- Record first quarter revenue of
$1.46 billion representing a 2.2%, or$31.3 million , increase as compared to the first quarter of 2023 in a seasonally slow quarter - Solid progress on
Specialty Foods' coreU.S. growth initiatives in sandwiches, protein and baked goods, which for the quarter generated an organic volume growth rate of 9.7% and total sales of$580.8 million - Record first quarter adjusted EBITDA1 of
$121.0 million representing a 9.3%, or$10.3 million , increase as compared to the first quarter of 2023 - An 8.3% adjusted EBITDA margin, up from 7.7% in the first quarter of 2023
Specialty Foods' adjusted EBITDA margin continues to normalize reaching 9.5% for the quarter, a 90-basis point improvement as compared to the first quarter of 2023- First quarter adjusted EPS1 of
$0.54 per share representing a 15.6%, or$0.10 per share decrease as compared to the first quarter of 2023 - Sales and adjusted EBITDA guidance for 2024 was reaffirmed
- Declared a dividend of
$0.85 per common share for the second quarter of 2024
1 | The Company reports its financial results in accordance with International Financial Reporting Standards (IFRS) as issued by the |
The Company will hold a Q&A session on its first quarter 2024 results today at
Access to the Q&A session may be obtained by calling the operator at (289) 514-5100 or (800) 717-1738 (Conference ID: 94615) 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 12:00 a.m.
(In millions of dollars except per share amounts and ratios)
13 weeks ended 2024 | 13 weeks ended 2023 | |
Revenue | 1,461.8 | 1,430.5 |
Adjusted EBITDA1 | 121.0 | 110.7 |
Earnings | 6.3 | 5.9 |
EPS | 0.14 | 0.13 |
Adjusted earnings1 | 24.0 | 28.6 |
Adjusted EPS1 | 0.54 | 0.64 |
Trailing Four Quarters Ended | ||
2024 | 2023 | |
Free cash flow1 | 251.0 | 273.0 |
Free cash flow per share | 5.65 | 6.13 |
Declared dividends | 141.1 | 128.3 |
Declared dividend per share | 3.16 | 2.87 |
Payout ratio1 | 56.2 % | 47.0 % |
1 | Reconciliations for all non-IFRS measures are included in the Non-IFRS Financial Measures section of this press release. |
"Over the last three years, we have made significant capital investments in building the capacity needed to support our
"Looking forward, as we move into our busier second and third quarters, we expect these initiatives to continue building momentum based on the broad range of new customer and product listing opportunities in the works," added
"In terms of the Canadian market, despite the difficult economic environment, we did make some progress in stabilizing our specialty foods sales, which generated organic volume growth of 1.1% as compared to a 4.3% contraction in the previous quarter. We are also seeing some positive signs for our lobster businesses with a solid start to the first Canadian fishery of 2024," said
"On the acquisitions front, we continue to enjoy a robust deal pipeline and while we didn't complete any transactions during the quarter we are working on several exciting opportunities that we expect to close in the coming quarters," added
The Company also announced that its Board of Directors approved a cash dividend of
Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2024 or a subsequent year is an eligible dividend for the purposes of the Enhanced Dividend Tax Credit System.
www.premiumbrandsholdings.com
The Company reports on two reportable segments,
Revenue
(in millions of dollars except percentages) | ||||
13 weeks ended 2024 | % (1) | 13 weeks ended 2023 | % (1) | |
Revenue by segment: | ||||
987.4 | 67.5 % | 948.8 | 66.3 % | |
Premium Food Distribution | 474.4 | 32.5 % | 481.7 | 33.7 % |
Consolidated | 1,461.8 | 100.0 % | 1,430.5 | 100.0 % |
(1) | Expressed as a percentage of consolidated revenue. |
SF's OVGR was driven by its core
SF's OVGR was negatively impacted by: (i) a below normal OVGR in
Premium Food Distribution's (PFD) revenue for the quarter decreased by
The contraction in PFD's sales volume was primarily due to lobster supply shortages caused mainly by a decline in the
Gross Profit
(in millions of dollars except percentages) | ||||
13 weeks ended 2024 | % (1) | 13 weeks ended 2023 | % (1) | |
Gross profit by segment: | ||||
223.0 | 22.6 % | 199.3 | 21.0 % | |
Premium Food Distribution | 74.7 | 15.7 % | 70.5 | 14.6 % |
Consolidated | 297.7 | 20.4 % | 269.8 | 18.9 % |
(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 160 basis points primarily due to: (i) a combination of lower raw material input costs and selling price increases on certain products; (ii) production efficiency improvements resulting from investments in automation, continuous improvement projects and a more stable labor market; and (iii) sales leveraging benefits associated with SF's organic volume growth. These factors were partially offset by: (i) wage inflation; and (ii) investments in additional plant infrastructure to support SF's current and future growth.
PFD's gross margin for the quarter increased by 110 basis points primarily due to higher margins on lobster-based products resulting from: (i) lower than normal margins in the first quarter of 2023; and (ii) a generally improved pricing environment caused by a shortage of supply.
Selling, General and Administrative Expenses (SG&A)
(in millions of dollars except percentages) | ||||
13 weeks ended 2024 | % (1) | 13 weeks ended 2023 | % (1) | |
SG&A by segment: | ||||
129.4 | 13.1 % | 117.8 | 12.4 % | |
Premium Food Distribution | 50.7 | 10.7 % | 48.1 | 10.0 % |
Corporate | 9.5 | 8.3 | ||
Consolidated | 189.6 | 13.0 % | 174.2 | 12.2 % |
(1) | Expressed as a percentage of the corresponding segment's revenue. |
SF's SG&A as a percentage of sales (SG&A ratio) for the quarter increased by 70 basis points primarily due to: (i) wage inflation; and (ii) 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. These factors were partially offset by the sales leveraging benefits associated with SF's organic growth.
PFD's SG&A ratio for the quarter increased by 70 basis points primarily due to the impact of sales deleveraging associated with the contraction in its sales volumes.
Adjusted EBITDA (1)
(in millions of dollars except percentages) | ||||
13 weeks ended 2024 | % (2) | 13 weeks | % (2) | |
Adjusted EBITDA by segment: | ||||
93.6 | 9.5 % | 81.5 | 8.6 % | |
Premium Food Distribution | 24.0 | 5.1 % | 22.4 | 4.7 % |
Corporate | (9.5) | (8.3) | ||
Interest Income from Investments | 12.9 | 15.1 | ||
Consolidated | 121.0 | 8.3 % | 110.7 | 7.7 % |
(1) | Adjusted EBITDA is a non-IFRS financial 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 quarter of 2024, the Company incurred
- Start-up of a new cooked protein capacity in
Versailles, Ohio - Reconfiguration of a cooked protein facility in
Scranton, Pennsylvania , including the addition of another cooked products production line - Start-up of a new 91,000 square foot artisan bakery in
San Francisco, California - Reconfiguration of a meat snack facility in
Kent, Washington - Start-up of new capacity associated with a 107,000 square foot expansion and reconfiguration of a meat snack and processed meats facility in
Ferndale, Washington - Start-up of a new 67,000 square foot sandwich production facility in
Edmonton, Alberta - Construction of a new 165,000 square foot distribution center and the related reconfiguration of a sandwich production facility in
Columbus, Ohio - Reconfiguration of a kettle cooking facility in
Richmond, British Columbia - Reconfiguration of a 27,000 square foot production facility from primarily fresh sandwich production to supporting the Company's Global Gourmet kettle business
- 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 2024 | 13 weeks ended 2023 |
Revenue | 123.5 | 124.5 |
Loss before payments to shareholders | (6.9) | (3.0) |
Net loss | (25.9) | (24.1) |
The Company: | ||
Equity loss in | (13.0) | (12.0) |
Other net equity losses | (0.3) | (0.3) |
Equity loss in investment in associates | (13.3) | (12.3) |
Revenue and Adjusted EBITDA Outlook
See Forward Looking Statements for a discussion of the risks and assumptions associated with forward looking statements.
2024 Outlook
(in millions of dollars) | Bottom of Range | Top of Range |
Revenue guidance range | 6,650 | 6,850 |
Adjusted EBITDA guidance range | 630 | 650 |
The Company's 2024 guidance for sales of
The Company's sales and adjusted EBITDA outlook for 2024 do not incorporate any provisions for potential future acquisitions, however, it remains active on this front and is pursuing several opportunities (see Forward Looking Statements).
5 Year Plan
(in millions of dollars) | 5-Year Target (2027) |
Revenue | 10,000 |
Adjusted EBITDA | 1,000 |
The Company remains on track (see Forward Looking Statements) to meet or exceed the five-year targets it set at the beginning of 2023.
Consolidated Balance Sheets | |||
(in millions of Canadian dollars) | |||
2024 | 2023 | 2023 | |
Current assets: | |||
Cash and cash equivalents | 10.2 | 27.6 | 30.6 |
Accounts receivable | 491.2 | 509.9 | 538.7 |
Inventories | 801.5 | 746.7 | 829.7 |
Prepaid expenses and other assets | 41.5 | 43.8 | 33.3 |
1,344.4 | 1,328.0 | 1,432.3 | |
Capital assets | 1,252.4 | 1,163.9 | 914.1 |
Right of use assets | 575.0 | 565.3 | 578.0 |
Intangible assets | 541.9 | 540.6 | 554.3 |
1,094.9 | 1,084.1 | 1,092.9 | |
Investments in and advances to associates | 450.1 | 453.5 | 538.2 |
Other assets | 21.1 | 22.7 | 23.7 |
5,279.8 | 5,158.1 | 5,133.5 | |
Current liabilities: | |||
Cheques outstanding | 18.9 | 16.4 | 18.8 |
Bank indebtedness | 14.9 | - | 2.3 |
Dividends payable | 37.9 | 34.4 | 34.4 |
Accounts payable and accrued liabilities | 476.9 | 470.9 | 440.8 |
Current portion of puttable interest in subsidiaries | 29.2 | 30.4 | 23.1 |
Current portion of long-term debt | 2.4 | 2.0 | 4.4 |
Current portion of lease obligations | 54.3 | 53.9 | 48.4 |
Current portion of provisions | 29.7 | 29.9 | 1.9 |
664.2 | 637.9 | 574.1 | |
Long-term debt | 1,633.6 | 1,510.4 | 1,496.5 |
Lease obligations | 597.8 | 583.4 | 592.3 |
Puttable interest in subsidiaries | 42.6 | 42.4 | 45.4 |
Deferred revenue | 2.7 | 2.8 | 2.8 |
Provisions | 17.5 | 14.5 | 43.2 |
Deferred income taxes | 115.8 | 115.7 | 115.0 |
3,074.2 | 2,907.1 | 2,869.3 | |
Convertible unsecured subordinated debentures | 466.1 | 484.5 | 480.0 |
Equity attributable to shareholders: | |||
Retained earnings (deficit) | (12.8) | 18.8 | 34.6 |
Share capital | 1,703.9 | 1,703.9 | 1,714.0 |
Reserves | 48.4 | 43.8 | 35.6 |
1,739.5 | 1,766.5 | 1,784.2 | |
5,279.8 | 5,158.1 | 5,133.5 |
| |||||||
(in millions of Canadian dollars except per share amounts) | |||||||
13 weeks 2024 | 13 weeks 2023 | ||||||
Revenue | 1,461.8 | 1,430.5 | |||||
Cost of goods sold | 1,164.1 | 1,160.7 | |||||
Gross profit before depreciation, amortization, and plant start-up | 297.7 | 269.8 | |||||
Interest income from investment in associates | 12.9 | 15.1 | |||||
Selling, general and administrative expenses before depreciation | 189.6 | 174.2 | |||||
Operating profit before depreciation, amortization, and plant | 121.0 | 110.7 | |||||
Depreciation of capital assets | 24.4 | 22.2 | |||||
Amortization of intangible assets | 5.5 | 4.0 | |||||
Amortization of right of use assets | 16.8 | 14.8 | |||||
Accretion of lease obligations | 7.4 | 6.6 | |||||
Plant start-up and restructuring costs | 10.8 | 5.8 | |||||
Interest and other financing costs | 40.4 | 33.4 | |||||
Acquisition transaction costs | 1.1 | 1.0 | |||||
Change in value of puttable interest in subsidiaries | 2.6 | 1.6 | |||||
Change in value and accretion of provisions | 3.3 | 0.5 | |||||
Equity losses in investments in associates | 13.3 | 12.3 | |||||
Change in fair value of option liabilities | (20.0) | - | |||||
Earnings before income taxes | 15.4 | 8.5 | |||||
Provision for income taxes (recovery) | |||||||
Current | 10.2 | 8.2 | |||||
Deferred | (1.1) | (5.6) | |||||
9.1 | 2.6 | ||||||
Earnings | 6.3 | 5.9 | |||||
Earnings per share: | |||||||
Basic | 0.14 | 0.13 | |||||
Diluted | 0.14 | 0.13 | |||||
Weighted average shares outstanding (in millions): | |||||||
Basic | 44.4 | 44.4 | |||||
Diluted | 44.6 | 44.5 | |||||
| ||||||
(in millions of Canadian dollars) | ||||||
13 weeks 2024 | 13 weeks 2023 | |||||
Cash flows from (used in) operating activities: | ||||||
Earnings | 6.3 | 5.9 | ||||
Items not involving cash: | ||||||
Depreciation of capital assets | 24.4 | 22.2 | ||||
Amortization of intangible assets | 5.5 | 4.0 | ||||
Amortization of right of use assets | 16.8 | 14.8 | ||||
Accretion of lease obligations | 7.4 | 6.6 | ||||
Change in value of puttable interest in subsidiaries | 2.6 | 1.6 | ||||
Equity losses in investments in associates | 13.3 | 12.3 | ||||
Non-cash financing costs | 1.9 | 1.9 | ||||
Change in value and accretion of provisions | 3.3 | 0.5 | ||||
Change in fair value of option liabilities | (20.0) | - | ||||
Deferred income taxes recovery | (1.1) | (5.6) | ||||
60.4 | 64.2 | |||||
Change in non-cash working capital | (32.3) | 21.6 | ||||
28.1 | 85.8 | |||||
Cash flows from (used in) financing activities: | ||||||
Long-term debt, net | 90.9 | 74.2 | ||||
Payments for lease obligations | (19.6) | (17.4) | ||||
Bank indebtedness and cheques outstanding | 17.4 | (16.2) | ||||
Common shares purchased for cancellation | - | (1.4) | ||||
Dividends paid to shareholders | (34.4) | (31.4) | ||||
54.3 | 7.8 | |||||
Cash flows from (used in) investing activities: | ||||||
Capital asset additions | (98.0) | (74.3) | ||||
Payment of provisions | (1.4) | (1.4) | ||||
Payment to shareholders of non-wholly owned subsidiaries | (3.0) | - | ||||
Net change in share purchase loans and notes receivable | 0.8 | (0.3) | ||||
Investment in and advances to associates – net of distributions | 1.8 | 1.6 | ||||
(99.8) | (74.4) | |||||
Change in cash and cash equivalents | (17.4) | 19.2 | ||||
Cash and cash equivalents – beginning of period | 27.6 | 11.4 | ||||
Cash and cash equivalents – end of period | 10.2 | 30.6 | ||||
Interest and other financing costs paid | 40.2 | 35.5 | ||||
Income taxes paid | 14.4 | 16.5 |
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 2024 | 13 weeks ended 2023 |
Earnings before income taxes | 15.4 | 8.5 |
Plant start-up and restructuring costs | 10.8 | 5.8 |
Depreciation of capital assets | 24.4 | 22.2 |
Amortization of intangible assets | 5.5 | 4.0 |
Amortization of right of use assets | 16.8 | 14.8 |
Accretion of lease obligations | 7.4 | 6.6 |
Interest and other financing costs | 40.4 | 33.4 |
Acquisition transaction costs | 1.1 | 1.0 |
Change in value of puttable interest in subsidiaries | 2.6 | 1.6 |
Accretion of provisions | 3.3 | 0.5 |
Equity loss in investments in associates | 13.3 | 12.3 |
Change in fair value of option liabilities | (20.0) | - |
Adjusted EBITDA | 121.0 | 110.7 |
Free Cash Flow
(in millions of dollars) | 52 weeks ended 2023 | 13 weeks ended 2024 | 13 weeks ended 2023 |
Rolling Four Quarters |
Cash flow from operating activities | 433.9 | 28.1 | 85.8 | 376.2 |
Changes in non-cash working capital | (110.6) | 32.3 | (21.6) | (56.7) |
Lease obligation payments | (74.0) | (19.6) | (17.4) | (76.2) |
Business acquisition transaction costs | 4.4 | 1.1 | 1.0 | 4.5 |
Plant start-up and restructuring costs | 45.3 | 10.8 | 5.8 | 50.3 |
Maintenance capital expenditures | (46.0) | (13.3) | (12.2) | (47.1) |
Free cash flow | 253.0 | 39.4 | 41.4 | 251.0 |
Adjusted Earnings and Adjusted Earnings per Share
(in millions of dollars except per share amounts) | 13 weeks 2024 | 13 weeks ended 2023 |
Earnings | 6.3 | 5.9 |
Plant start-up and restructuring costs | 10.8 | 5.8 |
Amortization of intangible assets associated with acquisitions | 5.5 | 4.0 |
Acquisition transaction costs | 1.1 | 1.0 |
Change in value of puttable interest in subsidiaries | 2.6 | 1.6 |
Accretion of provisions | 3.3 | 0.5 |
Equity loss in investments in associates | 13.3 | 12.3 |
Change in fair value of option liabilities | (20.0) | - |
22.9 | 31.1 | |
Current and deferred income tax effect of above items, and | 1.1 | (2.5) |
Adjusted earnings | 24.0 | 28.6 |
Weighted average shares outstanding | 44.4 | 44.4 |
Adjusted earnings per share | 0.54 | 0.64 |
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
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; 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 MD&A for the 13 Weeks ended
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
the United States will remain relatively stable and inCanada will improve in the later part of 2024. - 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.
- The Company will be able to access sufficient skilled and unskilled labor at reasonable wage levels.
- The value of the Canadian dollar relative to the
U.S. dollar will 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 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 theU.S. - 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
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