Full-Year Double-Digit Sales and Earnings Growth Driven by Foodservice and Vistar’s Strong Results, Solid Gross Profit per Case Growth and Continued Independent Case Growth
Fourth-Quarter Fiscal 2019 Highlights
- Total case volume grew 9.2%
- Net sales increased 28.4% to $5.9 billion
- Gross profit improved 14.4% to $700.1 million
- Net income declined 1.9% to $63.2 million
- Adjusted EBITDA increased 16.0% to $157.0 million1
- Diluted Earnings Per Share (“EPS”) decreased 1.6% to $0.60
- Adjusted Diluted EPS increased 32.1% to $0.701
Full-Year Fiscal 2019 Highlights
- Total case volume grew 6.0%
- Net sales increased 12.1% to $19.7 billion
- Gross profit improved 9.6% to $2.5 billion
- Net income declined 16.1% to $166.8 million
- Adjusted EBITDA increased 11.4% to $475.5 million1
- Diluted EPS decreased 16.3% to $1.59
- Adjusted Diluted EPS increased 20.1% to $1.851
August 14, 2019 07:00 AM Eastern Daylight Time
RICHMOND, Va.--(BUSINESS WIRE)--Performance Food Group Company (“PFG”) (NYSE: PFGC) today announced its fourth-quarter and full-year fiscal 2019 business results. “Fiscal 2019 was a successful year for PFG, and I’m very pleased with our team’s execution,” said George Holm, PFG’s Chairman, President and Chief Executive Officer. “Our strong top-line growth, combined with increased gross profit per case, led to profitability at the high end of our expectations for the year. Our core business segments delivered strong financial results led by Vistar’s double-digit EBITDA growth. Looking ahead to fiscal 2020, we believe our two recently announced strategic acquisitions position us well across our business and we expect fiscal 2020 to be another year of solid earnings growth.”
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This earnings release includes several metrics, including EBITDA, Adjusted EBITDA, Adjusted Diluted EPS and Free Cash Flow that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). Please see Statement Regarding Non-GAAP Financial Measures at the end of this release for the definitions of such non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP.
Fourth-Quarter Fiscal 2019 Financial Summary
Total case volume increased 9.2% for the fourth quarter of fiscal 2019 compared to the prior year period, with underlying organic growth of 2.9%. Total case volume included a 4.9% increase in independent cases, growth in Performance Brands cases and broad-based growth across Vistar’s sales channels.
Net sales for the fourth quarter of fiscal 2019 grew 28.4% to $5.9 billion versus the comparable prior year period. The increase in net sales was primarily attributable to growth in Vistar, most notably in the vending, office coffee service and corrections channels, case growth in Foodservice, specifically in the independent restaurant channel, and recent acquisitions. The acquisition of Eby-Brown Company LLC (“Eby-Brown”) in the fourth quarter of fiscal 2019 contributed $949.7 million to net sales, including $194.7 million related to tobacco excise taxes. Excluding Eby-Brown, net sales increased 7.7%. The increase in net sales was also attributable to an increase in selling price per case as a result of inflation and mix. Overall food cost inflation was approximately 2.3% in the fourth quarter.
Gross profit for the fourth quarter of fiscal 2019 grew 14.4% compared to the prior year, to $700.1 million. The strong gross profit increase was led by case growth and from selling an improved mix of customer channels and products, specifically in Vistar’s channels and the independent restaurant channel. Gross margin as a percentage of net sales was 11.9% for the fourth quarter of fiscal 2019 compared to 13.3% for the prior year period. The gross margin decline was driven by Eby-Brown.
Operating expenses rose by 15.8% to $599.6 million in the fourth quarter of fiscal 2019 compared to the prior year. The increase in operating expenses was primarily due to the increase in case volume and the resulting impact on variable operational expenses. Operating expenses also increased in the fourth quarter of fiscal 2019 as a result of recent acquisitions and increases in personnel expenses.
Operating profit was up 7.1% driven by a strong gross profit increase of 14.4%. Net income for the fourth quarter of fiscal 2019 declined 1.9% year-over-year to $63.2 million. The decline was primarily a result of a $5.8 million increase in income tax expense. The increase in income tax expense was primarily a result of the prior year impact of the Tax Cuts and Jobs Act (the “Act”). The effective tax rate in the fourth quarter of fiscal 2019 was 23.9% compared to 17.9% in the fourth quarter of fiscal 2018.
EBITDA increased 11.5% to $143.1 million in the fourth quarter of fiscal 2019 compared to the prior year. For the quarter, Adjusted EBITDA rose 16.0% to $157.0 million compared to the prior year period.
Diluted EPS declined 1.6% to $0.60 in the fourth quarter of fiscal 2019 compared to the prior year. Adjusted Diluted EPS increased 32.1% to $0.70 in the fourth quarter compared to the prior year period.
Fiscal 2019 Financial Summary
Total case volume increased 6.0% in fiscal 2019, with underlying organic growth of 3.0%.
Net sales for fiscal 2019 increased 12.1% to $19.7 billion. The increase in net sales was primarily attributable to sales growth in Vistar, particularly in the vending, theater, retail and corrections channels, case growth in Foodservice, specifically in the independent channel, and recent acquisitions. The acquisition of Eby-Brown contributed $949.7 million to net sales, including $194.7 million related to tobacco excise taxes. Excluding Eby-Brown, net sales increased 6.7%.
Gross profit for fiscal 2019 increased 9.6% to $2.5 billion compared to the prior year. The gross profit increase was led by case growth and an improved sales mix of customer channels and products, specifically in Vistar’s channels and the independent restaurant channel. Gross margin as a percentage of net sales was 12.7% for fiscal 2019 compared to 13.0% for fiscal 2018 as a result of Eby-Brown’s lower margins.
Operating expenses increased 9.3% to $2.2 billion for fiscal 2019 compared to the prior year. The increase was primarily due to case volume growth and the resulting impact on variable operational expenses. Operating expenses also increased in fiscal 2019 as a result of recent acquisitions, increases in personnel expenses, an increase in fuel expense and an increase in insurance expense. These increases were partially offset by decreases in stock-based compensation expense, professional, legal, and consulting expenses, and advisory fees.
Operating profit was up 11.8% to $283.3 million driven by strong top-line and gross profit growth and mix of business, specifically within the independent restaurant channel. Net income decreased 16.1% to $166.8 million for fiscal 2019 compared to the prior year. The decrease in net income was a result of the $56.6 million increase in income tax expense. The increase in income tax expense was primarily driven by prior year non-cash gains and other cash benefits as a result of the Act and the prior year excess tax benefit of $15.4 million associated with the performance vesting of certain stock-based compensation awards. The effective tax rate in fiscal 2019 was 23.6% compared to -2.6% in fiscal 2018.
For fiscal 2019, EBITDA increased 14.2% to $438.7 million compared to the prior year. Adjusted EBITDA increased 11.4% to $475.5 million for fiscal 2019 compared to the prior year.
Diluted EPS declined 16.3% to $1.59 for fiscal 2019 compared to the prior year. Adjusted Diluted EPS increased 20.1% to $1.85 for fiscal 2019 compared to the prior year period.
The full report may be viewed here.
