Performance Food pany(US:PFGC)2024-08-14 20:15Acquisition and Investments - The company entered into a definitive Stock Purchase Agreement to acquire Cheney Bros., Inc. for a transaction valued at $2.1 billion, subject to customary conditions and regulatory approvals[10]. - The Company paid $307.7 million for two acquisitions in fiscal year 2024, compared to $63.8 million for one acquisition in fiscal year 2023[256]. - The Company is in the process of acquiring Cheney Bros., Inc. for $2.1 billion, expected to be financed through borrowing and new senior unsecured notes[256]. - The total purchase price allocation for the two acquisitions in fiscal 2024 includes $22.5 million in net working capital and $116.4 million in goodwill[257]. - The Core-Mark acquisition, valued at $2.4 billion, resulted in net sales of $14.5 billion and a net loss of $17.6 million for the fiscal year ended July 2, 2022[261]. Financial Performance - Net sales for the fiscal year ended June 29, 2024, were $58,281.2 million, an increase of 1.8% from $57,254.7 million in the previous fiscal year[206]. - Gross profit for the fiscal year ended June 29, 2024, was $6,577.1 million, up from $6,254.9 million, reflecting a gross margin increase[206]. - Operating profit increased to $826.4 million for the fiscal year ended June 29, 2024, compared to $765.8 million in the prior year, indicating a growth of 7.9%[206]. - Net income for the fiscal year ended June 29, 2024, was $435.9 million, representing a 9.7% increase from $397.2 million in the previous year[207]. - Total assets as of June 29, 2024, were $13,392.9 million, up from $12,499.0 million as of July 1, 2023, showing a growth of 7.1%[205]. - Total liabilities increased to $9,266.0 million as of June 29, 2024, compared to $8,753.5 million in the prior year, reflecting a rise of 5.9%[205]. - Retained earnings rose significantly to $1,302.9 million as of June 29, 2024, compared to $867.0 million in the previous year, marking an increase of 50.2%[205]. - The company reported a diluted earnings per share of $2.79 for the fiscal year ended June 29, 2024, compared to $2.54 in the previous year, an increase of 9.8%[206]. - Cash increased to $20.0 million as of June 29, 2024, from $12.7 million as of July 1, 2023, indicating a growth of 57.5%[205]. - Cash provided by operating activities reached $1,163.0 million, significantly up from $832.1 million in the prior year[212]. Segment Performance - The Foodservice segment operates 78 distribution centers and serves over 175,000 customer locations, focusing on increasing sales to independent customers who typically generate higher gross profit per case[12][13]. - Vistar, a national distributor, serves over 75,000 customer locations from 27 distribution centers, expanding its reach to various channels including hospitality venues and college bookstores[14][15]. - The Convenience segment serves approximately 50,000 customer locations in the U.S. and Canada, operating 39 distribution centers and offering a full range of products including food, beverages, and health and beauty care products[16]. - Net external sales for the Foodservice segment reached $29,002.4 million for the year ended June 29, 2024, an increase from $28,467.5 million in the previous year[331]. - Foodservice Adjusted EBITDA for the fiscal year ended June 29, 2024, was $1,001.2 million, up from $943.6 million in the previous year, representing a growth of 6.5%[333]. - Vistar Adjusted EBITDA increased to $340.6 million for the fiscal year ended June 29, 2024, compared to $325.3 million in the prior year, reflecting a growth of 4.3%[333]. Regulatory and Compliance - The company’s operations are subject to various regulations, including those from the USDA and FDA, which impose standards for product quality and sanitation[30]. - The company is subject to various federal, state, and local laws, including those related to environmental, health, and safety requirements, which may incur material costs for compliance[34]. - The company’s customer relationships with U.S. federal and state governmental entities subject it to additional regulations applicable to government contractors[32]. Risk Management - The company manages economic risks primarily through the management of its debt funding and the use of derivative financial instruments[280]. - The entire change in the fair value of derivatives designated as cash flow hedges is recorded in other comprehensive income and reclassified into earnings when the hedged transaction occurs[281]. - As of June 29, 2024, Performance Food Group, Inc. had three interest rate swaps with a combined notional amount of $500.0 million[282]. - A hypothetical 100 bps increase in SOFR on variable-rate debt would lead to an increase of approximately $9.2 million in annual interest expense[190]. - The company incurred interest payments of $242.1 million during the fiscal year ended June 29, 2024, compared to $218.5 million in the previous year[215]. Shareholder Equity and Stock Compensation - The total shareholders' equity as of July 1, 2023, was $3,745.5 million, reflecting growth from $3,299.5 million as of July 2, 2022[210]. - Stock-based compensation expense was $37.4 million for the fiscal year ended June 29, 2024, slightly down from $39.2 million in the prior year[212]. - The intrinsic value of exercised options was $4.3 million for fiscal 2024, compared to $3.6 million for fiscal 2023, indicating an increase of approximately 19.4%[319]. - Total unrecognized compensation cost for all awards under the 2015 Incentive Plan is $45.0 million as of June 29, 2024, expected to be recognized over a weighted-average period of 1.7 years[323]. Legal and Contingencies - The Company is engaged in various legal proceedings, but management does not believe that the ultimate resolution will have a material adverse effect on its financial position[308]. - JUUL reached settlements in the multidistrict litigation, with the first settlement payment made on October 27, 2023, which may impact the Company’s future financial obligations[310]. Inventory and Assets - As of June 29, 2024, the Company's inventory balance was $3,314.7 million, with $2,164.4 million valued at FIFO and $1,150.3 million valued at LIFO[226]. - The Company’s inventories were adjusted by approximately $16.5 million for slow-moving, excess, and obsolete inventories as of June 29, 2024[226]. - As of June 29, 2024, total intangible assets with definite lives amounted to $2,322.5 million, with a net value of $945.5 million after accumulated amortization[265]. - The investment in wholly owned subsidiary increased to $4,227.9 million as of June 29, 2024, from $3,826.3 million as of July 1, 2023[336].