VANCOUVER, BC, May 6, 2022
/CNW/ - Premium Brands Holdings Corporation (TSX: PBH), a leading
producer, marketer and distributor of branded specialty food
products, announced today its results for the first quarter of
2022.
FIRST QUARTER HIGHLIGHTS
- Record first quarter revenue of $1.25
billion representing a 23.9%, or $241.4 million, increase as compared to the first
quarter of 2021
- Record first quarter adjusted EBITDA1 of
$95.8 million representing a 16.1%,
or $13.3 million, increase as
compared to the first quarter of 2021
- Record first quarter adjusted EPS1 of $0.88 per share representing a 22.2%, or
$0.16 per share increase as compared
to the first quarter of 2021
- Clearwater Seafoods, which is accounted for using the equity
method, continued to generate significantly improved results with
its sales and adjusted EBITDA for the quarter increasing by 28.9%
and 25.9%, respectively
- The Company declared a dividend $0.70 per share for the second quarter of
2022
- Sales and adjusted EBITDA guidance for 2022 was reaffirmed
1
|
The Company reports
its financial results in accordance with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board. Adjusted EBITDA and adjusted EPS
are non-IFRS financial measures. Reconciliations and
explanations for all non-IFRS measures are included in the Non-IFRS
Financial Measures section of this press release.
|
CONFERENCE CALL
The Company will hold a conference call to discuss its first
quarter 2022 results today at 10:30
a.m. PDT (1:30 p.m.
EDT). An investor presentation that will be referenced
on the conference call is available here or on the Company's
website at www.premiumbrandsholdings.com.
Access to the call may be obtained by calling the operator at
(833) 300-9218 / (647) 689-4551 (Conference ID: 3093083) up to
ten minutes prior to the scheduled start time. For those who are
unable to participate, a recording of the conference call will be
available through to 8:59 p.m. PST on
May 20, 2022 at (855) 859-2056 /
(404) 537-3406 (passcode: 3093083). Alternatively, a
recording of the conference call will be available at the Company's
website at www.premiumbrandsholdings.com.
SUMMARY FINANCIAL INFORMATION
(In millions of dollars except per share amounts and
ratios)
|
|
|
|
|
13
weeks
ended
Mar
26,
2022
|
13
weeks
ended
Mar
27,
2021
|
Revenue
|
|
|
|
|
1,251.2
|
1,009.8
|
Adjusted
EBITDA1
|
|
|
|
|
95.8
|
82.5
|
Earnings
|
|
|
|
|
22.4
|
19.8
|
EPS
|
|
|
|
|
0.50
|
0.45
|
Adjusted
earnings1
|
|
|
|
|
39.4
|
31.3
|
Adjusted
EPS1
|
|
|
|
|
0.88
|
0.72
|
|
|
|
Trailing Four
Quarters Ended
|
|
|
|
Mar
26,
2022
|
Mar
27,
2021
|
Free cash
flow1
|
|
|
269.8
|
203.0
|
Declared
dividends
|
|
|
115.2
|
98.0
|
Declared dividend per
share
|
|
|
2.61
|
2.37
|
Payout
ratio1
|
|
|
42.7%
|
48.3%
|
1
|
Reconciliations for
all non-IFRS measures are included in the Non-IFRS Financial
Measures section of this press release.
|
"Despite the current unusually volatile environment, we continue
to generate record top and bottom-line results. This is a
testament to both the exceptional people that make-up our company
as well as the resiliency and strength of our decentralized,
entrepreneurial-focused business model," said Mr. George Paleologou, President and CEO.
"Record inflationary cost pressures, the Omicron outbreak that
resulted in significant labor disruptions at the start of the year,
ongoing global supply chain issues and the general uncertainty
caused by recent geopolitical events have created the most
challenging and unpredictable business environment we have had to
face since the founding of Premium Brands in the early 2000s.
Despite this, we continue to make significant progress towards our
goal of becoming North America's
leading specialty food business, in large part by remaining focused
on long term outcomes, leveraging the growing size and diversity of
our ecosystem and empowering our talented management teams.
Furthermore, we continue to see exceptional capital allocation
opportunities, both in terms of acquisitions as well as organic
growth initiatives, as the consumer trends we have been investing
in continue to strengthen," said Mr. Paleologou. "Looking
forward, I have no doubt that we will emerge from these troubling
times a bigger, more profitable and diversified company with larger
moats around our individual businesses," added Mr. Paleologou.
"While we continue to generate record year over year results,
the challenges of the current environment are impacting our growth
rates and margins. These impacts are, however, transitory;
and as we return to a more normal operating environment,
particularly with respect to inflation and global supply channels,
we expect to see an even stronger acceleration in our
performance. Correspondingly, we remain on track to exceed
our five-year targets of $6 billion
in sales and $600 million in EBITDA
by 2023.
SECOND QUARTER 2022
DIVIDEND
The Company also announced that its Board of Directors approved
a cash dividend of $0.70 per share
for the second quarter of 2022, which will be payable on
July 15, 2022 to shareholders of
record at the close of business on June 30,
2022.
Unless indicated otherwise in writing at or before the time the
dividend is paid, each dividend paid by the Company in 2022 or a
subsequent year is an eligible dividend for the purposes of the
Enhanced Dividend Tax Credit System.
ABOUT PREMIUM BRANDS
Premium Brands Holdings Corporation owns a broad range of
leading specialty food manufacturing and differentiated food
distribution businesses with operations across Canada and the United States.
www.premiumbrandsholdings.com
RESULTS OF OPERATIONS
The Company reports on two reportable segments, Specialty Foods
and Premium Food Distribution, as well as non-segmented investment
income and corporate costs (Corporate). The Specialty Foods
segment consists of the Company's specialty food manufacturing
businesses while the Premium Food Distribution segment consists of
the Company's differentiated distribution and wholesale
businesses. Investment income includes interest and
management fees generated from the Company's businesses that are
accounted for using the equity method.
Revenue
(in millions of
dollars except percentages)
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
%
(1)
|
13 weeks
ended
Mar 27,
2021
|
%
(1)
|
Revenue by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
|
|
|
|
789.2
|
63.1%
|
655.9
|
65.0%
|
Premium Food
Distribution
|
|
|
|
|
462.0
|
36.9%
|
353.9
|
35.0%
|
Consolidated
|
|
|
|
|
1,251.2
|
100.0%
|
1,009.8
|
100.0%
|
(1)
Expressed as a percentage of consolidated
revenue.
|
Specialty Foods' (SF) revenue for the quarter increased by
$133.3 million or 20.3% primarily due
to: (i) selling price inflation of $66.5
million, which was driven by increases implemented in
reaction to inflationary pressures across a broad range of input
costs; (ii) business acquisitions, which accounted for $40.1 million of SF's growth; and (iii) organic
volume growth of $28.1 million
representing an organic volume growth rate (OVGR) of 4.3%.
These factors were partially offset by a $1.4 million reduction in the translated value of
sales generated by SF's U.S. based businesses due to a stronger
Canadian dollar – approximately 52.5% of SF's revenue for the
quarter was generated by these businesses.
SF's OVGR of 4.3%, which was driven primarily by its
artisan sandwich and meat snack initiatives in the U.S., was at the
bottom end of the Company's long-term targeted range of 4% to 6%
due to several temporary headwinds including: (i) less featuring of
branded products in the retail channel, which was done to mitigate
the margin impact of record increases in input costs while selling
price increases were being implemented; (ii) approximately
$22.8 million in lost sales
opportunities caused by supply chain disruptions and labor
shortages that resulted in lower than normal customer order fill
rates – adjusting for these, SF's OVGR is 7.7%; and (iii)
approximately $3.2 million in delayed
sales resulting from a later Easter holiday season relative to the
timing of Easter in 2021. Furthermore, SF historically
generates a lower organic growth rate in the first quarter of the
year due to seasonal factors.
Premium Food Distribution's (PFD) revenue for the quarter
increased by $108.1 million or 30.5%
due to: (i) selling price inflation of $56.1
million, which was driven by increases implemented in
reaction to inflationary pressures across a broad range of input
costs; and (ii) business acquisitions, which accounted for
$53.0 million of PFD's growth.
These factors were partially offset by: (i) a slightly negative
OVGR of 0.2%; and (ii) a $0.2 million
reduction in the translated value of sales generated by PFD's U.S.
based businesses due to a stronger Canadian dollar.
PFD's negative OVGR of 0.2% was primarily due to: (i) the
ongoing development of PFD's processed lobster strategies that
resulted in additional inventory being created for the busy spring
and summer seasons and less trading of lower margin live lobsters
in the off season; (ii) approximately $6.0
million in lost sales opportunities caused by a variety of
supply chain disruptions that resulted in less protein trading
opportunities and lower than normal customer order fill rates; and
(iii) sales mix changes associated with a variety of successful new
sales initiatives for lower priced protein products being offset in
dollar terms by retailers doing less featuring of PFD's premium
protein and seafood products – normalizing for this as well as the
impact of supply chain disruptions, PFD's OVGR is 3.1%.
Furthermore, like SF, PFD historically generates a lower organic
growth rate in the first quarter of the year due to seasonal
factors.
Gross Profit
(in millions of
dollars except percentages)
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
%
(1)
|
13 weeks
ended
Mar 27,
2021
|
%
(1)
|
Gross profit by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
|
|
|
|
162.9
|
20.6%
|
141.2
|
21.5%
|
Premium Food
Distribution
|
|
|
|
|
63.9
|
13.8%
|
52.2
|
14.7%
|
Consolidated
|
|
|
|
|
226.8
|
18.1%
|
193.4
|
19.2%
|
(1)
Expressed as a percentage of the
corresponding segment's revenue.
|
SF's gross profit as a percentage of its revenue (gross margin)
for the quarter decreased by 90 basis points primarily due to: (i)
significantly higher costs for a broad range of inputs including
raw materials, freight and labor, which exceeded SF's selling price
increases due mainly to delays associated with retailer minimum
notice periods – adjusting for a full quarter's impact of price
increases implemented during the quarter, SF's normalized gross
margin is approximately 22.6%; and (ii) additional outside storage
costs associated with building inventory for the busy spring and
summer seasons as well as to help mitigate the impact of rising
production input costs and industry wide supply chain
disruptions. These factors were partially offset by: (i)
sales leveraging associated with SF's organic growth; (ii) improved
production efficiencies driven by investments in automation and
various continuous improvement initiatives; and (iii) the reversal
of certain pandemic related costs incurred in the first quarter of
2021.
PFD's gross margin for the quarter decreased by 90 basis points
primarily due to: (i) significantly higher costs for a broad range
of inputs including procured products, raw materials, freight and
wages – PFD was able to offset these increased costs with selling
price increases (in general, PFD's businesses have much more
dynamic pricing structures relative to SF's businesses) but did not
maintain the same margin percentage due to a variety of factors
including temporarily providing its customers with time to adapt to
the higher price environment and a portion of its business being
structured on a cost-plus basis; and (ii) the acquisition of
Westmorland, which due to the timing of its annual sales cycle, has
a very low gross margin in the first quarter of the year.
These factors were partially offset by improved production
efficiencies driven by various continuous improvement
initiatives.
Selling, General and Administrative Expenses
(SG&A)
(in millions of
dollars except percentages)
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
%
(1)
|
13 weeks
ended
Mar 27,
2021
|
%
(1)
|
SG&A by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
|
|
|
|
96.3
|
12.2%
|
80.5
|
12.3%
|
Premium Food
Distribution
|
|
|
|
|
43.6
|
9.4%
|
35.1
|
9.9%
|
Corporate
|
|
|
|
|
5.9
|
|
5.4
|
|
Consolidated
|
|
|
|
|
145.8
|
11.7%
|
121.0
|
12.0%
|
(1)
|
Expressed as a
percentage of the corresponding segment's revenue.
|
SF's SG&A for the quarter increased by $15.8 million mainly due to business acquisitions
and freight and wage inflation.
PFD's SG&A for the quarter increased by $8.5 million primarily due to business
acquisitions.
Adjusted EBITDA (1)
(in millions of
dollars except percentages)
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
%
(2)
|
13 weeks
ended
Mar 27,
2021
|
%
(2)
|
Adjusted EBITDA by
segment:
|
|
|
|
|
Specialty
Foods
|
66.6
|
8.4%
|
60.7
|
9.3%
|
Premium Food
Distribution
|
20.3
|
4.4%
|
17.1
|
4.8%
|
Corporate
|
(5.9)
|
|
(5.4)
|
|
Interest Income from
Investments
|
14.8
|
|
10.1
|
|
Consolidated
|
95.8
|
7.7%
|
82.5
|
8.2%
|
(1)
|
Adjusted EBITDA is a
non-IFRS financial measure. Reconciliation and explanation is
included in the Non-IFRS Financial Measures section
of this press release.
|
(2)
|
Expressed as a
percentage of the corresponding segment's revenue.
|
The Company's adjusted EBITDA for the quarter of $95.8 million, while being $13.3 million or 16.1% higher as compared to the
first quarter of 2021, was significantly below what it would have
been in a normal operating environment. The two primary
challenges impacting the Company's first quarter adjusted EBITDA
were: (i) delays associated with retailer minimum notice periods
for putting through selling price increases; and (ii) lost sales
opportunities caused by supply chain disruptions and labor
shortages.
The Company's adjusted EBITDA margin for the quarter of 7.7% was
below its long-term annual target of 10% primarily due to: (i) the
factors outline above – adjusting for these the Company's adjusted
EBITDA is approximately 9.2%; (ii) the acquisition of Westmorland,
which generates nominal EBITDA in the first quarter of the year as
a result of the timing of its annual sales cycle; and (iii) the
Company's adjusted EBITDA margin in the first quarter generally
being lower than its average margin for the year as a result of
seasonal factors.
Plant Start-up and Restructuring
Costs
Plant start-up and restructuring costs consist of expenses
associated with: (i) the start-up of new production capacity; (ii)
the reconfiguration of existing capacity to gain efficiencies
and/or additional capacity; and/or (iii) the restructuring of a
business to improve its profitability. The Company expects (see
Forward Looking Statements) these investments to result in
improvements in its future earnings and cash flows.
During the first quarter of 2022, the Company incurred
$3.5 million in plant start-up and
restructuring costs relating to a variety of projects, including a
42,000 square foot expansion of its artisan bakery in British Columbia, a 26,000 square foot
expansion of its meat snack production facility in Ontario, installation of fully automated
sandwich production lines in its plants in Arizona and Nevada, and installation of new freezing
technology at its lobster processing facility in Maine.
Equity Earnings (Loss) in
Investment in Associates
Equity earnings (loss) in investment in associates includes the
Company's proportionate share of the earnings and losses of its
investments in associates.
(in millions
of dollars)
|
|
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Apr 3,
2021
|
Clearwater:
|
Sales
|
|
|
121.0
|
93.9
|
Gross profit
|
|
|
38.4
|
31.2
|
SG&A
|
|
|
13.1
|
11.1
|
|
|
|
25.3
|
20.1
|
Depreciation and
amortization
|
|
|
11.4
|
7.6
|
Interest – senior
debt
|
|
|
2.3
|
4.5
|
Income from
investments
|
|
|
1.2
|
1.4
|
Unrealized foreign
exchange gain
|
|
|
(1.5)
|
(5.1)
|
|
|
|
11.9
|
11.7
|
Interest – shareholder
debt
|
|
|
11.5
|
8.4
|
Payments to
shareholders
|
|
|
8.5
|
5.4
|
Acquisition related
costs
|
|
|
-
|
12.1
|
Closing risk fee paid
to Premium Brands
|
|
|
-
|
2.4
|
Income tax
expense
|
|
|
0.5
|
0.4
|
Earnings
(loss)
|
|
|
(8.6)
|
(17.0)
|
Pre-close earnings
(loss) (1)
|
|
|
-
|
(4.3)
|
|
|
|
(8.6)
|
(12.7)
|
Ownership
|
|
|
50.0%
|
50.0%
|
Clearwater net
equity earnings (loss)
|
|
|
(4.3)
|
(6.4)
|
Other net equity
earnings (loss)
|
|
|
(0.6)
|
0.4
|
Equity earnings (loss)
in investment in associates
|
|
|
(4.9)
|
(6.0)
|
(1)
|
Amount relates to
Clearwater earnings prior to acquisition on January 25, 2021 and
acquisition-related adjustments not included in Company's equity
loss in investments in associates.
|
Clearwater Seafoods Incorporated
(Clearwater)
Clearwater's sales for the
quarter increased by 28.9% or $27.1
million primarily due to the easing of pandemic related
restrictions and a corresponding reopening of economies in
North America, Europe and Asia, which resulted in stronger demand and
higher pricing for most of the species sold by Clearwater.
This was partially offset by a stronger Canadian dollar relative to
the U.S. dollar and the Euro as a significant portion of
Clearwater's sales are denominated
in these currencies.
Clearwater's gross margin for
the quarter decreased by 150 basis points to 31.7% primarily due to
(i) the elimination of pandemic related wage subsidies received in
the first quarter of 2021; and (ii) higher harvesting and
processing costs for certain species because of catch rate changes
and general cost inflation. These factors were partially
offset by an overall stronger pricing environment.
Clearwater's SG&A for the
quarter increased by $2.0 million
primarily due to: (i) increased accruals for incentive-based
compensation; and (ii) the elimination of pandemic related wage
subsidies received in 2021.
Sales and Adjusted EBITDA
Outlook
See Forward Looking Statements for a discussion of the
risks and assumptions associated with forward looking
statements.
2022
The Company is maintaining its sales and adjusted EBITDA
guidance for 2022, which is for sales to be between $5.60 billion and $5.85
billion and for adjusted EBITDA to be between $510.0 million and $530.0
million. These estimates are based on a range of
assumptions (see Forward Looking Statements) including: (i)
economic conditions in Canada and
the United States will remain
relatively stable with no major changes in consumer buying habits
in the short to medium term; (ii) the average cost of the basket of
procured products and raw materials purchased by the Company will
stabilize and start to moderate in the short to medium term
relative to recent increased volatility and inflationary trends;
(iii) global supply chains will start to normalize in the short to
medium term enabling the Company to access sufficient goods and
services for its manufacturing and distribution operations; and
(iv) stabilization of the Canadian dollar relative to the U.S.
dollar at current levels.
The Company's sales and adjusted EBITDA outlooks for 2022 do not
incorporate any amounts for potential future
acquisitions.
5 Year Plan
The Company continues to make solid progress on the execution of
its growth and value creation strategies and is confident (see
Forward Looking Statements) that it will exceed its
five-year targets set in 2018 of $6
billion in sales and $600
million in adjusted EBITDA by 2023.
Premium Brands
Holdings Corporation
|
Consolidated Balance
Sheets
|
(in millions of
Canadian dollars)
|
|
|
|
|
|
Mar 26,
2022
|
Dec 25,
2021
|
Mar 27,
2021
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
28.5
|
16.5
|
29.9
|
Accounts
receivable
|
508.9
|
521.7
|
536.1
|
Inventories
|
740.5
|
645.2
|
481.5
|
Prepaid expenses and
other assets
|
28.1
|
28.6
|
25.3
|
|
1,306.0
|
1,212.0
|
1,072.8
|
|
|
|
|
Capital
assets
|
653.6
|
617.3
|
544.3
|
Right of use
assets
|
463.4
|
464.5
|
573.2
|
Intangible
assets
|
547.6
|
526.3
|
520.1
|
Goodwill
|
1,009.9
|
1,001.2
|
866.7
|
Investments in and
advances to associates
|
568.7
|
568.8
|
541.4
|
Other assets
|
22.0
|
18.8
|
16.4
|
|
|
|
|
|
4,571.2
|
4,408.9
|
4,134.9
|
|
|
|
|
Current
liabilities:
|
|
|
|
Cheques
outstanding
|
25.9
|
18.7
|
12.3
|
Bank
indebtedness
|
12.3
|
16.3
|
1.4
|
Dividends
payable
|
31.4
|
28.4
|
27.7
|
Accounts payable and
accrued liabilities
|
420.2
|
445.5
|
380.5
|
Current portion of
puttable interest in subsidiaries
|
27.1
|
27.1
|
28.1
|
Current portion of
long-term debt
|
4.3
|
4.6
|
7.3
|
Current portion of
lease obligations
|
34.7
|
32.9
|
21.7
|
Current portion of
provisions
|
12.6
|
7.7
|
10.2
|
|
568.5
|
581.2
|
489.2
|
|
|
|
|
Long-term
debt
|
1,252.5
|
1,074.0
|
869.3
|
Lease
obligations
|
477.1
|
477.4
|
593.1
|
Puttable interest in
subsidiaries
|
11.0
|
-
|
-
|
Deferred
revenue
|
2.8
|
2.8
|
4.1
|
Provisions
|
60.3
|
63.4
|
61.6
|
Deferred income
taxes
|
105.6
|
105.2
|
98.7
|
|
2,477.8
|
2,304.0
|
2,116.0
|
|
|
|
|
Convertible unsecured
subordinated debentures
|
331.8
|
331.0
|
426.7
|
|
|
|
|
Equity attributable to
shareholders:
|
|
|
|
Retained
earnings
|
26.6
|
35.6
|
3.3
|
Share
capital
|
1,713.3
|
1,713.3
|
1,569.7
|
Reserves
|
21.7
|
25.0
|
19.2
|
|
1,761.6
|
1,773.9
|
1,592.2
|
|
|
|
|
|
4,571.2
|
4,408.9
|
4,134.9
|
Premium Brands
Holdings Corporation
|
Consolidated
Statements of Operations
|
(in millions of
Canadian dollars except per share amounts)
|
|
|
|
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Mar 27,
2021
|
|
|
|
|
|
|
|
Revenue
|
|
|
1,251.2
|
1,009.8
|
|
Cost of goods
sold
|
|
|
1,024.4
|
816.4
|
|
Gross profit before
depreciation, amortization and plant start-up and restructuring
costs
|
|
|
226.8
|
193.4
|
|
|
|
|
|
|
|
Interest income from
investment in associates
|
|
|
(14.8)
|
(10.1)
|
|
Selling, general and
administrative expenses before depreciation and
amortization
|
|
|
145.8
|
121.0
|
|
|
|
|
95.8
|
82.5
|
|
|
|
|
|
|
|
Plant start-up and
restructuring costs
|
|
|
3.5
|
0.5
|
|
Depreciation of capital
assets
|
|
|
17.5
|
17.6
|
|
Amortization of
intangible assets
|
|
|
7.5
|
6.6
|
|
Amortization of right
of use assets
|
|
|
10.8
|
8.1
|
|
Accretion of lease
obligations
|
|
|
5.3
|
3.8
|
|
Interest and other
financing costs
|
|
|
11.4
|
10.4
|
|
Acquisition transaction
costs
|
|
|
1.2
|
3.3
|
|
Accretion of
provisions
|
|
|
2.8
|
1.8
|
|
Equity loss in
investments in associates
|
|
|
4.9
|
6.0
|
|
Clearwater closing risk
fee
|
|
|
-
|
(2.4)
|
|
Acquisition bargain
purchase gain
|
|
|
-
|
(1.8)
|
|
Earnings before income
taxes
|
|
|
30.9
|
28.6
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
Current
|
|
|
8.6
|
23.3
|
|
Deferred
|
|
|
(0.1)
|
(14.5)
|
|
|
|
|
8.5
|
8.8
|
|
|
|
|
|
|
|
Earnings
|
|
|
22.4
|
19.8
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
|
|
0.50
|
0.45
|
|
Diluted
|
|
|
0.50
|
0.45
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in millions):
|
|
|
|
|
|
Basic
|
|
|
44.6
|
43.5
|
|
Diluted
|
|
|
44.8
|
43.6
|
|
Premium Brands
Holdings Corporation
|
|
Consolidated
Statements of Cash Flows
|
|
(in millions of
Canadian dollars)
|
|
|
|
|
|
|
|
|
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Mar 27,
2021
|
|
|
|
|
|
Cash flows from
(used in) operating activities:
|
|
|
|
|
Earnings
|
|
|
22.4
|
19.8
|
Items not involving
cash:
|
|
|
|
|
Depreciation of capital
assets
|
|
|
17.5
|
17.6
|
Amortization of
intangible assets
|
|
|
7.5
|
6.6
|
Amortization of right
of use assets
|
|
|
10.8
|
8.1
|
Accretion of lease
obligations
|
|
|
5.3
|
3.8
|
Equity loss in
investments in associates
|
|
|
4.9
|
6.0
|
Non-cash financing
costs
|
|
|
1.3
|
1.3
|
Accretion of
provisions
|
|
|
2.8
|
1.8
|
Deferred income taxes
(recovery)
|
|
|
(0.1)
|
(14.5)
|
Acquisition bargain
purchase gain
|
|
|
-
|
(1.8)
|
|
|
|
72.4
|
48.7
|
Change in non-cash
working capital
|
|
|
(123.4)
|
(26.7)
|
|
|
|
(51.0)
|
22.0
|
|
|
|
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
Long-term debt,
net
|
|
|
196.5
|
351.7
|
Payments for lease
obligations
|
|
|
(13.4)
|
(10.5)
|
Bank indebtedness and
cheques outstanding
|
|
|
3.2
|
(5.4)
|
Dividends paid to
shareholders
|
|
|
(28.4)
|
(25.2)
|
|
|
|
157.9
|
310.6
|
|
|
|
|
|
Cash flows from
(used in) investing activities:
|
|
|
|
|
Capital asset
additions
|
|
|
(43.3)
|
(34.2)
|
Business and asset
acquisitions
|
|
|
(35.7)
|
(177.4)
|
Payment of
provisions
|
|
|
(2.0)
|
(6.3)
|
Net change in share
purchase loans and notes receivable
|
|
|
(3.2)
|
0.2
|
Investment in and
advances to associates – net of distributions
|
|
|
(10.7)
|
(448.0)
|
|
|
|
(94.9)
|
(665.7)
|
|
|
|
|
|
Change in cash and cash
equivalents
|
|
|
12.0
|
(333.1)
|
Cash and cash
equivalents – beginning of period
|
|
|
16.5
|
363.0
|
|
|
|
|
|
Cash and cash
equivalents – end of period
|
|
|
28.5
|
29.9
|
|
|
|
|
|
|
|
|
|
|
Interest and other
financing costs paid
|
|
|
6.0
|
6.8
|
Income taxes
paid
|
|
|
38.0
|
14.9
|
|
|
|
|
|
|
NON-IFRS FINANCIAL MEASURES
The Company uses certain non-IFRS financial measures including
adjusted EBITDA, free cash flow, adjusted earnings and adjusted
earnings per share, which are not defined under IFRS and, as a
result, may not be comparable to similarly titled measures
presented by other publicly traded entities, nor should they be
construed as an alternative to other earnings measures determined
in accordance with IFRS. These non-IFRS measures are
calculated as follows:
Adjusted EBITDA
(in millions of
dollars)
|
|
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Mar 27,
2021
|
Earnings before income
taxes
|
|
|
30.9
|
28.6
|
Plant start-up and
restructuring costs
|
|
|
3.5
|
0.5
|
Depreciation of capital
assets
|
|
|
17.5
|
17.6
|
Amortization of
intangible assets
|
|
|
7.5
|
6.6
|
Amortization of right
of use assets
|
|
|
10.8
|
8.1
|
Accretion of lease
obligations
|
|
|
5.3
|
3.8
|
Interest and other
financing costs
|
|
|
11.4
|
10.4
|
Acquisition transaction
costs
|
|
|
1.2
|
3.3
|
Accretion of
provisions
|
|
|
2.8
|
1.8
|
Equity loss in
investments in associates
|
|
|
4.9
|
6.0
|
Clearwater closing risk
fee
|
|
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
|
|
-
|
(1.8)
|
Adjusted
EBITDA
|
|
|
95.8
|
82.5
|
Free Cash Flow
(in millions of
dollars)
|
52 weeks
ended
Dec 25,
2021
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Mar 27,
2021
|
Rolling
Four
Quarters
|
Cash flow from
operating activities
|
66.3
|
(51.0)
|
22.0
|
(6.7)
|
Changes in non-cash
working capital
|
253.8
|
123.4
|
26.7
|
350.5
|
Lease obligation
payments
|
(50.4)
|
(13.4)
|
(10.5)
|
(53.3)
|
Acquisition transaction
costs
|
7.7
|
1.2
|
3.3
|
5.6
|
Clearwater closing risk
fee
|
(2.4)
|
-
|
(2.4)
|
-
|
Plant start-up and
restructuring costs
|
2.1
|
3.5
|
0.5
|
5.1
|
Income taxes on sale
and leaseback transaction
|
15.5
|
-
|
14.2
|
1.3
|
Maintenance capital
expenditures
|
(29.3)
|
(9.5)
|
(6.1)
|
(32.7)
|
Free cash
flow
|
263.3
|
54.2
|
47.7
|
269.8
|
Adjusted Earnings and Adjusted Earnings per Share
(in millions of
dollars except per share amounts)
|
|
|
13 weeks
ended
Mar 26,
2022
|
13 weeks
ended
Mar 27,
2021
|
Earnings
|
|
|
22.4
|
19.8
|
Plant start-up and
restructuring costs
|
|
|
3.5
|
0.5
|
Acquisition transaction
costs
|
|
|
1.2
|
3.3
|
Accretion of
provisions
|
|
|
2.8
|
1.8
|
Equity loss from
investments in associates
|
|
|
4.9
|
6.0
|
Amortization of
intangibles associated with acquisitions
|
|
|
7.5
|
6.6
|
Clearwater closing risk
fee
|
|
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
|
|
-
|
(1.8)
|
|
|
|
42.3
|
33.8
|
Current and deferred
income tax effect of above items
|
|
|
(2.9)
|
(2.5)
|
Adjusted
earnings
|
|
|
39.4
|
31.3
|
Weighted average shares
outstanding
|
|
|
44.6
|
43.5
|
Adjusted earnings per
share
|
|
|
0.88
|
0.72
|
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements with
respect to the Company, including, without limitation, statements
regarding its business operations, strategy and financial
performance and condition, cash distributions, proposed
acquisitions, budgets, projected costs and plans and objectives of
or involving the Company. While management believes that the
expectations reflected in such forward looking statements are
reasonable and represent the Company's internal expectations and
belief as of May 6, 2022, there can
be no assurance that such expectations will prove to be correct as
such forward looking statements involve unknown risks and
uncertainties beyond the Company's control which may cause its
actual performance and results in future periods to differ
materially from any estimates or projections of future performance
or results expressed or implied by such forward looking
statements.
Forward looking statements generally can be identified by the
use of the words "may", "could", "should", "would", "will",
"expect", "intend", "plan", "estimate", "project", "anticipate",
"believe" or "continue", or the negative thereof or similar
variations. Forward looking statements in this press release
include statements with respect to the Company's expectations
and/or projections on its: (i) revenue; (ii) adjusted EBITDA; (iii)
plant start-up and restructuring costs; (iv) income tax rates; (v)
dividends and dividend policy; (vi) capital expenditures and
business acquisitions; (vii) convertible debentures; (viii) net
working capital; (ix) liquidity outlook; * provisions; (xi) 5 year
plan; and (xii) financial leverage ratios.
Some of the factors that could cause actual results to differ
materially from the Company's expectations are outlined in the
Company's Management Discussion & Analysis for the 13 weeks
ended March 26, 2022.
Assumptions used by the Company to develop forward looking
statements contained or incorporated by reference in this press
release are based on information currently available to it and
include those outlined below as well as those outlined elsewhere in
this document. Readers are cautioned that this information is
not exhaustive.
- Economic conditions in Canada
and the United States will remain
relatively stable with no major changes in consumer buying habits
in the short to medium term.
- The average cost of the basket of procured products and raw
materials purchased by the Company will stabilize and start to
moderate in the short to medium term relative to recent increased
volatility and inflationary trends.
- Global supply chains will start to normalize in the short to
medium term enabling the Company to access sufficient goods and
services for its manufacturing and distribution operations.
- The conflict between Russia
and Ukraine will not: (i)
materially impact the cost of raw materials purchased by the
Company or its ability to procure them; or (ii) result in other
retaliatory actions that adversely impact the Company's operations
or the operations of its customers and suppliers.
- Labor availability will continue to improve in Canada and the U.S, enabling the Company to
access sufficient skilled and unskilled labor at reasonable wage
levels.
- The value of the Canadian dollar relative to the U.S. dollar
will continue to fluctuate in line with the levels seen over the
last several months.
- The Company's major capital projects, plant start-up and
restructuring, and business acquisition initiatives will progress
in line with its expectations.
- The Company will be able to achieve its projected operating
efficiency improvements.
- There will not be any material changes in the competitive
environment of the markets in which the Company's various
businesses compete.
- There will not be any material changes in the long-term food
trends that have been driving growth in many of the Company's
businesses. These include: (i) growing demand for higher quality
foods made with simpler more wholesome ingredients and/or with
differentiating attributes such as antibiotic free, no added
hormones or use of organic ingredients; (ii) increased reliance on
convenience oriented foods both for on-the-go snacking as well as
easy home meal preparation; (iii) healthier eating including
reduced sugar consumption and increased emphasis on protein and
seafood; (iv) increased snacking in between and in place of meals;
(v) increased interest in understanding the background and stories
behind food products being consumed; and (vi) increased social
awareness on issues such as sustainability, sourcing products
locally, animal welfare and food waste.
- Weather conditions in the Company's core markets will not have
a significant impact on any of its businesses.
- There will not be any material changes in the Company's
relationships with its larger customers including the loss of a
major product listing and/or being forced to give significant
product pricing concessions.
- There will not be any material changes in the trade
relationship between Canada and
the U.S., particularly with respect to certain protein commodities
such as beef, pork and chicken.
- The Company will be able to negotiate new collective agreements
with no labor disruptions.
- The Company will be able to access reasonably priced debt and
equity capital.
- The Company's average interest cost on floating rate debt will
remain relatively stable in the near to medium
future. Contractual counterparties will continue to fulfill
their obligations to the Company.
- There will be no material changes to the tax and other
regulatory requirements governing the Company.
Management has set out the above summary of assumptions related
to forward looking statements included in this press release to
provide a more complete perspective on the Company's future
operations. Readers are cautioned that these statements may
not be appropriate for other purposes.
Unless otherwise indicated, the forward-looking statements in
this press release are made as of May 6,
2022 and, except as required by applicable law, will not be
publicly updated or revised. This cautionary statement
expressly qualifies the forward-looking statements in this press
release.
SOURCE Premium Brands Holdings Corporation