Performance Food Group (PFG) has disclosed its Q4 earnings, along with Its full-year 2022 fiscal results.
PFG had a great year and it has the bonkers numbers to prove it. Net sales soared by 67%, with gross profit showing an equally strong 49%. But the craziest number is reserved for net income, coming in at a whopping 176%!
“PFG closed out fiscal 2022 in a position of strength, with strong net sales and profit growth,” said George Holm, PFG’s Chairman & Chief Executive Officer. “Our focus on driving independent restaurant growth continues to improve our customer mix, producing better margins and high-quality earnings.
Fourth quarter results were not that far behind in the crazy department. Net sales increased by 57%. Gross profit rose by 40%. But again, the winner is net income, flying upward by 142%!
Success this year can be attributed to the increase in independent customer acquisitions and the inflationary effects on the items that they, and all other customers, order. Independent customers is a term meaning smaller, private-owned restaurants, many of whom were probably former US Foods or Sysco customers. The two massive companies shrugged off the smaller enterprises during the lockdowns because their case volume was too small. It now stands to benefit PFG, a smaller, more agile company. As a result, total case volume increased 17% YoY in Q4, but a very healthy 29% on the year.
But maybe the biggest reason for such growth was the acquisition of Core-Mark Holding Company, Inc., a 134yr old distribution company specializing in fresh retail convenience merchandise. The new addition helped to boost the total case volume and revenue up to those ludicrous heights, but also opened the door to a whole new sector of business.
However, acquisitions increase operating expenses, and this situation is no different. Operating expenses for the year were up 48.3% to $4.9 billion, with the Core-Mark acquisition contributing $761.8 million in costs. Other reasons for rising costs include the ubiquitous modern day thorns of higher fuel costs and personnel issues, the latter forcing PFG to spend an extra $81.2 million on temporary contract labor costs. Staffing shortages required that the company bring in more contract workers, but doing so requires travel expenses be paid. And so it seems no matter how good a year PFG had, they were still dogged by the same few factors that dog everyone.
Looking ahead, the company expects Q1 net sales to be between $14.2 billion and $14.5 billion. Full-year net sales are expected to hit between $56 billion and $58 billion, a 10%-14% increase over 2022 final net sales.
It should also be expected that PFG continues to add more of the small businesses that may have been dropped by the Big Two. However, foodservice operators are notoriously fickle and will drop PFG in an instant if US Foods or Sysco come crawling back.
Reality is a cruel seductress.