Vending

Performance Food Group Q1 2021 sales jump 12.9%, Vistar falls 13.2% due to COVID-19

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November 4, 2020

Performance Food Group, which owns Vistar, reported a 12.9% gain in net sales from $6.24 billion in 2019 to $7.0 billion for the three months that ended Sept. 26, 2020, although a boost in operating expenses resulted in a decline in operating profit, according to a company earnings release.

The company's non-GAAP earnings per share for the 2021 first quarter of 25 cents beat analyst expectations by 9 cents, while GAAP EPS of 1 cent missed expectations by 6 cents, according to Seeking Alpha.

The first quarter of fiscal 2021 resulted in a net loss of $0.7 million compared to net income of $36.1 million in the prior year period, according to the earnings release. The decline was primarily a result of the $27.7 million decrease in operating profit and a $21.5 million increase in interest expense, partially offset by a $11.4 million decrease in income tax expense.

Basic earnings per share for the latest quarter tumbled from 35 cents to a loss of 1 cent while diluted EPS fell from 34 cents to a loss of 1 cent, according to the earnings release.

Shares traded at $37.34 today against a 52-week range of $7.41-$54.49.

Vistar sales decreased 13.2% from $2.31 billion in 2019 to $2.0 billion for the quarter ending Sept. 26, 2020, driven by the continued economic effects of the COVID-19 pandemic.

EBITDA for Vistar during the quarter ending Sept. 26, 2020 decreased 77.3% to $11.7 million versus the prior year period. Gross profit decline of 29.6% for the first quarter of fiscal 2021 compared to the prior year period was fueled by the current economic environment due to COVID-19.

For the first three months of fiscal 2021, Vistar recorded $3.8 million of inventory write-offs primarily as a result of the current economic environment due to COVID-19, which is an increase of $2.8 million compared to the prior year period.

Vistar's operating expenses decreased primarily as a result of the decrease in sales volume, decreases in personnel and fuel expenses, and a reduction in contingent consideration accretion expense as compared to the prior year period.

Vistar recorded a total of $3.5 million of bad debt expense related to expected credit losses for customer receivables due to the impact of COVID-19, which represents an increase of $2.7 million compared to the first quarter of fiscal 2020.

"Our foodservice segment once again outperformed the industry, particularly in the independent restaurant channel," George Holm, PFG's chairman, president and chief executive officer, said in the press release. "The integration of Reinhart has progressed smoothly and Vistar, despite its exposure to some of the hardest hit channels, has remained profitable due to strength in the convenience store channel."

The company's first quarter sales increase was primarily attributable to the acquisition of Reinhart Foodservice LLC, partially offset by the effects of the novel coronavirus pandemic. The acquisition of Reinhart contributed $1.45 billion to net sales for the first three months of fiscal 2021. Overall food cost inflation was approximately 1.5%.

For the first three months of fiscal 2021, the company recorded a total of $11.9 million of inventory write-offs primarily as a result of the impact of COVID-19, which is a $5.7 million increase from the first three months of fiscal 2020. Gross margin as a percentage of net sales was 11.6% for the first quarter of fiscal 2021 compared to 11.4% for the prior year period.

Gross profit for the first quarter of fiscal 2021 increased 14.6% to $815.5 million as compared to the prior year period. The gross profit increase was led by the acquisition of Reinhart, partially offset by the current environment surrounding the outbreak of COVID-19.

For an update on how the coronavirus pandemic is affecting convenience services, click here.