PREMIUM BRANDS HOLDINGS CORPORATION REPORTS RECORD THIRD QUARTER SALES AND ADJUSTED EBITDA, ACQUISITION OF MENU-MER AND DECLARES FOURTH QUARTER DIVIDEND

VANCOUVER, BC, Nov. 14, 2023 /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 2023.

THIRD QUARTER HIGHLIGHTS 

• Record third quarter revenue of $1.64 billion representing a 1.3%, or $21.0 million, increase as compared to the third quarter of 2022
• Record third quarter adjusted EBITDA¹ of $158.8 million representing a 12.5%, or $17.6 million, increase as compared to the third quarter of 2022
• A 9.7% adjusted EBITDA margin, up from 8.7% in the third quarter of 2022
• Specialty Foods segment's adjusted EBITDA margin continues to normalize reaching 11.0% for the quarter, a 300-basis point improvement as compared to the third quarter of 2022
• Third quarter adjusted EPS¹ of $1.27 per share representing a 7.3%, or $0.10 per share decrease as compared to the third quarter of 2022
• Specialty Foods set to complete five capacity expansion projects in the coming quarters with three of them coming online in the fourth quarter – a major headwind for Specialty Foods sales growth in the quarter was a lack of capacity to support its U.S. based growth initiatives
• Solid progress made on reducing leverage ratios with the Company's senior debt to EBITDA ratio decreasing to 3.1:1 from 3.3:1 at the end of the previous quarter
• Declared a dividend of $0.77 per share for the fourth quarter of 2023
• Announced acquisition of Quebec based food distributor Menu-Mer

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.

QUESTIONS AND ANSWERS SESSION

The Company will hold a Q&A session on its third quarter 2023 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 [phone] or [phone] (Conference ID: 60488678) 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 11:50 p.m. Toronto time on December, 14 2023 at [phone] (passcode: 488678#).  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 30, 2023	13 weeks ended Sep 24, 2022	39 weeks ended Sep 30, 2023	39 weeks ended Sep 24, 2022
Revenue			1,644.9	1,623.9	4,706.3	4,395.0
Adjusted EBITDA1			158.8	141.2	421.9	367.8
Earnings			39.4	43.5	79.2	129.2
EPS			0.89	0.97	1.78	2.89
Adjusted earnings1			56.4	61.3	141.3	162.2
Adjusted EPS1			1.27	1.37	3.18	3.63

 

			Trailing Four Quarters Ended
			Sep 30, 2023	Sep 24, 2022
Free cash flow1			262.5	285.9
Free cash flow per share			5.91	6.45
Declared dividends			134.5	122.5
Declared dividend per share			3.010	2.735
Payout ratio1			51.2 %	42.8 %

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 adjusted EBITDA as we continue to make solid progress on our long-term value creation strategies, a clear indication of which is the 300-basis point improvement in our Specialty Food segment's adjusted EBITDA margin," said Mr. Paleologou, President and CEO.

"Our results for the quarter were, however, tempered by an unusually poor Maine lobster catch and some largely third quarter-specific impacts on our sandwich and protein businesses, including delays in a cooked protein capacity expansion project coming online," added Mr. Paleologou.

"Looking forward, we expect to see significant acceleration in our organic growth rate as five major capacity expansion projects get commissioned over the next several quarters, all of which are focused on supporting our very successful U.S. based growth initiatives in premium frozen sandwiches, cooked protein, meat snacks and artisan baked goods," stated Mr. Paleologou.

"We are also pleased to announce the acquisition of Menu-Mer, a Quebec based food distributor.  Menu-Mer, whose market focus complements the geographical reach of our Quebec based Viandex and C&C businesses, will be leveraging access to our ecosystem to enhance their buying power and expand the portfolio of products they can offer their customers," said Mr. Paleologou.

"Our acquisitions pipeline remains very robust and we are in active dialogues with many small and large businesses.  Correspondingly, we are well positioned to complete more transactions in 2024," added Mr. Paleologou.

FOURTH QUARTER 2023 DIVIDEND

The Company also announced that its Board of Directors approved a cash dividend of $0.77 per share for the fourth quarter of 2023, which will be payable on January 15, 2024 to shareholders of record at the close of business on December 29, 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.

As part of a realignment of certain businesses and management responsibilities, starting in fiscal 2023 the Company reclassified a business from the Premium Food Distribution segment to the Specialty Foods segment.  All comparative information has been retrospectively restated.

Revenue

(in millions of dollars except percentages)
	13 weeks ended Sep 30, 2023	% (1)	13 weeks ended Sep 24, 2022	% (1)	39 weeks ended Sep 30, 2023	% (1)	39 weeks ended Sep 24, 2022	% (1)
Revenue by segment:
Specialty Foods	1,058.0	64.3 %	1,008.6	62.1 %	3,091.8	65.7 %	2,760.2	62.8 %
Premium Food Distribution	586.9	35.7 %	615.3	37.9 %	1,614.5	34.3 %	1,634.8	37.2 %
Consolidated	1,644.9	100.0 %	1,623.9	100.0 %	4,706.3	100.0 %	4,395.0	100.0 %

(1)     Expressed as a percentage of consolidated revenue.

 

Specialty Foods' (SF) revenue for the quarter increased by $49.4 million or 4.9% primarily due to: (i) organic volume growth of $34.5 million representing an organic volume growth rate (OVGR) of 3.4%; (ii) a $14.5 million increase in the translated value of sales generated by SF's U.S. based businesses due to a weaker Canadian dollar – approximately 54% of SF's revenue for the quarter was generated by these businesses; and (iii) selling price inflation of $0.4 million.

SF's OVGR, which was driven primarily by its cooked protein, artisan sandwich, fresh skewer, meat snack and Italian charcuterie initiatives in the U.S., was below recent trends primarily due to: (i) temporarily lower sandwich sales growth while a major customer implements a variety of initiatives to optimize freight costs, reduce food waste and lower internal inventory levels; and (ii) delays in the startup of new cooked protein capacity at SF's King's Command facility in Ohio.  Normalizing for these factors, SF's OVGR for the quarter is approximately 7.6%.

The impact on SF's OVGR of $18.5 million in prior period sandwich sales reversed in the third quarter of 2022, due to third party supplier quality issues, was offset by $19.0 million in one-time sales (consisting mainly of the liquidation of discontinued inventory) in the same quarter associated with the acquisition of King's Command.

SF's revenue for the first three quarters of 2023 increased by $331.6 million or 12.0% primarily due to: (i) organic volume growth of $141.1 million representing an OVGR of 5.1%; (ii) selling price inflation of $67.0 million; (iii) a $74.2 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 first three quarters of 2023 was generated by these businesses; and (iv) business acquisitions, which accounted for $49.3 million of SF's growth. 

Premium Food Distribution's (PFD) revenue for the quarter decreased by $28.4 million or 4.6% due to: (i) a sales volume contraction of $28.0 million; and (ii) selling price deflation of $3.5 million, which related primarily to lower lobster product prices partially offset by higher beef product prices.  These factors were partially offset by a $3.1 million increase in the translated value of sales generated by PFD's U.S. based businesses due to a weaker Canadian dollar.

The contraction in PFD's sales volume was primarily due to: (i) a very challenging lobster market caused by several factors including a decline in the Maine lobster catch of approximately 20%, which was the result of unusually poor weather that prevented vessels from harvesting; and (ii) softening consumer demand for premium beef and seafood as consumers increasingly look for lower cost meal alternatives and shift to shopping at discount grocery banners.

PFD's revenue for the first three quarters of 2023 decreased by $20.3 million or 1.2% primarily due to: (i) a sales volume contraction of $6.7 million; and (ii) selling price deflation of $23.6 million.  These factors were partially offset by a $10.0 million increase in the translated value of sales generated by PFD's U.S. based businesses due to a weaker Canadian dollar.

Gross Profit

(in millions of dollars except percentages)
	13 weeks ended Sep 30, 2023	% (1)	13 weeks ended Sep 24, 2022	% (1)	39 weeks ended Sep 30, 2023	% (1)	39 weeks ended Sep 24, 2022	% (1)
Gross profit by segment:
Specialty Foods	235.9	22.3 %	197.0	19.5 %	671.5	21.7 %	559.1	20.3 %
Premium Food Distribution	84.1	14.3 %	96.8	15.7 %	241.7	15.0 %	238.6	14.6 %
Consolidated	320.0	19.5 %	293.8	18.1 %	913.2	19.4 %	797.7	18.2 %

(1)     Expressed as a percentage of the corresponding segment's revenue.

 

SF's gross profit as a percentage of its revenue (gross margin) for the quarter increased by 280 basis points primarily due to: (i) the moderation of certain input costs, including some raw materials and freight; and (ii) production efficiencies resulting from investments in automation, continuous improvement projects and a more stable labor market.  These factors were partially offset by wage inflation.

SF's gross margin for the first three quarters of 2023 increased by 140 basis points primarily due to the factors impacting the third quarter of 2023, partially offset by investments in additional plant infrastructure made in the first two quarters of 2023 to support SF's growth objectives.

PFD's gross margin for the quarter decreased by 140 basis points primarily due to the 20% decline in the Maine lobster catch which resulted in increased shore prices during a time of softening consumer demand (see Results of Operations – Revenue).

PFD's gross margin for the first three quarters of 2023 increased by 40 basis points primarily due to the moderation of some raw material costs in the first two quarters of 2023; partially offset by the impact of the challenges faced by PFD's lobster focused businesses in the third quarter.

Selling, General and Administrative Expenses (SG&A)

(in millions of dollars except percentages)
	13 weeks ended Sep 30, 2023	% (1)	13 weeks ended Sep 24, 2022	% (1)	39 weeks ended Sep 30, 2023	% (1)	39 weeks ended Sep 24, 2022	% (1)
SG&A by segment:
Specialty Foods	119.9	11.3 %	116.0	11.5 %	364.5	11.8 %	321.8	11.7 %
Premium Food Distribution	48.3	8.2 %	46.4	7.5 %	147.9	9.2 %	135.8	8.3 %
Corporate	8.4		5.5		24.5		17.6
Consolidated	176.6	10.7 %	167.9	10.3 %	536.9	11.4 %	475.2	10.8 %

(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 and the first three quarters of 2023 were relatively stable as the sales leveraging benefits associated with its organic growth were offset by higher promotion and wage costs.

PFD's SG&A ratio for the quarter and for the first three quarters of 2023 increased by 70 basis points and 90 basis points, respectively, primarily due to: (i) the impact of lower sales relative to a relatively fixed cost base; and (ii) wage, freight, and general cost inflation.

Adjusted EBITDA ⁽¹⁾

(in millions of dollars except percentages)
	13 weeks ended Sep 30, 2023	% (2)	13 weeks ended Sep 24, 2022	% (2)	39 weeks ended Sep 30, 2023	% (2)	39 weeks ended Sep 24, 2022	% (2)
Adjusted EBITDA by segment:
Specialty Foods	116.0	11.0 %	81.0	8.0 %	307.0	9.9 %	237.3	8.6 %
Premium Food Distribution	35.8	6.1 %	50.4	8.2 %	93.8	5.8 %	102.8	6.3 %
Corporate	(8.4)		(5.5)		(24.5)		(17.6)
Interest income from investments	15.4		15.3		45.6		45.3
Consolidated	158.8	9.7 %	141.2	8.7 %	421.9	9.0 %	367.8	8.4 %

(1)     Adjusted EBITDA is a non-IFRS measure.  Reconciliation and explanations are included in the Non-IFRS Financial Measures section of this press release. (2)     Expressed as a percentage of the corresponding segment's revenue.

 

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 2023, the Company incurred $28.0 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):

• Reconfiguration and 8,000 square foot expansion of its cooked protein facility in Versailles, Ohio
• Reconfiguration of its cooked protein facility in Scranton, Pennsylvania, including the addition of another cooked products production line
• 107,000 square foot expansion and reconfiguration of its meat snack and processed meats facility in Ferndale, Washington
• Reconfiguration of its meat snack facility in Kent, Washington
• Construction of a new 165,000 square foot distribution center and the related reconfiguration of its sandwich production facility in Columbus, Ohio
• Construction of a new 91,000 square foot artisan bakery in San Francisco, California
• Reconfiguration of its kettle cooking facility in Richmond, British Columbia
• Construction of a new 67,000 square foot sandwich production facility in Edmonton, Alberta in combination with the shutdown of a sandwich production facility in Laval, Quebec
• Construction of a new 60,000 square foot value-added seafood processing facility in Auburn, 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 30, 2023	13 weeks ended Sep 24, 2022	39 weeks ended Sep 30, 2023	39 weeks ended Sep 24, 2022
Clearwater:
Revenue	149.6	157.7	412.0	412.0
Earnings before payments to shareholders	18.5	11.9	24.6	31.5
Net loss	(3.2)	(9.2)	(39.6)	(30.6)
The Company:
Equity loss in Clearwater	(1.6)	(4.6)	(19.8)	(15.3)
Other net equity gains (losses)	0.8	2.0	0.8	1.0
Equity loss in investment in associates	(0.8)	(2.6)	(19.0)	(14.3)

 

Clearwater Seafoods Incorporated (Clearwater)

Clearwater's sales for the quarter decreased by $8.1 million primarily due to: (i) the delayed delivery of a new Canadian shrimp and turbot vessel, which is expected to begin fishing in December (see Forward Looking Statements) – a legacy vessel was sold early in the first quarter of 2023; (ii) unfavorable mix changes in the natural size and grade of clams harvested; and (iii) increased consumer price sensitivity in Europe that is impacting sales of a variety of products, including Patagonian scallops from Argentina.  These factors were partially offset by: (i) snow crab sales returning to pre-2023 levels with the normalization of the market after major supply / demand imbalances in 2023; and (ii) continued favorable conditions for Clearwater's Canadian sea scallops.

Clearwater's earnings before payments to shareholders for the quarter increased by $6.6 million primarily due to: (i) the adoption of hedge accounting which resulted in unrealized foreign exchange losses being recorded in other comprehensive income rather than earnings; (ii) lower non-controlling interest expense associated with its Argentinian operations; and (iii) reduced incentive-based compensation accruals.  These factors were partially offset by: (i) lower margins on products sold in the European market; (ii) reduced sales volumes; (iii) higher income taxes due to tax jurisdiction mix changes; and (iv) higher senior debt interest expense resulting from general market rate increases.

Revenue 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	6,300	6,400
Adjusted EBITDA guidance range	575	590
Revenue guidance range – previous	6,400	6,600
Adjusted EBITDA guidance range – previous	590	610

 

The Company is reducing its guidance range for 2023 based on the challenges faced by its lobster businesses in the third quarter, which are expected to continue into the fourth quarter, and the largely third quarter specific sales impacts experienced by its sandwich and cooked protein businesses (see Forward Looking Statements).  The revised guidance ranges are based on a variety 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.  In addition, they do not incorporate any provisions for potential future acquisitions.

Premium Brands Holdings Corporation
Consolidated Balance Sheets
(in millions of Canadian dollars)
	Sep 30, 2023	Dec 31, 2022	Sep 24, 2022
Current assets:
Cash and cash equivalents	40.7	11.4	38.3
Accounts receivable	545.5	590.8	632.6
Inventories	756.7	786.1	821.1
Prepaid expenses and other assets	27.6	38.0	34.5
	1,370.5	1,426.3	1,526.5
Capital assets	1,066.9	862.2	820.9
Right of use assets	551.7	576.0	494.2
Intangible assets	547.5	558.5	564.4
Goodwill	1,092.5	1,093.0	1,057.9
Investments in and advances to associates	554.2	538.9	568.0
Other assets	22.7	23.7	21.8
	5,206.0	5,078.6	5,053.7
Current liabilities:
Cheques outstanding	16.7	19.3	25.9
Bank indebtedness	-	18.0	9.5
Dividends payable	34.4	31.3	31.4
Accounts payable and accrued liabilities	480.1	419.4	435.1
Current portion of puttable interest in subsidiaries	24.0	23.1	24.1
Current portion of long-term debt	2.0	6.5	4.3
Current portion of lease obligations	49.6	45.4	41.9
Current portion of provisions	29.2	1.8	4.8
	636.0	564.8	577.0
Long-term debt	1,548.5	1,421.4	1,469.2
Lease obligations	571.9	589.3	505.8
Puttable interest in subsidiaries	48.7	43.9	12.0
Deferred revenue	2.8	2.8	2.8
Provisions	14.4	44.2	66.5
Deferred income taxes	114.0	120.6	119.7
	2,936.3	2,787.0	2,753.0
Convertible unsecured subordinated debentures	483.0	478.6	477.2
Equity attributable to shareholders:
Retained earnings	39.2	63.8	70.7
Share capital	1,703.9	1,702.6	1,714.0
Reserves	43.6	46.6	38.8
	1,786.7	1,813.0	1,823.5
	5,206.0	5,078.6	5,053.7

 

Premium Brands Holdings Corporation
Consolidated Statements of Operations
(in millions of Canadian dollars except per share amounts)
	13 weeks ended Sep 30, 2023	13 weeks ended        Sep 24,    2022	39 weeks ended Sep 30, 2023	39 weeks ended        Sep 24,    2022
Revenue	1,644.9	1,623.9	4,706.3	4,395.0
Cost of goods sold	1,324.9	1,330.1	3,793.1	3,597.3
Gross profit before depreciation, amortization and plant start-up and restructuring costs	320.0	293.8	913.2	797.7
Interest income from investments in associates	15.4	15.3	45.6	45.3
Selling, general and administrative expenses	176.6	167.9	536.9	475.2
	158.8	141.2	421.9	367.8
Depreciation of capital assets	21.7	21.8	63.0	57.5
Amortization of intangible assets	2.5	7.8	10.5	23.0
Amortization of right of use assets	15.3	11.6	45.0	33.6
Accretion of lease obligations	6.5	5.5	19.7	16.3
Plant start-up and restructuring costs	12.4	8.7	28.0	14.0
Interest and other financing costs	39.5	22.6	110.5	49.7
Acquisition transaction costs	1.1	1.3	3.3	5.0
Change in value of puttable interest in subsidiaries	3.0	-	9.2	-
Accretion of provisions	1.0	1.8	1.9	6.3
Equity loss in investments in associates	0.8	2.6	19.0	14.3
Fair value gains on investments in associates	-	-	-	(19.8)
Earnings before income taxes	55.0	57.5	111.8	167.9
Provision for income taxes (recovery)
Current	14.2	11.2	39.1	38.1
Deferred	1.4	2.8	(6.5)	0.6
	15.6	14.0	32.6	38.7
Earnings	39.4	43.5	79.2	129.2
Earnings per share:
Basic	0.89	0.97	1.78	2.89
Diluted	0.88	0.97	1.77	2.88
Weighted average shares outstanding (in millions):
Basic	44.4	44.6	44.4	44.6
Diluted	44.6	44.8	44.6	44.8

 

Premium Brands Holdings Corporation
Consolidated Statements of Cash Flows
(in millions of Canadian dollars)
	13 weeks ended Sep 30, 2023	13 weeks  ended       Sep 24,    2022	39 weeks ended Sep 30, 2023	39 weeks  ended       Sep 24,    2022
Cash flows from (used in) operating activities:
Earnings	39.4	43.5	79.2	129.2
Items not involving cash:
Depreciation of capital assets	21.7	21.8	63.0	57.5
Amortization of intangible assets	2.5	7.8	10.5	23.0
Amortization of right of use assets	15.3	11.6	45.0	33.6
Accretion of lease obligations	6.5	5.5	19.7	16.3
Change in value of puttable interest in subsidiaries	3.0	-	9.2	-
Accretion of provisions	1.0	1.8	1.9	6.3
Equity loss in investments in associates	0.8	2.6	19.0	14.3
Non-cash financing costs	2.2	1.9	6.1	4.7
Deferred income taxes (recovery)	1.4	2.8	(6.5)	0.6
Fair value gains on investment in associates	-	-	-	(19.8)
	93.8	99.3	247.1	265.7
Change in non-cash working capital	139.7	(14.9)	106.3	(303.4)
	233.5	84.4	353.4	(37.7)
Cash flows from (used in) financing activities:
Long-term debt, net	(60.0)	47.1	122.3	337.2
Payments for lease obligations	(18.9)	(15.2)	(54.7)	(42.8)
Bank indebtedness and cheques outstanding	(16.3)	2.2	(20.6)	0.4
Common shares purchased for cancellation	-	-	(1.4)	-
Dividends paid to shareholders	(34.3)	(31.4)	(100.0)	(91.2)
Proceeds from issuance of convertible debentures – net of issuance costs	-	-	-	143.0
	(129.5)	2.7	(54.4)	346.6
Cash flows from (used in) investing activities:
Capital asset additions	(92.9)	(54.3)	(268.1)	(154.7)
Business and asset acquisitions	-	(3.0)	-	(120.5)
Payment of provisions	(2.2)	(5.2)	(4.3)	(11.5)
Net change in share purchase loans and notes receivable	0.7	0.3	0.5	(2.8)
Investment in and advances to associates – net of distributions	3.7	0.3	5.7	3.7
Payments for settlement of puttable interest of non-wholly owned subsidiaries	-	(0.7)	(2.3)	(0.7)
Payments to shareholders of non-wholly owned subsidiaries	-	-	(1.2)	(0.6)
	(90.7)	(62.6)	(269.7)	(287.1)
Change in cash and cash equivalents	13.3	24.5	29.3	21.8
Cash and cash equivalents – beginning of period	27.4	13.8	11.4	16.5
Cash and cash equivalents – end of period	40.7	38.3	40.7	38.3
Interest and other financing costs paid	38.8	14.9	108.5	38.9
Income taxes paid (recovered)	(5.4)	11.3	24.6	67.9

 

NON-IFRS FINANCIAL MEASURES

The Company uses certain non-IFRS financial measures including adjusted EBITDA, free cash flow, adjusted earnings and adjusted earnings per share, which are not defined under IFRS and, as a result, may not be comparable to similarly titled measures presented by other publicly traded entities, nor should they be construed as an alternative to other earnings measures determined in accordance with IFRS.  These non-IFRS measures are calculated as follows:

Adjusted EBITDA

(in millions of dollars)	13 weeks ended Sep 30, 2023	13 weeks ended Sep 24, 2022	39 weeks ended Sep 30, 2023	39 weeks ended Sep 24, 2022
Earnings before income taxes	55.0	57.5	111.8	167.9
Plant start-up and restructuring costs	12.4	8.7	28.0	14.0
Depreciation of capital assets	21.7	21.8	63.0	57.5
Amortization of intangible assets	2.5	7.8	10.5	23.0
Amortization of right of use assets	15.3	11.6	45.0	33.6
Accretion of lease obligations	6.5	5.5	19.7	16.3
Interest and other financing costs	39.5	22.6	110.5	49.7
Acquisition transaction costs	1.1	1.3	3.3	5.0
Change in value of puttable interest in subsidiaries	3.0	-	9.2	-
Accretion of provisions	1.0	1.8	1.9	6.3
Equity loss in investments in associates	0.8	2.6	19.0	14.3
Fair value gains on investments in associates	-	-	-	(19.8)
Adjusted EBITDA	158.8	141.2	421.9	367.8

 

Free Cash Flow

(in millions of dollars)	53 weeks ended Dec 31, 2022	39 weeks ended Sep 30, 2023	39 weeks ended Sep 24, 2022	Rolling Four Quarters
Cash flow from operating activities	96.5	353.4	(37.7)	487.6
Changes in non-cash working capital	263.3	(106.3)	303.4	(146.4)
Lease obligation payments	(64.2)	(54.7)	(42.8)	(76.1)
Business acquisition transaction costs	6.2	3.3	5.0	4.5
Plant start-up and restructuring costs	27.2	28.0	14.0	41.2
Maintenance capital expenditures	(43.2)	(34.4)	(29.3)	(48.3)
Free cash flow	285.8	189.3	212.6	262.5

 

Adjusted Earnings and Adjusted Earnings per Share

(in millions of dollars except per share amounts)	13 weeks ended Sep 30, 2023	13 weeks ended Sep 24, 2022	39 weeks ended Sep 30, 2023	39 weeks ended Sep 24, 2022
Earnings	39.4	43.5	79.2	129.2
Plant start-up and restructuring costs	12.4	8.7	28.0	14.0
Business acquisition transaction costs	1.1	1.3	3.3	5.0
Accretion of provisions	1.0	1.8	1.9	6.3
Equity loss from associates in start-up	0.8	2.6	19.0	14.3
Change in value of puttable interest in subsidiaries	3.0	-	9.2	-
Amortization of intangibles associated with acquisitions	2.5	7.8	10.5	23.0
Fair value gains on investments in associates	-	-	-	(19.8)
	60.2	65.7	151.1	172.0
Current and deferred income tax effect of above items, and unusual tax recovery	(3.8)	(4.4)	(9.8)	(9.8)
Adjusted earnings	56.4	61.3	141.3	162.2
Weighted average shares outstanding	44.4	44.6	44.4	44.6
Adjusted earnings per share	1.27	1.37	3.18	3.63

 

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 14, 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 MD&A 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) financial leverage ratios; (xii) value of puttable interests; and (xiii) 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 MD&A for the 13 and 39 Weeks ended September 30, 2023.

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. 
• The Company will be able 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 differentiated attributes such as antibiotic free, no added hormones or use of organic ingredients; (ii) increased reliance on healthier and less processed convenience-oriented foods both for on-the-go snacking as well as easy meal preparation, both at home and in foodservice; (iii) healthier eating, including reduced sugar consumption and an increased emphasis on animal protein and seafood; (iv) increased snacking in between and in place of meals; (v) increased interest in understanding the provenance of individual food products; and (vi) increased social awareness of issues such as reconciliation with Indigenous Peoples, sustainability, and ethical supply chain practices.
• 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 14, 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

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