Performance Food Group Company reports fourth-quarter and full-year fiscal 2023 results

Performance Food Group Company (PFG) announced its fourth-quarter and full-year fiscal 2023 business results.

George Holm, PFG’s chairman and chief executive officer, said in the announcement: “PFG closed out fiscal 2023 with strong financial results and solid momentum as our organization continues to execute at a high level. Our company is seeing broad-based strength across all three reportable segments, particularly in our high margin, high return businesses. Organic independent restaurant case growth of 7.6% in the fiscal fourth quarter was a highlight, as the investments behind our salesforce are paying off and producing market share gains. Our strong balance sheet position has allowed us to invest behind important growth initiatives while returning cash to shareholders through share repurchases. We have high expectations for fiscal 2024 and are pleased with how our business is positioned for growth.”

Fourth-quarter fiscal 2023 financial summary

Total organic case volume increased 1.8% for the fourth quarter of fiscal 2023 compared to the prior year period. Case volume was not impacted by acquisitions in the fourth quarter of fiscal 2023 or the prior year period. Total organic case volume benefited from a 7.6% increase in organic independent cases, growth in Performance Brands cases, and broad-based growth across Vistar’s channels, partially offset by declines in Foodservice Chain business.

Net sales for the fourth quarter of fiscal 2023 grew 1.9% to $14.9 billion compared to the prior year period. The increase in net sales was primarily attributable to channel mix, growth in cases sold, and an increase in selling price per case as a result of inflation. The overall rate of product cost inflation continued to decline through the fourth quarter of fiscal 2023 and was approximately 4.6%.

Gross profit for the fourth quarter of fiscal 2023 grew 12.0% to $1.7 billion compared to the prior year period. The gross profit increase was primarily driven by a favorable shift in the mix of cases sold and growth in the independent channel.

Net income for the fourth quarter of fiscal 2023 increased $74.1 million year-over-year to $150.1 million. The increase was primarily a result of the $109.0 million increase in operating profit, partially offset by increases in income tax expense, interest expense, and other, net.

For the quarter, adjusted EBITDA rose 7.9% to $385.2 million compared to the prior year period.

Diluted EPS increased $0.47 to $0.96 per share in the fourth quarter of fiscal 2023 compared to the prior year period. Adjusted diluted EPS increased 6.5% to $1.14 per share in the fourth quarter of fiscal 2023 compared to the prior year period.

Full-year fiscal 2023 financial summary

Total case volume increased 5.8% in fiscal 2023 compared to the prior year period, including 7.3% independent case growth. Total organic case volume increased 1.6% in fiscal 2023 compared to the prior year period. Total organic case volume benefited from a 6.2% increase in organic independent cases, growth in Performance Brands cases, and broad-based growth across Vistar’s channels, partially offset by declines in Foodservice Chain business.

Net sales for fiscal 2023 grew 12.5% to $57.3 billion compared to the prior year period. The increase in net sales was primarily attributable to the acquisition of Core-Mark Holding Company, Inc. (Core-Mark) in the first quarter of fiscal 2022 and an increase in selling price per case due to inflation and channel mix. Overall product cost inflation for the company was approximately 8.6%.

Gross profit for fiscal 2023 grew 19.0% to $6.3 billion compared to the prior year period. The gross profit increase was primarily driven by the acquisition of Core-Mark, a favorable shift in the mix of cases sold, including growth in the independent channel, and procurement related gains.

Net income for fiscal 2023 increased $284.7 million year-over-year to $397.2 million. The increase was primarily a result of the $438.4 million increase in operating profit, partially offset by a $92.2 million increase in income tax expense and a $35.1 million increase in interest expense.

For fiscal 2023, adjusted EBITDA rose 33.7% to $1.4 billion compared to the prior year period.

Diluted EPS increased $1.80 to $2.54 per share in fiscal 2023 compared to the prior year period. Adjusted diluted EPS increased 49.2% to $3.88 per share in fiscal 2023 compared to the prior year period.

Fourth-quarter fiscal 2023 segment results

Vistar

For the fourth quarter of fiscal 2023, net sales for Vistar increased 18.3% to $1.2 billion compared to the prior year period. This increase was driven primarily by an increase in selling price per case as a result of inflation and channel mix, as well as case volume growth.

Fourth-quarter fiscal 2023 adjusted EBITDA for Vistar increased 31.5% to $85.6 million versus the prior year period. The increase was the result of a 15.8% increase in gross profit for the fourth quarter of fiscal 2023 compared to the prior year period, partially offset by a 6.7% increase in operating expenses. The increase in gross profit was driven by a favorable shift in the mix of cases sold, growth in cases sold, and procurement related gains. Operating expenses impacting Vistar’s adjusted EBITDA increased primarily as a result of the increased case volume and the resulting impact on variable operational and selling expenses, including a $7.7 million increase in personnel expenses.

Foodservice

Fourth-quarter fiscal 2023 net sales for Foodservice decreased 1.1% to $7.3 billion compared to the prior year period. This decrease in net sales was driven by a decrease in selling price per case as a result of deflation compared to the prior year period, which was driven primarily by price decreases for items such as poultry, cheese, and eggs, partially offset by an increase in case growth. Securing new and expanding business with independent customers resulted in independent case growth of approximately 7.6% for the fourth quarter of fiscal 2023 compared to the prior year period. For the fourth quarter of fiscal 2023, independent sales as a percentage of total segment sales were 40.8%.

Fourth-quarter fiscal 2023 adjusted EBITDA for Foodservice increased 1.7% to $273.3 million compared to the prior year period. Gross profit contributing to adjusted EBITDA increased 3.7% in the fourth quarter of fiscal 2023 compared to the prior year period driven by a favorable shift in the mix of cases sold to independent customers, including more Performance Brands products sold to independent customers. The increase in gross profit was partially offset by expected decreases in procurement gains. Operating expenses impacting Foodservice’s adjusted EBITDA increased 4.6% for the fourth quarter of fiscal 2023 compared to the prior year period primarily as a result of an increase in personnel expenses, partially offset by a decrease in fuel expense.

Convenience

Fourth-quarter fiscal 2023 net sales for Convenience increased 2.3% to $6.3 billion compared to the prior year period. Fourth-quarter fiscal 2023 adjusted EBITDA for Convenience decreased 7.6% to $80.7 million compared to the prior year period. Gross profit contributing to Convenience’s Adjusted EBITDA increased 1.8% in the fourth quarter of fiscal 2023 compared to the prior year period driven by a favorable shift in mix of products sold.

Fiscal 2024 and long-term outlook

For the fiscal first quarter of 2024, PFG expects net sales to be in a range of $14.7 billion to $15.0 billion and adjusted EBITDA to be in a range of $360 million to $380 million.

For the full fiscal year 2024, PFG expects net sales to be in a range of $59 billion to $60 billion. For the full fiscal year 2024, PFG expects Adjusted EBITDA to be in a range of $1.45 billion to $1.5 billion.

PFG reiterates its previously announced 3-year net sales and adjusted EBITDA targets. The company continues to expect to achieve annual net sales of $62 to $64 billion and adjusted EBITDA between $1.5 and $1.7 billion in fiscal 2025.