Performance Food Group Company reports strong second-quarter and first-half fiscal 2024 results

Performance Food Group Company (PFG) announced its second-quarter and first-half fiscal 2024 business results.

“Our strong business momentum continued through the fiscal second quarter, producing solid top and bottom-line results for our company,” George Holm, PFG’s chairman and chief executive officer, said in the announcement. “Our company benefitted from outstanding organic independent case growth, leading to another quarter of strong market share gains. Solid execution across our business segments, along with positive mix shift and broad channel growth, led to margin expansion and strong cash flow generation. I am very pleased with the organization’s successful execution of our business strategy with the goal of maximizing value for our shareholders.”

Second-quarter fiscal 2024 highlights

Total case volume grew 2.1%.

Net sales increased 2.9% to $14.3 billion.

Gross profit improved 6.6% to $1.6 billion.

Net income increased 10.1% to $78.3 million.

Adjusted EBITDA increased 11.9% to $345.4 million.

Diluted EPS increased 8.7% to $0.50.

Adjusted diluted EPS increased 8.4% to $0.90.

First-half fiscal 2024 highlights

Total case volume grew 2.4%.

Net sales increased 2.2% to $29.2 billion.

Gross profit improved 6.1% to $3.3 billion.

Net income increased 19.3% to $199.0 million.

Adjusted EBITDA increased 9.9% to $729.2 million.

Diluted EPS increased 18.7% to $1.27.

Adjusted diluted EPS increased 7.3% to $2.05.

Second-quarter fiscal 2024 financial summary

Total organic case volume increased 2.1% for the second quarter of fiscal 2024 compared to the prior year period. Total organic case volume benefited from an 8.7% increase in organic independent cases, growth in Performance Brands cases, growth in cases sold to foodservice's chain business, and broad-based growth across Vistar's channels.

Net sales for the second quarter of fiscal 2024 grew 2.9% to $14.3 billion compared to the prior year period. The increase in net sales was primarily attributable to an increase in cases sold.

Gross profit for the second quarter of fiscal 2024 grew 6.6% to $1.6 billion compared to the prior year period. The gross profit increase was primarily attributable to growth in cases sold and a favorable shift in the mix of cases sold, including growth in the independent channel and Performance Brands.

Net income for the second quarter of fiscal 2024 increased $7.2 million year-over-year to $78.3 million.

For the quarter, adjusted EBITDA rose 11.9% to $345.4 million compared to the prior year period.

Diluted EPS increased 8.7% to $0.50 per share in the second quarter of fiscal 2024 compared to the prior year period. Adjusted diluted EPS increased 8.4% to $0.90 per share in the second quarter of fiscal 2024 compared to the prior year period.

First-half fiscal 2024 financial summary

Total organic case volume increased 2.4% for the first half of fiscal 2024 compared to the prior year period. Total organic case volume benefited from an 8.1% increase in organic independent cases, growth in Performance Brands cases, growth in cases sold to Foodservice's Chain business, and broad-based growth across Vistar's channels.

Net sales for the first half of fiscal 2024 grew 2.2% to $29.2 billion compared to the prior year period. The increase in net sales was primarily attributable to an increase in cases sold, partially offset by a decrease in selling price per case as a result of 1.4% deflation in our Foodservice segment.

Gross profit for the first half of fiscal 2024 grew 6.1% to $3.3 billion compared to the prior year period. The gross profit increase was primarily attributable to cost of goods sold optimization through procurement efficiencies, as well as growth in cases sold, including growth in the independent channel.

Net income for the first half of fiscal 2024 increased $32.2 million year-over-year to $199.0 million.

For the first half of fiscal 2024, adjusted EBITDA rose 9.9% to $729.2 million compared to the prior year period. Diluted EPS increased 18.7% to $1.27 per share in the first half of fiscal 2024 compared to the prior year period. Adjusted diluted EPS increased 7.3% to $2.05 per share in the first half of fiscal 2024 compared to the prior year period.

Second-quarter fiscal 2024 segment results

Vistar

For the second quarter of fiscal 2024, net sales for Vistar increased 7.4% 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 a recent acquisition, as well as case volume growth.

Second-quarter fiscal 2024 adjusted EBITDA for Vistar increased 1.5% to $93.6 million versus the prior year period. The increase was the result of a 9.0% increase in gross profit for the second quarter of fiscal 2024 compared to the prior year period, partially offset by a 14.7% increase in operating expenses. The increase in gross profit contributing to Vistar's adjusted EBITDA was driven by a recent acquisition, pricing improvement from procurement efficiencies, and growth in cases sold, partially offset by expected decreases in inventory holding gains. Operating expenses impacting Vistar's adjusted EBITDA increased primarily as a result of a recent acquisition and an increase in building rent expense.

Foodservice

Second-quarter fiscal 2024 net sales for foodservice increased 2.6% to $7.1 billion compared to the prior year period. This increase in net sales were driven by case volume growth in independent and chain businesses, partially offset by a decrease in selling price per case. Overall product cost deflation for Foodservice was approximately 0.4% for the second quarter of fiscal 2024. Securing new and expanding business with independent customers resulted in organic independent case growth of approximately 8.7% for the second quarter of fiscal 2024 compared to the prior year period. For the second quarter of fiscal 2024, independent sales as a percentage of total segment sales were 39.1%.

Second-quarter fiscal 2024 adjusted EBITDA for foodservice increased 4.6% to $224.1 million compared to the prior year period. Gross profit contributing to adjusted EBITDA increased 5.2% in the second quarter of fiscal 2024 compared to the prior year period driven by growth in cases sold and a favorable shift in the mix of cases sold to independent customers, including more Performance Brands products sold to independent customers. Operating expenses impacting foodservice's adjusted EBITDA increased 5.3% for the second quarter of fiscal 2024 compared to the prior year period primarily as a result of an increase in personnel, insurance, and building rent expenses as compared to the prior year period.

Convenience

Second-quarter fiscal 2024 net sales for convenience increased 1.3% to $5.9 billion compared to the prior year period. The increase in net sales was driven primarily by an increase in selling price per case as a result of cigarette manufacturers’ price increases and continued inflation for food and foodservice related products, partially offset by a decline in cigarette carton sales and food and foodservice related cases sold.

Second-quarter fiscal 2024 adjusted EBITDA for convenience increased 20.5% to $83.5 million compared to the prior year period. Gross profit contributing to convenience's adjusted EBITDA increased 2.2% in the second quarter of fiscal 2024 compared to the prior year period driven by pricing improvement from procurement efficiencies. Operating expenses impacting convenience's adjusted EBITDA decreased $5.9 million in the second quarter of fiscal 2024 compared to the prior year, primarily as a result of decreases in personnel expenses from reduced contract labor and overtime.

Fiscal 2024 and long-term outlook

For the third quarter of fiscal 2024, PFG expects net sales to be in a range of $14.0 billion to $14.3 billion. For the third quarter of fiscal 2024, PFG expects adjusted EBITDA to be in a range of $310 million to $330 million.

For the full fiscal year 2024, PFG continues to expect net sales to be in a range of $59 billion to $60 billion. For the full fiscal year 2024, PFG continues to expect adjusted EBITDA to be at the upper end of the previously announced $1.45 billion to $1.5 billion range.

PFG reiterates its 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.