Performance Food Group Company

Please stand by, your program is about to begin. If you need assistance on today's conference, please press star zero. Good day and welcome to PFG's fiscal year Q2 2022 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, and good morning. We're here with George Holm, PFG's CEO, and Jim Hope, PFG's CFO. We issued a press release regarding our 2022 fiscal second quarter and six-month 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 fiscal 2021 fiscal second quarter. Additionally, occasionally during our call today, as noted, we are comparing results to the same period in our 2020 fiscal second 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 FCC 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 pleased to be able to share PFG's outstanding second quarter results and discuss our strategic goals and objectives. We had another active quarter, which included the announcement of a new management structure, continued integration of Coremark, and a food service acquisition in the southeastern U.S., I will address each of these items in turn and provide additional color on the direction of our company and where we are headed. Last quarter, we discussed our vision to transform PFG beyond a traditional food service distributor into a leader across a variety of channels and product offerings. During the past few months, we have aligned our operating management and report structures with this vision. We believe this new structure will increase our speed and agility capturing new lines of business, and our cross-selling capabilities. We have already seen the cross-selling between food service and convenience bear fruit, which I will discuss in more detail shortly. As you saw in this morning's earnings release, we have also realigned our reporting segments to reflect our strategy and management structure. We will now report three segments, food service, convenience, and VISTAR. The convenience segment includes all the business that came with EB Brown and Cormark acquisitions. The Vistar segment will reflect the legacy Vistar channels, including theater, vending, office coffee, retail value stores, and corrections. There were no changes to our food service segment. This new reporting structure not only aligns our organization with our strategic vision, but also gives our investors additional financial information. and a deeper look into business trends across different units. One of these units is our combined convenience store distribution operations. This includes the Cormark organization, which we acquired in September of last year, and the E.B. Brown business, which we acquired almost three years ago. Over the past five months, these two entities have worked quickly to come together as a united front in our efforts to build upon their combined strengths in the convenience store space. As we discussed in our last earnings call, we're off to a fast start with quick business wins across traditional convenience business as well as food service into convenience. Today, I can announce that we are in discussions with several additional customers to bring new business in this space. When we announced the core market acquisition, we had very high expectations for the value we would create by bringing that business to PFG. I am pleased to say our expectations are being realized and the future looks very bright. This could not be possible without the dedication and hard work of so many talented associates and a strong management team, including those who are new to the organization from Coremark, as well as our EB colleagues. The two teams have come together to form a cohesive unit, and as we had expected, have proven to be an excellent cultural fit. The integration has gone smoothly, and we're ahead of schedule in several areas, including finance, procurement, HR, and IT. The story is very similar to our success with Reinhart, which you are familiar with. On many occasions, you have heard me speak about our excitement with Reinhart. I'm pleased to say that our enthusiasm remains high. Last quarter, we highlighted the pace of independent growth that Reinhart has experienced. which has continued to outpace the strong results from our legacy performance food service business. Today, I would like to highlight another encouraging aspect of the success with Reinhardt. Our success in food service is driven by many initiatives. However, one of the most important elements of the strategy is growth of our PFG performance brands within the independent segment. These high-quality brands are important for our customers as they provide a differentiated offering at a reasonable price. It's also important for PFG as it separates us from the competition and comes at a higher margin per case than the national brands. Our performance brands today represent a significant portion of all cases sold to independent restaurants. And while we are seeing success across the company, this is another area where Reinhart is growing faster than the legacy business. It is rewarding to see our strategy play out and inspires us to continue along the growth path. We also added to our food service business with the acquisition of Merchants Food Service at the end of the quarter. Merchants adds to our food service scale and reach, filling in space in the southeastern United States. We are not providing financial details of the transaction, but historically Merchants has operated at an EBITDA margin that would be accretive. We are excited to welcome the Merchants Associates to the PFG family and look forward to many years of success. Altogether, our food service business is executing at a very high level. Our performance in the independent channel continues to drive our overall segment results. In fact, our market share gains in the independent channel accelerated sequentially from the first quarter to the second quarter compared to two years ago. This included strengthening the pizza, Italian, Hispanic, and seafood concepts. We are very pleased to see our momentum in food service continue, particularly in independent restaurants. Finally, let me comment on our Vistar business before turning it over to Jim, who will provide color on our results and financial position. As you know, Vistar's channels were some of the hardest-hit areas over the past two years, including significant impact to theater and office costs. I cannot speak highly enough about the effort this organization has put into achieving these results. There are many bright spots at Distar, including the areas of retail, corrections, and travel, all of which experienced second quarter 2022 net sales above 2020 levels. We are also very encouraged by the recent trends in the movie theater channel. While that business is still below levels of two years ago, it experienced significant improvement sequentially, along with a strong box office showing late in the calendar year. While January and February may not see the same level of box office product, we expect the strength to resume in the spring and early summer seasons. In summary, we have remained active in the pursuit of building upon our strength as a food and food service distribution leader. Our underlying path to success is simple. It starts with our customers and a relentless focus on helping them succeed. This has resulted in significant sales growth, particularly within high-margin channels and product categories. We seek to keep our organization lean and use operating efficiencies to grow EBITDA faster than sales and expand our margins. We then look to reinvest these profits back into the business to produce a sustained cycle of organic growth and for opportunistic M&A, We intend to tightly manage our working capital to generate long-term free cash flow with the goal of generating high shareholder returns. I'll now turn it over to Jim for an update on our fiscal second quarter and financial position.