Performance Food Group Company

Good day and welcome to PFG's fiscal year first quarter 2021 earnings conference call. If you would like to ask a question at the conclusion of the prepared remarks, please press the star key followed by the number one on your telephone keypad at any time. I would now like to turn the call over to Mr. Bill Marshall, Vice President, Investor Relations for PFG. Please go ahead, sir.

Thank you, Maria, and good morning. We are here with George Holm, PFG CEO, and Jim Hope, PFG CFO. We issued a press release regarding our 2021 fiscal first quarter results this morning, which can be found in the investor relations section of our website at pfgc.com. During our call today, unless otherwise stated, we are comparing results to the same period in our 2020 fiscal first quarter. The results discussed on this call will include GAAP and non-GAAP results adjusted for certain items, The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found at the back of the earnings release. Our remarks on this call and in the earnings release contain forward-looking statements and projections of future results. Please review the cautionary forward-looking statement section in today's earnings release and our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. Now, I'd like to turn the call over to George.

Thanks, Bill. Good morning, everyone, and thank you for joining our call today. I'm very pleased with the start to fiscal 2021. Our first quarter results came in ahead of our expectations as the business recovery remains on track and we continue to outpace the food service industry. We continue to win new business, particularly in the independent restaurant channel, which resulted in year over year gross margin expansion during the quarter. Meanwhile, the Reinhart transaction has exceeded our expectations and proven to be a strong cultural and operational fit with the legacy performance food service business. This gives us confidence in our ability to bring future Reinhart sales growth to be more in line with our legacy performance food service business. Reinhart's integration into the PFG family, which includes successful technology transition and sales compensation conversions, has continued to progress smoothly, and our synergy efforts similarly remain on track, which should result in roughly $50 million of annualized cost synergies in the third full fiscal year following the closing. As a result of all this work, we continue to expect long-term value creation from Reinhart, an exciting prospect for the years ahead for Performance Food Group. The EB Brown business has also continued to produce good results the past several months. While many of Vistar's channels have experienced significant disruption, the convenience store channel has kept moving forward, growing sales year over year. Keep in mind that we now have fully lapped the EB Brown acquisition, so the sales and earnings growth that they generate is fully organic. Before we discuss our first quarter results in more detail, I'd like to address the current operating environment. While it is still very early, we are not yet experiencing a negative impact from the cooler fall weather. In fact, our weekly sales trends have held steady through September and October, including the pro forma Reinhart results in the year-ago period. PFGs consolidated. Net sales were down 8.4% in September. approximately 8% in October. This is an improvement from the 10.9% decline in the month of August. While there has been some modest improvement in Legacy Distar, that business continues to be pressured by a handful of channels. In particular, we continue to expect a very slow recovery at movie theaters, office coffee services, travel, and hospitality. While none of us can predict the future, we remain extremely well positioned with the segments of the restaurant industry that have performed well during these challenging times. With that said, if factors out of our control do produce a more challenging environment, we believe that our customers and PFC operations leaders now have a playbook to adjust and can push through until we eventually get to a level of normalcy. For our part, we will continue to support our customers and look for opportunities to expand our market share. During our year-end call in August, you may recall that we discussed our strong market share gains driven by our Salesforce investments and business mix. I'm pleased to report that these trends continued in the first quarter as well, and we are particularly happy with our performance within the independent channel. For the quarter, our independent cases grew 28% compared to a total case volume growth of 8.9%. Excluding the contribution from Meinhardt, independent organic cases were down just 6.3% during the quarter, a fantastic outcome given the situation. Not surprisingly, we have been asked about the impact that business trends would have on our margin structure. We are therefore very pleased to report our first quarter gross margins expanded to 11.6% from 11.4% in the year-ago period. despite the dilutive impact from faster growth in the convenience store channel, which has lower margins than the rest of our business. We are pleased with our organization's focus on cost control. We believe we have found the right balance between controlling costs to match demand and equally as important, taking care of our customers during the recovery. We are experiencing higher inbound freight costs due to tightening capacity, particularly in recent weeks. While we feel good about our carrier relationships and our ability to effectively manage this cost item, we would expect some near-term cost pressure. Also, as we discussed last quarter, we continue to bring the associates back from furlough as sales trends have improved. In addition to servicing the needs of our core business and value customers, PFT associates continue to focus on helping the communities we serve. Over the past few months, their generosity has helped our neighbors in need across the country. Our newest community relationship is with the American Heart Association as the presenting sponsor for the Richmond Heart Walk. This was important to us because heart-related issues affect so many. It was a great opportunity to support our communities and reinforce our associates that health and wellness are priorities. Many associates provided support as part of the steering committee and as enthusiastic coaches for PFGs 17 teams. While it normally would have been only a local Richmond, Virginia event, it became a virtual walk and PFG associates across the country joined in. One of our longest standing community partnerships is with Feeding America. We know the need continues to grow and during this year's Hunger Action Month campaign in September, our associates generously donated online to benefit Feeding America network of food banks across the country. As a company, we have proudly provided financial and food donations for many years. From our associate food drives and donations from our operating companies throughout the year, we've donated, on average, more than a million pounds a year. And finally, PFG is pleased to again be offering a match for donations our associates make to the American Red Cross hurricane and disaster relief efforts. With wildfires in the west and very active hurricane season in the east, our associates are giving generously here to help the communities where we live, where we work, and to serve our customers. In closing, let me thank our PFG associates for the work they do every day for our business and the customers and communities we serve. While many organizations are struggling, our PFG family has come together to support one another and those around us. Company morale is strong. And it shows through in our business results and in many other intangible ways. This sets our organization apart from others and drives us forward as a true industry leader. With that, I'm going to turn things over to Jim, who will give you more detail on our first quarter and financial position.