Premium Brands Holdings Corporation Announces Record Second Quarter 2017 Results and Declares Third Quarter 2017 Dividend
VANCOUVER, Aug. 14, 2017 /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 2017.
HIGHLIGHTS FOR THE QUARTER
- Record second quarter revenue of $577.4 million representing a 24.7% increase as compared to the second quarter of 2016
- Record second quarter adjusted EBITDA of $55.0 million representing a 37.2% increase as compared to the second quarter of 2016
- Record second quarter earnings and earnings per share of $26.7 million and $0.90 per share, respectively, representing 45.1% and 40.6% increases as compared to the second quarter of 2016
- Record trailing four quarters free cash flow of $141.1 million resulting in a dividend to free cash flow ratio of 33.9%
- The completion and start-up of a new 212,000 square foot state-of-the-art sandwich production facility in Phoenix, AZ
- Subsequent to the quarter, acquired a 25% interest, through the purchase of treasury shares, in Seattle based Partners, A Tasteful Choice Company for US$2.0 million. Partners is a leading manufacturer of artisan crackers
- Subsequent to the quarter declared a quarterly dividend of $0.42 per share
SUMMARY FINANCIAL INFORMATION
(In millions of dollars except per share amounts and ratios)
| 13 weeks ended Jul 1, 2017 |
13 weeks ended Jun 25, 2016 |
26 weeks ended Jul 1, 2017 |
26 weeks ended Jun 25, 2016 |
|
| Revenue |
577.4 |
462.9 |
1,055.6 |
843.9 |
| Adjusted EBITDA |
55.0 |
40.1 |
93.4 |
65.2 |
| Earnings |
26.7 |
18.4 |
42.0 |
27.6 |
| EPS |
0.90 |
0.64 |
1.41 |
0.99 |
| Adjusted earnings |
27.9 |
18.9 |
43.5 |
28.8 |
| Adjusted EPS |
0.94 |
0.66 |
1.46 |
1.03 |
| Trailing Four Quarters Ended |
||||
| Jul 1, |
Dec 31, |
|||
| 2017 |
2016 |
|||
| Free cash flow |
141.1 |
121.5 |
||
| Declared dividends |
47.8 |
44.5 |
||
| Declared dividend per share |
1.60 |
1.52 |
||
| Payout ratio |
33.9% |
36.6% |
||
"We are very pleased with the steady progress made by all of our operating platforms as their ongoing growth and product sales mix optimization initiatives propelled us to another quarter of record results," said Mr. George Paleologou, President and CEO. "We are particularly pleased that our improved earnings were despite significant volatility in the cost of a number of our input commodities, once again showing the strength and resiliency of our unique business model. The diversification we have built into our company combined with our partnerships with talented entrepreneurial management teams is resulting in long-term sustainable growth in both our top and bottom lines.
"We are also pleased to announce the completion and commissioning at the end of the quarter of our new 212,000 square foot state-of-the-art sandwich facility in Phoenix, Arizona. Since its start-up, the plant has expanded from two production lines to five and, based on the opportunities presenting themselves, we expect it to be operating ten production lines by the end of this year.
"Our other major capital project, the construction of a 105,000 square foot combination seafood and protein custom cutting and distribution facility in the Greater Toronto Area, is proceeding well, however due to permitting related delays its completion date has been moved back to the end of this year.
"In terms of acquisitions, we continue to enjoy a particularly robust pipeline of opportunities and fully expect to complete several transactions this year. In fact, subsequent to the quarter we invested US$2.0 million in Seattle based Partners, a leading manufacturer of artisan crackers. This investment, which will facilitate the company's move into a new 150,000 square foot state-of-the-art facility in the Seattle region, once again demonstrates our ability to develop customized ownership solutions that address the personal objectives of talented entrepreneurs while helping them to elevate their business to the next level.
"For additional information on our major capital projects in Phoenix and Ontario as well as further insight into our acquisitions and general business strategies please see my most recent Letter to Shareholders titled Building Growth and Performance Platforms, which is posted on our website at www.premiumbrandsholdings.com," added Mr. Paleologou.
THIRD QUARTER 2017 DIVIDEND
The Company's Board of Directors approved a cash dividend of $0.42 per share for the third quarter of 2017, which will be payable on October 16, 2017 to shareholders of record at the close of business on September 29, 2017.
Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2017 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 in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, Nevada, Ohio, Arizona 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, Piller's, Freybe, SJ Fine Foods, Expresco, Belmont Meats, Hempler's, Isernio's, Fletcher's U.S., Direct Plus, Audrey's, SK Food Group, OvenPride, Bread Garden Go, Hygaard, Quality Fast Foods, Deli Chef, Creekside Bakehouse, Stuyver's Bakestudio, Island City Baking, Partners Crackers, Conte Foods, Larosa Foods, Gourmet Chef, Duso's, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Harlan Fairbanks, Maximum Seafood, Ocean Miracle, Hub City Fisheries, Diana's Seafood, C&C Packing, Premier Meats and Interprovincial Meat Sales.
RESULTS OF OPERATIONS
Revenue
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
%
|
13 weeks |
%
|
26 weeks |
%
|
26 weeks |
%
|
||
| Revenue by segment: |
|||||||||
| Specialty Foods |
347.7 |
60.2% |
273.0 |
59.0% |
632.2 |
59.9% |
535.2 |
63.4% |
|
| Premium Food Distribution |
229.7 |
39.8% |
189.9 |
41.0% |
423.4 |
40.1% |
308.7 |
36.6% |
|
| Consolidated |
577.4 |
100.0% |
462.9 |
100.0% |
1,055.6 |
100.0% |
843.9 |
100.0% |
|
Specialty Foods' (SF) revenue for the second quarter of 2017 as compared to the second quarter of 2016 increased by $74.7 million or 27.4% primarily due to: (i) business acquisitions, which accounted for $53.3 million of the increase; (ii) $26.0 million of organic volume growth representing a growth rate of 9.5%; and (iii) a $4.1 million increase in the translated value of its U.S. based businesses' sales resulting from, on average, a weaker Canadian dollar. These increases were partially offset by: (i) SF's exit from approximately $5.6 million of lower margin sales as part of a process to reallocate its production capacity to more sustainable and higher margin sales opportunities; and (ii) $3.1 million in selling price reductions relating primarily to products sold on a cost plus basis.
For the first two quarters of 2017 as compared to the first two quarters of 2016 SF's revenue increased by $97.0 million or 18.1% primarily due to: (i) business acquisitions, which accounted for $82.4 million of the increase; and (ii) $35.7 million of organic volume growth representing a growth rate of 6.7%. These increases were partially offset by: (i) $9.3 million in selling price reductions relating primarily to products sold on a cost plus basis; (ii) a $1.2 million decrease in the translated value of its U.S. based businesses resulting from, on average, a stronger Canadian dollar; and (iii) SF's exit from approximately $10.6 million of lower margin sales in order to allocate its production capacity to more sustainable and higher margin sales opportunities.
Meat snacks, premium processed meats and artisan sandwiches were the main drivers of SF's 6.7% organic volume growth for the first two quarters of 2017. Looking forward (see Forward Looking Statements) the Company is maintaining its guidance for SF's 2017 organic volume growth to exceed its long-term targeted range of 4% to 6% based on a variety of factors, including investments that SF has made in a number of longer term initiatives that are expected to begin contributing to its growth in the latter half of 2017. Among these is its new 212,000 square foot sandwich facility in Phoenix, AZ which commenced operations at the end of the quarter.
Premium Food Distribution's (PFD) revenue for the second quarter of 2017 as compared to the second quarter of 2016 increased by $39.8 million or 21.0% primarily due to: (i) business acquisitions, which accounted for $24.9 million of the increase; (ii) $10.6 million of organic volume growth representing a growth rate of 5.6%; and (iii) $4.3 million in selling price increases that were implemented in response to higher input costs for a variety of seafood and other protein commodities.
For the first two quarters of 2017 as compared to the first two quarters of 2016 PFD's revenue increased by $114.7 million or 37.2% primarily due to: (i) business acquisitions, which accounted for $91.0 million of the increase; (ii) $17.8 million of organic volume growth representing a growth rate of 5.8%; and (iii) $5.9 million in selling price increases that were implemented in response to higher input costs for a variety of seafood and other protein commodities.
The primary drivers of PFD's 5.8% organic volume growth for the first two quarters of 2017 were: (i) the expansion of its western Canada foodservice distribution network into niche segments of the retail channel; (ii) increased penetration into the Quebec retail market through its C&C and Premier Meats businesses; (iii) expansion of its non-distributive sales to national and regional restaurant chains; and (iv) capturing additional market share in the Greater Toronto Area foodservice market, primarily in the seafood product category. Its growth was also helped by some stabilization in the Alberta economy.
Looking forward (see Forward Looking Statements) the Company is maintaining its guidance for PFD's 2017 organic volume growth to exceed its long-term targeted range of 4% to 6% based primarily on the continued execution of its current growth strategies. Longer term the Company is expecting PFD to further accelerate its growth when it completes the construction of a new distribution and processing facility in Toronto at the end of 2017.
Gross Profit
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
%
|
13 weeks |
%
|
26 weeks |
%
|
26 weeks |
%
|
||
| Gross profit by segment: |
|||||||||
| Specialty Foods |
78.2 |
22.5% |
56.6 |
20.7% |
139.9 |
22.1% |
104.7 |
19.6% |
|
| Premium Food Distribution |
37.2 |
16.2% |
31.7 |
16.7% |
68.1 |
16.1% |
50.2 |
16.3% |
|
| Consolidated |
115.4 |
20.0% |
88.3 |
19.1% |
208.0 |
19.7% |
154.9 |
18.4% |
|
SF's gross profit as a percentage of its revenue (gross margin) for the second quarter of 2017 as compared to the second quarter of 2016 increased by 180 basis points to 22.5% primarily due to improved operating efficiencies at a number of its plants, in general, and at its new Columbus sandwich plant, in particular. These improvements were the result of a variety of continuous improvement initiatives as well as higher production volumes associated from SF's organic volume growth and an improved sales mix resulting from a combination of SF's exit from certain lower margin product sales and its growth coming from higher margin branded products.
For the first two quarters of 2017 as compared to the first two quarters of 2016 SF's gross margin increased by 250 basis points to 22.1% primarily due to the same factors that resulted in the increase in its gross margin in the second quarter of 2017. However, on a year to date basis these factors were partially offset by the acquisition of Belmont Meats in late 2016, which for seasonal reasons, has very low gross margins in the first quarter of the year. Excluding the impact of recent acquisitions, SF's gross margin for the first two quarters of 2017 was 22.6%.
PFD's gross margins for the second quarter of 2017 as compared to the second quarter of 2016 and for the first two quarters of 2017 as compared to the first two quarters of 2016 were relatively stable as a variety of factors across PFD's businesses, including selling price increases, sales mix changes and volatility in the cost of certain raw material commodities, offset one another.
Selling, General and Administrative Expenses (SG&A)
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
%
|
13 weeks |
%
|
26 weeks |
%
|
26 weeks |
%
|
||
| SG&A by segment: |
|||||||||
| Specialty Foods |
35.3 |
10.2% |
27.3 |
10.0% |
65.9 |
10.4% |
52.2 |
9.8% |
|
| Premium Food Distribution |
21.5 |
9.4% |
17.9 |
9.4% |
41.5 |
9.8% |
32.6 |
10.6% |
|
| Corporate |
3.6 |
3.0 |
7.2 |
4.9 |
|||||
| Consolidated |
60.4 |
10.5% |
48.2 |
10.4% |
114.6 |
10.9% |
89.7 |
10.6% |
|
SF's SG&A as a percentage of sales (SG&A ratio) for the second quarter of 2017 as compared to the second quarter of 2016 rose due to: (i) increased discretionary marketing costs associated with the promotion of higher margin branded products; and (ii) additional investment in the sales and management infrastructure needed to support SF's future growth. These increases were, however, largely offset by the impacts of: (i) acquisitions made in the latter half of 2016; and (ii) the fixed nature of a variety of costs relative to SF's organic revenue growth. Excluding the impact of acquisitions, SF's SG&A ratio for the quarter was 10.5%.
SF's SG&A ratio for the first two quarters of 2017 as compared to the first two quarters of 2016 increased by 60 basis points primarily due to the same factors impacting the second quarter as well increased accruals in the first quarter of 2017 for variable employee compensation that is tied to the growth in certain components of the Company's free cash flow. Excluding the impact of acquisitions, SF's SG&A ratio for first two quarters of 2017 was 10.7%.
PFD's SG&A ratio for the second quarter of 2017 as compared to the second quarter of 2016 was unchanged as increased costs associated with the expansion of its distribution network's capacity were offset by the impact of the fixed nature of a variety of costs relative to PFD's organic revenue growth.
PFD's SG&A ratio for the first two quarters of 2017 as compared to the first two quarters of 2016 decreased by 80 basis points primarily due to the impacts of: (i) the acquisition of C&C Foods, which occurred at the beginning of the second quarter of 2016; and (ii) the fixed nature of a variety of costs relative to its organic revenue growth. These were partially offset by increased costs associated with the expansion of PFD's distribution network's capacity. Excluding the impact of the acquisition of C&C Foods, PFD's SG&A ratio for the quarter was 10.4%.
Corporate SG&A for the second quarter of 2017 as compared to the second quarter of 2016 increased by $0.6 million due to a variety of items, the most significant of which was increased staffing levels needed to support the Company's acquisition and information technology strategies. These increases were partially offset by a higher exchange translation gain on U.S. dollar denominated liabilities.
Corporate SG&A for the first two quarters of 2017 as compared to the first two quarters of 2016 increased by $2.3 million mainly due to: (i) increased staffing levels to support the Company's acquisition and information technology strategies; and (ii) increased accruals in the first quarter of 2017 for variable employee compensation that is tied to growth in the Company's free cash flow.
Adjusted EBITDA
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks |
%
|
13 weeks |
%
|
26 weeks |
%
|
26 weeks |
%
|
||
| Adjusted EBITDA by segment: |
|||||||||
| Specialty Foods |
42.9 |
12.3% |
29.3 |
10.7% |
74.0 |
11.7% |
52.5 |
9.8% |
|
| Premium Food Distribution |
15.7 |
6.8% |
13.8 |
7.3% |
26.6 |
6.3% |
17.6 |
5.7% |
|
| Corporate |
(3.6) |
(3.0) |
(7.2) |
(4.9) |
|||||
| Consolidated |
55.0 |
9.5% |
40.1 |
8.7% |
93.4 |
8.8% |
65.2 |
7.7% |
|
The Company's adjusted EBITDA for the first two quarters of 2017 as compared to the first two quarters of 2016 increased by $28.2 million or 43.3% resulting in a trailing four quarters (TFQ) adjusted EBITDA of $183.0 million. The Company's adjusted EBITDA as a percentage of sales (EBITDA margin) for the TFQ was 8.8% as compared to 8.3% for 2016 and a targeted range for 2017 of 8.5% to 9.0%.
Looking forward (see Forward Looking Statements) the Company is maintaining its guidance for its 2017 adjusted EBITDA margin to be in the 8.5% to 9.0% range.
Plant start-up costs
Plant start-up costs consist of expenses associated with the start-up of new production capacity at one or more of the Company's businesses.
During the second quarter of 2017 the Company incurred $1.3 million in plant start-up costs due to the commissioning of its new 212,000 square foot sandwich production facility in Phoenix, AZ (the Phoenix Plant). $1.1 million of these costs related to pre-start-up expenses including plant overhead, recruiting and employee training with the balance consisting of normal inefficiencies associated with running new production lines.
Looking forward (see Forward Looking Statements), the Company expects to continue to incur start-up costs at the Phoenix Plant until the middle of the fourth quarter of 2017 and is projecting $5.0 million in total Phoenix Plant start-up costs for 2017.
Interest and other financing costs
The Company's interest and other financing costs for the second quarter of 2017 as compared to the second quarter of 2016 and for the first two quarters of 2017 as compared to the first two quarters of 2016 increased by $1.1 million and $2.8 million, respectively, primarily due to: (i) higher net funded debt levels; and (ii) a higher blended average cost of debt resulting from convertible debentures making up a larger portion of the Company's total net funded debt.
| Premium Brands Holdings Corporation |
||||
| Consolidated Balance Sheets |
||||
| (in millions of Canadian dollars) |
||||
| July 1, |
December 31, |
June 25, 2016 |
||
| Current assets: |
||||
| Cash and cash equivalents |
30.1 |
19.4 |
4.3 |
|
| Accounts receivable |
201.5 |
180.9 |
175.5 |
|
| Inventories |
194.9 |
170.4 |
162.3 |
|
| Prepaid expenses |
8.7 |
7.5 |
6.7 |
|
| Other assets |
0.5 |
0.5 |
0.6 |
|
| 435.7 |
378.7 |
349.4 |
||
| Capital assets |
276.5 |
251.7 |
228.1 |
|
| Intangible assets |
147.8 |
149.8 |
122.8 |
|
| Goodwill |
321.4 |
320.3 |
276.1 |
|
| Investment in associates |
9.1 |
9.5 |
9.5 |
|
| Other assets |
10.9 |
11.1 |
9.5 |
|
| 1,201.4 |
1,121.1 |
995.4 |
||
| Current liabilities: |
||||
| Cheques outstanding |
10.7 |
12.4 |
10.6 |
|
| Bank indebtedness |
3.0 |
0.2 |
6.0 |
|
| Dividends payable |
12.6 |
11.4 |
11.0 |
|
| Accounts payable and accrued liabilities |
178.8 |
155.8 |
151.2 |
|
| Current portion of long-term debt |
2.0 |
2.2 |
1.2 |
|
| Current portion of provisions |
20.2 |
2.1 |
2.0 |
|
| Current portion of puttable interest in subsidiaries |
6.0 |
4.8 |
- |
|
| 233.3 |
188.9 |
182.0 |
||
| Long-term debt |
195.9 |
152.2 |
194.1 |
|
| Puttable interest in subsidiaries |
29.2 |
27.4 |
26.7 |
|
| Provisions |
1.8 |
20.8 |
20.3 |
|
| Deferred revenue |
6.7 |
4.3 |
4.3 |
|
| Pension obligation |
1.5 |
1.5 |
1.6 |
|
| Deferred income taxes |
49.4 |
44.8 |
26.7 |
|
| 517.8 |
439.9 |
455.7 |
||
| Convertible unsecured subordinated debentures |
256.0 |
254.8 |
168.2 |
|
| Equity attributable to shareholders: |
||||
| Deficit |
(16.4) |
(33.3) |
(52.1) |
|
| Share capital |
426.4 |
429.9 |
402.5 |
|
| Reserves |
17.6 |
29.3 |
20.5 |
|
| Non-controlling interest |
- |
0.5 |
0.6 |
|
| 427.6 |
426.4 |
371.5 |
||
| 1,201.4 |
1,121.1 |
995.4 |
||
| Premium Brands Holdings Corporation |
|||||
| Consolidated Statements of Operations |
|||||
| (in millions of Canadian dollars except per share amounts) |
|||||
| 13 weeks ended July 1, 2017 |
13 weeks ended June 25, 2016 |
26 weeks July 1, 2017 |
26 weeks ended June 25, 2016 |
||
| Revenue |
577.4 |
462.9 |
1,055.6 |
843.9 |
|
| Cost of goods sold |
462.0 |
374.6 |
847.6 |
689.0 |
|
| Gross profit before depreciation and amortization |
115.4 |
88.3 |
208.0 |
154.9 |
|
| Selling, general and administrative expenses before |
|||||
| depreciation and amortization |
60.4 |
48.2 |
114.6 |
89.7 |
|
| 55.0 |
40.1 |
93.4 |
65.2 |
||
| Plant start-up costs |
1.3 |
- |
1.3 |
- |
|
| 53.7 |
40.1 |
92.1 |
65.2 |
||
| Depreciation of capital assets |
7.1 |
6.5 |
14.3 |
13.2 |
|
| Amortization of intangible assets |
2.5 |
2.1 |
4.9 |
3.3 |
|
| Interest and other financing costs |
5.4 |
4.3 |
10.5 |
7.7 |
|
| Acquisition transaction costs |
0.2 |
0.3 |
0.4 |
0.5 |
|
| Change in value of puttable interest in subsidiaries |
1.7 |
1.0 |
3.2 |
1.7 |
|
| Accretion of provisions |
0.2 |
0.3 |
0.5 |
0.4 |
|
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
|
| Equity loss (income) in associates |
0.2 |
- |
0.3 |
(0.3) |
|
| Earnings before income taxes |
36.4 |
25.6 |
58.0 |
38.0 |
|
| Provision for income taxes |
|||||
| Current |
8.2 |
2.5 |
11.7 |
3.6 |
|
| Deferred |
1.5 |
4.7 |
4.3 |
6.8 |
|
| 9.7 |
7.2 |
16.0 |
10.4 |
||
| Earnings |
26.7 |
18.4 |
42.0 |
27.6 |
|
| Earnings per share: |
|||||
| Basic |
0.90 |
0.64 |
1.41 |
0.99 |
|
| Diluted |
0.89 |
0.64 |
1.40 |
0.98 |
|
| Weighted average shares outstanding (in millions) |
|||||
| Basic |
29.7 |
28.8 |
29.7 |
28.0 |
|
| Diluted |
29.9 |
28.9 |
29.9 |
28.2 |
|
| Premium Brands Holdings Corporation |
||||||
| Consolidated Statements of Cash Flows |
||||||
| (in millions of Canadian dollars) |
||||||
| 13 weeks ended July 1, 2017 |
13 weeks ended June 25, 2016 |
26 weeks July 1, 2017 |
26 weeks ended June 25, 2016 |
|||
| Cash flows from (used in) operating activities: |
||||||
| Earnings |
26.7 |
18.4 |
42.0 |
27.6 |
||
| Items not involving cash: |
||||||
| Depreciation of capital assets |
7.1 |
6.5 |
14.3 |
13.2 |
||
| Amortization of intangible assets |
2.5 |
2.1 |
4.9 |
3.3 |
||
| Change in value of puttable interest in subsidiaries |
1.7 |
1.0 |
3.2 |
1.7 |
||
| Gain on disposal of assets |
(0.1) |
- |
(0.1) |
- |
||
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
||
| Equity loss (income) in associates |
0.2 |
- |
0.3 |
(0.3) |
||
| Deferred revenue |
2.0 |
- |
1.9 |
(0.1) |
||
| Non-cash financing costs |
0.7 |
0.5 |
1.4 |
0.9 |
||
| Accretion of provisions |
0.2 |
0.3 |
0.5 |
0.4 |
||
| Deferred income taxes |
1.5 |
4.7 |
4.3 |
6.8 |
||
| 42.5 |
33.5 |
72.7 |
54.2 |
|||
| Change in non-cash working capital |
(29.6) |
1.1 |
(27.8) |
13.1 |
||
| 12.9 |
34.6 |
44.9 |
67.3 |
|||
| Cash flows from (used in) financing activities: |
||||||
| Long-term debt – net |
42.2 |
12.5 |
43.6 |
(9.4) |
||
| Bank indebtedness and cheques outstanding |
(6.1) |
6.1 |
(2.0) |
5.5 |
||
| Convertible debentures – net of issuance costs |
- |
82.3 |
- |
82.3 |
||
| Dividends paid to shareholders |
(12.5) |
(10.8) |
(23.9) |
(20.2) |
||
| Other |
- |
(0.6) |
- |
(0.6) |
||
| 23.6 |
89.5 |
17.7 |
57.6 |
|||
| Cash flows from (used in) investing activities: |
||||||
| Capital asset additions |
(23.0) |
(9.6) |
(37.1) |
(17.1) |
||
| Business acquisitions |
- |
(111.8) |
(11.8) |
(111.8) |
||
| Payments to shareholders of non-wholly owned subsidiaries |
(1.2) |
(1.0) |
(1.8) |
(1.4) |
||
| Payment of provisions |
(1.7) |
(1.7) |
(1.7) |
(1.7) |
||
| Net change in share purchase loans and notes receivable |
0.1 |
0.2 |
0.2 |
0.3 |
||
| Distribution from associates |
- |
0.1 |
0.1 |
0.1 |
||
| Net proceeds from disposal of assets |
0.1 |
0.2 |
0.2 |
0.2 |
||
| Other |
- |
(0.4) |
- |
(0.4) |
||
| (25.7) |
(124.0) |
(51.9) |
(131.8) |
|||
| Change in cash and cash equivalents |
10.8 |
0.1 |
10.7 |
(6.9) |
||
| Effect of exchange on cash and cash equivalents |
- |
- |
- |
(0.1) |
||
| Cash and cash equivalents – beginning of period |
19.3 |
4.2 |
19.4 |
11.3 |
||
| Cash and cash equivalents – end of period |
30.1 |
4.3 |
30.1 |
4.3 |
||
| Interest and other financing costs paid |
8.1 |
3.4 |
9.3 |
6.5 |
||
| Income taxes paid |
13.3 |
0.3 |
15.9 |
0.7 |
||
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 |
| Earnings before income taxes |
36.4 |
25.6 |
58.0 |
38.0 |
| Plant start-up costs |
1.3 |
- |
1.3 |
- |
| Depreciation of capital assets |
7.1 |
6.5 |
14.3 |
13.2 |
| Amortization of intangible assets |
2.5 |
2.1 |
4.9 |
3.3 |
| Interest and other financing costs |
5.4 |
4.3 |
10.5 |
7.7 |
| Acquisition transaction costs |
0.2 |
0.3 |
0.4 |
0.5 |
| Change in value of puttable interest in subsidiaries |
1.7 |
1.0 |
3.2 |
1.7 |
| Accretion of provisions |
0.2 |
0.3 |
0.5 |
0.4 |
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
| Equity loss (income) in associates |
0.2 |
- |
0.3 |
(0.3) |
| Consolidated adjusted EBITDA |
55.0 |
40.1 |
93.4 |
65.2 |
Free Cash Flow
| (in millions of dollars) |
53 weeks |
26 weeks |
26 weeks |
Rolling |
| Cash flow from operating activities |
149.9 |
44.9 |
67.3 |
127.5 |
| Changes in non-cash working capital |
(21.4) |
27.8 |
(13.1) |
19.5 |
| Acquisition transaction costs |
1.6 |
0.4 |
0.5 |
1.5 |
| Plant start-up costs |
- |
1.3 |
- |
1.3 |
| Maintenance capital expenditures |
(8.6) |
(4.2) |
(4.1) |
(8.7) |
| Free cash flow |
121.5 |
70.2 |
50.6 |
141.1 |
Adjusted Earnings and Adjusted Earnings per Share
| (in millions of dollars except per share amounts) |
13 weeks |
13 weeks |
26 weeks |
26 weeks |
| Earnings |
26.7 |
18.4 |
42.0 |
27.6 |
| Plant start-up costs |
1.3 |
- |
1.3 |
- |
| Acquisition transaction costs |
0.2 |
0.3 |
0.4 |
0.5 |
| Accretion of provisions |
0.2 |
0.3 |
0.5 |
0.4 |
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
| 28.4 |
19.0 |
44.2 |
29.2 |
|
| Current and deferred income tax effect of above items |
(0.5) |
(0.1) |
(0.7) |
(0.4) |
| Adjusted earnings |
27.9 |
18.9 |
43.5 |
28.8 |
| Weighted average shares outstanding |
29.7 |
28.8 |
29.7 |
28.0 |
| Adjusted earnings per share |
0.94 |
0.66 |
1.46 |
1.03 |
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 14, 2017, 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 2016 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 14, 2017 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
George Paleologou, President and CEO or Will Kalutycz, CFO at (604) 656-3100.
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