Performance Food Group Co: Form 10-Q for the period ended Sep 27, 2025

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited Consolidated Financial Statements and the Notes thereto included in Item 1. Financial Statements (“Item 1”) of this Form 10-Q and the audited Consolidated Financial Statements and the Notes thereto included in Item 8. Financial Statements and Supplementary Data of the Form 10-K. In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including those described in Item 1A. Risk Factors of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Form 10-Q.

Our Company

We market and distribute food and food-related products to customers across North America from our over 150 locations to over 300,000 customer locations in the “food-away-from-home” industry. We offer our customers a broad assortment of products including our proprietary-branded products, nationally branded products, and products bearing our customers’ brands. Our product assortment ranges from “center-of-the-plate” items (such as beef, pork, poultry, and seafood), frozen foods, and groceries to candy, snacks, and beverages. We also sell disposables, cleaning and kitchen supplies, and related products used by our customers, as well as cigarettes and other nicotine products. In addition to the products we offer to our customers, we provide value-added services by allowing our customers to benefit from our industry knowledge, scale, and expertise in the areas of product selection and procurement, menu development, and operational strategy.

Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Convenience, and Specialty. Our Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “Performance Brands.” Foodservice sells to independent and multi-unit chain restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products and other items to convenience stores across North America. Our Specialty segment distributes candy, snacks, beverages, and other food items nationally to vending, office coffee service, theater, retail, and other channels and utilizes third-party carriers to deliver direct to consumers for our supplier partners and to our customers whose order sizes are too small to be served effectively by our fleet network. We believe our diverse segments provide substantial opportunities for cross-segment collaboration to better serve our customers, including business development, procurement, operational best practices such as the use of new productivity technologies, and supply chain and network optimization, as well as shared corporate functions such as accounting, treasury, tax, legal, information systems, and human resources.

Key Factors Affecting Our Business

Our business, our industry and the economy are influenced by a number of general macroeconomic factors, including, but not limited to, reduced demand for our products related to unfavorable macroeconomic conditions triggered by developments beyond our control, including geopolitical dynamics and other events that trigger economic volatility or negatively affect consumer confidence and discretionary spending. We continue to actively monitor the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies, on all aspects of our business. The Company and our industry may face challenges related to uncertain economic conditions and heightened uncertainty in the financial markets, inflationary pressure, an uncertain political environment, supply chain disruptions, and lower disposable incomes due to macroeconomic conditions. Although rapidly evolving tariff and global trade policies have caused increased uncertainty throughout calendar year 2025, we saw little impact to our results in fiscal 2025 and the first quarter of fiscal 2026. However, the extent and duration of the tariffs and the resulting future impact on general economic conditions and our future financial position, liquidity, and results of operations remains uncertain. Sustained macroeconomic challenges, whether due to tariffs or otherwise, could negatively affect consumer discretionary spending decisions within our customers’ establishments, which could negatively impact our sales and profitability.

We believe that our performance is principally affected by the following key factors:

• Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, changes in the rate of inflation and fuel prices, supply chain disruptions, and labor shortages.
• Food distribution market structure. The food distribution market consists of a wide spectrum of companies ranging from businesses selling a single category of product (e.g., produce) to large national and regional broadline distributors with many distribution centers and thousands of products across all categories. We believe our scale enables us to invest in our Performance Brands, to benefit from economies of scale in purchasing and procurement, and to drive supply chain efficiencies that enhance our customers’ satisfaction and profitability. We believe that the relative growth of larger foodservice distributors will continue to outpace that of smaller, independent players in our industry.
• Our ability to successfully execute our segment strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our segment strategies and to implement our current and future initiatives. The key strategies include focusing on independent sales and Performance Brands, pursuing new customers for our three reportable segments, expansion of geographies, utilizing our infrastructure to gain further operating and purchasing efficiencies, and making strategic acquisitions.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on rounded numbers.

Case Growth

Case volume represents the volume of products sold to customers during a given period of time. Case growth is calculated by dividing the increase (decrease) in the case volumes sold year-over-year by the number of cases sold in the prior year. We define a case as the lowest level of packaged products as received from our suppliers, with one case containing several individually packaged units of the same product. Where individual packaged units are sold separately, case volume is calculated using the case equivalent quantity sold. Case growth provides useful information to management and investors in evaluating sales performance and as an indicator of gross margin performance. In our assessment of sales performance, management utilizes total case growth, as well as organic case growth, which excludes acquisition-related growth until the acquired business has been reflected in our results of operations for at least 12 months. While overall case growth reflects a key component of sales growth, case growth by customer type provides additional context around gross profit performance. Management also reviews case volume growth by customer type, with distinction between Foodservice independent and chain customers, as this provides a measure of gross profit performance due to the pricing strategies and product mix differences associated with each customer type.

Net Sales

Net sales is equal to gross sales, plus excise taxes, minus sales returns; minus sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in case volumes, product inflation that is reflected in the pricing of our products, mix of products sold, and acquisitions.

Gross Profit

Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration), inbound freight, and remittances of excise tax. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.

Adjusted EBITDA

Management measures operating performance based on our Adjusted EBITDA, defined as net income before interest expense, interest income, income and franchise taxes, and depreciation and amortization, further adjusted to exclude certain items that we do not consider part of our core operating results. Such adjustments include certain unusual, non-cash, non-recurring, cost reduction, or other adjustment items permitted in calculating covenant compliance under our ABL Facility and indentures (other than certain pro forma adjustments permitted under our ABL Facility and indentures governing the Notes due 2027, Notes due 2029, and Notes due 2032 relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under our ABL Facility and indentures, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the ABL Facility and indentures). Our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.

Adjusted EBITDA is not a measure of operating income, operating performance, or liquidity presented in accordance with, or required by, GAAP and is subject to important limitations. We use this measure to evaluate the performance of our business on a consistent basis over time and for business planning purposes. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties, including our lenders under the ABL Facility and holders of our Notes due 2027, Notes due 2029, and Notes due 2032, in their evaluation of the operating performance of companies in industries similar to ours.

Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:

• excludes certain tax payments that may represent a reduction in cash available to us;
• does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
• does not reflect changes in, or cash requirements for, our working capital needs; and
• does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.

In calculating Adjusted EBITDA, we add back certain non-cash, non-recurring, and other items as permitted or required by our ABL Facility and indentures. Adjusted EBITDA among other things:

• does not include non-cash stock-based employee compensation expense and certain other non-cash charges;
• does not include acquisition, restructuring, and other costs incurred to realize future cost savings and enhance our operations; and
• does not include items outside of the ordinary course of the Company's operations and not indicative of ongoing performance.

We have included below reconciliations of Adjusted EBITDA to the most directly comparable measure calculated in accordance with GAAP for the periods presented.

Results of Operations and Adjusted EBITDA

The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated:

We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income. The following table reconciles Adjusted EBITDA to net income for the periods presented:

(In millions)

(1) Includes increases in the LIFO reserve of $1.7 million for Foodservice and $22.8 million for Convenience for the first quarter of fiscal 2026 compared to increases of $0.9 million for Foodservice and $11.8 million for Convenience for the first quarter of fiscal 2025.

(2) Includes professional fees and other costs related to in-progress, completed, and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.

(3) Includes amounts related to favorable and unfavorable leases, litigation-related accruals, severance, franchise tax expense, insurance proceeds due to hurricane and other weather related events, foreign currency transaction gains and losses, gains and losses on disposals of other fixed assets, and other adjustments permitted by our ABL Facility. Additionally, for the three months ended September 27, 2025, Other adjustments included $9.9 million of legal and professional fees incurred in connection with shareholder activism and the clean team agreement with US Foods Holding Corp.

Consolidated Results of Operations

Three months ended September 27, 2025 compared to the three months ended September 28, 2024

Net Sales

Net sales growth is primarily a function of acquisitions, case growth, pricing, including product inflation/deflation, and a changing mix of customers, channels, and product categories sold. Net sales increased $1,660.4 million, or 10.8%, for the first three months of fiscal 2026 compared to the first three months of fiscal 2025.

The increase in net sales was driven by recent acquisitions, including the Cheney Brothers Acquisition, an increase in cases sold, including a favorable shift in mix of cases sold, and an increase in selling price per case as a result of inflation. Total case volume increased 9.4% during the first three months of fiscal 2026 compared to the same period of fiscal 2025. Total organic case volume increased 2.8% in the first three months of fiscal 2026 compared to the same period of fiscal 2025. Total organic case volume benefited from a 6.3% increase in organic independent cases, including growth in Performance Brands cases, and growth in cases sold to Foodservice's chain business. The overall rate of product cost inflation was approximately 4.4% for the first three months of fiscal 2026.

Gross Profit

Gross profit increased $252.4 million, or 14.3%, for the first three months of fiscal 2026 compared to the first three months of fiscal 2025. The increase in gross profit was primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, cost of goods sold optimization through procurement efficiencies, as well as a favorable shift in the mix of cases sold, including growth in the independent channel. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers.

Operating Expenses

Operating expenses increased $243.0 million, or 15.7%, for the first three months of fiscal 2026 compared to the first three months of fiscal 2025. The increase in operating expenses for the first three months of fiscal 2026 was primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, a $65.8 million increase in personnel expenses primarily related to wages and salaries, commissions, and benefits, a $15.7 million increase in depreciation expense mainly driven by an increase in transportation equipment under finance leases, and $9.9 million in legal and professional fees incurred in connection with shareholder activism and the clean team agreement with US Foods Holding Corp. in the first three months of fiscal 2026 as compared to the prior year period.

Net Income

Net income decreased $14.4 million, or 13.3%, for the first three months of fiscal 2026 compared to the first three months of fiscal 2025. The decrease in net income was primarily attributable to the increase in operating expenses discussed above and an increase in interest expense, partially offset by the increase in gross profit discussed above and a decrease in income tax expense. The increase in interest expense was primarily the result of an increase in the average borrowings, including finance lease obligations, during the first three months fiscal 2026 compared to the prior year period.

The Company reported income tax expense of $27.9 million for the first three months of fiscal 2026 compared to income tax expense of $38.9 million for the first three months of fiscal 2025. Our effective tax rate for the first three months of fiscal 2026 was 23.0% compared to 26.5% for the first three months of fiscal 2025. The effective tax rate differed from the prior year period primarily due to an increase in deductible discrete items related to stock-based compensation and an increase in tax credits net of valuation allowance established, partially offset by an increase in foreign taxes as a percentage of income.

Segment Results

In the third quarter of fiscal 2025, the Company updated its operating segments to reflect the manner in which the business is managed. The Company continues to have three reportable segments: Foodservice, Convenience, and Specialty (formerly Vistar). Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Segment Adjusted EBITDA, which is the Company’s GAAP measure of segment profit. Segment Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, and amortization and excludes certain items that the Company does not consider part of its segments’ core operating results, including stock-based compensation expense, changes in the LIFO reserve, acquisition, integration and reorganization expenses, and gains and losses related to fuel derivatives. The presentation and amounts for the fiscal quarter ended September 28, 2024 have been recast to reflect these segment changes. See Note 13. Segment Information of the consolidated financial statements in this Form 10-Q.

Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size.

The following tables set forth net sales and Segment Adjusted EBITDA by reportable segment and the reconciling items for Corporate & All Other and eliminations for the periods indicated (dollars in millions):

Net Sales

Segment Adjusted EBITDA

Segment Results—Foodservice

Three months ended September 27, 2025, compared to the three months ended September 28, 2024

Net Sales

Net sales for Foodservice increased $1,444.6 million, or 18.8%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. This increase in net sales was driven by the Cheney Brothers Acquisition, case volume growth, including growth in our independent and chain business, and an increase in selling price per case as a result of inflation. The Cheney Brothers Acquisition contributed $852.5 million of net sales in the first three months of fiscal 2026. Total case growth for Foodservice was 15.6% and organic case growth was 5.1% for the first three months of fiscal 2025, compared to the prior year period. Total independent case growth was 16.6% for the first three months of fiscal 2026 compared to the prior year period driven by the Cheney

Brothers Acquisition. Securing new and expanding business with independent customers resulted in organic independent case growth of 6.3% in the first three months of fiscal 2026, compared to the prior year period. For the quarter, independent sales as a percentage of total Foodservice segment sales were 41.6%.

Segment Adjusted EBITDA

Adjusted EBITDA for Foodservice increased $49.8 million, or 18.1%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. This increase was the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $229.8 million, or 20.9%, in the first three months of fiscal 2026, compared to the prior year period. The increase in gross profit was driven by the Cheney Brothers Acquisition, a favorable shift in the mix of cases sold, and growth in cases sold, including more Performance Brands products sold to independent customers. The Cheney Brothers Acquisition contributed $142.8 million to Foodservice's gross profit impacting Adjusted EBITDA in the first three months of fiscal 2026.

Operating expenses impacting Foodservice's Adjusted EBITDA increased $181.2 million, or 21.9%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. Operating expenses increased as a result of the Cheney Brothers Acquisition, a $47.8 million increase in personnel expenses primarily related to salaries and wages, commissions, and benefits, and a $6.8 million increase in insurance expense primarily related to workers' compensation and vehicle liability compared to the prior year period. Cheney Brothers operating expenses impacting Foodservice's Adjusted EBITDA were $123.5 million in the first three months of fiscal 2026.

Depreciation of fixed assets and amortization of intangible assets recorded in this segment increased from $85.2 million in the first three months of fiscal 2025 to $130.3 million in the first three months of fiscal 2026 as a result of an increase in transportation equipment under finance leases and the Cheney Brothers Acquisition. Total depreciation and amortization related to Cheney Brothers was $29.7 million in the first three months of fiscal 2026.

Segment Results—Convenience

Three months ended September 27, 2025, compared to the three months ended September 28, 2024

Net Sales

Net sales for Convenience increased $223.2 million, or 3.5%, from the first three months of fiscal 2025 to the first three months of fiscal 2026 driven primarily by a recent acquisition, the addition of a new chain customer, and an increase in selling price per case as a result of continued inflation.

Segment Adjusted EBITDA

Adjusted EBITDA for Convenience increased $15.7 million, or 14.9%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience's Adjusted EBITDA increased $22.6 million, or 5.3%, for the first three months of fiscal 2026 compared to the prior year period primarily due to inventory holding gains, higher fees earned from manufacturers for distribution and related services, and a favorable shift in mix of cases sold.

Operating expenses impacting Convenience's Adjusted EBITDA increased $7.6 million, or 2.4%, for the first three months of fiscal 2026 compared to the prior year period primarily as a result of a $2.5 million increase related to a recent acquisition, a $2.3 million increase in repairs and maintenance expense, and a $1.5 million increase in outbound freight expense.

Depreciation of fixed assets and amortization of intangible assets recorded in this segment increased from $38.6 million in the first three months of fiscal 2025 to $39.9 million in the first three months of fiscal 2026 mainly driven by an increase in transportation equipment under finance leases.

Segment Results—Specialty

Three months ended September 27, 2025, compared to the three months ended September 28, 2024

Net Sales

Net sales for Specialty decreased $9.5 million, or 0.7%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. Specialty cases sold decreased 2.6%, as case growth in the vending, office coffee service, campus, and retail channels was fully offset by declines in theater for the first three months of fiscal 2026 compared to the prior year period.

Segment Adjusted EBITDA

Adjusted EBITDA for Specialty increased $10.8 million, or 13.0%, from the first three months of fiscal 2025 to the first three months of fiscal 2026. The increase was the result of an increase in gross profit along with a decrease in operating expenses. Gross profit increased $7.0 million, or 3.1%, for the first three months of fiscal 2026 compared to the prior year period primarily driven by pricing improvements from procurement efficiencies, inventory holding gains, and a favorable shift in mix of cases sold.

Operating expenses impacting Specialty's Adjusted EBITDA decreased $3.7 million, or 2.5%, for the first three months of fiscal 2026 primarily due to a $2.1 million decrease in variable operational expenses as a result of a shift in channel mix as well as a $1.0 million decrease in bad debt expense compared to the prior year period.

Depreciation of fixed assets and amortization of intangible assets recorded in this segment decreased from $14.4 million in the first three months of fiscal 2025 to $13.0 million in the first three months of fiscal 2026.

Liquidity and Capital Resources

We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our ABL Facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our ABL Facility and occasionally with the net proceeds from the issuances of senior notes and/or equity. Our borrowing levels are subject to seasonal fluctuations, as well as procurement and acquisition activities. We borrow under our ABL Facility or pay it down regularly based on our cash flows from operating and investing activities. Our practice is to minimize interest expense while maintaining reasonable liquidity.

As market conditions warrant, we may from time to time seek to repurchase our securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such repurchases may be funded by incurring new debt, including additional borrowings under our ABL Facility. In addition, depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness, make investments or acquisitions or for other purposes. Any new debt may be secured debt.

We are exposed to interest rate risk related to changes in interest rates for borrowings under our ABL Facility. To add stability to interest expense and manage our exposure to interest rate movements, we enter into interest rate swap agreements. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments. As of September 27, 2025, $150.0 million of the outstanding ABL Facility balance is hedged under interest rate swaps which results in 66% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.

On May 27, 2025, the Board of Directors authorized a new share repurchase program for up to $500 million of the Company’s outstanding common stock. This authorization replaces the previously authorized $300 million share repurchase program. The new share repurchase program has an expiration date of May 27, 2029. Repurchases of the Company’s outstanding common stock will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, through privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 trading plans. The share repurchase program may be amended, suspended or discontinued at any time at the Board’s discretion, and does not commit the Company to repurchase any specified number of shares of its common stock. The actual timing, number and value of the shares to be purchased under the program will be determined by the Company at its discretion and will depend on a number of factors, including the performance of the Company’s stock price, general market and other conditions, applicable legal requirements and compliance with the terms of the Company’s outstanding indebtedness. As of September 27, 2025, $500 million remained available for share repurchases.

Our contractual cash requirements over the next 12 months and beyond relate to our long-term debt and associated interest payments, operating and finance leases, and purchase obligations. For information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, see Note 6. Debt and Note 7. Leases, respectively, of the consolidated financial statements in this Form 10-Q. As of September 27, 2025, the Company had total purchase obligations of $324.6 million, which includes agreements for purchases related to capital projects and services in the normal course of business, for which all significant terms have been confirmed, as well as a minimum amount due for various Company meetings and conferences. Purchase obligations also include amounts committed to various capital projects in process or scheduled to be completed in the coming fiscal years. As of September 27, 2025, the Company had commitments of $198.3 million for capital projects related to warehouse expansion and improvements and warehouse equipment. The Company anticipates using cash flows from operations or borrowings under the ABL Facility to fulfill these commitments. Amounts due under these agreements were not included in the Company’s consolidated balance sheet as of September 27, 2025.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next 12 months and to maintain sufficient liquidity for normal operating purposes and to fund capital expenditures.

As of September 27, 2025, our cash balance totaled $46.4 million, including restricted cash of $8.3 million, as compared to a cash balance totaling $86.7 million, including restricted cash of $8.2 million, as of June 28, 2025.

Operating Activities

Three months ended September 27, 2025 compared to the three months ended September 28, 2024

During the first three months of fiscal 2026 and fiscal 2025, our operating activities used cash flow of $145.2 million and provided cash flow of $53.5 million, respectively. The decrease in cash flow provided by operating activities in the first three months of fiscal 2026 compared to the first three months of fiscal 2025 was largely driven by advanced purchases of cigarette and candy inventory to take advantage of preferred pricing.

Investing Activities

Three months ended September 27, 2025 compared to the three months ended September 28, 2024

Cash used in investing activities totaled $78.0 million in the first three months of fiscal 2026 compared to $669.8 million in the first three months of fiscal 2025. These investments consisted of no cash paid for acquisitions in the first three months of fiscal 2026 compared to $574.3 million for an acquisition in the first three months of fiscal 2025, along with capital purchases of property, plant, and equipment of $78.9 million and $96.5 million for the first three months of fiscal 2026 and the first three months of fiscal 2025, respectively. For the first three months of fiscal 2026, purchases of property, plant, and equipment primarily consisted of outlays for warehouse expansion and improvements, warehouse equipment, information technology, and transportation equipment. The following table presents the capital purchases of property, plant, and equipment by segment.

(In millions)

Financing Activities

Three months ended September 27, 2025 compared to the three months ended September 28, 2024

During the first three months of fiscal 2026, our financing activities provided cash flow of $182.9 million, which consisted primarily of $246.3 million in net borrowings under our ABL Facility.

During the first three months of fiscal 2025, our financing activities provided cash flow of $638.9 million, which consisted primarily of $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $263.7 million in net payments under our ABL Facility.

The Company's financing arrangements as of September 27, 2025 are described in Note 6. Debt of the consolidated financial statements within this Form 10-Q. As of September 27, 2025, the Company was in compliance with all of the covenants under the ABL Facility and the indentures governing the Notes due 2027, the Notes due 2029, and the Notes due 2032.

Total Assets by Segment

Total assets by segment discussed below exclude intercompany receivables between segments and amounts as of September 28, 2024 have been recast to reflect the changes to our reportable segments that occurred in the third quarter of fiscal 2025.

Total assets for Foodservice increased $3,417.3 million from $7,940.8 million as of September 28, 2024 to $11,358.1 million as of September 27, 2025, primarily due to the Cheney Brothers Acquisition. Total assets for Foodservice increased $87.0 million from $11,271.1 million as of June 28, 2025 to $11,358.1 million as of September 27, 2025 due to an increase in inventory, partially offset by a decrease in intangible assets due to normal amortization.

Total assets for Convenience increased $453.5 million from $4,265.1 million as of September 28, 2024 to $4,718.6 million as of September 27, 2025 and increased $441.8 million from $4,276.8 million as of June 28, 2025 to $4,718.6 million as of September 27, 2025. During these time periods, the segment increased its inventory due to advanced purchases to take advantage of preferred pricing and increased its property, plant and equipment through additional transportation equipment and a warehouse under finance leases. Additionally, the Convenience segment's accounts receivable balance increased compared to the prior year quarter. These increases for both periods were partially offset by decreases in prepaid expenses and other current assets, intangible assets due to normal amortization, and cash.

Total assets for Specialty decreased $30.4 million from $1,540.3 million as of September 28, 2024 to $1,509.9 million as of September 27, 2025, primarily due to decreases in inventory due to sales in the normal course of business and intangible assets due to normal amortization, partially offset by an increase in accounts receivable. Total assets for Specialty decreased $77.0 million from $1,586.9 million as of June 28, 2025 to $1,509.9 million as of September 27, 2025. During this time period, this segment decreased its inventory due to sales in the normal course of business, as well as decreases in property, plant and equipment, right of use assets, and intangible assets due to normal depreciation and amortization.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to portraying our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, inventory valuation, insurance programs, income taxes, vendor rebates and promotional incentives, leases, and goodwill and other intangible assets, which are described in the Form 10-K. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form 10-K.

Our market risks consist of interest rate risk and fuel price risk. There have been no material changes to our market risks since June 28, 2025. For further discussion on our exposure to market risk, see Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the Form 10-K.

Evaluation of Disclosure Controls and Procedures

Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Form 10-Q, were effective to accomplish their objectives at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to our principal risks that we believe are material to our business, results of operations, and financial condition from the risk factors previously disclosed in the Form 10-K.