PFGC - Earnings call transcript Q3 2024 | Performance Food Group Company

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Operator

Good day, and welcome to PFG's Fiscal Year Q3 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, 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 third 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 the and and This everyone, current the color environment joining the third share plans to our quarter, for and quarter results fiscal our on you morning, I'd like today. provide morning, business call fiscal some our fourth discuss for Thanks, Good beyond. from

know, a pressure. you challenging choppy calendar and a the signs January, As consumer of year inflationary in differences weather with began early environment, calendar

positive results in headwinds. performance. producing proud organization nicely were growth independent March, and these our and to am despite of improved stable achieve I particular, we business and Nonetheless, our how In February rebounded Foodservice chain case able

and bottom-line focused has trends, line control, top helping on the difficult it performance. experience to continued expense segment winning business new operating convenience remained tight Our though

third C-store the sequential after a by quarter quarters. month-to-month also fiscal very top line improvement a experienced encouraged in growth are prior strong trends the during in in more challenging quarter. Vistar We

we profitable about feel growth. to continue good will produce the very long-term we which in believe are how positioned We market,

more and quarter which the our fiscal will reflected optimistic in Patrick are momentum shortly. fourth guidance. is in XXXX, into We about detail guidance fiscal our discuss

Before our reasons I our provide turning on color outline optimism. and results, discuss to for will Patrick, our strategy

Let's segment Starting were our in quarter recent sales factors most up highlights Foodservice, the results. volume with impacting period. various with of some the net fiscal growth review X% quarter case the similar in the from third and

March, if into quarter, it a and very we went months February the fiscal the picture. continued decline. with we strong in January, However, different case We through has the walk QX. low a positive of which X quarter single-digit started In a had shows

case months in including Importantly, in grew X March. independent volume all of and growth February quarter, nearly the both X%

industry middle total February in of Independent growth the the through quarter. the week This market producing from the gains. share single-digit growth steady was case outpaced second the for each consistently of end week range

In in second restaurant for share fact, quarter. both we quarter. than share data the did the quarter shows business our performance fiscal accounts Gaining nice across independent across third in the and market Foodservice our fiscal chain warm

it's I'd like so that to important. because repeat

third the despite quarter the the facing headwinds sales is to the testament and our business a than industry. to for more in business ability new gained quarter. Foodservice compete share win restaurant second Our market This organization's

in to We're and that half in occurred both March. experienced calendar commodity business pleased a modest sequential despite deflationary which improvement improvement first Foodservice well. in continued in fiscal though This Our we XXXX. see February are headwind inflation to important the as deflation early of the persistent into seeing flip cheese year, this

the fiscal fourth the low sequential inflation move Given in expect commodities, most single-digit Foodservice we steady continue to quarter. in

the EBITDA gross benefit to provide margins in a to this period. We both the adjusted and expect

business. Convenience our to Turning

snack relative candy prices remains difficult, historic remain this at channel sales soft top opening to same-store Convenience As relief which the prices, the call, industry trends higher C-store. line Despite in in to tobacco mentioned we and gas on trends. the some of I attribute

key On Foodservice, including and improvement. side, the the business snacks and reflecting candy positive our new share wins top in total continued market to results categories, line outpace industry

and We are continue improve with new expanding services current Convenience performance successful us consistently coupled of to adding Foodservice This the our growth, top programs line gives forward. moving new within account to accounts customers. launch that several will confidence

our gain recent a We Convenience customers. pizza our to in grow progress GPN, Convenience. launching demonstrated is Foodservice our with efforts continue nationwide collaboration concept PFG-branded concepts traction to and and This to with selling Foodservice by

the has continued PFG focus value challenging well, management our labor activities the a good extremely tight with execute top These and produced in both on the line has drive strength warehouse, operating result, reducing to customers Despite serve. we coupled organization leverage. for Convenience diligent

fiscal we ahead Looking quarter, control. to sales the sequential expense improvement in operating and fourth expect continued

travel Total hospitality and was volume theater in in the declines offset Vistar. in in to supply. net growth Turning as Segment fiscal and were case channels sales essentially X.X% third flat the office quarter. vending, increased by the quarter

continued of to expected, was rate was fiscal in quarter. rate declines first the third from quarter deceleration the of inflation up at similar quarter. X.X% decelerate, As of second to the fiscal the Vistar the fiscal The rate

at this that goods calls, steady high year-over-year exposure in starts going prior XXXX fiscal in inflation have inflation single-digit consumer as support expect range we range. we products, closed low This forward. to rate in consistent As a discussed we to hold and on settle packaged

growth opportunities. value profit result and of ahead quarter, due expanding and improving in vending Vistar new business anticipate As the we we sales the This fourth to volume, fill the direct and rates channel. a in look better to performance is at fiscal channel better

who I color Patrick, some our weather third fiscal provide differences. a the quarter for of on XXXX and results will January's and guidance our and and calendar organization, fiscal specific drivers performance review to thoughts on certainly conditions quarter to then discuss and fiscal challenging our The more with due was want third future. few turning our and summarize Before for our to beyond. industry primarily inclement

are encouraged trends. recent by we more However,

line to in will for tailwind A the top we our in which stationary new months and of performance ahead. to Additionally, have business a segments, future. also well we of more environment bodes provide line operating each sight wins X stable expect the

In low rates provides business, single-digit inflation, a this Foodservice gross normal our more towards of which to means improving visibility return margins.

For Vistar, the should Convenience and lower absolute of ease on pressure inflation levels consumer. end

in a range space. the Over as significant a position term, with growing long diversification white markets PFG's across away-from-home market profitable food in provides leader channels of and the

our appreciate long-term Performance your believe Food result Group. will in are our returns. and in initiatives us associates enable positive PFG's shareholder interest growth. We which confident We profitable achieve we that core to investment will in

it our will who With financial turn Patrick, and more that, outlook. provide I to will over detail performance on Patrick?

Patrick Hatcher

you, and morning, everyone. Thank good George,

in to headwinds George of there As certainly fiscal third mentioned, XXXX. are quarter overcome

fiscal and strong during fourth take and then you in footing into quarter spend from financial our on position, most provide and I any for ahead time portion most be our build to a the guidance. quarter produced This However, call. our will position our a and market recent solid financial have months questions to priorities from of the review the the Q&A We'll happy some few my fiscal expect discussing of additional detail morning, result profit we XXXX. that highlights

driving morning, also the the of was fiscal our cost profitable in into on possible initiatives. disciplined our profit invest to third As a during channels future solid this because delivered results press behind control you quarter. focus company's sales and and focus release flow while This saw on most PFG growth cash continue

case January a started last quarter, fiscal quarter calendar we we This difficult for decline business month. the third throughout facing a total the As slight in due of in year XXXX. our bad weather mentioned to the resulted

improved to the year-over-year. which on us March, net PFG X.X% of February to quarter total or sales a footing. in $XX.X solid generated billion finish about allowed increase Trends

both including organic For growth case the February growth X% X.X%, was full and third restaurant quarter, nearly March. in independent

share independent of We favorable restaurant channel gain business. important of geographies our area in continue across the broad range highlighting our and a in this market concepts position to

flat, gross X-month into tough a new benefited recently were pleased impact which the chain We restaurant fiscal with, positive period, January. the billion. of chain Total the cases the we business accelerate fourth from period. fiscal were growth PFG in X.X% help in our increased Over quarter full given quarter again, very in should essentially business, which Once shift $X.X the and mix to profit third fiscal XXXX. onboarded

conditions our the commodities segment inflation Foodservice quarter I The of several which confidence Importantly, upon improving when review will forward, in pressure. deflationary guidance. I going in in experienced after inflation consecutive our resumption profit gives us quarters X touch key of

Convenience both company offset line Vistar in total to the X.X% year-over-year. higher with a by compared third the was quarter inflation model. in slightly Inflation up second was was Foodservice which quarter, inflation our fiscal decelerating fiscal in Higher basis, On in consolidated and

inflation slightly just inflation in more Vistar results X% for range, squarely experience, was while the Convenience I it's the on slightly Convenience As a consistent our fiscal increases price impact in space. touch inflation to for upon mid-single-digit below to mentioned, and tobacco due inflation elevated will tobacco on remain in our third Based uncommon George to its quarter. not moment. the moderated

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

in XXXX, fiscal support expect reported net important targeted midpoint year-over-year. of last income just and This from our X.X% in our line $XXX component profit Adjusted help the an to benefit guidance Foodservice. we of gross above In the million announced our million, our and through XX.X% PFG bottom increased third down the technology. approximately to quarter We is $XX.X workforce to per investments case EBITDA quarter. inflation of results growth

the per of earnings while was decline $X.XX, diluted $X.XX, XX.X% earnings share a year-over-year. was X.X% a Diluted third share decrease fiscal adjusted per in quarter

the percentage period, of in foreign income, increase the an expenses rate income. slightly effective taxes as percent taxes tax in as nondeductible due state fiscal of of year's in and mainly was rate a quarter to last XX.X% by comparable offset Our compared a third to XX.X% down lower

operational financial capital are management. diligent generating combination remains Our cash and position a strong, through of performance flow significant very working we

$XXX.X first million year, cash from XXXX, fiscal Free nearly months of million X X first of flow of to cash to $XXX the the X million, months last up Over last increased the compared $XXX months fiscal flow the increase million first generated a year. year. over PFG operating $XXX.X of

our and capacity We growth. support expect expenditures expand and our to capital activities cash our flow to deploy including value-creating

and X believe our view. million capital towards priorities evaluate months Over M&A, capital we deploy leverage deployment reduction and each first and upon $XXX.X our this value expenditures, create for the these of strategically unchanged in would include XXXX, We are PFG based capital fiscal CapEx. the After shareholders repurchases. remaining decisions share for invested

value program historic relative share as levels. our including stock compared Our valuation the of as to into repurchase consideration, well takes several factors the

we quarter, that important authorization, which third While in our of million is plan. we believe March any not as capital did fiscal allocation $XXX our of repurchase shares the remaining had about repurchase an component

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

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

rate to a very contracts. total, fund continue facility priorities debt of current focus closed to fixed operations million of while swap capital month, below this of including that our utilizing outstanding sheet. fiscal outstanding advantage debt of our provides fiscal net third ABL for the X.Xx ongoing In just efficiencies. rate highlighted. the range. we of allocation relative XXXX, called XX% we at I maintaining quarter flexibility feel that our close interest our midpoint take level I debt room this to rate to our Finally, notes adjusted ample $XXX on to believe XXXX quarter was of We third balance comfortable our healthy total in X.X Earlier We of target. EBITDA the the a leaving at

factors up I'll impacting guidance update our with outlook. an on some and finish our

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

the is $XX billion to we sales a largely to year quarter. guidance billion sales our billion. result the fourth the our third This of softness line range line, top in provided billion top reflects $XX below last $XX.X the $XX.X net suggests quarter had for quarter experienced fiscal On and full

billion to of we despite top to EBITDA line range. the to compared year of end raising range $X.XX tightening adjusted billion billion full However, $X.XX guidance the bottom $X.X the challenges, and prior billion a our $X.X to are

As strong the growth you fourth profit expect fiscal can see, quarter. we in acceleration

sight in to line are We confident items. projections our key due the on of several

the drive should segments, First, in sales are mentioned coming new line as in we case which earlier, months. business profitable all onboarding top X

Second, the to resumption of case. in compared of is per Foodservice expected gross higher deflation to result the first inflation in low profit single-digit year the in half

were heavily that business shift. benefit due as markup. is in mix reminder, deflationary based felt next should mix pricing case percent our as several year-over-year and restaurant stronger structure in a a a over to pressures the our As performance more independent on a help Positive both which inflation gains from product largely business, well quarters with profit

Finally, to inventory we holding several expect segments. products, on their of in quarter fourth which tobacco suppliers have Convenience favorable the increases announced gains result in fiscal our price

rate fiscal Taken tailwind fiscal should XXXX. coming will our together, growth also believe accelerate the nicely into quarter months. we over This a fourth profit provide

With just over X adjusted update strong on that June that $X.X EBITDA result earnings put targets reviewing our currently in August a us the EBITDA with mentioned, cadence. our years the our past at said, our I line are We as fiscal the XXXX normal billion expect call tailwinds billion we provide should Day. adjusted to range and X-year our comfortably XXXX coupled within Investor to with target set $X.X an

previously challenges expect adjusted and temporary. billion fiscal growth prove XXXX company are seen how level $X.X XXXX. EBITDA believe we've industry fiscal as the summarize, will close be operating a solid fiscal with the in third and noted, we to in that To our is quarter pleased As are to to we the expectation be in

you And to items for underpinned We are questions. today. happy forecast accelerate we'd quarter We in Group. our fiscal Food Thank interest fourth that, Performance in be by to your time expect model. with results specific your into your and fiscal in the appreciate XXXX that take

Operator

UBS. [Operator take with Instructions] first our We from Carden will question Mark

Mark Carden

Do better growth noted improvement XQ. your driving in as what weathered share jump relative And bit what, start, accelerated industry the some there? you a relative headwinds out performance relative sounds to the a macro guys that important mind, initiatives to in your To in stronger any the whole. you of like most it of just at driving market terms was you

George Holm

the XX% doing growth. stack would Well, existing it aren't It's out seen also there. be difficult in I have too, accounts as, our just with the have if would I doing been took We business aggregate, on quarter it definitely still note, penetration the independent, that would guess, were new before. a X-year market that accounts. you they a

and year and our this So we were year -- it's definitely then But or this north new of last XX that's years year. X.X% ago business driving growth.

Mark Carden

overall, distributor given Okay. seen in Great. That's helpful. much shift And are been then -- broader a competition just have you industry out? the the some calling have that in price just of of challenges

George Holm

change. that come There's of And that's But I it. think I little haven't industry competitive. always that to lot bit when much that Well, think seen by, I of a more is been we our a very market competitive. players a in hard to think you really growth get tend has a

Operator

from Jake question with our Bartlett We'll next take Truist Securities.

Jake Bartlett

quarter environment And the guidance there. January. you on third weather the for Mine in the after gave is out

of that incorporated. kind presumably, So was

So due the was you to miss seems more an like environment, the improvement about since. talked sales

the get whether So your better? not new a driving any just improvement? -- I'm wondering trends? and competitive that to and has or business? accelerating pipeline gotten of Trying the as consumer to Is your consumer that your any trajectory whether now your actions the driving Or environment and customers the is that customer are it competitive, sense right

George Holm

casual mean I soft be the restaurant a looked difficult. QSR but say dining. there base, business, there's part many fairly but both, is was but almost okay, independent and the I dining great, our in we're before. Well, a okay. say very [ tour finding them ] has our large really at definitely the softened. story. I would entirely softness -- of than of casual definitely more wouldn't to there were winners doing It's if is for say, are I quarter you January would it's January customer

and environment that I at some bad X%, really run growth new don't to income we've sold. ability are level. lower So there. I in a out accounts stressed But continue it's think to that that consumers new just our in got see probably the customers X% the

Jake Bartlett

my And margins. Great. second is it. Got question on

You Patrick, the question the quarter? productivity I the you on solid the in bit operating beat it as how on you I you what and the trajectory costs, down -- as there that? the gross stronger third in kind that leverage -- just what progress productivity listed, profits driver third bringing it improving think one making wasn't The quarter, And I'm a being than was X drivers of is quarter. your costs. helped the fourth them. in was margins expected? Or a little Was improving inflation is, improvements wondering of of you're and there what about your a little think for

George Holm

Yes. Well, and a profit continue margin, we as mix gross per grow than as case, business. to that's a rate chain of we independent as the do faster far at function particularly

As operational assume delivery and would productivity. productivity far productivity as you're I warehouse speaking or goes,

improve. continue that our XXXX like Convenience And than We improvement a doing they're well We're business to from really when XXXX to actually do better you we're back and the but not to -- both business, productivity customized we our standpoint seeing. then get levels, numbers. doing

Patrick Hatcher

performance, that the drive But Jake, call it's things I they've and didn't to mean, do a improve. out businesses efficiencies Convenience all we been in and of results. was QX are operational expect to as we mentioned certainly our that going comments, that going And specifically I to performing to his in good just George to point one continue add. as the

Operator

Fargo. from our We'll Wells next with Edward question take Kelly

Edward Kelly

more detail just to I of bit I guess maybe level with and And confidence. start a QX. wanted

hold? midpoint. were need more magnitude, you guidance, a XX% the order of do about you trends Can that bridge, of about to sort factors, X of do within few mean, speak just tobacco And curious thinking you're And takes quarters relates mean, well know I expecting year other if and when in Patrick, this for don't I up about doesn't is any you there or 'XX the I'm to at you instance. regard? with number, as puts little talk in in this, first consider. Or the about EBITDA to they are really how gain, all particularly any So I the gave the this you then listed like bit 'XX, if size the improvement of April those it are

Patrick Hatcher

the Thanks, on I'll the point I start, mean in Ed. that's to there. will Yes. sure and like for range call, comments. the on 'XX, going start is end end add right. mean, bottom we're I'm George let's is we're We've just last of close mentioned your X-year some on top I saying exactly guide. 'XX the to EBITDA, the to of be range which really guidance our the

within So X-year that puts us comfortable that guide.

do we year ending what then that about and this feel next So means we're year. for really where good

segment, lot -- in across new the on And all fact them just I our in detail order hit of August it's but really business I terms in order numbers, of business magnitude, put a it X it's in call. We've last of would of put and Foodservice going that to that in weeks. we how with a to like more I terms onboarded these mean start segments. then terms of And have new coming of necessarily again, in the I already of and you we're we'll lot couple wouldn't of yes, much P&L. the I give wanted one say unpack things I not the

business, new May. We coming expect And in then on later June. a Vistar in little has Convenience business onboard to the

really the obviously, our deflation. important, sales previously development then been that So the efforts with quarters fact segments. all we've at across And X pleased really it's looking of

per about the but move and we we going that it's GP to the happen case. of well. our The rest in in continued the in we mix inflation, believe the of our for And And that third very as which then I is think line cigarette business improvement to then also with way improving in moderate helped that, largely to in quarter, saw that's the continue what as we've really And inflation, noted, last just year. quarter, saw price we've finally, see modest really increases. Foodservice that to deflation what's

So that bottom called it our -- because inventory out but help we get line those just as gains. will we

George Holm

long-winded overcame a Yes. I'll fourth we were We year. that And mentioned few last as he add to into anymore. gains we too inventory overcome year above have to here, get $XX this getting don't of that without about quarter, inventory gains. million the but that

we day, then meant you for So the us. we say get quarter calendar calendar we would we which deal quarter. Easter, in line, week I end of the for any opposite rest a lot yet after at to QX, where of that's also additional the QX, the when calendar started affected which out it fiscal the April, of benefit slowest way. positive the year. with and a our And to a the second with top got bottom have and January typically And good issues with still delivery is don't week had

So that's very helpful.

close has, Then were Patrick business mentioned, salespeople. last to running help. year, we additional new XX% The big

as expense were go to the the and up get the X.X% new about pretty good we good for out And salespeople year. have we handled through most that there. a that carrying additional we've that. of we're quarter So right fourth sales we of We're And expense ones. productivity lapped the won't starting now

stress I'll also additional help. bringing business Core-Mark, will big And a be on with they're the

then on that's gives into good some total our will confidence really around and first the for communication in direction we call will year us and have what for of guidance fourth right are what us quarter next year. be our year, the things quarter lot positive August So a and which of that going for next a now, give

Edward Kelly

in I follow-up. guess, to good cash Leverage you're really spot. this, is Maybe flow. but good It's I a ask just quick generating sort of related a could

and Your earnings what like EBITDA stock to year. probably Xx at trading going you're is end next probably up

may you higher how usually a are thinking buyback at up think appetite stock point? you right? for about bit this M&A I versus Like M&A end than that,

Patrick Hatcher

repurchase to X repurchase, perform view the continue well M&A, continue Yes, opportunities. didn't at and we this the always anything lot that is buy in job, the program in good about we've we've we there. And then strategy, done capacity, to we've we us. capital said, priorities to but in new I and $XXX laid the look And our talked other mentioned, a of just buildings as all out. Ed. or really have invest to allocation #X and pieces we'll When as additional building one to go other coming have but see investments and expansions in obviously you these we online, and use done them, is still our can with And are available there. just of to important, terms continue reduce conjunction what And we I'm going quarter, of leverage I share through we've we a incredibly million and

So them at and we just strategically deploy capital accordingly. very that look

Operator

Slagle Jefferies. We'll next from take Alex question our with

Alexander Slagle

and little kind firmed pricing I the kept like restaurants on March back just color you was drivers question Thanks I that across of Jake's businesses. a the little the the seemed this the for biggest mean quarter bit, back overall your headwind And revenue during and up. February a it just to line? what's experienced solidly independents like bounced morning. want the top circle different that on in and

perhaps of surprised cases about was to be and more I guess more what sluggish that in could pricing out but and appeared Convenience a it bit Vistar you a expected, recovery So you? you as the and flesh

George Holm

we wasn't We March. did weren't was and to Foodservice we improve say we improvement how standpoint. February that I in with and real and just a in we're getting much that to March. January Foodservice past it continue exactly pleased from in going think Yes. so would the had It February

for an think I lasted Vistar micro think the think and and to vending adjustment Convenience And go machine been was base Convenience, when to a they with pretty to I there's increases. go that longer or of level price market into there's I inflation their some dealt they need customer in significant they store, go higher adjust. a or and a

think we something at before. and And for that, Convenience. experienced seeing I the same-store time. it's a that or channel I X.X% not as number. for are declines And will look were has at It's huge. just we sales We they adjust it's think what penetration quarter

Our Foodservice Vistar, but is new some That with in confidence have sales line We growing and same it back. a ever issues growth there. lot help time got first will well I in we've coming think -- of of top that to the coming alleviate is the that had Vistar, nice business they've in. just that

that's but Now going going to, be continual obviously, tobacco, that. a it's to not decline, we expect

Patrick Hatcher

looking at when at of XXXX. revenue down. Alex, and I prior mean the theaters, in XX% example. us about versus I is mean I'll you It's this XX% versus their box just add comping more a at just business information, bit and on Vistar, just to just little give office, you Vistar detailed think only a year

service a there's going different is of in channels. lot lot a So Vistar

having some struggles are some well, really performing theaters. are like Some

pretty it's bag a there. mixed So

Alexander Slagle

that sense. about what talked the I I on I and makes food mean, was the Convenience the in guess, was That And was Convenience, think to included Foodservice that case down. you Foodservice number? that if group? related look not you What category like side and, did

George Holm

would Performance last counts so But food that I I'm you going we've and what up. week, a but and the that And well. pizza I with if ever look the that for Convenience it's both actually stores probably I the to. sold week. to matter had Foodservice, actually fact, say of itself say combined Hispanic number think business business, was That's that did been record yes, And most It's Well, or at of digit. last actually doing took set would you Foodservice our because with We we sold Foodservice give Foodservice specifically. down, the we our a area I didn't mid-single encouraging.

Operator

BMO Capital. with We'll Kelly take Bania our next question from

Kelly Bania

levers that of be, I largely guess bit a support playing at I bottom as expenses some new least your on I just out seems more the or expected. think the already business to margins the to dive or and I pull to line some in plan think, you're -- into little of wanted guess able that to in wins inflation were I

So the kind line to it where maintain able just line of despite how bottom the is? in are outlook coming you top

George Holm

Yes.

the be levers as far As to pulled.

our get pleased now, with from was pre-COVID, a took area, just to we're point, any just And and and gains our this don't our us national, getting done will it back of mix want continue build we from our in crew to our changes standpoint. to right where to in our and levers want expenses, have we've that us right to in see at pretty an we pull think most continue a business. job to now. and margins think far -- be warehouse And I delivery while build We workforce as force. I sales good it up expense as of you'll Foodservice both independent what in

Operator

next Bank. Deutsche We'll take question our with from Lauren Silberman

Lauren Silberman

in new this the How to the of is returning business wanted traffic? Patrick, signs wins a flat. to of I improvement business much versus ask of side any underlying function just of chain about chain

George Holm

Well, I but mentioned I that earlier, think again. worth about talking kind of it's

in look you at I definitely is the aggregate, slow. them at if chains, if think it look you

in been don't for some well. time, real business. chain we no, slow see we a the that strengthening to long are have happen doing Now have In aggregate, we but that some have any

not because to going the of account us that's numbers existing in come from chain business, of accounts, see our base. You're better because new but

Lauren Silberman

Helpful.

dynamics becoming on Another promotional more Vistar. than it competitive expand seeing and that the or to? Can segment whether in you're any a just used and changes you're bit you specifically competitive on one

Patrick Hatcher

Thanks, obviously Yes. very because a a Lauren. have It's plays environment so different different do of channels, lot in they Vistar many competitive competitions.

they that's a of I promotional, as do far work As CPG. with lot -- mean, again,

all as the is sure if answered going compete I come if promotional your of they their your correctly. channels, as -- to market activity to make manufacturer, they in across far most question So question. understanding every want the day, just I that's I'm But how go to board the from

Lauren Silberman

distributor anything getting bit there's competitive I just in of if the space, terms gains. share players know Yes. more other it's if from in like don't Foodservice a

George Holm

say but would the that's in theater category. only would I I yes, say

Operator

next Bernstein question with Jeffrey our take We'll Barclays. from

Jeffrey Bernstein

Two questions.

implemented the on whether change you George, quite your just in from encouraging. sustainable how X to going your in I you're independence, end this more how But new in mentioned there's to the one, of think any your that in up wondering achieve just larger business, wondering just you to I'm all segments, competitors, you've about or onboarding whether onboarding business any you're all late of broadly is. winning think peers there's on mentioned smaller been you're I if X terms first changes The which segments, strategy that, just seems X% X%. doing you're achieve? I'm

George Holm

would I whatsoever. businesses able we're that say Well, and get that from we've business Yes. that competitors our different change it's because no strategy in been competitor have in. there's the very different we different that sets to

I the to mid-single inflation think be bit national comfortable nicely I growth far to digit little right be in And we'll that type good independent with a go fit, somebody feel goes. fit the think we're of opportunistic that to account we and higher area. We're going always we we're of case It's in always along with that and for that for, a as be business. looking it. as it's culture profitable geographic can There's it.

Jeffrey Bernstein

are creation, shareholder the in value or discussions. then hurts big those Coast. that and on macro for targets the the have just the industry, industry, helps whether might for not now going? you embarking on And with whether opportunity necessarily be on for Obviously, you slowing but yourself, the a Understood. wondering of discussions M&A that I'm mention how West

Just wondering how that of plays this out environment type versus others. in

George Holm

our spending Yes. time We're something sure always that out that standpoint. on M&A an our projected very isn't probably try from talking a big I year. of numbers is we that and talking to Day. get active the And just have next gone X-year part are several on X-year We fit going from materialize. that this we're people. we're to always good that it for make not when to period through people think very put But what next Investor a to we important We're really of we we a the fiscal part

how isn't. affects far mean I the there or that affects marketplace I is it, that the don't know much. either it really and it As as it that value

I think time most the of the that's is done more get M&A that the person right selling. we've been able to it being about for just

Jeffrey Bernstein

Understood.

will the fourth over that your your clarify, forward be few. past part a has play the it then 'XX year. the fiscal a to than likely And was that X-year George, perhaps first give would report years outlook? over would you fiscal Just think is few comment quarter, when I M&A bigger you So it next so guys

George Holm

be Investor Yes. would at X We Investor last numbers after Day point. that Day give the X-year years and plan to an that have

giving be project We'll be what we'll tighten gave projection number XXXX. then versus we for come guidance fiscal what that be So that August and our before. what would X-year we will our

Operator

Heinbockel take We'll our John next Guggenheim. question with from

John Heinbockel

So to George, call on, of used they on. are sales what maturation. when force drill call there of they XX%, a is used a think quarter, can that a accounts they how right, off move sure the you maybe is that. maybe over those have about the I'm talk of to third, accounts I the not noncompetes, successfully then thumb, right? number a don't to thought rule know to the And on on coming wanted expansion, you many I down that

this of very the in X% piece case into the onboarded of that last visibility I that? like So you've environment think is, And that sheer I growth then size because to guess, your sales that is force it achievable. the is guess X% you independent even of sounds

George Holm

-- I'd have Yes. tell that it's that coming geographically are several off could Well, But that. that widespread noncompetes. have we are with happen possibility every and we you,

and And they're to people the in year them they were before area have don't they because to want ends, when because where to back different come that we compete. they'll a put go us We doing so well.

that very they were, don't well back well. that back do we area do don't have do We an that year. we they We that put that there. and year, well really well and where they have people during And them them know don't they and do people put into

like success really cadence have over people can times consistent And was numbers. would that to for that I but weren't it So bringing They've people say a we would of last in up it, that a the a it our we been where several very catch I of for all more us. time more hired we more that train trying in as period we years. good so make hits board. many. it didn't to were from kind properly. very over we of say a so hiring people, We had the didn't pandemic And we lot turnover brought affect

into I to people going this back we think QX get or X.X% year. that up closer get us. more I with X% for will that fiscal be next So into would X% hope as good we number

John Heinbockel

benefiting. business, I RFP you gears, said to are X disproportionate then know stores, the the those X amount biggest given versus Because for that Okay. the you would right, X-year you X- all up, of you right, new can assess other? Foodservice win come X? think outlook you a size right? And the lumpy, is look the if stores onboarding of C how would that of How each should So expertise. I C Maybe switching more right? be at segments the do

George Holm

Yes. month give and from from look the total it gives is Foodservice would in between standpoint. better. profit add we when that Convenience We'll Foodservice what actually generates have gross brought the say you But because say growth, a of the business X.X% amount we feel. X.X% that that I Foodservice I would standpoint. top is components. that have our a bigger good number, doesn't coming a one dollars tobacco it bigger to And the We at you line this I'll you in for this

John Heinbockel

That's just this month.

George Holm

That's yes. what this month, brought on we

Operator

We'll from from take Andrew next King. Wolf CL question our

Andrew Paul Wolf

getting some and the to wanted parse Just the competitive questions new around of for customers. Foodservice. want environment to I kind revisit versus industry were there in

has the for the any general of sure that in kind that even in in rational. I'm balance Has are, service, of you, First the just any place, been rationality is with think Do you in environment? looking X the and pricing market? still there all, last, just you more in chain side, but competitive changes not gotten maybe there years, change in

George Holm

I think rational, it's yes.

Andrew Paul Wolf

the of independents. the year-over-year? is and increase costs slow, for to And switching incentive sometimes second, in amount for the independents, the for when things start distributors switching switching trending that lower to How

George Holm

though. part It's higher. would still I significant trending a business, the it's not say of

Andrew Paul Wolf

turnover if salespeople? so. a And are industry. one, How your of in terms your internal you But to it. people are put the more stable. mean, you your keep your to competitors third more I seeing it's and trying conversations activity, Got hire more I said could not, sure it's you just rates away in make

George Holm

lead be closely. part manufacturing retirement. the follow Most may when We they turnover, it We what our may impacts a follow the to they into look of few do us turnover customer. and a at it or competitor. very, we -- Our go either our it leave how go very industry very or they the

turnover. consider somebody promoted, is if or be to we retires So that do

Operator

to next Morgan We'll Stanley. Brian go Harbour with

Brian Harbour

that's downshift faster? that's bit Foodservice little maybe but fair relative more probably and seen your a rebounding you fourth quarter bit, this versus I maybe looking of kind kind were. where seems the In one sales Vistar a the them of And directly. of about of it is talked Is fourth the characterization? a true third in We've to in a Yes. seen more side ask maybe that expectation. still at mean I'll quarter like the and you've kind

George Holm

accurate. very is said you What

Brian Harbour

segment. And last side year. to at also, little of EBITDA segment but if that in there I weeds, any base, the cost the corporate favorability M&A in changes you there is that a of just the bit know corporate in relative level, bit? this was a little a don't had of know just you more the in I could on elaborate but sort was some sort

Patrick Hatcher

This is Yes. Brian. Yes. Patrick,

capability January do other and segment, small EBITDA has to we've the when some that been companies have a out, some line on corporate there specifically the wasn't are the with cases, company. some as really obviously, that relatively softness again, it with pointed lot the These but one, And you X out, already acquisitions growth So bring to there. all you comes that the the they're and in And -- discussed pointed there. new. top Vistar, major segments, as

haven't we So comped over EBITDA. their

And then well. savings some in that, to other cost been as there in all the addition line has corporate,

those all a some some of combination it's -- and then acquisitions smaller that of those So the savings. of of companies,

George Holm

those with of that Some of that synergies around very slow been We've would existed Reinhart. and some be Core-Mark functions. late-coming consolidating with

Operator

from take [Operator question Saleh will BTIG. our Instructions] with final Peter We

Peter Saleh

I And in around to today. did the the the color want come back appreciate Foodservice. overall to conversation I all Great. particularly environment,

think I soft. you definitely dining QSR mentioned and very was softer casual

this are than and your in really confined seeing was opinion, you So income is kind softer you to the quarter? up much Or of ex any -- that to of this softness? just weather the really evidence Do calendar environment lower-income prior consumer? terms that feel it that in in the migrating is shifts, stream the like is

George Holm

it prior quarter, was worst really, the December, towards well. in It quarter. activity the November and month definitely prior just of ironic particularly We independent, was time, really this that as good because Well, January. the but was some saw our which not before of the end softer in best it's was than early late changed and times of just

market rebounded I somewhat I would the think say from but that still there, it's is soft.

I towards think end. more lean does it lower the

QSR. see that certainly in We

We high well, -- I mean, but most area. have dining very that tough It's and for part, continues play area, doing -- QSR quite casual doing and the a well. been the it a they're the of in this has really suffered for QSR years, couple end

Peter Saleh

in of driving in what's kind inflation driving that that forward? that Is Or I Understood. here fourth higher then think something is what's cheese inflation acceleration Is cheese? moved see the May. in you're going some just expecting help into that Foodservice you And driving there month on I that else Can that? primarily there? inflation, in just the -- quarter. April us is

George Holm

it comes Yes. really over-index to We when cheese.

it. of So the part biggest be would that

Operator

further And there turn to over the any back Marshall Bill at no are questions I closing call remarks. will this time. for

Bill Marshall

call our joining for today. you Thank

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

Operator

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

time. disconnect may at You any

Performance Food (PFGC) 8 May 242024 Q3 Earnings call transcript