Performance Food Group Co
For the period ended Sep 28, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Nov 6, 2024
PFGC$107.50-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-08.
0000950170-24-055773
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-11-06.
0000950170-24-122325
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 117 current paragraphs.
52 unchanged; 41 reworded; 20 added; 26 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 9 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
On October 8, 2024, the Company acquired Cheney Bros., Inc. ("Cheney Brothers") in a transaction valued at $2.1 billion. The $2.1 billion purchase price was financed with borrowings under the ABL Facility. Cheney Brothers will be reported in the Foodservice segment.
Current report
Adjusted EBITDA
Current report
Includes increases in the LIFO reserve of $0.9 million for Foodservice and $11.8 million for Convenience for the first quarter of fiscal 2025 compared to increases of $1.7 million for Foodservice and $17.5 million for Convenience for the first quarter of fiscal 2024.
Current report
The increase in net sales was driven by recent acquisitions, an increase in cases sold including a favorable shift in mix of cases sold, and an increase in selling price per case as a result of inflation. Total case volume increased 2.6% in the first three months of fiscal 2025 compared to the same period of fiscal 2024. Total organic case volume growth of 1.2% benefited from a 4.3% increase in organic independent 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 5.0% for the first three months of fiscal 2025.
Current report
Operating expenses increased $102.2 million, or 7.1%, for the first three months of fiscal 2025 compared to the first three months of fiscal 2024. The increase in operating expenses for the first three months of fiscal 2025 was primarily driven by recent acquisitions, a $41.9 million increase in personnel expenses primarily related to wages, commissions, and benefits, and an $12.2 million increase in insurance expense primarily related to workers’ compensation and vehicle liability, partially offset by a $9.0 million decrease in fuel expense primarily due to lower fuel prices in the first three months of fiscal 2025 as compared to the prior year period.
Current report
Operating expenses impacting Foodservice's Adjusted EBITDA increased $31.8 million, or 4.1%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. Operating expenses increased as a result of a recent acquisition, a $23.0 million increase in personnel expenses primarily related to wages, commissions, and benefits, and a $6.7 million increase in insurance expense primarily related to workers' compensation and vehicle liability, partially offset by an $8.2 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period.
Current report
Net sales for Vistar increased $35.3 million, or 2.8%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. The increase in net sales was driven primarily by an acquisition in the second quarter of fiscal 2024. Total organic case volume growth for Vistar was flat, as growth in the vending, office coffee service, and corrections channels was offset by declines in theater and retail cases sold, in the first three months of fiscal 2025 compared to the prior year period.
Current report
Adjusted EBITDA for Vistar decreased $5.4 million, or 6.1%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. The decrease was the result of an increase in operating expenses, partially offset by an increase in gross profit. Gross profit increased $19.0 million, or 9.1%, for the first three months of fiscal 2025 compared to the prior year period primarily driven by an acquisition in the second quarter of fiscal 2024.
Current report
Operating expenses impacting Vistar's Adjusted EBITDA increased $24.3 million, or 20.2%, for the first three months of fiscal 2025 compared to the prior year period. Operating expenses increased $18.1 million due to an acquisition in the second quarter of fiscal 2024, $3.0 million due to variable operational expenses as a result of a shift in channel mix, and $2.1 million due to an increase in occupancy costs associated with building expansions compared to the prior year period.
Current report
Adjusted EBITDA for Convenience increased $10.6 million, or 11.2%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. This increase was 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 $13.7 million, or 3.3%, for the first three months of fiscal 2025 compared to the prior year period primarily due to a favorable shift in mix of cases sold and growth in cases sold.
Current report
Depreciation and amortization of intangible assets recorded in this segment increased from $37.7 million in the first three months of fiscal 2024 to $38.6 million in the first three months of fiscal 2025.
Current report
Adjusted EBITDA for Corporate & All Other was a negative $56.6 million for the first three months of fiscal 2025 compared to a negative $45.5 million for the first three months of fiscal 2024. The decline in Adjusted EBITDA was primarily driven by a $5.4 million increase in corporate personnel expense and a $2.7 million increase in information technology maintenance expense primarily related to cloud-based services.
Current report
On September 9, 2024, PFGC and Performance Food Group, Inc. entered into the Sixth Amended and Restated Credit Agreement (the "ABL Facility"), with Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent, and the other lenders party thereto, which amends and restates the Prior Credit Agreement. The ABL Facility, among other things, (i) increases the total revolving commitments from $4.0 billion under the Prior Credit Agreement to $5.0 billion under the ABL Facility and (ii) extends the stated maturity date from September 17, 2026, under the Prior Credit Agreement to September 9, 2029, under the ABL Facility. The ABL Facility also provides for up to $1.0 billion of uncommitted incremental facilities. The terms of any such incremental facility shall be agreed between Performance Food Group, Inc. and the lenders providing the new commitments, subject to certain limitations set forth in the ABL Facility.
Current report
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2027 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2027 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Beginning on October 15, 2024, Performance Food Group, Inc. may redeem all or part of the Notes due 2027 at a redemption price equal to 100.0% of the principal amount redeemed, plus accrued and unpaid interest.
Current report
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 acquisition of Cheney Brothers 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 from 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.
Current report
The Notes due 2032 were issued at 100.0% of their par value. The Notes due 2032 mature on September 15, 2032, and bear interest at a rate of 6.125% per year, payable semi-annually in arrears.
Current report
The ABL Facility and the indentures governing the Notes due 2027, the Notes due 2029, and the Notes due 2032 contain customary restrictive covenants under which all of the net assets of PFGC and its subsidiaries were restricted from distribution to Performance Food Group Company, except for approximately $1,872.2 million of restricted payment capacity available under such debt agreements, as of September 28, 2024. Such minimum estimated restricted payment capacity is calculated based on the most restrictive of our debt agreements and may fluctuate from period to period, which fluctuations may be material. Our restricted payment capacity under other debt instruments to which the Company is subject may be materially higher than the foregoing estimate.
Current report
Total assets for Foodservice increased $1,251.7 million from $6,633.1 million as of September 30, 2023 to $7,884.8 million as of September 28, 2024. Total assets for Foodservice increased $888.0 million from $6,996.8 million as of June 29, 2024 to $7,884.8 million as of September 28, 2024. During both time periods, this segment increased its goodwill, intangible assets, property, plant and equipment, accounts receivable, and inventory primarily due to an acquisition. Property, plant and equipment also increased due to additions of transportation equipment under finance leases and warehouse expansion and improvement projects.
Current report
Total assets for Vistar increased $208.8 million from $1,331.5 million as of September 30, 2023 to $1,540.3 million as of September 28, 2024. During this time period, this segment increased its property, plant and equipment, goodwill, intangible assets, operating lease right-of-use assets, and inventory due to a fiscal 2024 acquisition. Total assets for Vistar increased $21.2 million from $1,519.1 million as of June 29, 2024 to $1,540.3 million as of September 28, 2024. During this time period, this segment increased its inventory and property, plant and equipment.
Current report
Total assets for Corporate & All Other decreased $7.0 million from $713.3 million as of September 30, 2023 to $706.3 million as of September 28, 2024. During this time period, Corporate & All Other decreased its intangible assets and inventory, partially offset by an increase in prepaid expenses and other current assets. Total assets for Corporate & All Other decreased $89.8 million from $796.1 million as of June 29, 2024 to $706.3 million as of September 28, 2024. During this time period, Corporate & All Other decreased its prepaid expenses and other current assets and other assets.
Removed paragraphs (26)
Previous report
Our business, our industry and the U.S. economy are influenced by a number of general macroeconomic factors, including, but not limited to, changes in the rate of inflation and fuel prices, interest rates, supply chain disruptions, labor shortages, and the effects of health epidemics and pandemics. We continue to actively monitor the impacts of the evolving macroeconomic and geopolitical landscape on all aspects of our business. The Company and our industry may face challenges related to product and fleet supply, increased product and logistics costs, access to labor supply, and lower disposable incomes due to inflationary pressures and macroeconomic conditions. The extent to which these challenges will affect our future financial position, liquidity, and results of operations remains uncertain.
Previous report
Includes a decrease in the LIFO reserve of $1.2 million for Foodservice and an increase of $10.7 million for Convenience for the third quarter of fiscal 2024 compared to a decrease of $13.1 million for Foodservice and an increase of $29.6 million for Convenience for the third quarter of fiscal 2023. The LIFO reserve decreased $0.6 million for Foodservice and increased $51.1 million for Convenience for the first nine months of fiscal 2024 compared to a decrease of $15.1 million for Foodservice and an increase of $83.4 million for Convenience for the first nine months of fiscal 2023.
Previous report
Net sales increased $86.4 million, or 0.6%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024 due to case volume growth in our independent Foodservice business, as well as recent acquisitions, partially offset by case declines in our Convenience business. Total case volume growth was impacted by bad weather during the third quarter of fiscal 2024. Net sales increased $702.5 million, or 1.7%, for the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023, primarily attributable to growth in cases sold. Total case volume decreased 0.2% and increased 1.7% during the third quarter and first nine months of fiscal 2024, respectively. Total organic case volume decreased 0.6% in the third quarter of fiscal 2024 and increased 1.4%, in the first nine months of fiscal 2024, compared to the same periods of fiscal 2023. Total organic case volume benefited from an increase of 4.3% and 6.9% in organic independent cases sold during the third quarter and first nine months of fiscal 2024, respectively, as well as growth in Performance Brands and case growth in vending and value store channels in Vistar.
Previous report
Operating expenses increased $70.9 million, or 5.3%, for the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023. The increase in operating expenses was primarily driven by a $31.3 million increase in personnel expense primarily related to wages, commissions, and benefits, a $12.3 million increase in insurance expense primarily related to vehicle liability and workers’ compensation, and a $9.2 million increase in repairs and maintenance expense primarily related to transportation equipment, partially offset by a $7.0 million decrease in fuel expense primarily due to lower fuel prices in the third quarter of fiscal 2024 as compared to the prior year period.
Previous report
Operating expenses increased $202.3 million, or 5.0%, for the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The increase in operating expenses for the first nine months of fiscal 2024 was primarily driven by a $106.2 million increase in personnel expenses primarily related to wages, commissions, and benefits, a $43.7 million increase in insurance expense primarily related to vehicle liability and workers’ compensation, and a $35.5 million increase in repairs and maintenance expense primarily related to transportation equipment for the first nine months of fiscal 2024 compared to the prior year period. These increases were partially offset by a $35.1 million decrease in fuel expense primarily due to lower fuel prices for the first nine months of fiscal 2024 compared to the prior year period.
Previous report
Adjusted EBITDA for Foodservice decreased $0.7 million, or 0.3%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. This decrease was the result of an increase in operating expenses, partially offset by an increase in gross profit. Adjusted EBITDA for Foodservice increased $19.1 million, or 2.8%, from the first nine months of fiscal 2023 to the first nine months of fiscal
Previous report
Operating expenses impacting Foodservice's Adjusted EBITDA increased $115.5 million, or 5.3%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. Operating expenses increased primarily as a result of a $83.1 million increase in personnel expenses primarily related to wages, commissions, and benefits due primarily to an increase in full-time employees, a $20.7 million increase in insurance expense primarily related to vehicle liability and workers' compensation, and an increase of $8.3 million of repairs and maintenance expense primarily related to transportation equipment, compared to the prior year period.
Previous report
Net sales for Vistar increased $19.0 million, or 1.7%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. This increase in net sales was driven primarily by a recent acquisition. Net sales for Vistar increased $262.3 million, or 7.9%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. This increase in net sales was driven primarily by a recent acquisition, an increase in selling price per case as a result of inflation, and case volume growth in the vending and value store channels in the first nine months of fiscal 2024 compared to the prior year period.
Previous report
Adjusted EBITDA for Vistar decreased $0.2 million, or 0.3%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. This decrease was a result of an increase in operating expenses, partially offset by an increase in gross profit. Adjusted EBITDA for Vistar increased $15.4 million, or 6.4%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. This increase was the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Vistar's Adjusted EBITDA increased $10.2 million, or 5.4%, for the third quarter of fiscal 2024 and increased $48.7 million, or 8.3%, for the first nine months of fiscal 2024 compared to the prior year periods driven by a recent acquisition and pricing improvement from procurement efficiencies, partially offset by expected decreases in inventory holding gains.
Previous report
Operating expenses impacting Vistar's Adjusted EBITDA increased $9.8 million, or 8.5%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024 and increased $32.5 million, or 9.4%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. Operating expenses increased primarily as a result of a recent acquisition and increases of $1.3 million and $4.7 million in building rent expense as a result of lease renewals and expansion, for the third quarter and first nine months of fiscal 2024, respectively, compared to the prior year periods.
Previous report
Adjusted EBITDA for Convenience decreased $2.3 million, or 3.1%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. This decrease was a result of a decrease in gross profit, partially offset by a decrease in operating expenses. Gross profit contributing to Convenience's Adjusted EBITDA decreased $8.0 million, or 2.1%, for the third quarter of fiscal 2024 compared to the prior year period driven by expected decreases in inventory holding gains, partially offset by pricing improvement from procurement efficiencies. Operating expenses impacting Convenience's Adjusted EBITDA decreased $7.6 million, or 2.4%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. Operating expenses decreased primarily as a result of a $5.3 million decrease in lease expense and a $2.4 million decrease in personnel expenses from reduced contract labor and overtime, compared to the prior year period.
Previous report
Adjusted EBITDA for Convenience increased $1.0 million, or 0.4%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. This increase was a result of a decrease in operating expenses, partially offset by a decrease in gross profit. Gross profit contributing to Convenience's Adjusted EBITDA decreased $22.2 million, or 1.9%, for the first nine months of fiscal 2024 compared to the prior year period primarily due to expected decreases in inventory holding gains, partially offset by pricing improvement from procurement efficiencies. Operating expenses impacting Convenience's Adjusted EBITDA decreased $25.3 million, or 2.7%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. Operating expenses decreased primarily as a result of a $17.4 million decrease in personnel expenses from reduced contract labor and overtime, an $11.1 million decrease in lease expense, and a $10.7 million decrease in fuel expense, partially offset by an increase of a $12.8 million of repairs and maintenance expense primarily related to transportation equipment for the first nine months of fiscal 2024 as compared to the prior year period.
Previous report
Depreciation and amortization of intangible assets recorded in this segment increased from $36.7 million in the third quarter of fiscal 2023 to $38.7 million in the third quarter of fiscal 2024 and increased from $110.0 million in the first nine months of fiscal 2023 to $113.6 million in the first nine months of fiscal 2024.
Previous report
Adjusted EBITDA for Corporate & All Other was a negative $42.4 million for the third quarter of fiscal 2024 compared to a negative $51.6 million for the third quarter of fiscal 2023 and was a negative $143.7 million for the first nine months of fiscal 2024 compared to a negative $179.9 million for the first nine months of fiscal 2023. Corporate & All Other’s Adjusted EBITDA benefited in the third quarter and first nine months of fiscal 2024 from an increase of $7.3 million and $28.9 million in Adjusted EBITDA, respectively, from the operations of acquisitions made in the second quarter of fiscal 2023 and in the first quarter of fiscal 2024.
Previous report
Nine months ended March 30, 2024, compared to the nine months ended April 1, 2023
Previous report
Senior Notes due 2025: On April 24, 2020, Performance Food Group, Inc. issued and sold $275.0 million aggregate principal amount of its 6.875% Senior Notes due 2025 (the "Notes due 2025"). The Notes due 2025 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2025 are not guaranteed by Performance Food Group Company.
Previous report
The Notes due 2025 were issued at 100.0% of their par value. The Notes due 2025 mature on May 1, 2025 and bear interest at a rate of 6.875% per year, payable semi-annually in arrears.
Previous report
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2025 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2025 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2025 at a redemption price equal to 101.719% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 100% of the principal amount redeemed, plus accrued and unpaid interest, on May 1, 2024.
Previous report
On April 19, 2024, Performance Food Group, Inc. elected to exercise its optional redemption rights to redeem all of its outstanding Notes due 2025 in the aggregate principal amount of $275.0 million. Performance Food Group, Inc. redeemed the Notes due 2025 on May 1, 2024 (the “Redemption Date”) at a redemption price equal to 100% of the aggregate principal amount of the Notes due 2025, plus accrued and unpaid interest thereon to, but not including, the Redemption Date, in accordance with the terms and conditions set forth in the indenture governing the Notes due 2025.
Previous report
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2027 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2027 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2027 at a redemption price equal to 101.375% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 100% of the principal amount redeemed, plus accrued and unpaid interest, on October 15, 2024.
Previous report
The indenture governing the Notes due 2027 contains covenants limiting, among other things, PFGC 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 2027 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2027 to become or be declared due and payable.
Previous report
Total assets by segment discussed below exclude intercompany receivables between segments.
Previous report
Total assets for Vistar increased $205.5 million from $1,225.9 million as of April 1, 2023 to $1,431.4 million as of March 30, 2024. During this time period, this segment increased its property, plant and equipment, operating lease right-of-use assets, intangible assets, goodwill, and inventory, primarily as a result of a recent acquisition. Total assets for Vistar increased $138.7 million from
Previous report
$1,292.7 million as of July 1, 2023 to $1,431.4 million as of March 30, 2024. During this time period, this segment increased its intangible assets, property, plant and equipment, goodwill, and operating lease right-of-use assets, primarily as a result of a recent acquisition, partially offset by a decrease in accounts receivable and inventory.
Previous report
Total assets for Convenience decreased $240.7 million from $4,064.8 million as of April 1, 2023 to $3,824.1 million as of March 30, 2024. During this time period, the segment decreased its inventory, intangible assets, and operating lease right-of-use assets, partially offset by an increase in property, plant and equipment. Total assets for Convenience decreased $402.1 million from $4,226.2 million as of July 1, 2023 to $3,824.1 million as of March 30, 2024. During this time period, the segment decreased its inventory, accounts receivable, intangible assets, and operating lease right-of-use assets.
Previous report
Total assets for Corporate & All Other increased $325.4 million from $498.8 million as of April 1, 2023 to $824.2 million as of March 30, 2024. Total assets for Corporate & All Other increased $355.7 million from $468.5 million as of July 1, 2023 to $824.2 million as of March 30, 2024. During both time periods, Corporate & All Other primarily increased its assets due to recent acquisitions within a non-reportable operating segment.
Reworded paragraphs (41)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10-Q and the audited consolidated financial statements and the notes thereto included in 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 but not limited to those described in the “Item 1A. Risk Factors” section of the Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC. 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 quarterly report on Form 10-Q.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10-Q and the audited consolidated financial statements and the notes thereto included in 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 but not limited to those described in the “Item 1A. Risk Factors” section 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 quarterly report on Form 10-Q.
Previous wording
Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, and changes in the prices of certain goods.
Current wording
Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, changes in the rate of inflation and fuel prices, supply chain disruptions, and labor shortages.
Previous wording
Net sales is equal to gross sales, plus excise taxes, minus sales returns; 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 that is reflected in the pricing of our products and mix of products sold.
Current wording
Net sales is equal to gross sales, plus excise taxes, minus sales returns; 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 and product inflation that is reflected in the pricing of our products and mix of products sold.
Previous wording
does not include non-cash stock-based employee compensation expense, changes in the last in, first out ("LIFO") reserve, and other non-cash charges; and
Current wording
does not include non-cash stock-based employee compensation expense and other non-cash charges; and
Previous wording
Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.
Current wording
Includes professional fees and other costs related to in-progress, completed, and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.
Previous wording
Includes $8.1 million gain on the sale of a Foodservice warehouse facility for the nine months ended March 30, 2024, $10.8 million gain on the sale of a Vistar warehouse facility for the three and nine months ended April 1, 2023, as well as asset impairments, insurance proceeds due to hurricane and other weather related events, amounts related to favorable and unfavorable leases, foreign currency transaction gains and losses, franchise tax expense, and other adjustments permitted by our ABL Facility.
Current wording
Includes asset impairments, gains and losses on disposal of fixed assets, amounts related to favorable and unfavorable leases, foreign currency transaction gains and losses, franchise tax expense, and other adjustments permitted by our ABL Facility.
Previous wording
Three and nine months ended March 30, 2024 compared to the three and nine months ended April 1, 2023
Current wording
Three months ended September 28, 2024 compared to the three months ended September 30, 2023
Previous wording
Net sales growth is a function of acquisitions, case growth, pricing (which is primarily based on product inflation/deflation), and a changing mix of customers, channels, and product categories sold.
Current wording
Net sales growth is a function of acquisitions, case growth, pricing (which is primarily based on product inflation/deflation), and a changing mix of customers, channels, and product categories sold. Net sales increased $476.9 million, or 3.2%, for the first three months of fiscal 2025 compared to the first three months of fiscal 2024.
Previous wording
Gross profit increased $57.0 million, or 3.8%, for the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023. The increase in gross profit for the third quarter of fiscal 2024 was primarily driven by a favorable shift in the mix of cases sold, including growth in the independent channel and Performance Brands, as well as cost of goods sold optimization through procurement efficiencies, and recent acquisitions. Gross profit increased $243.3 million, or 5.3%, for the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The increase in gross profit for the first nine months of fiscal 2024 was primarily driven by cost of goods sold optimization through procurement efficiencies, as well as growth in cases sold, including growth in the independent channel, and recent acquisitions. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers.
Current wording
Gross profit increased $101.3 million, or 6.1%, for the first three months of fiscal 2025 compared to the first three months of fiscal 2024. The increase in gross profit was primarily driven by recent acquisitions, cost of goods sold optimization through procurement efficiencies, a favorable shift in the mix of cases sold, and growth in cases sold, including growth in the independent channel. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers.
Previous wording
Depreciation and amortization of intangible assets increased from $124.8 million in the third quarter of fiscal 2023 to $139.3 million in the third quarter of fiscal 2024. Depreciation and amortization of intangible assets increased from $369.2 million in the first nine months of fiscal 2023 to $411.9 million in the first nine months of fiscal 2024. Depreciation and amortization of intangible assets increased as a result of recent acquisitions, accelerated amortization of certain customer relationships and trade names, and an increase in transportation equipment under finance leases.
Current wording
Depreciation and amortization of intangible assets increased from $129.3 million for the first three months of fiscal 2024 to $152.9 million in the first three months of fiscal 2025. Depreciation of fixed assets and amortization of intangible assets increased as a result of recent acquisitions, an increase in transportation equipment under finance leases, and accelerated amortization of certain customer relationships and trade names.
Previous wording
Net income decreased $9.9 million, or 12.3%, for the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023 driven by the decrease in operating profit, partially offset by a decrease in income tax expense. Net income increased $22.3 million, or 9.0%, for the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023 due to the increase in operating profit and an increase in other income, partially offset by increases in interest expense and income tax expense. The increase in other income for the first nine months of fiscal 2024 primarily relates to realized and unrealized gains for fuel hedging instruments. The increase in interest expense was primarily the result of an increase in the average interest rate during the first nine months of fiscal 2024 compared to the prior year period.
Current wording
Net income decreased $12.7 million, or 10.5% for the first three months of fiscal 2025 compared to the first three months of fiscal 2024. The decrease in net income was primarily attributable to the increase in operating expenses, interest expense, and other expense, partially offset by the increase in gross profit and decrease in income tax expense. The increase in interest expense was primarily the result of an increase in the average borrowings, including finance lease obligations, during the first three months fiscal 2025 compared to the prior year period.
Previous wording
The Company reported income tax expense of $26.4 million and $102.4 million for the third quarter and first nine months of fiscal 2024, respectively, compared to income tax expense of $31.5 million and $90.8 million for the third quarter and first nine months of fiscal 2023, respectively. Our effective tax rate for the third quarter of fiscal 2024 was 27.3%, compared to 28.1% for the third quarter of fiscal 2023. The effective tax rate for the three months ended March 30, 2024 differed from the prior year period primarily due to a decrease in foreign taxes as a percentage of income, partially offset by an increase in non-deductible expenses and state taxes as a percentage of income. Our effective tax rate for the first nine months of fiscal 2024 was 27.5%, compared to 26.9% for the first nine months of fiscal 2023. The effective tax rate for the nine months ended March 30, 2024 differed from the prior year period primarily due to an increase in non-deductible expenses and state and foreign taxes as a percentage of income, partially offset by an increase in deductible discrete items related to stock-based compensation.
Current wording
The Company reported income tax expense of $38.9 million for the first three months of fiscal 2025 compared to income tax expense of $42.6 million for the first three months of fiscal 2024. Our effective tax rate for the first three months of fiscal 2025 was 26.5% compared to 26.1% for the first three months of fiscal 2024. The effective tax rate for the period ended September 28, 2024, differed from the prior year period primarily due to an increase in foreign taxes and a decrease in deductible discrete items related to stock-based compensation, partially offset by a decrease in state taxes and an increase in federal credits.
Previous wording
The Company has three reportable segments: Foodservice, Vistar, and Convenience. Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, amortization and excludes certain items that the Company does not consider part of its segments' core operating results, including but not limited to stock-based compensation expense, changes in the LIFO reserve, acquisition, integration and reorganization expenses, and gains and losses related to fuel derivatives. See Note 13. Segment Information within Part I, Item 1. Financial Statements of the consolidated financial statements in this Form 10-Q.
Current wording
The Company has three reportable segments: Foodservice, Vistar, and Convenience. 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 stock-based compensation expense, changes in the LIFO reserve, acquisition, integration and reorganization expenses, and gains and losses related to fuel derivatives. See Note 13. Segment Informationof the consolidated financial statements within Part I, Item 1. Financial Statementsin this Form 10-Q.
Previous wording
Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. This includes the operations of our internal logistics unit responsible for managing and allocating inbound logistics revenue and expense.
Current wording
Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. This also includes the operations of our internal logistics unit responsible for managing and allocating inbound logistics revenue and expense.
Previous wording
The following tables set forth net sales and Adjusted EBITDA by segment for the periods indicated (dollars in millions):
Current wording
The following tables set forth net sales and Segment Adjusted EBITDA by segment for the periods indicated (dollars in millions):
Previous wording
Net sales for Foodservice increased $69.3 million, or 1.0%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024 and increased $199.0 million, or 0.9%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. These increases in net sales were driven by case volume growth in our independent business. Chain and other Foodservice business case volume was flat for the third quarter of fiscal 2024 compared to the prior year period. Total Foodservice case volume growth was impacted by bad weather in January. Securing new and expanding business with independent customers resulted in organic independent case growth of 4.3% in the third quarter of fiscal 2024 and approximately 6.9% in the first nine months of fiscal 2024, compared to the prior year periods. For the quarter, independent sales as a percentage of total Foodservice sales were 38.8%. Overall product cost inflation was 0.6% for the third quarter of fiscal 2024 and product cost deflation was 0.8% for the first nine months of fiscal 2024.
Current wording
Net sales for Foodservice increased $415.1 million, or 5.7%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. This increase in net sales was driven by a recent acquisition, an increase in selling price per case as a result of inflation, and case volume growth, including growth in our independent and Chain business. Total case growth for Foodservice was 2.9% and organic case growth was 1.6% for the first three months of fiscal 2025, compared to the prior year period. Securing new and expanding business with independent customers resulted in total independent case growth of 7.8% and organic independent case growth of 4.3% in the first three months of fiscal 2025, compared to the prior year period. For the quarter, independent sales as a percentage of total Foodservice segment sales were 41.7%.
Previous wording
This increase was the result of an increase in gross profit, offset by an increase in operating expenses. Gross profit contributing to Foodservice's Adjusted EBITDA increased $28.0 million, or 3.0%, in the third quarter of fiscal 2024 and increased $134.2 million, or 4.7% in the first nine months of fiscal 2024, compared to the prior year periods. The increase in gross profit was driven by a favorable shift in the mix of cases sold and growth in cases sold, including more Performance Brands products sold to our independent customers.
Current wording
Adjusted EBITDA for Foodservice increased $34.0 million, or 13.8%, from the first three months of fiscal 2024 to the first three months of fiscal 2025. This increase was the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $65.7 million, or 6.4%, in the first three months of fiscal 2025, compared to the prior year period. The increase in gross profit was driven by a recent acquisition, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to independent customers.
Previous wording
Depreciation and amortization of intangible assets recorded in this segment increased from $70.9 million in the third quarter of fiscal 2023 to $74.7 million in the third quarter of fiscal 2024 and increased from $208.7 million in the first nine months of fiscal 2023 to $218.0 million in the first nine months of fiscal 2024 as a result of an increase in transportation equipment under finance leases, partially offset by amortization of certain customer relationships in the prior year.
Current wording
Depreciation and amortization of intangible assets recorded in this segment increased from $70.6 million in the first three months of fiscal 2024 to $85.0 million in the first three months of fiscal 2025 as a result of an increase in transportation equipment under finance leases and a recent acquisition.
Previous wording
Depreciation and amortization of intangible assets recorded in this segment increased from $10.4 million in the third quarter of fiscal 2023 to $12.8 million in the third quarter of fiscal 2024 and increased from $31.7 million in the first nine months of fiscal 2023 to $36.0 million in the first nine months of fiscal 2024 due primarily to a recent acquisition.
Current wording
Depreciation and amortization of intangible assets recorded in this segment increased from $10.4 million in the first three months of fiscal 2024 to $14.4 million in the first three months of fiscal 2025 due primarily to an acquisition in the second quarter of fiscal 2024.
Previous wording
Net sales for Convenience decreased $41.2 million, or 0.7%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. This decrease in net sales for the third quarter of fiscal 2024 was driven primarily by a decrease in cigarette carton sales and food and foodservice related cases sold, partially offset by an increase in selling price per case as a result of cigarette manufacturers’ price increases and continued inflation for food and foodservice related products. Net sales for Convenience increased $86.2 million, or 0.5%, from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. This increase in net sales for the first nine months of fiscal 2024 was driven primarily by an increase in selling price per case as a result of cigarette manufacturers’ price increases and continued inflation for food and foodservice related products, partially offset by a decline in cigarette carton sales and food and foodservice related cases sold.
Current wording
Net sales for Convenience increased $26.7 million, or 0.4%, from the first three months of fiscal 2024 to the first three months of fiscal 2025 driven primarily by an increase in selling price per case as a result of continued inflation for food and foodservice related products and cigarette manufacturers’ price increases, as well as an increase in food and foodservice related cases sold, partially offset by a decline in cigarette carton sales.
Previous wording
Operating expenses impacting Foodservice's Adjusted EBITDA increased $28.9 million, or 4.0%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. Operating expenses increased primarily as a result of a $26.0 million increase in personnel expenses primarily related to wages, commissions, and benefits due primarily to an increase in full-time employees, and a $5.0 million increase in insurance expense primarily related to vehicle liability and workers' compensation, partially offset by a $3.8 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period.
Current wording
Operating expenses impacting Convenience's Adjusted EBITDA increased $3.0 million, or 1.0%, for the first three months of fiscal 2025 compared to the prior year period. Operating expenses increased primarily as a result of a $4.0 million increase in insurance expense primarily related to worker's compensation, partially offset by a $1.8 million decrease in fuel expense primarily due to lower fuel prices compared to the prior year period.
Previous wording
Net sales for Corporate & All Other increased $47.5 million from the third quarter of fiscal 2023 to the third quarter of fiscal 2024 and increased $209.3 million from the first nine months of fiscal 2023 to the first nine months of fiscal 2024. These increases were primarily attributable to recent acquisitions within a non-reportable segment and an increase in services provided to our other segments.
Current wording
Net sales for Corporate & All Other increased $15.7 million from the first three months of fiscal 2024 to the first three months of fiscal 2025. The increase was primarily attributable to an increase in products and services sold to our other segments.
Previous wording
Depreciation and amortization of intangible assets recorded in this segment increased from $6.8 million in the third quarter of fiscal 2023 to $13.1 million in the third quarter of fiscal 2024 and increased from $18.8 million for the first nine months of fiscal 2023 to $44.3 million for the first nine months of fiscal 2024 due to recent acquisitions and amortization of certain customer relationships and trade names.
Current wording
Depreciation and amortization of intangible assets recorded in this segment increased from $10.6 million in the first three months of fiscal 2024 to $14.9 million in the first three months of fiscal 2025 due to accelerated amortization of certain customer relationships and trade names.
Previous wording
We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our credit facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our credit facility or other debt instruments. Our working capital and borrowing levels are subject to seasonal fluctuations, typically with the lowest borrowing levels in the third and fourth fiscal quarters and the highest borrowing levels occurring in the first and second fiscal quarters. 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.
Current wording
We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our credit facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our credit facility or net proceeds from the issuances of senior notes. Our working capital and borrowing levels are subject to seasonal fluctuations and timing of procurement and acquisition activities. We borrow under our credit 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.
Previous wording
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.
Current wording
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 credit 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.
Previous wording
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 March 30, 2024, $350.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 86% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.
Current wording
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 28, 2024, $350.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 89% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.
Previous wording
On November 16, 2022, the Board of Directors authorized a new share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The new share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon marketplace conditions and other factors, including compliance with the covenants in the agreements governing our existing indebtedness. The Company did not repurchase any shares of common stock during the three months ended March 30, 2024. During the nine months ended March 30, 2024, the Company repurchased 1.3 million shares of the Company's common stock for a total of $78.1 million. As of March 30, 2024, $210.6 million remained available for share repurchases.
Current wording
In November 2022, the Board of Directors authorized a share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The new share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon marketplace conditions and other factors, including compliance with the covenants in the agreements governing our existing indebtedness. During the first quarter of fiscal 2025, the Company repurchased 0.4 million shares of the Company's common stock, for a total of $29.5 million or an average cost of $74.69 per share. During the three months ended September 30, 2023, the Company repurchased and subsequently retired 0.5 million shares of the Company's common stock, for a total of $28.1 million or an average cost of $60.35 per share. As of September 28, 2024, $181.1 million remained available for share repurchases.
Previous wording
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 7. Leases, respectively, of the consolidated financial statements in this Form 10-Q. As of March 30, 2024, the Company had total purchase obligations of $318.2 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. As of March 30, 2024, the Company had commitments of $231.3 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 March 30, 2024.
Current wording
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 7. Leases, respectively, of the consolidated financial statements in this Form 10-Q. As of September 28, 2024, the Company had total purchase obligations of $199.7 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. As of September 28, 2024, the Company had commitments of $114.8 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 28, 2024.
Previous wording
As of March 30, 2024, our cash balance totaled $24.1 million, including restricted cash of $7.6 million, as compared to a cash balance totaling $20.0 million, including restricted cash of $7.3 million, as of July 1, 2023.
Current wording
As of September 28, 2024, our cash balance totaled $50.3 million, including restricted cash of $7.8 million, as compared to a cash balance totaling $27.7 million, including restricted cash of $7.7 million, as of June 29, 2024.
Previous wording
During the first nine months of fiscal 2024 and fiscal 2023, our operating activities provided cash flow of $956.7 million and $657.2 million, respectively. The increase in cash flow provided by operating activities in the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023 was largely driven by improvements in working capital and higher operating income.
Current wording
During the first three months of fiscal 2025 and fiscal 2024, our operating activities provided cash flow of $53.5 million and $87.1 million, respectively. The decrease in cash flow provided by operating activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.
Previous wording
Cash used in investing activities totaled $533.0 million in the first nine months of fiscal 2024 compared to $219.5 million in the first nine months of fiscal 2023. These investments consisted of cash paid for acquisitions of $307.9 million in the first nine months of fiscal 2024 compared to $63.9 million in the first nine months of fiscal 2023, along with capital purchases of property, plant, and equipment of $244.4 million and $177.2 million for the first nine months of fiscal 2024 and the first nine months of fiscal 2023, respectively. For the first nine months of fiscal 2024, purchases of property, plant, and equipment primarily consisted of outlays for warehouse improvements and expansion, warehouse equipment, transportation equipment, and information technology. The following table presents the capital purchases of property, plant, and equipment by segment.
Current wording
Cash used in investing activities totaled $669.8 million in the first three months of fiscal 2025 compared to $266.9 million in the first three months of fiscal 2024. These investments consisted of cash paid of $574.3 million for an acquisition in the first three months of fiscal 2025 compared to $214.6 million for an acquisition in the first three months of fiscal 2024, along with capital purchases of property, plant, and equipment of $96.5 million and $53.2 million for the first three months of fiscal 2025 and the first three months of fiscal 2024, respectively. For the first three months of fiscal 2025, purchases of property, plant, and equipment primarily consisted of outlays for warehouse expansion and improvements, warehouse equipment, information technology, and transportation equipment. The following table presents the capital purchases of property, plant, and equipment by segment.
Previous wording
During the first nine months of fiscal 2024, our financing activities used cash flow of $419.6 million, which consisted primarily of $249.1 million in net payments under our ABL Facility, $87.8 million in payments under finance lease obligations, and $78.1 million in repurchases of common stock.
Current wording
During the first three months of fiscal 2025, our financing activities provided cash flow of $638.9 million, which consisted primarily of $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $263.7 million in net payments under our ABL Facility.
Previous wording
During the first nine months of fiscal 2023, our financing activities used cash flow of $441.0 million, which consisted primarily of $380.6 million in net payments under our ABL Facility.
Current wording
During the first three months of fiscal 2024, our financing activities provided cash flow of $175.0 million, which consisted primarily of $249.0 million in net borrowings under our ABL Facility.
Previous wording
Credit Agreement: PFGC, a wholly-owned subsidiary of the Company, and Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, are parties to the ABL Facility. The ABL Facility has an aggregate principal amount of $4.0 billion under the revolving loan facility and is scheduled to mature on September 17, 2026.
Current wording
Credit Agreement: PFGC, Inc. (“PFGC”), a wholly-owned subsidiary of the Company, and Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, were parties to the Fifth Amended and Restated Credit Agreement dated September 17, 2021, as amended by the First Amendment to the Fifth Amended and Restated Credit Agreement, dated April 17, 2023 (as amended, the “Prior Credit Agreement”). The Prior Credit Agreement had an aggregate principal amount available of $4.0 billion and was scheduled to mature on September 17, 2026.
Previous wording
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 captive insurance subsidiaries 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.
Current wording
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.
Previous wording
Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the greatest of (i) a floor rate of 0.00%, (ii) the federal funds rate in effect on such date plus 0.5%, (iii) the prime rate on such day, or (iv) one month Term SOFR (as defined in the ABL Facility) plus 1.0%) plus a spread or (b) Adjusted Term SOFR (as defined in the ABL Facility) plus a spread. The ABL Facility also provides for an unused commitment fee at a rate of 0.250% per annum.
Current wording
Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the greatest of (i) a floor rate of 0.00%, (ii) the federal funds rate in effect on such date plus 0.5%, (iii) the prime rate on such day, or (iv) one month Term SOFR plus 1.0%) plus a spread or (b) Term SOFR plus a spread. The ABL Facility also provides for an unused commitment fee at a rate of 0.250% per annum based on average excess availability.
Previous wording
The ABL Facility contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) $320.0 million and (ii) 10% of the lesser of the borrowing base and the revolving credit facility amount for five consecutive business days. The ABL Facility also contains customary restrictive covenants that include, but are not limited to, restrictions on PFGC’s and certain of its subsidiary's ability to incur additional indebtedness, pay dividends, create liens, make investments or specified payments, and dispose of assets. The ABL Facility provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. If an event of default occurs and is continuing, amounts due under such agreement may be accelerated and the rights and remedies of the lenders under the ABL Facility may be exercised, including rights with respect to the collateral securing the obligations under such agreement.
Current wording
The ABL Facility contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if Alternate Availability (as defined in the ABL Facility) falls below the greater of (i) $375.0 million and (ii) 10% of the lessor of the borrowing base and the sum of (a) the aggregate commitments plus (b) any outstanding term loans for five consecutive business days. The ABL Facility also contains customary restrictive covenants that include, but are not limited to, restrictions on the loan parties' and their subsidiaries' abilities to incur additional indebtedness, pay dividends, create liens, make investments, make prepayments, redemptions, or defeasances prior to the maturity of certain restricted debt and dispose of assets. The ABL Facility provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. If an event of default occurs and is continuing, amounts due under the ABL Facility may be accelerated and the rights and remedies of the lenders may be exercised, including rights with respect to the collateral securing the obligations under such agreement.
Previous wording
Senior Notes due 2027: On September 27, 2019, PFG Escrow Corporation (which merged with and into Performance Food Group, Inc.) issued and sold $1,060.0 million aggregate principal amount of its 5.500% Senior Notes due 2027 ("the "Notes due 2027"). The Notes due 2027 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2027 are not guaranteed by Performance Food Group Company.
Current wording
Senior Notes due 2027: On September 27, 2019, PFG Escrow Corporation (which merged with and into Performance Food Group, Inc.) issued and sold $1,060.0 million aggregate principal amount of its 5.500% Senior Notes due 2027 ("the "Notes due 2027"). The Notes due 2027 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2027 are not guaranteed by the Company.
Previous wording
Senior Notes due 2029: On July 26, 2021, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its 4.250% Senior Notes due 2029 (the “Notes due 2029”). The Notes due 2029 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2029 are not guaranteed by Performance Food Group Company.
Current wording
Senior Notes due 2029: On July 26, 2021, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its 4.250% Senior Notes due 2029 (the “Notes due 2029”). The Notes due 2029 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2029 are not guaranteed by the Company.
Previous wording
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2029 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2029 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at any time prior to August 1, 2024, at a redemption price equal to 100% of the principal amount of the Notes due 2029 being redeemed plus a make-whole premium and accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, beginning on August 1, 2024, Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at a redemption price equal to 102.125% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.163% and 100% of the principal amount redeemed, plus accrued and unpaid interest, on August 1, 2025, and August 1, 2026, respectively. In addition, at any time prior to August 1, 2024, Performance Food Group, Inc. may redeem up to 40% of the Notes due 2029 from the proceeds of certain equity offerings at a redemption price equal to 104.250% of the principal amount thereof, plus accrued and unpaid interest.
Current wording
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2032 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2032 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at any time prior to September 15, 2027, at a redemption price equal to 100% of the principal amount of the Notes due 2032 being redeemed plus a make-whole premium and accrued and unpaid interest. In addition, beginning on September 15, 2027, Performance Food Group, Inc. may redeem all or a part of the Notes due 2032 at a redemption price equal to 103.063% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.531% and 100% of the principal amount redeemed on September 15, 2028, and September 15, 2029, respectively. In addition, at any time prior to September 15, 2027, Performance Food Group, Inc. may redeem up to 40% of the Notes due 2032 from the proceeds of certain equity offerings at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Three months ended September 28, 2024 compared to the three months ended September 30, 2023
Current report — wording carried from elsewhere
Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2029 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2029 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at a redemption price equal to 102.125% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.163% and 100% of the principal amount redeemed on August 1, 2025, and August 1, 2026, respectively.
Current report — wording carried from elsewhere
Senior Notes due 2032: On September 12, 2024, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its Notes due 2032. The Notes due 2032 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2032 are not guaranteed by the Company.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The proceeds from the Notes due 2025 were used for working capital and general corporate purposes and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2025.