Financial Data and Key Metrics Changes - PFG's total net sales grew by 5.2% in Q2 2026, with total company cases increasing by 3.4% [19] - Net income reached $61.7 million, a 45.5% increase year-over-year [21] - Adjusted EBITDA increased by 6.7% to $451 million, with diluted earnings per share at $0.39 and adjusted diluted earnings per share flat at $0.98 year-over-year [22] Business Line Data and Key Metrics Changes - Food service segment delivered 5.3% organic independent case growth, driven by a 5.8% independent account growth [7] - Convenience segment net sales increased by 6.1%, benefiting from market share gains and onboarding of new accounts [13] - Specialty segment saw modest improvement in top-line trends, with sales growth in vending, office coffee, retail, campus, and travel channels [16] Market Data and Key Metrics Changes - Industry-wide foot traffic decelerated, with December traffic down 3.5% [9] - Convenience segment sales were driven by low single-digit dollar growth from food and mid-teen non-combustible nicotine product sales growth [14] - Total company cost inflation was approximately 4.5%, with food service inflation at 1.8% and convenience cost inflation at 7.4% [20] Company Strategy and Development Direction - The company is focused on a three-year strategic vision aimed at revenue growth, market share gains, gross margin enhancement, and improving operating leverage [6] - PFG is committed to pursuing strategic M&A opportunities, with a robust pipeline and a history of successful acquisitions [25] - The integration of Cheney Brothers is expected to contribute significantly to revenue and profit growth in the future, with synergies anticipated to flow through in years two and three post-acquisition [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive growth and EBITDA performance despite a challenging macro environment [6] - The company anticipates a modest sequential decline in net interest expense and expects to maintain a tax rate close to historical averages [23][24] - Management remains optimistic about achieving the full-year guidance and the three-year projections announced at Investor Day [27] Other Important Information - The company generated $456 million of operating cash flow in the first half of 2026, an increase of $77 million compared to the same period last year [24] - PFG did not repurchase any shares under its share repurchase program in the quarter, prioritizing debt reduction instead [25] Q&A Session Summary Question: Can you provide additional color on performance by month for organic independent case growth? - Management noted strong performance in October, followed by a decline due to the government shutdown, with a rebound in January despite weather impacts [30][32] Question: How did the pace of your sales force growth compare to recent quarters? - The sales force growth remained consistent at around 6%, with a focus on market share performance [34] Question: Can you discuss the dynamics at play for the food service business in the second quarter? - Management highlighted strong independent growth but noted elevated operating expenses due to Cheney investments and deflation in cheese and poultry [38][40] Question: What is the outlook for the convenience segment's EBITDA margins? - Management expressed optimism about margin expansion due to growth in food service and non-combustible nicotine products [42][44] Question: How is the company managing procurement opportunities? - Management indicated confidence in achieving procurement synergies over the three-year plan, with progress expected in the back half of the year [47][49] Question: What is the impact of deflation on margins? - Deflation is expected to impact margins, particularly in cheese and poultry, which the company overindexes [50][91] Question: How does the company view the competitive environment? - Management noted consistent market share gains and did not observe significant changes in the competitive landscape [82]

Financial Data and Key Metrics Changes - The negative EBITDA impact in Q4 from Monterrey challenges was $8 million, which was higher than the previously estimated $5 million [5] - EBITDA margins for the Hardware Solutions segment would have been around 16% without the negative impact [5] - A favorable cost roll impact in Q4 helped the Hardware Solutions segment [5] - SG&A is expected to be around $73 million in Q1, which is significantly higher than the previous year [34] Business Line Data and Key Metrics Changes - The Custom Solutions group may face impacts from tariffs, particularly in wood components, which could present opportunities to insource demand back into the U.S. [24] - Operational improvements are being seen in the Extruded Solutions group due to the sharing of best practices [25] Market Data and Key Metrics Changes - The company expects flat to down volumes with flat to up pricing in the upcoming year [9] - Demand for products is currently similar in both new residential and repair and remodel markets, with R&R expected to lead any recovery [52] Company Strategy and Development Direction - The company is focusing on paying down debt and balancing cash flow generation with stock repurchases [11][12] - The resegmentation is expected to yield mid- to long-term growth opportunities through process improvements and innovation [26] Management's Comments on Operating Environment and Future Outlook - Management has not observed irrational pricing in the market, indicating a focus on supply chain risk [20] - Commodity prices stabilizing may lead to pricing pressure in the future, but currently, there is no irrational pricing behavior [21] - The company is optimistic about operational efficiencies to offset increased costs as they move through the year [35] Other Important Information - The company has been proactive in addressing operational issues in its facilities, ensuring that similar risks are mitigated [32] - The first quarter is typically a low point for cash flow, but lower incentive payouts this year may help improve cash flow [59] Q&A Session Summary Question: Impact of Monterrey challenges on EBITDA - The negative EBITDA impact was confirmed to be $8 million, higher than expected, with a $3 million hit anticipated in Q1 [5][6] Question: Outlook for market volume and procurement synergies - The informal outlook suggests flat to down volumes with flat to up pricing, and less Mexico costs expected next year [9] Question: Clarification on SG&A increase - SG&A is expected to be around $73 million, reflecting higher benefit costs and inflationary measures [34][35] Question: Pricing and cost outlook for 2026 - Pricing increases are primarily driven by inflationary pressures, and the company believes it can maintain pricing due to justified cost increases [50][51] Question: Demand outlook for new residential vs. repair and remodel - Both markets are currently impacted similarly, but R&R is expected to lead any recovery [52][54]

Financial Data and Key Metrics Changes - The negative EBITDA impact from Monterrey challenges in Q4 was $8 million, higher than the previously estimated $5 million, affecting EBITDA margins for the Hardware Solutions segment [5][9] - The company paid down debt aggressively during the fiscal year and repurchased approximately $3 million in stock in Q4, despite shares being perceived as undervalued [10][12] Business Line Data and Key Metrics Changes - The Hardware Solutions segment faced challenges due to increased labor and expedited freight costs, but a favorable cost roll impact helped mitigate some losses [5][9] - The company expects a $3 million drag in Q1 from Monterrey issues but anticipates this will go to zero beyond the first quarter [6][9] Market Data and Key Metrics Changes - The company has not observed irrational pricing behavior in the market, indicating a focus on supply chain risk management among customers [19][20] - The Custom Solutions group may face impacts from tariffs, but there is potential for insourcing demand back into the U.S. to mitigate risks [21][23] Company Strategy and Development Direction - The company is focused on operational improvements and sharing best practices across segments, particularly in the extruded solutions group [24][25] - The resegmentation is expected to yield mid- to long-term growth opportunities, with a focus on innovation and process improvements [25] Management Comments on Operating Environment and Future Outlook - Management noted that both residential repair and remodel (R&R) and new construction markets are currently experiencing similar impacts, with R&R expected to lead any recovery [51][53] - The company anticipates stable material costs but expects continued inflationary pressure in specific areas, particularly oil-based products [35][36] Other Important Information - The company is balancing cash flow generation, stock repurchases, and debt paydown, with Q1 typically being a low cash flow period [12][56] - Incentive payouts for the executive team were lower than usual, which may positively impact cash flow in Q1 [57] Q&A Session Summary Question: Impact of Monterrey challenges on EBITDA - The negative EBITDA impact was confirmed to be $8 million, affecting margins in the Hardware Solutions segment [5] Question: Competitive response in the market - Management indicated no irrational pricing behavior has been observed, with supply chain risks being prioritized [19] Question: Expectations for product performance in 2026 - The Custom Solutions group may see impacts from tariffs, but there is potential for insourcing demand [21][23] Question: SG&A changes and outlook - SG&A is expected to be around $73 million, reflecting higher benefit costs and inflationary measures [33][34] Question: Pricing and cost outlook for 2026 - Pricing increases are primarily driven by inflationary pressures, with a strong ability to maintain prices due to cost support [48][50] Question: Cash flow expectations for Q1 - Slightly negative free cash flow is possible in Q1, depending on December and January performance [54][56]