Performance Food pany(PFGC) - 2025 Q3 - Quarterly Report

Special Note Regarding Forward-Looking Statements This report contains forward-looking statements subject to risks and uncertainties, including economic factors, supplier reliance, competition, and acquisition-related risks - This report contains forward-looking statements subject to risks and uncertainties, including economic factors, supplier reliance, competition, cost inflation, and risks related to acquisitions like Cheney Brothers Acquisition[8][9][12] PART I - FINANCIAL INFORMATION Financial Statements This section presents unaudited consolidated financial statements, reflecting increased assets and liabilities from the Cheney Brothers acquisition, with higher sales but lower net income due to increased expenses Consolidated Balance Sheet Highlights (Unaudited) | (In millions) | March 29, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Total current assets | $6,788.8 | $6,153.3 | | Goodwill | $3,455.2 | $2,418.3 | | Total assets | $17,123.4 | $13,392.9 | | Total current liabilities | $4,207.1 | $3,758.1 | | Long-term debt | $5,422.7 | $3,198.5 | | Total liabilities | $12,785.9 | $9,266.0 | | Total shareholders' equity | $4,337.5 | $4,126.9 | Consolidated Statements of Operations Highlights (Unaudited) | (In millions, except per share data) | Three Months Ended Mar 29, 2025 | Three Months Ended Mar 30, 2024 | Nine Months Ended Mar 29, 2025 | Nine Months Ended Mar 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $15,306.3 | $13,857.7 | $46,360.0 | $43,092.0 | | Gross profit | $1,822.4 | $1,568.9 | $5,414.4 | $4,829.9 | | Operating profit | $174.4 | $154.9 | $548.5 | $545.0 | | Net income | $58.3 | $70.4 | $208.7 | $269.4 | | Diluted EPS | $0.37 | $0.45 | $1.34 | $1.72 | Consolidated Statements of Cash Flows Highlights (Unaudited) | (In millions) | Nine Months Ended Mar 29, 2025 | Nine Months Ended Mar 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $827.1 | $956.7 | | Net cash used in investing activities | ($2,875.1) | ($533.0) | | Net cash provided by (used in) financing activities | $2,038.6 | ($419.6) | | Net (decrease) increase in cash | ($9.4) | $4.1 | Management's Discussion and Analysis of Financial Condition and Results of Operations The Cheney Brothers acquisition significantly impacted financial performance, driving sales growth but reducing net income due to higher expenses, while the company also amended its credit facility and issued new senior notes Business Overview and Key Factors Performance Food Group, a major North American food distributor, reorganized segments and acquired Cheney Bros., with its business influenced by macroeconomic trends and supply chain dynamics - The company acquired Cheney Bros., Inc. on October 8, 2024, expanding Foodservice operations in the Southeastern U.S[94] - In Q3 fiscal 2025, the company reorganized its operating segments, moving certain operations and costs to the Foodservice segment, with prior period data recast[92] Consolidated Results of Operations Q3 FY2025 saw net sales increase by 10.5% to $15.3 billion and gross profit by 16.2% to $1.8 billion, but net income declined 17.2% to $58.3 million due to higher expenses, while Adjusted EBITDA rose 20.1% to $385.1 million Q3 FY2025 vs Q3 FY2024 Consolidated Performance | Metric (In millions) | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $15,306.3 | $13,857.7 | +10.5% | | Gross Profit | $1,822.4 | $1,568.9 | +16.2% | | Operating Expenses | $1,648.0 | $1,414.0 | +16.5% | | Net Income | $58.3 | $70.4 | -17.2% | | Adjusted EBITDA | $385.1 | $320.7 | +20.1% | - Net sales growth was driven by recent acquisitions (including Cheney Brothers), a 10.0% increase in total case volume, and approximately 4.9% product cost inflation in Q3 FY2025[113][114] - Net income declined primarily due to increased operating expenses, depreciation, amortization, and interest expense related to recent acquisitions[118] Segment Results Foodservice segment led growth with a 19.2% sales increase driven by the Cheney Brothers acquisition, while Convenience and Specialty segments showed modest sales changes but improved Adjusted EBITDA Foodservice Segment Performance (Q3 FY2025 vs Q3 FY2024) | Metric (In millions) | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $8,374.5 | $7,023.0 | +19.2% | | Adjusted EBITDA | $275.0 | $213.2 | +29.0% | - The Cheney Brothers acquisition contributed $931.2 million to Foodservice net sales in Q3 FY2025, with organic independent case growth at 3.4%[124] Specialty Segment Performance (Q3 FY2025 vs Q3 FY2024) | Metric (In millions) | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $1,131.2 | $1,133.8 | -0.2% | | Adjusted EBITDA | $77.9 | $72.9 | +6.9% | Convenience Segment Performance (Q3 FY2025 vs Q3 FY2024) | Metric (In millions) | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $5,740.0 | $5,640.1 | +1.8% | | Adjusted EBITDA | $74.7 | $70.9 | +5.4% | Liquidity and Capital Resources The company's liquidity was impacted by financing the Cheney Brothers acquisition through an amended $5.0 billion ABL Facility and $1.0 billion in new senior notes, leading to decreased operating cash flow and increased investing cash outflow - On September 9, 2024, the company amended its credit agreement, increasing the ABL Facility from $4.0 billion to $5.0 billion and extending maturity to September 9, 2029[155] - On September 12, 2024, the company issued $1.0 billion of 6.125% Senior Notes due 2032 to help finance the Cheney Brothers acquisition[52][168] Cash Flow Summary (Nine Months Ended) | (In millions) | March 29, 2025 | March 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $827.1 | $956.7 | | Net cash used in investing activities | ($2,875.1) | ($533.0) | | Net cash from (used in) financing activities | $2,038.6 | ($419.6) | - The company repurchased 0.6 million shares for $44.2 million during the nine months ended March 29, 2025, with approximately $166.4 million remaining under the share repurchase program[145][146] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are interest rate and fuel price fluctuations, with increased variable-rate debt exposure from the Cheney Brothers Acquisition potentially raising annual interest expense by $22.4 million for a 100 basis point SOFR increase - The company's variable-rate debt increased due to the Cheney Brothers Acquisition[182] - A hypothetical 100 basis point increase in SOFR on approximately $2.2 billion of variable-rate debt would increase annual interest expense by about $22.4 million[183] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 29, 2025, with no material changes to internal control over financial reporting, excluding the recently acquired Cheney Brothers - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 29, 2025[185] - The internal control evaluation for the quarter excluded Cheney Brothers, acquired on October 8, 2024[187] PART II - OTHER INFORMATION Legal Proceedings The company is involved in JUUL litigation, with an MDL settlement releasing subsidiaries, but an ongoing Illinois state lawsuit has a trial date of October 6, 2025, with JUUL providing defense and indemnification - A settlement in the JUUL Multidistrict Litigation (MDL) has released the company's subsidiaries, Core-Mark and Eby-Brown, from claims[74] - A separate lawsuit against the company's subsidiaries regarding JUUL products is ongoing in Illinois state court, with a trial date of October 6, 2025, and JUUL is providing defense and indemnification[75] Risk Factors No material changes to the company's principal risk factors were reported since the last Annual Report on Form 10-K - No material changes to principal risk factors were reported since the last Form 10-K filing[190] Unregistered Sales of Equity Securities and Use of Proceeds In Q3 FY2025, the company repurchased 138,335 shares for $10.6 million, with $166.4 million remaining under the $300 million share repurchase authorization expiring November 2026 Share Repurchases (Q3 FY2025) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | Dec 29, 2024 – Mar 29, 2025 | 154,817 | $77.91 | 138,335 | - As of March 29, 2025, approximately $166.4 million remained available for share repurchases under the authorized plan[193] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[194] Mine Safety Disclosures This item is not applicable to the company - Not applicable[195] Other Information Several executive officers adopted Rule 10b5-1 trading plans for future sale of company securities during Q3 FY2025 - Several directors and Section 16 officers, including the CFO, Chief Development Officer, and General Counsel, adopted Rule 10b5-1 trading plans during the quarter ended March 29, 2025[196] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[197]