Performance Food pany(PFGC) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended December 28, 2024, increased by 9.4% to $15,638.2 million compared to$14,295.7 million for the same period in 2023[109] - Gross profit for the three months ended December 28, 2024, rose by 14.4% to $1,827.8 million, up from$1,598.1 million in the prior year[109] - Adjusted EBITDA for the three months ended December 28, 2024, increased by 22.5% to $423.0 million, compared to$345.4 million for the same period in 2023[109] - For the six months ended December 28, 2024, net sales increased by 6.2% to $31,053.7 million compared to$29,234.3 million in the same period in 2023[109] - Net sales increased by $1,342.5 million, or 9.4$229.7 million, or 14.4%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024[113] - Total Adjusted EBITDA for the second quarter of fiscal 2025 was $423.0 million, an increase of$77.6 million, or 22.5%, compared to the second quarter of fiscal 2024[121] Operating Expenses - Operating expenses for the three months ended December 28, 2024, increased by 17.2% to $1,669.0 million, compared to$1,424.2 million in the prior year[109] - Operating expenses increased by $244.8 million, or 17.2$157.0 million, or 20.8%, from Q2 FY2024 to Q2 FY2025, primarily due to recent acquisitions and a $38.0 million increase in personnel expenses[124] Net Income and Tax - Net income (GAAP) for the three months ended December 28, 2024, decreased by 45.8$42.4 million, down from $78.3 million in the same period last year[109] - The company reported a decrease in income before income taxes by 49.2$56.7 million for the three months ended December 28, 2024[109] - Net income decreased by $35.9 million, or 45.8$825.0 million to net sales in the second quarter of fiscal 2025[122] - The increase in variable-rate debt is attributed to the Cheney Brothers acquisition[180] Cash Flow and Investments - Cash balance as of December 28, 2024, totaled $18.7 million, down from$27.7 million as of June 29, 2024[146] - Operating activities provided cash flow of $379.0 million in the first six months of FY2025, a decrease from$554.0 million in FY2024, largely due to advanced inventory purchases[147] - Cash used in investing activities totaled $2,736.7 million in the first six months of fiscal 2025, a significant increase from$436.4 million in the same period of fiscal 2024[148] - Acquisitions accounted for $2,535.5 million of the investing activities in the first six months of fiscal 2025, compared to$308.1 million in fiscal 2024[148] - Capital purchases of property, plant, and equipment were $203.9 million in the first six months of fiscal 2025, up from$147.1 million in fiscal 2024[149] Debt and Financing - Aggregate borrowings as of December 28, 2024, were $2,660.7 million, with an average interest rate of 6.05$4.0 billion to $5.0 billion and extended the maturity date to September 9, 2029[152] - The proceeds from the Notes due 2032, totaling$1.0 billion, were initially intended for the acquisition of Cheney Brothers but were used to pay down a portion of the ABL Facility[167] - The Notes due 2027 and 2029 were issued at 100.0% of their par value, with interest rates of 5.500% and 4.250%, respectively[157][161] - The ABL Facility contains covenants requiring maintenance of a minimum consolidated fixed charge coverage ratio if Alternate Availability falls below $375.0 million[156] - The Company may redeem the Notes due 2032 at a redemption price equal to 100$1,428.4 million[171] Assets and Market Risks - Total assets for the Foodservice segment increased by $3,961.2 million from$6,582.5 million as of December 30, 2023, to $10,543.7 million as of December 28, 2024, primarily due to recent acquisitions[174] - Total assets for the Vistar segment increased by$131.6 million from $1,434.9 million as of December 30, 2023, to$1,566.5 million as of December 28, 2024, driven by advanced purchases of products and warehouse expansion[175] - Total assets for the Convenience segment increased by $96.5 million from$4,085.7 million as of December 30, 2023, to $4,182.2 million as of December 28, 2024, due to advanced purchases of tobacco products and new warehouse facilities[177] - The company is in compliance with all covenants under the ABL Facility and the indentures governing the Notes due 2027, 2029, and 2032 as of December 28, 2024[172] - Approximately$150.0 million of the company's outstanding long-term debt is fixed through interest rate swap agreements, while approximately $2.5 billion represents variable-rate debt[181] - A hypothetical 100 bps increase in SOFR on the variable-rate debt would lead to an increase of approximately$25.1 million in annual interest expense[181] - The company’s market risks consist of interest rate risk and fuel price risk, with no material changes since June 29, 2024[180] Accounting Policies - There have been no material changes to the company's critical accounting policies and estimates compared to those described in the Form 10-K[179]