Performance Food Group Q4 2025 Earnings Report

Performance Food Group EPS Results

• Actual EPS: $1.55
• Consensus EPS: $1.45
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $1.45

Performance Food Group Revenue Results

• Actual Revenue: $16.94 billion
• Expected Revenue: $16.85 billion
• Beat/Miss: Beat by +$88.95 million
• YoY Revenue Growth: +11.20%

Performance Food Group Announcement Details

• Quarter: Q4 2025
• Date: 8/13/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 13, 2025
• Conference Call Time: 9:00AM ET

Performance Food Group (NYSE:PFGC), through its subsidiaries, markets and distributes food and food-related products in the United States. It operates through three segments: Foodservice, Vistar, and Convenience. The company offers a range of frozen foods, groceries, candy, snacks, beverages, cigarettes, and other tobacco products; beef, pork, poultry, and seafood; and health and beauty care products. It also sells disposables, cleaning and kitchen supplies, and related products. In addition, the company offers value-added services, such as product selection and procurement, menu development, and operational strategy. It serves independent and chain restaurants, schools, business and industry locations, hospitals, vending distributors, office coffee service distributors, retailers, convenience stores, theaters, hospitality providers, concessionaires, airport gift shops, college bookstores, corrections facilities, and impulse locations, as well as franchises and other institutional customers. Performance Food Group Company was founded in 1885 and is headquartered in Richmond, Virginia.

Performance Food Group Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: PFG reported record $63B+ net sales and grew net income faster than revenue by improving gross and operating margins.
• Positive Sentiment: Organic independent restaurant case growth accelerated to 5.9% in Q4 (4.6% FY) and is expected to reach ~6% in fiscal 2026.
• Positive Sentiment: The convenience segment achieved positive growth every quarter despite mid-single-digit industry declines, driving double-digit profit gains.
• Positive Sentiment: Specialty segment rebounded with 4.1% sales growth in Q4 through new accounts, cost efficiencies, and stronger e-commerce performance.
• Neutral Sentiment: PFG maintains a balanced capital allocation plan—prioritizing debt reduction, disciplined M&A, share repurchases, and 70 bps CapEx—to support growth and shareholder returns.

Presentation

[Operator]

day, and welcome to PFG's Fiscal Year Q4 twenty twenty five Earnings Conference Call. I would now like to turn the call over to Bill Marshall, Senior Vice President, Investor Relations for PFG. Please go ahead, sir.

[Bill Marshall, SVP - IR at Performance Food Group Company]

Thank you, and good morning. We're here with George Holm, PFG's CEO Patrick Hatcher, PFG's CFO and Scott McPherson, PFG's COO. We issued a press release this morning regarding our twenty twenty five fiscal fourth quarter results, which can be found in the Investor Relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the results in the same period in fiscal twenty twenty four. Any reference to 2025, 2026 or specific quarters refers to our fiscal calendar unless otherwise stated.

[Bill Marshall, SVP - IR at Performance Food Group Company]

The results discussed on this call will include GAAP and non GAAP results adjusted for certain items. The reconciliation of these non GAAP measures to the corresponding GAAP measures can be found at the back of the earnings release. Our remarks on this call and in the earnings release contain forward looking statements and projections of future results. Please review the cautionary forward looking statements section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward looking statements and projections. With that, I'd like to turn the call over to George.

[George Holm, Chairman & CEO at Performance Food Group Company]

Thanks, Bill. Good morning, everyone, and thank you for joining our call today. I'm excited to review our company's progress through fiscal twenty twenty five and provide our current thoughts on the industry and external environment. PFG finished the fiscal year with excellent results and momentum to set us up for a strong 2026. While the food away from home industry is still not quite operating at a level we would like, our company has executed our strategy to take market share and win new business while improving our margins.

[George Holm, Chairman & CEO at Performance Food Group Company]

In 2025, we grew our top line and have now exceeded the $63,000,000,000 mark. Importantly, we grew our bottom line even faster through a combination of improving business mix and diligent focus on our gross and operating margins. As we highlighted at our Investor Day in May, PFT has carved out a unique niche in the food away from home market. Our range of capabilities allow our associates to aggressively pursue new business anywhere that consumers purchase food away from home with little restriction on where we can grow. At the same time, there is still ample white space for us to grow into over time, which we believe provides a runway of strong top and bottom line performance for many years to come.

[George Holm, Chairman & CEO at Performance Food Group Company]

We would not be in this position without the cooperation across our three segments: foodservice, convenience and specialty. At Investor Day, we described our PFG One strategy, which is focused on capturing top and bottom line opportunities across the entire PFG platform. As we closed out the fiscal year, all our business units were contributing to our performance. Through a volatile market, each business gained momentum. We're excited about PFG's potential in 2026 as we expect to propel our results to new highs.

[George Holm, Chairman & CEO at Performance Food Group Company]

In a moment, Patrick will provide a detailed review of our financial outlook. We are often asked how we were able to outperform and win market share at such a consistent clip. The simple answer is it starts with our 43,000 dedicated associates. We hire the best in the industry and give them the autonomy to build and grow business. In the fourth quarter, we continue to hire food service sales reps at a very aggressive rate, ending the year with an 8.8% increase compared prior year.

[George Holm, Chairman & CEO at Performance Food Group Company]

We are not slowing down this important investment in our business. As I mentioned earlier, the industry backdrop has room to improve, and I'm confident that we will see better trends in the future. The investments we are making in our people now will enable us to significantly accelerate growth as the industry finds its footing. Our efforts are producing results. As you know, our organization targets 6% independent restaurant case growth or better.

[George Holm, Chairman & CEO at Performance Food Group Company]

While we were not quite at that level in 2025, I am proud of what we were able to achieve. For the full year, we grew organic independent cases by 4.6% despite facing several difficult periods. If we exclude just the February result, which was heavily impacted by severe weather, our independent case growth would have been 5%. In the fourth quarter, our independent cases were up 5.9% organically with consistent results in each of the final three months of the fiscal year. This is encouraging as we enter 2026 and we believe we'll be right around 6% growth level for the full year.

[George Holm, Chairman & CEO at Performance Food Group Company]

We have also seen success growing our chain business profitably. Over the past several years, we have shifted our portfolio of chain restaurant towards high performing customers who are growing. We are excited to have partnered with several new accounts through the year, generating 2.2% case growth over the full year and 4.5% case growth in the fourth quarter. We still have a robust pipeline of potential new accounts that the team is working diligently to secure, which will provide additional growth. Overall, our food service segment had an outstanding 02/2025, and we believe is poised to produce an even better 2026 despite several casual chains experiencing sales declines.

[George Holm, Chairman & CEO at Performance Food Group Company]

We also closed the year strong in our Convenience and Specialty segments. Both organizations executed their strategic plans and saw sequential improvement into the end of the year. In convenience, the total industry continues to see mid single digit sales declines across many of the key categories. By adding new accounts, broadening our foodservice offerings and partnering with strong customers, convenience produced positive case growth in each of the four quarters with a stronger performance in the second half of the fiscal year. It's hard to overstate what an accomplishment this is in the current environment.

[George Holm, Chairman & CEO at Performance Food Group Company]

A strong focus on procurement opportunities and cost management generated double digit profit growth for the convenience segment over the full year. Even with a very difficult fourth quarter comparison, convenience grew adjusted EBITDA and is entering 2026 with a great deal of momentum. Our specialty business faced historically high prices across the candy and snack industry. High competition in the theater channel and financial struggles for several customers in 02/2025. The organization rose to the occasion by securing new business, identifying efficiency gains, and fostering collaboration across our broader organization.

[George Holm, Chairman & CEO at Performance Food Group Company]

These concerted efforts led to continuous improvement throughout the fiscal year. As we enter fiscal twenty twenty six, our financial position is strong and we are continuing to execute our balanced capital allocation plan, bringing our balance sheet back within our target range over the next several quarters. We'll also continue to look at disciplined M and A, where we have a track record of delivering sustainable growth across our three business segments. Before I turn the call over to Scott, I want to take a moment to address U. S. Foods' statements from last week.

[George Holm, Chairman & CEO at Performance Food Group Company]

PFG's board has a track record of regularly evaluating a range of potential paths to generate shareholder value. We are committed to taking actions that are in the best interest of PFG shareholders, and we will continue to focus on ways to deliver further growth and value creation. The outreach from US Foods was a request for information sharing to explore regulatory considerations and potential synergies related to a possible business combination. We have a clear strategy in place to effectively build upon the company's position as a leading North American food and food service distributor in the food away from home market. We are executing at a high level, continuing to make progress on our three year plan and advancing toward the targets we outlined at Investor Day in May.

[George Holm, Chairman & CEO at Performance Food Group Company]

We're doing this by aggressively pursuing new business and capitalizing on additional opportunities in the market while continuing to invest in our people. We expect to be well positioned to accelerate growth. PFG is building a formidable organization that is set up to grow and win for many years to come. Because of the successful execution of our strategy and our confidence in the path forward, any transaction would need to clear a high bar on all fronts. Value and speed and certainty to completion, taking into consideration associated risks, including regulatory, synergy, and integration risks.

[George Holm, Chairman & CEO at Performance Food Group Company]

After careful consideration, the PFG board determined that there was no basis to engage in the information sharing requested by US Foods. We have demonstrated PFG's powerful value proposition across our three business segments, have strong momentum underway, and have conviction in the value creating potential of our strategy. That is all we have to share today on this subject. And when we get to q and a, we'd ask that you keep questions focused on our results and outlook. I'd like to conclude my remarks by highlighting how proud I am of our team's efforts throughout the year and how excited I am about what lies ahead in 2026 and beyond. With that, I'll turn it over to Scott. Scott?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Thank you, George, and good morning, everyone. I'm excited to take you through our recent performance and discuss how we plan to continue our success in 2026. As George mentioned, we had a strong finish to 2025, picking up momentum into the summer months and maintaining strong growth in the early days of fiscal twenty twenty six. Despite an imperfect backdrop, our team is executing at a high level, which is reflected in our results and outlook. We plan on building upon this momentum in the months ahead.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Let's walk through a number of areas where we've had success due to the strategic actions we've taken. Starting with our foodservice business. As George described, we were able to accelerate our performance in the quarter through a combination of strong execution and broader market improvement. Restaurant foot traffic has improved month by month and while it declined year over year, during the quarter our foodservice organization was able to offset this headwind with new accounts and increased penetration into existing accounts, driving our nearly 6% organic independent case growth for the quarter. Our commitment to adding high quality sales force talent is unwavering and a key component to our growth.

[Scott Mcpherson, President & COO at Performance Food Group Company]

In Q4, our total organic independent case growth accelerated two fifty basis points sequentially, which was faster than the rate of industry foot traffic improvement, showing our consistent ability to take market share. There are several factors underpinning this success. In the quarter, we grew new independent accounts by 5.3%, the highest level in 2025. It is also the first time in 2025 that total organic case growth was greater than new account additions, which translates to increased penetration within existing accounts. We also saw our lines per drop increase in the quarter, which has been a consistent component of our success.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Our ability to increase penetration and grow lines per drop despite industry wide foot traffic declines is a very positive sign for our long term growth potential. We believe that the industry will continue to recover, at which point PFG will be very well positioned to accelerate total case growth. In addition, our chain business performed extremely well in the quarter, While our independent business and its contributions to profitability often gets the headlines, our chain business continues to be a valuable contributor to our overall performance. Over the past few years, we have slowly transformed our chain business portfolio to align with our goal of faster and more profitable growth. The results of these actions are apparent in our fourth quarter as we not only saw case and volume growth, but higher margin contribution.

[Scott Mcpherson, President & COO at Performance Food Group Company]

This success was achieved by winning new chain business with strong and growing partners supported by long term contracts that are beneficial to both PFG and our customers. We are also seeing positive signs from some of our legacy chain accounts, particularly in the casual dining space. While some casual dining chains continue to struggle, there is a subset that has seen success by creating a value proposition to attract foot traffic from consumers who are increasingly selective in their restaurant choices. We are thrilled to be partnering with several of these chains and are excited to see their growth in the months ahead. Overall, our foodservice organization is seeing accelerating results in both independent and chain business with higher profit contribution, setting the stage for a strong 2026.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Turning to our convenience segment. While the backdrop for the total C store industry remains consistently difficult, our organization was able to outperform and finish 2025 in a strong position. In fact, through 2025, our convenience segment sales growth accelerated in each of the four quarters. Continues to grow case volume while facing an environment of total industry case declines. In key areas like foodservice and snacks, Core Core Mark saw cases up low single digits despite low to mid single digit total industry category decline.

[Scott Mcpherson, President & COO at Performance Food Group Company]

This is through a combination of increased foodservice programs to existing customers and new account wins. I point you to our Investor Day presentation for more details on some of these key initiatives. Looking ahead, we are even more excited about what's in store. As we discussed briefly on our third quarter call, Hallmark has signed agreements with several new customers representing over 1,000 additional stores. We will be onboarding these stores through our fiscal twenty twenty six second and third quarters.

[Scott Mcpherson, President & COO at Performance Food Group Company]

While there will be startup costs associated with onboarding this new business, we expect a nice contribution to our sales and profit growth in the 2026. Finishing up our segment commentary with Specialty. Both net sales and adjusted EBITDA growth for the Specialty segment saw a nice acceleration in the fourth quarter. Total net sales for Specialty increased 4.1% in the quarter, an excellent recovery. Notably, the vending, office coffee services, retail and value channels all experienced an upswing in sales performance during the quarter.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Our e commerce platform, while still small, also continues to grow at a double digit clip. We have very high expectations for this area of the business over the long term. Overall, we are very optimistic about the future of specialty despite some of the persistent growth hurdles and believe 2026 will build on this momentum. In summary, all three of PFG's operating segments accelerated their growth in the final quarter of the year and are well positioned entering 2026. I'll now turn it over to Patrick, who will review our financial performance and outlook. Patrick?

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Thank you, Scott, and good morning, everyone. This morning, I will review our financial results from our fourth quarter and full year, provide color on our financial position and review the guidance we announced for 2026. We are pleased with our 2025 performance, ending the period in a strong financial position with momentum into 2026. In fiscal twenty twenty five, we achieved net sales above the midpoint of the long term target range we announced in 2022, with adjusted EBITDA above the high end of the target range. The financial priorities we outlined at our Investor Day in May support our operating strategy and new three year sales and adjusted EBITDA targets.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We are focused on translating our profit into strong and stable cash flow, which we then look to deploy in value creating investments and cash return to shareholders. We believe that these initiatives have put us on a path to deliver strong returns over the next three years. Some financial highlights from the quarter and year. PFG's total net sales grew 11.5% in the fourth quarter as strong underlying trends in all three of our operating segments were boosted by the addition of Jose Santiago and Cheney Brothers. As a reminder, we will begin lapping the Jose Santiago acquisition in the 2026.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We have one more quarter of incremental acquisition contribution from Cheney Brothers, and we'll begin lapping these results in the second week of the second quarter. Total company cost inflation was about 4.3% for the fourth quarter, a slight sequential slowdown from the third quarter. The main driver of the lower inflation was in the foodservice area, which experienced product cost inflation of 2.5% in the quarter, more than one point lower than the third quarter. The deceleration in foodservice inflation was largely the result of lower year over year increases in poultry and dairy, somewhat offset by cost increases in other proteins, including beef and seafood. Specialty segment cost inflation was up 3.3% year over year and convenience costs increased 6.5%.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We are closely watching product cost inflation. At this time, we are continuing to model low single to mid single digit inflation in 2026. As a reminder, we source the majority of our inventory from domestic suppliers and therefore do not expect a material impact from tariff increases. Still, we are remaining vigilant and in close communication with suppliers and customers to be able to adjust if necessary as the situation evolves. We have historically been able to manage price swings, including both inflation and deflation and expect to use a similar playbook going forward.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Moving down the P and L. Total company gross profit increased 14.6% in the fourth quarter, representing a gross profit per case increase of $0.17 as compared to the prior year's period. In the 2025, PFG reported net income of $131,500,000 Adjusted EBITDA increased 19.9% to 5 and $46,900,000 topping our previously stated guidance range. All three operating segments contributed to our strong adjusted EBITDA performance. In particular, Specialty saw a nice rebound to 9% segment adjusted EBITDA growth in the period.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We are also particularly pleased with the Convenience segment profit performance, which saw adjusted EBITDA growth of 4.8% in the quarter. This result was despite a difficult year over year comparison due to both a strong underlying performance and a large accrual true up in the prior year period. Over the full year, the Convenience segment increased adjusted EBITDA margins by 20 basis points. Diluted earnings per share in the fiscal fourth quarter was $0.84 while adjusted diluted earnings per share was $1.55 representing a 6.9% increase year over year. Our effective tax rate was 25.6% in the fourth quarter.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Our quarterly tax rate benefited from an increase in stock based compensation and income tax credits. At this time, we expect our 2026 tax rate to be closer to our historical range. Turning to our financial position and cash flow performance. In fiscal twenty twenty five, PFG generated $1,200,000,000 of operating cash flow. We invested $5.00 $6,000,000 on capital expenditures during 2025, resulting in free cash flow of about $7.00 $4,000,000 As we described last quarter, our capital expenditure level has increased due to investments to support capacity expansion at Cheney Brothers.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We are currently expecting a full year CapEx number in fiscal twenty twenty six in line with our long term outlook of 70 basis points on total net sales as we continue to invest in growth projects, including warehouse expansions and increasing our fleet. These are high return projects that will support our long term growth goals. During the fourth quarter, we also repurchased about 177,000 shares of our stock at an average cost of $75.39 per share for a total of $13,400,000 While share repurchases are a key component of our capital allocation strategy, we are currently prioritizing debt reduction. As you heard us discuss, our capital allocation strategy focuses on four key levers: capital expenditures, leverage reduction, share repurchases and M and A. Most of our capital spend is directed towards infrastructure to support our growth through warehouse capacity expansion and increased fleet.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

At the same time, our strong balance sheet enables us to explore new investment opportunities. We will continue to take various marketplace conditions into account when determining our capital deployment. As George said earlier, we will maintain our balanced capital allocation strategy to best position the company to capitalize on opportunities in the market and drive shareholder value. The M and A pipeline remains robust, and we continue to evaluate strategic M and A. PFG has a history of successful acquisitions to drive growth and shareholder value, and we expect that to continue.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

At the same time, we will apply our typical high standards and robust due diligence to evaluate high quality acquisition opportunities. Turning to our guidance. Today, we announced guidance for the first quarter and full year 2026. For the first quarter, we expect net sales to be in a range of $16,600,000,000 to $16,900,000,000 and adjusted EBITDA between $465,000,000 and $485,000,000 For the full fiscal year, we project net sales between $67,000,000,000 and $68,000,000,000 and adjusted EBITDA between 1,900,000,000.0 and $2,000,000,000 As previously mentioned, the first fiscal quarter will include the incremental results from Cheney Brothers, which we will begin lapping during the second week of the second quarter in fiscal twenty twenty six. These targets are aligned with our three year projections we announced at Investor Day with sales in the range of $73,000,000,000 to $75,000,000,000 and adjusted EBITDA between $2,300,000,000 and $2,500,000,000 in fiscal twenty twenty eight.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

When building your models, keep in mind that fiscal twenty twenty seven will include a fifty third week. To summarize, PFG closed our 2025 with strong results and solid momentum into 2026. All three of our operating segments are performing well and contributing to our overall results. We are in a solid financial position supporting our growth investments and capital return to our shareholders. We are excited about the future and believe we are well positioned to continue to win business within The U.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

S. Food away from home market. Thank you for your time today. We appreciate your interest in Performance Food Group. And with that, George, Scott and I would be happy to take your questions.

[Operator]

Our first question comes from Mark Carden with UBS. Your line is open. Please go ahead.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

Morning. Thanks so much for taking the questions. So to start, it sounds like the overall industry backdrop continues to slowly improve. How are you feeling about your July and August to date? And as you think about your guidance for the year ahead, what kind of industry traffic backdrop are you building it on?

[George Holm, Chairman & CEO at Performance Food Group Company]

Well, so far this is George. So far, July and the first couple weeks of August, we have seen an uptick, primarily in our independent food service business. I'm gonna have Scott kinda comment on on on the other channels. I guess when you just go to our prepared remarks, I think there there's a lot of confidence around here that we'll be able to achieve that 6% number this year, but we are off to a start that gives us that type of confidence.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Yeah.

[Scott Mcpherson, President & COO at Performance Food Group Company]

I think the other, comment I'd make there is if you look at Black Box results over the quarter, they continue to improve over the fourth quarter. And we actually saw our first positive result in July, so really positive trends around traffic and restaurant. Looking at the other two segments, the convenience segment continues to be pressured. But what gives us a lot of confidence in convenience is we continue to grow share and outperform there. And we talked about in the remarks a couple of really nice wins that we'll add on over the next couple of quarters that will really contribute to our growth and profitability and convenience.

[Scott Mcpherson, President & COO at Performance Food Group Company]

And then when I think about the Specialty segment, we've got a couple of channels that are still pressured. But overall, we had a really nice fourth quarter, have a lot of momentum in our e commerce space and a couple of our other segments. The return to work really helps us across all three of our segments. So I feel really good about the landscape.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Mark, this is Patrick. I'll just add on to the last part of your question around how our outlook. Obviously, we're really confident in our full year numbers. We obviously use a range, and that range is based on kind of current economic trends and how we're performing. And then, and that's kind of how we built that, outlook for it.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

But we're we're definitely have some confidence in those numbers.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

That's great. Thanks. And then, just my follow-up, a two part question just on Salesforce. First, just with one of your larger competitors moving past some of the Salesforce issues from a year ago, are you seeing any changes in the availability of quality talent? And then second, any anticipated changes in your pace of hiring over the course of the year ahead with the improving traffic backdrop?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Yes, Mark, this is Scott. Clearly, the fourth quarter, we saw great availability of talent. Fourth quarter was actually our strongest hiring quarter of the year. And for the year, we finished in the high 8% range as far as new salespeople that we've hired over the course of the year. We're a decentralized company.

[Scott Mcpherson, President & COO at Performance Food Group Company]

We allow our opcos to make those decisions. We have some that are hiring at a clip greater than eight percent or 9% and some that are a little lower than that. But when we look at that, we got 6% case growth. Feel really good about that momentum. And even with that, we have really good leverage in in the food service space.

[Scott Mcpherson, President & COO at Performance Food Group Company]

So, you know, we feel really good about the landscape of hiring. We've got great talent available to us, and feel like we're a great place for them to land.

[George Holm, Chairman & CEO at Performance Food Group Company]

Yeah. I'll make a couple other comments there. I mean, on paper, it looks like we're, you know, we're hiring, you know, I guess beyond the pace that we typically do. The restaurant business has been challenged for quite a while. Where we get our numbers as far as market share and the best information we can get shows that in our food service business, we're about 82% of our business is restaurants, where the rest of the industry is about 57%.

[George Holm, Chairman & CEO at Performance Food Group Company]

So, you know, we're really dependent on the growth of restaurants. I think when you go through as many quarters as we went through where it was challenged, you end up spending a lot of time on defense when, you know, we like to go out and aggressively pursue business. So for us, to get that people count up, to get our salespeople in a position where they voluntarily take some territory splits, we got the people to let that happen, has been very good for us.

[George Holm, Chairman & CEO at Performance Food Group Company]

We'll probably, you know, down the road, come down a little bit. Like Scott says, it's it's it's their decisions. I would suspect that that's what will happen. But having what our average salesperson does a week in business come down has been good for us. We look back all the way back to that COVID period, and we weren't hiring, and we didn't realize the level to which our people were improving until the rebound from COVID.

[George Holm, Chairman & CEO at Performance Food Group Company]

And then, you know, you wake up one day and the average person is is is doing probably more business than what you would wanna have to put out consistent growth. I mean, there's only so many hours in a day for them. And, when we have our calls with our people, Scott ends every call, every single call encouraging our people to add salespeople. And for the most part, that's what they're doing. Some of them are in a little different position.

[George Holm, Chairman & CEO at Performance Food Group Company]

They've already done that. But we're getting good response from our people. And an 8.8 number for us today, it's it's a big expense to hand, but it's the right move for us to make.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

Makes sense. Thanks so much. Good luck, guys.

[George Holm, Chairman & CEO at Performance Food Group Company]

Thanks, Mark. And

[Operator]

we'll go next to Kelly Bania with BMO Capital. Your line is open. Please go ahead.

[Kelly Bania, MD - Equity Research at BMO Capital Markets]

Good morning. Just wanted to talk about the procurement savings target that you outlined at the Analyst Day and how much progress there does that contribute to the fiscal twenty twenty six outlook specifically?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Kelly, this is Scott. So we talked a lot about that at Investor Day. We feel really good about our progress. And just to take a step back, we are always constantly working with our vendors and working on procurement opportunities. But as we looked at the landscape, we made the acquisitions of Cheney Brothers and Jose Santiago, and we continue to do a much better job working together between our segments.

[Scott Mcpherson, President & COO at Performance Food Group Company]

We saw an opportunity to create win win scenarios with our vendors, which is what we're doing today. I think as I look at the spread over our three year guidance, I think that spread of procurement synergy will be pretty balanced, and we're well on pace in this first year to achieve that.

[Kelly Bania, MD - Equity Research at BMO Capital Markets]

Okay. That's helpful. And just wanted to also ask a couple of questions about convenience. Obviously, the broader restaurant traffic is is really improving here, but the convenience, division remains kind of pressured. Obviously, you have some new business wins.

[Kelly Bania, MD - Equity Research at BMO Capital Markets]

But I was just curious maybe, Scott, what do you think needs to happen here? It looks like maybe easier comparisons were starting to help in the industry. But just when do you think, that will start to turn, if at all? Is that in your outlook? What do you think the operators need to do?

[Kelly Bania, MD - Equity Research at BMO Capital Markets]

And and just any color on the foodservice kind of sales and where that's tracking in that division?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Sure, Kelly. When I look at the landscape of convenience overall, one of the things that really hurt convenience was the work from home. And as we've seen that increase, I see nationally numbers where people are back in the office 3.5 days a week, a lot of people are four and five. You think about that commuter traffic, that morning traffic that's getting coffee and breakfast, that was a big part of where convenience lost. And so definitely, think the macro is improving a little bit.

[Scott Mcpherson, President & COO at Performance Food Group Company]

We've talked a little bit about the illicit vape issue in the country, and I think that this administration is looking a little more favorable on that, meaning that they're going to enforce it. That's a big upside for our convenience segment as well. And then I think the other thing that gives me great confidence is we continue to grow share. And not just the big customer wins that we've talked about, but our street folks are out there. Our independent performance is getting better.

[Scott Mcpherson, President & COO at Performance Food Group Company]

And so I think we're to fare well even if the macro remains pretty challenged.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Yes. And Kelly, that last point on the outlook, we really didn't plan for the macro to improve. Really, what's in in the outlook as far as convenience goes is just the excellent business wins that Scott talked about earlier in his remarks. And just as you look at how they finished up q four, they have just a lot of momentum. They're executing extremely well.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

So it's really more of that than, say, that the macro is going to improve as far as the outlook goes.

[Kelly Bania, MD - Equity Research at BMO Capital Markets]

Thank you.

[Operator]

We'll go next to Lauren Silberman with Deutsche Bank. Your line is open. Please go ahead. Thanks so much and congrats. I wanted to just ask on

[Lauren Silberman, Director at Deutsche Bank]

the independent case growth side. The independent account growth, the 5.3%, does that growth compound over time as presumably new accounts come in with smaller basket sizes and then build? Can you just talk about that dynamic as you've seen such strong new account growth and how that translates to increased penetration in future quarters?

[George Holm, Chairman & CEO at Performance Food Group Company]

We look real close at the average customer, within our new business versus existing business, and there's not much difference. I mean, it's certainly less, but it's not much less. That's a tribute to our salespeople. When they when they pick up an account, they, you know, they get a big piece of that business right away. The other thing that's been a positive for us is that we've been growing our lines all through this tough period of time.

[George Holm, Chairman & CEO at Performance Food Group Company]

But so far this fiscal year and really, most of last quarter, we've been seeing our sales grow as fast as our lines have grown, which before we've seen that because they weren't buying as much of the product that we sold to them both years. So that's been a a real positive for us as well. And then by by further beefing up our our salespeople, what we found and and this is normal, I think, in any environment, it gets really competitive, and, the actual channel isn't growing. You know, people get more aggressive. And by having the people out there and having our existing people calling on new accounts as we do some splits of the territories, you know, what we found is we're not losing accounts at the rate we were before.

[George Holm, Chairman & CEO at Performance Food Group Company]

I mean, we feel like we've always been good with that, but when we have single digit, reductions in accounts from the previous year in an industry that's got the kind of turnover that we have, that's a good sign for us. And we've been able to get that accomplished.

[Lauren Silberman, Director at Deutsche Bank]

Great. Thanks. And then if I could just shift and ask about what you're seeing in the M and A landscape, how your pipeline looks, willingness of potential targets to make deals come to the table, and anything you're considering for '26 or how we should think about that?

[George Holm, Chairman & CEO at Performance Food Group Company]

We feel good about what we have going on right now. We have some nice conversations, some that are actionable. Nothing that that I would call, in our history that I would call significant in size. But it's a great market today. I mean, there's there's a great amount of activity.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Yeah. Lauren, just going back to investor day, we talked a lot about our strategy, and I'd say our strategy hasn't changed.

[Lauren Silberman, Director at Deutsche Bank]

Great. Thank you, guys.

[Operator]

We'll go next to Edward Kelly with Wells Fargo. Your line is open. Please go ahead.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Hi. Good morning, everyone. Nice quarter. George, I wanted to ask you to maybe just kind of like take a step back on the industry. You've got more, I think, experience here than probably anybody.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Things have gotten better. But if we look out, we have tariff pricing that's starting to come in. That's followed by a large refund cycle. I'm just kind of curious as to whether you think some of the volatility that we've seen continues? And is your confidence really just around your own ability to execute against that? But just any color on bigger picture and how you're thinking about this backdrop would be helpful.

[George Holm, Chairman & CEO at Performance Food Group Company]

Well, the improvement's nice to see, but it's still negative. You know, we got mixed today, you know, with a couple chains that announced real mixed results. We have, you know, a lot of casual dining and a lot of them that are really suffering, but there's a couple that have made one a good comeback, one an incredible comeback. So it can still be done out there. But for us to rely on the industry to grow right now, I would not wanna do that.

[George Holm, Chairman & CEO at Performance Food Group Company]

I think a lot of it is around pricing. You know, our our customers are dealing with a lot of increased costs, and, you know, they they they've had to pass that on. And I think that's one of the things that, you know, keeps the industry a little lid on it. If if it stays as it is now with what we got going on, I've got a high level of confidence that that we'll be in that 6% number or better, because that's what we're doing today. And I just I mean, it could get worse, I guess, but I don't think so.

[George Holm, Chairman & CEO at Performance Food Group Company]

I I I think that we're gonna continue to see just a little better all the time, but I don't see a big jump. And I don't see it in convenience either. We're very, very large in in candy and snacks as an organization. Those prices are up significantly, and, you know, it looks like there'll be more and more states that are gonna take that out of the Snap card. So I think that's gonna impact us.

[George Holm, Chairman & CEO at Performance Food Group Company]

But if you just throw it all in a bucket and and and look at it in entirety, I think that we're in the right channels, Ed, and I I think it's going go real well for us.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Great. And then I just wanted to follow-up, maybe for Scott, maybe for Patrick, I'm not sure. But on the convenience side, you have some new customer wins coming in. How significant in size is that? And then you mentioned some start up costs sort of early on.

[Edward Kelly, MD - Equity Research at Wells Fargo]

So I'm kind of curious as to how you're thinking about the cadence of EBITDA growth in convenience as the year progresses and what's a good target in terms of EBITDA growth in that business for the year?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Ed, this is Scott. So obviously, we've called out that one of those chains will roll on starting September, the other one December. So it kinda gives you a timing. You know, they'll probably roll on over a handful of weeks. We're obviously for the September one, we're hiring right now.

[Scott Mcpherson, President & COO at Performance Food Group Company]

So we're obviously investing in labor and fleet and some facility modification to prepare for all of that. So we feel like we're in a great position there. But obviously, in this probably Q2, I think our profits will be a little bit moderated just because the investment that we're making, but I think they'll normalize into Q3 and Q4. We're not going to give a specific target on EBITDA growth for convenience, but feel really good about their performance in the quarter in 2025 and also into 2026. Feel really good about how they're going to perform.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Great. Thanks, guys.

[Operator]

We'll go next to Alex Slagle with Jefferies. Your line is open. Please go ahead.

[Alexander Slagle, Equity Analyst at Jefferies]

Thanks and congrats. And I guess just more on the EBITDA margins, which are sort of record across basically all the divisions. And we've talked to a little bit of it, but maybe you could touch on some of the incremental drivers we haven't touched so far yet. Favorable sales mix is continuing. You talked a little bit about procurement wins.

[Alexander Slagle, Equity Analyst at Jefferies]

if there's any inventory holding gains near term that we saw, but you could kind of touch on some of the other pieces, the profitability.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Yes. I'll start there and maybe Patrick will tag on to this. When I think about margins across the three segments, mix is probably the number one theme. We had really nice mixed performance in the Foodservice segment. Obviously, with our 6% independent case growth, that really helps margins.

[Scott Mcpherson, President & COO at Performance Food Group Company]

In the food or in the convenience space, it's really about the commodities that we're selling, much more in the foodservice, snack and candy area, where we're seeing nice growth, nice profit growth. So really, it's kind of a commodity mix shift there and very similar in the Specialty segment as well. So mix across all three segments was really good. The other thing I'd say is we had really nice OpEx leverage across all three segments as well. So all of them are performing well from an operating standpoint, warehouse transportation, hiring has been really good, retention of employees, overtime safety, feel really good about that landscape.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Mentioned the procurement savings. As I mentioned earlier, we feel like that's definitely a part of it and feel good about the pathway that we're on there. Patrick, I don't if you

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

want Yes. I'll just touch on a couple of things, Alex. One, yes, we're really pleased with the margin improvement we saw in Q4 and full year fiscal twenty twenty five and are looking forward to continuing that in 2026. You brought up inventory gains. Inventory gains were a slight benefit in Q4.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

But as we look out over 2026 quarter by quarter, we don't expect to see much in terms of inventory gains. And that's what we modeled in our guidance both for Q1 and the full fiscal year.

[Alexander Slagle, Equity Analyst at Jefferies]

Okay. Great. And just a follow-up. You talked about stability in trends, which I guess you're seeing that continuing. I mean, that comes at the same time.

[Alexander Slagle, Equity Analyst at Jefferies]

It looks like a good deal of uncertainty and variability between the operators and brands lately. So maybe you can kinda clarify what what you're seeing in terms of the stability.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Yes, Alex. I'd say, first off, I go to Black Box and just look at traffic. We saw traffic improve sequentially over Q4. And then as I mentioned, July was really the first positive month. But to your comment, when I look at QSR segment, when I look at Fast Casual segment, it's a little bit the haves and the have nots.

[Scott Mcpherson, President & COO at Performance Food Group Company]

As George mentioned, those that have created a value proposition with price to value seem to be performing really well. And then we have some other chains that are really struggling in that space. So that's kind of a blend. We've been very fortunate. As we mentioned, our chain growth was really strong.

[Scott Mcpherson, President & COO at Performance Food Group Company]

We've been very fortunate to partner with some of those more progressive restaurateurs out there, and it's really paid off for us.

[George Holm, Chairman & CEO at Performance Food Group Company]

Yes. I do a call out for our chain people, within our broad line and within our opcos that are strictly chain. We gave them know, a pretty big challenge. We we have some chains that have really dropped off. And, you know, we tend to be very loyal to them, and, we hang in there and hope that they come back as we've seen others that that have come back.

[George Holm, Chairman & CEO at Performance Food Group Company]

But we challenge them to, get themselves in a position where they could handle more SKUs than what they're handling today and to go out and get a different type of customer and customers that that are in a growth mode, and they've been able to do that. And, there's no small feat. That that took a it it took some courage to to get done what they got done, and we're in a real good spot. It was good for q four. We've got a good bit of time ahead of this where we have some good business in place that does not have sales histories, and they'll be a big contributor for us this year.

[Alexander Slagle, Equity Analyst at Jefferies]

That's great. Thank you.

[Operator]

We'll go next to Brian Harbour with Morgan Stanley. Your line is open. Please go ahead.

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

Yes. Thanks. Good morning, guys. Maybe on that topic, not to make this too macro focused, but I think you have pretty good perspective, right? I would say, and this is sort of a black box comment, but I would say quick service has actually been pretty uninspiring lately.

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

I know it's kind of better quarter over quarter, but it seems like that's the part of the industry that's a little more challenged. So I'm curious, guess, if you like on the independent side, do you see full service kind of doing better than quick service? Is that, you know, sort of similar to what's going on with chains? Do you think this is sort of demographics that explain this? Do you think it's just sort of, you know, experiences that are are still holding up better?

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

I mean, what would you conclude just kinda looking across your customer base?

[George Holm, Chairman & CEO at Performance Food Group Company]

QSR has been interesting because where where we're doing well and we're not huge in that category, but we certainly have our share. And where we're doing well, it's actually at the top of the market in the higher priced QSRs, particularly one in the burger area that's doing great. We got a couple in chicken that are that are really, really doing well. But I think that what may be here to stay, there's kind of a what is hot. And if somebody's resonating with the consumer, everybody knows it very quick because the social media is such a big part of what happens, in the chain restaurant business.

[George Holm, Chairman & CEO at Performance Food Group Company]

And sometimes it's just an item that'll that'll bring somebody up to a different level from where they were before. I would agree that if you wanna call it casual dining, family dining, sit down type restaurants. Of late, they appear to be coming back. Not everybody, of course. You know, like I said, social media is is is a big component here.

[George Holm, Chairman & CEO at Performance Food Group Company]

But it seems like people are doing a little less takeout. Delivery seems to still be big, but not I I don't know that it's growing fast. I think people are wanting to get out again and and enjoy themselves. And even with the kind of growth that we're running now in independent, we don't see that kind of growth in our takeout programs. So I I think people are coming back to the restaurants a bit.

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

Okay. Yes. Thanks. Can you comment maybe just on integration of Santiago and Cheney Brothers? Is that kind of on track?

[Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley]

Is it perhaps ahead of schedule? Can you comment on sort of organic growth in those businesses since you've, acquired them?

[George Holm, Chairman & CEO at Performance Food Group Company]

Well, we don't do much in the way of integration early with acquisitions because we want them to be the ones that drive what type of integration that we do. You know, there's some obvious things that that we get done early on that that have to be done. But I would say with both of them that it's moving at a at a pace that we typically do see. I mean, it's really been for us year three just seems to be the year that that we tend to take off. We saw that with Reinhart.

[George Holm, Chairman & CEO at Performance Food Group Company]

We're seeing it today with merchants. The legacy merchants companies are just on fire right now, and it took three years. Cheney and Jose Santiago are both extremely well managed businesses. I think that after our purchase of Cheney, we saw that market get a lot more competitive, particularly the Florida part of that market. And that's probably, you know, normal in that type of situation.

[George Holm, Chairman & CEO at Performance Food Group Company]

And they didn't for a while, they're put out kind of the typical type of growth, but now they're back and they're and they're getting that done again. So we're we're just so confident in those two companies. But I I can't speak to any significant amount of integration that we've done at this point.

[Operator]

And we'll take our next question from John Hybuckle with Guggenheim.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

Hey, George. I have a question on you're creating Salesforce capacity, like, individual salesperson capacity, which is which is great. How do you want them spending their time? And I know you this is decentralized. And and I wonder, because there's such a big opportunity, right, in in lines per account penetration.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

You know, are there some, op pros that are doing phenomenally well and and thus, they are best practices? Because it's been an opportunity that, you know, all of you have kinda struggled with. So I wonder, you know, if if if if the Salesforce capacity is put toward, penetration, You know, can can you guys finally move the needle on on Lions' pride in a significant way, or do you really want them to prioritize new accounts?

[George Holm, Chairman & CEO at Performance Food Group Company]

I I think, you know, the additional people that we've added, I think, is helping our penetration, but I think it'll help it more as we move forward. Training always. We're going to a lot more online training. But it it is it is very decentralized, and we do a lot of things around best practice. But that's between them or maybe some coaching that comes from from Scott or from Steve Broad as to, you know, who to go talk to.

[George Holm, Chairman & CEO at Performance Food Group Company]

But they they run their businesses, and I I think that things move in trends within our company. And the trend has been to to beef it up, to get the more experienced people calling on new accounts, and get our people where they have more time to work on penetration because it is certainly the most difficult part of our business today. You know, people are busy. A lot of ordering is done online, and it's less of an opportunity to to penetrate better or to to pull SKUs from from your competitor. This getting time freed up and getting the the real experienced talented people out there, I I I think that's where we're headed.

[George Holm, Chairman & CEO at Performance Food Group Company]

And I think that would be in just about every company. I think, Scott, you would look at it that way too.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Agreed.

[George Holm, Chairman & CEO at Performance Food Group Company]

Yeah.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

Alright. May maybe for Scott, the what what does the RFP landscape look like, right, for on on the Core Mark's side? Right? Obviously, that that comes in over time. But is is that now, you know, sort of is that much larger, right, over the next couple of years?

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

And, you know, I I wouldn't think you would lose many of those, particularly, you know, new ones, not not ones that you have. How do you think about preparing capacity, for those wins? Don't want to do far ahead of time, but where do you stand with that?

[Scott Mcpherson, President & COO at Performance Food Group Company]

Well, I can tell you, John, that the most recent wins that we have, we did a great job participating capacity. We expanded into two new facilities far in advance of getting those customer wins. Had we have not done that, we probably would have had to turn that business away. So we are constantly looking at our capacity across the network, where we think new business opportunities may come. And we base that on our relationships with customers and where we think we're going to make the most progress.

[Scott Mcpherson, President & COO at Performance Food Group Company]

And to your point, in the convenience landscape, incumbency is pretty powerful. And so that's why we're so proud that we've gotten what I'd call a handful of really prominent retailers to choose us as their primary supplier across the country. So feel really good about how the convenience group is performing and how they're servicing their customers.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

And John, as you know, we've talked about this for several quarters. We continue to invest in CapEx to continue to expand buildings, get new buildings across all three segments. And primarily, our focus, as we've said, has been foodservice. But as Scott just alluded to, we have done this in convenience and even in specialty as well.

[George Holm, Chairman & CEO at Performance Food Group Company]

Yeah. I wanna make a couple comments there. You know, we're in three different businesses. We certainly don't have any intention to get any more complicated than we are. It looks complicated, but the people that manage each one of those businesses may live and die of those businesses.

[George Holm, Chairman & CEO at Performance Food Group Company]

When we say our priority is food service, it certainly is. I have a tremendous amount of confidence in how Core Mark is managed today and the same for Vistar. And when they need CapEx, it's not their like they're fighting for CapEx because we're doing it in another direction. If they have something compelling, we have the confidence in them that that they'll make good use of it. And that's what our people in Core Mark did. I mean, we put two places in exactly the right places in anticipation of the two pieces of business that we got. So once again, I'll use that word. That took that took a lot of courage and a lot of commitment.

[George Holm, Chairman & CEO at Performance Food Group Company]

We've always in the past, we've also been careful to spend money where we had a tremendous amount of confidence that it was gonna get a return. So early on, we replaced almost every Vistar facility. That was our our best run business at the time. Still is extraordinarily well well run and the most profitable. Then we spent a lot of money where we have big broadliners, and we've gotten a great payback from that.

[George Holm, Chairman & CEO at Performance Food Group Company]

Now what we've done is we've gone in the West where we are very subscale, and we've built new buildings. We've done big additions. That's part of why we have 8.8% more people. We're gearing up there. And I think that we've been so successful with our CapEx that that those people have confidence, and we're we're gonna support them.

[George Holm, Chairman & CEO at Performance Food Group Company]

So I've I've made a comment that I think our CapEx is gonna get more back to that pretty consistent seven tenths of a point of sales. But if we have opportunities, we'll take it higher than that. And if we don't have the opportunities, we're not gonna throw money away and and invest just for the sake of investing. But I feel real good about what we're doing around gaining capacity.

[John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities]

Thank you.

[Operator]

Our next question comes from Jeffrey Bernstein with Barclays. Your line is open. Please go ahead.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Great. Thank you very much. My first question is just on following up on the M and A. Obviously, from a macro perspective, still somewhat difficult. I would think it's more challenged for your smaller foodservice distribution peers.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

I think you mentioned you have good M and A pipeline, but nothing of significant size. And I think that's been a consistent message. So as an alternative, George, how do you feel about your organic growth specifically as you think about the West Coast, whether you go full speed ahead organic? Or do you prefer to wait for the M and A? It seems like it's a difficult dance to decide whether to wait versus just pursue the organic, which will presumably take a little bit more time.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

How do you think about balancing that? And then I had one follow-up.

[George Holm, Chairman & CEO at Performance Food Group Company]

Well, you know, basically, we're we are betting on organic right now, And I think it's a good bet. Scott, you might wanna comment on it as well. But Scott's been very involved with what we've done in the West, but, we feel encouraged.

[Scott Mcpherson, President & COO at Performance Food Group Company]

Yeah. I'd say structurally, we talked a little bit One of the big challenges in the West of achieving broader scale outside of capacity is just our brands. And that's one of our most powerful tools on the street. And just having that critical mass in the West has been a challenge.

[Scott Mcpherson, President & COO at Performance Food Group Company]

So we have invested in a redistribution facility in the West that will allow us to take brands much more broadly to those opcos. So just another lever that we can pull as we kind of march that direction.

[George Holm, Chairman & CEO at Performance Food Group Company]

And probably goes without saying, that doesn't mean that if we had the right opportunity from an m and a standpoint that we wouldn't take advantage of that. And you mentioned smaller ones. I I mean, if our people were really committed to some type of fold in, I guess I would be there, but I've never found that to be a successful route to go. You tend to not hold on to the right percentage of the business. And, you know, we like to do acquisitions where we feel we can hold on to all the business and then grow it from there.

[George Holm, Chairman & CEO at Performance Food Group Company]

And if you're buying somebody that is a fold in or, you know, whatever you wanna call them, and their SKU base is significantly different, change SKUs, change customers is typically what happens. So we we don't have a huge appetite for that, maybe no appetite at all.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Got it. And my follow-up is more specific to the first quarter. Looks like your guidance for sales and EBITDA was below at least consensus expectations. I'm wondering whether we perhaps just mismodeled or there's some unusuals or noise that are impacting results on your end. I know you still have the favorable benefit from both acquisitions before they get lapped.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

But is there any segment expected to be below the kind of longer term run rate or any unusuals we should be aware of the fiscal first quarter? Or perhaps was it just a mis modeling on the Street part? Thank you.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Yes. No, it's a great question. I appreciate it. So as you look as you know, the reason we give you quarterly cadence is exactly for that reason is we want you to understand better the cadence in q one. And so a couple of things.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

We actually have lapped the Jose Santiago, but both for Jose Santiago and Cheney, which we'll lap in the second quarter, This is their slower period of sales, summer months are. So the September would be a slower period for them. In fact, for Cheney, July is similar to what January is for the rest of food service. So we just we wanted to definitely give you that Q1 look to help you understand just that cadence. But we really are anchored on the full year, and we feel, like I said before, really confident in our full year guidance.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

And again, it is August, so just starting the year, but we wanted to give that outlook both for the Q1 and the full year, obviously.

[George Holm, Chairman & CEO at Performance Food Group Company]

And also, I want remind you, and these are both very positive things, but we needed to keep them take them into account with q one. One is, you know, we're investing very heavily right now in salespeople. And, when we do that, we make sure that the compensation to our existing people doesn't suffer because of that and that that they're totally on board with moving some accounts. And so we we, you know, we keep that into account, that's gonna taper off some as we get further into the year. And then we have those start up costs.

[George Holm, Chairman & CEO at Performance Food Group Company]

I mean, we feel like we're gonna have a great year in Cormark, but there's very definite start up costs when you're bringing on that amount of business over a fairly short period of time. And we wanna be able to, day one, service them as if we've always had the business. So we've gotta get those people trained, ready to go, and go through a period of overstaffing in our, Core Mark opco. So those two things we had to take into consideration, and they're good problems to have.

[Jeffrey Bernstein, Equity Research Analyst at Barclays Capital]

Thank you.

[Operator]

Our next question comes from Peter Saleh with BTIG. Your line is open. Please go ahead.

[Peter Saleh, MD - Restaurants at BTIG]

Great. Thanks for taking the questions. A little over a year ago, I think you guys were talking about how the breakfast daypart was coming back, particularly, I think on Mondays and Fridays expected to come back a little bit stronger. Can you just talk a little bit about what you're seeing? Because it seems like that daypart continues to lie, at least from what we see from the restaurant space. Just curious as to your perspective and and the go forward expectations on that daypart.

[George Holm, Chairman & CEO at Performance Food Group Company]

Well, I think that Mondays are lunches are, for the most part, back. Friday, no. I would say no. The other thing that happened is a lot of people didn't open back up seven days a week if that's what they used to do, you know, when COVID came. And a lot of them, know some personally, that found that, you know what?

[George Holm, Chairman & CEO at Performance Food Group Company]

You know, I never made any money Sunday night or Monday night. So why was I open? So, you know, I I think that is still having a little bit of a drag because I have seen some of them go back, from five days to six days, not many to seven, at least, in the in the non, metro, you know, big metro markets. Would you have some comments beyond that, Scott?

[Scott Mcpherson, President & COO at Performance Food Group Company]

I would just to what you said, I think Monday and Friday are still pressured days. And if you look nationally return to work, I think the average is somewhere in the, you know, 3.2 to 3.5 range, and people tend to to make Monday and Friday the days they're not coming in. So those days are still very pressured, and it tends to be that morning day part is still the most pressured because work hours have also changed a little bit. We see people, you know, across the country coming in a little later. So maybe they're having their coffee at home, doing some things at home before they come to the office.

[Scott Mcpherson, President & COO at Performance Food Group Company]

So still some pressure there, but certainly has improved. And I think that's part of what's helped our independent case growth and and helped, you know, to some extent, the macro in in convenience and specialty.

[George Holm, Chairman & CEO at Performance Food Group Company]

I look at this every day, and it's I think it's a barometer. But you can tell by our sale of coffee in the convenience that that morning day part, the traffic is not back to normal. It's still not at 2,019 levels.

[Peter Saleh, MD - Restaurants at BTIG]

Thank you. Very helpful. Just a follow-up on the new account growth, you know, this quarter or maybe just, this year. Was there anything specific on the type of cuisine or geographies that you're seeing?

[Scott Mcpherson, President & COO at Performance Food Group Company]

The only thing I'd say about type of cuisine and geography, cuisine wise, we have performed, as we've said on prior calls, really well in the Mexican space, really well in the foodservice and the convenience space. We've had some success in the Asian space as well. And Pizza and Italian, we're holding our own and continue to that's a big part of our business, continue to do well there. So really seeing it broadly across the segments.

[Peter Saleh, MD - Restaurants at BTIG]

Thank you very much.

[Operator]

We'll go next to Jake Bartlett with Truist Securities. Your line is open. Please go ahead.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. Thanks for taking the question. Mine was on EBITDA margin guidance. I think you're at the midpoint of the '26 guidance, a little bit of a less expansion than you saw in 2025. And then I believe you're reiterating your three year targets that you expect a reacceleration or kind of a widening EBITDA margin expansion in the next two years.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

So can you just help us understand that dynamic, whether it's being driven purely by investments in the sales force near term or some of the convenience investments to bring on those accounts. Any drivers there of the kind of the cadence of the EBITDA margin?

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

Yeah. Jake, I'll start and see if anyone else wants to contribute. I mean, if you look at it, again, we we exited '25 with some really nice margin improvement. As we go into '26, we do have some investments as we talked about. We also have some onboarding costs.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

And then those new accounts that we talked about might have some, margin shift as well overall. But we feel really strongly that, again, it's August. We're looking at the numbers. We're very anchored to them. They're They're strong numbers in terms of growth.

[Patrick Hatcher, EVP & CFO at Performance Food Group Company]

And I would expect that there's still some room for upside there, but it does have to do with some of the onboarding new customers and the mix shift.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Okay. And then to follow-up on the comments on your recent trends. And George, I believe you said that July there was an uptick, but you're also talking about 6% independent organic case growth similar to the second quarter. So maybe just kind of clarify or you expected a slight deceleration from July or maybe the July uptick wasn't too material? Just trying to understand the cadence of what you're expecting going forward.

[George Holm, Chairman & CEO at Performance Food Group Company]

No. I think we're just being cautious. July and the first two weeks of of August are could fit better than q four was. Okay? And the two weeks of August are are even better than what July was.

[George Holm, Chairman & CEO at Performance Food Group Company]

But we're cautious. You know, it's it's been a volatile market. But all in all, we feel good. I'll make a couple comments back to the EBITDA margin too. You know, we're bringing on two significant convenience accounts, and the product makeup of convenience is totally different.

[George Holm, Chairman & CEO at Performance Food Group Company]

And that affects us in entirety. And if you if you go back to to where we we started with with, out having convenience, we were less than the 2% EBITDA. And we've reworked this business over several years. If you took out convenience, we were at three and a half, and we still have a substantial chain business. You get outside of our chains.

[George Holm, Chairman & CEO at Performance Food Group Company]

We don't have noncommercial business, which, you know, is for the most part better business. It's not something that is our focus today or will be anytime in the near future. But if you take out convenience, but you leave all of the corporate overhead in there, we're above three and a half. And that's huge progress for us, particularly with the kind of of mix of business that we have. Our big broadliners of which we have many, they're over five.

[George Holm, Chairman & CEO at Performance Food Group Company]

We don't look at it that close, but we're gonna continue to put a bigger portion of our gross profit dollars to the bottom line. But we're not maniacally focused on that. A lot is just where our mix of business comes in effect. Now we've always grown it, but we've always had a better mix of business. Can we count on that forever?

[George Holm, Chairman & CEO at Performance Food Group Company]

I'm not sure. That just depends on what opportunities lay out there.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. I really appreciate it.

[George Holm, Chairman & CEO at Performance Food Group Company]

Thanks.

[Operator]

This does conclude today's question and answer period. I will now turn the program back over to Bill Marshall for closing remarks.

[Bill Marshall, SVP - IR at Performance Food Group Company]

Thank you for joining our call today. If you have any follow-up questions, please reach out to Investor Relations.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Bill Marshall, SVP - IR
• George Holm, Chairman & CEO
• Scott Mcpherson, President & COO
• Patrick Hatcher, EVP & CFO

Analysts

• Mark Carden, Director - Equity Research at UBS Investment Bank
• Kelly Bania, MD - Equity Research at BMO Capital Markets
• Lauren Silberman, Director at Deutsche Bank
• Edward Kelly, MD - Equity Research at Wells Fargo
• Alexander Slagle, Equity Analyst at Jefferies
• Brian Harbour, Equity Analyst & Executive Director - Restaurants & Food Distribution at Morgan Stanley
• John Heinbockel, Senior MD & Equity Research Analyst at Guggenheim Securities
• Jeffrey Bernstein, Equity Research Analyst at Barclays Capital
• Peter Saleh, MD - Restaurants at BTIG
• Jake Bartlett, Senior Equity Research Analyst at Truist Securities