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Performance Food Group Co PFGC

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No-Moat Performance Food Group Is Recovering From the Pandemic as Expected, but Shares Overcooked

Analyst Note

| Rebecca Scheuneman, CFA |

No-moat Performance Food Group’s recovery from the pandemic is tracking in line with our expectations. Its food-service segment’s organic sales fell 8% in the second fiscal quarter of 2021, in line with our estimate, and reported sales grew 27% including the Reinhart acquisition. The segment’s EBITDA margin increased 20 basis points to 3.2% due to the mix shift to more profitable independent pizzerias from lower-margin casual dining chains, which have been hard hit. PFG’s Vistar segment’s sales fell 12% in the quarter, a bit worse than our expectation for a 10% drop. The segment’s EBITDA margin contracted 60 basis points to 2.0% due to a mix shift toward convenience stores and away from higher-margin theatres.

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Company Profile

Business Description

Performance Food Group is the third- largest U.S. food-service distributor, with 7% market share and a heavy presence along the Eastern seaboard, the Southeast, and the Midwest. PFG's food-service business (67% of fiscal 2020 sales) has its largest exposure to national and regional restaurant chains (52% of segment revenue), followed by independent restaurants (27%), and other channels (20%) such as retail, hospitality, and education. The firm's Vistar segment (33% of sales) is a national distributor of candy, snacks, and beverages to convenience stores, vending and office coffee service distributors, theaters, sporting arenas, and correctional facilities.

12500 West Creek Parkway
Richmond, VA, 23238
T +1 804 484-7700
Sector Consumer Defensive
Industry Food Distribution
Most Recent Earnings Dec 31, 2020
Fiscal Year End Jun 27, 2021
Stock Type Speculative Growth
Employees 20,000