Performance Food Group Co Q3 FY2025 earnings call

• The fiscal third quarter had challenges due to macroeconomic environment and adverse weather, but March saw recovery and April rebounded. PFG recognizes it can't control external environment but focuses on how to approach markets, customers, etc. - Strategic priorities include driving growth through sales associates, leveraging proprietary brands and procurement synergies, and using technology for supply chain efficiency. - Foodservice growth was strong with market share gains; Chain restaurant grew cases with new business and pricing inflation help; Convenience outperformed industry with new business wins; Specialty faced challenges but had some stabilized and improving segments.

Foodservice

• Overall, foodservice growth was strong, benefiting from the addition of Cheney Brothers and Jose Santiago. Organic independent case growth took a step back in February, growing 3.4% over the full third quarter. Independent customer account growth increased 3.9% year-over-year and lines growing at 4.3%. Performance Brands sold to independent restaurants were 53% in the quarter.

Chain restaurant

• Grew cases by 1.5% in the quarter. Growth boosted by onboarding of new business. Pricing inflation helped sales and margins. Closely watching commodities market and tariff considerations.

Convenience

• Volume grew by approximately 1%, well above industry performance. Core-Mark continues to win new business. April sales performance was notably better. As a consolidated Convenience and Foodservice distributor, has a competitive advantage.

Specialty (formerly Vistar)

• Total net sales were roughly flat in the third quarter on a low-single digit volume decline. Theater and value channels faced challenges, but vending and office coffee business stabilized, small parcel business improved.

• Now expects net sales to be in a $63 billion to $63.5 billion range, adjusting the top end by $500 million and leaving the bottom end unchanged. - Adjusted EBITDA guidance for the fiscal year is now a range of $1.725 billion to $1.75 billion, narrowing the upper end by $50 million. - Feels confident in these targets which are in line or above the three year plan set at Investor Day 2022.

• Difficult macroeconomic environment and adverse weather can impact business. - Uncertainty regarding tariff actions and potential inflation from tariffs. - Volatile consumer performance and behavior which is hard to gauge.

Q: Curious about consumer demand and behavior, any trade down or trade out, shifts in cuisine types?

A: Scott McPherson said independent demand had setbacks in February but improved later. George Holm mentioned February was a key month affecting penetration, and it was related to weather and consumer reaction to economic uncertainty.

Q: Outlook on food inflation and pre-buys?

A: Patrick Hatcher said inflation was in line with previous quarters, and it's too early to understand tariff impacts; pre-buys would depend on more information. Scott McPherson added tariffs have minor impact on cost of goods as import less than 10% of goods.

Q: Organic independent case growth trends and Q4 guidance?

A: George Holm said they are cautious about the macro environment, April was positive but need to see June. Edward Kelly asked about Q4 guidance, George Holm said they are being cautious due to macro environment and need to see June's performance.

Q: How smaller competitors and other competitors react, and talent hiring for sales force?

A: George Holm said the market is more competitive, large distributors are getting bigger market share than smaller ones. Regarding talent hiring, George Holm said they have a great pipeline of experienced salespeople and are continuing to grow the sales force.

Q: Convenience trends, Easter shift, and competition for sales force talent?

A: George Holm said no clear improvement in the industry but have better penetration and new business. George Holm also said they are not seeing change in talent hiring for sales force.

Q: Cases per account, drop size, and Convenience future growth?

A: Scott McPherson said lines per account were up but drop sizes remained relatively flat. George Holm and Scott McPherson talked about Convenience having new business and being well positioned for future growth.

Q: Competition impact, Vistar/Specialty performance, and margin expectations?

A: George Holm said competition is rational but people get more competitive, need to watch pricing and cost structure. Scott McPherson talked about Vistar/Specialty having tough quarters but optimistic about future with e-commerce and return to work. Scott McPherson also talked about margin expectations related to mix, chain margins, and procurement strategies.

Q: April dynamics, Easter shift, and M&A opportunity?

A: George Holm said April was choppy with calendar challenges. George Holm and Patrick Hatcher talked about M&A pipeline being robust and taking advantage of market dislocation while focusing on debt reduction.