PREMIUM BRANDS HOLDINGS CORPORATION REPORTS RECORD FOURTH QUARTER SALES AND ADJUSTED EBITDA, ANNOUNCES ACQUISITION AND DECLARES FIRST QUARTER DIVIDEND
PREMIUM BRANDS HOLDINGS CORPORATION REPORTS RECORD FOURTH QUARTER SALES AND ADJUSTED EBITDA, ANNOUNCES ACQUISITION AND DECLARES FIRST QUARTER DIVIDEND |
| [21-March-2025] |
VANCOUVER, BC, March 21, 2025 /CNW/ - Premium 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 2024. FOURTH QUARTER HIGHLIGHTS
2024 HIGHLIGHTS
QUESTIONS AND ANSWERS SESSION The Company will hold a Q&A session on its fourth quarter 2024 results today at 10:30 a.m.Vancouver time (1:30 p.m. Toronto time). Management's pre-recorded remarks and an investor presentation that will be referenced on the conference call are available here or by navigating through the Company's website at www.premiumbrandsholdings.com. Access to the Q&A session may be obtained by calling the operator at (289) 514-5100 or (800) 717-1738 (Conference ID: 60180) 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 11:59 p.m. Toronto time on April 21, 2025 at (289) 819-1325 or (888) 660-6264 (passcode: 60180#). Alternatively, a recording of the conference call will be available on the Company's website at www.premiumbrandsholdings.com. SUMMARY FINANCIAL INFORMATION
"2024 finished on a strong note driven by our Protein and Bakery Groups' US sales initiatives, which generated approximately $50 million in sales volume growth in the quarter. We also saw an improved consumer environment in the Canadian market with our Premium Food Distribution segment's Canadian businesses generating 2.4% in organic volume growth for the quarter," said Mr. George Paleologou, President and CEO. "Our Sandwich Group continued to make progress on a variety of growth initiatives including solid growth in the club store channel. This was, however, more than offset by the impact of challenges being faced by one of its major foodservice customers. On a positive note, this impact was less than we experienced in the third quarter and we remain confident that this headwind is temporary, and that sales to this customer will recover and eventually return to their historic growth rates," added Mr. Paleologou. "With most of our major production capacity projects now complete, and our businesses starting to generate solid momentum in executing on their robust sales pipelines, we expect 2025 to be a major inflection point for our Company and are very well positioned to meet or exceed our 2027 sales and adjusted EBITDA targets of $10 billion and $1 billion, respectively. "While they did not make any meaningful contribution to our fourth quarter results, we are pleased to welcome three new businesses to our family: NSP Quality Meats, Casa Di Bertacchi and Italia Salami. NSP and Casa will play significant roles in supporting our U.S. focused growth initiatives in cooked protein while Italia will support our very successful Italian charcuterie initiatives in Canada. Looking forward, our acquisition pipeline remains full and in fact we recently completed the acquisition of Arizona's premium fresh sausage business, Denmark Sausage. "In regard to the tariff related issues dominating today's headlines, we are pleased to report that our strategic focus on generally manufacturing in the jurisdictions that we sell has positioned us relatively well to manage any tariff headwinds. Some of our businesses do ship products across borders, however, we are confident that we will be able to largely mitigate the impact of tariffs on these sales. In terms of our Specialty Foods segment, its diversified network of production facilities across Canada and the U.S. will enable it to shift production of many of its products crossing a border to the jurisdiction in which they are sold. In terms of our Premium Foods Distribution segment, processed lobster is the primary product crossing a border, however, this is produced from a scarce resource and as a result customers have very limited supply options. Furthermore, our Premium Food Distribution segment has major lobster processing operations in both Canada and the U.S.," said Mr. Paleologou. FIRST QUARTER 2025 DIVIDEND The Company also announced that its Board of Directors approved a cash dividend of $0.85 per common share for the first quarter of 2025, which will be payable on April 15, 2025 to shareholders of record at the close of business on March 31, 2025. Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2025 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. RESULTS OF OPERATIONS The Company reports on two reportable segments, Specialty Foods (SF) and Premium Food Distribution (PFD), 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
Specialty Foods' (SF) revenue for the quarter increased by $70.7 million or 7.0% primarily due to: (i) organic volume growth of $34.7 million representing an organic volume growth rate (OVGR) of 3.5%; (ii) a $22.2 million increase in the translated value of sales generated by SF's U.S. based businesses due to a weaker Canadian dollar; (iii) selling price increases of $11.2 million, which were put into place to address rising chicken, beef and egg costs; and (iv) business acquisitions, which generated $3.6 million in growth. These factors were partially offset by the shutdown of SF's Creekside Custom Foods business as its capacity is transitioned to support the growth of its Global Gourmet kettle business – this resulted in $1.0 million of lost sales, primarily in the fresh sandwich category. SF's OVGR of 3.5% was driven by: (i) a variety of protein, sandwich and baked goods growth initiatives in the U.S. which generated organic volume growth of $55.4 million; and (ii) stabilization of its Canadian sales, which grew at an OVGR of approximately 1%. These increases were partially offset by: (i) a decline in sales to a major foodservice customer resulting from reduced consumer spending in the customer's stores, albeit at a lesser rate than SF experienced in the third quarter of 2024; and (ii) generally weaker consumer spending in the convenience store channel. SF's revenue for 2024 increased by $185.4 million or 4.5% primarily due to: (i) organic volume growth of $146.1 million representing an OVGR of 3.6%; (ii) a $37.6 million increase in the translated value of sales generated by SF's U.S. based businesses due to a weaker Canadian dollar; (iii) selling price inflation of $4.5 million; and (iv) business acquisitions, which generated $3.6 million in growth. These factors were partially offset by the shutdown of SF's Creekside Custom Foods business that resulted in $6.4 million of lost sales. Premium Food Distribution's (PFD) revenue for the quarter increased by $13.7 million or 2.5% due to: (i) selling price inflation of $34.0 million relating primarily to lobster and to a lesser extent beef and salmon products; (ii) a $3.0 million increase in the translated value of sales generated by PFD's U.S. based businesses due to a weaker Canadian dollar; and (iii) business acquisitions, which generated $0.7 million in growth. These factors were partially offset by a sales volume contraction of $24.0 million. The contraction in PFD's sales volume was primarily due to lower lobster product sales resulting from: (i) the timing of customer orders which resulted in approximately $11.5 million of traditional fourth quarter sales being recognized in the first quarter of 2025; and (ii) a poor Maine lobster fishery which resulted in high lobster selling prices that in turn lowered demand in the U.S. and China markets due to generally weaker consumer environments. These factors were partially offset by stabilization of PFD's Canadian distribution sales, which grew at an OVGR of approximately 2.4%. PFD's revenue for 2024 increased by $24.1 million or 1.1% primarily due to: (i) selling price inflation of $79.4 million relating primarily to lobster, beef and to a lesser extent salmon products; (ii) business acquisitions, which generated $18.4 million in growth; and (iii) a $5.0 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 a sales volume contraction of $78.7 million. Gross Profit
SF's gross profit as a percentage of its revenue (gross margin) for the quarter increased by 130 basis points primarily due to: (i) production efficiency gains; and (ii) sales leveraging benefits associated with its organic volume growth. These factors were partially offset by: (i) additional plant overhead costs associated with new production capacity; and (ii) higher promotion costs that have been recorded as a reduction in selling prices. SF's gross margin for 2024 increased by 70 basis points primarily due to the impact of improved production efficiencies and sales leveraging benefits associated with SF's sales growth partially offset by: (i) additional plant overhead costs associated with new production capacity being brought online; (ii) rising chicken and beef raw material costs in the first three quarters of the year; and (iii) higher promotion costs that have been recorded as a reduction in selling prices. PFD's gross margin for the quarter decreased by 80 basis points primarily due to: (i) selling prices for lobster and certain beef products not rising as fast as the cost of the associated commodity inputs. PFD's selling price increases for these items in dollar terms did, however, exceed the increase in the cost of the commodity inputs; (ii) sales mix changes as reduced sales of higher margin lobster products were partially offset by growth in lower margin distributive beef and seafood sales; and (iii) sales deleveraging challenges resulting from a contraction in processed lobster sales. These factors were partially offset by production efficiencies in PFD's Canadian lobster processing facility. PFD's gross margin for 2024 increased by 50 basis points primarily due to: (i) higher margins on processed lobster in the third quarter of 2024, resulting from favorable inventory positions; and (ii) a variety of efficiency improvement and cost reduction initiatives. These factors were partially offset by the margin challenges experienced in the fourth quarter. Selling, General and Administrative Expenses (SG&A)
SF's SG&A as a percentage of sales (SG&A ratio) for the quarter increased by 50 basis points primarily due to higher discretionary compensation accruals and promotional activity, partially offset by sales leveraging benefits associated with its sales growth. SF's SG&A as a percentage of sales (SG&A ratio) for 2024 increased by 30 basis points primarily due to: (i) higher outside storage costs, which were mostly the result of providing a major customer with additional services, the cost of which is recovered through increased selling prices on applicable products; (ii) wage inflation; and (iii) higher discretionary compensation accruals. These factors were partially offset by sales leveraging benefits associated with SF's sales growth. PFD's SG&A ratio for the quarter decreased by 50 basis points primarily due to: (i) sales leveraging benefits associated with its sales growth; and (ii) foreign exchange gains on U.S. dollar denominated assets. PFD's SG&A ratio for 2024 was relatively stable as the impacts of wage and general cost inflation were mostly offset by sales leveraging benefits associated with its sales growth. Adjusted EBITDA (1)
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 2024, the Company incurred $43.7 million in plant start-up and restructuring costs relating primarily to the following projects, all of which are expected to expand its capacity and/or generate improved operating efficiencies (see Forward Looking Statements):
Equity Earnings (Losses) from Investments in Associates Equity earnings (losses) from investments in associates includes the Company's proportionate share of the earnings and losses of its investments in associates.
Clearwater Seafoods Incorporated (Clearwater) Clearwater's revenue for the fourth quarter of 2024 as compared to the fourth quarter of 2023 decreased by $15.3 million primarily due to poor catch rates for most of its core Canadian species but mainly scallops which were down significantly as a result of natural variability in the resource. This was partially offset by stronger procured product sales in its Macduff business due to improved landings. Clearwater's earnings before payments to shareholders for the fourth quarter of 2024 as compared to the fourth quarter of 2023 were relatively flat despite the inefficiencies and lost contribution margin associated with the below average harvesting conditions for its core Canadian species primarily due to: (i) the recognition of $6.7 million in tax assets mostly relating to prior years; and (ii) lower restructuring and start-up costs. Revenue and Adjusted EBITDA Outlook See Forward Looking Statements for a discussion of the risks and assumptions associated with forward looking statements. 2025 Outlook
The above 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 and interest rates continuing to moderate; (ii) relatively stable raw material costs across a range of commodities; and (iii) the Canadian dollar remaining at current levels relative to the U.S. dollar. The Company's guidance does not reflect any potential impact of tariffs imposed on trade between Canada and the U.S. due to a lack of visibility resulting from a rapidly changing state of affairs. It is, however, implementing strategies to mitigate potential impacts in the event that tariffs directly impacting the Company are put into place by the U.S. and/or Canadian governments. The Company's sales and adjusted EBITDA outlooks for 2025 do not incorporate any provisions for potential future acquisitions, however, it remains active on this front and expects (see Forward Looking Statements) to complete several transactions during the year. 5 Year Plan
The Company has a strong pipeline of sales opportunities and remains on track (see Forward Looking Statements) to meet or exceed the five-year targets it set at the beginning of 2023. SUBSEQUENT EVENTS Subsequent to December 28, 2024, the following events occurred: Business acquisitions In March 2025, the Company acquired Denmark Sausage, LLC for US$21.0 million consisting of US$15.7 million in cash and the issuance of 97,438 of the Company's common shares. Denmark is a manufacturer of premium branded fresh sausages and other value-added food products with a plant in Peoria, AZ. Issuance of convertible debenture In March 2025, the Company issued $150.0 million of convertible unsecured debentures at an annual rate of 5.5%, resulting in net proceeds of $143.0 million after transaction costs of approximately $7.0 million. Imposition of tariffs On March 4, 2025, the United States imposed 25% tariffs on all goods imported from Canada (excluding energy and energy resources, which are subject to 10% tariffs) which were then delayed on March 6, 2025 for potential resumption on April 2, 2025. Canada has also imposed a first round of tariffs on $30 billion of certain U.S. goods, with a second round on a wider list of U.S. goods valued at $125 billion expected to come into effect in early April. Discussions between the U.S. and Canadian governments remain ongoing, but there is no assurance that these discussions will result in a successful withdrawal or reduction of tariffs. The actual impact of these tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the Canadian government may take, and any mitigating actions that may become available (see Forward Looking Statements).
Certain comparatives have been restated to the current year presentation 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
Free Cash Flow
Adjusted Earnings and Adjusted Earnings per Share
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 21, 2025, 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: revenue; adjusted EBITDA; plant start-up and restructuring costs; income tax rates; dividends and dividend policy; capital expenditures and business acquisitions; convertible debentures; net working capital; liquidity outlook; provisions; financial leverage ratios; value of puttable interests; property sales; and sale and leaseback and lease renewal transactions. Some of the factors that could cause actual results to differ materially from the Company's expectations are outlined below under Risks and Uncertainties section in the Company's Management Discussion & Analysis for the 13 and 52 Weeks Ended December 28, 2024. 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.
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 21, 2025 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: Toronto:PBH | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
