Premium Brands Holdings Corporation Announces Record Second Quarter 2016 Results and Declares Third Quarter 2016 Dividend
VANCOUVER, Aug. 9, 2016 /CNW/ - Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today its results for the second quarter of 2016.
HIGHLIGHTS FOR THE QUARTER
- Record second quarter revenue of $462.9 million representing a 27.4% increase as compared to the second quarter of 2015
- Record second quarter adjusted EBITDA of $40.1 million representing a 40.7% increase as compared to the second quarter of 2015
- Record second quarter earnings and earnings per share of $18.4 million and $0.64 per share, respectively
- Record rolling four quarters free cash flow of $96.2 million resulting in a dividend to free cash flow ratio of 41.5%
- Subsequent to the quarter, the Company:
- Announced that it is proceeding with the construction of a 212,000 square foot, state-of-the-art sandwich assembly facility in Phoenix, AZ
- Declared a quarterly dividend of $0.38 per share
- Completed the redemption of its outstanding 5.50% convertible unsecured subordinated debentures. Approximately $0.7 million of the debentures were redeemed and the balance was converted by the holders thereof into the Company's common shares at a conversion price of $29.25 per share
- Announced that it is proceeding with the construction of a 212,000 square foot, state-of-the-art sandwich assembly facility in Phoenix, AZ
SUMMARY FINANCIAL INFORMATION
(In millions of dollars except per share amounts and ratios)
| 13 Weeks |
13 Weeks |
26 Weeks |
26 Weeks |
|
| Ended |
Ended |
Ended |
Ended |
|
| June 25, |
June 27, |
June 25, |
June 27, |
|
| 2016 |
2015 |
2016 |
2015 |
|
| Revenue |
462.9 |
363.3 |
843.9 |
691.6 |
| Adjusted EBITDA |
40.1 |
28.5 |
65.2 |
47.4 |
| Earnings (loss) |
18.4 |
(10.5) |
27.6 |
(6.9) |
| EPS |
0.64 |
(0.44) |
0.99 |
(0.29) |
| Adjusted earnings |
18.9 |
11.3 |
28.8 |
16.7 |
| Adjusted EPS |
0.66 |
0.47 |
1.03 |
0.71 |
| Trailing Four Quarters Ended |
||
| June 25, |
Dec 26, |
|
| 2016 |
2015 |
|
| Free cash flow |
96.2 |
81.1 |
| Declared dividends |
39.9 |
35.0 |
| Declared dividend per share |
1.4150 |
1.3800 |
| Payout ratio |
41.5% |
43.2% |
"We are very pleased with the progress we made during the quarter as we continue to improve our performance through a combination of internal and acquisition based initiatives. On the internal front, we are exceeding our long-term organic growth targets and are generating steady improvement in our margins through the consistent execution of several core growth strategies. These include product innovation and differentiation, focusing on high growth product categories, geographical expansion and investing in state-of-the-art capacity and technology," said Mr. George Paleologou, President and CEO.
"On the acquisitions front, we added another best-in-class company to our portfolio of businesses with the purchase of C&C Foods part way through the quarter. We have since been working closely with C&C's talented management team on a number of exciting opportunities that will drive growth and create long-term value for our shareholders," stated Mr. Paleologou. "Looking ahead, our acquisition pipeline remains very active and we fully expect to complete several more accretive acquisitions this year," added Mr. Paleologou.
"For the quarter, our sales grew by 27.4%, our EBITDA grew by 40.7% and our adjusted earnings per share grew by 40.4%. These results were despite several of our businesses facing significant challenges such as the slowdown in Alberta's and Saskatchewan's economies and production issues associated with a major new product launch," said Mr. Paleologou. "Once again, our results are illustrating how the diversification we have built into our business model is enabling us to continue to profitably grow even when one or more of our businesses are faced with major challenges or setbacks," added Mr. Paleologou.
"We remain on course for yet another record year and are steadily progressing towards our goal of being one of North America's leading specialty food companies," said Mr. Paleologou.
THIRD QUARTER 2016 DIVIDEND
The Company's Board of Directors approved a cash dividend of $0.38 per share for the third quarter of 2016, which will be payable on October 14, 2016 to shareholders of record at the close of business on September 30, 2016.
Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2016 or a subsequent year is an eligible dividend for the purposes of the Enhanced Dividend Tax Credit System.
5.50% DEBENTURE REDEMPTION
Subsequent to the quarter, the Company completed the redemption of its outstanding 5.50% convertible unsecured subordinated debentures. Approximately $0.7 million of the debentures were redeemed and the balance converted by the holders thereof into common shares at a conversion price of $29.25 per share. As a result, the Company's total shares outstanding increased to 29,781,521 and its total funded debt, as compared to the amount outstanding as at the end of the second quarter of 2016, decreased by $21.1 million.
ABOUT PREMIUM BRANDS
Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Isernio's, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's, Freybe, Expresco, C&C Packing and Premier Meats.
RESULTS OF OPERATIONS
Revenue
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks ended Jun 25, 2016 |
% |
13 weeks ended Jun 27, 2015 |
% |
26 weeks ended Jun 25, 2016 |
% |
26 weeks ended Jun 27, 2015 |
% |
||
| Revenue by segment: |
|||||||||
| Specialty Foods |
273.0 |
59.0% |
232.2 |
63.9% |
535.2 |
63.4% |
447.7 |
64.7% |
|
| Premium Food Distribution |
189.9 |
41.0% |
131.1 |
36.1% |
308.7 |
36.6% |
243.9 |
35.3% |
|
| Consolidated |
462.9 |
100.0% |
363.3 |
100.0% |
843.9 |
100.0% |
691.6 |
100.0% |
|
Specialty Foods' revenue for the second quarter of 2016 as compared to the second quarter of 2015 increased by $40.8 million or 17.6% primarily due to: (i) the acquisitions of Isernio's Sausage and Expresco Foods in the third quarter of 2015 which accounted for $21.0 million of the increase; (ii) $13.8 million of organic volume growth across a range of products with a significant portion coming from the Company's sandwich initiatives; and (iii) a $6.0 million increase in the translated value of its U.S. based businesses' sales. Excluding the impact of acquisitions and exchange translation, Specialty Foods' organic volume growth for the quarter was approximately 6.0%.
Specialty Foods' revenue for the first two quarters of 2016 as compared to the first two quarters of 2015 increased by $87.5 million or 19.5% primarily due to: (i) the Isernio's Sausage and Expresco Foods acquisitions which accounted for $39.5 million of the increase; (ii) $29.2 million of organic volume growth; (iii) a $18.1 million increase in the translated value of its U.S. based businesses' sales; and (iv) approximately $0.7 million in net selling price increases that were implemented in response to higher raw material costs. Excluding the impact of acquisitions, exchange translation and net selling price increases, Specialty Foods' organic volume growth for the first two quarters of 2016 was approximately 6.5%.
For the balance of 2016, the Company expects (see Forward Looking Statements) Specialty Foods' organic volume growth to be at the top end or exceed its long-term targeted range of 4% to 6% (6% to 8% after inflation) due to a range of factors including the continued success of its sandwich initiatives and a number of growing consumer trends that are benefiting Specialty Foods' product categories in general.
Premium Food Distribution's revenue for the second quarter of 2016 as compared to the second quarter of 2015 increased by $58.8 million or 44.9% primarily due to: (i) the acquisition of C&C Foods during the quarter which accounted for $52.6 million of the increase; (ii) approximately $4.8 million in net selling price increases that were implemented in response to higher raw material costs; and (iii) net organic volume growth of $1.4 million. Excluding the impact of acquisitions and net selling price increases, Premium Food Distribution's organic volume growth for the quarter was approximately 1.0%.
Premium Food Distribution's revenue for the first two quarters of 2016 as compared to the first two quarters of 2015 increased by $64.8 million or 26.6% primarily due to: (i) the acquisition of C&C Foods which accounted for $52.6 million of the increase; (ii) approximately $9.6 million in net selling price increases; and (iii) net organic volume growth of $2.6 million. Excluding the impact of acquisitions and net selling price increases, Premium Food Distribution's organic volume growth for the first two quarters of 2016 was approximately 1.0%.
Premium Food Distribution's low organic volume growth rate for the quarter and for the first half of 2016 was due to the impact on its Alberta and Saskatchewan foodservice operations of the economic slowdowns in these regions. Excluding this impact, Premium Food Distribution's organic volume growth rate would have been at the bottom end of the Company's long-term targeted range of 4% to 6%.
For the balance of 2016, the Company expects (see Forward Looking Statements) Premium Food Distribution's organic volume growth to continue to be below its long-term targeted range of 4% to 6% as the impact of the weakness in the Alberta and Saskatchewan economies continues to largely offset the solid growth being generated from a variety of new product initiatives as well as stronger foodservice sales in southern British Columbia.
Gross Profit
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks ended Jun 25, 2016 |
% |
13 weeks ended Jun 27, 2015 |
% |
26 weeks ended Jun 25, 2016 |
% |
26 weeks ended Jun 27, 2015 |
% |
||
| Gross profit by segment |
|||||||||
| Specialty Foods |
56.6 |
20.7% |
49.3 |
21.2% |
104.7 |
19.6% |
90.7 |
20.3% |
|
| Premium Food Distribution |
31.7 |
16.7% |
21.8 |
16.6% |
50.2 |
16.3% |
39.1 |
16.0% |
|
| Consolidated |
88.3 |
19.1% |
71.1 |
19.6% |
154.9 |
18.4% |
129.8 |
18.8% |
|
Specialty Foods' gross profit as a percentage of its revenue (gross margin) for the second quarter of 2016 as compared to the second quarter of 2015 and for the first two quarters of 2016 as compared to the first two quarters of 2015 decreased due to a variety of factors including changes in the Company's sales mix, namely higher sandwich sales, and lower than normal margins on certain turkey based products resulting from raw material cost increases. In addition, Specialty Foods' sandwich operation's gross margins, while higher as compared to the second quarter of 2015, continued to be below its long-term expected levels due to start-up inefficiencies associated with the launch of a large number of new products earlier in the year and labor sourcing issues at its Columbus and Reno plants resulting from tight labor markets.
Premium Food Distribution's gross margin for the second quarter of 2016 as compared to the second quarter of 2015 was relatively stable as improved margins on beef based products, resulting from a decline in raw material costs from record highs earlier in the year, was largely offset by the impact of the acquisition of C&C Foods.
Premium Food Distribution's gross margin for the first two quarters of 2016 as compared to the first two quarters of 2015 increased slightly due to lower raw material costs resulting from a strengthening of the Canadian dollar earlier in the year being partially offset by the impact of the acquisition of C&C Foods.
Selling, General and Administrative Expenses (SG&A)
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
% |
13 weeks |
% |
26 weeks |
% |
26 weeks |
% |
||
| ended |
ended |
ended |
ended |
||||||
| Jun 25, |
Jun 27, |
Jun 25, |
Jun 27, |
||||||
| 2016 |
2015 |
2016 |
2015 |
||||||
| SG&A by segment: |
|||||||||
| Specialty Foods |
27.3 |
10.0% |
24.9 |
10.7% |
52.2 |
9.8% |
47.7 |
10.7% |
|
| Premium Food Distribution |
17.9 |
9.4% |
14.9 |
11.4% |
32.6 |
10.6% |
29.1 |
11.9% |
|
| Corporate |
3.0 |
2.8 |
4.9 |
5.6 |
|||||
| Consolidated |
48.2 |
10.4% |
42.6 |
11.7% |
89.7 |
10.6% |
82.4 |
11.9% |
|
Specialty Foods' SG&A as a percentage of sales (SG&A ratio) for the second quarter of 2016 as compared to the second quarter of 2015 and for the first two quarters of 2016 as compared to the first two quarters of 2015 decreased primarily due to: (i) reduced discretionary employee compensation associated with growth in the free cash flow of certain businesses; (ii) the fixed nature of a variety of costs relative to its organic revenue growth; and (iii) changes in the Company's sales mix, namely higher sandwich sales.
Premium Food Distribution's SG&A ratio for the second quarter of 2016 as compared to the second quarter of 2015 and for the first two quarters of 2016 as compared to the first two quarters of 2015 decreased primarily due to: (i) the acquisition of C&C Foods; and (ii) the fixed nature of a variety of costs relative to its organic revenue growth.
Adjusted EBITDA
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
% |
13 weeks |
% |
26 weeks |
% |
26 weeks |
% |
||
| ended |
ended |
ended |
ended |
||||||
| Jun 25, |
Jun 27, |
Jun 25, |
Jun 27, |
||||||
| 2016 |
2015 |
2016 |
2015 |
||||||
| Adjusted EBITDA by segment: |
|||||||||
| Specialty Foods |
29.3 |
10.7% |
24.4 |
10.5% |
52.5 |
9.8% |
43.0 |
9.6% |
|
| Premium Food Distribution |
13.8 |
7.3% |
6.9 |
5.3% |
17.6 |
5.7% |
10.0 |
4.1% |
|
| Corporate |
(3.0) |
(2.8) |
(4.9) |
(5.6) |
|||||
| Consolidated |
40.1 |
8.7% |
28.5 |
7.8% |
65.2 |
7.7% |
47.4 |
6.9% |
|
The Company's targeted EBITDA margin for 2016 is (see Forward Looking Statements) to be within the range of 8.0% to 8.5%. This target was set several years ago when its EBITDA margin was approximately 6.5% and since then the Company has made steady progress with its adjusted EBITDA margin improving to 7.5% in 2015. With the continued improvement in the Company's adjusted EBITDA margin in the first two quarters of 2016, its adjusted EBITDA margin for the trailing four quarters is 7.9%.
Looking forward (see Forward Looking Statements) the Company still expects to be within its targeted adjusted EBITDA margin range for 2016, albeit at the lower end primarily due to the acquisition of C&C Foods which, as a distribution business, has historically generated lower annual adjusted EBITDA margins relative to the Company's targeted range. Excluding the impact of the C&C Foods acquisition, the Company expects to continue to improve its adjusted EBITDA margin based on: (i) improved gross margins in its sandwich operations as production start-up issues associated with the launch of a large number of new products earlier in the year are resolved; (ii) a general improvement in operating efficiencies in a number of the Company's businesses resulting from projected organic sales growth; and (iii) continuing improvement of Premium Foods Distribution's gross margins due to falling raw material costs.
Interest and other financing costs
The Company's interest and other financing costs for the second quarter of 2016 as compared to the second quarter of 2015 decreased due to lower average borrowing costs on both its senior revolving credit facilities and the blend of its convertible debentures. This decrease was partially offset by additional interest associated with the Company's higher total funded debt levels relative to the second quarter of 2015.
The Company's interest and other financing costs for the first two quarters of 2016 as compared to the first two quarters of 2015 decreased primarily due to (i) the same factors that impacted the second quarter; and (ii) lower total funded debt levels in the first quarter of 2016 relative to the first quarter of 2015.
| Premium Brands Holdings Corporation |
|||||
| Consolidated Balance Sheets |
|||||
| (Unaudited and in millions of Canadian dollars) |
|||||
| June 25, |
December 26, |
June 27, |
|||
| 2016 |
2015 |
2015 |
|||
| Current assets: |
|||||
| Cash and cash equivalents |
4.3 |
11.3 |
7.3 |
||
| Accounts receivable |
175.5 |
159.9 |
134.8 |
||
| Inventories |
162.3 |
141.6 |
130.7 |
||
| Prepaid expenses |
6.7 |
6.4 |
6.5 |
||
| Other assets |
0.6 |
1.0 |
0.8 |
||
| 349.4 |
320.2 |
280.1 |
|||
| Capital assets |
228.1 |
227.3 |
208.6 |
||
| Intangible assets |
122.8 |
79.7 |
70.1 |
||
| Goodwill |
276.1 |
209.5 |
175.7 |
||
| Investment in associates |
9.5 |
9.3 |
9.4 |
||
| Other assets |
9.5 |
10.2 |
10.4 |
||
| 995.4 |
856.2 |
754.3 |
|||
| Current liabilities: |
|||||
| Cheques outstanding |
10.6 |
6.8 |
2.8 |
||
| Bank indebtedness |
6.0 |
3.9 |
0.2 |
||
| Dividend payable |
11.0 |
9.4 |
8.7 |
||
| Accounts payable and accrued liabilities |
151.2 |
133.9 |
122.2 |
||
| Current portion of long-term debt |
1.2 |
3.7 |
1.6 |
||
| Current portion of provisions |
2.0 |
1.9 |
1.8 |
||
| 182.0 |
159.6 |
137.3 |
|||
| Long-term debt |
194.1 |
202.8 |
159.0 |
||
| Puttable interest in subsidiaries |
26.7 |
26.3 |
17.9 |
||
| Deferred revenue |
4.3 |
4.4 |
4.5 |
||
| Provisions |
20.3 |
4.1 |
5.2 |
||
| Pension obligation |
1.6 |
1.4 |
1.5 |
||
| Deferred income taxes |
26.7 |
15.5 |
4.4 |
||
| 455.7 |
414.1 |
329.8 |
|||
| Convertible unsecured subordinated debentures |
168.2 |
121.8 |
177.6 |
||
| Equity attributable to shareholders: |
|||||
| Deficit |
(52.1) |
(57.9) |
(58.8) |
||
| Share capital |
402.5 |
345.2 |
289.4 |
||
| Reserves |
20.5 |
32.4 |
15.8 |
||
| Non-controlling interest |
0.6 |
0.6 |
0.5 |
||
| 371.5 |
320.3 |
246.9 |
|||
| 995.4 |
856.2 |
754.3 |
|||
| Premium Brands Holdings Corporation |
|||||
| Consolidated Statements of Operations |
|||||
| (Unaudited and in millions of Canadian dollars) |
|||||
| 13 weeks |
13 weeks |
26 weeks |
26 weeks |
||
| ended |
ended |
ended |
ended |
||
| June 25, |
June 27, |
June 25, |
June 27, |
||
| 2016 |
2015 |
2016 |
2015 |
||
| Revenue |
462.9 |
363.3 |
843.9 |
691.6 |
|
| Cost of goods sold |
374.6 |
292.2 |
689.0 |
561.8 |
|
| Gross profit |
88.3 |
71.1 |
154.9 |
129.8 |
|
| Selling, general and administrative expenses before depreciation, |
48.2 |
42.6 |
89.7 |
82.4 |
|
| 40.1 |
28.5 |
65.2 |
47.4 |
||
| Plant start-up costs |
- |
- |
- |
2.9 |
|
| 40.1 |
28.5 |
65.2 |
44.5 |
||
| Depreciation of capital assets |
6.5 |
6.6 |
13.2 |
12.3 |
|
| Amortization of intangible assets |
2.1 |
1.1 |
3.3 |
2.1 |
|
| Interest and other financing costs |
4.3 |
4.5 |
7.6 |
9.3 |
|
| Amortization of financing costs |
- |
- |
0.1 |
0.1 |
|
| Acquisition transaction costs |
0.3 |
- |
0.5 |
- |
|
| Change in value of puttable interest in subsidiaries |
1.0 |
0.6 |
1.7 |
0.9 |
|
| Accretion of provisions |
0.3 |
0.1 |
0.4 |
0.2 |
|
| Unrealized loss on foreign currency contracts |
- |
0.3 |
0.7 |
0.1 |
|
| Equity income (loss) in associates |
- |
0.2 |
(0.3) |
0.1 |
|
| Earnings before income taxes |
25.6 |
15.1 |
38.0 |
19.4 |
|
| Provision for income taxes |
|||||
| Current |
2.5 |
0.6 |
3.6 |
0.8 |
|
| Deferred |
4.7 |
25.1 |
6.8 |
25.7 |
|
| 7.2 |
25.7 |
10.4 |
26.5 |
||
| Earnings (loss) from continuing operations |
18.4 |
(10.6) |
27.6 |
(7.1) |
|
| Discontinued operation, net of income taxes |
- |
0.1 |
- |
0.2 |
|
| Earnings (loss) |
18.4 |
(10.5) |
27.6 |
(6.9) |
|
| Earnings (loss) attributable to: |
|||||
| Shareholders |
18.4 |
(10.4) |
27.6 |
(6.8) |
|
| Non-controlling interest |
- |
(0.1) |
- |
(0.1) |
|
| 18.4 |
(10.5) |
27.6 |
(6.9) |
||
| Earnings (loss) per share from: |
|||||
| Continuing operations - basic |
0.64 |
(0.44) |
0.99 |
(0.30) |
|
| Continuing operations - diluted |
0.64 |
(0.44) |
0.98 |
(0.30) |
|
| Discontinued operation - basic and diluted |
- |
- |
- |
0.01 |
|
| Earnings attributable to shareholders - basic |
0.64 |
(0.43) |
0.99 |
(0.29) |
|
| Earnings attributable to shareholders - diluted |
0.64 |
(0.43) |
0.98 |
(0.29) |
|
| Weighted average shares outstanding: |
|||||
| Basic |
28.8 |
24.3 |
28.0 |
23.5 |
|
| Diluted |
28.9 |
24.4 |
28.2 |
23.6 |
|
| Premium Brands Holdings Corporation |
|||||||
| Consolidated Statements of Cash Flows |
|||||||
| (Unaudited and in millions of Canadian dollars) |
|||||||
| 13 weeks |
13 weeks |
26 weeks |
26 weeks |
||||
| ended |
ended |
ended |
ended |
||||
| June 25, |
June 27, |
June 25, |
June 27, |
||||
| 2016 |
2015 |
2016 |
2015 |
||||
| Cash flows from (used in) operating activities: |
|||||||
| Earnings (loss) from continuing operations |
18.4 |
(10.6) |
27.6 |
(7.1) |
|||
| Items not involving cash: |
|||||||
| Depreciation of capital assets |
6.5 |
6.6 |
13.2 |
12.3 |
|||
| Amortization of intangible assets |
2.1 |
1.1 |
3.3 |
2.1 |
|||
| Amortization of financing costs |
- |
- |
0.1 |
0.1 |
|||
| Change in value of puttable interest in subsidiaries |
1.0 |
0.6 |
1.7 |
0.9 |
|||
| Unrealized loss on foreign currency contracts |
- |
0.3 |
0.7 |
0.1 |
|||
| Equity loss (income) in associates |
- |
0.2 |
(0.3) |
0.1 |
|||
| Deferred revenue |
- |
(0.1) |
(0.1) |
(0.1) |
|||
| Accretion of convertible debentures, long-term |
0.8 |
1.3 |
1.2 |
2.0 |
|||
| Deferred income taxes |
4.7 |
25.1 |
6.8 |
25.7 |
|||
| 33.5 |
24.5 |
54.2 |
36.1 |
||||
| Change in non-cash working capital |
1.1 |
(8.3) |
13.1 |
(8.1) |
|||
| Discontinued operation |
- |
0.1 |
- |
0.2 |
|||
| Non-cash items in discontinued operations |
- |
0.1 |
- |
0.1 |
|||
| 34.6 |
16.4 |
67.3 |
28.3 |
||||
| Cash flows from (used in) financing activities: |
|||||||
| Long term debt - net change |
12.5 |
(57.3) |
(9.4) |
(53.8) |
|||
| Bank indebtedness and cheques outstanding |
6.1 |
(1.4) |
5.5 |
(3.4) |
|||
| Convertible debentures - net of issuance costs |
82.3 |
65.7 |
82.3 |
65.7 |
|||
| Dividends paid to shareholders |
(10.8) |
(8.1) |
(20.2) |
(15.1) |
|||
| Repayment of convertible debentures |
- |
(1.2) |
- |
(1.4) |
|||
| Other |
(0.6) |
(0.1) |
(0.6) |
(0.1) |
|||
| 89.5 |
(2.4) |
57.6 |
(8.1) |
||||
| Cash flows from (used in) investing activities: |
|||||||
| Capital asset additions |
(9.6) |
(9.6) |
(17.1) |
(14.1) |
|||
| Business acquisitions |
(111.8) |
- |
(111.8) |
- |
|||
| Payments to shareholders of non-wholly owned |
(1.0) |
(0.6) |
(1.4) |
(1.2) |
|||
| Payment of provisions |
(1.7) |
- |
(1.7) |
- |
|||
| Purchase of shares for employee share loans |
- |
(7.5) |
- |
(7.5) |
|||
| Change in share purchase loans and notes receivable |
0.2 |
- |
0.3 |
0.1 |
|||
| Distribution from associates |
0.1 |
- |
0.1 |
0.1 |
|||
| Net proceeds from sales of assets |
0.2 |
0.1 |
0.2 |
0.1 |
|||
| Other |
(0.4) |
0.1 |
(0.4) |
0.1 |
|||
| (124.0) |
(17.5) |
(131.8) |
(22.4) |
||||
| Change in cash and cash equivalents |
0.1 |
(3.5) |
(6.9) |
(2.2) |
|||
| Effects of exchange on cash and cash equivalents |
- |
- |
(0.1) |
0.1 |
|||
| Cash and cash equivalents, beginning of period |
4.2 |
10.8 |
11.3 |
9.4 |
|||
| Cash and cash equivalents, end of period |
4.3 |
7.3 |
4.3 |
7.3 |
|||
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 |
13 weeks |
26 weeks |
26 weeks |
|
| ended |
ended |
ended |
ended |
|
| Jun 25, |
Jun 27, |
Jun 25, |
Jun 27, |
|
| 2016 |
2015 |
2016 |
2015 |
|
| Earnings before income taxes |
25.6 |
15.1 |
38.0 |
19.4 |
| Plant start-up costs |
- |
- |
- |
2.9 |
| Depreciation of capital assets |
6.5 |
6.6 |
13.2 |
12.3 |
| Amortization of intangible assets |
2.1 |
1.1 |
3.3 |
2.1 |
| Interest and other financing costs |
4.3 |
4.5 |
7.6 |
9.3 |
| Amortization of financing costs |
- |
- |
0.1 |
0.1 |
| Acquisition transaction costs |
0.3 |
- |
0.5 |
- |
| Change in value of puttable interest in subsidiaries |
1.0 |
0.6 |
1.7 |
0.9 |
| Accretion of provisions |
0.3 |
0.1 |
0.4 |
0.2 |
| Unrealized loss on foreign currency contracts |
- |
0.3 |
0.7 |
0.1 |
| Equity loss (income) in associates |
- |
0.2 |
(0.3) |
0.1 |
| Consolidated adjusted EBITDA |
40.1 |
28.5 |
65.2 |
47.4 |
Free Cash Flow
| (in millions of dollars) |
52 weeks |
26 weeks |
26 weeks |
Trailing |
| ended |
ended |
ended |
Four |
|
| Dec 26, 2015 |
Jun 25, 2016 |
Jun 27, 2015 |
Quarters |
|
| Cash flow from operating activities |
67.4 |
67.3 |
28.3 |
106.4 |
| Changes in non-cash working capital |
17.1 |
(13.1) |
8.1 |
(4.1) |
| Acquisition transaction costs |
0.2 |
0.5 |
- |
0.7 |
| Plant start-up costs |
2.9 |
- |
2.9 |
- |
| Maintenance capital expenditures |
(6.5) |
(4.1) |
(3.8) |
(6.8) |
| Free cash flow |
81.1 |
50.6 |
35.5 |
96.2 |
Adjusted Earnings and Adjusted Earnings per Share
| (in millions of dollars except per share amounts) |
||||
| 13 weeks |
13 weeks |
26 weeks |
26 weeks |
|
| ended |
ended |
ended |
ended |
|
| Jun 25, |
Jun 27, |
Jun 25, |
Jun 27, |
|
| 2016 |
2015 |
2016 |
2015 |
|
| Earnings (loss) |
18.4 |
(10.5) |
27.6 |
(6.9) |
| Plant start-up costs |
- |
- |
- |
2.9 |
| Acquisition transaction costs |
0.3 |
- |
0.5 |
- |
| Accretion of provisions |
0.3 |
0.1 |
0.4 |
0.2 |
| Unrealized loss on foreign currency contracts |
- |
0.3 |
0.7 |
0.1 |
| 19.0 |
(10.1) |
29.2 |
(3.7) |
|
| Current and deferred income tax effect of above items |
(0.1) |
(0.1) |
(0.4) |
(1.1) |
| Non-cash write-down of deferred income tax assets resulting from |
- |
21.5 |
- |
21.5 |
| Adjusted earnings |
18.9 |
11.3 |
28.8 |
16.7 |
| Weighted average shares outstanding |
28.8 |
24.3 |
28.0 |
23.5 |
| Adjusted earnings per share |
0.66 |
0.47 |
1.03 |
0.71 |
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements with respect to the Company, including its business operations, strategy and financial performance and condition. These statements generally can be identified by the use of forward looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.
Although management believes that the expectations reflected in such forward looking statements are reasonable and represent the Company's internal expectations and belief as of August 8, 2016, such 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.
Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of finished products sourced from third party manufacturers; (v) changes in the Company's relationships with its larger customers; (vi) access to commodity raw materials; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; * execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its growth initiatives; (xv) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xvi) the loss and/or inability to attract key senior personnel; (xvii) fluctuations in the interest rates associated with the Company's funded debt; (xviii) failure or breach of the Company's information systems; (xix) financial exposure resulting from credit extended to the Company's customers; (xx) the malfunction of critical equipment used in the Company's operations; (xxi) livestock health issues; (xxii) international trade issues; and (xxiii) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's 2015 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.
Unless otherwise indicated, the forward looking statements in this document are made as of August 8, 2016 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
please contact George Paleologou, President and CEO or Will Kalutycz, CFO at (604) 656-3100; www.premiumbrandsholdings.com
Share this article