PFGC Filings — Performance Food Group Company - FilingSpy
PFGC
Performance Food Group Company
A food distributor that supplies restaurants, schools, hospitals, convenience stores, and theaters across North America, delivering everything from custom-cut meats to cigarettes and candy. Its roots reach back to 1885, when James Capers began peddling groceries in Richmond, Virginia—an operation that grew into Pocahontas Foods and was gathered under the Performance Food Group name in 1987. One fun twist: its convenience arm carries the Core-Mark brand, dating to 1888, when the Glaser brothers opened a small family store in San Francisco.
10-K · Fiscal year ended Jun 27, 2026 · SEC filing ↗
PFG's gross margin reached 11.9% in FY2026, its highest annual level in at least a decade, while free cash flow rose 46% to $1.03B.
nearly doubled, reaching $1.03 billion. rose 7.2% to $67.8 billion and widened to 11.9% as a shift toward higher-margin independent customers and procurement gains lifted profitability, even as operating expenses grew in lockstep. The company is generating more cash than ever, but $5.0 billion in remains the central weight on the balance sheet.
Key takeaways
rose 46.2% to $1.03 billion, driven by a 16.8% increase in to $1.41 billion and a sharp swing after the prior year's build for the Cheney Brothers acquisition unwound.
widened 0.2 points to 11.9%, the highest annual figure in the data provided, as a favorable customer mix shift toward independent restaurants and procurement efficiencies more than offset cost pressures.
Total case volume grew 5.1%, with organic case volume up 2.8%, while product cost inflation of approximately 4.5% provided an additional to the 7.2% increase.
Section summaries
Business
Performance Food Group is a North American food distributor operating three segments—Foodservice, Convenience, and Specialty—serving over 350,000 customer locations.
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Foodservice is the broadline distributing custom-cut meats, frozen foods, and groceries to independent and chain restaurants, schools, and healthcare facilities, with independent customers generating higher .
The Foodservice posted 5.9% organic independent case growth for the year, accelerating from the low-single-digit rates flagged as a concern in fiscal 2025, and the Cheney Brothers acquisition contributed $3.7 billion in .
Operating expenses rose 9.1% to $7.2 billion, matching the growth rate, as a $71.7 million increase in personnel costs in Q3 alone and a $47.6 million rise in annual fuel expense absorbed much of the gross profit gain.
fell 7.1% to $5.0 billion after the company repaid $1.1 billion of 5.500% Senior Notes due 2027, though $1.8 billion remains variable-rate and exposed to movements.
What changed
The prior year's watch item on whether the 11.7% could hold as Cheney Brothers was integrated resolved upward: gross margin reached 11.9% for the full year, supported by a sustained mix shift toward independent customers rather than being pressured by integration costs.
Organic independent case growth in Foodservice, which had slowed to low-single-digit rates in fiscal 2025 and was flagged as a risk of further deceleration, instead accelerated to 5.9% for the full year, with Q1 and Q3 both above 6%.
recovered sharply from the $704.1 million reported in fiscal 2025, when demands from the Cheney Brothers integration weighed on the result, to $1.03 billion, surpassing the prior peak of $767.4 million set in fiscal 2024.
The $500 million authorization announced in fiscal 2025 remained entirely unused through fiscal 2026, as the company prioritized debt reduction, lowering by $382 million over the course of the year.
Legal costs tied to shareholder activism and a clean team agreement with US Foods, which emerged as a new expense in fiscal 2026, totaled $20.1 million across Q1 and Q2 and represent a new recurring cost category not present in prior years.
What to watch
Whether the 11.9% can be sustained or expanded further in fiscal 2027, or if the 9.1% operating expense growth rate—matching growth—continues to prevent from widening.
The trajectory of organic independent case growth in Foodservice after a 5.9% full-year rate: whether it stabilizes near this level or reverts toward the low-single-digit rates seen in fiscal 2025.
Whether the company begins to deploy the $500 million authorization in fiscal 2027, or continues to prioritize debt reduction with $1.8 billion in variable-rate debt still exposed to movements.
The scale and duration of legal and advisory costs tied to the clean team agreement with US Foods, given $10.2 million was incurred in Q2 alone and no resolution has been disclosed.
Convenience is a leading wholesale distributor to convenience stores, drug stores, and small-format retailers, offering cigarettes, snacks, beverages, and fresh products across 38 distribution centers in the U.S. and Canada.
Specialty distributes candy, snacks, and perishable foods to vending distributors, theaters, and retailers, and provides small-parcel pick-and-pack fulfillment using third-party carriers for direct-to-consumer orders.
The company leverages proprietary Performance Brands for higher margins, uses cost-plus or fixed-markup pricing to insulate against commodity cost swings, and hedges approximately 20% of expected diesel fuel gallons.
No single customer accounted for more than 10% of consolidated in fiscal 2026, and the workforce of over 44,000 includes approximately 2,800 unionized associates.
Macroeconomic pressures, intense competition, and reliance on independent customers and Performance Brands create material risks to sales and margins.
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Sustained inflation, fuel cost increases ($57.1M in FY2026), and geopolitical instability may reduce consumer discretionary spending and pressure sales.
The business depends on non-contractual customer purchases and faces pricing pressure from , risking volume and margin loss.
Growth strategies, including acquisitions and Performance Brand expansion, require significant investment and may fail to deliver expected returns or synergies.
A significant sales volume reliance on declining cigarette distribution exposes the company to a long-term consumption downtrend.
Cybersecurity threats, including AI-enhanced attacks, and technology disruptions could compromise sensitive data and disrupt transaction-intensive operations.
Labor shortages, unionization risks, and rising insurance costs ($25.3M increase in FY2026) threaten operational efficiency and profitability.
As of June 27, 2026, the company operated 154 distribution centers across three segments, with 71 owned and 83 leased.
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The Foodservice operates 90 distribution centers, the most of any segment, with 11 offering custom meat cutting and 2 providing seafood processing.
The Convenience runs 38 distribution centers plus 6 redistribution centers and 2 third-party logistics facilities dedicated to a single customer.
The Specialty has 26 distribution centers, the fewest among the three .
Facilities average approximately 200,000 square feet, and Foodservice broadline customers are typically within 200 miles of a center, while national chain customers are within 450 miles.
Corporate and headquarters are located in Richmond, Virginia (Foodservice), Westlake, Texas (Convenience), and Englewood, Colorado (Specialty).
We are a party to various claims, lawsuits and other legal proceedings arising in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits, and claims, management believes that adequate provisi…
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We are a party to various claims, lawsuits and other legal proceedings arising in the ordinary course of business.
While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits, and claims, management believes that adequate provisions have been made or insurance secured for all currently pending proceedings so that the ultimate outcomes are not expected to have a material adverse effect on our financial position. Refer to Note 15. Commitments and Contingencies within the Notes to Consolidated Financial Statements included in Item 8 for disclosure of ongoing litigation.
Net sales rose 7.2% to $67.8B in fiscal 2026, driven by organic case growth, acquisitions, and inflation, while net income increased 5.6% to $359.3M.
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Consolidated grew 7.2% to $67.8B, with total case volume up 5.1% and organic case volume up 2.8%, supported by a 4.5% product cost inflation rate.
increased 9.1% to $8.1B, benefiting from case growth, a favorable mix shift toward independent customers, acquisitions, and vendor rebates.
Operating expenses rose 9.1% to $7.2B, driven by higher personnel costs, $156.4M in added expenses from the Cheney Brothers Acquisition, and a $47.6M increase in fuel expense.
Foodservice grew 8.7% to $36.6B, with total case growth of 6.6% and organic independent case growth of 5.9%; the Cheney Brothers Acquisition contributed $3.7B in net sales.
Convenience rose 16.7% to $475.4M on 5.9% growth, driven by new chain customers and a 4.8% increase in total cases sold.
was $1.4B; the company repaid $1.1B of 5.500% Senior Notes due 2027 and issued $1.1B of Notes due 2034, ending with $103.1M in cash.
Quantitative and Qualitative Disclosures About Market Risk
Primary market risks are interest rate exposure on variable-rate debt and diesel fuel price exposure, managed through swaps, collars, and surcharges.
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Interest rate risk arises from the ABL Facility, with $1.8 billion in variable-rate debt and $150 million fixed via swaps as of June 27, 2026.
A hypothetical 100 increase in SOFR would raise annual by about $18.2 million on the variable-rate portion.
The company hedges interest rate risk with two pay-fixed swaps totaling $150 million notional; a 100 SOFR decrease would cause a $2.0 million loss in .
Fuel price risk is managed through diesel surcharges (on a one-month lag), , and swaps covering approximately 5% of expected gallons over the next twelve months.
A 10% hypothetical diesel price increase would raise annual fuel costs by roughly $43.9 million, partially offset by surcharges and hedging gains.
In fiscal 2026, fuel collars generated a $9.5 million gain; after year-end, the company added a swap covering an additional 15% of expected gallons.
Auditors issued unqualified opinions on internal control and financial statements, with a critical audit matter on vendor rebates.
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Deloitte & Touche LLP issued an on the Company's as of June 27, 2026.
The firm also issued an on the consolidated financial statements for the fiscal years ended June 27, 2026, June 28, 2025, and June 29, 2024.
The audit identified a related to the accounting for volume-based vendor rebates and promotional incentives, which are recorded as a reduction of .
Audit procedures for the critical matter included testing controls, confirming vendor , recalculating incentives, and performing independent estimates and margin analyses.
The report confirms the financial statements present fairly, in all material respects, the company's financial position and results of operations in conformity with U.S. .