Performance Food Group Co

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. 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 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 Form 10-Q.

Previous wording

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, Vistar, and Convenience. Our Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “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 Vistar segment specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America. We believe that there are substantial synergies across our segments. Cross-segment synergies include 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.

Current wording

Our Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “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 Specialty segment, previously referred to as Vistar, specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America. We believe that there are substantial synergies across our segments. Cross-segment synergies include 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.

Previous wording

On October 8, 2024, the Company acquired Cheney Bros., Inc. (“Cheney Brothers”), expanding its Foodservice operations in the Southeastern portion of the United States. Refer to Note 5. Business Combinations of the consolidated financial statements in the Form 10-Q for additional details regarding the acquisition of Cheney Brothers.

Current wording

On October 8, 2024, the Company acquired Cheney Bros., Inc. (“Cheney Brothers”), expanding its Foodservice operations in the Southeastern portion of the United States. Refer to Note 5. Business Combinations of the consolidated financial statements in this Form 10-Q for additional details regarding the acquisition of Cheney Brothers.

Previous wording

Includes a decrease in the LIFO reserve of $0.1 million for Foodservice and an increase of $17.9 million for Convenience for the second quarter of fiscal 2025 compared to a decrease of $1.1 million for Foodservice and an increase of $22.9 million for Convenience for the second quarter of fiscal 2024. The LIFO reserve increased $0.8 million for Foodservice and increased $29.7 million for Convenience for the first six months of fiscal 2025 compared to an increase of $0.6 million for Foodservice and an increase of $40.4 million for Convenience for the first six months of fiscal 2024.

Current wording

Includes an increase in the LIFO reserve of $0.2 million for Foodservice and an increase of $8.2 million for Convenience for the third quarter of fiscal 2025 compared to a decrease of $1.2 million for Foodservice and an increase of $10.7 million for Convenience for the third quarter of fiscal 2024. The LIFO reserve increased $1.0 million for Foodservice and increased $37.9 million for Convenience for the first nine months of fiscal 2025 compared to a decrease of $0.6 million for Foodservice and an increase of $51.1 million for Convenience for the first nine months of fiscal 2024.

Previous wording

Includes an $8.1 million gain on the sale of a Foodservice warehouse facility for the three and six months ended December 30, 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 a $3.8 million gain on the sale of a Foodservice warehouse facility for the three and nine months ended March 29, 2025 and an $8.1 million gain on the sale of a Foodservice warehouse facility for the nine months ended March 30, 2024, 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.

Previous wording

Three and six months ended December 28, 2024 compared to the three and six months ended December 30, 2023

Current wording

Three and nine months ended March 29, 2025 compared to the three and nine months ended March 30, 2024

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. Net sales increased $1,342.5 million, or 9.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025, and net sales increased $1,819.4 million, or 6.2%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024.

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 $1,448.6 million, or 10.5%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, and net sales increased $3,268.0 million, or 7.6%, for the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

Previous wording

The increase in net sales was driven by recent acquisitions, including the Cheney Brothers acquisition, 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 9.8% and 6.1% during the second quarter and first six months of fiscal 2025, respectively, compared to the same periods of fiscal 2024. Total organic case volume increased 2.1% in the second quarter of fiscal 2025 and increased 1.6% in the first six months of fiscal 2025, compared to the same periods of fiscal 2024. Total organic case volume benefited from an increase of 5.0% and 4.6% in organic independent cases sold during the second quarter and first six months of fiscal 2025, respectively, 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 4.6% and 4.8% for the second quarter and first six months of fiscal 2025, respectively.

Current wording

The increase in net sales was driven by recent acquisitions, including the Cheney Brothers Acquisition, 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 10.0% and 7.4% during the third quarter and first nine months of fiscal 2025, respectively, compared to the same periods of fiscal 2024. Total organic case volume increased 1.3% in the third quarter of fiscal 2025 and increased 1.5% in the first nine months of fiscal 2025, compared to the same periods of fiscal 2024. Total organic case volume benefited from an increase of 3.4% and 4.2% in organic independent cases sold during the third quarter and first nine months of fiscal 2025, respectively, 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 4.9% and 4.8% for the third quarter and first nine months of fiscal 2025, respectively.

Previous wording

Gross profit increased $229.7 million, or 14.4%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 and increased $331.0 million, or 10.2%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. The increases in gross profit for the second quarter and the first six months of fiscal 2025 were primarily driven by recent acquisitions, including the Cheney Brothers acquisition, cost of goods sold optimization through procurement efficiencies, as well as a favorable shift in the mix of 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.

Current wording

Gross profit increased $253.5 million, or 16.2%, for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 and increased $584.5 million, or 12.1%, for the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. The increases in gross profit for the third quarter and the first nine months of fiscal 2025 were primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, cost of goods sold optimization through procurement efficiencies, as well as a favorable shift in the mix of 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

Operating expenses increased $244.8 million, or 17.2%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. The increase in operating expenses was primarily driven by recent acquisitions, including the Cheney Brothers acquisition, a $48.2 million increase in personnel expense primarily related to wages, commissions, and benefits, and a $7.8 million increase in professional fees primarily related to recent acquisitions, partially offset by a $12.6 million decrease in fuel expense primarily due to lower fuel prices in the second quarter of fiscal 2025 as compared to the prior year period.

Current wording

Operating expenses increased $234.0 million, or 16.5%, for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. The increase in operating expenses was primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, a $36.9 million increase in personnel expense primarily related to wages and salaries, commissions, and benefits, a $11.8 million increase in depreciation expense mainly driven by an increase in transportation equipment under finance leases, and a $9.2 million increase in insurance expense primarily related to workers' compensation, partially offset by a $6.1 million decrease in fuel expense primarily due to lower fuel prices, in the third quarter of fiscal 2025 as compared to the prior year period. Cheney Brothers operating expenses were $159.5 million for the third quarter of fiscal 2025.

Previous wording

Operating expenses increased $347.0 million, or 12.1%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. The increase in operating expenses for the first six months of fiscal 2025 was primarily driven by recent acquisitions, including the Cheney Brothers acquisition, a $90.1 million increase in personnel expenses primarily related to wages, commissions, and benefits, a $12.7 million increase in professional fees related to recent acquisitions, a $11.0 million increase in insurance expense primarily related to workers’ compensation, and a $6.3 million increase in repairs and maintenance expense primarily related to transportation equipment for the first six months of fiscal 2025 compared to the prior year period. These increases were partially offset by a $21.7 million decrease in fuel expense primarily due to lower fuel prices for the first six months of fiscal 2025 compared to the prior year period.

Current wording

Operating expenses increased $581.0 million, or 13.6%, for the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. The increase in operating expenses for the first nine months of fiscal 2025 was primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, a $127.0 million increase in personnel expenses primarily related to wages, commissions, and benefits, a $37.4 million increase in depreciation expense mainly driven by an increase in transportation equipment under finance leases, a $20.2 million increase in insurance expense primarily related to workers’ compensation and vehicle liability, a $22.2 million increase in professional fees and outside services related to recent acquisitions, and a $7.0 million increase in repairs and maintenance expense primarily related to information technology maintenance for the first nine months of fiscal 2025 compared to the prior year period. These increases were partially offset by a $27.7 million decrease in fuel expense primarily due to lower fuel prices for the first nine months of fiscal 2025 compared to the prior year period. Cheney Brothers operating expenses were $299.5 million for the first nine months of fiscal 2025.

Previous wording

Net income decreased $35.9 million, or 45.8%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 driven by an increase in interest expense and decrease in operating profit, partially offset by a decrease in income tax expense. Net income decreased $48.6 million, or 24.4%, for the first six months of fiscal 2025 compared to the first six months of fiscal 2024 due to an increase in interest expense and decrease in operating profit, partially offset by a 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 second quarter and first six months of fiscal 2025 compared to the prior year periods.

Current wording

Net income decreased $12.1 million, or 17.2%, for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 and decreased $60.7 million, or 22.5%, for the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024 driven by an increase in depreciation and amortization and interest expense related to recent acquisitions, partially offset by a decrease in income tax expense and gross profit contributions from recent acquisitions. The increase in interest expense was primarily the result of an increase in the average borrowings, including finance lease obligations, during the third quarter and first nine months of fiscal 2025 compared to the prior year periods.

Previous wording

The Company reported income tax expense of $14.3 million and $53.2 million for the second quarter and first six months of fiscal 2025, respectively, compared to income tax expense of $33.4 million and $76.0 million for the second quarter and first six months of fiscal 2024, respectively. Our effective tax rates for the second quarter and first six months of fiscal 2025 were 25.2% and 26.1%, respectively, compared to 29.9% and 27.6% for the second quarter and first six months of fiscal 2024, respectively. The effective tax rates for the periods ended December 28, 2024, differed from the prior year periods primarily due to an increase in deductible discrete items related to stock-based compensation, a decrease in state and foreign taxes, and an increase in federal credits, partially offset by an increase in non-deductible expenses.

Current wording

The Company reported income tax expense of $20.2 million and $73.4 million for the third quarter and first nine months of fiscal 2025, respectively, compared to income tax expense of $26.4 million and $102.4 million for the third quarter and first nine months of fiscal 2024, respectively. Our effective tax rates for the third quarter and first nine months of fiscal 2025 were 25.8% and 26.0%, respectively, compared to 27.3% and 27.5% for the third quarter and first nine months of fiscal 2024, respectively. The effective tax rates for the periods ended March 29, 2025, differed from the prior year periods primarily due to an increase in deductible discrete items related to stock-based compensation and an increase in federal credits net of valuation allowance established, partially offset by an increase in non-deductible expenses and an increase in state and foreign taxes as a percentage of income.

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 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. Refer to Note 13. Segment Informationof the consolidated financial statements in the Form 10-Q for additional information.

Current wording

In the third quarter of fiscal 2025, the Company changed its operating segments to reflect the manner in which the business is managed. The Company continues to have three reportable segments: Foodservice, Specialty (formerly 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. Refer to Note 13. Segment Informationof the consolidated financial statements in this Form 10-Q for additional information.

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 also 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.

Previous wording

Net sales for Foodservice increased $1,289.0 million, or 18.2%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $1,704.1 million, or 11.9%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases in net sales were driven by recent acquisitions, an increase in selling price per case as a result of inflation, and case volume growth, including growth in our independent and Chain business. The acquisition of Cheney Brothers contributed $825.0 million to net sales in the second quarter and first six months of fiscal 2025. Total case growth for Foodservice was 15.0% in the second quarter of fiscal 2025 and 8.9% in the first six months of fiscal 2025, compared to the prior year periods. Securing new and expanding business with independent customers resulted in total independent case growth of 19.8% and 13.5% for the second quarter and first six months of fiscal 2025, respectively, compared to the prior year periods. Organic independent case growth was 5.0% and 4.6% in the second quarter and first six months of fiscal 2025, respectively, compared to the prior year periods. For the second quarter and first six months of fiscal 2025, independent sales as a percentage of total Foodservice sales were 40.1% and 40.9%, respectively.

Current wording

Net sales for Foodservice increased $1,351.5 million, or 19.2%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025 and increased $3,054.2 million, or 14.3%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. These increases in net sales were driven by recent acquisitions, an increase in selling price per case as a result of inflation, and case volume growth, including growth in our independent and Chain business. The acquisition of Cheney Brothers contributed $931.2 million and $1,756.2 million to net sales in the third quarter and first nine months of fiscal 2025, respectively. Total case growth for Foodservice was 15.5% in the third quarter of fiscal 2025 and 11.0% in the first nine months of fiscal 2025, compared to the prior year periods. Securing new and expanding business with independent customers resulted in total independent case growth of 20.0% and 15.6% for the third quarter and first nine months of fiscal 2025, respectively, compared to the prior year periods. Organic independent case growth was 3.4% and 4.2% in the third quarter and first nine months of fiscal 2025, respectively, compared to the prior year periods. For the third quarter and first nine months of fiscal 2025, independent sales as a percentage of total Foodservice sales were 39.8% and 40.5%, respectively.

Previous wording

Adjusted EBITDA for Foodservice increased $65.8 million, or 29.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Adjusted EBITDA for Foodservice increased $99.8 million, or 21.2%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases were 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 $223.0 million, or 22.8%, in the second quarter of fiscal 2025 and increased $288.7 million, or 14.4%, in the first six months of fiscal 2025, compared to the prior year periods. The increase in gross profit was driven by recent acquisitions, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to our independent customers. Cheney Brothers contributed $145.4 million to Foodservice’s gross profit impacting Adjusted EBITDA in the second quarter and first six months of fiscal 2025.

Current wording

Adjusted EBITDA for Foodservice increased $61.8 million, or 29.0%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025. Adjusted EBITDA for Foodservice increased $158.8 million, or 23.5%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. These increases were 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 $245.4 million, or 25.1%, in the third quarter of fiscal 2025 and increased $532.9 million, or 17.8%, in the first nine months of fiscal 2025, compared to the prior year periods. The increase in gross profit was driven by recent acquisitions, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to our independent customers. Cheney Brothers contributed $170.6 million and $316.0 million to Foodservice’s gross profit impacting Adjusted EBITDA in the third quarter and first nine months of fiscal 2025, respectively.

Previous wording

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $157.0 million, or 20.8%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Operating expenses increased primarily as a result of recent acquisitions, including the Cheney Brothers acquisition, and a $38.0 million increase in personnel expenses primarily related to salaries and wages, commissions, and benefits, partially offset by a $7.7 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period. Operating expenses impacting Foodservice’s Adjusted EBITDA were $110.2 million for Cheney Brothers.

Current wording

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $183.6 million, or 24.0%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025. Operating expenses increased compared to the prior year period primarily as a result of recent acquisitions, including the Cheney Brothers acquisition, and a $36.5 million increase in personnel expenses primarily related to salaries and wages, benefits, and commissions, partially offset by a $3.3 million decrease in fuel expense primarily due to lower fuel prices. Cheney Brothers operating expenses impacting Foodservice’s Adjusted EBITDA were $128.3 million for the third quarter of fiscal 2025.

Previous wording

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $188.8 million, or 12.3%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. Operating expenses increased primarily as a result of recent acquisitions, including the Cheney Brothers acquisition, a $60.9 million increase in personnel expenses primarily related to salaries and wages, commissions, and benefits, and a $5.4 million increase in insurance expense primarily related to workers’ compensation, partially offset by a $15.9 million decrease in fuel expense primarily due to lower fuel prices, compared to the prior year period.

Current wording

Operating expenses impacting Foodservice’s Adjusted EBITDA increased $374.0 million, or 16.1%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. Operating expenses increased compared to the prior year period primarily as a result of recent acquisitions, including the Cheney Brothers Acquisition, a $98.7 million increase in personnel expenses primarily related to salaries and wages, benefits, and commissions, and a $13.4 million increase in insurance expense primarily related to workers’ compensation, partially offset by a $19.2 million decrease in fuel expense primarily due to lower fuel prices. Cheney Brothers operating expenses impacting Foodservice’s Adjusted EBITDA were $238.5 million for the first nine months of fiscal 2025.

Previous wording

Depreciation and amortization of intangible assets recorded in this segment increased from $72.7 million in the second quarter of fiscal 2024 to $115.6 million in the second quarter of fiscal 2025 and increased from $143.3 million in the first six months of fiscal 2024 to $200.6 million in the first six months of fiscal 2025 as a result of recent acquisitions and an increase in transportation equipment under finance leases. Total depreciation and amortization related to Cheney Brothers was $26.5 million in the second quarter and first six months of fiscal 2025.

Current wording

Depreciation and amortization of intangible assets recorded in this segment increased from $74.8 million in the third quarter of fiscal 2024 to $120.5 million in the third quarter of fiscal 2025 and increased from $218.6 million in the first nine months of fiscal 2024 to $321.5 million in the first nine months of fiscal 2025 as a result of recent acquisitions and an increase in transportation equipment under finance leases. Total depreciation and amortization related to Cheney Brothers was $28.0 million and $54.5 million in the third quarter and first nine months of fiscal 2025, respectively.

Previous wording

Net sales for Vistar increased $32.7 million, or 2.7%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $68.0 million, or 2.8%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. The increase in net sales for the second quarter of fiscal 2025 was primarily driven by case volume growth in the vending, office coffee service, theater, and corrections channels, as well as an increase in selling price per case due to a change in sales mix. The increase in net sales for the first six months of fiscal 2025 was driven primarily by an acquisition in the second quarter of fiscal 2024. Total organic case volume growth for Vistar for the first six months of fiscal 2025 was flat, as growth in the vending, office coffee service, and corrections channels was offset by declines in theater and retail cases sold compared to the prior year period.

Current wording

Net sales for Specialty decreased $2.6 million, or 0.2%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025 and increased $65.4 million, or 1.8%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. The decrease in net sales for the third quarter of fiscal 2025 was primarily driven by declines in the theater and value channels, slightly offset by an increase in selling price per case due to a change in channel mix. The increase in net sales for the first nine months of fiscal 2025 was driven primarily by growth in the vending channel and an acquisition in the second quarter of fiscal 2024. Total organic case volume growth for Specialty for the first nine months of fiscal 2025 was flat, as growth in the vending, office coffee service, corrections, and office supply channels was offset by declines in theater and retail cases sold compared to the prior year period.

Previous wording

Operating expenses impacting Vistar’s Adjusted EBITDA increased $2.7 million, or 2.0%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 primarily due to an increase in personnel expenses. Operating expenses impacting Vistar’s Adjusted EBITDA increased $27.0 million, or 10.7%, from the first six months of fiscal 2024 to the first six months of fiscal 2025 primarily driven by $18.1 million in costs related to an acquisition in the second quarter of fiscal 2024, $4.5 million in variable operational expenses as a result of a shift in channel mix, and a $2.4 million increase in occupancy costs associated with building expansions compared to the prior year period.

Current wording

Adjusted EBITDA for Specialty remained relatively flat from the first nine months of fiscal 2024 to the first nine months of fiscal 2025 as a result of an increase in gross profit, offset by an increase in operating expenses. Gross profit contributing to Specialty’s Adjusted EBITDA increased $24.5 million, or 3.9%, for the first nine months of fiscal 2025 compared to the prior year period primarily driven by an acquisition in the second quarter of fiscal 2024. Operating expenses impacting Specialty’s Adjusted EBITDA increased $25.0 million, or 6.6%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025 primarily driven by $18.1 million of expenses related to an acquisition in the second quarter of fiscal 2024, $4.2 million in variable operational expenses as a result of a shift in channel mix, and a $3.4 million increase in occupancy costs associated with building expansions compared to the prior year period.

Previous wording

Depreciation and amortization of intangible assets recorded in this segment increased from $12.8 million in the second quarter of fiscal 2024 to $13.3 million in the second quarter of fiscal 2025 and increased from $23.2 million in the first six months of fiscal 2024 to $27.7 million in the first six months of fiscal 2025 due primarily to an acquisition in the second quarter of fiscal 2024.

Current wording

Depreciation and amortization of intangible assets recorded in this segment increased from $12.8 million in the third quarter of fiscal 2024 to $13.4 million in the third quarter of fiscal 2025 and increased from $36.0 million in the first nine months of fiscal 2024 to $41.1 million in the first nine months of fiscal 2025 due primarily to an acquisition in the second quarter of fiscal 2024.

Previous wording

Net sales for Convenience increased $26.1 million, or 0.4%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $52.8 million, or 0.4%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. These increases in net sales for the second quarter and the first six months of fiscal 2025 were driven primarily by an increase in selling price per case as a result of continued inflation and growth in cases sold for food and foodservice related products, partially offset by a decline in cigarette carton sales.

Current wording

Net sales for Convenience increased $99.9 million, or 1.8%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025 and increased $152.7 million, or 0.9%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. These increases in net sales for the third quarter and the first nine months of fiscal 2025 were primarily attributable to higher selling prices per case driven by continued inflation. Additionally, net sales benefited from a favorable shift in sales mix resulting in higher case volumes sold for food and foodservice related products.

Previous wording

Adjusted EBITDA for Convenience increased $23.8 million, or 28.5%, from the second quarter of fiscal 2024 to the second quarter 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 $32.1 million, or 8.3%, for the second quarter of fiscal 2025 compared to the prior year period primarily due to an increase in pricing improvement from procurement efficiencies, inventory holding gains, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $8.1 million, or 2.7%, from the second quarter of fiscal 2024 to the second quarter of fiscal 2025. Operating expenses increased primarily as a result of an $8.3 million increase in personnel expenses, partially offset by a $3.0 million decrease in fuel expense primarily due to lower fuel prices compared to the prior year period.

Current wording

Adjusted EBITDA for Convenience increased $3.8 million, or 5.4%, from the third quarter of fiscal 2024 to the third quarter 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 $8.1 million, or 2.2%, for the third quarter of fiscal 2025 compared to the prior year period primarily due to an increase in inventory holding gains, pricing improvement from procurement efficiencies, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $4.3 million, or 1.4%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025 primarily as a result of a $3.0 million increase in insurance expense, a $1.3 million increase in occupancy costs, and a $1.1 million increase in freight expense, partially offset by a $2.2 million decrease in fuel expense primarily due to lower fuel prices compared to the prior year period.

Previous wording

Adjusted EBITDA for Convenience increased $34.4 million, or 19.3%, from the first six months of fiscal 2024 to the first six 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 $45.8 million, or 5.8%, for the first six months of fiscal 2025 compared to the prior year period primarily due to an increase in inventory holding gains, pricing improvement from procurement efficiencies, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $11.1 million, or 1.8%, from the first six months of fiscal 2024 to the first six months of fiscal 2025. Operating expenses increased primarily as a result of a $10.1 million increase in personnel expenses and a $5.2 million increase in insurance expense, partially offset by a $4.8 million decrease in fuel expense driven by lower fuel prices compared to the prior year period.

Current wording

Adjusted EBITDA for Convenience increased $38.2 million, or 15.3%, from the first nine months of fiscal 2024 to the first nine 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 $53.9 million, or 4.6%, for the first nine months of fiscal 2025 compared to the prior year period primarily due to an increase in inventory holding gains, pricing improvement from procurement efficiencies, and a favorable shift in mix of cases sold. Operating expenses impacting Convenience’s Adjusted EBITDA increased $15.4 million, or 1.7%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. Operating expenses increased primarily as a result of a $9.4 million increase in personnel expenses, a $8.2 million increase in insurance expense, and a $3.3 million increase in freight expense, partially offset by a $7.0 million decrease in fuel expense driven by lower fuel prices compared to the prior year period.

Previous wording

Net sales for Corporate & All Other increased $12.5 million from the second quarter of fiscal 2024 to the second quarter of fiscal 2025 and increased $28.2 million from the first six months of fiscal 2024 to the first six months of fiscal 2025. The increase was primarily attributable to an increase in products and services sold to our other segments.

Current wording

Net sales for Corporate & All Other decreased $2.6 million, or 1.2%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025 and increased $27.0 million, or 4.0%, from the first nine months of fiscal 2024 to the first nine months of fiscal 2025. The increase in net sales for the first nine months of fiscal 2025 was primarily attributable to an increase in products and services sold to our other segments.

Previous wording

Adjusted EBITDA for Corporate & All Other was a negative $68.1 million for the second quarter of fiscal 2025 compared to a negative $55.8 million for the second quarter of fiscal 2024 and was a negative $124.7 million for the first six months of fiscal 2025 compared to a negative $101.3 million for the first six months of fiscal 2024. The decline in Adjusted EBITDA was primarily driven by increases in corporate personnel expenses of $8.3 million and $13.2 million and increases in information technology maintenance expense primarily related to cloud-based services of $1.3 million and $3.9 million for the second quarter and first six months of fiscal 2025, respectively.

Current wording

Adjusted EBITDA for Corporate & All Other was a negative $42.5 million for the third quarter of fiscal 2025 compared to a negative $36.3 million for the third quarter of fiscal 2024 and was a negative $157.0 million for the first nine months of fiscal 2025 compared to a negative $130.2 million for the first nine months of fiscal 2024. The decline in Adjusted EBITDA was primarily driven by increases in corporate personnel expenses of $5.9 million and $18.0 million and increases in information technology maintenance expense primarily related to cloud-based services of $1.3 million and $5.1 million, partially offset by a decrease in insurance expense primarily related to workers’ compensation of $2.3 million and $3.1 million for the third quarter and first nine months of fiscal 2025 compared to the prior year periods, respectively.

Previous wording

Depreciation and amortization of intangible assets recorded in this segment decreased from $20.6 million in the second quarter of fiscal 2024 to $14.6 million in the second quarter of fiscal 2025 and decreased from $31.2 million for the first six months of fiscal 2024 to $29.5 million for the first six months of fiscal 2025 due to prior period accelerated amortization of certain customer relationships and trade names.

Current wording

Depreciation and amortization of intangible assets recorded in this segment increased from $13.0 million in the third quarter of fiscal 2024 to $13.8 million in the third quarter of fiscal 2025 and decreased from $43.7 million for the first nine months of fiscal 2024 to $42.9 million for the first nine months of fiscal 2025.

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 December 28, 2024, $150.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 63% 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 March 29, 2025, $150.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 66% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.

Previous 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 current 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 six months ended December 28, 2024, the Company repurchased and subsequently retired 0.4 million shares of the Company’s common stock for a total of $33.6 million or an average cost of $75.19 per share. During the six months ended December 30, 2023, the Company repurchased and subsequently retired 1.3 million shares of the Company’s common stock for a total of $78.1 million or an average cost of $58.83 per share. As of December 28, 2024, approximately $177.0 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 current 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 three months ended March 29, 2025, the Company repurchased and subsequently retired 0.2 million shares of the Company’s common stock for a total of $10.6 million or an average cost of $76.82 per share. During the nine months ended March 29, 2025, the Company repurchased and subsequently retired 0.6 million shares of common stock, for a total of $44.2 million or an average cost of $75.57 per share. 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 and subsequently retired 1.3 million shares of the

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. Refer to Note 6. Debt and Note 7. Leases of the consolidated financial statements in the Form 10-Q for information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, respectively. As of December 28, 2024, the Company had total purchase obligations of $269.8 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 December 28, 2024, the Company had commitments of $176.1 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 December 28, 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. Refer to Note 6. Debt and Note 7. Leases of the consolidated financial statements in this Form 10-Q for information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, respectively. As of March 29, 2025, the Company had total purchase obligations of $304.3 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. As of March 29, 2025, the Company had commitments of $197.5 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 29, 2025.

Previous wording

As of December 28, 2024, our cash balance totaled $18.7 million, including restricted cash of $8.0 million, as compared to a cash balance totaling $27.7 million, including restricted cash of $7.7 million, as of June 29, 2024.

Current wording

As of March 29, 2025, our cash balance totaled $18.3 million, including restricted cash of $8.1 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 six months of fiscal 2025 and fiscal 2024, our operating activities provided cash flow of $379.0 million and $554.0 million, respectively. The decrease in cash flow provided by operating activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.

Current wording

During the first nine months of fiscal 2025 and fiscal 2024, our operating activities provided cash flow of $827.1 million and $956.7 million, respectively. The decrease in cash flow provided by operating activities in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024 was largely driven by a change in the timing of advanced purchases of cigarette inventory to take advantage of preferred pricing.

Previous wording

Cash used in investing activities totaled $2,736.7 million in the first six months of fiscal 2025 compared to $436.4 million in the first six months of fiscal 2024. These investments consisted of cash paid for acquisitions of $2,535.5 million in the first six months of fiscal 2025 compared to $308.1 million in the first six months of fiscal 2024, along with capital purchases of property, plant, and equipment of $203.9 million and $147.1 million for the first six months of fiscal 2025 and the first six months of fiscal 2024, respectively. For the first six months of both fiscal 2025 and 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 $2,875.1 million in the first nine months of fiscal 2025 compared to $533.0 million in the first nine months of fiscal 2024. These investments consisted of cash paid for acquisitions of $2,552.9 million in the first nine months of fiscal 2025 compared to $307.9 million in the first nine months of fiscal 2024, along with capital purchases of property, plant, and equipment of $332.7 million and $244.4 million for the first nine months of fiscal 2025 and the first nine months of fiscal 2024, respectively. For the first nine months of both fiscal 2025 and 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:

Previous wording

During the first six months of fiscal 2025, our financing activities provided cash flow of $2,348.7 million, which consisted primarily of $1,499.9 million in net borrowings under our ABL Facility and $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $84.8 million in payments under finance lease obligations.

Current wording

During the first nine months of fiscal 2025, our financing activities provided cash flow of $2,038.6 million, which consisted primarily of $1,229.7 million in net borrowings under our ABL Facility and $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $135.4 million in payments under finance lease obligations and $43.6 million in cash paid for repurchases of common stock.

Previous wording

During the first six months of fiscal 2024, our financing activities used cash flow of $113.7 million, which consisted primarily of $78.1 million in payments to repurchase common stock and $56.5 million in payments under finance lease obligations.

Current 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.

Previous 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 lesser 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 the 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.

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 lesser 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

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 wording

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 initially 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.

Previous wording

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 $1,428.4 million of restricted payment capacity available under such debt agreements, as of December 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 wording

The ABL Facility and the indentures governing the Company's outstanding notes 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 $1,631.4 million of restricted payment capacity available under such debt agreements, as of March 29, 2025. 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.