Performance Food Group Earnings: Double-Digit Growth Powered by Independent Foodservice Surge
- Hardik Shah
- 42 minutes ago
- 3 min read
TL;DR
• Revenue Strength: Net sales rose 10.8% to $17.1B, fueled by the Cheney Brothers acquisition and strong independent Foodservice case growth (+16.6%).
• Margin Trends: Adjusted EBITDA climbed 16.6% to $480M; gross profit up 14.3% to $2B on better mix and procurement gains.
• Forward Outlook: FY2026 sales guidance raised to $67.5–$68.5B, reflecting confidence in multi-segment momentum and sustained operational execution.
Business Overview
Performance Food Group Company (NYSE: PFGC) is a leading foodservice and food distribution player in North America, serving over 300,000 customer locations including restaurants, schools, healthcare, vending, and convenience retail. With 43,000 associates and a portfolio spanning Foodservice, Convenience, and Specialty segments, the company leverages scale and local agility to drive growth across the away-from-home food market.
Performance Food Group Earnings
Revenue: Up 10.8% YoY to $17.1B, driven by the Cheney Brothers acquisition, favorable case mix, and moderate inflation (+4.4%).
Gross Profit: +14.3% YoY to $2.0B, aided by inventory gains, procurement efficiencies, and strong independent volume.
Net Income: Down 13% YoY to $93.6M, reflecting higher operating and interest expenses.
Adjusted EBITDA: +16.6% YoY to $480.1M.
EPS: Reported $0.60 (–13%); Adjusted EPS rose 1.7% to $1.18.
Cash Flow:Operating cash flow was –$145M, reflecting inventory prebuys for preferred pricing. Capex fell to $79M, while free cash flow was –$224M.
Capital Return:A $500M share repurchase authorization remains available through 2029.
Operational Performance
Foodservice Segment:
Sales up 18.8% to $9.1B; Adjusted EBITDA up 18.1% to $324M.
Organic independent case growth of 6.3%, supported by new customer wins and mix improvements.
Positive margin leverage from Performance Brands and procurement efficiencies.
“Independent case growth exceeded 6%, propelled by market share wins and deeper customer penetration,” said CEO George Holm, adding that the diversified structure “continues to deliver broad-based share gains.”
Convenience Segment:
Sales up 3.5% to $6.6B; EBITDA up 14.9% to $121M.
Strength from Core-Mark, with new national accounts at Love’s Travel Stops and RaceTrac onboarding this year.
“Core-Mark continues to outperform the industry, and new chain wins will fuel another year of excellent profit performance,” said COO Scott McPherson.
Specialty Segment:
Sales down 0.7% to $1.3B, impacted by theater softness, but EBITDA up 13% to $94M.
Growth in vending, office coffee, campus retail, and e-commerce offset category headwinds.
“A favorable mix shift and expense control drove profit growth despite a slower backdrop,” Holm noted.
Market Insights
PFG continues to capture market share in the independent restaurant channel, even as the broader food-away-from-home market remains mixed. Inflation remains in the low single digits, with beef inflation offset by deflation in poultry and cheese. Convenience retail trends remain resilient, and foodservice within convenience stores is emerging as a key growth engine.
Consumer Behavior & Sentiment
Consumer spending remains bifurcated:
Low-income consumers are pressured, affecting quick-service restaurant (QSR) traffic.
Value-oriented propositions are performing best.
The company sees limited direct softness among younger consumers but acknowledges cautious spending patterns.
“The value proposition is what’s really making the day for concepts,” McPherson said, noting strong engagement across branded offerings.
Strategic Initiatives
Continued integration of Cheney Brothers and José Santiago acquisitions, with full synergy realization expected by FY2027.
Investments in salesforce expansion (+6%), digital platforms, and distribution infrastructure to enhance scale efficiency.
Strong M&A pipeline, with management emphasizing “high standards and robust due diligence” for future deals.
Capital Allocation
Prioritizing debt reduction and selective M&A.
No share repurchases this quarter; repurchase authorization remains intact.
FY2026 capex expected at ~70 bps of sales, focused on fleet and cold storage expansion.
Forward Guidance
Q2 FY2026: Sales $16.4–$16.7B, Adjusted EBITDA $450–$470M.
FY2026: Sales $67.5–$68.5B (raised); Adjusted EBITDA $1.9–$2.0B (unchanged).
“We’re raising sales guidance and reiterating EBITDA targets with a high degree of confidence,” said CFO Patrick Hatcher. “Our results keep us on track to achieve our three-year objectives announced at Investor Day.”
The Bottom Line
PFG’s Q1 2026 results reaffirm its execution strength and diversified growth engine. With broad-based momentum across segments, continued synergy capture from acquisitions, and rising independent penetration, the company remains well positioned to deliver sustainable earnings growth.
Investor Watchpoints:
Integration pace and synergy realization from Cheney Brothers.
Independent Foodservice volume resilience amid macro softening.
Working capital normalization and cash flow improvement through FY2026.
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