"We started the year on a positive note, achieving steady growth and solid earnings improvement," noted Bob Sledd, chairman and ceo. "We continue to leverage our new capacity and technology investments and invest in our sales force as we maintain our focus on growing higher margin business."
Sledd noted that sales in the broadline division increased 1% in the same period as street sales expanded by 6%.
PFG reported that consolidated net sales from continuing operations in the first quarter ended April 1 increased to approximately $1.5 billion, an increase of 3% over the year earlier period. Inflation for the first quarter was nominal. Net earnings from continuing operations for the first quarter increased approximately 21% to approximately $5.7 million, compared to approximately $4.7 million in the prior year quarter, the distributorship said.
Net earnings per share from continuing operations increased 60% to16 cents per share diluted, compared to10 cents per share diluted in the prior year quarter, partially as a result of the completion of the company's previously announced stock repurchase program in the first quarter. Excluding stock compensation expense, net earnings per share from continuing operations in the first quarter amounted to approximately 18 cents per share diluted.
Sales in PFG's customized segment increased approximately 7% during the first quarter compared to the same period in the previous year. The customized segment experienced deflation of approximately 2% in the first quarter, the corporation state, while sales gains in the quarter were driven by solid growth with existing customers. Sledd indicated that customized results were positively impacted in the quarter by improved operating efficiencies as PFG lapped the opening of the Indiana distribution center in the prior year quarter.
In the broadline segment, Sledd said PFG focused its efforts on growing higher margin business and completed its planned exit of certain lower margin multi-unit businesses in the first quarter. Sales in broadline increased 1% in the first quarter over the same prior year period and were impacted by the company's exit of multi-unit business in the quarter, Sledd explained.
Street sales increased approximately 6% over the prior year quarter. Inflation amounted to approximately 2% in the quarter. Sledd said the company maintained its positive momentum in street sales growth and will continue to focus sales efforts on driving higher margin business throughout the year. However, he said, broadline results were impacted by the transition of multi-unit business and investment in the expansion of the sales force.
Sledd concluded, "Our balance sheet remains exceptionally strong with a debt to capital ratio of less than 1% at the end of the first quarter, excluding $130 million of interests in accounts receivable sold under an accounts receivable purchase facility. Free cash flow was approximately $1.4 million during the first quarter, compared to a use of free cash of approximately $7.2 million in the prior year quarter. Based on current business trends, we expect net earnings per share to be in the range of 32-36 cents per share diluted for the second quarter of 2006. For the 2006 year, we expect net earnings per share to be in the range of $1.22 to $1.30 per share diluted, which reflects our anticipated stock compensation expense for the year of approximately $5-5.5 million, or approximately 9-10 cents per share. Excluding the impact of stock compensation expense, our net earnings per share projection for the year is approximately $1.31-$1.40 per share diluted."
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