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

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George Holm: Yes. Well, where we still have fairly high inflation is in Vistar still in Core-Mark, not as much but some inflation. We don’t concern ourselves with deflation there because they typically raise their price in the same pattern all the time and they fight hard to get their prices increases in. And you just don’t see them back off. So I think that’s stable. They may skip some price increases or something like that certainly could happen but deflation, no. In our Foodservice business, particularly our independent, that’s where we really watch at the closest. And right now, we’re seeing our case growth and our pricing almost converging. So — and that’s real recent. So that doesn’t mean that there can’t be something within our mix that we’ll see as we do our inflation numbers at the end of the quarter.

But I think that inflation is right now appears to be headed in our independent Foodservice business for very low single digit. And as far as inflation, I think, we’re set up to handle — I mean deflation, I think we’re set up to handle that well. We didn’t handle it so well when it happened back in the Great Recession but we’ve got some good systems in place and a more experienced sales force and we feel fine with it.

Operator: We’ll take our next question from Kelly Bania with BMO Capital.

Kelly Bania: George, I wanted to go back to something that you said at ICR about — the comment about renegotiating terms with most customers, I think, almost every customer and I believe that’s on the contract side. And that’s pretty consistent with what we hear across the board. But I was just curious if you can help us understand the changes in the way that the contracts are structured and negotiated today, versus maybe a few years ago and how that may impact the future of the — how the business performs in the future? And I guess, I’m particularly just curious, if there’s any changes or ways that we should be modeling as we transition here from this higher inflationary environment to a possibly lower inflationary environment.

George Holm: I don’t see, at least within our world that there’s really any changes in how they’re structured. We just needed to get most of that as a fee business and we needed to get a higher fee because of our expenses and we try to do a good job of making sure that we are recouping what we felt were kind of those long-term expenses. Obviously, the operating expenses that we had through the severe part of COVID is not something that you want to pass on to a customer, you’re just going to cause yourself problems down the road. But we were fairly successful, I would say, very successful. We have a good customer base and where we weren’t successful, we lost some business. And that’s just the way it goes. But no, I just don’t see a big change moving forward. And if we go through a deflationary period of time, those customers will benefit from lower costs and they’ll probably in the end, be good for our business, good for our industry.

Kelly Bania: Okay, that’s helpful. And maybe just a follow-up on fill rates. Very helpful color there. I think you gave us for Foodservice in Vistar. Just curious if you have a sense of how you think those compare both on the inbound and outbound metrics to the rest of the industry and your competition?

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