Richmond, Virginia, Jan. 10, 2008 - Performance Food Group Company announced today its forecast for the 2008 fiscal year.
“PFG is moving forward and our business is very well positioned for sustainable growth and profitability,” commented Steven L. Spinner, president and chief executive officer. “We anticipate solid earnings growth in 2008, especially given current economic conditions. We remain focused on driving efficiencies through our technology investments, aggressively managing our costs, and growing our higher margin street sales.
We are committed to maintaining a distribution network that supports the growth objectives ofthe Company. In evaluating our infrastructure, we have decided to discontinue operations at the Company’s Magee, Mississippi broadline location in March 2008. This facility was part of an acquisition that the Company made in 2002, and the location does not fit our long-term growth model with respect to demographics and scale. We anticipate one-time, pre-tax costs associated with this closing of $8 to $10 million. While we are sensitive to the impact that this decision has on our associates, customers, and the local community, we believe that this is the right decision for PFG’s future growth.
Based on our current view of the business, we expect adjusted net earnings per share diluted to be in the range of $1.53 to $1.65 for the full year, excluding the one-time charges, and net earnings per share diluted to be $1.39 to $1.49.
On a consolidated basis, internal sales growth is expected to be in the mid to high single digits for 2008. Sales growth will be positively impacted by a 53rd week and negatively impacted by the exit of certain business related to the closing of our Magee broadline facility. Our growth should again exceed the overall industry growth, which is expected to remain moderate in the coming year. Consolidated operating margins (adjusted for the facility closing) are expected to improve 5 to 15 basis points for the year, compared to anticipated 2007 results, and are expected to be relatively consistent with the prior year (including the impact of the one-time charges.)
Internal sales growth in the broadline segment is expected to be in the mid single digits for the full year. We continue to explore opportunities for broadline acquisitions and to leverage our scale. Broadline operating margins (adjusted for the closing) are expected to improve 15 to 25 basis points for the year and to remain relatively unchanged (including the impact of the one-time charges) compared to 2007.
In the customized segment, sales growth is expected to be in the upper single to low double digits for the year. This reflects the impact of the previously announced business that was added in late 2007, and a new customer that will roll-out in early 2008. Late in the year, we anticipate beginning construction on a ninth customized facility to be located in the western United States. For 2008, we expect to maintain approximately the same level of customized operating margins that we experienced in the 2007 year.
Corporate costs are expected to decrease slightly as a percentage of sales, excluding stock compensation expense, reflecting continued leverage of our corporate infrastructure. Pre-tax stock compensation expense is expected to be approximately $8.5 to $9.5 million for the 2008 year, reflecting an incremental increase of approximately $2 to $3 million, compared to the anticipated expense for 2007. For 2008, depreciation is expected to be approximately $28 to $32 million, amortization approximately $3 to $4 million, and capital expenditures approximately $30 to $40 million for the year, as we anticipate a more moderate level of capital expenditures.”
Steve Spinner concluded, “We are pleased with the consistent progress we’ve made growing PFG in this challenging economic climate—further evidence that our strategies are working. We continue to invest in technology and the centralization of financial support functions. The Company’s balance sheet remains very strong and will allow us to take advantage of acquisitions and other opportunities. We believe that our initiatives position us for sustained growth in sales and earnings over the next several years.”
Performance Food Group markets and distributes more than 68,000 national and private label food and food-related products to approximately 41,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions.