Performance Food Group Company (NYSE:PFGC) Q2 2023 Earnings Call Transcript

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But there, we do not get involved in the accounts receivable on that product. We’re fulfilling those orders, most often for the manufacturer or the online site. So all we’re billing is our fee. So there is extremely low case cost average and almost all of it is margin. So it has extremely high margins. And then inventory gains can change quarter-to-quarter based on what kind of job we did of anticipating increases. And so there’s a lot of volatility in there and there’s a lot of volatility in the EBITDA margins. But when it comes down to how we do as far as the percentage of the gross profit dollars that we put to the bottom line, is pretty stable. And John, I don’t see that changing. Actually, I would like to see our fulfillment business become a much bigger part of our business.

Operator: And we’ll take our next question from Alex Slagle with Jefferies.

Alex Slagle: Just following up on the previous questions, that the restaurant industry traffic seemingly still subdued. I wonder, if you could talk about your incremental efforts to drive an acceleration in the new customer wins and independent business and what you’re doing to drive that? It does sound like ramping the sales force a little bit more and — maybe any comments on how you’re incentivizing your sales force or other levers to drive further acceleration in that?

George Holm: Yes. We really — we don’t offer up promotional activities, that are national or things that we go to our people with. It’s really all around growing our sales force. And we’ve always found that, if we’re doing the right training and we’re hiring the right people, that we’re going to grow our business faster than we grow our sales force. And it’s pretty simple but that’s how we look at it. And I think that we’ve been able to hire some good people of late. We got some intense training going on. A lot of them have already been cut loose and we’re ready to let them all cut loose. I guess, it’s just no different than that.

Alex Slagle: Got it. And then just on productivity and your efforts around matching your staffing levels to the volumes which have been seemingly more volatile and hard to predict. Just kind of seeing — do you see any opportunity for improved tools or processes or anything you’re working on to help drive better productivity here and hopefully, the volume trends do stabilize some more into February and March but any thoughts there?

George Holm: Yes. Patrick is going to take that. Because he’s much closer to what we’re doing there.

Patrick Hatcher: Yes, Alex, thanks for the question. So first of all, when we think about labor, we’ve been really pleased. It’s been slow but it is improving. And when I think about what’s going on in the field and our leadership in the field and how they’re working, every day on the hiring and retention and training of our warehouse and drivers. Again, we’re really pleased with the progress they’re making. It’s slow and it’s slow because the one area that we want to continue to see more improvement, is on retention. But because of their success so far, we really have seen the temp labor come out of the system for the most part. And we’re also seeing overtime reduced. So, as George mentioned earlier in his comments, we really think that why it may not match it perfectly but over the next several quarters, this is going to be — it has been a headwind but it will become a tailwind, it will help offset some of the comping that we’re going to have to do with these inventory gains.

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