PFGC - Earnings call 1 2024 | Performance Food Group Company

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Operator

Good day, and welcome to PFG's Fiscal Year Q1 2021 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. We're here with George Holm, PFG's CEO; and Patrick Hatcher, PFG's CFO. at release which regarding the can section our press first XXXX Investor a of results, quarter be website issued this our morning fiscal Relations We pfgc.com. found in

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

the first segment from in reminder, a updated adjusted prior we the of our As metrics EBITDA to fiscal quarter metric. XXXX, EBITDA reporting

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

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

George Holm

Bill. thank a I'm everyone, which XXXX our despite joining momentum, with strong macroeconomic our of you for and quarter results first business you morning, to share today. today, pleased continues call highlighting our range factors. Thanks, Good fiscal

range. EBITDA line adjusted our was this in August. we above range saw end top you As of guidance our just morning, the performance of our release below top was the top in guidance our the laid And end out

ability to to economic forward. our at continue company's of this scenarios, for results Our expect range high we show perform a level and a going

decisions industry. But to the is important I each the share of growth, of make ahead. on will with quarter our restaurant channel. view first, and grow this focus company our reasons investment the strategic in believe our which you of distribution that a in a discuss X.X% thrive to are current the We add on we pleased accounts very items case state again, the a independent the wanted factor backdrop a recognize basis. new few in Once address as PFG's In and foodservice dominant daily economic we and will continue we in moment, these share that was I years our

PFG has XXXX. public since we went significantly evolved in

broadened added line new and channels share believe end lines market grow have industry. We both the top of This services we business come. shift deliberate, added been large our capture for products has and that and food-away-from-home years and market and bottom PFG positions our to to to

to breadth scale our built independent foodservice elevate restaurant effort an has Our business sales. in and

to gains, to invest on In a have has force in our restaurant results and We long-term and continue moment, build provide in which market a for more share a be winning capacity to independent strong business. our the will proven sales details strategy. Patrick allow new

increase Vistar's food always range that the include Vistar Vistar purchases is as products, beverage range market channels. sold distribution and the bars to the significant sells and The and of health a serve alternatives channel to have and vending options. as in itself. impulse has unique in packaging prepared allowed more as expanded expansion protein machine and distinct and of organization candy, like offerings nonfood adapted from healthy beauty of largely beverages, has for opportunities. well a Vistar snacks These product reinvent traditional wide with range continue that XX the From products industry, than now servicing an

which growing area, excited the has we the We opportunity market in are micro substantially. been particularly about see

positioned capitalize believe this is opportunity. retail format. concept Vistar a The range shift on well allows fully to wide a is micromarket of product structural market offerings from for and benefiting We towards this

see another we where significant potential. Fulfillment area growth is

parcels automation and directly that in We that consumers. invested ship equipped with small to facilities us customers efficiently are have allows to

The opportunity margins suppliers, of of is that beneficial a many runway ability We believe fee of driven a a is allowing above-average For manage priced range portion last operating above currently EBITDA for an average. producing not produce in distribution Vistar's by to Vistar growth market this are margins facilities product very do take basis. mile to this partners, of margins. products. supplier is business is significant financial this part With the of Vistar. high our the on and the with All servicing a ownership partnership, we the the for

expect to these improve further. we efficiencies time, scale Over margins

X-day that We States. have most achieve of us a will the plan to to capacity continental into sites to allow additional United shipments expand our

away Finally, Core-Mark more we that beverages. towards PFG. landscape brought undergoing to convenience are extremely from opportunity options shift is traditional a and products food excited has in about tobacco The store the

we Our gains softer to of Core-Mark the provide share remain few at food achieved. many is customer a categories. of significant are a has partnership, categories, outperformance significant industry. top rate quarters. period top very convenience The somewhat and performance many convenience This opportunities and add relationship growth has exceeded long the to Still, is including broad been pipeline the bottom expect consumption accounts new The pleased importantly, we immediate all and with knowledge foodservice market past expertise with PFG's steady key rate with of years. Core-Mark's new line has Core-Mark's in business line over segments operating in in growth. service the with expected the combined adjusted and both over And spans industry backdrop and EBITDA result which snack

has difficult this of was gain only than stress. The would Historically, period. PFG a typically market more share pandemic that been is we of in clear not company example but over a during periods we time which resilient multiyear improved during times, a has

coincidence from opportunity view While during stronger, environment, do an of Rather, moments we as would all our share including away disruption, a no It prefer get of a that and new recessions pandemic. as smooth is prior heights. leader volatility. our market we has the the we market of and some position propel not it company to periods shy solidify our increases operating global seen business largest to

trends put from take the willingness let's and I consumer thoughts current about and impact foot we short-term has that, of and expect health through the discussion food to U.S. how purchase of to a backdrop away ability their and from inflation on will navigate health market. traffic the the their to food-away-from-home discuss walk With the focus much our the deflation. consumers factors There influencing macroeconomic and home. been moment and

seen dynamic we are traffic significant market. than is Despite just discussion a the where stores not reaction have that to date. level With purchase behavior softer natural of of the inflation is in at convenience the typical, consumer a business said, including mentioned. demand, there that of is what somewhat to materialize drop-off significant I This pockets potential hit that that the

nearly the would services run and given year. fact, the for that than the of price have the be through economy, start predicted all to rapid consumer products In has proven at many calendar resilient increases our more

despite our We growth of has headline along this pressures two as force and slow experienced very the While quarters. adjusted margin these to move sales would segment the expansion to positive our deflation show the Through deflationary have of been continue with pricing, on we foodservice inflation to Through these persist. in restaurants, demonstrated ability deflation over work lower, time, have trend been our continuation EBITDA executes past pressures. deflationary combination expect manageable. have to significant to mix the a this were independent shift we

lessen a However, deflation position. we more neutral towards are move pleased and to see

a levels particularly of market, both deflationary just commodity the the If has year, expect, is the beginning dynamic in our trends and end year, continues, fiscal inflationary back sequentially the fact, service healthy low deflation as pace. the we single-digit inflation In in we of out to at played expect be of of third with proteins By which to likely back calendar anticipated be August will food lower fiscal September. areas foodservice slightly this the quarter. to as

to on and to specific then performance. I'm fiscal going themes. beyond. discuss and you drivers will guidance more results for XXXX Patrick, our it few over to key leave a going I'm our color of who with And provide turn

we nearly with away home the First, product offerings. well very from large and PFG across and market in channels believe positioned is exposure all growing food

consumer years has economic the grown And stronger periods during normal volatility. finally, difficult our in above resilient remains weathered company inflation. of of and has despite Second, past multiple conditions the

We're Our Performance Food investing I'm it by Patrick. excited view future and that value. the is what in for our PFG now interest appreciate in Group. our grow stable going assets your is to evolve to turn the market and produce in holds continues shareholder long-term and and effort to people to

Patrick Hatcher

you, George, good everyone. Thank and morning,

XXXX morning. our review to turning to for beyond. this the priorities excited we're share quarter on announced the portion outlook the and allocation we results and fiscal of then our like to reviewing conclude behalf had with XXXX by start of and associates, financial capital As performance across Q&A the to with George I'd fiscal the I'll start mentioned, three specific before we the our this and first TFG's segments. of drivers some call. our strong I'll proud year position financial XX,XXX morning

this and in As fiscal morning, and our year guidance updated second press for quarter saw release we outlooks. our you announced long-term the full

$XXX EBITDA billion fiscal second to to of and in be billion in expect range net to million. of the XXXX, sales million to the $XXX $XX we quarter For adjusted range the be of $XX.X

A embedded thoughts outlook. is what couple in our second quarter on of fiscal

experience continue fiscal we moving foodservice First, the segment to expect in to quarter. deflation as third towards we enter mild the flat the though quarter,

rate the will said, a segment to which adjusted very year's large normalize results business remain quarter. gains on the With we from Vistar experience expect gain the second Second, reach a holding have basis, we Vistar the segment growth on difficult in back and comparison year. year-over-year company of no holding total these that expect be will profit growth EBITDA. a longer fiscal inventory strong, when inventory we XQ, for basis, nice Vistar's for as half comparison in fiscal last gain largely that reflected Underlying in we

be year, come to EBITDA billion the billion look million announced our the end sales For fiscal of $XX to $X.XX to net to We $X.X expect of we range previously range. full to billion. adjusted upper the $XX continue at in now for in

upper flat with end segment essentially the we persist back year. the slightly are the rising EBITDA from to upside We in 'XX fiscal second of to of outlook above adjusted assumes through in outlook announced quarter deflation was the half our earnings. up the XQ the performance through fiscal to This 'XX which XQ Foodservice flowing the

convenience, year, the of end state fiscal the remainder fiscal low For and we anticipate reaching the by inflation year. of the in a the range steady to Vistar decelerating through mid-single-digit

as largely assumptions anticipated. last quarter we out have Our inflation inflation what not have discussed we dynamics from changed and played

which With $XX We outlook, are billion be $XX to outlook. within to Adjusted a our EBITDA billion to will expected be billion range we XXXX. in said, that EBITDA we increasingly be are in reiterating see our as within adjusted $X.X in fiscal XXXX long-term XXXX. a XXXX. net reflected projects to $X.X that to billion results fiscal to And fiscal range in comfortably the is we fiscal our range confident updated continue sales in upside

outlook footing. As can on our business from we and solid believe fiscal current for the years, you PFG's in next that are two our trajectory confident see is

some and of first of quarter our our drivers fiscal performance. review highlights Let's from the underlying

increase of year-over-year. PFG X.X% first our billion, quarter fiscal sales $XX.X total generated net of more In a XXXX, than

increase sales was by total case Our X.X% a performance volume driven in growth.

is part X.X% our and our of again, reflects first Independent highest Vistar's of that our quarter, important case to was restaurants another business. including growth end particularly account in cases several in result the gains restaurant the due independent Once market which independent and markets. X.X% performance channels, increased new period. in outstanding in share wins case fiscal that increased margin Our strong

year. compared Importantly, chain of the of modestly volume quarter, was the the last while better in decline in down XQ was fiscal sequentially rate to our 'XX quarter fourth

fiscal the $X.X to with strong run Total our chain quarter We chain billion. partnering growing profit accounts. by increased gross X.X% will PFG first and in to business continue

margin a to due shift We profit continue nice businesses. our performance mix to and across expansion show gross positive

deflationary performance Our the environment Foodservice a despite segment. gross quarter produce to in our in reflects ability solid the profit profit growth

the up profit period. of first million, share XX% increased prior $XXX.X case in the reported In $XXX about quarter X% per approximately per Adjusted earnings to adjusted was and earnings first diluted income PFG Diluted year-over-year, the Gross increase million. per year-over-year. quarter, and EBITDA was increase respectively. XX% share fiscal was year's a $X.XX, the X.X% in to compared net quarter first $X.XX $X.XX a

to inflation and due deceleration inflation experienced moderate to first fiscal segments. continues Total our X.X% of deflation the inflation in the inflation was X.X% the high was the quarter, convenience to norms quarter. fiscal in in year-over-year trend showing company first the quarter similar deflation in in experiencing though quarter. still convenience remains and lower Vistar continued elevated historic the Total the the quarter. Vistar by segment in in cost rates and single-digit slowing single-digit is compared segment Foodservice which to first high range. inflation food both a Directionally, driven service fiscal segment The find dynamic

the in financial healthy today and to PFG to Operating included fiscal investments towards continued large of and generation, in like position the September. we quarter. remarks was with our some that of I'd flow XXXX. including in our quarter. very flow conclude priorities. $XX.X result In had balance the thoughts was a months cash X cash flow buy million our sheet generate tobacco strong inventory This additional cash a capital some on end free in allocation the particular, operating first

As we build quarter. you're including inventory sell aware, the and candy then in and tobacco that certain subsequent through inventory periodically products,

the growth cash includes to in generated flow to our top periods free growth cash capital in additional inventory. future investing $XX.X the business After this see positive tobacco long-term projects remains Investing flow. expect of our million in PFG for of build primarily sell-through We expenditures, generation million priority to company. This capacity aspirations. support our $XX.X from

our excited home top growth time, We over making market. generate food facility adding our line very that are like believe our returns investments Virginia new these we service will have example, in more the opened For company significant to to while efficient.

strategically our uses leverage flow, including capital our cash each against evaluate and based the upon for create decisions shareholders After repurchases. this believe share expenditures, for M&A, would capital we three main deploy value and have these we additional view. We reduction

valuation share well as compared levels. program as the Our considers our stock historic repurchase relative the value of to

October, In X.X $XX.X the PFG share is repurchased shares fiscal a million of company per approximately total million. shares $XX.X million, repurchased the an first of of a which fiscal average quarter, total cost in million $XX.XX. for X.X for Subsequently,

in share confident long-term We reflect our our and are prospects through repurchases. this

We look to also creation. strategic of avenue continue shareholder another as at value M&A

acquisitions throughout are and our We of PFG's proud track history. [indiscernible] record of integrating

just largely diligence deals, current fit. success We on unwavering M&A, immaterial close strategic working the With our scale methodology. is not ago. hard we the and process ever exception over increasingly The have while to since and credit environment. our more this years interesting X past completed to small in believe as interest price become that due has process, as team larger in of we M&A opportunities of important the Core-Mark We our identify disciplined are due in rate remaining

maintaining Finally, sheet. a we our have focused on efforts healthy balance

comfortable and target our We have debt of midpoint feel for X.Xx the fiscal right quarters target very range. several We closed net right at the of first to midpoint EBITDA again, adjusted this in the quarter, the to at been X.Xx range.

between floating of XX% room rate We also ample provides to of ongoing consider and convert of the a the the of priorities our our rate. I our XXXX, a believe the for fiscal while fixed balance fixed used highlighted. including at a fixed quarter was operations rate, allocation flexibility swap debt, debt to balance interest and We contracts. current our fund total just rate carefully At level outstanding ABL rate close debt capital portion to leaving the first of swaps

PFG years, deliver shown happy and in and over questions. as our with we'd changes the is Performance confident to are for your to long-term We be ability by well outlook. appreciate that, organization to quarter, interest despite our we on your started business the strong strong increasingly success we in you today. our believe X with XXXX time shareholders. fiscal first macroeconomic Group. achieve strong and take next Food our investing summarize, in results environment, To a feel We results And for Thank our your in

Operator

with from Fargo. Kelly [Operator our Instructions] Wells Edward we question have first And

Edward Kelly

by first. I on presentation for about quarter. follow Nice thanks, the to the you wanted growth of volume I color, And guess, last Can just cadence you up department, talk all around more independents, various which bit part maybe the quarter, started during off a -- the little hot the the macro, case mentioned the especially in that in you the quarter. pretty way, which

then just and what it so thinking seeing the you're pertaining volume of the case how you're of And today Just played you're what quarter? through to seeing year? rest sort since out far curious as about then trends the the things in of and thoughts then second guidance, sustainability how the

George Holm

started We we before. over I And X% were think only year of came in very We think, quarter September, Yes. had our in August, the business. independent off under to particularly that And slightly we then fiscal X.X%, the I it X%. we were month in back were -- the strong, slightly in mid-Xs. And July. just

think mean, the very been it period that have was obviously, next, volatile. we're three of XX% you but I to kind up I X% could week the like and I in consistency and where now do have seeing we a all, like COVID versus would all stronger, that

is that increase with X.X% cases, as probably As We think X.X% about guidance, far stay. we we're going customers. but in where increase to where in now at we're did

to year we spite right to So of level. in we're a the more selling at And selling good them still SKUs than the growth ago. were not customer that's seeing customers

get as account national business So expect we me half still materialize. year, and pretty that we be in going that didn't see that too, softness. back better right some level, shows the into of at there's to restaurant it year, see the to confident we as our further growth it the thought to get we're some case just do But we're now national. year last We

Edward Kelly

follow-up. a just And

look maybe case headwind, around profit X% dollar probably know, X% I growth. If gross that and don't up, at gross that growth, you of back you couple here. profit under dollars just procurement out on A were things

cost year. of And we Can that sold in growth sustainability into even that back come mentioned dollar into volume as little how a gross before impacts inflation you half about about little of bit back press a optimization the that the is across about? have relationship profit goods then talk versus what the Talk mix You business the growth. release. bit

George Holm

that I one too little friend, within better gets independent to when our with We've environment too headwind quarter Well, in dealt got inventory our gains think each in the previous tends running the the on but impact with a growth better Vistar just anywhere The a is really what Core-Mark in QX, the it's and, inflationary the really ended the business. case year. last our the being that businesses of slight year had even particularly of it we've do to Most we inflation there. margins year fiscal has and of to not that us. over do go continue for we up near being in quarter against not should of so And growth course, much in much continue that when able in margin be help It high. the with just we macro, an but margins in an had we to deflation mix. to tend mix our

Patrick Hatcher

I'll just real add quick. Ed, Yes.

foodservice the food the really If All about brands, well and strategy cases, are growing also our penetration convenience. channels, working those us. with independent what expansion, around for you we've and but very explained margin think Vistar is

Operator

from question next our Mark with have Carden UBS. We

Mark Carden

of you independent And restaurants? are the start customer peak a that to shifts surprised seeing also normalized your labored where the for there's on guys resiliency benefit set. you this Do So more think of business. Are demand? in much within hour another question then independent business, you independent

George Holm

Yes.

restaurants but industry when year and it get it's are are people now, and you than slower, As the down, at information you money in right the look restaurant surprised, transactions think they more spending did that lot a ago. is hear far as a being I certainly that we

Now that's inflation. led by menu

an deflation it inflation experiencing our So in. in in where it's product. of foodservice, that, while because we're menu, experiencing kind price just experiencing to a restaurants took this on that's time just we're increases think get odd we're a And but I those the

understandable. some is raise I to which were think price, their afraid

And quickly, actually so want I some didn't didn't they prices undershoot. are because think they going deflation this some expect come. to overshot to

think than I industry going the as money they the backing -- look slow get were back get spending don't these consumer think they off in being restaurants And as traffic So the from are before. to at or to because accepted, position more we're don't I I menu prices comes more where back. restaurant that

Mark Carden

done follow-up as full then this to still on there? about it long much point? tail you salespeople? can a stage, is many should add my the that how And And people take sales this it. reach we sales more their expecting to force is still productivity? think at are at How how Or of for Got build, new these largely additional then

George Holm

Yes. And where pandemic, done And asked the have long past, It's previous look in typically how you had of that growth XX% customers, some. down us, behind it X.X% them now, about a numbers, that is what of year. wide number three off and we think I during be number did to X% we more we more productive. in few not the our we we've takes we're start X.X% such come Because than will for increase of you variance, salespeople. strong. had case different right if and X% to probably got is And the felt about or a we're salespeople through we actually like go at months period a around in around the

a such wide have We variance.

to non-compete a after us great to well. really noncompete, And industry. do expires, no with of couple might well do tend years. tend certainly, of often the but with come with quick. And experience to them take come a they a experience that people deal a they it fairly in have we that have We people

say would we're experience the I So direct are as salesperson. in without hiring industry in coming today probably more that a people that the

to going year be to more it's in two. So that

that's long Now doing we we've time. been where for that be big that on a have that we'd bringing not expense because cadence a

time, as doesn't ratios. our So of clicking affect people period really as expense it long are after that

Operator

We from have next Capital with question Bania Kelly our BMO Markets.

Kelly Bania

I growth. to understand it's just customer growth, bit talk remains new to customer back but which PhD? wanted switching growth. new go driver Can clearly here. account strong trying independent it openings? driven beneath like about to just you the by that that But a sounds to new account of being Just case largely a little little that bit the Is

George Holm

accounts places results probably you've I that pandemic. store opening going new it like lot new new I When always level. today's switching getting say the and think of a to and new opening. customers some to And of Well, new I is buildings. are A near good vacated think the lot just what would that of There a at I'd caused places a the distribution. some the longer to go to taking that new that lot And And openings. for of remodeling of there like then that but that's a single-purpose people vacated through just are of we're not that's and of they're were in it anywhere But just is buildings expected, got were -- it's world, -- people softness bit still think they're little making them changes box. where accounts and

Kelly Bania

Okay. about That's maybe helpful. convenience wanted bit. talk a little And then just to

strong two there new think in pipeline comments the I release, one of about business. were a

and was and also to point a platform. leveraging up like? PFT I to wondering you're just about of then comment just big update platform about seeing there kind And there in And opportunities business? the So are where coming here Core-Mark convenience could was RFP how that what talk looks an extent PFG's if or evolve. that which continue a new just at really leveraging could you on the cycle maybe Is this

George Holm

warehouse showing convenience warehouse. been of Core-Mark good business. in out our We've And very performance a of service delivered is Okay. remember, growth of that's food Foodservice not out being some

what So call we turnkey we have programs. these,

several in them have We cuisines. type of

some foreseeable it's Core-Mark in based a some In in on amount company instances, is a that a instances, to it's -- going at adding market, only both. stopped to some And We lot go have. don't cooler the In probably they to available and way freezer of future. of those we're of space that that freezer ourselves performance and buildings. foodservice. And for Core-Mark see market cooler that's the the

We've and in customers inflation that of price to some slowness with do inconvenience, general getting seen we think fuel just to has are prices, a as and used lot higher points.

case at not And very actually the have look Core-Mark pandemic if from Not growth. seen -- fully the coffee and the breakfast back business, point. big you come We at this -- it had a good quarter.

and some customer has pretty declines. very We large gone that's changes good some experienced through have a

had back They're far as our job pre-COVID an years, in as equalize double-digit And EBITDA. but we and in productivity take done Core-Mark and would the that's have doing those warehousing well. gains, were to those best them increase businesses if to X inventory impact, had transportation So without of very actually numbers. getting they've a to

that been do yet in our service Vistar business. have our We food to not business able or

Operator

And our next Brian question Harbour Stanley. Morgan from comes with

Brian Harbour

Yes.

Just stores ]. of to one your earlier follow comments on up [

shy talk of I Or the of in bit puts mentioned, is you some business, about had is salespeople? more X% At growth think operating and of which in little by in this you you a just mostly what could other driven buckets point, takes expenses. foodservice that the operating expense?

George Holm

Yes. I would there's there. say things three

sales salespeople. more to for X% us It's force. be XX% would unusual be first increased The the and between

although in mix operating National Productivity, from an handle what would little expenses, it. tend it levels expense as side, pre-COVID an lower that's to mix we guess, bigger real that customer. improved, been on more operating as deliveries we good but expenses comes go, or the the ratios independent sales that's with a to lower call feel And But general, business of expense. And then acceptable I about levels. not that just So just is far it's back count to cost particularly takes density. have bit better different. our

Andrew Paul Wolf

Or also quarter on? you areas In fuel about you've the of softness that versus talked Or the function past, the just is have in C-store in that And tobacco? Okay. other declines there's prices about willing sometimes this of mentioned? talk think of of back products and was the you like people a specific what that channel C-store on kind in side. food pulled to that primarily are kind growth the you do

George Holm

mean, that just attention think cartons. X% year don't I it, morning things. I to that inflation it's fiscal come that two think I to X% and areas fuel improve. prepared some to as that Obviously, into where Is breakfast. changes about pay we've been running to Well, declines of levels. business has we're running both made And I think that daypart, but this deeper will Pat. also we close two an going and the but really been pre-COVID to about I be the I those for better coffee our it's continue Tobacco, to think get to I turn right? not impact. actually, in But it's that it's back -- cost have it might

Patrick Hatcher

area. that around right That's Yes.

George Holm

Yes.

Operator

we And from Jefferies. have next Alex question with our Slagle

Alexander Slagle

of I idea this think quarters maybe sure just mean, convenience. not the we on and these been how expected just how to ahead. in look new on some decline growth just the steady pipeline online? as mean just Just get any this previous to I'm convenience, and the timing And trying And into this food early about then I compared service questions the come to XQ. previous case here customers in trend -- of expanding might when commentary business of if I'm the and has an

George Holm

Yes. business see some online We'll that come fiscal in year this will convenience.

far, this it quarter, part So looks really business. like the in each last quarter, really in of

Pat I'll this looks think that's as it on like I to well, comment what turn to but So, point. at to that me it

Patrick Hatcher

pipeline, a job with On good a performing pipeline. continuing well. been And -- it is work done the been convenience they've long of yes, They've customers. to it's

lot really a in of positive have know that we things So but pipeline. that, we

Alexander Slagle

on in like Okay. where were just on I the notable previous and to lines what continuation business this micro And mean seeing inflection the of or can is growth? quarter. Vistar, markets it the just you're a accelerated seeing of degree highlighting the fulfillment you you're new a you sounds expand

George Holm

I came market wanting we from, just would a to continuation, is nice strong. the the we're for to think a snacks, employees basically beverages giving no very say back work. of where to seeing that's but call a enticement term think be with cost lot has And that. continues micro of to all. at I microkitchen, get I And people more the that. know employer a And to that don't where candy what do I do it's

fast As our it. I part we've It's future. rate. We're that that good business. great both It's, is got we're that far our growing very systems is of at think, fulfillment us. six goes, a of for centers supplier as distribution service now. able that to beneficial great do a to type up It's a of fulfillment give a And for that business of our our part

a good of business. our So part it's

Patrick Hatcher

George, saw I with mean, Vistar, with obviously, theater just season Barbie. really add, Oppenheimer and strong I a

a lot. that them So helped

proves there's And the we depth just that will lull of into back it So see go people content, as normally go a of content, content, kind of breadth does to when then of theaters. that Swift to that seasonality people And to seasonality it. go lot with with channel movie. have the nice is theater. back There a -- Taylor was but a some pickup a did

that. work And we on so with them

Operator

question from And we Heinbockel next with Guggenheim. John our have

John Heinbockel

things. case on the growth you X% growth, think is X%, sales normalize translates right? this independent going that it algo forward? do growth? into less? and then independent of it is good case to sense force a X% Is you independent force the average guys -- is the And your XX% more, related do Once sales share algo? have two is What wallet where George, you

George Holm

Yes.

Okay.

faster I a for while, the that able force, about add grow say done but be as far on would people. As haven't than a we this basis percentage sales we we XX% to should

growth gives as So point by we have And give X different that us in we percentage us what as far feel use that we as X% the wallet only cases far X% then share, as have of should types a a a go. for salespeople growth customers.

in contract because Of XXs lodging. share as we care very low or as look do in goes. typically, course, health the close feeding at little the And we we're restaurant far

John Heinbockel

follow up maybe to And on that.

So their Is where a for the was still do product than is address Because that? the broadliners the And credit think you COP whole opportunity, right? more hole and specialists were I that and/or were. true? was the years the getting ago, how big idea

George Holm

actually and get the are We cheese. you of to when center the over-indexed plate

industry-wide. numbers and just doesn't a we overindexed lot get speak can't And we're I are primarily broadline specialties. of distributors, because the So the include it

sure we world so look answer put a cheese the broad business. we there what our we you the part distributors, we of of call at So are But on Pizza which center that I'm over-indexed Thanks. of is not question. big because line can in if that plate,

Operator

Bernstein next And with question from we Barclays. Jeffrey our have

Jeffrey Bernstein

Great. Two questions.

about restaurant over months like data commentary week think The you few corroborated past the first trends that recovery one, But consumer, some just that on Obviously, in August It or past But and angle talked really a shows has at maybe August. to been sales least the one a gets was investors the plenty on seasonality September August the among return that I and attention. is October September, the even seems industry. and there the so of and has over the broader industry in slowdown restaurant slowdown. the maybe alternative question why? the headwinds after many restaurants been which fact in the the

for would a the would slowdown maybe has holding which it because up return that the believing that well. is to encouraging actually think been consumer imply culprit are I and more the quite think be seasonality I reacceleration,

much wondering, headwinds? been has service reason one volatility just then that recent the so the I'm you And thoughts of follow-up. than seasonality being that perhaps for rather had idea that on consumer So I the your maybe industry,

George Holm

than preface the but don't seasonality, customer I same. but pretty certainly our slower this don't I with got shares, that about large see July, I we're than company, slower our September, have in were real high was to industry. gains is we share a yet Yes. fragmented it and August base a mean and we're

as far as broadline what industry So the produces.

we see So a October like really. necessarily uptick as in market. looks I as October And have it not case the mean I far don't in growth. as seen first us slowdown an the quarter to

I than put just together, the think business base. customer would be chain we're our the probably our then And [indiscernible], of business because chain think probably -- chain of all slower business I if in you

accounts lean think some to But have we group going to national ones I the the are struggling with think towards we're see up. things change right grow. our that that of I are probably of now, coming that

Jeffrey Bernstein

of follow up Understood. existing the And penetration topic then accounts. just to on wanted of

I cases up which independent overly imply were up existing think, mid-X% that you George, mentioned customer think mid was X%, and penetration accounts. simplistically, further I of no would count would

you your wondering think It distributors. from and expand you for be those existing product share trend have to smaller maybe the dropping less initiatives like just of at wouldn't more I customers from to mentioned would low and accounts of service would have penetration you existing XX% more why the would think benefit higher food it least or would be I'm if higher. you number accounts. wondering I'm having existing very profitable taking off seem be that accounts? share competitors. I

on your thoughts So that. wondering just

George Holm

of there. Yes. things Well, couple a

our existing within than our accounts. that our market or that. own we Our get. I information That's penetration higher that broadline is much would accounts penetration isn't within within suspect XX% the

think than only accounts. though what's restaurants, of mentioned number very, in very case I growing is marginally people more are encouraging that count as I earlier, even our is but spending money our faster

much. when SKUs it's they've accounts the having And And think to they're are better consumer than getting the buying, I the more those restaurants think that not they're I in within do grown SKUs as more past has with business there and restaurants the existing buying that what spread that had choices before. Our we've growing and comparable out just more penetration. across to

Operator

our have Wolf Andrew CL question we next King. with from And

Andrew Paul Wolf

was in slightly I about follow want a asking on to what Jeff way. up different

your down entire or give differentiate you SKUs between -- independent group the cases and versus down by does the at same can the offset are obviously, cases independent breakdown So are increased lines. how us much being

George Holm

X.X% They're are the not, up and are X.X%. up accounts cases

not it's flat. down, they're but very So that they're

Andrew Paul Wolf

sorry, your think flat, base, are I just right? same existing about this at I customer Your it right. thinking I'm at cases George, meant drop per

on is existing an Obviously, I base and up the stop you independent just the on say you're per and drop was that can lines. down is So would getting down drop much you'd this because if that mean cases independent if how the us -- the wondering average to down? increased per through cases offset flat overall, give new are cases or of the you're customers. the customer

George Holm

Yes.

slightly. Our cases very mean per drop are not even... up I very,

Andrew Paul Wolf

All right.

that, that be that improvement there to quickly? that more wanted geographic how on between with Foodservice, ask are between reason? Core-Mark Or analyze those variance the addressed I businesses is or something as changes thing you structural other best or something Second and is just can labor any is productivity management and practices

George Holm

It's just pack. such operate and difference they so the high Core-Mark in percentage in business our is a much. of full There's fulfillment not a cases. operate They pick in how A facilities.

work. wider little a probably longer of or capable have kind take market people that much in do simply but a it's productivity that. you I to So just that doing desire just it's a are think of And to that And of we'll from going get standpoint of foodservice, work there. bit kind

Andrew Paul Wolf

either existing And so, is it. with right? expansion I this of the to opportunities is, chain last Got national thing forward? of going business And if you hear improve customers that kind or... expect did new Do

George Holm

which of some yes, started. already business, has new It's

case of Some will starts growth. the that put business unless, existing think positive calendar happen I And don't the in would we real drop-off in year. some which saw unless us first

Operator

Silberman question Lauren next comes our with Bank. from Deutsche And

Lauren Silberman

wanted I allocation. to ask capital about

expand trading M&A? capital history million versus to really willingness pretty of Can You and strong back the $XX you're discount at year-to-date. buybacks allocation deployment Stock even you big how lean your buybacks on guys with fundamentals. to and in further just thinking bought about a

Patrick Hatcher

with our about we building as we overall October. in we've question. think for and capital capital strategy purchased capacity. think #X then our obviously when you last said, that -- allocation shares always allocation And the we also and you when in quarter thank did strategy, our and is purchases Lauren, I'll yes, about shared Yes, the priority you around

grow. we the see, independent the continue can of that to you we've with seen the segments. in We're and some growth really other As happy cases

real shares we is So there. to at repurchase, again in the invest we then And M&A, We're we QX. we'll looking and we bought them then the leverage. are about, going closely look purchasing and share QX, to talked started in And at to which continue thing also continue reducing also final M&A.

can that you buying then again, we're And in quarter. this see

methodology there. a out have We

we We working have it's a think framework out well. there, and really

October You mentioned it. is working what a we it why we framework in couple that did we with important think that's key and because we to designed share think is you exactly of points, how

Lauren Silberman

more your appetite for as food about you think And than relative to Okay. you just service can about talk C-store? acquisitions M&A,

George Holm

is food We for much near don't distributor. greater. traditional appetite service a ourselves see Our in future buying store convenience the

that's the from M&A service an is part more where course, focus today focus foodservice convenience, food our of standpoint. on of but and Our is

Lauren Silberman

Okay. one in you me, and break for final with just Can two just you Vistar what saw convenience. down this inflation in And those Great. segments quarter?

Patrick Hatcher

kind where convenience it's exactly mean, right a we've and the said, higher. they're been as one was Vistar. But in that I we've largely down running at I at little area, seeing. just than They've faster digits, exactly Yes. doing They're parity. mid-single-digit little mid-single of they're up a mean almost what point, caught in

Operator

next question our Inc. Long with And have Joshua we Stephens from

Joshua Long

coffee play little office out? dynamics breakfast helpful. you has your as continued talk more to or coffee that the were office bit And trend kind convenience has trend return the around segment how a if convenience to the of about performed could of and some Curious business. the the George, commentary and

George Holm

convenience. now actually returned good quicker the that's Yes, has it right growth we're than year. in over seeing And previous

and doing back doing very XXXX but wanting I close. think more Office a an levels, to are And We again, to just of of function for work coffee to free once people get back enticement. is not we're well. and the kind quite coffee that's pre-COVID people

Joshua Long

investments on capacity curious you And made. That's helpful. the

center in making then delivery. investments mile the you're out last Virginia that some called the on You distribution and also new

if and investments of forward from think that you last system, side? kind that's foodservice mile across about if like could roll you how maybe delivery. plan center bit on contextualize the a kind just but systems It investments allocation could to on curious how of curious that the think perspective Or additional going Just little commentary could we seems for the distribution out easier to give there. about capital a some maybe

Patrick Hatcher

saying our And where Josh, #X very project launched build to well. on right the system. Virginia the again, -- keep foodservice they segment, is got Richmond, a continue we that facility. the of that just the have just most are in open, it's the building we'll foodservice about really right out we're priority we that performed they to side, the well. And capacity gate capacity. and very and is into really, It's do focus there extremely When at going excited nice to on we

where mile like really behind made it. we've invest a there. distribution projects last the system. we're more while, the it's efficiency going of a think type lot really to business. -- the side, but to that, that's focusing we And They be bring a on right see growing lot X-day a to they the a of to thing lot to and country, I we've more doing the progress size then for going getting for on across we're been continue Obviously,

So that on as focus we'll well. to continue

Joshua Long

then And for That's follow-up me. helpful. one

out back go 'XX As your we from from fiscal comp us there curious, growth trends through an case how through perspective say, the how just year we on quarter. think that about easier curious quotas a a played But XQ restaurants, period, performed perhaps we of comparison there you quarter? perspective side? to, think as the prior trend was if can Just remind

Patrick Hatcher

the asking bit. growth? in is trends foodservice for just the a confirm, how to out cutting case just you So were Are about little for prior quarter

Joshua Long

that contextualize to forward. prior That's last so the XQ trying we In as to lap start right. quarter just 'XX year, going of

George Holm

last you quarter the now in and that year. later Are about talking we're

Joshua Long

correct. That's

George Holm

our to When it consistent me. really the holiday I look are Obviously, other strong. history, looks themselves at period fairly weeks than the holiday

quarter the As a I left. I sit is like look today, think going just to we the quarter here lot

Operator

And of our question William have America. Bank next from we Reuter with

William Reuter

additional I thinking facilities? How forward $XXX is you So in compare with about to And it automation that How last that. investments to in going does increased year? in compare how the automation, million? Vistar, to are CapEx is your were regard your mentioned year's about first talking going guess this you you

Patrick Hatcher

make definitely and lot Yes. I pickers They're just opportunities other looking different. multi-shuttle, doing of more that much automations talk across that expand pick-and-pack part you And job last that be look automation, but looking looking segments. efficient. And we of it's just can could We're automation put I'm more at actually but little are various automation to all There's our we simply buildings just three automation, efficient. a the into the forgot sorry, question. to to at When us at buildings for those. the continue that your more actually be Vistar, make facilities, a technology, but ways could Vistar, this to that at we're different for also we --

William Reuter

million? year's to how does expect you year be CapEx to $XXX do how -- It this last relative was

Patrick Hatcher

Yes. priority But automation. like is capacity. we can we don't the to invest for looking things in at that's number we I to said, that. And mean I provide what is, you #X are us on continue a as tell

continue make two can those accomplish that spend we'll to sure appropriately we to So behind . it goals.

William Reuter

I automation labor will of you different you number time in expect do the have be will a on you reduce the employees piece, when facilities? the there guess savings essentially that can that

Patrick Hatcher

for making more in the our savings It's really much the It's less sense in of automation sense of for efficient. savings pickers people. automation labor labor not definitely

the So that. would we about can just more increase think I the buildings. throughput in it like

George Holm

more the capability a big of handle automation. to part And SKUs. It's our

Operator

BTIG. question we next have our from Peter with And Saleh

Peter Saleh

of couple a Just questions.

are independents outsized categories seeing. Are gains or the gains share you the there some any specific regions on guys you're share there? that market First, seeing that with

George Holm

where games at look take guess course, outsized best I what share closely, spread gains where gains we you our And I not I they're pick the If at say gains. our we've not if mean, to share the of -- from lowest. but a gains equally, are is the had in our difference independent business. probably real is there's of foodservice huge to Northeast I a country, part had the some the would

Peter Saleh

FY to, Got I And of that of benefits guess, Or not that take it. And just you then do less think to in mentioned, productivity, what to 'XX? do Great. next pre-pandemic of mentioned. it's had acceptable more going labor levels that drive higher? it turnover, productivity just training? year tenure, labor 'XX Is that a is see more kind on benefit? better productivity type FY What on you back you think levels, George, the or I is to just you not back

George Holm

in And has fairly accuracy learning it a has down to it. productivity but improved job get turnover Well, our curve, that at real our as as totality. and learning people have while to we're of it's that curve, our climbing gone a easy learn, still climbed and good takes kind

the did reflection We there. labor nature even have struggling than the have market that to And are work. it's companies are that of doing of and and better 'XX, just companies a the much they in get we

Operator

from And our with next Jake Bartlett question comes Securities. True

Jake Bartlett

Great.

I'm may leverage? driven expect And margin that expansion But Sorry, you operating expansion, wondering is turn about margin any noise. in do if I'm all expense 'XX. you expected margin gross by that not Or sure any from contribution profits? really

George Holm

be have of need get. force, it's get making way expected, more and in gains to ratios to get we we're Remember, now investments do our any see people. think the big not are what sales we driven mix where But probably investment to productivity in wise right and Well, a better with as still we have we expense we into displeased we're by that we our deeper the for #X. year. kind in outsized expense expect We would ratios us

Jake Bartlett

Got last I a it. expense -- look just been makes -- quarters. I I sales think for at has sense. as about That up percentage the of operating four

of maybe the you in And so operating expense on as versus end the for just being confirm by Do year percentage think I want or 'XX? remainder expect the of operating sales the kind year of 'XX to a expense of of that. of leverage to kind flat

George Holm

to Well, year today a versus ago. there's mix that our expensive more so base we many than customer business moving we ago of year service pieces with had that. is a slightly what have a

into our where we're necessarily user So fulfillment certainly profit part the that possession one of when running then end billing the the of Then get we financial don't the business sales. and gross we're take is and it. just not we're the product, you of not the product,

spread to that's that case cost expenses don't artificially don't you because that you only the also have the ratios case full produces to the going high margins have of because give consumer. So deliver to extremely high billing you EBITDA to the It over. full of expense the case service those

Jake Bartlett

What of a adjustment adjustment of terms the negative positive quarter. year? makes for of adjustments first to is puts reserve That reserve what drove key modeling in remainder and the last kind but increase, sense. Got the LIFO takes are maybe quarter went the quarter. And kind this positive the from the in it. this the And adjustment question, of

Patrick Hatcher

leave really forward. the around We that on just that any just Yes. quarters. don't guidance -- It's going something It's there. I'll it fluctuates provide so

Operator

from our Fargo. Kelly Wells And next with have question we Edward

Edward Kelly

in neutral-ish. M&A you that. last it I XX And flow years, a about Just this ones normally there ] missed from the More guys. cash out [ Working perspective. it would working of quick you. larger think I it, -- you definitely capital $XXX don't year for few be think quarter. How this plays do year? going It's drag then I a talked couple maybe capital. was this for would than you million Do be to

there. Just any color

Patrick Hatcher

net mean working continue there. Ed, On to we capital, I Sure. improvements see

I year. continue think periodically in And improve So quarter time, throughout like did as investments will that's we that opportunistic. to the we we past do make mentioned, but inventory, time to from this

doing come occasionally. on a acquisition did and strategic it play So was we food we that into then we're what very with -- it's make M&A, had, And service. immaterial but convenience those an to do

results. about immaterial So we But to our feel good really financial overall it. it's

Operator

time remarks. And call session now I our Q&A for Marshall today. to for closing we allotted have would reached to turn Bill our like over back the

Bill Marshall

our you call Thank joining today. for

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

Operator

participation. today's conclude Thank does you This program. for you. Thank your

now disconnect. You may

Performance Food (PFGC) 8 Nov 232024 Q1 Earnings call transcript