1. Case volume rose 9.8% in Q2 FY2025, fueled by independent channels. 2. Net sales increased by 9.4%, totaling $15.6 billion for Q2 FY2025. 3. Gross profit grew by 14.4% to $1.8 billion, driven by acquisitions. 4. Net income dropped 45.8% to $42.4 million, impacted by higher interest expense. 5. Adjusted EBITDA improved by 22.5%, reaching $423 million in Q2 FY2025.
Strong sales and EBITDA growth indicate solid operational performance, improving investor sentiment. Past quarters of revenue growth often led to stock price increases.
The financial performance data is critical for investors evaluating PFGC's growth potential and stability. Significant changes in sales and profit metrics directly affect stock valuation.
The immediate financial results and growth rates can positively influence PFGC's stock in the near term. Similar quarterly results previously led to short-term price increases.
RICHMOND, Va.--(BUSINESS WIRE)--Performance Food Group Company (“PFG” or the “Company”) (NYSE: PFGC) today announced its second quarter and first six months fiscal 2025 business results.
“Our solid business performance continued through the fiscal second quarter, resulting in strong sales and Adjusted EBITDA growth, exceeding the upper end of our guidance on both measures,” said George Holm, PFG’s Chairman & Chief Executive Officer. “Our organic business, along with recent acquisitions, contributed significantly to our exceptional case growth in Foodservice. All three of our business segments have maintained a solid foundation, consistently winning new business and driving growth opportunities. Our integration of José Santiago and Cheney Brothers has gone well, and we are excited about the value and expertise those two organizations bring to PFG. Overall, I am very pleased with our business which continues to successfully execute our strategy to maximize value for our shareholders.”
Total case volume increased 9.8% for the second quarter of fiscal 2025 compared to the prior year period. Total organic case volume increased 2.1% for the second quarter of fiscal 2025 compared to the prior year period. Total organic case volume benefited from a 5.0% increase in organic independent cases, including growth in Performance Brands cases, and growth in cases sold to Foodservice’s Chain business. Total independent case volume increased 19.8%.
Net sales for the second quarter of fiscal 2025 grew 9.4% to $15.6 billion compared to the prior year period. The increase in net sales was driven by recent acquisitions, including the acquisition of Cheney Bros., Inc. (“Cheney Brothers”), an increase in cases sold including a favorable shift in the mix of cases sold, and an increase in selling price per case as a result of inflation. Overall product cost inflation for the Company was approximately 4.6%.
Gross profit for the second quarter of fiscal 2025 grew 14.4% to $1.8 billion compared to the prior year period. The gross profit increase was driven by recent acquisitions, 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.
Operating expenses rose 17.2% to $1.7 billion in the second quarter of fiscal 2025 compared to the prior year period. The increase in operating expenses was primarily driven by recent acquisitions, an increase in personnel expense primarily related to wages, commissions, and benefits, and an increase in professional fees primarily related to recent acquisitions, partially offset by a decrease in fuel expense primarily due to lower fuel prices in the second quarter of fiscal 2025 as compared to the prior year period. Depreciation and amortization increased $39.2 million in the second quarter of fiscal 2025 compared to the prior year period primarily as a result of recent acquisitions and an increase in transportation equipment under finance leases.
Net income for the second quarter of fiscal 2025 decreased $35.9 million year-over-year to $42.4 million. The decrease was primarily a result of a $38.8 million increase in interest expense and a $15.1 million decrease in operating profit, partially offset by a $19.1 million decrease in income tax expense. The effective tax rate in the second quarter of fiscal 2025 was approximately 25.2% compared to 29.9% in the second quarter of fiscal 2024. The effective tax rate for the second quarter of fiscal 2025 differed from the prior year period 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.
For the quarter, Adjusted EBITDA rose 22.5% to $423.0 million compared to the prior year period.
Diluted EPS decreased 46.0% to $0.27 per share in the second quarter of fiscal 2025 compared to the prior year period. Adjusted Diluted EPS increased 8.9% to $0.98 per share in the second quarter of fiscal 2025 compared to the prior year period.
Total case volume increased 6.1% for the first six months of fiscal 2025 compared to the prior year period. Total organic case volume increased 1.6% for the first six months of fiscal 2025 compared to the prior year period. Total organic case volume benefited from a 4.6% increase in organic independent cases, growth in Performance Brands cases, and growth in cases sold to Foodservice’s Chain business. Total independent case volume increased 13.5%.
Net sales for the first six months of fiscal 2025 grew 6.2% to $31.1 billion compared to the prior year period. The increase in net sales was primarily attributable to 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.
Gross profit for the first six months of fiscal 2025 grew 10.2% to $3.6 billion compared to the prior year period. The gross profit increase was primarily attributable to recent acquisitions, 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.
Operating expenses rose 12.1% to $3.2 billion in the first six months of fiscal 2025 compared to the prior year period. The increase in operating expenses was primarily due to recent acquisitions, increases in personnel expenses primarily related to wages, commissions, and benefits, professional fees related to recent acquisitions, insurance expense primarily related to workers’ compensation, and repairs and maintenance expense primarily related to transportation equipment. These increases were partially offset by a decrease in fuel expense primarily due to lower fuel prices for the first six months of fiscal 2025 as compared to the prior year period. Depreciation and amortization increased $62.8 million in the first six months of fiscal 2025 compared to the prior year period primarily as a result of recent acquisitions, an increase in transportation equipment under finance leases, and accelerated amortization of certain customer relationships and trade names.
Net income for the first six months of fiscal 2025 decreased $48.6 million year-over-year to $150.4 million. The decrease was primarily a result of a $49.5 million increase in interest expense and a $16.0 million decrease in operating profit, partially offset by a $22.8 million decrease in income tax expense. The effective tax rate in the first six months of fiscal 2025 was approximately 26.1% compared to 27.6% in the first six months of fiscal 2024. The effective tax rate for the first six months of fiscal 2025 differed from the prior year period 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.
For the first six months of fiscal 2025, Adjusted EBITDA rose 14.5% to $834.9 million compared to the prior year period.
Diluted EPS decreased 24.4% to $0.96 per share in the first six months of fiscal 2025 compared to the prior year period. Adjusted Diluted EPS increased 3.9% to $2.13 per share in the first six months of fiscal 2025 compared to the prior year period.
In the first six months of 2025, PFG provided $379.0 million in cash flow from operating activities compared to $554.0 million in cash flow from operating activities in the prior year period. The decrease in cash flow provided by operating activities in the first six months of fiscal 2025 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.
In the first six months of fiscal 2025, PFG invested $203.9 million in capital expenditures, an increase of $56.8 million versus the prior year period. In the first six months of fiscal 2025, PFG delivered free cash flow of $175.1 million compared to free cash flow of $406.9 million in the prior year period.1
During the three months ended December 28, 2024, the Company repurchased and subsequently retired less than 0.1 million shares of common stock, for a total of $4.0 million or an average cost of $79.05 per share. During the six months ended December 28, 2024, the Company repurchased and subsequently retired 0.4 million shares of common stock, for a total of $33.6 million or an average cost of $75.19 per share. As of December 28, 2024, there remains approximately $177.0 million available for additional share repurchases under the Company’s $300 million share repurchase program authorized by the Board of Directors in November 2022.
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.
Corporate & All Other is comprised of 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.
The following tables set forth net sales and Segment Adjusted EBITDA by segment for the periods indicated (dollars in millions):
| Net Sales | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||||||||||
| December 28, 2024 | December 30, 2023 | Change | ||||||||||||||
| Foodservice | $ | 8,368.3 | $ | 7,079.3 | $ | 1,289.0 | 18.2 | |||||||||
| Vistar | 1,234.6 | $ | 1,201.9 | 32.7 | 0.3 | |||||||||||
| Convenience | 6,000.0 | $ | 5,941.4 | 26.1 | 0.4 | |||||||||||
| Corporate & All Other | (124.7) | (101.3) | (12.3) | (22.0) | ||||||||||||
| Total Adjusted EBITDA | $ | 834.9 | $ | 729.2 | $ | 105.7 | 14.5 | |||||||||