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PFG Reports 6% Increase in Street Sales in Quarter



Expressing his pleasure with the statistics, Bob Sledd, chairman and ceo, remarked: "We are aggressively implementing our strategy to grow higher margin street business while maintaining our focus on improving productivity by leveraging new technologies and standardization programs and implementing our procurement initiatives. Our efforts yielded solid progress in the growth of street business. Overall sales declined slightly, reflecting our previously announced exit of certain lower margin multi-unit business and a slowing of sales in certain industry segments. In addition to our focus on growing street business, we are actively pursuing attractive restaurant chain opportunities. In the prior year quarter, we recognized a significant gain on the sale of our fresh-cut segment, which enabled us to return over $400 million of proceeds to our shareholders."

PFG reported that consolidated net sales from continuing operations in the second quarter were approximately $1.4 billion, a decrease of approximately 1%, compared with the prior year quarter. Inflation for the quarter was nominal, the distributorship said. Net earnings from continuing operations for the second quarter amounted to approximately $12.2 million, which was unchanged compared with the same quarter in the previous year.

Net earnings include the impact of stock compensation expense of approximately $900,000 after tax for the quarter, or approximately three cents per share diluted. Net earnings per share from continuing operations increased approximately 35% to 35 cents per share diluted, compared to 26 cents per share diluted in the prior year quarter, on approximately 27% fewer shares outstanding. Excluding stock compensation expense, net earnings per share from continuing operations in the second quarter amounted to approximately 38 cents per share diluted.

PFG said consolidated net sales from continuing operations for the first six months of 2006 were approximately $2.9 billion, an increase of approximately 1% from the prior year period. Inflation was nominal for the same period. Net earnings from continuing operations in the period increased approximately 5% to $17.8 million compared to approximately $16.9 million in the prior year period. Net earnings include the impact of stock compensation expense of approximately $1.4 million after tax for the period, or approximately four cents per share diluted. Net earnings per share from continuing operations increased approximately 42% to $0.51 per share diluted, compared to 36 cents per share diluted in the same period in the previous year, on approximately 27% fewer shares outstanding. Excluding stock compensation expense, net earnings per share from continuing operations in the period amounted to approximately $0.55 per share diluted.

Sledd noted that the broadline segment continued to grow higher margin street business, however, sales in broadline decreased by approximately 4% in the second quarter versus the prior year quarter and were impacted by our exit of lower margin multi-unit business during late 2005 and the first quarter of 2006.

"Our higher margin street sales increased approximately 6% over the prior year quarter. Inflation amounted to approximately 1% in the quarter. Results in the broadline segment were also impacted by the investment in our expanded street sales force and by higher fuel costs, offset in part by favorable trends in insurance costs. We are pleased with the continued positive change in our mix of higher margin street sales in broadline," he said.

Looking at the balance sheet, Sledd said it "remains exceptionally strong with a debt to capital ratio of less than 1% at the end of the second quarter, excluding $130 million of interests in accounts receivable sold under an accounts receivable purchase facility. Free cash flow was approximately $7.4 million during the second quarter, compared to a use of free cash of approximately $500,000 in the prior year quarter."

He said based on current business trends, the company expect net earnings per share to be in the range of 32-36 cents per share diluted for the third quarter of 2006. For the 2006 year, Sledd expects net earnings per share to be in the range of $1.22 to $1.30 per share diluted, which, he said, reflects the company's anticipated stock compensation expense for the year of approximately $5.0 to $5.5 million, or approximately 9-10 cents per share.

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