Performance Food Group’s latest quarter was met with a significant negative reaction from the market, following results that fell short of Wall Street’s profit expectations, despite meeting revenue consensus. Management attributed the shortfall largely to higher-than-anticipated integration costs from the Cheney Brothers acquisition and persistent deflation in key categories like cheese and poultry. CEO Scott McPherson highlighted, “Expenses are running a little bit higher than we anticipated,” particularly with new facilities coming online. The company also faced softer sales volumes, with consumer traffic impacted by macroeconomic headwinds and weather disruptions. While Performance Food Group continued to gain market share, especially in its independent restaurant and convenience segments, the combination of increased operating expenses and lower sales per location weighed on profitability.
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Performance Food Group (PFGC) Q4 CY2025 Highlights:
- Revenue: $16.44 billion vs analyst estimates of $16.52 billion (5.2% year-on-year growth, in line)
- Adjusted EPS: $0.98 vs analyst expectations of $1.09 (10% miss)
- Adjusted EBITDA: $451.2 million vs analyst estimates of $464.2 million (2.7% margin, 2.8% miss)
- The company reconfirmed its revenue guidance for the full year of $67.75 billion at the midpoint
- EBITDA guidance for the full year is $1.93 billion at the midpoint, below analyst estimates of $1.98 billion
- Operating Margin: 1.2%, in line with the same quarter last year
- Sales Volumes rose 3.4% year on year (980% in the same quarter last year)
- Market Capitalization: $14.14 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Performance Food Group’s Q4 Earnings Call
- Mark Carden (UBS) asked about the likelihood of achieving 6% organic independent case growth for the year. CEO Scott McPherson explained the company is “fighting to get there” but acknowledged the impact of weather and macro conditions, noting January saw a rebound before being offset by February’s weather disruptions.
- Alex Slagle (Jefferies) inquired about elevated operating expenses in foodservice, especially due to Cheney Brothers. McPherson said, “Overall, I would say their costs are running a little bit higher than we anticipated,” and that integration costs and commodity deflation accounted for much of the margin pressure.
- John Heinbockel (Guggenheim) questioned the status of strategic procurement initiatives and margin improvement. McPherson indicated they expect to achieve the upper end of $100-125 million in procurement synergies over three years, with benefits starting to appear more meaningfully in the back half of this year.
- Jeffrey Bernstein (Barclays) pressed on the drivers of EBITDA underperformance, asking whether weather or Cheney Brothers were more to blame. McPherson and Hatcher both stressed that Cheney’s higher costs and commodity deflation were the primary factors, with weather also contributing.
- Lauren Silberman (Deutsche Bank) sought clarity on underlying operating expense trends excluding Cheney Brothers. McPherson responded that core foodservice expense performance was “fairly consistent,” with most of the overrun traced to Cheney integration, and that expense leverage remains a key focus.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be closely watching (1) the pace at which integration costs at Cheney Brothers subside and procurement synergies begin to materialize, (2) the sustainability of market share gains in key segments amid ongoing commodity deflation, and (3) the margin impact of continued mix shift in the convenience business. Execution on cost control initiatives and resilience in consumer demand will be key performance markers.
Performance Food Group currently trades at $90.18, down from $97.09 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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