Performance Food Group Company (PFGC) Earnings

Management highlights

- Core Company Strategy & Market Position * PFG competes across the entire food away from home market, a strategy that delivered consistent market share gains and solid revenue growth across all three segments in 2026 * The cross-segment PFG1 operating model enables cross-selling opportunities (e.g., food service supporting convenience store customers, specialty e-commerce distributing small wares to restaurants), creating a competitive advantage - Growth Drivers & Investments * Continued investment in the sales organization, sales technology, customer relationships, and infrastructure to support future growth * Added over 580 new branded SKUs in 2026, bringing the total PFG brand portfolio to ~25,000 SKUs across 85+ brand families, which management views as a key competitive advantage with high profit potential * 2026 saw a reduction in workplace accidents and injuries, which lowered insurance costs and improved corporate overhead results * Leveraging new technologies to improve operational efficiency: AI-enabled routing for fleet optimization, drone inventory counting in warehouses, and AI-assisted data assimilation across segments to unlock procurement and logistics opportunities * Entered a 12-month diesel fuel swap contract for exposure not covered by existing fuel surcharge programs, to reduce cash flow volatility and improve forecasting visibility - Financial & Operational Execution * Generated $1.4 billion in operating cash flow (up ~$200 million year-over-year) and over $1 billion in free cash flow (up $326 million year-over-year) in full year 2026 * 2026 capital expenditures totaled $384.1 million, with management planning 2027 CapEx to remain below the long-term target of 70 basis points of net revenue * On track to meet or exceed the high end of the $120 million to $125 million procurement synergy target announced at investor day by the end of fiscal 2028, with most synergies currently flowing to the food service segment - Recent M&A Integration * The new Chaney Brothers facility in Florence, South Carolina is fully operational and already the fastest growing PFG facility in the Southeast, enabling the company to win and service new large national accounts like Jersey Mike's

Guidance

- First quarter of fiscal 2027: Net sales expected in the range of $17.9 billion to $18.1 billion, adjusted EBITDA expected in the range of $510 million to $530 million. EBITDA growth is projected to accelerate throughout the fiscal year. - Full fiscal year 2027: Net sales expected between $72.5 billion and $73 billion, adjusted EBITDA expected between $2.125 billion and $2.225 billion. The guidance range includes a 2% benefit from an extra 53rd accounting week in Q4 2027. The midpoint of the guidance range represents 7.2% year-over-year sales growth and 12.7% year-over-year adjusted EBITDA growth. - Full year 2027 overall cost inflation is expected to remain in the low to mid single-digit range: food service inflation is modeled at ~2%, while convenience and specialty are expected to see mid-single digit inflation, with convenience slightly higher than specialty. - The effective full year 2027 tax rate is expected to be between 26% and 27%, in line with historical ranges. Interest expense is expected to stay relatively flat compared to Q4 2026, with modest improvement expected by the end of 2027. - The guidance keeps PFG on track to hit its three-year targets announced at investor day, which call for fiscal 2028 sales of $73 billion to $75 billion and adjusted EBITDA of $2.3 billion to $2.5 billion.

Segment performance

1. Food Service: Delivered 5.8% organic independent case growth in Q4 2026, with full year independent case growth reaching 5.9% and full year revenue growth reaching nearly 9%. Chain restaurant case volume declined slightly in Q4 but still outperformed industry restaurant foot traffic declines. PFG-owned brands represented ~54% of cases sold to independent restaurants (ex-Chaney Brothers), or just over 50% including Chaney Brothers, and grew faster than the overall segment business. 5.8% Q4 organic independent case growth contributed to overall segment strength despite industry-wide negative restaurant foot traffic throughout 2026. 2. Convenience (Cormark): Produced mid-single digit full year revenue growth, which translated to 10.4% Q4 year-over-year adjusted EBITDA growth (double-digit profit growth). National store count grew 16% in 2026, driving 6.9% case growth, led by new additions of Loves and Racetrack. The segment gained market share in all key non-nicotine categories (food service, candy, snacks, health and beauty), which grew mid-single digits in Q4 2026 against an industry decline of nearly 6%. Gross margin improvement and disciplined operating expense control drove the strong EBITDA result. 3. Specialty (Vistar): Top line growth accelerated in each of the final three quarters of 2026, finishing with 6.6% year-over-year sales growth in Q4. Growth was driven by new account wins and positive performance across vending, campus, travel, and hospitality channels. The segment faced headwinds from persistent candy/snack inflation, a choppy consumer environment, and elevated operating costs through 2026, but built positive momentum entering 2027 and launched expansion into the new specialty grocery vertical in late 2026. Total company net sales grew 6.4% year-over-year in Q4 2026, total cases grew 3.5%, gross profit increased 8.3%, GAAP net income grew 23.4% to $162.3 million, and adjusted EBITDA increased 7.4% to $587.5 million.

Risks & headwinds

- Persistent macroeconomic headwinds: Consumers continue to navigate higher prices, and industry-wide operating cost pressures (including elevated fuel and labor costs) weigh on the broader food away from home market. Restaurant foot traffic trended negative every month of fiscal 2026. - Fuel price volatility: Higher diesel prices created a $16 million net negative impact in Q4 2026, with fuel price headwinds expected to remain similar to Q4 levels in Q1 2027 before easing in the second half of the year. - Industry-specific headwinds: The convenience segment faces ongoing pressure from high gasoline prices that reduce customer traffic and inflation-led pricing for in-store products. The specialty segment faces persistent candy, snack, and beverage inflation that pressured results in 2026, with operating cost pressures expected to persist through the first half of 2027. - Labor market tightness: There are regional hotspots for truck driver availability, though overall turnover, overtime, and temp labor usage have remained stable over the past two years with no material industry-wide shift. Uncertain macroeconomic conditions create downside risk to results if unexpected headwinds emerge.

Analyst Q&A

• Q: How do the three segments align with the 2027 EBITDA growth outlook, and what is the outlook for corporate overhead? /

  A: Management expects all three segments to deliver solid growth: Food service is targeting 6% independent case growth, with the new Jersey Mike's national account providing a strong back-half 2027 boost; Convenience will benefit from ongoing momentum from the Loves and Racetrack acquisitions; Specialty has accelerated growth over three consecutive quarters and is gaining traction in new verticals. Procurement synergies will build throughout the year, driving margin improvement. Easier year-over-year comparisons for Chaney Brothers operating expenses and continued safety improvements will reduce overhead in the second half of 2027, and all these dynamics are already incorporated into the published guidance range.

• Q: What is driving the recent deceleration in food service inflation, how is inflation modeled for 2027, and what are the drivers of independent penetration growth? /

  A: Food service inflation fell to below 1% in July 2027 after reaching 2.7% in Q4 2026, driven by beef inflation normalizing after double-digit growth a year prior, alongside ongoing deflation in cheese, poultry, and eggs. Full year 2027 food service inflation is modeled at ~2%, with other segments seeing similar low to mid single-digit inflation. Penetration growth (lines per drop) is driven by improved sales technology that provides better product recommendations and new item suggestions to customers, alongside consistent 5% net new account growth that remains the core driver of market share gains.

• Q: What is the cadence of expected 2027 EBITDA acceleration, and how large are the expected benefits from lapping one-time 2026 headwinds like Chaney Brothers integration and elevated fuel costs? /

  A: Q1 2027 will still see similar fuel headwinds to Q4 2026, with only modest improvement. The benefits of lapping Chaney Brothers integration costs and easing fuel headwinds will primarily materialize in the second half of 2027. The guidance range accounts for potential macro tailwinds and headwinds: the midpoint reflects current base expectations, with upside to the upper end of the range if tailwinds emerge. The new Chaney Florence facility is already operating successfully and enabled PFG to win the Jersey Mike's regional business, creating long-term bottom-line benefit.

• Q: What are PFG's capital allocation priorities for 2027, and where does the company stand on technology investment benefits? /

  A: Capital allocation priorities are maintaining leverage within the 2.5x to 3.5x net debt target range, investing in organic growth capacity across all segments, and pursuing strategic M&A. Share repurchases under the existing authorization are not a top three priority but will become more important as leverage moves lower within the target range. The company is still in early innings of leveraging AI and new technology, with key work underway to unify master data across segments to unlock procurement and cross-selling benefits. Cross-segment collaboration under the PFG1 model is already delivering tangible cross-selling synergy across the business today.