VANCOUVER, BC, Aug. 5, 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 second quarter of
2022.
SECOND QUARTER
HIGHLIGHTS
- Record second quarter revenue of $1.52
billion representing a 23.1%, or $285.2 million, increase as compared to the
second quarter of 2021
- Record second quarter adjusted EBITDA1 of
$130.8 million representing a 16.6%,
or $18.6 million, increase as
compared to the second quarter of 2021
- Record second quarter adjusted EPS1 of $1.38 per share representing a 12.2%, or
$0.15 per share, increase as compared
to the second quarter of 2021
- The Company increased its 2022 revenue guidance range to
$5.75 billion to $6.0 billion and maintained its 2022 adjusted
EBITDA guidance range of $510.0
million to $530.0 million
- Clearwater Seafoods generated record second quarter adjusted
EBITDA of $31.3 million and earnings
before distributions to shareholders of $10.7 million
- The Company announced the acquisitions of King's Command, an
Ohio based cooked protein
manufacturer, and Golden Valley Farms, an Ontario based deli meats manufacturer
- The Company declared a dividend of $0.70 per share for the third quarter of
2022
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 second
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
(416) 764-8646 or (888) 396-8049 (Conference ID: 94465746)
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 10:30 a.m. eastern time on
September 5, 2022 at (416)
764-8692 or (877) 674-7070 (passcode: 465746#).
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
Jun 25,
2022
|
13 weeks
ended
Jun 26,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
Revenue
|
|
|
1,519.9
|
1,234.7
|
2,771.1
|
2,244.5
|
Adjusted
EBITDA1
|
|
|
130.8
|
112.2
|
226.6
|
194.7
|
Earnings
|
|
|
63.3
|
28.0
|
85.7
|
47.8
|
EPS
|
|
|
1.42
|
0.65
|
1.92
|
1.10
|
Adjusted
earnings1
|
|
|
61.5
|
53.5
|
100.9
|
84.8
|
Adjusted
EPS1
|
|
|
1.38
|
1.23
|
2.26
|
1.95
|
|
|
|
Trailing Four Quarters Ended
|
|
|
|
Jun 25,
2022
|
Jun 26,
2021
|
Free cash
flow1
|
|
|
276.3
|
238.4
|
Free cash flow per
share
|
|
|
6.27
|
5.79
|
Declared
dividends
|
|
|
118.8
|
104.0
|
Declared dividend per
share
|
|
|
2.67
|
2.425
|
Payout
ratio1
|
|
|
43.0 %
|
43.6 %
|
1
|
Reconciliations for
all non-IFRS measures are included in the Non-IFRS Financial
Measures section of this press release.
|
"We are finally seeing tangible signs of a return to more normal
market conditions after over two years of pandemic driven
challenges and disruptions," said Mr. George Paleologou, President and CEO. "The
second quarter was, however, not without headwinds and operational
issues, but despite these we once again generated record sales,
adjusted EBITDA, adjusted earnings and free cash flow per
share.
"Our protein group of businesses was impacted particularly hard
this quarter. Poor spring weather, less retail featuring
(which was done to mitigate the margin impact of record increases
in input costs while higher selling prices were being implemented),
labor issues, a shift in consumer spending from the retail channel
to the foodservice channel and acute price inflation combined to
create a very difficult sales environment. The good news is
that most of these challenges are temporary, and the group is
already generating improved growth and operational performance in
the third quarter. Furthermore, our results for the quarter
again demonstrated the strength of our diversification strategies
as we were still able to generate net organic volume growth as our
foodservice focused businesses benefited from some of the
challenges faced by our protein group of businesses.
"As the economic environment stabilizes, and labor and global
supply chains continue to normalize, we expect to see a strong
acceleration in our performance based on the investments we have
made and initiatives we have implemented over the last several
years," added Mr. Paleologou.
"Throughout the chaos caused by the pandemic, we maintained our
focus on the long-term and continued to invest in our people and
businesses. This past quarter was no different with us making
$133.5 million in new capital
allocation decisions, including the acquisitions of King's Command
and Golden Valley Farms. Both of these businesses will play a
significant role in supporting our organic growth initiatives as
they provide us with much needed capacity solutions in two very
exciting growth categories, namely cooked protein and dry cured
meats.
"Looking forward, we are now positioned to exceed our 2023
objectives of $6.0 billion in sales
and $600 million in adjusted EBITDA
and to achieve our longer-term goal of being one of North America's leading specialty foods
companies. In addition, we continue to enjoy a robust
pipeline of acquisition opportunities that spans all our platforms
and provides us with the ability to further accelerate our growth,"
said Mr. Paleologou.
THIRD QUARTER 2022
DIVIDEND
The Company also announced that its Board of Directors approved
a cash dividend of $0.70 per share
for the third quarter of 2022, which will be payable on
October 17, 2022 to shareholders of
record at the close of business on September
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 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
as well as certain seafood processing 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
Jun 25,
2022
|
%
(1)
|
13 weeks
ended
Jun 26,
2021
|
%
(1)
|
26 weeks
ended
Jun 25,
2022
|
%
(1)
|
26 weeks
ended
Jun 26,
2021
|
%
(1)
|
Revenue by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
929.3
|
61.1 %
|
775.4
|
62.8 %
|
1,718.5
|
62.0 %
|
1,431.3
|
63.8 %
|
Premium Food
Distribution
|
590.6
|
38.9 %
|
459.3
|
37.2 %
|
1,052.6
|
38.0 %
|
813.2
|
36.2 %
|
Consolidated
|
1,519.9
|
100.0 %
|
1,234.7
|
100.0 %
|
2,771.1
|
100.0 %
|
2,244.5
|
100.0 %
|
|
(1)
|
Expressed as a
percentage of consolidated revenue.
|
Specialty Foods' (SF) revenue for the quarter increased by
$153.9 million or 19.8% primarily due
to: (i) selling price inflation of $88.7
million, which was driven by increases implemented in
reaction to inflationary pressures across a broad range of costs;
(ii) business acquisitions, which accounted for $51.7 million of SF's growth; and (iii) a
$17.4 million increase in the
translated value of sales generated by SF's U.S. based businesses
due to a weaker Canadian dollar – approximately 50.0% of SF's
revenue for the quarter was generated by these businesses.
These factors were partially offset by organic volume contraction
of $3.9 million or 0.5%.
SF's lack of organic volume growth was primarily due to: (i)
reduced branded protein sales resulting from a range of challenges
including poor spring weather across most of Canada, less featuring (which was done to
mitigate the margin impact of record increases in input costs while
higher selling prices are being implemented), consumer spending
shifting from retail to foodservice and price related demand
destruction in certain limited product categories (primarily beef
jerky); and (ii) higher customer order short shipments resulting
from the reconfiguration of SF's Phoenix sandwich plant's labor force, which is
being done to maximize the plant's potential capacity but during
the transition is negatively impacting its capacity – normalizing
for the higher customer order short shipments, SF's organic volume
growth rate (OVGR) is 2.2%.
SF's revenue for the first two quarters of 2022 increased by
$287.2 million or 20.1% primarily due
to: (i) selling price inflation of $155.3
million; (ii) business acquisitions, which accounted for
$92.0 million of the increase; (iii)
organic volume growth of $24.0
million representing an OVGR of 4.3%; and (iv) a
$15.9 million increase in the
translated value of sales generated by the Company's U.S. based
businesses.
Premium Food Distribution's (PFD) revenue for the quarter
increased by $131.3 million or 28.6%
due to: (i) business acquisitions, which accounted for $62.4 million of PFD's growth; (ii) selling price
inflation of $45.7 million, which was
driven by increases implemented in reaction to inflationary
pressures across a broad range of costs; (iii) organic volume
growth of $20.5 million representing
an OVGR of 4.4%; and (iv) a $2.7
million increase in the translated value of sales generated
by SF's U.S. based businesses due to a weaker Canadian dollar.
PFD's OVGR of 4.4% was primarily due to a recovery in its
foodservice and cruise line sales post the lifting of pandemic
related restrictions. This was partially offset by: (i) the
ongoing development of PFD's processed lobster strategies that
resulted in additional inventory being created for the back half of
2022 and correspondingly less trading of live lobsters in the
quarter; (ii) less featuring by retailers and restaurants of
premium seafood products because of record high prices; and (iii)
reduced exports of lobsters to China resulting from pandemic related
shutdowns in that country and a lack of air transport
capacity.
PFD's revenue for the first two quarters of 2022 increased by
$239.4 million or 29.4% primarily due
to: (i) business acquisitions, which accounted for $115.4 million of the increase; (ii) selling
price inflation of $101.8 million;
(iii) organic volume growth of $19.7
million representing an OVGR of 2.4%; and (iv) a
$2.5 million increase in the
translated value of sales generated by the Company's U.S. based
businesses.
Gross Profit
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Jun 25,
2022
|
%
(1)
|
13 weeks
ended
Jun 26,
2021
|
%
(1)
|
26 weeks
ended
Jun 25,
2022
|
%
(1)
|
26 weeks
ended
Jun 26,
2021
|
%
(1)
|
Gross profit by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
191.2
|
20.6 %
|
158.1
|
20.4 %
|
354.1
|
20.6 %
|
299.3
|
20.9 %
|
Premium Food
Distribution
|
85.9
|
14.5 %
|
74.9
|
16.3 %
|
149.8
|
14.2 %
|
127.1
|
15.6 %
|
Consolidated
|
277.1
|
18.2 %
|
233.0
|
18.9 %
|
503.9
|
18.2 %
|
426.4
|
19.0 %
|
|
(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 increased by 20 basis points primarily due to: (i)
sales mix changes; and (ii) recent business acquisitions generating
higher average gross margins. These factors were partially
offset by: (i) retailer notice-period requirements which delayed
the implementation of selling price increases being put through to
address inflation across a broad range of costs including raw
materials, wages and freight – adjusting for a full quarter's
impact of price increases implemented during the quarter, SF's
normalized gross margin is approximately 21.6%; and (ii) additional
outside storage costs associated with higher inventory levels –
SF's higher inventory levels are expected (see Forward Looking
Statements) to partially reverse in the second half of
2022.
SF's gross margin for the first two quarters of 2022 decreased
by 30 basis points primarily due to: (i) retailer notice-period
related delays – adjusting for the full half year's impact of price
increases implemented in the first two quarters of 2022, SF's
normalized gross margin is approximately 21.9%; and (ii) additional
outside storage costs. These factors were partially offset
by: (i) sales mix changes and sales leveraging associated with SF's
organic growth; and (ii) recent business acquisitions generating
higher average gross margins.
PFD's gross margin for the quarter and for the first two
quarters of 2022 decreased by 180 basis points and 140 basis
points, respectively, primarily due to: (i) lower than normal
margins on lobster products due to unusually volatile market prices
and sales mix changes associated with reduced exports to
China; (ii) significantly higher
costs for a broad range of inputs including procured products, raw
materials, freight and wages – PFD was able to offset these
increases by raising its selling prices (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
(iii) lower average gross margins on recent business
acquisitions. These factors were partially offset by sales
leveraging associated with PFD's organic growth.
Selling, General and
Administrative Expenses (SG&A)
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Jun 25,
2022
|
%
(1)
|
13 weeks
ended
Jun 26,
2021
|
%
(1)
|
26 weeks
ended
Jun 25,
2022
|
%
(1)
|
26 weeks
ended
Jun 26,
2021
|
%
(1)
|
SG&A by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
107.0
|
11.5 %
|
88.4
|
11.4 %
|
203.3
|
11.8 %
|
168.9
|
11.8 %
|
Premium Food
Distribution
|
48.3
|
8.2 %
|
40.9
|
8.9 %
|
91.9
|
8.7 %
|
76.0
|
9.3 %
|
Corporate
|
6.1
|
|
5.8
|
|
12.0
|
|
11.2
|
|
Consolidated
|
161.4
|
10.6 %
|
135.1
|
10.9 %
|
307.2
|
11.1 %
|
256.1
|
11.4 %
|
|
(1)
|
Expressed as a
percentage of the corresponding segment's revenue.
|
SF's SG&A for the quarter and for the first two quarters of
2022 increased by $18.6 million and
$34.4 million, respectively,
primarily due to: (i) freight and wage inflation; (ii) business
acquisitions; and (iii) a variety of additional infrastructure
investments made to support the segment's long-term growth
objectives. These factors were partially offset by lower
incentive-based compensation accruals.
PFD's SG&A for the quarter and for the first two quarters of
2022 increased by $7.4 million and
$15.9 million, respectively,
primarily due to: (i) freight and wage inflation; and (ii) business
acquisitions.
Adjusted EBITDA
(1)
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Jun 25,
2022
|
%
(2)
|
13 weeks
ended
Jun 26,
2021
|
%
(2)
|
26 weeks
ended
Jun 25,
2022
|
%
(2)
|
26 weeks
ended
Jun 26,
2021
|
%
(2)
|
Adjusted EBITDA by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
84.2
|
9.1 %
|
69.7
|
9.0 %
|
150.8
|
8.8 %
|
130.4
|
9.1 %
|
Premium Food
Distribution
|
37.6
|
6.4 %
|
34.0
|
7.4 %
|
57.9
|
5.5 %
|
51.1
|
6.3 %
|
Corporate
|
(6.1)
|
|
(5.8)
|
|
(12.0)
|
|
(11.2)
|
|
Interest Income from
Investments
|
15.1
|
|
14.3
|
|
29.9
|
|
24.4
|
|
Consolidated
|
130.8
|
8.6 %
|
112.2
|
9.1 %
|
226.6
|
8.2 %
|
194.7
|
8.7 %
|
|
(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 $130.8 million, while being $18.6 million or 16.6% higher as compared to the
second quarter of 2021, was at the lower end of its expected range
primarily due to: (i) the sales challenges impacting SF, and in
particular the poor spring weather across most of Canada; (ii) higher freight inflation and
(iii) lower than normal lobster product margins. These
factors were partially offset by: (i) lower than projected costs
for certain raw materials; and (ii) lower incentive-based
compensation accruals.
The Company's adjusted EBITDA margin for the first two quarters
of 2022 of 8.2% was below its long-term annual target of 10%
primarily due to: (i) delays in implementing selling prices due to
retailer notice-period requirements – adjusting for the full half
year's impact of price increases implemented in the first two
quarters of 2022, the Company's normalized adjusted EBITDA margin
is approximately 9.1%; (ii) the sales challenges impacting SF in
the second quarter; and (iii) lower than normal lobster product
margins.
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 two quarters of 2022, the Company incurred
$5.3 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, installation of new packaging
technology at its sandwich production facility in Mississippi, 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
Jun 25,
2022
|
13 weeks
ended
Jul 3,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jul 3,
2021
|
Clearwater:
|
Sales
|
133.3
|
138.9
|
254.2
|
232.8
|
Gross
profit
|
44.4
|
41.2
|
82.8
|
70.7
|
SG&A
|
13.1
|
13.2
|
26.1
|
22.6
|
|
31.3
|
28.0
|
56.7
|
48.1
|
Depreciation and
amortization
|
11.3
|
12.3
|
22.8
|
19.9
|
Interest – senior
debt
|
3.1
|
2.5
|
5.4
|
7.0
|
Income from
investments
|
1.6
|
-
|
2.8
|
1.4
|
Unrealized foreign
exchange loss (gain)
|
8.5
|
(4.3)
|
7.0
|
(9.4)
|
|
6.8
|
17.5
|
18.7
|
29.2
|
Interest on
shareholder debt
|
12.5
|
11.6
|
24.0
|
20.0
|
Payments to
shareholders
|
8.5
|
6.3
|
17.0
|
11.7
|
Acquisition related
costs
|
0.2
|
0.7
|
0.2
|
12.8
|
Closing risk fee paid
to Premium Brands
|
-
|
-
|
-
|
2.4
|
Income tax expense
(recovery)
|
(1.6)
|
(3.6)
|
(1.1)
|
(3.2)
|
Earnings
(loss)
|
(12.8)
|
2.5
|
(21.4)
|
(14.5)
|
Pre-close earnings
(loss) (1)
|
-
|
-
|
-
|
(4.3)
|
|
(12.8)
|
2.5
|
(21.4)
|
(10.2)
|
Ownership
|
50.0 %
|
50.0 %
|
50.0 %
|
50.0 %
|
Clearwater net
equity earnings (loss)
|
(6.4)
|
1.2
|
(10.7)
|
(5.1)
|
Other net equity
earnings (loss)
|
(0.4)
|
(0.1)
|
(1.0)
|
0.2
|
Equity earnings (loss)
in investment in associates
|
(6.8)
|
1.1
|
(11.7)
|
(4.9)
|
|
|
(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 decreased by 4.0% or $5.6
million primarily due to: (i) lower snow crab volumes as
Clearwater held back sales while
it waits for prices to stabilize – pricing in the snow crab market
was very volatile in the quarter due to a range of factors
including: (a) higher than normal retail channel inventories
carried over from the first quarter; (b) unusual geopolitical
factors that lead to a large amount of product being imported into
North America earlier in the year;
and (c) strong spring landings in Atlantic Canada; and (ii) a
stronger Canadian dollar relative to the Yen, GBP and Euro.
These factors were partially offset by strong pricing for
Clearwater's core harvested species (scallops, clams and frozen at
sea shrimp) driven by: (i) strength in various global markets
resulting from increased travel and foodservice activity as
pandemic related restrictions were lifted; and (ii) the
differentiated premium nature of Clearwater's products.
Clearwater's gross margin for
the quarter increased by 360 basis points primarily due to: (i) the
strong pricing environment for Clearwater's core harvested species; and (ii)
changes in sales mix resulting from lower snow crab sales.
These factors were partially offset by: (i) general cost inflation;
and (ii) the reclassification of certain costs from SG&A.
Clearwater's SG&A for the
quarter was relatively flat as the decrease resulting from the
reclassification of certain costs to cost of sales was offset by:
(i) discretionary promotional activity and travel returning to
pre-pandemic levels; (ii) wage inflation; and (iii) elimination of
pandemic related subsidies.
Sales and Adjusted EBITDA
Outlook
See Forward Looking Statements for a discussion of the
risks and assumptions associated with forward looking
statements.
2022
(in millions of
dollars)
|
Bottom of
Range
|
Top of Range
|
Previous revenue
guidance
|
5,600.0
|
5,850.0
|
Revised revenue
guidance
|
5,750.0
|
6,000.0
|
Adjusted EBITDA
guidance (unchanged)
|
510.0
|
530.0
|
The Company is increasing its revenue guidance for 2022 (see
Forward Looking Statements) based on: (i) the
acquisitions of King's Command and Golden Valley Farms; and (ii) a
weaker Canadian dollar relative to the U.S. dollar, which results
in the favorable translation of the Company's U.S. based
businesses' revenue. These factors are expected to be
partially offset by: (i) lower-than-expected sales of branded
protein products as a result of the factors impacting SF's sales in
the second quarter, some of which are projected to continue into
the second half of the year; and (ii) lower lobster selling prices
as a result of a variety of factors including pandemic related
demand destruction (particularly in China) and strong spring landings in the
Canadian east coast fishery.
While the Company is maintaining its adjusted EBITDA guidance
for 2022, it is assigning a higher probability to being at the
lower end of its range based on: (i) reduced sales of higher margin
branded protein products; (ii) a reduced likelihood of the cost of
certain raw materials moderating in the back half of the year; and
(iii) higher than originally anticipated freight inflation (see
Forward Looking Statements). Furthermore, due to the
Company's acquisitions of King's Command and Golden Valley Farms
being based on medium to long-term capacity solutions, these
businesses are expected to generate only nominal adjusted EBITDA in
2022.
The Company's revenue and adjusted EBITDA guidance ranges do not
incorporate any amounts for potential future acquisitions and are
based on a range of assumptions (see Forward Looking
Statements) including: (i) economic conditions in Canada and the U.S. remaining relatively
stable; (ii) the average cost of the basket of procured products
and raw materials purchased by the Company stabilizing at current
levels; (iii) global supply chains continuing to normalize; and
(iv) the Canadian dollar relative to the U.S. dollar stabilizing at
current levels.
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)
|
|
|
|
|
|
Jun 25,
2022
|
Dec 25,
2021
|
Jun 26,
2021
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
13.8
|
16.5
|
24.2
|
Accounts
receivable
|
617.5
|
521.7
|
453.3
|
Inventories
|
836.2
|
645.2
|
483.0
|
Prepaid expenses and
other assets
|
29.9
|
28.6
|
25.5
|
|
1,497.4
|
1,212.0
|
986.0
|
|
|
|
|
Capital
assets
|
772.7
|
617.3
|
558.6
|
Right of use
assets
|
471.6
|
464.5
|
433.8
|
Intangible
assets
|
558.7
|
526.3
|
507.9
|
Goodwill
|
1,033.3
|
1,001.2
|
859.9
|
Investments in and
advances to associates
|
555.9
|
568.8
|
576.1
|
Other assets
|
21.8
|
18.8
|
15.6
|
|
|
|
|
|
4,911.4
|
4,408.9
|
3,937.9
|
|
|
|
|
Current
liabilities:
|
|
|
|
Cheques
outstanding
|
19.1
|
18.7
|
21.9
|
Bank
indebtedness
|
14.1
|
16.3
|
1.0
|
Dividends
payable
|
31.4
|
28.4
|
27.7
|
Accounts payable and
accrued liabilities
|
448.9
|
445.5
|
403.3
|
Current portion of
puttable interest in subsidiaries
|
26.4
|
27.1
|
27.8
|
Current portion of
long-term debt
|
4.3
|
4.6
|
7.1
|
Current portion of
lease obligations
|
38.3
|
32.9
|
28.0
|
Current portion of
provisions
|
9.6
|
7.7
|
11.2
|
|
592.1
|
581.2
|
528.0
|
|
|
|
|
Long-term
debt
|
1,374.6
|
1,074.0
|
780.8
|
Lease
obligations
|
484.5
|
477.4
|
449.3
|
Puttable interest in
subsidiaries
|
11.4
|
-
|
-
|
Deferred
revenue
|
2.8
|
2.8
|
3.7
|
Provisions
|
62.4
|
63.4
|
61.2
|
Deferred income
taxes
|
114.9
|
105.2
|
92.3
|
|
2,642.7
|
2,304.0
|
1,915.3
|
|
|
|
|
Convertible unsecured
subordinated debentures
|
475.8
|
331.0
|
452.1
|
|
|
|
|
Equity attributable to
shareholders:
|
|
|
|
Retained
earnings
|
58.6
|
35.6
|
3.6
|
Share
capital
|
1,712.4
|
1,713.3
|
1,563.6
|
Reserves
|
21.9
|
25.0
|
3.3
|
|
1,792.9
|
1,773.9
|
1,570.5
|
|
|
|
|
|
4,911.4
|
4,408.9
|
3,937.9
|
Premium Brands
Holdings Corporation
|
Consolidated
Statements of Operations
|
(in millions of
Canadian dollars except per share amounts)
|
|
|
|
|
|
|
|
13 weeks
ended
Jun 25,
2022
|
13 weeks
ended
Jun 26,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
|
|
|
|
|
Revenue
|
1,519.9
|
1,234.7
|
2,771.1
|
2,244.5
|
Cost of goods
sold
|
1,242.8
|
1,001.7
|
2,267.2
|
1,818.1
|
Gross profit before
depreciation, amortization and plant start-up
and restructuring costs
|
277.1
|
233.0
|
503.9
|
426.4
|
|
|
|
|
|
Interest income from
investments in associates
|
(15.1)
|
(14.3)
|
(29.9)
|
(24.4)
|
Selling, general and
administrative expenses
|
161.4
|
135.1
|
307.2
|
256.1
|
|
130.8
|
112.2
|
226.6
|
194.7
|
|
|
|
|
|
Plant start-up and
restructuring costs
|
1.8
|
0.5
|
5.3
|
1.0
|
Depreciation of capital
assets
|
18.2
|
17.2
|
35.7
|
34.8
|
Amortization of
intangible assets
|
7.7
|
6.8
|
15.2
|
13.4
|
Amortization of right
of use assets
|
11.2
|
9.2
|
22.0
|
17.3
|
Accretion of lease
obligations
|
5.5
|
5.0
|
10.8
|
8.8
|
Interest and other
financing costs
|
15.7
|
10.9
|
27.1
|
21.3
|
Change in fair value of
option liabilities
|
-
|
24.3
|
-
|
24.3
|
Change in value of
puttable interest in subsidiaries
|
-
|
0.5
|
-
|
0.5
|
Acquisition transaction
costs
|
2.5
|
1.1
|
3.7
|
4.4
|
Accretion of
provisions
|
1.7
|
1.8
|
4.5
|
3.6
|
Equity loss (earnings)
in investments in associates
|
6.8
|
(1.1)
|
11.7
|
4.9
|
Fair value gains on
investments in associates
|
(19.8)
|
-
|
(19.8)
|
-
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
Earnings before income
taxes
|
79.5
|
36.0
|
110.4
|
64.6
|
|
|
|
|
|
Provision for income
taxes (recovery)
|
|
|
|
|
Current
|
18.3
|
13.7
|
26.9
|
37.0
|
Deferred
|
(2.1)
|
(5.7)
|
(2.2)
|
(20.2)
|
|
16.2
|
8.0
|
24.7
|
16.8
|
|
|
|
|
|
Earnings
|
63.3
|
28.0
|
85.7
|
47.8
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
1.42
|
0.65
|
1.92
|
1.10
|
Diluted
|
1.41
|
0.64
|
1.91
|
1.10
|
|
|
|
|
|
Weighted average shares
outstanding (in millions):
|
|
|
|
|
Basic
|
44.6
|
43.4
|
44.6
|
43.4
|
Diluted
|
44.8
|
43.6
|
44.8
|
43.6
|
|
|
|
|
|
|
|
|
|
|
Premium Brands
Holdings Corporation
|
|
Consolidated
Statements of Cash Flows
|
|
(in millions of
Canadian dollars)
|
|
|
|
|
|
|
|
|
13 weeks
ended
Jun 25,
2022
|
13 weeks
ended
Jun 26
, 2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
|
|
|
|
|
|
Cash flows from
(used in) operating activities:
|
|
|
|
|
Earnings
|
63.3
|
28.0
|
85.7
|
47.8
|
Items not involving
cash:
|
|
|
|
|
Depreciation of
capital assets
|
18.2
|
17.2
|
35.7
|
34.8
|
Amortization of
intangible assets
|
7.7
|
6.8
|
15.2
|
13.4
|
Amortization of right
of use assets
|
11.2
|
9.2
|
22.0
|
17.3
|
Accretion of lease
obligations
|
5.5
|
5.0
|
10.8
|
8.8
|
Change in value of
puttable interest in subsidiaries
|
-
|
0.5
|
-
|
0.5
|
Equity loss (earnings)
in investments in associates
|
6.8
|
(1.1)
|
11.7
|
4.9
|
Change in fair value
of option liabilities
|
-
|
24.3
|
-
|
24.3
|
Non-cash financing
costs
|
1.5
|
1.4
|
2.8
|
2.7
|
Accretion of
provisions
|
1.7
|
1.8
|
4.5
|
3.6
|
Deferred income taxes
(recovery)
|
(2.1)
|
(5.7)
|
(2.2)
|
(20.2)
|
Fair value gains on
investments in associates
|
(19.8)
|
-
|
(19.8)
|
-
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
|
94.0
|
87.4
|
166.4
|
136.1
|
Change in non-cash
working capital
|
(165.1)
|
(75.8)
|
(288.5)
|
(102.5)
|
|
(71.1)
|
11.6
|
(122.1)
|
33.6
|
|
|
|
|
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
Long-term debt,
net
|
93.6
|
(78.0)
|
290.1
|
273.7
|
Payments for lease
obligations
|
(14.2)
|
(12.0)
|
(27.6)
|
(22.5)
|
Bank indebtedness and
cheques outstanding
|
(5.0)
|
9.2
|
(1.8)
|
3.8
|
Dividends paid to
shareholders
|
(31.4)
|
(27.7)
|
(59.8)
|
(52.9)
|
Proceeds from issuance
of convertible debentures – net of
issuance costs
|
143.0
|
-
|
143.0
|
-
|
|
186.0
|
(108.5)
|
343.9
|
202.1
|
|
|
|
|
|
|
Cash flows from
(used in) investing activities:
|
|
|
|
|
Capital asset
additions
|
(57.1)
|
(34.4)
|
(100.4)
|
(68.6)
|
Business
acquisitions
|
(81.8)
|
(1.6)
|
(117.5)
|
(179.0)
|
Payments to
shareholders of non-wholly owned subsidiaries
|
(0.6)
|
(0.8)
|
(0.6)
|
(0.8)
|
Payment of
provisions
|
(4.3)
|
-
|
(6.3)
|
(6.3)
|
Proceeds from
sale-leaseback
|
-
|
150.0
|
-
|
150.0
|
Net change in share
purchase loans and notes receivable
|
0.1
|
0.3
|
(3.1)
|
0.5
|
Investment in and
advances to associates – net of
distributions
|
14.1
|
(22.3)
|
3.4
|
(470.3)
|
|
(129.6)
|
91.2
|
(224.5)
|
(574.5)
|
|
|
|
|
|
Change in cash and cash
equivalents
|
(14.7)
|
(5.7)
|
(2.7)
|
(338.8)
|
Cash and cash
equivalents – beginning of period
|
28.5
|
29.9
|
16.5
|
363.0
|
|
|
|
|
|
Cash and cash
equivalents – end of period
|
13.8
|
24.2
|
13.8
|
24.2
|
|
|
|
|
|
|
|
|
|
|
Interest and other
financing costs paid
|
18.0
|
13.0
|
24.0
|
19.8
|
Income taxes
paid
|
18.6
|
8.1
|
56.6
|
23.0
|
|
|
|
|
|
|
|
|
|
|
|
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
Jun 25,
2022
|
13 weeks
ended
Jun 26,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
Earnings before income
taxes
|
79.5
|
36.0
|
110.4
|
64.6
|
Plant start-up and
restructuring costs
|
1.8
|
0.5
|
5.3
|
1.0
|
Depreciation of capital
assets
|
18.2
|
17.2
|
35.7
|
34.8
|
Amortization of
intangible assets
|
7.7
|
6.8
|
15.2
|
13.4
|
Amortization of right
of use assets
|
11.2
|
9.2
|
22.0
|
17.3
|
Accretion of lease
obligations
|
5.5
|
5.0
|
10.8
|
8.8
|
Interest and other
financing costs
|
15.7
|
10.9
|
27.1
|
21.3
|
Change in fair value of
option liabilities
|
-
|
24.3
|
-
|
24.3
|
Business acquisition
transaction costs
|
2.5
|
1.1
|
3.7
|
4.4
|
Change in value of
puttable interest in subsidiaries
|
-
|
0.5
|
-
|
0.5
|
Accretion of
provisions
|
1.7
|
1.8
|
4.5
|
3.6
|
Equity loss (earnings)
in investments in associates
|
6.8
|
(1.1)
|
11.7
|
4.9
|
Fair value gains on
investments in associates
|
(19.8)
|
-
|
(19.8)
|
-
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
Adjusted
EBITDA
|
130.8
|
112.2
|
226.6
|
194.7
|
Free Cash Flow
(in millions of
dollars)
|
52 weeks
ended
Dec 25,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
Rolling
Four
Quarters
|
Cash flow from
operating activities
|
66.3
|
(122.1)
|
33.6
|
(89.4)
|
Changes in non-cash
working capital
|
253.8
|
288.5
|
102.5
|
439.8
|
Lease obligation
payments
|
(50.4)
|
(27.6)
|
(22.5)
|
(55.5)
|
Business acquisition
transaction costs
|
7.7
|
3.7
|
4.4
|
7.0
|
Clearwater closing risk
fee
|
(2.4)
|
-
|
(2.4)
|
-
|
Plant start-up and
restructuring costs
|
2.1
|
5.3
|
1.0
|
6.4
|
Income taxes on sale
and leaseback transaction
|
15.5
|
-
|
14.2
|
1.3
|
Maintenance capital
expenditures
|
(29.3)
|
(19.1)
|
(15.1)
|
(33.3)
|
Free cash
flow
|
263.3
|
128.7
|
115.7
|
276.3
|
Adjusted Earnings and Adjusted Earnings per Share
(in millions of
dollars except per share amounts)
|
13 weeks
ended
Jun 25,
2022
|
13 weeks
ended
Jun 26,
2021
|
26 weeks
ended
Jun 25,
2022
|
26 weeks
ended
Jun 26,
2021
|
Earnings
|
63.3
|
28.0
|
85.7
|
47.8
|
Plant start-up and
restructuring costs
|
1.8
|
0.5
|
5.3
|
1.0
|
Business acquisition
transaction costs
|
2.5
|
1.1
|
3.7
|
4.4
|
Accretion of
provisions
|
1.7
|
1.8
|
4.5
|
3.6
|
Equity loss (earnings)
from associates in start-up
|
6.8
|
(1.1)
|
11.7
|
4.9
|
Change in value of
puttable interest in subsidiaries
|
-
|
0.5
|
-
|
0.5
|
Amortization of
intangibles associated with acquisitions
|
7.7
|
6.8
|
15.2
|
13.4
|
Fair value gains on
investments in associates
|
(19.8)
|
-
|
(19.8)
|
-
|
Change in fair value of
option liabilities
|
-
|
24.3
|
-
|
24.3
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
|
64.0
|
61.9
|
106.3
|
95.7
|
Current and deferred
income tax effect of above items, and
unusual tax recovery
|
(2.5)
|
(8.4)
|
(5.4)
|
(10.9)
|
Adjusted
earnings
|
61.5
|
53.5
|
100.9
|
84.8
|
Weighted average shares
outstanding
|
44.6
|
43.4
|
44.6
|
43.4
|
Adjusted earnings per
share
|
1.38
|
1.23
|
2.26
|
1.95
|
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 August 5, 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; (xii) financial leverage ratios; and (xiii) value of puttable
interests.
Some of the factors that could cause actual results to differ
materially from the Company's expectations are outlined in the
Company's MD&A for the 13 and 26 Weeks Ended June 25, 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.
- The average cost of the basket of procured products and raw
materials purchased by the Company will remain relatively stable in
the short to medium term.
- Global supply chains will continue 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 (see Risks and
Uncertainties outlined in the Company's MD&A for the 13 and 52
Weeks Ended December 25, 2021)
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 August 5,
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