(Continuing operations adjusted to exclude the impact of 2004 charge for redemption of convertible notes. 2005 Net EPS increased 70% including 2004 charge)
• 2005 Adjusted net earnings increased 27% to $41.8 million
• 2005 Adjusted net EPS increased 38% to $0.95 per share diluted
• 2005 Operating profit increased 11% to $70.5 million
RICHMOND, VA. (Feb 7, 2006) - Performance Food Group (Nasdaq/NM:PFGC) today announced results for the fourth quarter and year ended December 31, 2005. On June 28, 2005, the company completed the sale of its fresh-cut segment to Chiquita Brands International, Inc. All amounts pertaining to the Company's fresh-cut segment are accounted for as discontinued operations.
“We concluded the 2005 fourth quarter and year with solid earnings growth and a series of significant accomplishments,” commented Bob Sledd, Chairman and CEO. “We successfully completed the sale of our fresh-cut segment, retired substantially all of our debt on the balance sheet, completed a tender offer for the repurchase of 10.1 million shares of our common stock and announced our ongoing repurchase program for up to $100 million of our common stock, approximately $60 million of which had been repurchased as of year end. In our continuing operations, we added approximately 45% of new capacity in our customized segment. We also streamlined our infrastructure in the broadline segment and are standardizing best practices, successfully introducing new technologies to support operational excellence in the areas of sales, warehousing and transportation management.”
“Sales in our customized segment increased 9% during the fourth quarter and full year compared to the same periods in the previous year. The customized segment experienced slight deflation in the fourth quarter and approximately 1% inflation for the full year. Sales gains in the fourth quarter and year were driven by continued growth with existing customers. We completed our customized capacity expansion in 2005, which we believe positions us favorably for potential new business in 2006. Our new capacity also enables us to more efficiently serve our customers by transferring existing business into new facilities and reducing driving miles, offsetting some of the cost associated with the new facilities.”
Mr. Sledd added, “We are pleased with our sales in the broadline segment, both for the quarter and the year. Sales increased approximately 5% in the fourth quarter and approximately 12% for the full year over the same prior year periods. We planned for slower but more profitable growth as we focus strongly on growing our street sales. We lapped a major multi-unit customer added in late 2004 and are exiting certain lower margin multi-unit business in the fourth quarter and first quarter of 2006. Inflation amounted to approximately 2% in the quarter and year. For the full year, street sales increased approximately 5% over the previous year. We began to build momentum in our street sales growth in the fourth quarter and we expect it to continue over the course of 2006. We will also continue to maintain our focus on operational excellence initiatives.”
Consolidated net sales from continuing operations in the fourth quarter increased to $1.4 billion, an increase of approximately 7% over the year earlier period. Inflation for the fourth quarter was approximately 1%. Net earnings from continuing operations for the 2005 fourth quarter increased approximately 235% to $12.9 million, compared to approximately $3.9 million in the prior year quarter. The prior year period includes the impact during the 2004 fourth quarter of a one-time $6.1 million after-tax charge related to the redemption of the Company’s convertible notes. Excluding the impact of the Company’s redemption of the convertible notes, net earnings from continuing operations for the 2005 fourth quarter increased approximately 30% over the prior year’s comparable quarter. Net earnings per share from continuing operations increased approximately 338% to $0.35 per share diluted, compared to $0.08 per share diluted in the prior year quarter, which includes the impact of the Company’s redemption of its convertible notes in 2004 and reflects the execution of the Company’s stock repurchase programs in 2005.
Consolidated net sales from continuing operations for the full year were $5.7 billion, an increase of approximately 11% from the prior year period. Internal growth represented all of the Company’s sales increase for the year. Inflation for 2005 amounted to approximately 1½%. Net earnings from continuing operations for the year increased approximately 57% to $41.8 million compared to $26.6 million in the prior year and net earnings per share from continuing operations increased approximately 70% to $0.95 per share diluted, compared to $0.56 per share diluted in the prior year. Excluding the impact of the Company’s redemption of its convertible notes in 2004, the Company’s net earnings from continuing operations for the 2005 year increased approximately 27% compared to the prior year, with earnings per share increasing approximately 38%.
Net earnings per share from discontinued operations were $0.09 in the quarter and $4.65 for the year, while consolidated net earnings per share including both continuing operations and discontinued operations were $0.44 in the quarter and $5.60 for the year.
Mr. Sledd concluded, “Our balance sheet remains exceptionally strong with a debt to capital ratio of less than 1% at the end of the fourth quarter, excluding $130 million of interests in accounts receivable sold under an accounts receivable purchase facility. For the 2006 year, we expect net earnings per share to be in the range of $1.20 to $1.30 per share diluted, which reflects our anticipated stock compensation expense for the year of approximately $5.0 to $5.5 million, or approximately $0.09 to $0.10 per share, and the completion of our previously announced program to repurchase up to $100 million of our outstanding common stock. Excluding the impact of stock compensation expense of approximately $0.09 to $0.10, our earnings per share projection for the year is approximately $1.29 to $1.40 per share diluted.”