Performance Food pany(US:PFGC)2025-02-05 21:15Financial 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%, for the second quarter of fiscal 2025 compared to the same period in fiscal 2024[111] - Total case volume increased by 9.8% in the second quarter of fiscal 2025 and 6.1% in the first six months compared to the same periods in fiscal 2024[112] - Gross profit rose by $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%, for the second quarter of fiscal 2025 compared to the same period in fiscal 2024[114] - Operating expenses for Foodservice rose by $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% to $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% to $56.7 million for the three months ended December 28, 2024[109] - Net income decreased by $35.9 million, or 45.8%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024[117] - The effective tax rate for the second quarter of fiscal 2025 was 25.2%, down from 29.9% in the same period of fiscal 2024[118] Acquisitions - The company acquired Cheney Bros., Inc. on October 8, 2024, enhancing its Foodservice operations in the Southeastern United States[96] - The acquisition of Cheney Brothers contributed $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%[155] - The ABL Facility increased total revolving commitments from $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% of the principal amount redeemed plus accrued interest, with specific conditions for early redemption[169] - As of December 28, 2024, the restricted payment capacity available under debt agreements is approximately $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]