Performance Food Group Q1 Profit Rises; Backs FY Profit Outlook

(RTTNews) - Performance Food Group Company (PFGC) reported that its net income grew by 85.2% in the first quarter of fiscal 2018 compared to the prior year period, to $22.6 million. The growth was primarily a result of an increase in operating profit, partially offset by interest, income tax and other expenses. The increase in interest expense was primarily the result of higher average borrowings. For the quarter, the income tax rate was up 10 basis points to 37.5%.

Earnings per share increased 83.3% in the first quarter of fiscal 2018 over the prior year period, to $0.22 per share. Adjusted EPS grew by 35.0% in the first quarter over the prior year period, to $0.27 per share.

Total case volume increased 3.5% in the first quarter of fiscal 2018 compared to the prior year period, with underlying organic growth of 2.1%. Total case volume was driven by a 6.3% increase in independent cases, growth in Performance Brands cases and broad-based growth in Vistar's sales channels.

Operating expenses grew by 5.1% in the first quarter of fiscal 2018 compared to the prior year period, to $504.2 million. The increase was primarily due to growth in case volume and the resulting impact on variable operational and selling expenses, as well as an increase in personnel expenses, partially offset by decreases in professional, legal and consulting expenses.

Net sales for the first quarter of fiscal 2018 increased 7.9% to $4.4 billion, versus the comparable prior year period. Gross profit for the first quarter of fiscal 2018 grew 8.5% compared to the prior year period, to $554.7 million. The gross profit increase was led by case growth and through selling an improved mix of customer channels and products, specifically to the independent channel. Gross margin as a percentage of net sales was up 10 basis points to 12.7%.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share and revenues of $4.37 billion for the first-quarter. Analysts' estimates typically exclude special items.

For fiscal 2018, PFG reaffirmed its Adjusted EBITDA growth to be in a range of 8% to 11% over its fiscal 2017 Adjusted EBITDA of $390.7 million. The company expects to be at the higher end of the fiscal 2018 Adjusted EBITDA range, which reflects expected first-half growth in the mid-teens and expected second-half growth in the high single digits.

PFG also reaffirmed it expects fiscal 2018 Adjusted Diluted EPS to grow in a range of 13% to 18% to $1.40 to $1.46 over its fiscal 2017 Adjusted EPS of $1.24. Analysts expect annual earnings of $1.43 per share.