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Performance Food Group reports Q1 fiscal 2017 results

Published 09 November 2016

Performance Food Group Company announced its first-quarter fiscal 2017 business results.

“Our underlying business performed well in the quarter,” said George Holm, PFG’s President and Chief Executive Officer. “Our Performance Foodservice segment reported strong independent case growth of 8%. However, we experienced an increase in new business transition costs and corporate expenses during the quarter, leading to Adjusted EBITDA coming in below our expectations.”

Holm continued, “Our planned strategic growth investments in PFG Customized and Vistar will continue through the second quarter as we enhance our diverse business model to further provide us with significant growth opportunities in fiscal 2017 and over the next several years.”

First-Quarter Fiscal 2017 Financial Summary

Total case volume increased 6.5% in the first quarter of fiscal 2017 compared to the prior year, with underlying organic growth of 5.3%. Total case volume was driven by an 8.0% increase in independent cases, double-digit growth in Performance Brands cases and broad-based growth in Vistar’s sales channels.

Net sales for the first quarter of fiscal 2017 were $4.0 billion, an increase of 3.0% versus the comparable prior year period. Gross profit for the first quarter of fiscal 2017 increased 6.3% compared to the prior year period, to $511.3 million. The gross profit increase in the first quarter of fiscal 2017 was fueled by case growth and through selling an improved mix of customer channels and products, specifically to the independent channel. Gross margin as a percentage of net sales was up 40 basis points to 12.6%

Operating expenses increased 9.7% in the first quarter of fiscal 2017 compared to the prior year period, to $479.7 million. The increase was primarily due to growth in case volume and the resulting impact on variable operational and selling expenses, as well as investments associated with expansion of geographies served in the dollar store channel, transition of business within Customized and the opening of a new automated retail facility within the Vistar segment. Additionally, operating expenses were higher during the quarter as a result of increases in employee medical claims, legal expenses and settlements of $4.0 million, insurance expense related primarily to workers compensation of $3.6 million and stock-based compensation expense of $3.1 million.

Net income was unchanged at $12.2 million for the first quarter of 2017 compared to the prior year period, a result of a decrease in operating profit that was fully offset by decreases in interest, income tax and other expenses. For the quarter, the income tax rate decreased 390 basis points to 37.4%. The decrease in the tax rate was primarily a result of an increase in permanent deductions related to the adoption of a new accounting standard.

Diluted EPS decreased 14.3% in the first quarter of fiscal 2017 over the prior year period, to $0.12 per share. Adjusted diluted EPS decreased 4.8% in the first quarter over the prior year period, to $0.20 per share.

EBITDA decreased 11.6% in the first quarter of fiscal 2017 compared to the prior year period, to $61.9 million. For the quarter, Adjusted EBITDA decreased 5.1% to $76.0 million compared to the prior year.



Source: Company Press Release