? it's business? of kind driven sure within You've of sales to But your Has those. performance side existing of sales increase more the accounts kind growth. of you

George Holm

in Our you basically the business brands are independent look doing entirely of with independent, very when our customer well. base customers almost it's And at outside restaurant is Foodservice chain.

business little doing nursing those with hospitals, homes business, the no contract to feeders So hotels. parts of in or or we're Foodservice,

the right So we is now growth a end really restaurants. where best from And for of product quality seeing standpoint. build our we're products our the higher at

driving really that's what's So, it.

Brian Harbour

Okay, great. Thanks.

George Holm

and And been these are it. with well by yeah, brands Core-Mark very the adopting the way, -- doing also way, by has

Brian Harbour

great, thanks. Okay,

like capital in then. or for And there? year? that? this or purely thinking through this expanding sort for you of do you on of any you how have just repurchase much allocation any also CapEx think annual you're you -- the walk then Could might increase of be us components Just going have how facilities opportunistic? are different growth to of you the Any sort about anything kind some is you do target like if Do capital,

Patrick Hatcher

we're allocation great the And cases. CapEx, George Yeah. in I'll number seeing second capital independent to comes priority our stated, to invest growth the business. our that's continue one When to was just always answer is the it part we've as describing, first. in for as

growth to doing. we've that been continue for we'll invest as So

the on be to the be as be historic we going in at should I relative a market. things, not it at when I'm and too we to on help share repurchase, we but very and market details, guide in look we're mean, then us multiples do And we I how strategic. go many the few should would to look valuation characterize trying into

Operator

All right. Thank you.

question Slagle Our next come Alex from with Jefferies. will

Alex Slagle

morning Good And independent wanted quarter third ask lapping Omicron. thanks. and been to which talked on congrats mean guess, impact just level, might bit just quarter, and the strong sort was it but view trying little to on barely had see imagine dive on saw the really on of I the that that I just fourth the what that of in wanted would more acceleration have and Hey, growth and fourth some underlying the you I first case growth strong through in to the the I up? below a of the benefit quarter. case little the more in the you into success. about quarter. a bit trend And step

George Holm

three growth the March. more fourth as the you slightly in August again through two And where in kind was growth the that with momentum opposite if and had saw less just far Omicron. has unusually one in July, into stepping quarter, look I do actually then got been better high those of then so pace January at growth And and quarters, We February. of gained fiscal we Yeah, month in gained a the each and momentum less then yet. months calendar, actually, slightly lot we an last to happened think

I unusual was now, think the reached ways little that some be that in be right a more that been in had I may slow there's we've seasonal consistent in right. typically it although will each think, I I think past. where we've the last finally industry it's like flows what quarter the that continue to and always the like and more point something three think that's that have I years So, been mean,

Alex Slagle

customer-first then And it. Got the platform. digital ordering on ask to wanted

you where will mix comment driving this kind that could that where now? future. the seeing Maybe how that favorable and important stands where you've digital been If the in goes progress rollout of mix, on be in

Patrick Hatcher

I believe on ordering on well. -- on lot complete rollout commented important. with And little as our view is customer-first, platform, rollout. bit. Yeah, of been I'll a really progress has we the we're we've force. to as sales Yeah. replace on of previously Again happy completed this digital as side rollout mean, Again, Patrick. we've the I a making touch it's very the is that never progress Vistar our and as the it almost Foodservice or the it we

a believe absolutely growth. a you've that our that force from more augment us, with salesperson works case As to with how is PFG asset. can very that way journey in order But we And see them help as give customer actually the and opportunities the view online. heard will order do we as their independent a customer we and sales with strategic all they the in tool much seamless our on it --

customers all cross-order of or like would they Vistar lot they're to, a see if Foodservice then they a have there. so talked we to. can past, So as like into value we've And convenience have as we across into it three the customer segments, as about in and eventually we'll

Alex Slagle

Great, thanks.

Operator

Thank you.

UBS. comes Carden Our Mark next with from question

Mark Carden

so much for morning. Thanks Good questions. taking the

the was update really on start, So convenience to helpful. the business

get-go, has seeing that Foodservice? you guys cross-selling Convenience while might into -- slower now about it you intuit, anything played Sounds or relative out expectations? the your front? that you faster Foodservice or always optimistic and the building now to any From from momentum Convenience from expected, has either Convenience Just were Is surprised have on original than guys like are into of lot you're Foodservice. between how opportunity just there. that you that a a little But

George Holm

really two we've get itself a been sometimes product. two of when of when the got, both change pipeline. there are course, it, you they the them. on seeing said, to quicker, of develop like been the we're parts of outside But the but as a focus develop gelling. kind different got would they They've the success And I has in the and this business. CPG-type good a They're store like Foodservice for are we really Core-Mark, companies better Well, develop really don't And -- things quick. businesses. has part And of while. at It took

Foodservice a Core-Mark. we're through just have doing -- in going out very And us now we the lot are with separate that Our people don't and two a location assortment we needed of that doing started into well together. it doing Convenience well a real

to feel going a feel of future. to growth we -- mean, near here we great. in our going lot So I be the it's

Mark Carden

Good think normalized a are fill stage to both just follow-up, to Vistar do quick guys and then rates how close see And this you at at hear. you Convenience?

George Holm

our lack is to normal, rate the very fill and And that some close discontinued improving had ways Vistar maybe in finding it normal. Foodservice items I the and say probably some very, Core-Mark still would it's if time. of were is have that to back. that business the COVID discontinued that What not in are all will Well, we're business continued permanently be come we've are during gone, of things in

rest is So the that's unexplainable us. for it And of somewhat part of it.

but are in are that they're improve. rates not it's We fill have also businesses. those they're that widespread continuing to pleased we pretty two normal rates, fill frustrated And back we don't better that to

Mark Carden

Got guys, it. and luck. helpful That's much, context. good so Thanks

Operator

you. Thank

Bania Markets. next question Capital Our BMO will with Kelly come from

Kelly Bania

little we Thanks a BMO. across gross taking was wondering good Hi, the could here margin for from talk bit Kelly our if about It's morning. I categories. questions. Bania just

and which as manageable Convenience? temporary mix clearly, that of supports quarter XXXX, within margin characterized to or what maybe, of across the of expansion the you've are manageable, fiscal much being the outlook both actions other that. the gross And within So Foodservice, deflation taking? is But how as Vistar, you're well as kind drivers that contributing for segments

George Holm

gross Well, all Foodservice, margin seen businesses, Core-Mark, Vistar three have expansion.

as really the mix, brands. it's we're Mix As it's three then is of mix, those It's the to success earlier, in why thing that businesses product I of seeing the and biggest growth. all mentioned mix. channel

pricing, As say far as just aggressive probably really -- that that's not done. I would something we've that

Kelly Bania

Okay. -- And mix for outlook support within XXXX, margin gross we from continued and your those should fiscal dynamics. expect the

George Holm

we could fiscal of impact. these actually, that guess too, business part the gains more overcoming is some national if up it We inventory that and some of we of fiscal large should. we had for chunks the the XXXX end And, I pleasing in of this in increases. by less than XXXX picked the have But with XXXX. without that we that primarily seeing of said, case. And some this obviously had it's profit in due to I have good But mix. to that. it, last we're we quarter like gains gross has did And drive deal helped the we still And XXXX. inventory per is year, area

Patrick Hatcher

if Yeah. that look And Kelly, at strong trends really could the underlying add. last these quarters, showed mean, we've George, you businesses. if I several performance for different just been seeing by -- the I

looked and we XXXX, So that's outlook you. helped did on us yeah, with outlook trends, those our we that that anticipate what that and gave guide at for

George Holm

in that And with is add gains. our have about guidance obviously talk we've now, which experienced that to highest nice. be still to the those again. confidence, then And overcome ever right once we was it. it, the will I inventory -- in have And we're This quarter we don't really gains great will

Kelly Bania

of end-markets. view broad your have because and I of you just Agreed. pretty one more a ask given consumer all trends segments different maybe Can

So, Thank or about value you're what and we forward? you among What it's respect you're what points just types? seeing trade-down, price a a as maybe move can case you're seeing and whether trade-down you. expecting trade-down among talk to customer with

George Holm

get Well, certainly effect assume better degree, dining I at that's I, And the some just to I an think the case. is you -- family look dining. QSR published, trade-down. that's numbers if that would casual probably than of doing or

well I is store is think consumable our value and product doing trade-down.

as is good Walmart Foodservice but product, with at customers. And guess, probably that we're Although our it the higher-end to, a fastest confusing if I that's within sound growing our most that how just independent the is well. as of it's expensive look product well, reflection then you doing

time think look there a or we favor telling. I just mixed So to we bag. the national now. casual that trading down not accounts are it is in we -- have people When that seeing at they it's account Is dining a tough level, in are restaurants, going independent are certainly

Patrick Hatcher

this capture is still different if we if just a week add I the life consumer and trading segments service, like about all and talked we'll at up, or three when different of in really our times the those the channels feel between about the we to could we've that diversification And sales. that, trading that down you Kelly, the think about business,

George Holm

may a may higher-end us I before, product, know, the have that points where those have environment -- you and for products. really markets that's of offer this type of can price different been bending had And move micro better and more can well. into they you offer is at doing doing

we're mixed. different good a But So point think channels. I just that so made I it's many think Patrick in very very,

Foodservice about -- right doing contract we're the but and serious Although growing fastest two probably that being and feeding real we're well. that the channels playing think all are lodging, a from that the I standpoint that but missing are other in we're now

Kelly Bania

you. Thank

Operator

Thank you.

comes C.L. question Andrew King. next with Wolf Our from

Andrew Wolf

morning. or any I just getting case seeing with driven you George, new accelerating is help in getting it good by recently really growth drop the being the acceleration size Hey, you're guess, independent -- account are growth? from

George Holm

size, coming little but the growth. a bulk accelerated is We're new bit from getting drop from of account it

Andrew Wolf

view, But on can these give you in as will with sound that you that any eventually. insight these it coming is from customers? have my you on at pretty lower. macro get How is customers all relative mean it the still new point much think average, uncertain. us of of the got customers? uncertain, a least guess the are -- out being Hey, you rate think maybe or said I like we've And the better I of new guidance? building sticky stickiness kind hopeful it's I churn positive will I you're new

confident even the in the and given macro. more top-line So, we're

George Holm

lost that go very to single-digit typically able and of get our from loss high to every better year, at restaurants both. detail And important. amount retaining consider and real you get the we've been previous retaining keep the on we've we is turnover been business business. Well, and our out each if customers business of accounts to or year, able And salespeople, year, very

adding the sales we retention our we -- accounts, we're that level with force. feel we have as So feel pretty confident. with And particularly

I think those go two hand-in-hand.

Andrew Wolf

if I of said and warehouse. you. warehouse as of of them just you little, also separately could expense of Thank a a it. combined how could But productive? little last comparison, your they're the just becoming side terms I each productive. least could think Understandably, ask was I you kind Got you But on quarter? a more at more progressing you ask you but in overall think driver talk that about to down I follow-up ratios were was on, commentary as when unpack And that

George Holm

well a -- expense area the continue more was lot to continue has overshot get that we We XXXX increase productivity we're last things quarter we did just level our, workers are to progress may say That Not seeing and going hired to constant the we Those ratios during reduced back some of paying our little temporary Yeah, have But problems better. previous continuing we with helped was And feel been levels. expense in add shrink. But certainly of to some. -- not then I force. lot. and helped to going we're are We a sales are over ratios real overtime the people. get the big using heavily that new our to to the in feel guess, year. improve. we're service. money to -- heavy COVID I would to of helped increase better We're our really productivity. the periods us for And degree a has areas. that A bit

Andrew Wolf

I a that I But double-check to just in the is heard good. wanted if just business you take one was think And And your commentary a I context right. the were out convenience holding the Okay. that follow-up, was on the that last believe margins I gains. that, if

the to the of been gross guess, again, the referring so better really holding substantially tobacco or would have year big, period? you EBITDA from margin, take gain I you the were margin if And out more ago

George Holm

Yeah.

the Convenience. took they've standpoint, was out driven probably growth the and certainly from we we into holding improved that double-digit somewhat the sales. gains you to I COVID actually where If warehousing were delivery, an mean, were helps. for well But year, now, EBITDA from by most. that operational food previous from And

Andrew Wolf

Thank Okay. you.

George Holm

Andy. Thanks,

Operator

Thank you.

from comes Jake question Truist next with Securities. Our Bartlett

Jake Bartlett

points expansion. wrapping Great. there's XX of Thanks in it's source for first to trying be at is basis of is. I at question. up looks XXXX, the help look when expansion? taking out to margin like Just margin that questions the bunch biggest margin of Whether gross questions I'm going hoping which expense -- EBITDA it prior the asked, midpoint main guidance leverage expansion. driver wrapping can you but other operating figure the of us from is for the what out a My parse the of or kind about

Patrick Hatcher

continue to and Convenience, we they of will drive improvements. improve It's to But thank up and a Yeah. things of continue to brands is expansion really side the food that be like lot both. and the to operational is as George And wrapping we you. combination efficiencies. then, obviously, have And discussed. it things just and This again, Foodservice seen expect lot to a Vistar the then Patrick. and going cases, we've of and a do those explained, more we confidence to independent it's And more definitely already due have

Jake Bartlett

expenses, profits the Okay, great. deleverage gross operating D&A, of between was EBITDA. Because a There and less look the I when in last quarters. bridge at kind two

your to leverage trying you'd in confidence operating get think just just That will I'm going So that to that get XXXX. reverse? you're some

Patrick Hatcher

investments mean leverage. and we've I absolutely. do making some lot have we Yeah, says, that -- will a so as George confidence in we that that been people of see

Jake Bartlett

have the first quarter, given the in just is and the on accelerates Lowest the then guidance. And growth sales last trajectory. Right. from you there, question

-- determine is expect what think change from on drag look accelerates? from estimate just the continued growth you going a how the the the the growth the taking beginning to And if I you drivers help the acceleration are? of just or it progresses? maybe sales what Or how I sales segment, be year. in XXXX? Foodservice can sales growth us But out growth deceleration. flat. throughout deflation, quarter, sales the or a real the in was But on segment of fourth do Foodservice growth at That's inflation trajectory Specifically, about

Patrick Hatcher

all this we confidence but year-over-year, growth. Foodservice mean, lot a I is of our Well, in Yeah. again, have of sales

are this into we continuing deflation quarter. explained, experiencing Foodservice we've As is that in

coupled that anticipate other did that our outlook. factors, So with we some in

rate more of get off slowly up year a go historical increase and improve start so what inflation does deflation then -- to hopefully number. imagine a against that lower-growth get of we And at we comps the the is and then, balance and it see does it would and easier slight traditional better as through

Jake Bartlett

you end -- to whole you year? of become you deflationary just the Or to it's be clarify inflationary that And throughout the do the year? going do the expect to Okay. think by Foodservice deflation

Patrick Hatcher

No, will outlook, inflationary. in become believe we it our

Jake Bartlett

Okay. so much. Thank you

Operator

you. Thank

come will Casella question from next with JP Morgan. Our Carla

Carla Casella

a have Hi. your question follow-up M&A. I on comments about

your and -- given Foodservice of total is focus Just as the Would kind in those categories you markets of of addressable touted you kind or Vistar on more is in M&A -- stability Convenience strength well? the there opportunity and still there.

George Holm

our things culture. that business get we culture our fit would M&A and and businesses. in to Overall, it's going valuation, of be do three fits the can to those right any opportunistic probably their Provided we

we more have centers centers we'll whitespace. if have distribution M&A we would good still that we us, we would Roma get have of where call be of legacy method and companies, be doing offering. In broadline have expanding That's a And probably Foodservice. to opportunity a always certainly will where But foodservice have our good integrating significant distribution And limited opportunistic. we is think specifically. I product part priority that always biggest priority. business we an Our business to we be

Carla Casella

terms you of versus going growth maintenance maintenance is CapEx look is Okay, great. you what much forward? in And CapEx, just then update your at us or how could when

Patrick Hatcher

is It's about maintenance. one-third

Carla Casella

you. Thank Great.

Operator

Jeffrey our Bernstein Barclays. from will with Thank come And last question you.

Jeffrey Bernstein

Great. Thank questions. Two much. you very

just seems saying are the gaining it like what seems momentum it and I think you're months, that X.X%. quarter each George, is of just, as Foodservice macro seeing, all first chains like X.X% to the of where if of referred independents, fiscal like are the you're ahead First in true, case you four-plus softness, growth. I'm XXXX sounds past drove which it the that wondering that's

group sustainable is that's the entire just whether think you or across and think unique And you your then, whether wondering had initiatives? I'm to seen just I that and So performance follow-up. one industry related food that's being

George Holm

a think do share. as or say And isn't we're we'll degree. We're this would certainly before and as but the I cautious. going I XXXX. our Yeah. we've out. I probably look some XXXX than I have, of this Well, the we there direction we've I that can that different share, there's to think keep taking guess. mean, guidance confident. we've mean, at with given, been macro issues long account, gaining like competitors. But gaining percentage could business I always we macro It's and the we're that be out see not through we And keep very you more if gaining certainly to likely you that laid that it's with we're customers, confident into what

Jeffrey Bernstein

my think then your guidance, low-end And it. is guess the EBITDA the the $X.X being fiscal you fiscal high-end I I to Got fiscal XXXX and XXXX. billion look mentioned as XXXX follow-up. of we out

quarters, Thank that plan. guidance coming moving wondering continuation you're we might I'm So would more that that or schedule we about of fiscal three-year derail assume clearly make a derail you. that quite therefore within confidence to in Because increase a of what what just again you full-year are EBITDA? upside is there's impressive. how going being to by should a ahead I'm or wondering that. of challenging. ahead Should XXXX think potentially

Patrick Hatcher

It Patrick. is Jeffrey. Yeah,

there. strong top Just we're still put comment as George out XXXX. make we've guidance for on us And for anything to because pointing change. XXXX, early see can that it's to that we've allowed we that explained, a what three-year thanks you again for all such the and that range guidance our of the about that put really at end really that would At out But excited XXXX. had guided too confident just we one, that this point, are

things progress. to continue everyone we'll that So on as update

Jeffrey Bernstein

you. Great, thank

Operator

additional back any Bill Thank turn now would for you. to to Marshall the call I over like or remarks. closing

Bill Marshall

joining for today. you call our Thank

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

Performance Food (PFGC) 16 Aug 232023 Q4 Earnings call transcript