Performance Food Group Co Reports Solid Growth in Q1 Fiscal 2024
Performance Food Group Co (NYSE:PFGC) sees a 26.1% increase in net income for Q1 fiscal 2024.
Adjusted EBITDA climbs 8.2%, reaching $383.8 million, exceeding expectations.
Strong independent case growth contributes to a 1.5% rise in net sales, totaling $14.9 billion.
Free cash flow reported at $33.9 million amidst strategic capital investments and share repurchases.
On November 8, 2023, Performance Food Group Co (NYSE:PFGC) released its earnings report for the first quarter of fiscal 2024, showcasing robust growth and financial health. The company reported a significant 26.1% year-over-year increase in net income, which amounted to $120.7 million. Adjusted EBITDA also saw a notable rise, increasing by 8.2% to reach $383.8 million, surpassing the previously announced guidance range.
Financial Highlights and Segment Performance
Total case volume for PFGC grew by 2.6%, with net sales experiencing a 1.5% uptick to $14.9 billion. This growth was primarily driven by an increase in cases sold, despite a slight decrease in selling price per case due to deflation in the Foodservice segment. Gross profit improved by 5.6% to $1.7 billion, attributed to procurement efficiencies and growth in the independent channel.
Operating expenses rose by 4.5% to $1.4 billion, largely due to increases in personnel expenses, repairs, maintenance, professional fees, and insurance expense. Despite these cost increases, the company's net income surged, bolstered by a $25.0 million increase in operating profit and a stable effective tax rate of approximately 26.1%.
Diluted Earnings Per Share (EPS) increased by 24.2% to $0.77, and Adjusted Diluted EPS saw a 6.5% rise to $1.15. The company generated an operating cash flow of $87.1 million and reported free cash flow of $33.9 million after investing $53.2 million in capital expenditures.
Strategic Initiatives and Share Repurchase Program
PFGC continued its share repurchase program, buying back 0.5 million shares of common stock for a total of $28.1 million at an average cost of $60.37 per share. As of October 28, 2023, approximately $232.8 million remained available for additional share repurchases.
In terms of segment results, Foodservice net sales slightly decreased by 0.7% to $7.3 billion, while Adjusted EBITDA for the segment grew by 4.2% to $246.0 million. Vistar's net sales increased by 14.7% to $1.3 billion, with Adjusted EBITDA up by 19.1% to $88.6 million. The Convenience segment saw a modest 0.8% increase in net sales to $6.3 billion, although its Adjusted EBITDA decreased by 10.3% to $94.7 million.
Outlook and Analyst Commentary
Looking ahead, PFGC expects net sales for the fiscal second quarter of 2024 to be in the range of $14 billion to $14.3 billion, with Adjusted EBITDA projected to be between $325 million and $345 million. For the full fiscal year 2024, the company anticipates net sales to be between $59 billion and $60 billion, with Adjusted EBITDA expected at the upper end of the $1.45 billion to $1.5 billion range previously announced.
George Holm, PFGs Chairman & Chief Executive Officer, expressed confidence in the company's trajectory, stating,
Our organization had an excellent start to fiscal 2024, closing the first quarter with strong sales and profit momentum."
He highlighted the growth in the independent restaurant segment and new business lines as key drivers for the positive results.
For detailed financial tables and a full reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, please refer to the original earnings release.
Performance Food Group Co (NYSE:PFGC) continues to demonstrate resilience and strategic growth in a challenging operating environment, positioning itself favorably for the remainder of fiscal 2024 and beyond.
Explore the complete 8-K earnings release (here) from Performance Food Group Co for further details.
This article first appeared on GuruFocus.
