VANCOUVER, BC, Nov. 3, 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 third quarter of
2022.
THIRD QUARTER HIGHLIGHTS
- Record third quarter revenue of $1.62
billion representing a 21.0%, or $282.1 million, increase as compared to the third
quarter of 2021
- Record third quarter adjusted EBITDA1 of
$141.2 million representing a 15.2%,
or $18.6 million, increase as
compared to the third quarter of 2021
- Record third quarter adjusted EPS1 of $1.37 per share representing a 3.0%, or
$0.04 per share, increase as compared
to the third quarter of 2021
- The Company issued its 2022 ESG Progress Report, which can be
found on its website at www.premiumbrandsholdings.com
- The Company declared a dividend of $0.70 per share for the fourth 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 third
quarter 2022 results today at 10:30
a.m. PT (1:30 p.m. ET).
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: 90849003)
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. ET on
December 2, 2022 at (877)
674-7070 (passcode: 849003#). 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
Sep
24,
2022
|
13
weeks
ended
Sep
25,
2021
|
39
weeks
ended
Sep
24,
2022
|
39
weeks
ended
Sep
25,
2021
|
Revenue
|
|
|
1,623.9
|
1,341.8
|
4,395.0
|
3,586.3
|
Adjusted
EBITDA1
|
|
|
141.2
|
122.6
|
367.8
|
317.3
|
Earnings
|
|
|
43.5
|
46.9
|
129.2
|
94.7
|
EPS
|
|
|
0.97
|
1.08
|
2.89
|
2.18
|
Adjusted
earnings1
|
|
|
61.3
|
57.8
|
162.2
|
142.6
|
Adjusted
EPS1
|
|
|
1.37
|
1.33
|
3.63
|
3.28
|
|
|
|
Trailing Four
Quarters Ended
|
|
|
|
Sep
24,
2022
|
Sep
25,
2021
|
Free cash
flow1
|
|
|
285.9
|
245.6
|
Free cash flow per
share
|
|
|
6.45
|
5.80
|
Declared
dividends
|
|
|
122.5
|
108.2
|
Declared dividend per
share
|
|
|
2.7350
|
2.4825
|
Payout
ratio1
|
|
|
42.8 %
|
44.1 %
|
|
1
Reconciliations for all
non-IFRS measures are included in the Non-IFRS Financial Measures
section of this press release.
|
"We are pleased to report another quarter of record sales and
EBITDA as we continue to see a gradual return to more normal
operating conditions. We are particularly encouraged by the
trend in our results as our performance got progressively better
through the course of the quarter," said Mr. George Paleologou, President and CEO.
"Despite the persistent but moderating headwinds of inflation,
supply chain challenges and labor shortages, we are making steady
progress towards our short and long-term goals and remain confident
that our diversified business model, decentralized and
entrepreneurial culture, and dedicated and passionate people
position us to generate superior long-term returns for our
shareholders.
"Our businesses are continuing to invest in product innovation,
production capacity, process improvement and most importantly their
people, which has ideally positioned them to generate improved
margins and significant organic growth as consumer lifestyles and
behaviors return to normal. Furthermore, we continue to see
significant opportunities to enhance the growth and profitability
profiles of our businesses through strategic and opportunistic
acquisitions as our pipeline remains very robust with the number of
opportunities seeming to grow weekly.
"Looking forward, we are well positioned to achieve our
five-year 2023 sales and adjusted EBITDA targets of $6 billion and $600
million, respectively," added Mr. Paleologou.
"We are also pleased to announce the issuance of our 2022 ESG
Progress Report, which can be found on our website. We have
made significant progress over the past year in advancing our ESG
initiatives and remain committed to our goal of leading our
industry in this important area. As I have discussed before,
the core principles of ESG are part of DNA of our company and our
vision to help build a better future for our communities and the
world at large," said Mr. Paleologou.
FOURTH QUARTER 2022 DIVIDEND
The Company also announced that its Board of Directors approved
a cash dividend of $0.70 per share
for the fourth quarter of 2022, which will be payable on
January 16, 2023 to shareholders of
record at the close of business on December
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
Sep 24,
2022
|
%
(1)
|
13 weeks
ended
Sep 25,
2021
|
%
(1)
|
39 weeks
ended
Sep 24,
2022
|
%
(1)
|
39 weeks
ended
Sep 25,
2021
|
%
(1)
|
Revenue by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
994.1
|
61.2 %
|
776.3
|
57.9 %
|
2,712.6
|
61.7 %
|
2,207.7
|
61.6 %
|
Premium Food
Distribution
|
629.8
|
38.8 %
|
565.5
|
42.1 %
|
1,682.4
|
38.3 %
|
1,378.6
|
38.4 %
|
Consolidated
|
1,623.9
|
100.0 %
|
1,341.8
|
100.0 %
|
4,395.0
|
100.0 %
|
3,586.3
|
100.0 %
|
(1)
Expressed as a percentage of consolidated
revenue.
|
Specialty Foods' (SF) revenue for the quarter increased by
$217.8 million or 28.1% primarily due
to: (i) business acquisitions, which accounted for $100.6 million of SF's growth; (ii) selling price
inflation of $90.9 million, which was
driven by increases implemented in reaction to inflationary
pressures across a broad range of costs; (iii) organic volume
growth of $31.0 million representing
an organic volume growth rate (OVGR) of 4.0%; and (iv) a
$13.8 million increase in the
translated value of sales generated by SF's U.S. based businesses
due to a weaker Canadian dollar – approximately 54.0% of SF's
revenue for the quarter was generated by these businesses.
These factors were partially offset by an $18.5 million accrual for a claim made by a
customer for products sold in the second quarter of 2022 that
did not meet the customer's specifications. The
specifications issue was the result of raw materials supplied to SF
that did not meet its own defined requirements, and
correspondingly, the impact of this accrual on SF's gross profit is
offset by an accrual for expected proceeds from claims against the
associated supplier and/or the Company's insurance
policies.
SF's OVGR of 4.0% was driven primarily by its artisan sandwich
and specialty baked goods initiatives. This rate was within
SF's long-term targeted range of 4% to 6% but significantly below
its medium term growth expectations due to: (i) lower sales of
branded protein products in the retail channel resulting from a
shift in consumer spending to out-of-home dining and less retail
featuring activity; (ii) the cancellation of a recently launched
new product by a major customer as a result of the product
specification issue outlined above; (iii) a shortage of turkey raw
materials that resulted in short shipments to customers and/or the
temporary delisting of certain deli products; (iv) a three week
shutdown of production of a high volume cooked protein product due
to disruptions caused by the installation of new manufacturing
equipment; and (v) price related demand destruction in certain
limited product categories – primarily meat snacks in the
convenience store channel.
SF's revenue for the first three quarters of 2022 increased by
$504.9 million or 22.9% primarily due
to: (i) selling price inflation of $246.2
million; (ii) business acquisitions, which accounted for
$192.5 million of the increase; (iii)
organic volume growth of $36.4
million after deducting the $18.5
million customer claim recorded in the third quarter; and
(iv) a $29.8 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 $64.3 million or 11.4%
due to: (i) business acquisitions, which accounted for $52.8 million of PFD's growth; (ii) organic
volume growth of $8.4 million
representing an OVGR of 1.5%; and (iii) a $4.5 million increase in the translated value of
sales generated by PFD's U.S. based businesses due to a weaker
Canadian dollar. These factors were partially offset by
selling price deflation of $1.4
million, which was entirely 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 1.5% was driven by: (i) a recovery in its
foodservice and cruise line sales post the lifting of pandemic
related restrictions; and (ii) growing momentum in several of its
live and value-added lobster initiatives. This rate was below
PFD's long-term targeted range of 4% to 6% primarily due to: (i)
reduced retail channel sales resulting from a shift in consumer
spending to out-of-home experiences and less retail featuring
activity; and (ii) less trading of lobsters as PFD reallocates
supply to its value-added initiatives, which resulted in a
year-over-year increase in its lobster inventory.
PFD's revenue for the first three quarters of 2022 increased by
$303.8 million or 22.0% primarily due
to: (i) business acquisitions, which accounted for $168.2 million of the increase; (ii) selling
price inflation of $100.4 million;
(iii) organic volume growth of $28.1
million; and (iv) a $7.1
million increase in the translated value of sales generated
by the Company's U.S. based businesses.
Specialty Foods' (SF) revenue for the quarter increased by
$217.8 million or 28.1% primarily due
to: (i) business acquisitions, which accounted for $100.6 million of SF's growth; (ii) selling price
inflation of $90.9 million, which was
driven by increases implemented in reaction to inflationary
pressures across a broad range of costs; (iii) organic volume
growth of $31.0 million representing
an organic volume growth rate (OVGR) of 4.0%; and (iv) a
$13.8 million increase in the
translated value of sales generated by SF's U.S. based businesses
due to a weaker Canadian dollar – approximately 54.0% of SF's
revenue for the quarter was generated by these businesses.
These factors were partially offset by an $18.5 million accrual for a claim made by a
customer for products sold in the second quarter of 2022 that did
not meet the customer's specifications. The specifications
issue was the result of raw materials supplied to SF that did not
meet its own defined requirements, and correspondingly, the impact
of this accrual on SF's gross profit is offset by an accrual for
expected proceeds from claims against the associated supplier
and/or the Company's insurance policies.
Gross Profit
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Sep 24,
2022
|
%
(1)
|
13 weeks
ended
Sep 25,
2021
|
%
(1)
|
39 weeks
ended
Sep 24,
2022
|
%
(1)
|
39 weeks
ended
Sep 25,
2021
|
%
(1)
|
Gross profit by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
193.7
|
19.5 %
|
156.9
|
20.2 %
|
547.9
|
20.2 %
|
456.2
|
20.7 %
|
Premium Food
Distribution
|
100.1
|
15.9 %
|
84.5
|
14.9 %
|
249.8
|
14.8 %
|
211.6
|
15.3 %
|
Consolidated
|
293.8
|
18.1 %
|
241.4
|
18.0 %
|
797.7
|
18.2 %
|
667.8
|
18.6 %
|
(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 70 basis points primarily due to: (i)
wage and freight cost inflation; (ii) additional outside storage
costs associated with higher inventory levels – SF's inventory is
expected (see Forward Looking Statements) to return to more
normal levels over the next couple of quarters as global supply
chain issues are resolved and raw material costs stabilize; (iii)
retailer notice-period requirements which delayed the
implementation of selling price increases being put through to
address cost inflation – adjusting for a full quarter's impact of
price increases implemented during the quarter, SF's normalized
gross margin is approximately 19.9%; and (iv) recently acquired
businesses that are undergoing significant restructurings and in
the interim are generating lower margins relative to SF's average
margin. These factors were partially offset by: (i) sales
leveraging associated with SF's organic volume growth; and (ii)
production efficiencies resulting from investments in automation,
continuous improvement projects and a more stable labor market.
SF's gross margin for the first three quarters of 2022 decreased
by 50 basis points primarily due to the factors outlined
above. In regard to retailer notice-period related delays,
adjusting for the year-to-date impact, SF's normalized gross margin
is approximately 21.2%.
PFD's gross margin for the quarter increased by 100 basis points
primarily due to higher margins on lobster based products as a
result of more favorable market conditions as well as PFD's focus
on value-added initiatives, partially offset by: (i) higher costs
across 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 some of its businesses did not maintain the
same margin percentage due to a variety of factors including
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) recently acquired businesses generating
lower margins relative to PFD's average.
PFD's gross margin for the first three quarters of 2022
decreased by 50 basis points primarily due to: (i) the cost
inflation related challenges discussed above; and (ii) recently
acquired businesses generating lower margins relative to PFD's
average. These factors were partially offset by sales
leveraging associated with PFD's organic growth. On a
year-to-date basis, the third quarter impact of higher lobster
product margins was offset by a variety of lobster market-related
challenges earlier in the year.
Selling, General and Administrative Expenses
(SG&A)
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Sep 24,
2022
|
%
(1)
|
13 weeks
ended
Sep 25,
2021
|
%
(1)
|
39 weeks
ended
Sep 24,
2022
|
%
(1)
|
39 weeks
ended
Sep 25,
2021
|
%
(1)
|
SG&A by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
114.7
|
11.5 %
|
85.9
|
11.1 %
|
318.1
|
11.7 %
|
254.8
|
11.5 %
|
Premium Food
Distribution
|
47.7
|
7.6 %
|
42.5
|
7.5 %
|
139.5
|
8.3 %
|
118.5
|
8.6 %
|
Corporate
|
5.5
|
|
5.0
|
|
17.6
|
|
16.2
|
|
Consolidated
|
167.9
|
10.3 %
|
133.4
|
9.9 %
|
475.2
|
10.8 %
|
389.5
|
10.9 %
|
(1)
Expressed as a percentage of the
corresponding segment's revenue.
|
SF's SG&A for the quarter increased by $28.8 million primarily due to: (i) business
acquisitions; (ii) freight, wage and general cost inflation; and
(iii) additional promotional and variable selling costs associated
with its organic volume growth. These factors were partially
offset by lower incentive-based compensation accruals.
SF's SG&A for the first three quarters of 2022 increased by
$63.3 million primarily due to: (i)
the factors outlined above; and (ii) investments made in
infrastructure to support SF's long-term growth objectives.
PFD's SG&A for the quarter and for the first three quarters
of 2022 increased by $5.2 million and
$21.0 million, respectively,
primarily due to: (i) business acquisitions; and (ii) freight and
wage inflation.
Adjusted EBITDA (1)
(in millions of
dollars except percentages)
|
|
13 weeks
ended
Sep 24,
2022
|
%
(2)
|
13 weeks
ended
Sep 25,
2021
|
%
(2)
|
39 weeks
ended
Sep 24,
2022
|
%
(2)
|
39 weeks
ended
Sep 25,
2021
|
%
(2)
|
Adjusted EBITDA by
segment:
|
|
|
|
|
|
|
|
|
Specialty
Foods
|
79.0
|
7.9 %
|
71.0
|
9.1 %
|
229.8
|
8.5 %
|
201.4
|
9.1 %
|
Premium Food
Distribution
|
52.4
|
8.3 %
|
42.0
|
7.4 %
|
110.3
|
6.6 %
|
93.1
|
6.8 %
|
Corporate
|
(5.5)
|
|
(5.0)
|
|
(17.6)
|
|
(16.2)
|
|
Interest Income from
Investments
|
15.3
|
|
14.6
|
|
45.3
|
|
39.0
|
|
Consolidated
|
141.2
|
8.7 %
|
122.6
|
9.1 %
|
367.8
|
8.4 %
|
317.3
|
8.8 %
|
(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 the first three quarters
of 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 the first three quarters of 2022,
the Company's normalized adjusted EBITDA margin is approximately
9.1%; (ii) the sales challenges impacting SF in the second and
third quarters as the contribution margin associated with SF's
incremental sales is significantly above 10%; (iii) high outside
storage costs which are expected to decrease as SF's inventory
returns to more normal levels (see Forward Looking
Statements); (iv) high freight costs, which will be addressed
through higher selling prices if they do not revert to longer term
average prices; and (v) 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 the first three quarters of 2022, the Company incurred
$14.0 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;
- 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)
|
13 weeks
ended
Sep 24,
2022
|
13 weeks
ended
Oct 2,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Oct 2,
2021
|
Clearwater:
|
Sales
|
157.7
|
158.4
|
412.0
|
391.2
|
Gross
profit
|
50.6
|
53.1
|
133.4
|
123.8
|
SG&A
|
14.0
|
13.0
|
40.1
|
35.6
|
|
36.6
|
40.1
|
93.3
|
88.2
|
Depreciation and
amortization
|
11.6
|
11.1
|
34.4
|
31.0
|
Interest – senior
debt
|
4.5
|
3.1
|
9.9
|
10.1
|
Income from
investments
|
1.7
|
0.5
|
4.5
|
1.9
|
Unrealized foreign
exchange loss (gain)
|
9.5
|
6.5
|
16.5
|
(2.8)
|
Other
|
0.2
|
(0.1)
|
0.4
|
(0.2)
|
|
9.1
|
19.0
|
27.6
|
48.2
|
Interest on
shareholder debt
|
12.6
|
12.4
|
36.6
|
32.4
|
Payments to
shareholders
|
8.5
|
11.8
|
25.5
|
23.5
|
Acquisition related
costs
|
-
|
-
|
-
|
12.8
|
Closing risk fee paid
to Premium Brands
|
-
|
-
|
-
|
2.4
|
Income tax expense
(recovery)
|
(2.8)
|
(1.6)
|
(3.9)
|
(4.8)
|
Earnings
(loss)
|
(9.2)
|
(3.6)
|
(30.6)
|
(18.1)
|
Pre-close earnings
(loss) (1)
|
-
|
-
|
-
|
(4.3)
|
|
(9.2)
|
(3.6)
|
(30.6)
|
(13.8)
|
Ownership
|
50.0 %
|
50.0 %
|
50.0 %
|
50.0 %
|
Clearwater net
equity earnings (loss)
|
(4.6)
|
(1.8)
|
(15.3)
|
(6.9)
|
Other net equity
earnings (loss)
|
2.0
|
1.0
|
1.0
|
1.2
|
Equity earnings (loss)
in investment in associates
|
(2.6)
|
(0.8)
|
(14.3)
|
(5.7)
|
(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 0.4% or $0.7
million primarily due to: (i) the delayed sale of snow crab
inventory in anticipation of more favorable pricing later in the
year; and (ii) a stronger Canadian dollar relative to the Yen, GBP
and Euro. These factors were partially offset by a strong
pricing environment for Clearwater's core harvested species, namely
frozen-at-sea scallops, clams and shrimp.
Clearwater's gross margin for
the quarter decreased by 140 basis points primarily due to: (i)
general cost inflation and, in particular, fleet fuel cost
increases; and (ii) a stronger Canadian dollar relative to the Yen,
GBP and Euro. These factors were partially offset by: (i) a
strong pricing environment for Clearwater's core harvested species; and (ii)
changes in sales mix resulting from lower snow crab sales.
Clearwater's SG&A for the
quarter increased by $1.0 million
primarily due to: (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 on risks
and assumptions associated with forward looking statements.
2022
(in millions of
dollars)
|
Bottom of
Range
|
Top of Range
|
Revenue guidance range
– unchanged
|
5,750.0
|
6,000.0
|
Adjusted EBITDA
guidance range – unchanged
|
510.0
|
530.0
|
The Company's previously provided adjusted EBITDA guidance weighted
its expectations towards the lower end of its guidance range based
in large part on rising freight costs and the reduced likelihood of
the average cost of its raw materials moderating. While the
Company is seeing early signs of improvement in many of the issues
that it has faced over the last year, which bodes well for its
performance in 2023, it continues to assign a higher probability to
its adjusted EBITDA for 2022 being at the lower or bottom end of
its targeted range.
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)
|
|
|
|
|
|
Sep 24,
2022
|
Dec 25,
2021
|
Sep 25,
2021
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
38.3
|
16.5
|
24.9
|
Accounts
receivable
|
632.6
|
521.7
|
478.1
|
Inventories
|
821.1
|
645.2
|
513.6
|
Prepaid expenses and
other assets
|
34.5
|
28.6
|
20.1
|
|
1,526.5
|
1,212.0
|
1,036.7
|
|
|
|
|
Capital
assets
|
820.9
|
617.3
|
579.9
|
Right of use
assets
|
494.2
|
464.5
|
442.6
|
Intangible
assets
|
564.4
|
526.3
|
512.3
|
Goodwill
|
1,057.9
|
1,001.2
|
872.6
|
Investments in and
advances to associates
|
568.0
|
568.8
|
560.2
|
Other assets
|
21.8
|
18.8
|
17.5
|
|
|
|
|
|
5,053.7
|
4,408.9
|
4,021.8
|
|
|
|
|
Current
liabilities:
|
|
|
|
Cheques
outstanding
|
25.9
|
18.7
|
19.4
|
Bank
indebtedness
|
9.5
|
16.3
|
2.2
|
Dividends
payable
|
31.4
|
28.4
|
27.7
|
Accounts payable and
accrued liabilities
|
435.1
|
445.5
|
420.8
|
Current portion of
puttable interest in subsidiaries
|
24.1
|
27.1
|
27.1
|
Current portion of
long-term debt
|
4.3
|
4.6
|
6.7
|
Current portion of
lease obligations
|
41.9
|
32.9
|
30.1
|
Current portion of
provisions
|
4.8
|
7.7
|
11.5
|
|
577.0
|
581.2
|
545.5
|
|
|
|
|
Long-term
debt
|
1,469.2
|
1,074.0
|
806.4
|
Lease
obligations
|
505.8
|
477.4
|
456.4
|
Puttable interest in
subsidiaries
|
12.0
|
-
|
-
|
Deferred
revenue
|
2.8
|
2.8
|
2.8
|
Provisions
|
66.5
|
63.4
|
57.3
|
Deferred income
taxes
|
119.7
|
105.2
|
93.2
|
|
2,753.0
|
2,304.0
|
1,961.6
|
|
|
|
|
Convertible unsecured
subordinated debenture
|
477.2
|
331.0
|
456.0
|
|
|
|
|
Equity attributable to
shareholders:
|
|
|
|
Retained
earnings
|
70.7
|
35.6
|
22.8
|
Share
capital
|
1,714.0
|
1,713.3
|
1,563.6
|
Reserves
|
38.8
|
25.0
|
17.8
|
|
1,823.5
|
1,773.9
|
1,604.2
|
|
|
|
|
|
5,053.7
|
4,408.9
|
4,021.8
|
Premium Brands
Holdings Corporation
|
Consolidated
Statements of Operations
|
(in millions of
Canadian dollars except per share amounts)
|
|
|
|
|
|
|
|
13 weeks
ended
Sep 24,
2022
|
13 weeks
ended
Sep 25,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Sep 25,
2021
|
|
|
|
|
|
Revenue
|
1,623.9
|
1,341.8
|
4,395.0
|
3,586.3
|
Cost of goods
sold
|
1,330.1
|
1,100.4
|
3,597.3
|
2,918.5
|
Gross profit before
depreciation, amortization and plant start-up and restructuring
costs
|
293.8
|
241.4
|
797.7
|
667.8
|
|
|
|
|
|
Interest income from
investments in associates
|
(15.3)
|
(14.6)
|
(45.3)
|
(39.0)
|
Selling, general and
administrative expenses
|
167.9
|
133.4
|
475.2
|
389.5
|
|
141.2
|
122.6
|
367.8
|
317.3
|
|
|
|
|
|
Plant start-up and
restructuring costs
|
8.7
|
-
|
14.0
|
1.0
|
Depreciation of capital
assets
|
21.8
|
18.4
|
57.5
|
53.2
|
Amortization of
intangible assets
|
7.8
|
6.8
|
23.0
|
20.2
|
Amortization of right
of use assets
|
11.6
|
9.5
|
33.6
|
26.8
|
Accretion of lease
obligations
|
5.5
|
5.1
|
16.3
|
13.9
|
Interest and other
financing costs
|
22.6
|
11.7
|
49.7
|
33.0
|
Acquisition transaction
costs
|
1.3
|
1.4
|
5.0
|
5.8
|
Accretion of
provisions
|
1.8
|
1.8
|
6.3
|
5.4
|
Equity loss in
investments in associates
|
2.6
|
0.8
|
14.3
|
5.7
|
Change in fair value of
option liabilities
|
-
|
2.6
|
-
|
26.9
|
Fair value gains on
investments in associates
|
-
|
-
|
(19.8)
|
-
|
Change in value of
puttable interest in subsidiaries
|
-
|
-
|
-
|
0.5
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
Earnings before income
taxes
|
57.5
|
64.5
|
167.9
|
129.1
|
|
|
|
|
|
Provision for income
taxes (recovery)
|
|
|
|
|
Current
|
11.2
|
18.1
|
38.1
|
55.1
|
Deferred
|
2.8
|
(0.5)
|
0.6
|
(20.7)
|
|
14.0
|
17.6
|
38.7
|
34.4
|
|
|
|
|
|
Earnings
|
43.5
|
46.9
|
129.2
|
94.7
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
0.97
|
1.08
|
2.89
|
2.18
|
Diluted
|
0.97
|
1.07
|
2.88
|
2.17
|
|
|
|
|
|
Weighted average shares
outstanding (in millions):
|
|
|
|
|
Basic
|
44.6
|
43.5
|
44.6
|
43.5
|
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
Sep 24,
2022
|
13 weeks
ended
Sep 25,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Sep 25,
2021
|
|
|
|
|
|
|
Cash flows from
(used in) operating activities:
|
|
|
|
|
Earnings
|
43.5
|
46.9
|
129.2
|
94.7
|
Items not involving
cash:
|
|
|
|
|
Depreciation of
capital assets
|
21.8
|
18.4
|
57.5
|
53.2
|
Amortization of
intangible assets
|
7.8
|
6.8
|
23.0
|
20.2
|
Amortization of right
of use assets
|
11.6
|
9.5
|
33.6
|
26.8
|
Accretion of lease
obligations
|
5.5
|
5.1
|
16.3
|
13.9
|
Accretion of
provisions
|
1.8
|
1.8
|
6.3
|
5.4
|
Equity loss in
investments in associates
|
2.6
|
0.8
|
14.3
|
5.7
|
Change in fair value
of option liabilities
|
-
|
2.6
|
-
|
26.9
|
Fair value gains on
investments in associates
|
-
|
-
|
(19.8)
|
-
|
Change in value of
puttable interest in subsidiaries
|
-
|
-
|
-
|
0.5
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
Non-cash financing
costs
|
1.9
|
1.6
|
4.7
|
4.3
|
Deferred income taxes
(recovery)
|
2.8
|
(0.5)
|
0.6
|
(20.7)
|
|
99.3
|
93.0
|
265.7
|
229.1
|
Change in non-cash
working capital
|
(14.9)
|
(39.2)
|
(303.4)
|
(141.7)
|
|
84.4
|
53.8
|
(37.7)
|
87.4
|
|
|
|
|
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
Long-term debt,
net
|
47.1
|
10.1
|
337.2
|
283.8
|
Payments for lease
obligations
|
(15.2)
|
(14.5)
|
(42.8)
|
(37.0)
|
Bank indebtedness and
cheques outstanding
|
2.2
|
(1.3)
|
0.4
|
2.5
|
Dividends paid to
shareholders
|
(31.4)
|
(27.7)
|
(91.2)
|
(80.6)
|
Proceeds from issuance
of convertible debentures – net of issuance costs
|
-
|
-
|
143.0
|
-
|
|
2.7
|
(33.4)
|
346.6
|
168.7
|
|
|
|
|
|
|
Cash flows from
(used in) investing activities:
|
|
|
|
|
Capital asset
additions
|
(54.3)
|
(31.4)
|
(154.7)
|
(100.0)
|
Business
acquisitions
|
(3.0)
|
(6.1)
|
(120.5)
|
(185.1)
|
Payment of
provisions
|
(5.2)
|
(8.4)
|
(11.5)
|
(14.7)
|
Net change in share
purchase loans and notes receivable
|
0.3
|
0.2
|
(2.8)
|
0.7
|
Investment in and
advances to associates – net of distributions
|
0.3
|
26.7
|
3.7
|
(443.6)
|
Payment for settlement
of puttable interest of non-wholly owned subsidiary
|
(0.7)
|
(0.7)
|
(0.7)
|
(0.9)
|
Payments to
shareholders of non-wholly owned subsidiaries
|
-
|
-
|
(0.6)
|
(0.6)
|
Proceeds from
sale-leaseback
|
-
|
-
|
-
|
150.0
|
|
(62.6)
|
(19.7)
|
(287.1)
|
(594.2)
|
|
|
|
|
|
Change in cash and cash
equivalents
|
24.5
|
0.7
|
21.8
|
(338.1)
|
Cash and cash
equivalents – beginning of period
|
13.8
|
24.2
|
16.5
|
363.0
|
|
|
|
|
|
Cash and cash
equivalents – end of period
|
38.3
|
24.9
|
38.3
|
24.9
|
|
|
|
|
|
|
|
|
|
|
Interest and other
financing costs paid
|
14.9
|
7.6
|
38.9
|
27.4
|
Income taxes
paid
|
11.3
|
6.2
|
67.9
|
29.2
|
|
|
|
|
|
|
|
|
|
|
|
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
Sep 24,
2022
|
13 weeks
ended
Sep 25,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Sep 25,
2021
|
Earnings before income
taxes
|
57.5
|
64.5
|
167.9
|
129.1
|
Plant start-up and
restructuring costs
|
8.7
|
-
|
14.0
|
1.0
|
Depreciation of capital
assets
|
21.8
|
18.4
|
57.5
|
53.2
|
Amortization of
intangible assets
|
7.8
|
6.8
|
23.0
|
20.2
|
Amortization of right
of use assets
|
11.6
|
9.5
|
33.6
|
26.8
|
Accretion of lease
obligations
|
5.5
|
5.1
|
16.3
|
13.9
|
Interest and other
financing costs
|
22.6
|
11.7
|
49.7
|
33.0
|
Change in fair value of
option liabilities
|
-
|
2.6
|
-
|
26.9
|
Acquisition transaction
costs
|
1.3
|
1.4
|
5.0
|
5.8
|
Change in value of
puttable interest in subsidiaries
|
-
|
-
|
-
|
0.5
|
Accretion of
provisions
|
1.8
|
1.8
|
6.3
|
5.4
|
Equity loss in
investments in associates
|
2.6
|
0.8
|
14.3
|
5.7
|
Fair value gains on
investments in associates
|
-
|
-
|
(19.8)
|
-
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
Adjusted
EBITDA
|
141.2
|
122.6
|
367.8
|
317.3
|
Free Cash Flow
(in millions of
dollars)
|
52 weeks
ended
Dec 25,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Sep 25,
2021
|
Rolling
Four
Quarters
|
Cash flow from
operating activities
|
66.3
|
(37.7)
|
87.4
|
(58.8)
|
Changes in non-cash
working capital
|
253.8
|
303.4
|
141.7
|
415.5
|
Lease obligation
payments
|
(50.4)
|
(42.8)
|
(37.0)
|
(56.2)
|
Business acquisition
transaction costs
|
7.7
|
5.0
|
5.8
|
6.9
|
Clearwater closing risk
fee
|
(2.4)
|
-
|
(2.4)
|
-
|
Plant start-up and
restructuring costs
|
2.1
|
14.0
|
1.0
|
15.1
|
Income taxes on sale
and leaseback transaction
|
15.5
|
-
|
15.5
|
-
|
Maintenance capital
expenditures
|
(29.3)
|
(29.3)
|
(22.0)
|
(36.6)
|
Free cash
flow
|
263.3
|
212.6
|
190.0
|
285.9
|
Adjusted Earnings and Adjusted Earnings per Share
(in millions of
dollars except per share amounts)
|
13 weeks
ended
Sep 24,
2022
|
13 weeks
ended
Sep 25,
2021
|
39 weeks
ended
Sep 24,
2022
|
39 weeks
ended
Sep 25,
2021
|
Earnings
|
43.5
|
46.9
|
129.2
|
94.7
|
Plant start-up and
restructuring costs
|
8.7
|
-
|
14.0
|
1.0
|
Business acquisition
transaction costs
|
1.3
|
1.4
|
5.0
|
5.8
|
Accretion of
provisions
|
1.8
|
1.8
|
6.3
|
5.4
|
Equity loss from
associates in start-up
|
2.6
|
0.8
|
14.3
|
5.7
|
Amortization of
intangibles associated with acquisitions
|
7.8
|
6.8
|
23.0
|
20.2
|
Fair value gains on
investments in associates
|
-
|
-
|
(19.8)
|
-
|
Change in value of
puttable interest in subsidiaries
|
-
|
-
|
-
|
0.5
|
Change in fair value of
option liabilities
|
-
|
2.6
|
-
|
26.9
|
Clearwater closing risk
fee
|
-
|
-
|
-
|
(2.4)
|
Acquisition bargain
purchase gain
|
-
|
-
|
-
|
(1.8)
|
|
65.7
|
60.3
|
172.0
|
156.0
|
Current and deferred
income tax effect of above items, and unusual tax
recovery
|
(4.4)
|
(2.5)
|
(9.8)
|
(13.4)
|
Adjusted
earnings
|
61.3
|
57.8
|
162.2
|
142.6
|
Weighted average shares
outstanding
|
44.6
|
43.5
|
44.6
|
43.5
|
Adjusted earnings per
share
|
1.37
|
1.33
|
3.63
|
3.2
|
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 November 3, 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 39 Weeks Ended September 24, 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 November
3, 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