Performance Food 2025 Q3 Earnings Misses Targets as Net Income Falls 17.2%

Performance Food (PFGC) reported its fiscal 2025 Q3 earnings on May 07, 2025. The company missed earnings expectations, as net income decreased by 17.2% compared to the same quarter last year, falling to $58.3 million. Despite this, revenue grew by 10.5%, reaching $15.31 billion. The company updated its full-year fiscal 2025 guidance, narrowing its net sales expectations to a range of $63 billion to $63.5 billion, down from $63 billion to $64 billion. The adjustments reflect ongoing integration efforts and market conditions.

Revenue
Performance Food reported a 10.5% increase in total revenue for Q3 2025, reaching $15.31 billion compared to $13.86 billion in Q3 2024. This growth was fueled by recent acquisitions, increased case volumes, and inflation-driven price adjustments. The Foodservice segment saw a substantial 19.2% rise in revenue, totaling $8.4 billion, driven by acquisitions and volume increases. The Specialty segment experienced a slight decline of 0.2%, generating $1.1 billion due to channel mix shifts. Meanwhile, the Convenience segment posted a 1.8% increase, achieving $5.7 billion in revenue.

Earnings/Net Income
Performance Food’s EPS fell by 17.4% to $0.38 in Q3 2025 from $0.46 in Q3 2024, while net income declined to $58.3 million, marking a 17.2% year-over-year decrease. The earnings decline suggests challenges in cost management and integration impacts.

Post-Earnings Price Action Review
A strategy of purchasing Performance Food shares following a revenue increase and holding for 30 days yielded a 16.37% return over the past five years, which significantly underperformed the benchmark's 84.08% return. This strategy exhibited poor risk-adjusted returns, indicated by a low Sharpe ratio of 0.19. The maximum drawdown reached -26.69%, and the strategy's volatility was 16.28%. These metrics reflect the challenges and risks associated with this investment approach, suggesting that while there is some return potential, the associated risks and volatility are considerable. Investors may need to consider these factors when evaluating the effectiveness of this strategy in future market conditions.

CEO Commentary
"Our organization rose to the challenges in the quarter and is on strong footing for the remainder of the year," said George Holm, Chairman & Chief Executive Officer. He noted that while the fiscal third-quarter results were not as strong as anticipated, the company is executing well and making progress in integrating Cheney Brothers and José Santiago. Holm expressed optimism about consumer resilience in the early weeks of the fiscal fourth quarter and highlighted the need to update full-year fiscal 2025 guidance due to a difficult February, while remaining confident in fourth-quarter projections.

Guidance
The company updated its full-year fiscal 2025 guidance, indicating expectations of improved performance in the fourth quarter. Holm emphasized confidence in achieving the projected outcomes for the fiscal fourth quarter, reflecting a cautious yet optimistic tone in light of current market conditions and integration efforts.

Additional News
Performance Food Group (PFGC) has been active in mergers and acquisitions, recently completing the integration of Cheney Brothers and José Santiago into its operations. This strategic move is part of PFGC's efforts to expand its market presence and enhance service offerings. Additionally, the company has been focusing on capital allocation, with a share repurchase program in place. During the three months ended March 29, 2025, PFGC repurchased and retired 0.2 million shares, amounting to $10.6 million. This move demonstrates the company's commitment to returning value to shareholders while managing its capital structure effectively.