VANCOUVER, BC, March 16,
2023 /CNW/ - Pemium Brands Holdings Corporation (TSX:
PBH), a leading producer, marketer and distributor of branded
specialty food products, announced today its results for the fourth
quarter of 2022.
FOURTH QUARTER HIGHLIGHTS
- Record fourth quarter revenue of $1.63
billion representing a 21.5%, or $289.4 million, increase as compared to the
fourth quarter of 2021
- Record fourth quarter adjusted EBITDA1 of
$136.4 million representing a 20.3%,
or $23.0 million, increase as
compared to the fourth quarter of 2021
- Fourth quarter adjusted EPS1 of $1.19 per share, which was unchanged from the
fourth quarter of 2021
- Subsequent to the quarter, dividend rate increased by 10.0% and
a dividend of $0.77 per common share
declared for the first quarter of 2023
- Purchased 167,086 common shares under a normal course issuer
bid for $13.7 million representing an
average per share cost of $81.68
- Initiated a three-phase project to build a 525,000 square foot
state-of-the-art sandwich production facility in Cleveland, TN
- Released new five-year plan with revenue and adjusted EBITDA
targets of $10.0 billion and
$1.0 billion, respectively
2022 HIGHLIGHTS
- Record revenue of $6.0 billion
representing a 22.3%, or $1.1
billion, increase as compared to 2021
- Record adjusted EBITDA1 of $504.2 million representing a 17.1%, or
$73.5 million, increase as compared
to 2021
- Record adjusted EPS1 of $4.82 per share representing a 7.6%, or
$0.34 per share increase as compared
to 2021
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 fourth
quarter 2022 results today at 10:30
a.m. Vancouver time
(1:30 p.m. Toronto time). An investor presentation that
will be referenced on the conference call is available here or
by navigating through 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: 11419492)
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 noon Toronto time on April
17, 2023 at (877) 674-7070 (passcode:
419492#). 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)
|
|
14
weeks
ended
Dec
31,
2022
|
|
13
weeks
ended
Dec
25,
2021
|
|
53
weeks
ended
Dec
31,
2022
|
|
52
weeks
ended
Dec
25,
2021
|
Revenue
|
|
1,634.8
|
|
1,345.4
|
|
6,029.8
|
|
4,931.7
|
Adjusted
EBITDA1
|
|
136.4
|
|
113.4
|
|
504.2
|
|
430.7
|
Earnings
|
|
30.9
|
|
38.0
|
|
160.1
|
|
132.7
|
EPS
|
|
0.69
|
|
0.87
|
|
3.59
|
|
3.05
|
Adjusted
earnings1
|
|
52.9
|
|
52.2
|
|
215.0
|
|
194.8
|
Adjusted
EPS1
|
|
1.19
|
|
1.19
|
|
4.82
|
|
4.48
|
Free cash
flow1
|
|
|
|
|
|
285.8
|
|
263.3
|
Free cash flow per
share
|
|
|
|
|
|
6.41
|
|
6.05
|
Declared
dividends
|
|
|
|
|
|
125.3
|
|
111.5
|
Declared dividend per
share
|
|
|
|
|
|
2.80
|
|
2.54
|
Payout
ratio1
|
|
|
|
|
|
43.8 %
|
|
42.3 %
|
|
1
Reconciliations for all non-IFRS measures are included in the
Non-IFRS Financial Measures section of this press
release.
|
|
"Our record results for the fourth quarter, which is a
seasonally slower quarter, once again demonstrates the strength and
resiliency of our business model as we were able to achieve these
during a period of unprecedented volatility," said Mr. George Paleologou, President and CEO. "Our
performance is the direct result of our decentralized management
structure and strong entrepreneurial focused culture, which on a
combined basis empower our talented management teams to act
decisively and effectively in dealing with challenges and
capitalizing on opportunities.
"For 2022, we are very pleased to report our 18th consecutive
year of record financial results. Furthermore, we achieved
our five-year sales target one year ahead of plan and are well
positioned to meet our five-year adjusted EBITDA target of
$600 million this year," said Mr.
Paleologou. "Looking forward, we continue to see tremendous
opportunities to grow both our revenue and margins and have
announced a new five-year plan which calls for us to deliver
$10 billion in sales and $1 billion in adjusted EBITDA by 2027. With
a full pipeline of opportunities, we expect acquisitions to
continue to be a key growth driver for our business, however, these
new targets are conservatively based primarily on organic
initiatives given the significant opportunities our businesses are
pursuing through product innovation, automation and capacity
expansion," stated Mr. Paleologou.
FIRST QUARTER 2023 DIVIDEND
The Company also announced that its Board of Directors approved
a cash dividend of $0.77 per share
for the first quarter of 2023, which will be payable on
April 14, 2023 to shareholders of
record at the close of business on March 31,
2023.
Unless indicated otherwise in writing at or before the time the
dividend is paid, each dividend paid by the Company in 2023 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)
|
|
14 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
13 weeks
ended
Dec 25,
2021
|
%
(1)
|
|
53 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
52 weeks
ended
Dec 25,
2021
|
%
(1)
|
Revenue by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
1,018.7
|
62.3 %
|
|
779.4
|
57.9 %
|
|
3,731.3
|
61.9 %
|
|
2,987.1
|
60.6 %
|
Premium Food
Distribution
|
616.1
|
37.7 %
|
|
566.0
|
42.1 %
|
|
2,298.5
|
38.1 %
|
|
1,944.6
|
39.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
1,634.8
|
100.0 %
|
|
1,345.4
|
100.0 %
|
|
6,029.8
|
100.0 %
|
|
4,931.7
|
100.0 %
|
|
|
(1)
|
Expressed as a
percentage of consolidated revenue.
|
|
|
Specialty Foods' (SF) revenue for the quarter increased by
$239.3 million or 30.7% primarily due
to: (i) selling price inflation of $81.3
million, which was driven by increases implemented in
reaction to inflationary pressures across a broad range of costs;
(ii) an extra week of operations resulting from the Company's 2022
fiscal year having 53 weeks versus 52 weeks in the 2021 fiscal year
– this accounted for $47.6 million of
SF's growth; (iii) business acquisitions, which accounted for
$38.5 million of SF's growth; (iv) a
$36.1 million increase in the
translated value of sales generated by SF's U.S. based businesses
due to a weaker Canadian dollar – approximately 55% of SF's revenue
for the quarter was generated by these businesses; and (v) organic
volume growth of $35.8 million
representing an organic volume growth rate (OVGR) of
4.6%.
SF's OVGR, which was driven primarily by its artisan sandwich,
cooked protein and specialty baked goods initiatives, was within
its long-term targeted range of 4% to 6% but at the lower end due
to: (i) generally reduced growth rates in the fourth quarter as a
result of seasonal factors; (ii) lower sales of branded protein
products in the retail channel associated with a shift in consumer
spending to out-of-home dining; (iii) a shortage of turkey raw
materials caused by industry wide supply challenges; and (iv) the
impacts of price inflation which slowed growth rates in certain
limited product categories.
SF's revenue for 2022 increased by $744.2
million or 24.9% primarily due to: (i) selling price
inflation of $327.5 million; (ii)
business acquisitions, which accounted for $231.0 million of the increase; (iii) organic
volume growth of $72.3 million
representing an OVGR of 2.4%; (iv) a $65.8
million increase in the translated value of sales generated
by the Company's U.S. based businesses; and (v) the extra week of
operations.
Premium Food Distribution's (PFD) revenue for the quarter
increased by $50.1 million or 8.9%
due to: (i) the extra week of operations – this accounted for
$32.4 million of PFD's growth; (ii)
organic volume growth of $25.0
million representing an OVGR of 4.4%; (iii) a $6.8 million increase in the translated value of
sales generated by PFD's U.S. based businesses due to a weaker
Canadian dollar; and (iv) business acquisitions, which accounted
for $5.3 million of PFD's growth.
These factors were partially offset by selling price deflation of
$19.4 million, which was primarily
due to lower lobster market prices as PFD continued to implement
price increases on many of its other products in reaction to broad
based cost inflation.
PFD's OVGR of 4.4%, which was driven by its value-added
processed lobster initiatives and a reclass of warehousing rental
income, was within its long-term targeted range of 4% to 6% but at
the lower end due to: (i) generally reduced growth rates in the
fourth quarter as a result of seasonal factors; and (ii) less
business-to-business trading of live lobsters as PFD increased its
inventory to support the future growth of its processed lobster
initiatives. PFD also experienced strong growth in its sales
to foodservice and cruise line customers post the lifting of
pandemic related restrictions, however, this was largely offset by
lower retail channel sales associated with a shift in consumer
spending to out-of-home experiences.
PFD's revenue for 2022 increased by $353.9 million or 18.2% primarily due to: (i)
business acquisitions, which accounted for $173.5 million of the increase; (ii) selling
price inflation of $81.0 million;
(iii) organic volume growth of $53.3
million representing an OVGR of 2.7%; (iv) the extra week of
operations; and (v) a $13.7 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)
|
|
14 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
13 weeks
ended
Dec 25,
2021
|
%
(1)
|
|
53 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
52 weeks
ended
Dec 25,
2021
|
%
(1)
|
Gross profit by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
209.4
|
20.6 %
|
|
150.3
|
19.3 %
|
|
757.3
|
20.3 %
|
|
606.5
|
20.3 %
|
Premium Food
Distribution
|
96.6
|
15.7 %
|
|
83.8
|
14.8 %
|
|
346.4
|
15.1 %
|
|
295.4
|
15.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
306.0
|
18.7 %
|
|
234.1
|
17.4 %
|
|
1,103.7
|
18.3 %
|
|
901.9
|
18.3 %
|
|
|
(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 130 basis points primarily due to: (i)
steady progress in normalizing its margins as its selling price
increases catch up to the impacts of cost inflation across a broad
range of inputs including raw materials, labor and freight; (ii)
production efficiencies resulting from investments in automation,
continuous improvement projects and a more stable labor market; and
(iii) sales leveraging associated with SF's organic volume
growth. These factors were partially offset by: (i) retailer
notice-period requirements which delayed the implementation of
additional selling price increases being put through largely to
address general cost inflation – adjusting for a full quarter's
impact of price increases implemented during the quarter, SF's
normalized gross margin is approximately 21.2%; (ii) the extra week
of operations as this is a seasonally very low sales week resulting
in reduced sales leveraging and lower production efficiencies; and
(iii) recently acquired businesses that are undergoing significant
restructurings and in the interim are generating lower margins
relative to SF's average margin.
SF's gross margin for 2022, which is below its longer-term
average, remained the same as 2021 primarily due to the factors
outlined above, however, with cost inflation and the impact of
recent acquisitions more than offsetting the pace of SF's selling
price increase during the first three quarters of the year.
Regarding retailer notice-period related delays, adjusting for a
full year's impact, SF's normalized gross margin for 2022 is
approximately 21.2%.
PFD's gross margin for the quarter increased by 90 basis points
primarily due to sales leveraging associated with PFD's organic
growth and the reclass of warehouse rental income.
PFD's gross margin for 2022 was relatively stable as compared to
2021 and in line with its longer-term average.
Selling, General and Administrative Expenses
(SG&A)
(in millions of
dollars except percentages)
|
|
14 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
13 weeks
ended
Dec 25,
2021
|
%
(1)
|
|
53 weeks
ended
Dec 31,
2022
|
%
(1)
|
|
52 weeks
ended
Dec 25,
2021
|
%
(1)
|
SG&A by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
126.9
|
12.5 %
|
|
87.1
|
11.2 %
|
|
445.0
|
11.9 %
|
|
342.0
|
11.4 %
|
Premium Food
Distribution
|
51.7
|
8.4 %
|
|
43.3
|
7.7 %
|
|
191.2
|
8.3 %
|
|
161.8
|
8.3 %
|
Corporate
|
7.5
|
|
|
5.0
|
|
|
25.1
|
|
|
21.1
|
|
Consolidated
|
186.1
|
11.4 %
|
|
135.4
|
10.1 %
|
|
661.3
|
11.0 %
|
|
524.9
|
10.6 %
|
|
(1)
Expressed as a percentage of the
corresponding segment's revenue.
|
|
SF's SG&A as a percentage of sales (SG&A ratio) for the
quarter increased by 130 basis points primarily due to: (i) cost
inflation; (ii) higher incentive-based compensation accruals; (iii)
the extra week of operations; and (iv) business acquisitions.
These factors were partially offset by sales leveraging associated
with SF's organic sales growth.
SF's SG&A ratio for 2022 increased by 50 basis points
primarily due to cost inflation and business acquisitions,
partially offset by sales leveraging associated with SF's organic
growth.
PFD's SG&A ratio for the quarter increased by 70 basis
points primarily due to cost inflation and the extra week of
operations, partially offset by sales leveraging associated with
PFD's organic growth.
PFD's SG&A ratio for 2022 was relatively stable as compared
to 2021 but lower than its longer-term average primarily due to
sales leveraging associated with PFD's organic growth and lower
incentive-based compensation accruals.
Adjusted EBITDA (1)
(in millions of
dollars except percentages)
|
|
14 weeks
ended
Dec 31,
2022
|
%
(2)
|
|
13 weeks
ended
Dec 25,
2021
|
%
(2)
|
|
53 weeks
ended
Dec 31,
2022
|
%
(2)
|
|
52 weeks
ended
Dec 25,
2021
|
%
(2)
|
Adjusted EBITDA by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
82.5
|
8.1 %
|
|
63.2
|
8.1 %
|
|
312.3
|
8.4 %
|
|
264.5
|
8.9 %
|
Premium Food
Distribution
|
44.9
|
7.3 %
|
|
40.5
|
7.2 %
|
|
155.2
|
6.8 %
|
|
133.6
|
6.9 %
|
Corporate
|
(7.5)
|
|
|
(5.0)
|
|
|
(25.1)
|
|
|
(21.1)
|
|
Interest Income from
Investments
|
16.5
|
|
|
14.7
|
|
|
61.8
|
|
|
53.7
|
|
Consolidated
|
136.4
|
8.3 %
|
|
113.4
|
8.4 %
|
|
504.2
|
8.4 %
|
|
430.7
|
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 margin for 2022 of 8.4% was below
its long-term annual target of 10% primarily due to: (i) retailer
notice-period requirements, which delayed the implementation of
selling price increases being put through to address cost inflation
– adjusting for the full impact of price increases implemented in
2022, the Company's normalized adjusted EBITDA margin is
approximately 9.1%; (ii) sales challenges impacting its SF segment
in the second and third quarters as the contribution margin
associated with SF's incremental sales is significantly above 10%;
and (iii) recently acquired businesses that are undergoing
significant restructurings and in the interim are generating lower
margins relative to the Company's 10% target.
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 2022, the Company incurred $27.2
million in plant start-up and restructuring costs relating
primarily to the following projects:
- A 42,000 square foot expansion of its artisan bakery in
British Columbia;
- Construction of a new 91,000 square foot artisan bakery in
California;
- A 26,000 square foot expansion of one of its meat snack
production facilities in Ontario;
- Installation of new cooking line and freezing technology at one
of its cooked protein facilities in Quebec;
- The reconfiguration and 107,000 square foot expansion of one of
its meat snack and cooked protein facility in Washington;
- Installation of fully automated sandwich production lines in
its plants in Arizona and
Nevada;
- A 42,600 square foot expansion of its sandwich production
facility in Minnesota;
- Installation of new packaging technology at its sandwich
production facility in Mississippi;
- The start-up of new sandwich programs at its production
facilities in Quebec, Mississippi and Minnesota; 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)
|
14 weeks
ended
Dec 31,
2022
|
|
13 weeks
ended
Dec 31,
2021
|
|
52 weeks
ended
Dec 31,
2022
|
|
52 weeks
ended
Dec 31,
2021
|
Clearwater:
|
Revenue
|
192.5
|
|
141.7
|
|
604.5
|
|
532.9
|
Earnings before
payments to shareholders
|
15.5
|
|
1.9
|
|
47.0
|
|
42.1
|
Net loss
|
(6.9)
|
|
(15.0)
|
|
(37.5)
|
|
(33.1)
|
|
|
|
|
|
|
|
|
The Company:
|
|
|
|
|
|
|
|
Equity loss in
Clearwater
|
(3.5)
|
|
(3.0)
|
|
(18.8)
|
|
(9.9)
|
Other net equity
earnings
|
2.0
|
|
0.9
|
|
3.0
|
|
2.1
|
Equity loss in
investment in associates
|
(1.5)
|
|
(2.1)
|
|
(15.8)
|
|
(7.8)
|
Clearwater Seafoods Incorporated (Clearwater)
Clearwater's sales for the
fourth quarter and 2022 increased by $50.8
million and $71.6 million,
respectively, primarily due to: (i) continued strong pricing and
global demand for Clearwater's
core harvested species; (ii) the timing of the sale of certain
harvested species associated with general fluctuations in fishing
activity; and (iii) an extra week of operations in the fourth
quarter resulting from Clearwater
matching its reporting periods with the Company's – this accounted
for $6.9 million of Clearwater's growth.
Clearwater's earnings before
payments to shareholders for the fourth quarter and 2022 increased
by $13.6 million and $4.9 million, respectively, primarily due to: (i)
a continued strong pricing environment for Clearwater's core harvested species; and (ii)
higher sales volumes. These factors were partially offset by:
(i) general cost inflation and, in particular, higher fleet fuel
costs and wages; and (ii) discretionary promotional activity and
travel returning to pre-pandemic levels.
Sales and Adjusted EBITDA Outlook
See Forward Looking Statements for a discussion of the
risks and assumptions associated with forward looking
statements.
2023 Outlook
(in millions of
dollars)
|
Bottom of
Range
|
|
Top of Range
|
Revenue guidance
range
|
6,400
|
|
6,600
|
Adjusted EBITDA
guidance range
|
590
|
|
610
|
For 2023, the Company expects its sales to be between
$6.4 billion and $6.6 billion and its adjusted EBITDA to be
between $590 million and $610 million. These estimates are based on
a range of assumptions (see Forward Looking Statements)
including: (i) reasonably stable economic environments in
Canada and the U.S. with inflation
rates in both countries continuing to moderate; (ii) stable raw
material costs; and (iii) modest appreciation in the Canadian
dollar relative to the U.S. dollar.
The Company's sales and adjusted EBITDA outlooks for 2023 do not
incorporate any provisions for potential future acquisitions,
however, it remains very active on this front and expects (see
Forward Looking Statements) to complete several transactions
during the year.
5 Year Plan
In 2018, the Company set the following five-year targets:
(in millions of
dollars)
|
2018
|
|
5-Year
Target
(2023)
|
Revenue
|
3,026
|
|
6,000
|
Adjusted
EBITDA
|
251
|
|
600
|
The Company achieved its five-year revenue target one year early
with fiscal 2022 sales of just over $6.0
billion and is well positioned to meet its five-year
adjusted EBITDA target in 2023 (see Forward Looking
Statements). Based on this, the Company has set the
following new five-year targets:
(in millions of
dollars)
|
2022
|
|
5-Year
Target
(2027)
|
Revenue
|
6,030
|
|
10,000
|
Adjusted
EBITDA
|
504
|
|
1,000
|
Premium Brands
Holdings Corporation
|
Consolidated Balance
Sheets (in millions of Canadian dollars)
|
|
|
|
|
|
December 31,
2022
|
|
December 25,
2021
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
11.4
|
|
16.5
|
Accounts
receivable
|
590.8
|
|
521.7
|
Inventories
|
786.1
|
|
645.2
|
Prepaid expenses and
other assets
|
38.0
|
|
28.6
|
|
1,426.3
|
|
1,212.0
|
|
|
|
|
Capital
assets
|
862.2
|
|
617.3
|
Right of use
assets
|
576.0
|
|
464.5
|
Intangible
assets
|
558.5
|
|
526.3
|
Goodwill
|
1,093.0
|
|
1,001.2
|
Investment in and
advances to associates
|
538.9
|
|
568.8
|
Other assets
|
23.7
|
|
18.8
|
|
|
|
|
|
5,078.6
|
|
4,408.9
|
|
|
|
|
Current
liabilities:
|
|
|
|
Cheques
outstanding
|
19.3
|
|
18.7
|
Bank
indebtedness
|
18.0
|
|
16.3
|
Dividends
payable
|
31.3
|
|
28.4
|
Accounts payable and
accrued liabilities
|
419.4
|
|
445.5
|
Current portion of
puttable interest in subsidiaries
|
23.1
|
|
27.1
|
Current portion of
long-term debt
|
6.5
|
|
4.6
|
Current portion of
lease obligations
|
45.4
|
|
32.9
|
Current portion of
provisions
|
1.8
|
|
7.7
|
|
564.8
|
|
581.2
|
|
|
|
|
Long-term
debt
|
1,421.4
|
|
1,074.0
|
Lease
obligations
|
589.3
|
|
477.4
|
Puttable interest in
subsidiaries
|
43.9
|
|
-
|
Deferred
revenue
|
2.8
|
|
2.8
|
Provisions
|
44.2
|
|
63.4
|
Deferred income
taxes
|
120.6
|
|
105.2
|
|
2,787.0
|
|
2,304.0
|
|
|
|
|
Convertible unsecured
subordinated debentures
|
478.6
|
|
331.0
|
|
|
|
|
Equity attributable to
shareholders:
|
|
|
|
Retained
earnings
|
63.8
|
|
35.6
|
Share
capital
|
1,702.6
|
|
1,713.3
|
Reserves
|
46.6
|
|
25.0
|
|
1,813.0
|
|
1,773.9
|
|
|
|
|
|
5,078.6
|
|
4,408.9
|
Premium Brands
Holdings Corporation
|
Consolidated
Statements of Operations (in millions of Canadian dollars
except per share amounts)
|
|
|
|
|
|
|
14 weeks
ended
December 31,
2022
|
|
13 weeks
ended
December 25,
2021
|
|
53 weeks
ended
December 31,
2022
|
|
52 weeks
ended
December 25,
2021
|
|
|
|
|
|
|
|
|
Revenue
|
1,634.8
|
|
1,345.4
|
|
6,029.8
|
|
4,931.7
|
Cost of goods
sold
|
1,328.8
|
|
1,111.3
|
|
4,926.1
|
|
4,029.8
|
Gross profit before
depreciation, amortization and plant
start-up and restructuring costs
|
306.0
|
|
234.1
|
|
1,103.7
|
|
901.9
|
|
|
|
|
|
|
|
|
Interest income from
investment in associates
|
16.5
|
|
14.7
|
|
61.8
|
|
53.7
|
Selling, general and
administrative expenses
|
186.1
|
|
135.4
|
|
661.3
|
|
524.9
|
Operating profit before
depreciation, amortization and
plant start-up and restructuring
costs
|
136.4
|
|
113.4
|
|
504.2
|
|
430.7
|
|
|
|
|
|
|
|
|
Plant start-up and
restructuring costs
|
13.2
|
|
1.1
|
|
27.2
|
|
2.1
|
Depreciation of capital
assets
|
22.0
|
|
16.8
|
|
79.5
|
|
70.0
|
Amortization of
intangible assets
|
5.8
|
|
7.1
|
|
28.8
|
|
27.3
|
Amortization of right
of use assets
|
18.4
|
|
10.7
|
|
52.0
|
|
37.5
|
Accretion of lease
obligations
|
8.2
|
|
5.3
|
|
24.5
|
|
19.2
|
Interest and other
financing costs
|
31.7
|
|
8.3
|
|
81.4
|
|
41.3
|
Change in fair value of
option liabilities
|
-
|
|
3.1
|
|
-
|
|
30.0
|
Acquisition transaction
costs
|
1.2
|
|
1.9
|
|
6.2
|
|
7.7
|
Change in value of
puttable interest in subsidiaries
|
5.5
|
|
-
|
|
5.5
|
|
0.5
|
Accretion of
provisions
|
0.5
|
|
1.9
|
|
6.8
|
|
7.3
|
Remeasurement of
provisions
|
(21.8)
|
|
-
|
|
(21.8)
|
|
-
|
Equity loss in
investments in associates
|
1.5
|
|
2.1
|
|
15.8
|
|
7.8
|
Change in value of
investments in associates
|
16.0
|
|
-
|
|
16.0
|
|
-
|
Fair value gains on
investments in associates
|
(0.1)
|
|
-
|
|
(19.9)
|
|
-
|
Others
|
0.7
|
|
-
|
|
0.7
|
|
-
|
Clearwater closing risk
fee
|
-
|
|
-
|
|
-
|
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
|
-
|
|
-
|
|
(1.8)
|
Earnings before income
taxes
|
33.6
|
|
55.1
|
|
201.5
|
|
184.2
|
|
|
|
|
|
|
|
|
Provision for income
taxes (recovery)
|
|
|
|
|
|
|
|
Current
|
(1.7)
|
|
11.2
|
|
36.4
|
|
66.3
|
Deferred
|
4.4
|
|
5.9
|
|
5.0
|
|
(14.8)
|
|
2.7
|
|
17.1
|
|
41.4
|
|
51.5
|
|
|
|
|
|
|
|
|
Earnings
|
30.9
|
|
38.0
|
|
160.1
|
|
132.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
0.69
|
|
0.87
|
|
3.59
|
|
3.05
|
Diluted
|
0.69
|
|
0.87
|
|
3.57
|
|
3.04
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in millions):
|
|
|
|
|
|
|
|
Basic
|
44.6
|
|
43.7
|
|
44.6
|
|
43.5
|
Diluted
|
44.8
|
|
43.9
|
|
44.8
|
|
43.7
|
Premium Brands
Holdings Corporation
|
Consolidated
Statements of Cash Flows (in millions of Canadian
dollars)
|
|
|
|
|
14 weeks
ended
December 31,
2022
|
|
13 weeks
ended
December 25,
2021
|
|
53 weeks
ended
December 31,
2022
|
|
52 weeks
ended
December 25,
2021
|
|
|
|
|
|
|
|
|
Cash flows from
(used in) operating activities:
|
|
|
|
|
|
|
|
Earnings
|
30.9
|
|
38.0
|
|
160.1
|
|
132.7
|
Items not involving
cash:
|
|
|
|
|
|
|
|
Depreciation of
capital assets
|
22.0
|
|
16.8
|
|
79.5
|
|
70.0
|
Amortization of
intangible assets
|
5.8
|
|
7.1
|
|
28.8
|
|
27.3
|
Amortization of right
of use assets
|
18.4
|
|
10.7
|
|
52.0
|
|
37.5
|
Accretion of lease
obligations
|
8.2
|
|
5.3
|
|
24.5
|
|
19.2
|
Change in fair value
of option liabilities
|
-
|
|
3.1
|
|
-
|
|
30.0
|
Change in value of
puttable interest in subsidiaries
|
5.5
|
|
-
|
|
5.5
|
|
0.5
|
Accretion of
provisions
|
0.5
|
|
1.9
|
|
6.8
|
|
7.3
|
Remeasurement of
provisions
|
(21.8)
|
|
-
|
|
(21.8)
|
|
-
|
Equity
loss in
investment in associates
|
1.5
|
|
2.1
|
|
15.8
|
|
7.8
|
Change in value of
investments in associates
|
16.0
|
|
-
|
|
16.0
|
|
-
|
Fair value gains on
investments in associates
|
(0.1)
|
|
-
|
|
(19.9)
|
|
-
|
Non-cash financing
costs
|
2.1
|
|
0.1
|
|
6.8
|
|
4.4
|
Deferred income taxes
(recovery)
|
4.4
|
|
5.9
|
|
5.0
|
|
(14.8)
|
Others
|
0.7
|
|
-
|
|
0.7
|
|
-
|
Acquisition bargain
purchase gain
|
-
|
|
-
|
|
-
|
|
(1.8)
|
|
94.1
|
|
91.0
|
|
359.8
|
|
320.1
|
Change in non-cash
working capital
|
40.1
|
|
(112.1)
|
|
(263.3)
|
|
(253.8)
|
|
134.2
|
|
(21.1)
|
|
96.5
|
|
66.3
|
|
|
|
|
|
|
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
|
|
|
Long-term debt,
net
|
(40.1)
|
|
263.0
|
|
297.1
|
|
546.8
|
Payments for lease
obligations
|
(21.4)
|
|
(13.4)
|
|
(64.2)
|
|
(50.4)
|
Bank indebtedness and
cheques outstanding
|
1.9
|
|
13.4
|
|
2.3
|
|
15.9
|
Dividends paid to
shareholders
|
(31.3)
|
|
(27.6)
|
|
(122.5)
|
|
(108.2)
|
Repayment of
convertible debentures
|
-
|
|
(8.0)
|
|
-
|
|
(8.0)
|
Proceeds from issuance
of convertible debentures – net of
issuance costs
|
-
|
|
-
|
|
143.0
|
|
-
|
Common shares
purchased for cancellation
|
(13.7)
|
|
-
|
|
(13.7)
|
|
-
|
|
(104.6)
|
|
227.4
|
|
242.0
|
|
396.1
|
|
|
|
|
|
|
|
|
Cash flows from
(used in) investing activities:
|
|
|
|
|
|
|
|
Capital asset
additions
|
(73.7)
|
|
(43.2)
|
|
(228.4)
|
|
(143.2)
|
Business and asset
acquisitions
|
(2.4)
|
|
(174.6)
|
|
(122.9)
|
|
(359.7)
|
Payment of
provisions
|
(3.0)
|
|
-
|
|
(14.5)
|
|
(14.7)
|
Payments to
shareholders of non-wholly owned
subsidiaries
|
-
|
|
-
|
|
(0.6)
|
|
(0.6)
|
Payment for settlement
of puttable interest of non-wholly
owned subsidiary
|
(1.0)
|
|
-
|
|
(1.7)
|
|
(0.9)
|
Net change in share
purchase loans and notes receivable
|
(2.6)
|
|
0.5
|
|
(5.4)
|
|
1.2
|
Investment in and
advances to associates – net of
distributions
|
26.2
|
|
2.6
|
|
29.9
|
|
(441.0)
|
Proceeds from
sale-leaseback
|
-
|
|
-
|
|
-
|
|
150.0
|
|
(56.5)
|
|
(214.7)
|
|
(343.6)
|
|
(808.9)
|
|
|
|
|
|
|
|
|
Change in
cash and cash equivalents
|
(26.9)
|
|
(8.4)
|
|
(5.1)
|
|
(346.5)
|
Cash and cash
equivalents – beginning of period
|
38.3
|
|
24.9
|
|
16.5
|
|
363.0
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents – end of period
|
11.4
|
|
16.5
|
|
11.4
|
|
16.5
|
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)
|
14 weeks
ended
Dec 31,
2022
|
|
13 weeks
ended
Dec 25,
2021
|
|
53 weeks
ended
Dec 31,
2022
|
|
52 weeks
ended
Dec 25,
2021
|
Earnings before income
taxes
|
33.6
|
|
55.1
|
|
201.5
|
|
184.2
|
Plant start-up and
restructuring costs
|
13.2
|
|
1.1
|
|
27.2
|
|
2.1
|
Depreciation of capital
assets
|
22.0
|
|
16.8
|
|
79.5
|
|
70.0
|
Amortization of
intangible assets
|
5.8
|
|
7.1
|
|
28.8
|
|
27.3
|
Amortization of right
of use assets
|
18.4
|
|
10.7
|
|
52.0
|
|
37.5
|
Accretion of lease
obligations
|
8.2
|
|
5.3
|
|
24.5
|
|
19.2
|
Interest and other
financing costs
|
31.7
|
|
8.3
|
|
81.4
|
|
41.3
|
Change in fair value of
option liabilities
|
-
|
|
3.1
|
|
-
|
|
30.0
|
Business acquisition
transaction costs
|
1.2
|
|
1.9
|
|
6.2
|
|
7.7
|
Change in value of
puttable interest in subsidiaries
|
5.5
|
|
-
|
|
5.5
|
|
0.5
|
Accretion of
provisions
|
0.5
|
|
1.9
|
|
6.8
|
|
7.3
|
Remeasurement of
provisions
|
(21.8)
|
|
-
|
|
(21.8)
|
|
-
|
Equity loss in
investments in associates
|
1.5
|
|
2.1
|
|
15.8
|
|
7.8
|
Change in value of
investments in associates
|
16.0
|
|
-
|
|
16.0
|
|
-
|
Fair value gains on
investments in associates
|
(0.1)
|
|
-
|
|
(19.9)
|
|
-
|
Others
|
0.7
|
|
-
|
|
0.7
|
|
-
|
Clearwater closing risk
fee
|
-
|
|
-
|
|
-
|
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
|
-
|
|
-
|
|
(1.8)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
136.4
|
|
113.4
|
|
504.2
|
|
430.7
|
Free Cash Flow
(in millions of
dollars)
|
53 weeks
ended
Dec 31,
2022
|
|
52 weeks
ended
Dec 25,
2021
|
Cash flow from
operating activities
|
96.5
|
|
66.3
|
Changes in non-cash
working capital
|
263.3
|
|
253.8
|
Lease obligation
payments
|
(64.2)
|
|
(50.4)
|
Business acquisition
transaction costs
|
6.2
|
|
7.7
|
Clearwater closing risk
fee
|
-
|
|
(2.4)
|
Plant start-up and
restructuring costs
|
27.2
|
|
2.1
|
Income taxes on sale
and leaseback transaction
|
-
|
|
15.5
|
Maintenance capital
expenditures
|
(43.2)
|
|
(29.3)
|
|
|
|
|
Free cash
flow
|
285.8
|
|
263.3
|
Adjusted Earnings and Adjusted Earnings per Share
(in millions of
dollars except per share amounts)
|
14 weeks
ended
Dec 31,
2022
|
|
13 weeks
ended
Dec 25,
2021
|
|
53 weeks
ended
Dec 31,
2022
|
|
52 weeks
ended
Dec 25,
2021
|
Earnings
|
30.9
|
|
38.0
|
|
160.1
|
|
132.7
|
Plant start-up and
restructuring costs
|
13.2
|
|
1.1
|
|
27.2
|
|
2.1
|
Amortization of
intangibles associated
|
5.8
|
|
7.1
|
|
28.8
|
|
27.3
|
Change in fair value of
option liabilities
|
-
|
|
3.1
|
|
-
|
|
30.0
|
Business acquisition
transaction costs
|
1.2
|
|
1.9
|
|
6.2
|
|
7.7
|
Change in value of
puttable interest in subsidiaries
|
5.5
|
|
-
|
|
5.5
|
|
0.5
|
Accretion of
provisions
|
0.5
|
|
1.9
|
|
6.8
|
|
7.3
|
Remeasurement of
provisions
|
(21.8)
|
|
-
|
|
(21.8)
|
|
-
|
Equity loss from
associates in start-up
|
1.5
|
|
2.1
|
|
15.8
|
|
7.8
|
Change in value of
investments in associates
|
16.0
|
|
-
|
|
16.0
|
|
-
|
Fair value gains on
investments in associates
|
(0.1)
|
|
-
|
|
(19.9)
|
|
-
|
Others
|
0.7
|
|
-
|
|
0.7
|
|
-
|
Clearwater closing risk
fee
|
-
|
|
-
|
|
-
|
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
|
-
|
|
-
|
|
(1.8)
|
|
53.4
|
|
55.2
|
|
225.4
|
|
211.2
|
Current and deferred
income tax effect of above items, and
unusual tax recovery
|
(0.5)
|
|
(3.0)
|
|
(10.4)
|
|
(16.4)
|
Adjusted
earnings
|
52.9
|
|
52.2
|
|
215.0
|
|
194.8
|
Weighted average shares
outstanding
|
44.6
|
|
43.7
|
|
44.6
|
|
43.5
|
Adjusted earnings per
share
|
1.19
|
|
1.19
|
|
4.82
|
|
4.48
|
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 March 16, 2023, 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
Risks and Uncertainties section in the Company's MD&A
for the 14 and 53 Weeks Ended December 31,
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.
- Global supply chains will continue to normalize enabling the
Company to access sufficient goods and services for its
manufacturing and distribution operations.
- 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.
- 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 March 16,
2023 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