Performance Food Group (Nasdaq/NM:PFGC)
- Net sales increased 15% to new third-quarter high of $798.8 million.
- Net earnings rose 55% to $12.9 million.
- Earnings per share rose 21% to $0.34 per share (diluted) on 31% additional shares.
Performance Food Group (Nasdaq/NM:PFGC) yesterday announced a new quarterly high in net sales and net earnings for the three months ended September 29, 2001.
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Sales for the third quarter of 2001 amounted to $798.8 million, up 15% from $693.1 million in the year-earlier period. Net earnings for the quarter increased 55% to $12.9 million compared with $8.3 million a year ago. Net earnings per share for the quarter increased 21% to $0.34 per share diluted compared with net earnings of $0.28 per share diluted in the year-earlier quarter. The average number of shares outstanding increased 31% for the third quarter compared to the year-earlier period, due principally to the Company’s secondary offering completed in December 2000. All share and per share figures reflect the 2-for-1 stock split distributed on April 30, 2001.
The Company indicated that net earnings, excluding goodwill amortization, amounted to $0.38 per share diluted for the third quarter, up 27% from a year ago and earnings per share on the same basis for the first nine months totaled $0.91 per share diluted, up 28% from the year-earlier period.
C. Michael Gray, president and chief executive officer, remarked, “This marks the 27th consecutive quarter in which we have recorded increased net sales and net earnings compared with the year-earlier period. Our year-to-year gains in the quarter have been driven primarily by productivity and margin improvements in each of our business segments. We believe this strong performance clearly validates our fundamental growth strategy. Despite the impact that the tragic events of September 11th have had in accelerating the slowdown that was already occurring in the nation’s economy, our internal growth for the quarter amounted to 5.5%. We are fortunate that the foodservice industry is again demonstrating its resiliency to sudden changes in the pace of economic activity and swings in consumer confidence.
“Our third quarter was highlighted not only by outstanding financial results but also by progress on two important strategic acquisitions that have now been completed. A component of our growth strategy is the acquisition of complementary foodservice operations. Although we have successfully completed acquisitions regularly over the past several years, 2001 has been an especially eventful period. At the start of the second quarter, we added Empire Seafood that expanded our product offerings in the rapidly growing seafood category. We are pleased with the assimilation of Empire to date. Although we are experiencing some slowing in demand from cruise lines, we are optimistic about the contribution of Empire as we move into the seasonally strongest period of sales for its products. Toward the end of the third quarter, we completed the merger of Springfield Foodservice Corporation that meaningfully strengthened our broadline operations in the heavily populated and attractive New England region. The largest transaction this year, and in fact our largest ever, was completed subsequent to quarter end through the acquisition of Fresh Express, the category leader in the approximately $6 billion fresh-cut produce industry. We are excited about the opportunities that Fresh Express brings through product innovations, expanded markets for existing products and synergies in production and product procurement.”
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By GlobalDataGray added, “As we have indicated, we expect these recent acquisitions to contribute incremental earnings in 2002. Although the slowdown in the economy has restricted the growth of our sales, our operations are continuing to report gratifying improvement in productivity and efficiency. We are especially pleased with the 22% increase in sales of our proprietary brands that enable us to offer customers more value and develop even stronger working relationships. Our plan for selectively adding new customers was rewarded during the third quarter by a contract to provide customized foodservice distribution for approximately 250 restaurants operated under the names Ruby Tuesday, American Cafe and Tia’s Tex Mex. The roll-out of our service to these restaurants will extend into the first quarter of 2002 and should have a positive impact on our operations once it is fully implemented.
Gray added, “In early July, we completed a $90 million receivables securitization facility, which allows us to monetize accounts receivables at a very attractive cost. As of quarter end, we had sold $78 million of receivables under this program. Another recent highlight was the completion earlier this month of a secondary offering of 5,750,000 shares of common stock and $201.25 million of 5 1/2% convertible subordinated notes due 2008. Concurrent with these offerings, we completed a new $200 million revolving credit facility. Our ability to successfully complete these financings in such a volatile investment environment is especially gratifying. The additional capital was specifically used to fund the acquisition of Fresh Express, and we continue to have considerable flexibility to fund our ongoing growth and pursue strategic acquisitions.”
Performance Food Group markets and distributes more than 36,000 national and private label food and food-related products to approximately 29,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions. For more information on Performance Food Group, visit www.pfgc.com.
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are based on current expectations and management’s estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to, general economic conditions, the relatively low margins and economic sensitivity of the foodservice business, the Company’s reliance on major customers, the ability to identify and successfully complete acquisitions of other foodservice distributors and management of the Company’s planned growth, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission.
PERFORMANCE FOOD GROUP COMPANY
Unaudited Financial Highlights
Three Months Ended
—————————-
Sept. 29, Sept. 30,
2001 2000
———— ————
Net sales $798,807,000 $693,127,000
Net earnings $ 12,921,000 $ 8,329,000
Net earnings per share:(1)
Basic $ 0.35 $ 0.30
Diluted $ 0.34 $ 0.28
Weighted average number of
common shares outstanding:(1)
Basic 36,944,000 27,966,000
Diluted 38,377,000 29,394,000
Nine Months Ended
——————————-
Sept. 29, Sept. 30,
2001 2000
————– ————–
Net sales $2,317,104,000 $1,927,480,000
Net earnings $ 30,092,000 $ 18,933,000
Net earnings per share:(1)
Basic $ 0.83 $ 0.68
Diluted $ 0.80 $ 0.65
Weighted average number of
common shares outstanding:(1)
Basic 36,359,000 27,897,000
Diluted 37,719,000 28,974,000
(1) All share and per share figures reflect the 2-for-1 stock
split that was distributed to shareholders on April 30, 2001.
Performance Food Group Company
Condensed Consolidated Balance Sheet and Income Statement
September 29, 2001
(In thousands, except net earnings per common share)
Sept. 29, 2001 Dec. 30, 2000
————– ————-
Assets
Cash $ 16,041 $ 18,530
Trade accounts and notes
receivable, net 66,816 167,444
Inventories 159,625 123,586
Other current assets 56,196 14,696
————– ————-
Total current assets 298,678 324,256
————– ————-
Property, plant and equipment,
net 150,476 143,142
Intangible assets, net 367,691 239,311
Other assets 7,789 2,987
Total assets $ 824,634 $ 709,696
Liabilities and Shareholders’ Equity
Outstanding checks in excess
of deposits $ 47,062 $ 33,330
Current installments of
long-term debt 1,347 1,966
Trade accounts payable 155,086 134,986
Other current liabilities 68,303 57,504
————– ————-
Total current liabilities 271,798 227,786
Long-term debt, excluding
current installments 88,544 114,492
Deferred income taxes 9,845 9,701
Shareholders’ equity 454,447 357,717
————– ————-
Total liabilities and
shareholders’ equity $ 824,634 $ 709,696
============== =============
Three Months Ended
Sept. 29, Sept. 30,
2001 2000
————— —————
Net sales $798,807 100.0% $693,127 100.0%
Cost of goods sold 687,910 86.1% 599,904 86.5%
————— —————
Gross profit 110,897 13.9% 93,223 13.5%
Operating expenses 87,943 11.0% 78,084 11.3%
————— —————
Operating profit 22,954 2.9% 15,139 2.2%
Other income (expense):
Interest expense (1,252) (1,716)
Loss of sale of receivables (836) –
Other, net (25) 10
————— —————
Other expense, net (2,113) (0.3)% (1,706) (0.2)%
————— —————
Earnings before
income taxes 20,841 2.6% 13,433 2.0%
Income taxes 7,920 1.0% 5,104 0.8%
————— —————
Net earnings $ 12,921 1.6% $ 8,329 1.2%
=============== ===============
Weighted average common
shares outstanding 36,944 27,966
=============== ===============
Basic net earnings per
common share $ 0.35 $ 0.30
=============== ===============
Weighted average common
shares and dilutive
potential common
shares outstanding 38,377 29,394
=============== ===============
Diluted net earnings per
common share $ 0.34 $ 0.28
=============== ===============
Nine Months Ended
Sept. 29, Sept. 30,
2001 2000
—————– —————–
Net sales $2,317,104 100.0% $1,927,480 100.0%
Cost of goods sold 2,002,216 86.4% 1,669,869 86.6%
Gross profit 314,888 13.6% 257,611 13.4%
Operating expenses 259,978 11.2% 222,520 11.6%
—————– —————–
Operating profit 54,910 2.4% 35,091 1.8%
Other income (expense):
Interest expense (5,055) (4,604)
Loss of sale of receivables (836) –
Other, net (483) 50
—————– —————–
Other expense, net (6,374) (0.3)% (4,554) (0.2)%
—————– —————–
Earnings before
income taxes 48,536 2.1% 30,537 1.6%
Income taxes 18,444 0.8% 11,604 0.6%
—————– —————–
Net earnings $ 30,092 1.3% $ 18,933 1.0%
=============== ===============
Weighted average common
shares outstanding 36,359 27,897
=============== ===============
Basic net earnings per
common share $ 0.83 $ 0.68
=============== ===============
Weighted average common
shares and dilutive
potential common
shares outstanding 37,719 28,974
=============== ===============
Diluted net earnings per
common share $ 0.80 $ 0.65
=============== ===============
