Performance Food Group Company

And welcome to PFG's fiscal year Q4 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 Bill Marshall, Vice President, Investor Relations for PFG. Please go ahead, sir.

Thank you, Brittany. And good morning, everyone. We're here this morning with George Holm, PFG's CEO, and Jim Hope, PFG's CFO. We issued a press release regarding our 2021 fiscal fourth quarter and full year 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 for the same period in our 2020 fiscal fourth quarter and full year. Additionally, occasionally during our call today, as noted, we are comparing results to the same period in our 2019 fiscal fourth quarter and full year. 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. It is my pleasure to discuss PFG's fourth quarter results with you this morning. Fiscal 2021 was a dynamic year for our industry and companies. We started the year with depressed levels of sales and profit as our industry and the country struggled through the COVID-19 pandemic. But I'm thrilled to say that we finished on a high note, posting several record sales weeks during the fiscal fourth quarter, accompanied by a strong recovery in earnings. The past year has shown that the restaurant industry is resilient and determined to serve everyone a wonderful dining experience. Our customers have pushed ahead, providing a steady path towards a return to better times for us all. We appreciate all the hard work undertaken by our customers and suppliers, as well as the role PFG associates play in our country's food supply chain. On May 18th, we announced our intention to acquire Cormark, which will boost our convenience store capabilities and continue to expand our presence in the food away from home market. After providing more detail on the fourth quarter results, I'd like to spend some time discussing the strategic vision we have for Cormark. I will then turn the call over to Jim, who will review our financial performance. As we entered the spring, we had high hopes that a full restaurant recovery was beginning to take hold. From a sales perspective, it is fair to say that our expectations were exceeded as our case volume and dollar sales began hitting record levels soon into the fiscal fourth quarter. The result was over $9.3 billion of net sales in the quarter, excluding the impact of the 53rd week. We estimate our net sales to be approximately $8.6 billion, well above anything our company has achieved in our history, and an increase of 9.3% compared to the fourth quarter of 2019, including pro forma results for acquisitions. Compared to the fiscal fourth quarter of 2019, this results, included 14.9% net sales growth for our legacy food service business and 7.1% growth for Reinhardt, excluding the impact of the 53rd week. We are particularly pleased with our continued strength in the independent restaurant business. In the quarter, our independent case volume increased 69.2%. Independent sales reached 37.8% of total food service sales in the fourth quarter. a 4.4% higher percentage of total sales than just two years ago. Importantly, channels that had been pockets of strength last year, namely independent pizza, Italian, and Hispanic, continue to grow in the most recent period despite difficult comparisons as the market shifted to in-store dining. And our average weekly dollar sales results in July and early August were very similar to weekly results in June. Regionally, we still see strength in the southeast, southwest, and west regions. While our total broad-line service volumes remain down for the northeast and midwest compared to the same period in 2019, both regions experienced sequential improvement into June. Our food service independent case volume is now growing in every region compared to 2019. Our food service business has taken advantage of this period of strength, continuing to roll out and expand on our customer-facing activity with many new programs designed to support the independent operator in areas such as recruiting and cost control. Also, PFT expanded its Ghost Kitchen partnership to meet the growing demand of this segment. PFT's customer-centric operating model has delivered strong results through the challenges of the past year, and we believe our business is in a stronger position today than it was before the pandemic. Illustrating our strong position, we are seeing better results with new and existing customers and lower loss rate since March. Independent cases from new customers surged in the fourth quarter of fiscal 2021, representing the main driver of growth compared to 2019. Meanwhile, retained business has been very strong as dining restrictions ease through the spring and summer. At the same time, our lost business rate has decreased to the point that it ended the quarter below pre-pandemic levels. The combination of those three factors is what has driven our strong independent sales growth and positive business mix. All in all, our food service business is performing very well on the top and bottom line. Our integration of Reinhart continues to progress at We're above expectations, and we expect this momentum to continue into fiscal 2022. At Vistar, the recovery in movie theaters and office coffee remains slow, but we are seeing steady progress off a low base. Other Vistar channels, including convenience stores, retail, value, and corrections, have remained resilient. Those channels all grew sales in the quarter compared to fiscal 2019, excluding the additional week. We do expect theaters and office coffee to remain under pressure, at least through the summer, as continued office closures and a slow build in theater persist. As a result, Vistar experienced 43.4% sales growth in the fiscal fourth quarter, excluding the extra week. Of course, these strong top-line results in both of our segments do come with costs. As you all know, the labor market has been tight up and down the supply chain. While this is not a PSG-specific problem, we are not immune. With that said, our team has done an outstanding job in most markets managing the staffing issues, and we believe that the labor supply situation will eventually ease. Right now, we are focused on improving our service levels with the customers who are experiencing challenges. We recognize our customers also have labor issues, and we will push to get back to exemplary service levels as soon as possible. To wrap up the discussion of our base business, we are extremely pleased with the top line recovery and our company's performance during this period. Certain cost items have been near term challenges, but we believe much of this is transitory. We continue to invest in driving sales growth and have expanded on key partnerships with our customers to adapt to the changing landscape. With the efforts across our enterprise, we believe we are all situated for a strong fiscal 2022. Switching to Coremark, we are moving quickly through the closing process. Last week, we announced that the HSR waiting period expired with no second request from the FTC. As a result, the next step is the Coremark shareholder vote, which is scheduled for next week. Assuming approval by Coremark shareholders, we anticipate a close of the transaction in late August or early September. When we announced the Coremark acquisition three months ago, we were excited with the opportunity Since then, our enthusiasm has only grown as we continue to evaluate the potential for value creation that this transaction brings. We're also very pleased with the quality of management at both Cormark and E.B. Brown. Convene store distribution represents about $110 billion of total addressable market. We are particularly excited about the $55 billion food and food service portion of in-store sales, and we believe We're uniquely qualified to capture share and grow the overall market. Not only is food service the fastest growing area in the C-Store, it brings meaningful margins for both the distributor and the C-Store operator. We expect the C-Store mix to continue to shift away from low margin tobacco products towards more food service, boosting both sales and profit growth long term. We have continued to work with our current convenience store business to plan for an acceleration in food service opportunities. And food service is not the only area of value creation for PFT in the convenience channel. Currently, many convenience stores receive a significant number of deliveries from various direct store delivery suppliers. Over time, we hope to bring some of these suppliers to our network, helping the suppliers lower costs and achieve better margins. Adding sales to the PFT network and reducing complexity for the C-Store operators. We have been successful with this strategy at Vistar over the years and hope to see similar results in the C-Store space. We are incredibly excited to close the Cornmark transaction, welcome the new associates to PFG, and begin unlocking the value of this deal. We see significant top-line opportunities that we can take to the 40,000 customers Cornmark serves. We will continue to share more about the convenience store space as we move forward in this important strategic area. Before turning it over to Jim, I want to highlight some of our recent efforts in the ESG arena. ESG is an important focus area for our company, and we significantly stepped up our commitment in fiscal 2021. This included allocating dedicated resources to ESG-related initiatives, creating a reporting structure for our ESG activities, and heightened disclosure of our ESG-specific activities. In December, we published our first ESG report and expect to follow this up with an update by the end of the calendar year. Our upcoming ESG report will include additional details around our 2030 goals and objectives. Last month, we announced the Community Solar Project as the next step in PFG's journey towards delivering on our commitment to renewable energy procurement. Over the 20-year term of this agreement, PFG will purchase power generated from the 2.25 megawatt project, estimated to be about 3,000 megawatt hours annually. This is a step towards our goal of purchasing 10% of our consumed power from renewable energy by 2030. Our entire team is proud of our ESG efforts to date, You should expect to hear more in this area in the months and years ahead. With that, I'm going to turn things over to Jim, who will give you more detail on our fourth quarter and our financial position.