Performance Food Group Company · NYSE:PFGC
Performance Food — CAGNY 2019
50 slides from Performance Food's conference presentation, Feb 19, 2019
Slide 1: CAGNY February 19, 2019
CAGNY February 19, 2019 Performance Food Group
Slide 2: Welcome
Welcome Michael Neese, VP Investor Relations 1
Slide 3: Forward-Looking Statements
Forward-Looking Statements • This presentation includes, and our response to various questions may include, certain forward‐looking statements, estimates, and projections with respect to our anticipated future performance, including the statements in the “Fiscal 2019 Outlook” section of this present
Slide 4: Performance Food Group
Performance Food Group George Holm, Chairman, President & CEO 3
Slide 5: Delivering Success: Our Mission
Delivering Success Our mission: To be a leader in the foodservice distribution industry by delivering world-class innovative products and value-added services that enable our customers’ success and support enduring supplier relationships 4
Slide 6: Delivering Success: Our Vision
Delivering Success Our vision: To become a supply-chain services leader by providing customer-centric and innovative foodservice, beverage and snack solutions 5
Slide 7: Who We Are
Who We Are • Market leader with scale • Customer-centric approach • Unique Performance Brands private label business • Differentiated national candy, snack and beverage distributor • Disciplined and proven acquirer with ample opportunities • Track record of strong and consistent financial performanc
Slide 8: PFG at a Glance
PFG at a Glance Vistar is one of the leading distributors of candy, 1 snacks, beverages to multiple distribution channels PFG is one of the leading distributors to casual 1 dining restaurant chains PFG is the 3rd largest foodservice distribution 3 company in the US 15 Over 15,000 associates nationwi
Slide 9: PFG Overview
PFG Overview U.S. Market Share EBITDA Profit Margins Sysco PFGC 17.2% US 6.5% Foods 8.6% Foodservice 2.9% Others 67.7% Vistar 4.0% 2018 Adj. EBITDA(1) = $426.7MM 2018 Net Sales = $17.6B EBITDA by Segment Vistar Vistar 19.0% 24% 81.0% Foodservice 76% Foodservice (1)For reconciliation of non-GAAP to G
Slide 10: Core Strategies
Core Strategies • Grow our independent customer base and brands in Foodservice and expand our channels in Vistar • Pursue strategic acquisitions • Deliver consistent financial performance through strong operating cash flows
Slide 11: Broad Geographic Footprint
Broad Geographic Footprint Headquarters Foodservice 48 Vistar 27 75 As of Fiscal Q2 2019 10
Slide 12: Solid Industry Fundamentals
Solid Industry Fundamentals… Food Away From Home $ Billions CAGR 6% $816 $555 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Foodservice Market Size $ Billions CAGR 4% $289 $225 2010 2011 2012 2013 2014 2015 2016 2017 Note: U.S. Department of Commerce for Food Away from Home; Technomic for U.S. Foodse
Slide 13: Combined with Market Share Gains
…Combined with Market Share Gains… CAGR 4% $ Billions 289.0 278.0 268.0 256.0 247.0 239.0 228.0 90.0 31% 85.0 82.2 75.7 80.2 71.9 Top 3: 29% 67.2 185.8 193.0 199.0 69% Others: 71% 167.1 171.3 175.8 160.8 2011 2012 2013 2014 2015 2016 2017 Note: Technomic and company filings for Sysco, PFG, and US Fo
Slide 14: And Unique Barriers to Entry
… And Unique Barriers to Entry • Relationship-driven business • Trucks have trailers with multi-temp coolers with large drop sizes • Nationally branded, high-quality, specialized foodservice products • SKUs are complex and have varying pack sizes • Last mile logistics 13
Slide 15: Fragmented U.S. Foodservice Marketplace
Fragmented U.S. Foodservice Marketplace 2017 Market Size = ~ $289 $ Billions Top 3 ~$90 4-10 Regional ~$29 Broadliners 11-15,000+ All Other ~$170 Note: Technomic and company filings for Sysco, PFG, and US Foods. U.S. Sales only, where available; PFG estimates. 14
Slide 16: M&A Activity
M&A Activity • The M&A pipeline is robust; however multiples remain high. • Continuing to develop new channels in Vistar and broadline opportunities in Foodservice 15
Slide 17: Segment Overview - Foodservice
Segment Overview - Foodservice Segment Highlights Product Mix • Channels served: − Focus on Independent Operations: • Leading distributor in Pizza/Italian Segment • Family Dining • Bar and Grill • Fast Casual − Local, Regional and Selected National Chains − Independent Healthcare − Hospitality • Dis
Slide 18: Segment Overview - Foodservice
Segment Overview - Foodservice Industry Leading Growth Driven By: • Customer-centric strategy • Laser focus on faster growing independent restaurants • Expanding portfolio of strategic Performance Brands • Evolving technology to enhance customer experience and salesforce effectiveness Net Sales EBIT
Slide 19: Industry-Leading Independent Case Growth
We’ve Delivered Industry-Leading Independent Case Growth 10.0% 5-year CAGR ~7% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2014 2015 2016 2017 2018 18
Slide 20: Improving Mix of Business
Improving Mix of Business Drive Profitability Independent Foodservice Mix Performance Brand Mix of Independent 680 bps 600 bps 46.0% 31.6% 25.6% 39.2% FY13 FY18 FY13 FY18 • Mix shift of 600 bps in Independent Foodservice mix • Performance Brands consistently growing 100-400 bps faster than independe
Slide 21: Foodservice: National Sales Organization
Foodservice: National Sales Organization The Foodservice Multi-Level Sales Organization is comprised of highly trained, technically equipped and segment specific sales associates. Breakdown o National Account – Nationwide distribution across multiple OPCOs o Corporate Account – Region Specific distr
Slide 22: Performance Brands
Performance Brands o Brand Development and What Makes Them Unique o Why Brands? o PerformanceFoodservice.com o Brand Spotlight: Braveheart & Bacio o Delivering Results 21
Slide 23: Brand Development
Brand Development Umbrella Brands & Strategic Brands 22
Slide 24: Exclusive Brand Lineup
Exclusive Brand Lineup Strategic Brands BRAVEHEART BLACK ANGUS BEEF® Black Angus beef to satisfy operators’ needs with a serious commitment to quality, food safety (traceability) and state-of-the-art processing via our exclusive PathProven® program. Black Cattle raised in the Midwest and fed on loca
Slide 25: Segment Overview - Vistar
Segment Overview Segment Highlights Footprint • Leading distributor of candy, snacks, and beverages and other single serve, impulse, immediate consumption items • Channels served: − Vending Distributors − Office Coffee Service Distributors − Theaters, Stadium and Arenas − Retail Impulse − Hospitalit
Slide 26: Delivering Growth
Delivering Growth Growth Strategy • Utilize strengths to grow both core and emerging channels • Improve mix • Improve cost structure through utilization of technology • Enter new channels and develop new capabilities through acquisitions Net Sales EBITDA $ Billions $ Millions $133.1 $3.3 CAGR 10.9%
Slide 27: A History of Evolution
A History of Evolution • The type of products we sell define us: − Single Serve − Impulse − Immediate consumption • What began as candy, chips, and soda evolved to protein bars, energy drinks and meal replacement options • SKU growth continues to evolve as consumers More continue to evolve Customers
Slide 28: A History of Evolution
A History of Evolution FY 2002 FY2008 FY2018 $1.0B Net Sales $1.4B Net Sales $3.3B Net Sales 19% 11% 4% 3% 15% 5% 96% 1% 73% 5% 5% 3% 10% 46% 2% Vend/OCS Vend/OCS Theater Theater/Concession 2% Retail Hospitality/Travel Vend/OCS Corrections Theater/Concession All Other Retail Office Supply Hospitalit
Slide 29: Nationwide Coverage
Nationwide Coverage Wholesale candy, snack, and beverage specialists Delivering solutions from one box to a truckload 28
Slide 30: Evolving Beyond a Distributor
Evolving Beyond a Distributor • Continue to build upon our core competencies in distribution centers and logistics • Ongoing evolution and expansion of product offerings in the impulse, single serve, immediate consumption category • Invest in the continued growth of automated facilities and IT infra
Slide 31: Automated Technology
Automated Technology • Vistar Retail Central – an automated parcel distribution facility in Southaven, Mississippi • Allows for significant enhancement to product availability and outbound order shipping capacity • Software and conveyor technology provide significant enhancements to operational proc
Slide 32: Plans for Growth
Plans for Growth E-Commerce Distributor of Candy & Snacks Production MANUFACTURERS Distribution Centers & Delivery Logistics VISTAR Other Smaller Distributors E-Commerce Retailers Direct to E-Comm Consumers Boutique (Vistar E-Comm for business, Large Retailers Retailers club sports programs, consume
Slide 33: Performance Food Group
Performance Food Group Jim Hope, EVP and CFO
Slide 34: Strong Sales Growth
Strong Sales Growth Net Sales Growth + 7.3% CAGR $17.6B $ Billions $10.1B JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE June JUNE FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 We have delivered consistent sales growth over a long-term economic cycle 33
Slide 35: Solid EBITDA Growth
Solid EBITDA Growth PFG Adjusted EBITDA(1) $ Millions $443 $427 CAGR ~10% $391 $367 $329 $286 $271 $241 $220 $193 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 TTM (1) For reconciliation of non-GAAP to GAAP measures see the Appendix 34
Slide 36: Fiscal 2018 Financial Performance
Fiscal 2018 Financial Performance FY2018 Growth vs. PY Cases 3.0% Net Sales $17.6B 5.1% Gross Profit $2.3B 7.9% Net Income $198.7MM 106.3% Diluted EPS $1.90 104.3% Adjusted EBITDA1 $426.7MM 9.2% Adj. EBITDA1/Gross Profit 18.6% 20 bps Adjusted Diluted EPS1 $1.54 24.2% (1) For reconciliation of non-GA
Slide 37: Fiscal 2019 First Six Months Financial Performance
Fiscal 2019 First Six Months Financial Performance FY2019 First Growth vs. PY Six Months Cases 4.6% Net Sales $9.2B 5.5% Gross Profit $1.2B 7.7% Net Income $71.3MM (29.1%) Diluted EPS $0.68 (29.2%) Adjusted EBITDA1 $212.4MM 8.5% Adj. EBITDA1/Gross Profit 17.6% 20 bps Adjusted Diluted EPS1 $0.80 19.4
Slide 38: Looking Ahead: Our Focus
Looking Ahead: Our Focus • Continued investment in growth • Expanding operating margins • Disciplined use of capital 37
Slide 39: Investment in Growth
Investment in Growth Foodservice AM Sales Force 1,869 1,400 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Notes: FY19 as of Q2 FY2019 38
Slide 40: Expanding Margins
Expanding Margins • Productivity − OpEx innovation − Pricing tool − Brand penetration • Leverage − Supplier negotiations − New supplier billing process − Overhead control • Mix − Mix shift to Independent − Specialty growth at higher margin 39
Slide 41: Disciplined Use of Capital
Disciplined Use of Capital 1. Investment in the business = facility expansions − 149,000 sq. ft. added in FY2016 Net Debt and Leverage − 426,000 sq. ft. added in FY2017 $ Millions − 750,000 sq. ft. added in FY2018 $1,469 $1,454 $1,433 2. Strategic M&A $1,289 $1,197 5.3x $1,135 $1,177 5.1x − Vistar 5
Slide 42: Share Repurchase Program
Share Repurchase Program • On November 13, 2018, the Board of Directors of the Company authorized a share repurchase program for up to $250 million of the Company’s outstanding common stock. • During the three months ended December 29, 2018, the Company repurchased 157,900 shares of common stock for
Slide 43: FY 2019 Outlook
FY 2019 Outlook Case Growth 3% to 5% Adjusted EBITDA Growth 7% to 10% Adjusted EPS Growth 10% to 16% 1 This presentation includes several metrics, including EBITDA, Adjusted EBITDA and Adjusted Diluted Earnings per Share that are not calculated in accordance with Generally Accepted Accounting Princi
Slide 44: Summary
Summary • Industry-leading growth company • Continue to focus and grow independent restaurant cases • Profitably grow our market share in a fragmented marketplace • Performance Brands private label business is unique with higher margins • Differentiated national candy, snack and beverage distributor
Slide 45: Questions
Questions ~SPFG =:
Slide 46: Appendix
Appendix —SPFG =:
Slide 47: Non-GAAP Financial Measures
Non-GAAP Financial Measures • This presentation and the accompanying financial statement tables include several financial measures that are not calculated in accordance with GAAP, including EBITDA, Adjusted EBITDA, and Adjusted Diluted Earnings per Share. Such measures are not recognized terms under
Slide 48: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation Non-GAAP Financial Measures Refer to Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations included in the annual report on Form 10-K for the fiscal year ended June 30, 2018 for statements regarding our use of non-GAAP f
Slide 49: EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS Reconciliation
EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS Reconciliation Fiscal year ended June 30, 2018 July 1, 2017 Change % Diluted earnings per share (GAAP) $ 1.90 $ 0.93 $ 0.97 104.3 Impact of non-cash items 0.22 0.18 0.04 22.2 Impact of acquisition, integration & reorganization charges 0.04 0.17 (0.13
Slide 50: EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS Reconciliation
EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS Reconciliation Six Months Ended ($ in millions, except share and per share data) December 29, 2018 December 30, 2017 Change % Net income (GAAP) $ 71.3 $ 100.6 $ (29.3) (29.1) Interest expense, net 31.6 29.7 1.9 6.4 Income tax expense (benefit) 20.2 (