Performance Food Group Q1 FY2027 profit rises 38.4%
Organic case growth, recent acquisitions and inflation-related pricing were the primary drivers of higher sales.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Performance Food Group Company (PFGC) reported first-quarter fiscal 2027 net sales of $18,018.4 million, up 5.5% year over year, and net income of $129.5 million, up 38.4%; diluted earnings per share were $0.82, versus $0.60. Non-GAAP Adjusted EBITDA rose 10.0% to $528.0 million. Sales growth included $437.8 million from organic case growth, $261.2 million from recent acquisitions and $243.5 million from inflation-related pricing.
Sales increased in Foodservice (5.0%), Convenience (5.4%) and Specialty (10.3%). Segment Adjusted EBITDA was $367.9 million, $125.6 million and $89.5 million, respectively; Specialty’s figure declined from $94.0 million. Net cash used in operating activities was $89.3 million, compared with $145.2 million a year earlier. As of September 26, 2026, long-term debt was $5,170.0 million and ABL excess availability was $2,706.8 million.
The company paid $4.1 million for a controlling interest in a Foodservice equity-method investment, with $3.2 million in non-cash consideration tied to its preexisting investment, net of settlements. It said the acquisition did not materially affect results. The share repurchase program authorizes up to $500 million, with $498.5 million available as of September 26, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales increased 5.5% to $18,018.4 million year over year.
- Moderate pointNet income rose 38.4% to $129.5 million year over year.
- Moderate pointNon-GAAP Adjusted EBITDA rose 10.0% to $528.0 million year over year.
Negative
- None.
Filing Explained
The company also reports
Key Figures
Key Terms
Segment Adjusted EBITDA financial
ABL Facility financial
borrowing base financial
cash flow hedges financial
LIFO reserve financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did PFGC report in Q1 fiscal 2027?
How much did PFGC earn in Q1 fiscal 2027?
Why did PFGC use cash in operating activities?
What are the size and maturity of PFGC's ABL Facility?
AI-generated analysis. How Rhea-AI works. Not financial advice.
mil
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For the quarterly period ended
For the transition period from to ___________
Commission File Number
(Exact name of registrant as specified in its charter)
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(IRS employer identification number) |
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(Address of principal executive offices) (Zip Code) |
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(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
TABLE OF CONTENTS
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Special Note Regarding Forward-Looking Statements |
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PART I - FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II - OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
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Defaults Upon Senior Securities |
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Item 4. |
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Mine Safety Disclosures |
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Item 5. |
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Other Information |
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Item 6. |
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Exhibits |
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SIGNATURES |
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2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report on Form 10-Q (this “Form 10-Q”) may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, are forward-looking statements. Words such as “estimates,” “expects,” “contemplates,” “will,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved, and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 27, 2026 (the “Form 10-K”), as such risk factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), and are accessible on the SEC’s website at www.sec.gov, and also include the following:
3
We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. We cannot assure you (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” or “PFG” as used in this Form 10-Q refer to Performance Food Group Company and its consolidated subsidiaries.
4
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except per share data) |
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As of |
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As of |
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ASSETS |
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Current assets: |
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Cash |
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$ |
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$ |
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Accounts receivable, less allowances of $ |
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Inventories, net |
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Income taxes receivable |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Goodwill |
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Other intangible assets, net |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Trade accounts payable and outstanding checks in excess of deposits |
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Accrued expenses and other current liabilities |
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Finance lease obligations—current installments |
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Operating lease obligations—current installments |
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Total current liabilities |
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Long-term debt |
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Deferred income tax liability, net |
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Finance lease obligations, excluding current installments |
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Operating lease obligations, excluding current installments |
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Other long-term liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Common Stock: $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss), net of tax (expense) benefit of ($ |
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Retained earnings |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
5
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data) |
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Three Months Ended |
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Three Months Ended |
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Net sales |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses |
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Operating profit |
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Other expense, net: |
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Interest expense |
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Other, net |
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( |
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Other expense, net |
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Income before taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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Earnings per common share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
6
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions) |
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Three Months Ended |
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Three Months Ended |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss), net of tax |
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Interest rate swaps: |
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Change in fair value, net of tax |
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Reclassification adjustment, net of tax |
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( |
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( |
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Fuel derivatives: |
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Change in fair value, net of tax |
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Reclassification adjustment, net of tax |
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( |
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Foreign currency translation adjustment, net of tax |
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( |
) |
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Other comprehensive income (loss) |
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$ |
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$ |
( |
) |
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Total comprehensive income |
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$ |
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$ |
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See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
7
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Retained |
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Shareholders’ |
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(In millions) |
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Shares |
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Amount |
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Capital |
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Loss |
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Earnings |
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Equity |
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Balance as of June 28, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Interest rate swaps, net of tax |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Foreign currency translation adjustment, net of tax |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Issuance of common stock under stock-based compensation plans |
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( |
) |
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— |
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— |
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( |
) |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Balance as of September 27, 2025 |
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|
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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|||||
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||||||
Balance as of June 27, 2026 |
|
|
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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|||||
Net income |
|
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— |
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|
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— |
|
|
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— |
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|
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— |
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|
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|
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||
Interest rate swaps, net of tax |
|
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— |
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— |
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— |
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— |
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||
Fuel derivatives, net of tax |
|
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— |
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— |
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|
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— |
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|
|
|
|
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— |
|
|
|
|
||
Foreign currency translation adjustment, net of tax |
|
|
— |
|
|
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— |
|
|
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— |
|
|
|
|
|
|
— |
|
|
|
|
||
Issuance of common stock under stock-based compensation plans |
|
|
|
|
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— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Issuance of common stock under employee stock purchase plan |
|
|
|
|
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— |
|
|
|
|
|
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— |
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|
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— |
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|||
Stock-based compensation expense |
|
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— |
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— |
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|
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— |
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|
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— |
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|
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||
Balance as of September 26, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
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|
$ |
|
||||||
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
8
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions) |
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Three Months Ended |
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Three Months Ended |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
|
||
Adjustments to reconcile net income to net cash used in operating activities |
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Depreciation |
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Amortization of intangible assets |
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Amortization of deferred financing costs |
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Provision for losses on accounts receivables |
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Change in LIFO reserve |
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Stock-based compensation expense |
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Deferred income tax (benefit) expense |
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( |
) |
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Other non-cash activities |
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Changes in operating assets and liabilities, net |
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|
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Accounts receivable |
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|
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( |
) |
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Inventories |
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( |
) |
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( |
) |
Income taxes receivable |
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Prepaid expenses and other assets |
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( |
) |
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Trade accounts payable and outstanding checks in excess of deposits |
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Accrued expenses and other liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Purchases of property, plant and equipment |
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( |
) |
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( |
) |
Net cash paid for acquisitions |
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( |
) |
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Proceeds from sale of property, plant and equipment and other |
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Net cash used in investing activities |
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( |
) |
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( |
) |
Cash flows from financing activities: |
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Net borrowings under ABL Facility |
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Payments under finance lease obligations |
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( |
) |
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( |
) |
Net cash paid for acquisitions |
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( |
) |
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( |
) |
Payments of other debt |
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( |
) |
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Proceeds from employee stock purchase plan |
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Proceeds from exercise of stock options |
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Cash paid for shares withheld to cover taxes |
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( |
) |
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( |
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Net cash provided by financing activities |
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Net decrease in cash and restricted cash |
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( |
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( |
) |
Cash and restricted cash, beginning of period |
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Cash and restricted cash, end of period |
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$ |
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$ |
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9
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
(In millions) |
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As of September 26, 2026 |
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As of June 27, 2026 |
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Cash |
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$ |
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$ |
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Restricted cash(1) |
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Total cash and restricted cash |
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$ |
|
|
$ |
|
||
Supplemental disclosures of cash flow information are as follows:
(In millions) |
|
Three Months Ended |
|
|
Three Months Ended |
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Interest (net of amounts capitalized) |
|
$ |
|
|
$ |
|
||
Income taxes (net of refunds received) |
|
|
|
|
|
|
||
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
10
PERFORMANCE FOOD GROUP COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Business Activities
Business Overview
Performance Food Group Company, through its subsidiaries, markets and distributes primarily national and Company-branded food and food-related products to customer locations across North America. The Company serves both of the major customer types in the restaurant industry: (i) independent customers, and (ii) multi-unit, or chain, customers, which include some of the most recognizable family and casual dining restaurant chains, as well as schools, business and industry locations, healthcare facilities, and retail establishments.
The Company also specializes in distributing candy, snacks, beverages, cigarettes, alternative nicotine products, food and food-related products, and other non-food items nationally to convenience stores, vending and office coffee service distributors, retailers and entertainment venues, and provides small parcel “pick and pack” capabilities including fulfillment of ambient, frozen, fresh and temperature sensitive items utilizing third-party carriers to deliver order sizes too small to be served effectively by our fleet network.
Share Repurchase Program
2. Summary of Significant Accounting Policies and Estimates
Basis of Presentation
The consolidated financial statements have been prepared by the Company, without audit, with the exception of the June 27, 2026 consolidated balance sheet, which was derived from the audited consolidated financial statements included in the Form 10-K. The financial statements include consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of shareholders’ equity, and consolidated statements of cash flows. Certain prior period amounts have been reclassified to conform to current period presentation. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, shareholders’ equity, and cash flows for all periods presented have been made.
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates used by management are related to the accounting for the allowance for doubtful accounts, reserve for inventories, impairment testing of goodwill and other intangible assets, acquisition accounting, reserves for claims and recoveries under insurance programs, vendor rebates and promotional incentives, bonus accruals, depreciation, amortization, determination of useful lives of tangible and intangible assets, leases, and income taxes. Actual results could differ from these estimates.
The results of operations are not necessarily indicative of the results to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K. Certain footnote disclosures included in annual financial statements prepared in accordance with GAAP have been condensed or omitted herein pursuant to applicable rules and regulations for interim financial statements.
3. Recently Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments--Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides a practical expedient for all entities to simplify the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification (“ASC”) 606: Revenue from Contracts with Customers. In developing reasonable and supportable forecasts as part of estimating expected credit losses, entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this update should be applied on a prospective basis. This
11
pronouncement is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company adopted the amendments in this update prospectively at the beginning of fiscal 2027 and elected to apply the practical expedient when estimating expected credit losses. The provisions of the new standard did not have a material impact on the Company’s results of operations, financial position, or cash flows.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, to modernize the accounting for and disclosure of internal-use software costs. This update removes all references to project stages, defines the threshold to begin capitalizing costs, and clarifies the disclosure requirements of capitalized software costs. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years, and can be applied retrospectively, prospectively, or on a modified transition approach. Early adoption is permitted. The Company early adopted the amendments in this update at the beginning of fiscal 2027 with a modified prospective transition approach. The provisions of the new standard did not have a material impact on the Company’s results of operations, financial position, or cash flows.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvement. The new guidance amends existing guidance to simplify the application of hedge accounting, enhance alignment between risk management activities and financial reporting, and provide additional flexibility in the designation and measurement of certain hedging relationships. The amendments included in the five matters addressed in this ASU are intended to better reflect hedging and risk management strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. This pronouncement is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted on any date on or after the issuance of the ASU. The amendments in this ASU should be applied on a prospective basis for all hedging relationships. The Company early adopted the amendments in this update at the beginning of fiscal 2027. The provisions of the new standard did not have a material impact on the Company’s results of operations, financial position, or cash flows.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement--Reporting Comprehensive Income--Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The update improves the disclosures about a public entity’s expenses and addresses requests from investors for more detailed information about the types of expenses in commonly presented expense captions. In January 2025, the FASB released ASU 2025-01 to clarify that ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The amendments in this update will be adopted for the fiscal year ending July 1, 2028 (“fiscal 2028”), with annual reporting requirements effective for our fiscal 2028 Annual Report on Form 10-K and interim reporting requirements effective for our Quarterly Reports on Forms 10-Q within the fiscal year ending June 30, 2029 (“fiscal 2029”). The amendments in this update should be applied prospectively; however, retrospective application is permitted. The provisions of the new standard will not impact the Company’s results of operations, financial position, or cash flows but will require the Company to expand its disclosures of the Company’s expenses. The Company is currently evaluating its processes and controls related to gathering the information needed to meet the new disclosure requirements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. This pronouncement is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The provisions of the new standard will not impact the Company’s results of operations, financial position, or cash flows but may require the Company to expand its interim disclosures beginning in fiscal 2029.
4.
The Company markets and distributes nationally branded food and food-related products and products bearing our customers’ brands as well as Performance Brands to food-away-from-home locations across North America. The Foodservice segment primarily services restaurants and supplies a broadline assortment of products to its customers, including the Company’s Performance Brands and custom-cut meats and seafood, as well as products that are specific to each customer’s menu requirements. The Convenience segment primarily distributes candy, snacks, beverages, cigarettes and alternative nicotine products, food and food-related products, and other non-food items to convenience stores. The Specialty segment distributes candy, snacks, and beverages as well as fresh and frozen perishable foods and other non-food items nationally to vending and office coffee service distributors, retailers and entertainment venues, and provides small parcel “pick and pack” capabilities including fulfillment of ambient, frozen, fresh and temperature sensitive items utilizing third-party carriers to deliver order sizes too small to be served effectively by our fleet network. The Company disaggregates revenue by customer type and product offerings and determined that disaggregating revenue at the segment level achieves the disclosure objective to depict how the
12
nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 14. Segment Information for external revenue by reportable segment.
The Company has customer contracts in which incentives are paid upfront to certain customers. These payments have become industry practice and are not related to financing the customer’s business, nor are they associated with any distinct good or service to be received from the customer. These incentive payments are capitalized and amortized over the life of the contract or the expected life of the customer relationship on a straight-line basis, and are regularly assessed for impairment. The Company’s contract asset for these incentives totaled $
5. Business Combinations
During the first quarter of fiscal 2027, the Company paid cash of $
6. Debt
The Company is a holding company and conducts its operations through its subsidiaries, which have incurred or guaranteed indebtedness as described below.
Debt consisted of the following:
(In millions) |
|
As of September 26, 2026 |
|
|
As of June 27, 2026 |
|
||
ABL Facility |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Less: Original issue discount and deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
|
|
|
|
|
||
Less: current installments |
|
|
|
|
|
|||
Total debt, excluding current installments |
|
$ |
|
|
$ |
|
||
Credit Agreement
PFGC, Inc. (“PFGC”), a wholly-owned subsidiary of the Company, and Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, are parties to the Sixth Amended and Restated Credit Agreement dated September 9, 2024 (the “ABL Facility”), with Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent, and the other lenders party thereto. The ABL Facility has an aggregate principal amount available of $
Performance Food Group, Inc. is the lead borrower under the ABL Facility, which is jointly and severally guaranteed by, and secured by the majority of the assets of, PFGC and all material domestic direct and indirect wholly-owned subsidiaries of PFGC (other than the captive insurance subsidiary and other excluded subsidiaries). Availability for loans and letters of credit under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including trade accounts receivable, inventory, owned real property, and owned transportation equipment. The borrowing base is reduced quarterly by a cumulative fraction of the real property and transportation equipment values. Advances on accounts receivable and inventory are subject to change based on periodic commercial finance examinations and appraisals, and the real property and transportation equipment values included in the borrowing base are subject to change based on periodic appraisals. Audits and appraisals are conducted at the direction of the administrative agent for the benefit and on behalf of all lenders.
Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at
13
The following table summarizes outstanding borrowings, availability, and the average interest rate under the ABL Facility:
(Dollars in millions) |
|
As of September 26, 2026 |
|
|
As of June 27, 2026 |
|
||
Aggregate borrowings |
|
$ |
|
|
$ |
|
||
Letters of credit |
|
|
|
|
|
|
||
Excess availability, net of lenders’ reserves of $ |
|
|
|
|
|
|
||
Average interest rate, excluding impact of interest rate swaps |
|
|
% |
|
|
% |
||
Senior Notes due 2029
On July 26, 2021, Performance Food Group, Inc. issued and sold $
The proceeds from the Notes due 2029 were used to pay down the outstanding balance of a prior credit agreement, to redeem the
The Notes due 2029 were issued at
The indenture governing the Notes due 2029 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2029 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2029 to become or be declared due and payable.
Senior Notes due 2032
On September 12, 2024, Performance Food Group, Inc. issued and sold $
The Company intended to use the proceeds from the Notes due 2032, together with borrowings under the ABL Facility, to finance the cash consideration in connection with the Company’s acquisition of Cheney Bros., Inc. (the “Cheney Brothers Acquisition”) and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2032. However, since there was no requirement to hold the funds in escrow until the Cheney Brothers Acquisition closed, the net proceeds for the Notes due 2032 were used to pay down a portion of the outstanding balance of the ABL Facility. The Company subsequently funded the cash consideration for the Cheney Brothers Acquisition with borrowings under the ABL Facility.
The Notes due 2032 were issued at
14
The indenture governing the Notes due 2032 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2032 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2032 to become or be declared due and payable.
Senior Notes due 2034
On February 19, 2026, Performance Food Group, Inc. issued and sold $
The proceeds from the Notes due 2034, along with additional borrowings under the ABL Facility, were used to redeem the
The Notes due 2034 were issued at
The indenture governing the Notes due 2034 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2034 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2034 to become or be declared due and payable.
7. Derivatives and Hedging Activities
Hedges of Forecasted Diesel Fuel Purchases
From time to time, the Company enters into costless collars or swaps to manage its exposure to fuel costs and the related variability in cash flows for its forecasted purchases of diesel fuel. At the beginning of fiscal 2027, the Company had
15
collar contract for a notional volume of
In conjunction with the Company’s adoption of ASU 2025-09, as described in Note 3. Recently Issued Accounting Pronouncements, the Company elected to designate its fuel collar and swap contracts under ASC 815, Derivatives and Hedging as cash flow hedges of forecasted diesel fuel purchases to manage the Company’s exposure to variability in diesel fuel prices. The fuel derivative instruments are recorded at a fair value of $
Changes in the fair value of the fuel derivative instruments are initially recognized in other comprehensive income and such amounts are subsequently reclassified into operating expenses in the same period in which the related forecasted fuel purchases affect earnings. During the first quarter of fiscal 2027, the Company realized gains of $
8. Leases
The Company determines if an arrangement is a lease at inception and recognizes a financing or operating lease liability and right-of-use asset in the Company’s consolidated balance sheet. Right-of-use assets and lease liabilities for both operating and finance leases are recognized based on the present value of lease payments over the lease term at commencement date. When the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. This rate was determined by using the yield curve based on the Company’s credit rating adjusted for the Company’s specific debt profile and secured debt risk. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease expenses for these short-term leases are recognized on a straight-line basis over the lease term. The Company has several lease agreements that contain lease and non-lease components, such as maintenance, taxes, and insurance, which are accounted for separately. The difference between the operating lease right-of-use assets and operating lease liabilities primarily relates to adjustments for deferred rent, favorable leases, and prepaid rent.
Subsidiaries of the Company have entered into numerous operating and finance leases for various warehouses, office facilities, equipment, tractors, and trailers. Our leases have remaining lease terms of
Certain of the leases for tractors, trailers, and other vehicles and equipment provide for residual value guarantees to the lessors. Circumstances that would require the subsidiary to perform under the guarantees include either (1) default on the leases with the leased assets being sold for less than the specified residual values in the lease agreements, or (2) decisions not to purchase the assets at the end of the lease terms combined with the sale of the assets, with sales proceeds less than the residual value of the leased assets specified in the lease agreements. Residual value guarantees under these operating lease agreements typically range between
16
The following table presents the location of the right-of-use assets and lease liabilities in the Company’s consolidated balance sheet as of September 26, 2026 and June 27, 2026 (in millions), as well as the weighted-average lease term and discount rate for the Company’s leases:
Leases |
|
Consolidated Balance Sheet Location |
|
As of |
|
|
As of |
|
||
Assets: |
|
|
|
|
|
|
|
|
||
Operating |
|
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Finance |
|
|
|
|
|
|
|
|||
Total lease assets |
|
|
|
$ |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
|
|
||
Operating |
|
Operating lease obligations—current installments |
|
$ |
|
|
$ |
|
||
Finance |
|
Finance lease obligations—current installments |
|
|
|
|
|
|
||
Non-current |
|
|
|
|
|
|
|
|
||
Operating |
|
Operating lease obligations, excluding current installments |
|
|
|
|
|
|
||
Finance |
|
Finance lease obligations, excluding current installments |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Weighted average remaining lease term |
|
|
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||||
Finance leases |
|
|
|
|
|
|
||||
Weighted average discount rate |
|
|
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
% |
|
|
% |
||
Finance leases |
|
|
|
|
% |
|
|
% |
||
The following table presents the location of lease costs in the Company’s consolidated statement of operations for the periods reported (in millions):
|
|
|
|
Three Months Ended |
|
|||||
Lease Cost |
|
Statement of Operations Location |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Finance lease cost: |
|
|
|
|
|
|
|
|
||
Amortization of finance lease assets |
|
Operating expenses |
|
$ |
|
|
$ |
|
||
Interest on lease liabilities |
|
Interest expense |
|
|
|
|
|
|
||
Total finance lease cost |
|
|
|
$ |
|
|
$ |
|
||
Operating lease cost |
|
Operating expenses |
|
|
|
|
|
|
||
Short-term lease cost |
|
Operating expenses |
|
|
|
|
|
|
||
Total lease cost |
|
|
|
$ |
|
|
$ |
|
||
The following table presents the supplemental cash flow information related to leases for the periods reported (in millions):
|
|
Three Months Ended |
|
|||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
|
||
17
The following table presents the future minimum lease payments under non-cancelable leases as of September 26, 2026 (in millions):
Fiscal Year |
|
Operating Leases |
|
|
Finance Leases |
|
||
2027 |
|
$ |
|
|
$ |
|
||
2028 |
|
|
|
|
|
|
||
2029 |
|
|
|
|
|
|
||
2030 |
|
|
|
|
|
|
||
2031 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
$ |
|
|
$ |
|
||
Less: Interest |
|
|
|
|
|
|
||
Present value of future minimum lease payments |
|
$ |
|
|
$ |
|
||
As of September 26, 2026, the Company had additional operating and finance leases that had not yet commenced, which total $
9. Fair Value of Financial Instruments
The carrying values of cash, accounts receivable, outstanding checks in excess of deposits, trade accounts payable, and accrued expenses approximate their fair values because of the relatively short maturities of those instruments. The derivative assets and liabilities are recorded at fair value on the balance sheet. The fair value of long-term debt, which has a carrying value of $
10. Income Taxes
The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state, and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.
The Company’s effective tax rate was
As of September 26, 2026 and June 27, 2026, the Company had net deferred tax assets of $
11. Commitments and Contingencies
Purchase Obligations
The Company had outstanding contracts and purchase orders of $
Guarantees
The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to: (i) certain real estate leases under which subsidiaries
18
of the Company may be required to indemnify property owners for environmental and other liabilities and other claims arising from their use of the applicable premises; (ii) certain agreements with the Company’s officers, directors, and employees under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship; and (iii) customer agreements under which the Company may be required to indemnify customers for certain claims brought against them with respect to the supplied products. Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been required to make payments under these obligations and, therefore, no liabilities have been recorded for these obligations in the Company’s consolidated balance sheets.
Litigation
The Company is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss arising from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When losses are probable and reasonably estimable, they have been accrued. Based on estimates of the range of potential losses associated with these matters, management does not believe that the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the Company. However, the final results of legal proceedings cannot be predicted with certainty and, if the Company failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the Company’s current estimates of the range of potential losses, the Company’s consolidated financial position or results of operations could be materially adversely affected in future periods.
Tax Liabilities
The Company is subject to customary audits by authorities in the jurisdictions where it conducts business in the United States and foreign countries, which may result in assessments of additional taxes. These additional taxes are accrued when probable and reasonably estimable.
Tariffs and Trade Regulations
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Because we are not the importer of record for most products we distribute, our direct exposure to potential tariff refunds is limited. We recognize tariff refunds when they become probable, as defined under ASC 450-20, under the loss recovery model. During the three months ended September 26, 2026, we recognized an immaterial amount of tariff refunds. The timing and amount of any future recovery of tariffs previously paid under IEEPA by our suppliers and passed through to the Company are uncertain and, therefore, we are unable to estimate the future financial effects of potential tariff refunds at this time.
12. Related-Party Transactions
The Company participates in, and has an equity method investment in, a purchasing alliance that was formed to obtain better pricing, to expand product options, to reduce internal costs, and to achieve greater inventory turnover. The Company’s investment in the purchasing alliance was $
13. Earnings Per Common Share
Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. The Company’s potential common shares include outstanding stock-based compensation awards and expected issuable shares under the employee stock purchase plan. In computing diluted earnings per common share, the average closing stock price for the period is used in determining the number of shares assumed to be purchased with the assumed proceeds under the treasury stock method. Potential common shares of
19
A reconciliation of the numerators and denominators for the basic and diluted earnings per common share computations is as follows:
(In millions, except per share amounts) |
|
Three Months Ended September 26, 2026 |
|
|
Three Months Ended September 27, 2025 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Denominator: |
|
|
|
|
|
|
||
Weighted-average common shares outstanding |
|
|
|
|
|
|
||
Dilutive effect of potential common shares |
|
|
|
|
|
|
||
Weighted-average dilutive common shares outstanding |
|
|
|
|
|
|
||
Basic earnings per common share |
|
$ |
|
|
$ |
|
||
Diluted earnings per common share |
|
$ |
|
|
$ |
|
||
14. Segment Information
Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has
The Foodservice segment distributes a broadline assortment of products under national brands, customer brands, and our Performance Brands. Foodservice sells to independent and multi-unit chain restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Convenience segment distributes candy, snacks, beverages, cigarettes, alternative nicotine products, food and food-related products and other non-food items to convenience stores across North America. Our Specialty segment distributes candy, snacks, and beverages as well as fresh and frozen perishable foods and other non-food items nationally to vending and office coffee service distributors, retailers and entertainment venues, and provides small parcel “pick and pack” capabilities, including fulfillment of ambient, frozen, fresh and temperature sensitive items, utilizing third-party carriers to deliver order sizes too small to be served effectively by our fleet network.
Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. Corporate & All Other may also include capital expenditures for certain information technology projects that are transferred to the segments once placed in service.
Intersegment sales represent sales between the segments which are eliminated in consolidation.
The Company’s significant segment expenses included in the measure of segment profit, Segment Adjusted EBITDA, and regularly provided to or easily computed from information regularly provided to our CODM are Segment Cost of Goods Sold and Segment Operating Expense. Accordingly, the Company’s significant segment expenses exclude the same items that are excluded from Segment Adjusted EBITDA.
20
The following is a reconciliation of segment revenue and significant segment expenses to Segment Adjusted EBITDA:
|
|
Reportable Segments |
|
|
Reconciling Items |
|
|
|
|
|||||||||||||||
(In millions) |
|
Foodservice |
|
|
Convenience |
|
|
Specialty |
|
|
Corporate |
|
|
Eliminations |
|
|
Consolidated |
|
||||||
For the three months ended September 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net external sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Inter-segment sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment cost of goods sold(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment operating expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment other (income) expense, net(3) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the three months ended September 27, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net external sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Inter-segment sales |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment cost of goods sold(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment operating expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment other (income) expense, net(3) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
21
Segment Adjusted EBITDA for each reportable segment and Corporate & All Other is presented below along with a reconciliation to consolidated income before taxes.
|
|
Three Months Ended |
|
|||||
(In millions) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Foodservice Adjusted EBITDA |
|
$ |
|
|
$ |
|
||
Convenience Adjusted EBITDA |
|
|
|
|
|
|
||
Specialty Adjusted EBITDA |
|
|
|
|
|
|
||
Corporate & All Other |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
Change in LIFO reserve |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
( |
) |
|
|
( |
) |
Acquisition & business optimization expenses |
|
|
( |
) |
|
|
( |
) |
Other adjustments (4) |
|
|
( |
) |
|
|
( |
) |
Income before taxes |
|
$ |
|
|
$ |
|
||
Total assets by reportable segment and the reconciling items for Corporate & All Other, excluding intercompany receivables between segments, are as follows:
(In millions) |
|
As of |
|
|
As of |
|
||
Foodservice |
|
$ |
|
|
$ |
|
||
Convenience |
|
|
|
|
|
|
||
Specialty |
|
|
|
|
|
|
||
Corporate & All Other |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited Consolidated Financial Statements and the Notes thereto included in Item 1. Financial Statements (“Item 1”) of this Form 10-Q and the audited Consolidated Financial Statements and the Notes thereto included in Item 8. Financial Statements and Supplementary Data of the Form 10-K. In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including those described in Item 1A. Risk Factors of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Form 10-Q.
Our Company
We market and distribute more than 300,000 food and food-related products to customers across North America, from our over 150 distribution centers to over 350,000 customer locations in the food-away-from-home industry. We offer our customers a broadline assortment of products including our proprietary-branded products, nationally branded products, and products bearing our customers’ brands. Our product assortment ranges from “center-of-the-plate” items (such as beef, pork, poultry, and seafood), frozen foods, and groceries to candy, snacks, and beverages. We also sell disposables, cleaning and kitchen supplies, and related products used by our customers, as well as cigarettes and alternative nicotine products. In addition to the products we offer to our customers, we provide value-added services by allowing our customers to benefit from our industry knowledge, scale, and expertise in the areas of product selection and procurement, menu development, and operational strategy.
Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Convenience, and Specialty. Our Foodservice segment distributes a broadline assortment of products under national brands, customer brands, and our Performance Brands. Foodservice sells to independent and multi-unit chain restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Convenience segment distributes candy, snacks, beverages, cigarettes, alternative nicotine products, food and food-related products and other non-food items to convenience stores across North America. Our Specialty segment distributes candy, snacks, and beverages as well as fresh and frozen perishable foods and other non-food items nationally to vending and office coffee service distributors, retailers and entertainment venues, and provides small parcel “pick and pack” capabilities, including fulfillment of ambient, frozen, fresh and temperature sensitive items, utilizing third-party carriers to deliver order sizes too small to be served effectively by our fleet network. We believe our diverse segments provide substantial opportunities for cross-segment collaboration to better serve our customers, including business development, procurement, operational best practices such as the use of new productivity technologies, and supply chain and network optimization, as well as shared corporate functions such as accounting, treasury, tax, legal, information systems, and human resources.
Key Factors Affecting Our Business
Our business, our industry and the economy are subject to a number of macroeconomic conditions triggered by developments beyond our control, which can result in reduced demand for our products. The Company and our industry may face challenges related to geopolitical dynamics and other events, which can drive economic volatility, market uncertainty, inflationary pressure, supply chain disruptions, or lower disposable incomes, negatively affecting consumer confidence and discretionary spending. We continue to actively monitor the impacts of the evolving macroeconomic and geopolitical landscape, including dynamic tariff and global trade policies, recovery of potential tariff refunds, and recent geopolitical events (including the ongoing conflicts in Ukraine and the Middle East), on all aspects of our business. Although we saw little impact from tariffs on our results during fiscal 2026 and the first quarter of fiscal 2027, rapidly evolving tariff and global trade policies and geopolitical dynamics continued to cause uncertainty. Additionally, recent hostilities and geopolitical tensions, such as the conflict in the Middle East, contributed to significantly higher fuel prices in fiscal 2026 and the first quarter of fiscal 2027. To the extent increasing fuel expenses are not able to be offset by (i) diesel fuel surcharges (which are generally recognized on a one-month lag following changes in fuel prices) and/or (ii) gains on derivative instruments, prolonged high fuel prices could adversely affect our business, financial condition, or results of operations. Further, sustained macroeconomic challenges, whether due to tariffs, rising fuel prices, or otherwise, have in the past and could in the future negatively affect consumer discretionary spending decisions within our customers’ establishments, which could negatively impact our sales and profitability.
We believe that our performance is principally affected by the following key factors:
23
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on rounded numbers.
Case Growth
Case volume represents the volume of products sold to customers during a given period of time. Case growth is calculated by dividing the increase (decrease) in the case volumes sold year-over-year by the number of cases sold in the prior year. We define a case as the lowest level of packaged products as received from our suppliers, with one case containing several individually packaged units of the same product. Where individual packaged units are sold separately, case volume is calculated using the case equivalent quantity sold. Case growth provides useful information to management and investors in evaluating sales performance and as an indicator of gross margin performance. In our assessment of sales performance, management utilizes total case growth, as well as organic case growth, which excludes acquisition-related growth until the acquired business has been reflected in our results of operations for at least 12 months. Management also reviews case volume growth by customer type, with distinction between Foodservice independent and chain customers, as this provides a measure of gross profit performance due to the pricing strategies and product mix differences associated with each customer type.
Net Sales
Net sales is equal to gross sales, plus excise taxes, minus sales returns; minus sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in case volumes, product inflation or deflation that is reflected in the pricing of our products, mix of products sold, and acquisitions.
Gross Profit
Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of vendor rebates and promotional incentives), inbound freight, and remittances of excise tax. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.
Adjusted EBITDA
Management measures operating performance based on our Adjusted EBITDA, defined as net income before interest expense, interest income, income taxes, and depreciation and amortization, further adjusted to exclude certain items that we do not consider part of our core operating results. Such adjustments include certain unusual, non-cash, non-recurring, cost reduction, or other adjustment items permitted in calculating covenant compliance under our ABL Facility and indentures (other than certain pro forma adjustments permitted under our ABL Facility and indentures governing the Notes due 2029, Notes due 2032, and Notes due 2034 relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under our ABL Facility and indentures, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the ABL Facility and indentures). Our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.
Adjusted EBITDA is not a measure of operating income, operating performance, or liquidity presented in accordance with, or required by, GAAP and is subject to important limitations. We use this measure to evaluate the performance of our business on
24
a consistent basis over time and for business planning purposes. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties, including our lenders under the ABL Facility and holders of our Notes due 2029, Notes due 2032, and Notes due 2034 in their evaluation of the operating performance of companies in industries similar to ours.
Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:
In calculating Adjusted EBITDA, we add back certain non-cash, non-recurring, and other items as permitted or required by our ABL Facility and indentures. Adjusted EBITDA among other things:
We have included below reconciliations of Adjusted EBITDA to the most directly comparable measure calculated in accordance with GAAP for the periods presented.
Results of Operations and Adjusted EBITDA
The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated:
|
|
Three Months Ended |
|
|||||||||||||
(In millions, except per share data) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
Change |
|
|
% |
|
||||
Net sales |
|
$ |
18,018.4 |
|
|
$ |
17,075.9 |
|
|
$ |
942.5 |
|
|
|
5.5 |
|
Cost of goods sold |
|
|
15,830.9 |
|
|
|
15,059.3 |
|
|
|
771.6 |
|
|
|
5.1 |
|
Gross profit |
|
|
2,187.5 |
|
|
|
2,016.6 |
|
|
|
170.9 |
|
|
|
8.5 |
|
Operating expenses |
|
|
1,915.3 |
|
|
|
1,791.9 |
|
|
|
123.4 |
|
|
|
6.9 |
|
Operating profit |
|
|
272.2 |
|
|
|
224.7 |
|
|
|
47.5 |
|
|
|
21.1 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
98.4 |
|
|
|
104.4 |
|
|
|
(6.0 |
) |
|
|
(5.7 |
) |
Other, net |
|
|
0.7 |
|
|
|
(1.2 |
) |
|
|
1.9 |
|
|
|
158.3 |
|
Other expense, net |
|
|
99.1 |
|
|
|
103.2 |
|
|
|
(4.1 |
) |
|
|
(4.0 |
) |
Income before income taxes |
|
|
173.1 |
|
|
|
121.5 |
|
|
|
51.6 |
|
|
|
42.5 |
|
Income tax expense |
|
|
43.6 |
|
|
|
27.9 |
|
|
|
15.7 |
|
|
|
56.3 |
|
Net income (GAAP) |
|
$ |
129.5 |
|
|
$ |
93.6 |
|
|
$ |
35.9 |
|
|
|
38.4 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
528.0 |
|
|
$ |
480.1 |
|
|
$ |
47.9 |
|
|
|
10.0 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
156.7 |
|
|
|
155.5 |
|
|
|
1.2 |
|
|
|
0.8 |
|
Diluted |
|
|
157.5 |
|
|
|
156.9 |
|
|
|
0.6 |
|
|
|
0.4 |
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.83 |
|
|
$ |
0.60 |
|
|
$ |
0.23 |
|
|
|
38.3 |
|
Diluted |
|
$ |
0.82 |
|
|
$ |
0.60 |
|
|
$ |
0.22 |
|
|
|
36.7 |
|
25
We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income. The following table reconciles Adjusted EBITDA to net income for the periods presented:
|
|
Three Months Ended |
|
|||||
(In millions) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Net income (GAAP) |
|
$ |
129.5 |
|
|
$ |
93.6 |
|
Interest expense |
|
|
98.4 |
|
|
|
104.4 |
|
Income tax expense |
|
|
43.6 |
|
|
|
27.9 |
|
Depreciation |
|
|
149.7 |
|
|
|
128.7 |
|
Amortization of intangible assets |
|
|
61.0 |
|
|
|
66.7 |
|
Change in LIFO reserve (1) |
|
|
18.7 |
|
|
|
24.5 |
|
Stock-based compensation expense |
|
|
13.2 |
|
|
|
13.0 |
|
Acquisition & business optimization expenses (2) |
|
|
12.0 |
|
|
|
9.2 |
|
Other adjustments (3) |
|
|
1.9 |
|
|
|
12.1 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
528.0 |
|
|
$ |
480.1 |
|
Consolidated Results of Operations
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
Net Sales
Net sales growth is primarily a function of acquisitions, case growth, pricing, including product inflation/deflation, and a changing mix of customers, channels, and product categories sold. Net sales increased $942.5 million, or 5.5%, for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 primarily driven by an increase of $437.8 million resulting from an increase in organic cases sold, $261.2 million of incremental net sales from recent acquisitions, and an increase of $243.5 million related to an increase in selling price per case as a result of inflation. Total case volume increased 4.2% during the first quarter of fiscal 2027 compared to the same period of fiscal 2026. Total organic case volume increased 2.5% in the first quarter of fiscal 2027 compared to the same period of fiscal 2026. Total organic case volume benefited from a 5.5% increase in organic independent Foodservice cases, including growth in Performance Brands cases, and growth in cases sold to Foodservice’s chain business. The overall rate of product cost inflation was approximately 3.4% for the first quarter of fiscal 2027.
Gross Profit
Gross profit increased $170.9 million, or 8.5%, for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 primarily driven by vendor rebates and promotional incentives, a favorable shift in the mix of cases sold, including growth in the independent channel which generates higher gross profit due to additional services provided, as well as recent acquisitions.
Operating Expenses
Operating expenses increased $123.4 million, or 6.9%, for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 primarily driven by recent acquisitions, a $42.8 million increase in personnel expenses primarily related to salaries, wages, commissions and benefits, and a $34.2 million increase in fuel expenses (excluding the impact of fuel surcharges in net sales) primarily due to higher fuel prices and miles driven as a result of new business, partially offset by realized gains related to fuel hedges. The increase in operating expenses was partially offset by a $4.5 million decrease in professional fees and a $4.1 million decrease in insurance expense primarily related to auto insurance and workers’ compensation.
26
Net Income
Net income increased $35.9 million, or 38.4%, for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 primarily driven by an increase in gross profit and decrease in interest expense, partially offset by increases in operating expenses and income tax expense. The decrease in interest expense was primarily the result of decreases in the average borrowings and average interest rate during the first quarter of fiscal 2027 compared to the prior year period.
The Company reported income tax expense of $43.6 million for the first quarter of fiscal 2027 compared to $27.9 million for the first quarter of fiscal 2026. Our effective tax rate for the first quarter of fiscal 2027 was 25.2% compared to 23.0% for the first quarter of fiscal 2026. The effective tax rate differed from the prior year period primarily due to a decrease in deductible discrete items related to stock-based compensation and a decrease in federal tax credits net of valuation allowance established, partly offset by a decrease in non-deductible compensation and other non-deductible expenses and a decrease in foreign taxes as a percentage of income.
Segment Results
Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Convenience, and Specialty. Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Segment Adjusted EBITDA, which is the Company’s GAAP measure of segment profit. Segment Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, and amortization and excludes certain items that the Company does not consider part of its segments’ core operating results, including changes in the LIFO reserve, stock-based compensation expense, and acquisition and business optimization expenses. See Note 14. Segment Information of the consolidated financial statements in this Form 10-Q.
Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. Corporate & All Other may also include capital expenditures for certain information technology projects that are transferred to the segments once placed in service.
The following tables set forth total net sales and Segment Adjusted EBITDA by reportable segment and the reconciling items for Corporate & All Other and eliminations for the periods indicated (dollars in millions):
Net Sales
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
Change |
|
|
% |
|
||||
Foodservice |
|
$ |
9,604.6 |
|
|
$ |
9,146.1 |
|
|
$ |
458.5 |
|
|
|
5.0 |
|
Convenience |
|
|
6,940.1 |
|
|
|
6,586.9 |
|
|
|
353.2 |
|
|
|
5.4 |
|
Specialty |
|
|
1,407.3 |
|
|
|
1,276.2 |
|
|
|
131.1 |
|
|
|
10.3 |
|
Total segments |
|
$ |
17,952.0 |
|
|
$ |
17,009.2 |
|
|
$ |
942.8 |
|
|
|
5.5 |
|
Corporate & All Other |
|
|
269.8 |
|
|
|
250.2 |
|
|
|
19.6 |
|
|
|
7.8 |
|
Intersegment eliminations |
|
|
(203.4 |
) |
|
|
(183.5 |
) |
|
|
(19.9 |
) |
|
|
(10.8 |
) |
Total net sales |
|
$ |
18,018.4 |
|
|
$ |
17,075.9 |
|
|
$ |
942.5 |
|
|
|
5.5 |
|
Segment Adjusted EBITDA
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
September 26, 2026 |
|
|
September 27, 2025 |
|
|
Change |
|
|
% |
|
||||
Foodservice |
|
$ |
367.9 |
|
|
$ |
324.4 |
|
|
$ |
43.5 |
|
|
|
13.4 |
|
Convenience |
|
|
125.6 |
|
|
|
121.0 |
|
|
|
4.6 |
|
|
|
3.8 |
|
Specialty |
|
|
89.5 |
|
|
|
94.0 |
|
|
|
(4.5 |
) |
|
|
(4.8 |
) |
Total segments |
|
$ |
583.0 |
|
|
$ |
539.4 |
|
|
$ |
43.6 |
|
|
|
8.1 |
|
Corporate & All Other |
|
|
(55.0 |
) |
|
|
(59.3 |
) |
|
|
4.3 |
|
|
|
7.3 |
|
Total Adjusted EBITDA |
|
$ |
528.0 |
|
|
$ |
480.1 |
|
|
$ |
47.9 |
|
|
|
10.0 |
|
Segment Results—Foodservice
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
Net Sales
Net sales for Foodservice increased $458.5 million, or 5.0%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily driven by $261.2 million of incremental net sales contributions from recent acquisitions, a $151.8 million increase as a result of organic case volume growth, and a $45.5 million increase related to an increase in selling price per case as a result of
27
inflation. Total case growth for Foodservice was 4.2% and organic case growth was 1.7% for the first quarter of fiscal 2027, compared to the prior year period. Total independent case growth was 7.8% for the first quarter of fiscal 2027 compared to the prior year period. Securing new, and expanding business with, independent customers resulted in organic independent case growth of 5.5% in the first quarter of fiscal 2027 compared to the prior year period. For the first quarter of fiscal 2027, independent sales as a percentage of total Foodservice segment sales were 43.0%.
Segment Adjusted EBITDA
Adjusted EBITDA for Foodservice increased $43.5 million, or 13.4%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily as a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $141.9 million, or 10.7%, in the first quarter of fiscal 2027, compared to the prior year period, primarily driven by growth in cases sold, a favorable shift in the mix of cases sold, including more Performance Brands products sold to independent customers, vendor rebates and promotional incentives, and recent acquisitions.
Operating expenses impacting Foodservice’s Adjusted EBITDA increased $97.9 million, or 9.7%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily as a result of recent acquisitions, a $38.5 million increase in personnel expenses primarily related to salaries, wages, commissions, and benefits, and a $24.5 million increase in fuel expenses (excluding the impact of fuel surcharges in net sales) primarily due to higher fuel prices and miles driven as a result of new business, partially offset by realized gains related to fuel hedges.
Depreciation of fixed assets and amortization of intangible assets recorded in this segment increased from $130.3 million in the first quarter of fiscal 2026 to $142.2 million in the first quarter of fiscal 2027, primarily driven by recent acquisitions.
Segment Results—Convenience
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
Net Sales
Net sales for Convenience increased $353.2 million, or 5.4%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily driven by an increase of $274.4 million as a result of case growth due to the addition of new chain customers and an increase of $78.8 million related to an increase in selling price per case related to inflation, partially offset by a mix shift from cigarettes to alternative nicotine products. Total Convenience cases sold increased 4.1% in the first quarter of fiscal 2027 compared to the prior year period.
Segment Adjusted EBITDA
Adjusted EBITDA for Convenience increased $4.6 million, or 3.8%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily as a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience’s Adjusted EBITDA increased $16.7 million, or 3.7%, for the first quarter of fiscal 2027 compared to the prior year period primarily due to vendor rebates and promotional incentives and income earned from manufacturers for distribution and related services.
Operating expenses impacting Convenience’s Adjusted EBITDA increased $11.6 million, or 3.5%, for the first quarter of fiscal 2027 compared to the prior year period primarily as a result of an $8.6 million increase in personnel expenses primarily related to salaries, wages and benefits and a $6.9 million increase in fuel expenses (excluding the impact of fuel surcharges in net sales) primarily due to higher fuel prices, partially offset by realized gains related to fuel hedges. These increases in operating expenses were partially offset by a $1.1 million decrease in fleet maintenance and repair expenses, a $1.1 million decrease in rent expense primarily related to fleet leases, and a $0.9 million decrease in insurance expense primarily related to auto insurance and workers’ compensation.
Depreciation of fixed assets and amortization of intangible assets recorded in this segment increased from $39.9 million in the first quarter of fiscal 2026 to $41.1 million in the first quarter of fiscal 2027.
Segment Results—Specialty
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
Net Sales
During the current fiscal year, Specialty has revised its sales channel classifications to better align with how management evaluates operating performance and market opportunities. As a result, the former value channel is presented as grocery retail, and the theater, concessions and hospitality channels are presented on a combined basis within entertainment. Comparative channel information discussed below has been reclassified to conform to the current presentation.
28
Net sales for Specialty increased $131.1 million, or 10.3%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily driven by an increase of $73.0 million related to an increase in selling price per case due to a favorable channel mix as well as inflation and an increase of $58.1 million as a result of case growth in the vending, grocery retail, entertainment, and office supply channels, partially offset by declines in retail. Total Specialty cases sold increased 4.3% in the first quarter of fiscal 2027 compared to the prior year period.
Segment Adjusted EBITDA
Adjusted EBITDA for Specialty decreased $4.5 million, or 4.8%, from the first quarter of fiscal 2026 to the first quarter of fiscal 2027 primarily as a result of an increase in operating expenses, partially offset by an increase in gross profit. Gross profit contributing to Specialty’s Adjusted EBITDA increased $8.2 million, or 3.5%, for the first quarter of fiscal 2027 compared to the prior year period primarily driven by vendor rebates and promotional incentives and net sales growth.
Operating expenses impacting Specialty’s Adjusted EBITDA increased $12.7 million, or 9.0%, for the first quarter of fiscal 2027 compared to the prior year period, primarily due to a $4.3 million increase in personnel expenses primarily driven by salaries, wages and benefits, a $2.6 million increase in bad debt expense, a $2.5 million increase in fuel expenses (excluding the impact of fuel surcharges in net sales) primarily due to higher fuel prices and miles driven, partially offset by realized gains related to fuel hedges, and an increase of $1.4 million in third-party outbound freight expense.
Depreciation of fixed assets and amortization of intangible assets recorded in this segment increased from $13.0 million in the first quarter of fiscal 2026 to $14.2 million in the first quarter of fiscal 2027.
Liquidity and Capital Resources
We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our ABL Facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our ABL Facility and occasionally with the net proceeds from the issuances of senior notes and/or equity. Our borrowing levels are subject to seasonal fluctuations, as well as procurement and acquisition activities. We borrow under our ABL Facility or pay it down regularly based on our cash flows from operating and investing activities. Our practice is to minimize interest expense while maintaining reasonable liquidity.
As market conditions warrant, we may from time to time seek to repurchase our securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such repurchases may be funded by incurring new debt, including additional borrowings under our ABL Facility. In addition, depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness, make investments or acquisitions or for other purposes. Any new debt may be secured debt.
We are exposed to interest rate risk related to changes in interest rates for borrowings under our ABL Facility. To add stability to interest expense and manage our exposure to interest rate movements, we enter into interest rate swap agreements. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments. As of September 26, 2026, $150.0 million of the outstanding ABL Facility balance is hedged under interest rate swaps, which results in 71% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.
On May 27, 2025, the Board of Directors authorized a share repurchase program for up to $500 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $300 million share repurchase program. The current share repurchase program has an expiration date of May 27, 2029. Repurchases of the Company’s outstanding common stock will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, through privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 trading plans. The share repurchase program may be amended, suspended or discontinued at any time at the Board’s discretion, and does not commit the Company to repurchase any specified number of shares of its common stock. The actual timing, number and value of the shares to be purchased under the program will be determined by the Company at its discretion and will depend on a number of factors, including the performance of the Company’s stock price, general market and other conditions, applicable legal requirements and compliance with the terms of the Company’s outstanding indebtedness. As of September 26, 2026, $498.5 million remained available for share repurchases.
Our contractual cash requirements over the next 12 months and beyond relate to our long-term debt and associated interest payments, operating and finance leases, and purchase obligations. For information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, see Note 6. Debt and Note 8. Leases, respectively, within the Notes to Consolidated Financial Statements included in Item 1. As of September 26, 2026, the Company had total purchase obligations of $217.3 million, which includes agreements for purchases related to capital projects and services in the normal course of business, for which all significant terms have been confirmed, as well as a minimum amount due for various Company meetings and conferences. Purchase obligations also include amounts committed to various capital projects in process or scheduled to be completed in the coming fiscal years. Included in the total purchase obligations above are commitments of $85.5
29
million for capital projects related to warehouse expansion and improvements and warehouse equipment. The Company anticipates using cash flows from operations or borrowings under the ABL Facility to fulfill these commitments. Amounts due under these agreements were not included in the Company’s consolidated balance sheet as of September 26, 2026.
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next 12 months and beyond, to maintain sufficient liquidity for normal operating purposes, and to fund capital expenditures.
As of September 26, 2026, our cash balance totaled $46.6 million, including restricted cash of $10.7 million, as compared to a cash balance totaling $103.1 million, including restricted cash of $10.7 million, as of June 27, 2026.
Operating Activities
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
During the first three months of fiscal 2027 and fiscal 2026, net cash used in operating activities was $89.3 million and $145.2 million, respectively. The improvement in net cash used in operating activities in the first three months of fiscal 2027 compared to the first three months of fiscal 2026 was largely driven by a change in the timing and volume of advanced purchases of inventory to take advantage of preferred pricing.
Investing Activities
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
Net cash used in investing activities was $53.8 million in the first three months of fiscal 2027 compared to $78.0 million in the first three months of fiscal 2026. These investments consisted of $4.1 million cash paid for an acquisition in the first three months of fiscal 2027 compared to no cash paid for acquisitions in the first three months of fiscal 2026, along with capital purchases of property, plant, and equipment of $53.9 million and $78.9 million for the first three months of fiscal 2027 and the first three months of fiscal 2026, respectively. For the first three months of fiscal 2027, purchases of property, plant, and equipment primarily consisted of outlays for transportation equipment, information technology, warehouse equipment, and warehouse improvements and expansions. The following table presents the capital purchases of property, plant, and equipment by segment.
|
|
Three Months Ended |
|
|||||
(In millions) |
|
September 26, 2026 |
|
|
September 27, 2025 |
|
||
Foodservice |
|
$ |
46.0 |
|
|
$ |
51.5 |
|
Convenience |
|
|
9.6 |
|
|
|
13.9 |
|
Specialty |
|
|
1.2 |
|
|
|
2.5 |
|
Corporate & All Other |
|
|
(2.9 |
) |
|
|
11.0 |
|
Total capital purchases of property, plant and equipment |
|
$ |
53.9 |
|
|
$ |
78.9 |
|
Financing Activities
Three months ended September 26, 2026 compared to the three months ended September 27, 2025
During the first three months of fiscal 2027, net cash provided by financing activities was $86.6 million, which consisted primarily of $162.3 million in net borrowings under our ABL Facility, which was partially offset by $70.3 million in payments under finance lease obligations.
During the first three months of fiscal 2026, net cash provided by financing activities was $182.9 million, which consisted primarily of $246.3 million in net borrowings under our ABL Facility, which was partially offset by $57.5 million in payments under finance lease obligations.
The Company’s financing arrangements as of September 26, 2026 are described in Note 6. Debt of the consolidated financial statements within this Form 10-Q. As of September 26, 2026, the Company was in compliance with all of the covenants under the ABL Facility and the indentures governing the Notes due 2029, the Notes due 2032, and the Notes due 2034.
Total Assets by Segment
Total assets by segment discussed below exclude intercompany receivables between segments.
Total assets for Foodservice increased $549.9 million from $11,358.1 million as of September 27, 2025 to $11,908.0 million as of September 26, 2026 primarily due to recent acquisitions as well as increases in property, plant and equipment through
30
additional transportation equipment under finance leases. Total assets for Foodservice decreased $56.1 million from $11,964.1 million as of June 27, 2026 to $11,908.0 million as of September 26, 2026 primarily driven by decreases in property, plant and equipment and intangible assets due to normal depreciation and amortization.
Total assets for Convenience increased $21.4 million from $4,718.6 million as of September 27, 2025 to $4,740.0 million as of September 26, 2026 primarily due to increases in inventory, prepaid expenses, and property, plant and equipment through additional transportation equipment under finance leases, partially offset by decreases in intangible assets and right-of-use assets due to normal amortization. Total assets for Convenience increased $278.5 million from $4,461.5 million as of June 27, 2026 to $4,740.0 million as of September 26, 2026 primarily due to increases in inventory due to advanced purchases to take advantage of preferred pricing, partially offset by a decrease in cash and accounts receivable.
Total assets for Specialty increased $20.2 million from $1,509.9 million as of September 27, 2025 to $1,530.1 million as of September 26, 2026 primarily due to increases in accounts receivable, partially offset by decreases in property, plant and equipment, and right-of-use assets due to normal depreciation and amortization. Total assets for Specialty decreased $93.5 million from $1,623.6 million as of June 27, 2026 to $1,530.1 million as of September 26, 2026 primarily due to decreases in inventory as a result of sales in the normal course of business, as well as decreases in accounts receivable and property, plant and equipment due to normal depreciation.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those that are most important to portraying our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, inventory valuation, insurance programs, income taxes, vendor rebates and promotional incentives, leases, and goodwill and other intangible assets, which are described in the Form 10-K. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risks consist of interest rate risk and fuel price risk. There have been no material changes to our market risks since June 27, 2026. For further discussion on our exposure to market risk, see Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Form 10-Q, were effective to accomplish their objectives at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 26, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to various allegations, claims, and legal actions arising in the ordinary course of business.
While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits, and claims, management believes that adequate provisions have been made or insurance secured for all currently pending proceedings so that the ultimate outcomes are not expected to have a material adverse effect on our financial position. Refer to Note 11. Commitments and Contingencies within the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q for additional disclosure regarding litigation.
Item 1A. Risk Factors
There have been no material changes to our principal risks that we believe are material to our business, results of operations, and financial condition from the risk factors previously disclosed in the Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to our purchases of the Company’s common stock during the first quarter of fiscal 2027.
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of |
|
|
Maximum Dollar Value |
|
||||
June 28, 2026—July 25, 2026 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
498.5 |
|
July 26, 2026—August 22, 2026 |
|
|
180,484 |
|
|
$ |
104.90 |
|
|
|
— |
|
|
$ |
498.5 |
|
August 23, 2026—September 26, 2026 |
|
|
7,257 |
|
|
$ |
104.70 |
|
|
|
— |
|
|
$ |
498.5 |
|
Total |
|
|
187,741 |
|
|
$ |
104.89 |
|
|
|
— |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
32
Item 5. Other Information
The table below shows the plan(s) or other arrangement(s) adopted or
Name |
|
Title |
|
Action |
|
Date |
|
Rule |
|
Non-Rule |
|
Number of |
|
Expiration Date (3) |
|
|
|
|
X |
|
|
|
|
33
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
|
|
|
31.1* |
|
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
31.2* |
|
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
32.1* |
|
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
32.2* |
|
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
101.INS |
|
Inline XBRL Instance Document |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE FOOD GROUP COMPANY (Registrant) |
||
|
|
|
|
|||
Dated: November 4, 2026 |
|
|
|
By: |
|
/s/ H. Patrick Hatcher |
|
|
|
|
Name: |
|
H. Patrick Hatcher |
|
|
|
|
Title: |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory) |
35