PFGC - Earnings call 2 2024 | Performance Food Group Company

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Operator

Good day, and welcome to PFG's Fiscal Year Q2 2024 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.

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 second 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 in 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

strength Bill. thank on of focus I'm everyone, into results strong second close joining our our strong we accelerated you fiscal in year. end our calendar today, broad for and of quarter with second and you in morning, business to again, share announced Once momentum today. quarter start which the excited the call units a strong were our the Building high-margin X fiscal across to Thanks, at Good our year, XXXX saw we expectations came with results the high areas. months ago.

seen of of some leader Last the for variety in forward look performance your discuss exposure the Then performance and a away-from-home strategic review and our we products. taking focus to remainder food year. industry on have outlook will a being channels broad quarter, the we we with in questions. discussed to fiscal our morning, review will I This business trends financial and our market. the Patrick recent

our top economic position that and consistent across produces our during believe different in conditions. growth lines bottom resiliency We and market the provides

quarter our business segments example was this The performance. with an of second excellent contributing our to each of

segment. Let's our begin with Foodservice

pleased restaurants. independent case volumes are sales quarter with outstanding volume food performance continues chain growth both of and growth case despite to perform across The in modest We drove with period how another deflation. service the We'll favorable accelerating to about first due provide growing expectations more in detail the inflation year-over-year a accelerated finish strong fiscal case Independent calendar. in very moment. X.X% from second our and the quarter, quarter a

market long-term which share independent component force remains aspirations. of an our space, sales certainly head The important count have consistently the in grown within restaurant is our factor. an our We profit important growth increased

building this to area in business been performance, expect independent a maintaining key is individuals on of I In we provide is relationships. emphasis PSG and our our Their and cannot our for overstate by quarters the view, has synthesis the hard every decades. this momentum the continued driver work of of ahead. and and development supported the However, PFG performance to knowledge product day. quality contribute training, rigorous company's the they these our of

the prior discussed have by This in increasing nearly has year. we customers of active in the growth driver independent several account over new earnings continued the independent been As growth main the largely past case in X% with second the calls, channel. quarter fiscal

November penetration particularly within existing December. to we in and accounts, did see However, improved begin

year. January of in In have last seen customers fact, more than sales a increased to on basis since year-over-year existing we December

business are existing that our growth We become case more of a will optimistic with important customers our growing piece trends.

we positive quarters. that the business, we're next sequential optimistic the case highlighted growth of Last several chain performance and quarter, our over could see we

fiscal the The a sequentially small between see business with of are to growth accelerate customers our that was existing accounts. mostly contribution business in chain new by performance We growth continue our driven in positive improved quarter. to from second pleased case chain a

As of deflationary you first Sequentially, to we are results the pressure. second as moderated deflation quarter in business in compared fiscal quarters had aware, several have quarter excellent our despite expected. the Foodservice produced fiscal we several

the our the less offset than was quarter. gross we deflationary positive pressure, While resulting mix improvement the moderation case had slightly and in in performance anticipated, originally strong shift profit

slight we inflation back reach end fiscal continue half year. time of we we turned deflation our moderating to XXXX, attention expect the of by As the the turn to the very

it extremely engine proud are to growth the will profit our over our We how be of time. has believe for continue and performed business Foodservice

Turning in company top and results strong our growth were quarter. has to important for second fiscal is and the We Vistar. produced results. the line engine bottom very Vistar consistently pleased an with

successfully line discussed bottom higher the did were on typical the we last period. earnings call, second in due a to than As have overcome and holding hurdle comparison this results to quarter quarter's Vistar fiscal grow gains last They difficult able in year. inventory

of products. helped segment range office wide office quarter, diversity One a allowing coffee vending, to high Vistar produce once strength single-digit ability saw to and results the channels. important of This channels broad is in sales compete again Vistar a selling supply the and particularly of strong in sales the second growth. variety fiscal

line both One and performance improvement fill of was key inbound of rates, top drivers the of the outbound. the continued

gains rates have and remember, area recently. business, still may are see been to we you slower As in to in recover Foodservice this pleased Vistar our

open as consumers. will to continued this believe of business sales well of pipeline are about excited has lines a Vistar Vistar e-commerce enable increase offer we channel, growth their platform, strong further as directly existing new us to we future. in the potential to which new enhance has and business to customers

produce has results. convenience business a difficult our Finally, line bottom powered macroeconomic environment to through very strong

outperform in of continue landscape, convenience the important the On to outperformed areas largest score in in able business. Core-Mark the top service C our particular, has been to and win channels. the business and operations the new Core-Mark broader line, particularly food and most In snack

is competition. inflationary that line we as quite has pressure, While take the gas win both Core-Mark might not inside their believe growth shown to robust ability We as share convenience top and kept store the normalize market and like, growth to from to quarters. has allow historic in this past convenience time, space. line several revert over and expect to the we pump rates trends consumer unit top demand the Over

income are errors, timing shrink stable Meanwhile, workforce, fewer overtime levels lower decreased workers an from efficiencies which operating efficiencies by temporary outstanding as done to has expense, Core-Mark Core-Mark's low of half several worker long-term job and operating on higher the and capturing has full XXXX. workforce expense particularly record productivity. picking productivity. A approximately in including attributed of QX advantages, line,

despite result inventory experienced basis. efficiencies, This holding year-over-year EBITDA growth on a XX% a in gains the these As of quarter. performance convenience is the profit segment lower adjusted

strong Through segment's the Still, is XXXX, profit as level. convenience food momentum to normal business excellent additional underlying our both anticipate broadline to acquisition. well fiscal to the opportunities us capabilities ability management remainder capture enabled inventory of as and service deliver gains we Convenience Core-Mark's groups since cost of store a the to holding moderate due traditional has to items. expertise

Hispanic concepts, fried expanded our cuisine such to chicken various barbecue. branded additional incorporate including as have We types capabilities and

True-Q several sales Southern help performance Contigo, to in these have in business including ] brand them We of our in equity strong brands, expect pipeline used programs the Red that to Perfectly Chicken, additional years We barbecue. strong drive Fried and Seal our and a believe [ result ahead. Pizza

from and Patrick, XXXX then color provide I beyond. for grow profit to PFG's on for a leave with resulting second our the results value. our our turning away-from-home drivers sales to more us and future. Before or who will our position over expectations long and the believe and term, a you consistently guidance We key results food quarter specific the messages additional discuss performance that growing leader to enable few and will in market want shareholder as in

invest fiscal Our gains capacity and we employees new compete. customer-facing market has in profitable in produced share in highly commitment which channels the to

believe climate. to the that white our channel business Our space us from significant gives exposure access in opportunities macroeconomic broad external changes we insulates

future and for appreciate interest. over excited now what the turn will are We your it holds to Patrick. I

Patrick Hatcher

then guidance. We'll remainder our embedded outlook I'd fiscal start of the Q&A position be Thank the you, then portion financial for on I'll performance key capital XXXX commenting and like priorities. financial by some review PFG's our fiscal to and any everyone. and of in our drivers allocation XXXX reviewing questions good George, call. of take quarter for and during happy morning, morning second to discuss the the have this you

season, which the you saw We fiscal first how the second accelerated we delivered release were the growth. in our calendar building momentum As this during strong PFG the quarter. with results closed morning, selling from quarter, holiday during important year on pleased our particularly experienced press

billion, XXXX, a fiscal sales the generated total of net $XX.X X.X% In year-over-year. increase PFG second quarter of

the revenue we was very pleased out last Our with upper result. at and laid range of guidance end quarter, we the this are

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

in X.X% Our than case This case of area result highlighting prior momentum point in the business. percentage this by the increased full our was performance in a acceleration quarters. which more boosted two independent growth, quarter. solid an was restaurant the than fiscal higher

decline. quarter restaurants As the pleased to growing case to consecutive George investment gains after mentioned, to sales also quarters our that share attribute market report force. chain our resulting this of I'm we and several in in outstanding strength fiscal volume grew

of discussed earnings improved call, strength. combination new creating improvements our to key last towards had of and sequentially positive is It accounts in our rewarding this we growth, area our in a move performance As our wins. some as of back result a chain with see powerful independent business our business

chain as new expect growing add accounts strong to profitability continue We we restaurants. business, emphasizing partner and with our to to

increased mix profit to fiscal shift margin X.X% continues Total Positive second and gross PSG the billion. growth to profit expansion gross for PFG. $X.X drive in quarter

headwind. moderated the food in it deflation a While compared quarter second remains quarter, service modest first the in to

produce Our just that fiscal in deflation quarter this slowing I offset in once again moderating to deflationary the gross reflects at slightly performance quarter increased inflation Convenience the service our the solid due inflation backdrop. ability growth both profit despite and mentioned, food the company of to segments. rates the the second in year-over-year Total profit segment Vistar

in the the X.X points percentage moderated first to first fiscal sequentially cost Public quarter, fiscal the compared second quarter. in segment was in up to Foodservice X.X% second the the from X.X% X.X% in quarter. quarter Deflation company deflation fiscal inflation fiscal product

finished the though it inflation elevated inflation to lower As expected, slowly continued to quarter, Vistar with below trend compared X%. historic Vistar in quarter norms. the second remains just

X.X% convenience a in is fiscal The quarter. dynamic similar the segment inflation with experiencing second

our in we settling inflation mid-single-digit in Vistar convenience XXXX by service at of fiscal the These move and more are the Looking range. to to assumptions low with continue end deflation expect a toward fiscal to the inflation food ahead, normal guidance. year,

per case profit the year's $X.XX Gross in compared quarter to as prior the period. second was up

ability Our is this our to growth. increase factor profit line an important at rate gross bottom in

You mid-single-digit partially costs. Higher expense release, will offset mostly our an factor expense see our earnings insurance due in partly match the increase demand. in our by expense was pace fiscal This productivity. increase at larger personnel operating in increase our increase a second did higher a workforce quarter. These of were and to personnel increased is in to increases

delivery. We in warehouse to areas expect periods these opportunities steadily to efficient, improvements as particularly more in and become capture future the we continue of

In a quarter, $XXX $XX.X year-over-year. increased million. million, Adjusted income increase of EBITDA to nearly second XX% reported our net PFG XX%

earnings which increase in an we due result fiscal second a of rate was year-over-year. an share tax increase was state Diluted is the percentage adjusted effective adjusted per at provided increase quarter end Our the We and did in taxes X.X% guidance X.X%, very last share fiscal income. quarter. XX.X%, earnings second of as diluted quarter the nondeductible EBITDA a top of and of $X.XX, our $X.XX, expenses while per the to an see higher was in foreign

to our Turning guidance.

fiscal of our fiscal of to the year to of to a in in million. XXXX, the quarter to volume typically and quarter in EBITDA For third expect January be light third range million fiscal Keep $XXX in smallest quarter $XX the billion be net that the February. is in adjusted sales $XXX relatively mind and billion range we $XX.X industry to due

we have A fiscal couple quarter third outlook. on the assumptions our of to applied thoughts

the second to expected, the in quarter. as deflation segment First, fiscal Foodservice experience mild continued

anticipated. deflation this towards move pace quarter, bit flat may improvement the a third than although the expect to slower this continue be originally of we fiscal during We to

so weather while our impact second significant with had of mindful Second, our our However, not early result quarter Bad in weather slower to we month, an we closed fiscal start do the is are that January a year impact in January volume believe momentum, sales will out resulted than to small originally expected. we results. in and we Typically, calendar very to a full the third quarter the significant

reaffirming XXXX our year Despite these are fiscal full challenges, we guidance.

sales of billion our We $XX to adjusted to continue in to upper end range. billion expect to $XX the to billion EBITDA of the net range come previously billion and $X.X be announced $X.XX at

billion We are of currently end $XX the billion to range. sales at tracking the lower $XX

So strong fourth we fiscal quarter. do expect to a have

be reiterating XXXX. our EBITDA to be in also fiscal XXXX. $XX outlook projects billion billion the billion within billion is long-term are which comfortably $X.X $X.X to range net sales expected the in $XX fiscal We to the Adjusted to in range

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

balance our financial and including our generation to I'd flow with position, prepared allocation capital conclude today priorities. cash like sheet remarks our

the strong $XXX months X higher operating X cash Operating generated capital of to build increase was first fiscal million remains aspirations. million expenditures, the investing including improvement 'XX growth income. first million our cash an the of free to PFG flow. flow. generated capacity and Over about XXXX, XXXX, in fiscal Investing due in to over in months flow from projects After operating $XXX.X in months the of business priority, growth support fiscal first our $XXX.X X free million capital $XXX our cash PFG of top long-term additional the working

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

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

we million X.X cost for confident repurchases. $XX long-term PFG in fiscal the of are for a of shares through In share share an prospects and $XX.XX quarter, average million total second this our repurchased per reflect

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

is We PFG's acquisitions and throughout on of completing our integrating disciplined strategic fit. working identify are remaining to continuously team while proud The and track record interesting opportunities price history.

just X.X have quarter feel efforts a net We this closed Finally, balance the focused below maintaining sheet. our range. adjusted midpoint target. X.Xx We very healthy we our debt to the in EBITDA on to of comfortable

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

investing and To quarter. we long-term in to are Food XXXX well our summarize, second appreciate and happy your you And in in shareholders. calendar your be with PFG the a positioned Performance for We our macroeconomic your strong business take is finished with success achieve that, fiscal results despite changes the Thank We strong we'd environment. interest of time our today. questions. Group. to organization believe

Operator

And [Operator have our do with Truist Jake question Instructions] Bartlett from Securities. first we

Jake Bartlett

My fourth. EBITDA question guidance third the quarter of in was the on and the the and cadence the sales

of large that how You very an mentioned have to it mentioned going but weather, also small wasn't you January is. given impact

guidance the gives it, By end you fourth quarter, third. much the to X% in math, so accelerate up low X% about growth from, the in at question call the So it's X.X% in what is growth the sales fourth that my confidence will quarter? of

you So in acceleration? confidence level of what that gives

George Holm

a is momentum in our help. big business Well, independent

new that Core-Mark in, have of account business same in starts And from the national some our fourth the anywhere quarter area our and beginning May. We in of the starts coming business. in it

have we've We up is that new coming already we in. business know some and signed

the those get fourth So into give quarter. that are things us we confidence as the

Jake Bartlett

[indiscernible]... Okay.

Patrick Hatcher

add, is to going just gave clarity that sure we we're to the some of was trying on cadence QX. I guys QX really Jake, Sorry, you make to what do

Jake Bartlett

but much. the much it's quarter there to impacted whole? in January, But by as of done. is an quantify seen kind way third impact any weather, do think you just you Is can how it. much you've the was January by not of quarter How a Got

George Holm

slow was normal. which California just significant is glad February back it were back growth January a right We're was be belt quarter Well, to weather, mean got our a things was now, this case doing in bad we week past month. impact. the I to under normal. And our to really having once

to weeks, X that impact have below have got us. critical but an insight X a we've we quarter, but to difficult our March on make full that for have would up third on want we into is it so weeks January month a don't communicate does always us. what impact is So to QX EBITDA for

Operator

next our have Carden with do We from question UBS. Mark

Mark Carden

to wanted into I bit. dig Convenience a So

that mentioned down share Foodservice. that would the Foodservice been embedded were sales within include if I'm in Performance both business. Still you Convenience, have you're And overall You curious then... if are in cases your and there, taking Foodservice this Foodservice positive

George Holm

Yes, case been include X.X% if the a food increase, service. would it you have

Mark Carden

Great. Okay.

in you Are bit? prices of have as a behavior moderated change much Okay. a consumer gas seeing

George Holm

least very to still Monday deal one with from with morning moderation to account think recent because it's early back and seeing historically, is pretty that it's Where norm. is large that it's -- that too component Friday that. we're the we're traffic going impact is quite the soft. to not and see some softness positive the And that there. weather it tell at we've you look we've I had if had At to

some of going But the than working I X into X-day other see for because success. office all it's days. weaker that, think we aren't good people a a lot

mentioned contractual cycle, years I've times, But are maybe X those long And X convenience maybe programs, general. in which has are in and Foodservice, the it where there long a then typically in several arrangements branded fairly years. sales

mentioned type chicken, So they're and they're somebody out agreement. a else with ], those we're that [ the Where our had change where barbecue not programs in that X- Perfectly prepared quick I signage who to doing like doing maybe or X-year Southern True-Q remarks they programs. have turnkey or of that, getting are something with

we good be that up are those But what months how going is do many track programs actually with keep and new to it Sometimes feel we to a months, signed before up things we've of we of going. every difficult X XX up. there. sign significant Even month they're And month real those amount the just get January, we where was done, did customers.

the site business So this where of real Convenience and with the pleased our we're game. at, at Foodservice we're stage

Mark Carden

as And Great. potential about a bit the then strategic for a you Okay. talked follow-up, M&A. just

recently likely You Foodservice there. that be the mentioned would focus primary

optimistic Just highest would just within space? additions simply add did any deals. of you make anything bolt-ons, the or at if that you is seen less service, looking Or more category you've food it volume return? at that between recently or the have potential white And of preference order any you then do

George Holm

Yes. Well, the we're the always looking or a West us. actually. time capacity spent lot at white in space. whole It's West important on We've to of Coast

the look west had Mississippi, country. broad our and If smallest in line in broad-liner company a that's the really you our we actually of that's and one, only California, at Northern from standpoint,

and which we fairly is So got large players. we information, it's think share monthly of all our accurate the get

very West. East in low the shares the East. high in Our and the in better to very get continue And are

like there's We opposed that makes have. capacity capacity or be sense acquisitions acquisitions bolt-ons ones really we West, And lot where we of as at maybe us potential just won't feel something a look available. don't fold-ins, now. that not it's we're to need other the we and right for adding So in that

Operator

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

Edward Kelly

independent competitive about seem on independent maybe on is the start there's case the strategy focus from you there. I amount independent Can a driving what like growth. we saw standpoint could mean, you competitively? is It just of obviously, backdrop growth, nice the a intensifying of there bit is acceleration in clearly you're side? talk seeing Maybe does working a just case

forward, kind Is of XX% of right you be of growth. in think great. this we think time? business XXXX, a it thoughts talked That target time. about I that then X% couple target how about And for to for looking the about long do a you as was we a pace growth would for Just years? the there was think reasonable coming over

George Holm

the Yes, we'll start competitive with nature the business. of

competitive from time very that our been never being and always really people. wasn't as I more it than it's where seen far competitive don't think as normal, hear I've independent. I a

it's So right that ever as I would necessarily now, as say not a very it's so. just more business, competitive and but competitive

to I our with that far pace still of starting post an year growth, we customers, of now salespeople. salespeople. X% lap adding as excess that new We're right in got X% it on. As about something that And XX% in and last hang think we're to doing X% busy with to the we're hat is want doing COVID we increase

is probably growth these people as they're number come but and higher having more to far down experience better, gained we doing have a case to look So year-over-year, than that as going But off we people. from want that. at something we a X% where point not to ingrained salespeople. it's in have growth our back And to XX% we're that is in still

Edward Kelly

across you we've it, lot normalize. has of and industry And in think And have a demand let's call the the this business businesses. normalization Pricing upcoming you has underlying demand inflationary generally, pressures of of as these been an easing I coming destruction in by like the benefit follow-up, pricing convenience of inflation. do all seen is as that this mentioned just business, that caused notion the probably imagine elasticity that's a that to from,

obviously, growing very You've is where the a I growth, backdrop solid very up think been much. don't in putting industry

George Holm

previous of is we the that see confidence X/XX going mean a in that's in that the we gaining shares, and is as are. and but X/XX doing that are. And size a ours gives than, low to or that's better what us we job with I forward share it's and had share share. the increase that lot get, reports more say, degree in we guess, a year, as Well, we're previous better I the

As blame pricing not some was issues of and them, we're utilities pricing to I think people I up. going that I food goes, everything a with food, of overshot facing and just but degree, rents lot going inflation with going mean far as lot the don't a up, up.

What there's menu now people lot on not just backing but promotional we're seeing is of prices, a lot are of a off on. their activity that's going

a prices in that are January down did step I going last down where coming year things January, inflation and take we was anything a saw a of are increase, business to up from this and Vistar to not lot price ago, not down. this up their year going sign normal Another saw about our in than more January think to did they year start December our people and And people going and January. time prices, what calm we typically certainly Core-Mark a increase

I know. don't just don't people I just I prices. don't So see people reducing I menu mean, see that their --

more kind and hanging they're I heavier. where think on will be of it that at promoting now. like

Edward Kelly

on And off a of Any weather. you soft just you, improvement an there? color for additional mentioned George, quickly January

George Holm

of not. us It particularly QX, too. week, January first increase year as of far previous week it calendar for the the as end another hurt over was it, a the factor certainly the with was us really week QX. and helped us last there's and normal the at And percentage

factor another it. with So that's

very a volume low anyway. it's Now week

look and looks fine So that. you it when not over weeks, hard it's the numbers you when me. XX change at real you material. I weeks don't any But spread certainly that -- over in to see XX But look things, industry. don't like I it's when underneath really

I think there. out is the still demand

Operator

have next we And our BMO Kelly do question with Bania from Capital.

Kelly Bania

talked follow bit there I to just on if up Foodservice. through the include Foodservice product. I'm think growth go that's little that you a convenience. you about X% George, mostly assuming type wanted Just cases

George Holm

entirely is It Foodservice.

Kelly Bania

what where then bit a But for to turnkey of bit touched make and to and can cycle you little just that But you chain is talk elaborate of little the about okay. And about appetite independent Foodservice, a maybe appetite this stores also in business that the sort you wins just transition? convenience is can there talked that Entirely of new programs. kind on maybe on? the you softness, make conversion,

George Holm

Yes.

I have gross business going to I they Foodservice mean way do think high. to the of the is And appetite to that. certainly, to slide profit continue have those and best them And that something is that, tobacco side dollars I the to replace is think for their creates. how they're before. didn't the do isn't were give in to many products return that and take these it into to getting putting programs places watching space I'm that really service giving enjoying of them Where them Foodservice food that finding us in store that used place.

signage The Now involved equipment there. involved typically, there's there.

a does take good bit time. of So it

we'll some business months. has it's X have starting they that haven't. new instances, situation wait where a several things In the to the we As end. have to in some far and the contract supplier for goes, Often have that next notified as been current you

our that. do job that's So to not

within piece of in great growth business. any about our future confidence convenience have specifically talk don't we our we But So area.

Kelly Bania

on one on Maybe just another Okay. That's Vistar helpful. I'll here. tack

just think X%. I the under you said inflation was

So it into are the you you as growing that just looks think positive. Vistar for back just like just maybe maybe the And not? channels cases were case about or slightly on half? growth elaborate Can maybe

Patrick Hatcher

this Yes, I'll one. Patrick. take Kelly, that is

half really there. growing, growth off QX, relatively see content we're go expect vending quarter back they January coffee, forward. a in really of out a year, were Vistar, accelerating that But and inventory we then them, forward on We again, some as we was don't quarter But always channels where they strong the office office as have fact that that things the comping supply theater in they and given QX. had well soft saw going relatively lot them. some a gains nice we start at the channels just So of the for for looking the in not a

office their March later vending coming kind them, of with channels growth the the then so for out much season not into too. year, office tail most -- we pick new So theater a that's nice to up we show end balance year, and but as coffee, should well, the get coffee for vending into including and quite bit, positive releases should and of of expect do some of the some the

George Holm

And is that doing would I business Kelly, very our also then add, e-commerce well.

Operator

question comes from next with Slagle our Alex And Jefferies.

Alexander Slagle

this And case that on see there. chain green seeing the to some seem business. pick merging. mostly growth casual you signs in environment? the business, dining broader a does chain marketing strength you'd value is it and national customer wanted out the their function the you're about mix? this like and shoots there start optimism up, of of be touch Just to where in of Is there category voice talked flexing of may full-service Or some your there benefits the

George Holm

bottom, our bit Well, done off account say. while. quite mix we bouncing accounts seen well in a We've do the that national I little a the would have have of not for

growth have that path. are great We some on a

little which bit to So aggregate, We was nice coming a see. they come of really In had business new together. in. that mix did grow,

more actually have we of in starts We month, have starts that more May. next that and

growth, So and putting pretty case account we'll out all in the area. national good be restaurant it's

Alexander Slagle

for emerge customer as nice been it's a mean products And mix bigger just shifts while, behind But there some shift drivers future? or have you that positive you've business this of of are and that it. And if confidence have corners the about a talked the the that. internal external Got continuing a seen your I more might these most tailwind of and in positive and we across broadly, with types. in there been seeing the just follow-up, smaller curious drivers is and certain kind independent. where

George Holm

have Yes. excluding our always really mean, in story been XX we a to continue that for margin. very like than better our big I definitely really Foodservice business a is see as we And far continued different mix into Well, some business story confidence have independent We but think as for to of business I just strong what And national efficient goes, be and produce of mix And some grow have maybe profitable. going well, to and going Foodservice we be gross areas that's around us. good Convenience. E-commerce business, We've acquisitions that grown great point the us. our a the that's for I higher to account some the very when the But made certainly not business drives some great our and that's margins, the relationships. customers have. years.

Patrick Hatcher

Southern, programs add a And potential they brought us. the also call, huge have convenience George on into up for those this like because turnkey go

George Holm

typically for The They to And would you do. product. a brands a up us. sell we're business. restaurant. would developed. good what not growth to that. than we've consumption. call to has I it took through look engine some had a We we and mean, it do, strong much at lot got a It's that product a different some I tweaking And what longer to we've while. absolute We as pretty is hold of this had immediate work just And

Operator

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

Brian Harbour

or in Is impact one C-stores more don't quick if that three of feels maybe a first. weather more significant in I one January know Like the any anything? your Just segments?

George Holm

It much. was to this Foodservice, convenience probably start in not the was very close most that significant, so

Brian Harbour

in recent function Is just kind of rates forward. the kind that of segment with growth Or operating leverage and profit you else gross kind a Do will Okay. Understood. most in of was quarter, expenses what see segment, the your Foodservice lines? going of more similar. cycle? the two the those growth you think of of that can In growth kind sort I are in operating drive think in of you hiring that where

George Holm

a our operational affected Well, came job. And has the going through comeback productivity the back terrific we've there's one still good better. got from we be had see a to much that was probably was an done. did COVID Actually, the standpoint. Core-Mark but fastest that more there, most They

cycle time there we've salespeople, come going higher on big glad through was a people good it's to that So with carried good of for a have. then also capacity learning part a did that. you of open to We'll it. facilities, investments. is and going And It new we've that's of payroll expenses It's period along curve, The it. that time. a a were commission for definite when not period of of the investment, we hiring added

I the one address our slow which with higher. where an a would we've careful that. on We're And expense comes Pat also Certainly, to get then IT then heavily is from I very ERP, have be probably there. with should say And that always standpoint, we're would invested that. path the to insurance, path, because pretty areas disruption, and

Patrick Hatcher

I'll And on just Yes. in that. jump

definitely and high that some insurer. we've were I the insurance, to to But do comes we seen expansion So out are much nicely at grow too line. When not deductible faster to point mean, but we nice dropped it into talked, so to I margin it detail, have OpEx. want EBITDA higher some profit able specifically, gross as a we go

like limitations. so the they're expect this additional deductible And we than But was so that a like that And for lot and have of we industry, little driving. But severity that don't market insurers how a many of particular, a a we to a it can't manage in really some manage seeing there manage would with with those to GAAP, that and third-party this It forward. But industry obviously. lot according just bit was an we some the quarter. going It there's are we're expected. miles the with expect we everything that that we do catch-up, to higher And things dynamics incidents. we accrual. do the overall forward the we quarter, cover incidents some expense deductible we established has saw have been don't above and going what to has expense that

George Holm

would make for quarter previous that quarter was a inventory when within us. standpoint from look lot, a We year, holding reported, I the inventory quite the particularly And the you had that had, Yes. the the you headwinds insurance at we against that we When gains it statement we look Vistar. too. just at an were really up

pleased. be couldn't I So more

Operator

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

Joshua Long

sounds a hear maybe wallet kind like also little noted consumers, existing about some the you of opportunities reengagement the to new that? maybe penetration. a It had about on accounts bit share side. your to Encouraged drive Can talk of you more growth

George Holm

was XX per at account anybody actual are when And a that what of customer dark Well, look coming would adding cases and buying typically then finding maybe us. than think we're we're up. very of get business. detail it's XX restaurant, around are What that that they the ends other appears have for buying that normally And Fries interesting the and year our But else to all the when there level, we We something you run account spaces not we what the wasn't they that and to SKUs it's location to be SKUs not existing up. that does. rare. buying were very week And that I penetration I a add filling the don't goes up year these French to ability they're are is last that restaurant see a in amount now. numbers, SKUs month we buying the at end rare in certainly have the ago. but that buying more what is the SKUs, restaurants. showing reports don't But of within they be

just competition out units there there's it's I there's because more more think open. and

back So in. that will settle

where a back six to things, which level way they're that in as account than or days open. back anything. hours. of hours helping reduce go labor lot course, We're the customers going days around they're And days and reduce is is adding One at week and I our start their of sales other seeing a think, that their well, their that was the more, going to to of availability the seven

things another state. changed and during one pandemic to normal going many are Just back that gradually of this those

So case SKUs off, the or the the those to totally then up the to me that within industry better show spaces or account these that's fact penetration that tells general, in accounts going we're think still actual normalizes as I dollar adding are accounts. in

where see I So us. upside for that's some

Joshua Long

your but the you customers? able and line product just opportunities premium proposition add terms just the of partnership just Great. you also was product one-off quality, of I'm or if And down interesting then maybe should a convenience you the pretty on to thing then kind to kind in side. a we to options, overall elevate opportunity expect something other of being speak recently, dessert see or value that's announced that curious bring could similar that

George Holm

will the sure if making more But We're arrangement think area a -- I great that in area. products areas. using our an their we'll the did we high-quality more it brand we alongside can ours. specified their they're would so that be market of that, there's do we manufacturer. that that do just probably product that then convenience it's could be that if It of in

one-off, new certainly I strategy. is it's a but not probably think a not this

Joshua Long

opportunity to business just a That's market Got kind customer that markets of we've about towards kind on have drive you we talked in micro When had return And the something me. where about you've then in the one leadership kind calls. position provide a out consumer terms think last you segments as could micro an environment. building normalization in and if it. helpful. continued for of of there already moving think office and about growth is prior an update Curious of maybe that end to and and work we

Patrick Hatcher

this is The gets expensive. continue Yes, technology Josh, just Micro better and to markets less Patrick. grow.

in the different types of and the provide for frozen So to bring a sizes. much broader in the hot all then and checkout and different snacks just refrigerated all beverages can candy, opportunity you selection,

it. a attractive lot just So there's things to of

the put new either spaces But a to they because as And continue banks in we SKUs past. office operators that net grow what just they vending market. they that and continuing create micro add sell they've that to had really with, and categories either So to the have Vistar in the opportunity for old can just and into the works spaces, expand way, of that market. additional see replace mark-to-market positive it's all to a upon to or

George Holm

opposed that in play an us during had situation. in our a to that's then because employee where noncommercial and of the most COVID places the up cafeteria past, for as micro Foodservice. had type market the We've the from back And a they of really also great Yes. line open tray don't business down we as shut areas

Operator

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

Jeffrey Bernstein

Great. questions. Two

just Or any you XQ fiscal one, how accounts macro have accelerating maybe besides a you weather, months. strong into or you mentioned had -- think just you purely people within then fiscal First to about seeing you and by And hit I the change weeks obviously, recent know a early trying weather. I weather? mentioned XQ. macro. weather I Foodservice the think close holidays, in your to in and the the one are Foodservice And sales growth segment? macro and your I'm decipher slower some talked get sense know follow-up. it's I do between perhaps But slowing

George Holm

was that one only coming very Yes. the the weather Well, normal. week have and of we out

a end don't blip I see I so that is that And week know helped really by of now. it the as previous four in three But now, the January that that only mean, sign, end the the don't weeks I X-day weather-related. ship can a at of quarter. that's I versus QX, certainly, right So a happened from we of was week. look good were what helped say having we a a at but difference QX, at year, one in

Jeffrey Bernstein

just COVID. encouraging. a And come through like to that from fewer were into out. mentioned but filling was while, boxes boxes, emptying Great. George, after came it they then of not And COVID, were I necessarily was No, those another there you somebody that month, would maybe closed XX% I that a consensus like in restaurant think lot or that's terms of restaurants people month a maybe XX% feel one, sounded for

of seeing units. you think I But up. in number terms you end, the sounds the net in of seeing empty maybe that like it So now weren't those mentioned filling you're a boxes recovery

just you data. to hard good find know it's I'm So said wondering, I

is restaurant good Just for sense sure, everybody. recovery for prior again, But we peak than those for for the petty back of much us boxes in are terms harder back your trying filling where the So for count? it's to you. up get which to

George Holm

ago. tell. Yes, months that I see can restaurants I wouldn't probably X said many that's to travels, any longer. say empty I my even in don't that hard have

So up as restaurant our they're far filling ahead accounts. of look of at accounts, of I number accounts, we're number independent I as and far XXXX so think particularly

the for pretty health the that good hope in think I we again. of industry, think a I overbuilt spot. that don't we're But I get

Jeffrey Bernstein

Actually.

it's perhaps know think I are you mentioned similar. X% more of Just competitive sales independent peers some aggressively invest in lastly, segment, you the I year-on-year. up force, to your mentioned something you it's always It your and continue like doing sounds

challenge done you've after getting wondering are people, players aggressive whether sales similar I'm pursue So finding finding it incremental you because increased independent you're good any labor going to harder other perhaps. or or for now more turnover always what making that's anything

George Holm

continuing it is to of is don't Yes. would are and now than earlier, think is lot And there's and it's to than our the as has the guys, going And challenge room competitive think it in a And to a I type people I benefit guess. industry, our any market consolidate. a good the But I more other large business. been. players benefit. more I that of I say think of this mission for I lot -- said

Operator

Silberman next with our have Deutsche Bank. we And . question Lauren from

Lauren Silberman

A couple on guidance.

to at end billion think range. is I billion the said checking the fiscal of $XX the $XX year low you

else look entirely than back, driven is a expectations. you different would anything you expected little bit inflation than have by As this lower

Patrick Hatcher

convenience. expected and a and Patrick. It in direction It what quarters in gone about in Deflation wanted Foodservice moving we've It the in to. a Vistar bit inflationary, little has that do is have correct been it's speaking fact I when that, hasn't deflation our beliefs happen food just the also is sooner. mentioned to to just we as been little would slower, direction. due would inflation is due that this for to do on the my Lauren, to in would a comments, service several and we move to little

but dramatically, us effect then little change on doesn't impact a the we've well. already And it So bit touched there. January as it did

George Holm

price in from where And is that particularly we one run the cheese, that deflation size our for possible big by an in our market of price the as block category. we times we And way a our inflationary as which anticipating we've increases as area the standpoint us deflationary often, them. well possible anticipating agreement our times inventory over-index business is And a customers, inventory that cheese during greatly from many them on and over within and well goes and pizza. with the making deflation is to far as in sure done how standpoint

price. we with important losses But us. And inventory the up. the market we as once is where business way we taking those extremely have the have weeks few in put on run seen a cheese a the row And has continued gone had go [ down to block that ], on other finally our And the age that cheese in turn again, product has just way. the we we've been where to

that even going that's continues $XX $XX billion. part a that's to to if for I stabilizes. of billion a be us think But or this positive So

been of That's fine. it have in. with don't higher. dollar of a lot and is X%, just the we're that part goes but a another of cigarette to profit, be big down you that something think typically it's Which volume I rate come business at sales about in is

I about that's And contributes that So probably it. think it. to

Patrick Hatcher

so, think . I yes.

Lauren Silberman

normalized is Great. the like a and guide full you we guide, the of the in you third a are to January this impacts about fiscal of year just second cadence given installation, what and know guys is idiosyncratic third embedding return quarter, Super fiscal just to I -- helpful. talked reiterated quarter? half the of seasonality, versus more Clarifying some these extent function more

Patrick Hatcher

Yes.

a us I ability just give some we're it's trying give that cadence of you to to help that the lot cadence and that the think seeing. of to quarters understand

former it's So you what more latter. the much than described the

Lauren Silberman

be low end guide. 'XX little of in fiscal 'XX Could the help guide, Great. And last 'XX? then we just fiscal you bit come fiscal how should the fiscal frame just the a at on thinking one about 'XX

Patrick Hatcher

I reiterate coming comfortable Yes. we've we've feel in midpoint said mean continued of we guidance. that And right to really that the that guidance. in about I think

why really continue particular see we continue we guidance. that and positive things, think I So to to that's reiterate

Operator

Wolf And our CL next King. comes question Andrew with from

Andrew Paul Wolf

Maybe I with? of is service? bit independent with that's Just sales your elaborate is parts penetration a why you commentary like us what they wanted pricing customers help to the ask the -- could understand more that it that process on algorithms Are confidence Is little the get being improving. happening. maybe on there applied. differentiation

George Holm

don't we have pricing Well, algorithms.

have do We we And Therefore, train it. wouldn't the as the product to than people, with accounts. anything no knowledge it's have those with be them and that train to knowledge us to more our complicated Andy, they really best equipped and So possible that.

Andrew Paul Wolf

and basically persuasive combination? would kind showing you of So a that call it up selling

George Holm

Yes.

Andrew Paul Wolf

a the operating much better to expense better was business, they're distribution better on just better maybe of performance? kind The segments, folks? what full-time Foodservice more having back relative getting suffer that's overtime, store I and just convenience actually help sure whether to wasn't and up catching other to because sense lot so to is get the wanted really up question to trying or it two hiring I'm of Vistar time they're get I there's you're into detailing of really other if of had just results of and lagging longer. Or people terms and hire by to the -- hang they sort a a temps it to in is over temporary

George Holm

numbers think just operational they service to of than said, in. tell they're would we fast people and you, Certainly they just situation, it. real I to I real got productivity as levels They putting it they be got business from well what situation. the to for We've their really as improve. they're levels. And good for good it's they've certainly a back ever pre-COVID good think continue came out and need prepared been Well, pay and on paying an standpoint, them. right very were we're shape shows We've coming hit that. to focused came good and it, the a and fastest comes and back and in now I that in It's on. hardest. they great And getting

Patrick Hatcher

be just the to George industrial The specifically lot to times picking to or etches in trying but only oversimplify, type They have on convenience food to oversimplify but hire, worker the a is that service, add Again, not speaking to thing athletes. to very warehouse not I'll especially and the of of things, we as refers they're small side, tax. have physical.

So a it be to can fire demanding a less easier little therefore, be us. might for and, job

So them I to ability drive in OpEx think that's helped really that lower. their

Andrew Paul Wolf

a just Good. more having little customers what customers, service level? I going lower are rates, that stock, not patches it kind excess on a is more convenience expectations Yes. tolerant a was structural sort that? can to aggressive service of labor because How question. of by maybe about the little more ask their get of Or

Patrick Hatcher

don't say they convenience stock. would have any real mostly No. back customer, I the opposite like

shelves. and So if going service making to deliveries great have we're providing they're levels, empty not

really be have service good And to at that level. so no, they

George Holm

the reason, rates. and pre-COVID people And suppliers have we for Vistar to some back able seeing to on the And improvement get levels get service Foodservice, back seen pre-COVID. are and levels convenience the we've not whatever to their in service fill inbound been and just

Operator

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

Peter Saleh

Great.

the maybe second on come So around by and you trend fiscal And been a I to more and part lunch What comment now? adding are us kind this this just this of dynamic? can comment Is in are for days. And Or you several cuisines of recent quarter? operators quarters labor more there kind and of the maybe on of returns the day given back you're are operating outperforming dinner? to normal. seeing specific mixes? want going hours that help that days some to has as seeing

George Holm

that's it what I as I as trend, think, again of expanding hours people a labor Well, that's I'm market I've days, And as But function gotten helping adding us. and think seeing it's, market. different just more back. far a they've seen how by

of As far think been made no can what it's has delivery as all, they're pizza tell and delivery But much certainly you and Asian on doing, good third-party that. expert see, And for lot food. first how more I I of restaurants. than I is cuisines a

it isn't doing have it high was was Now and when lean as COVID, but it's than higher pre-COVID. that as we SKUs look that towards certainly at takeout the delivery, we it

So do I benefited. somewhat. benefited me their in delivery so that change cuisines big that I'm in eat. conducive take to itself a have not and restaurants and did change people tells out that take see for general people in And probably that is delivery that behavior out sure what product is

that, out. in there And fatigue was resulted some pizza then softness. I seems would to kind the areas they pizza, overshot and of And some think that in also cycle around say that that where also I of back too. some has on pricing

office, habitual. and working comeback. And that nice back ones have we of and breakfast strong. a very at a going come breakfast to it's the I people working they're has that function is -- really a breakfast supply in think that's a Now least very back the made And it's

Peter Saleh

That was very helpful.

to the Was on soft. kind are Monday is of to breakfast, more now that is you as calendar happening? office and Just comments 'XX It expecting -- was return Monday Friday, improve that I your traffic. you think Friday morning on mentioned I also believe and something still in with

George Holm

morning. [indiscernible] Yes,

Operator

Instructions] John Securities. Heinbockel [Operator from comes Guggenheim with our question next

John Heinbockel

the impact I on impact right, maybe I in Patrick, business, what an the you near-term on on for strategically, P&L, wanted is Vistar, that that can the know Vistar So needle referenced Green right? right? guys, of which Maybe I impact Rabbits think particular Rabbit. that was with in And a business? acquisition, SG&A, do? particularly in Green The to George, the release, start weight? And does for fulfillment that move then And

Patrick Hatcher

acquisition that's the highlight of OpEx. figured Thanks, you that it's those a we've gross them. showing And obvious to year. or of really just year the muted just out this in I profit start prior up Yes. John. not inventory thing then the looks the the maybe because in gains in and There's quarter, is added the couple obviously, on mean, going things that versus

So profit it's if year the growing still you OpEx, were last able to double acquisition, about strip out those to Vistar. gross gross -- the gains inventory the and from

Vistar So we're really is comfortable with how performing.

at comp You're acquisitions just I'll getting a it from lot George. of to that turn and noise you P&L, getting that inventory the over have gains. added into year-over-year

George Holm

idea And strategic at the area out for a our a standpoint, I at a is bring years. something business, facilities and this From to doing Vistar mean, and didn't that had it the while. ran to where enough product we've business [indiscernible] the something necessarily the for volume quite benefit was We truckloads. go been few of to Vistar e-commerce of in several Yes. the of whole we were we need Vistar his semi-automated

one then we did two and like So did the and semi-automated million we facilities pops. $XX more the of

expensive to do. very they're So

actually do the distribution long also They smaller well, which the to like Two have but refrigerated are an them talked in standpoint. for quite of e-commerce than don't One does people centers do. we Green as large, is one we three a ours. time. we So larger frozen, and Rabbit

have frozen and product. right do Now for refrigerated the chocolate, temperatures to but we not

the getting is the that people takes they to the to us, two in do business all that for product expertise those exceptional. from. gives six other that that areas. it And products, hit suppliers us us which And So run ability buy with the we're the we

standpoint. it's a we centers from And So strategic gotten three really EBITDA to than big a important. they center. Vistar from one a regular profitable those More were us, an margin and had distribution it's actually standpoint, where for

all take that possession is that, before, mentioned products. of of of part Now I've the don't we too, physical as

are same. cost some it, the in We the So have of margin the sales and the don't of goods.

our But Vistar. is within helps. a of obviously it's that So part this big -- future

John Heinbockel

single-digit argue, Great. Do to little right, been I that? This we is still we independent Foodservice, still you get of chain 'XX on this And haven't fiscal case then right, early growth, sales maybe and the inflation, if growth because there And a business high Do agree little think? a right? force Would a think EBITDA you follow-up, you're the because back with with quick you think X% of no, business you'd is -- -- just growing X% part or business. investment. there growth. in a that

George Holm

are strictly distribution distribution eight restaurant chain have centers, we which centers. Well,

what and volume and not acquisitions going $XXX business, over kind to make where we We business, are. going we are good kind they're broadline where business. blend profit which those know have know full We sometimes profitability. a have to the So the have we cases, high you're We put XXs, very with make margins. of out of EBITDA XXs, levels we company, large are a comes we of not, cheese chain those of not margins,

to done. biggest our going were up And invest think But lower back to kind Foodservice to I a particularly to independent that sure we're And thing that like us that getting more EBITDA were we margins have broadline got that growth lately. for not we it's facility. to our getting business as continue get business, to to make to pre-COVID. us, going have we're continue we we sales And the far within follow I just to see and return it like as the we against more going profitable. is with And that invested, where of we degree a was and invest on going where felt

Operator

will we over That for questions back queue. have it today, Bill session Marshall our And to no for further turn comments. conclude on the will and Q&A closing I

Bill Marshall

you for our today. Thank call joining

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

Operator

your for you. Thank Thank does today's teleconference. you conclude participation. That

You disconnect. may now

Performance Food (PFGC) 7 Feb 242024 Q2 Earnings call transcript