Premium Brands Holdings Corporation Reports Third Quarter 2021 Results, Declares Fourth Quarter Dividend, and Announces Closing of Two Acquisitions

VANCOUVER, BC, Nov. 4, 2021 /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 2021.

HIGHLIGHTS

• Record third quarter revenue of $1.3 billion representing a 21.9%, or $240.7 million, increase as compared to the third quarter of 2020
• Record third quarter adjusted EBITDA¹ of $122.6 million representing a 31.1%, or $29.1 million, increase as compared to the third quarter of 2020
• Record third quarter adjusted EPS¹ of $1.33 per share representing a 24.3%, or $0.26 per share increase as compared to the third quarter of 2020
• Clearwater Seafood, which is accounted for using the equity method, continued to generate significantly improved results posting quarterly sales and EBITDA of $158.4 million and $40.1 million, respectively, as compared to $133.7 million and $25.4 million, respectively in the third quarter of 2020
• The Company declared a quarterly dividend of $0.635 per share for the fourth quarter of 2021
• While conditions in many of the Company's selling channels have returned to normal, its customers in the airline and cruise line channels, as well as in certain segments of the foodservice channel, continue to be impacted by pandemic related challenges
• Subsequent to the quarter, the Company completed the acquisitions of Maid-Rite Specialty Foods, a Pennsylvania based leading manufacturer of customized cooked and raw protein solutions for retail and foodservice customers across Canada and the U.S; and Westmorland Fisheries, a New Brunswick based leading processor, distributor and marketer of lobster products which it sells to retail, foodservice and distribution customers around the world
• Also, subsequent to the quarter, the Company increased its revolving senior credit facility by US$250.0 million to approximately $1.5 billion, extended the facility's maturity date to November 1, 2026, and linked the interest rates associated with the facility to the Company's performance relative to certain environmental and social objectives set by the Company

^1

The Company reports its financial results in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).  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.

CONFERENCE CALL

The Company will hold a conference call to discuss its third quarter 2021 results today at 10:30 a.m. PDT (1:30 p.m. EDT).  An investor presentation that will be referenced on the conference call is available here or on the Company's website at http://www.premiumbrandsholdings.com.

Access to the call may be obtained by calling the operator at [phone] / [phone] (Conference ID: 2949817) 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 8:59 p.m. PST on November 18, 2021 at [phone] / [phone] (passcode: 2949817). Alternatively, a recording of the conference call will be available at the Company's website at http://www.premiumbrandsholdings.com.

SUMMARY FINANCIAL INFORMATION
(In millions of dollars except per share amounts and ratios)

			13 weeks  ended  Sep 25, 2021	13 weeks ended Sep 26, 2020	39 weeks ended Sep 25, 2021	39 weeks ended Sep 26, 2020
Revenue			1,341.8	1,101.1	3,586.3	3,012.7
Adjusted EBITDA^1			122.6	93.5	317.3	224.9
Earnings			46.9	34.7	94.7	60.4
EPS^1			1.08	0.88	2.18	1.59
Adjusted earnings^1			57.8	42.0	142.6	83.1
Adjusted EPS^1			1.33	1.07	3.28	2.19

			Trailing Four Quarters Ended
			Sep 25,  2021	Sep 26, 2020
Free cash flow^1			245.6	177.0
Declared dividends			108.2	86.5
Declared dividend per share			2.4825	2.2575
Payout ratio^1			44.1%	48.9%

^1	Reconciliations for all non-IFRS measures are included in the Non-IFRS Financial Measures section of this press release.

"Our third quarter results continue to demonstrate the balance and resiliency that we have built into our unique business model as we once again generated record sales and cash flows despite facing a barrage of widespread challenges including significant cost inflation, supply chain disruptions, and labor shortages," said Mr. George Paleologou, President and CEO.  "We are pleased but not surprised, by how our entrepreneurial management teams adapted to these challenges with unique and innovative solutions that not only resulted in our strong results for the quarter but are positioning us to accelerate our performance when things start to normalize.  We are particularly pleased with the results of our Seafood and Distribution platforms, which generated record sales and cash flows due in part to their preparedness for the surge in demand in the foodservice channel following the loosening of pandemic related restrictions in Canada and the U.S.

"Our Seafood platform grew its sales for the quarter by 77% while generating organic growth of 32%.  Clearwater Seafood, which is accounted for as an equity investment and not included in our Seafood platform results, also delivered very strong results with its sales and adjusted EBITDA for the quarter increasing by almost 19% and 58%, respectively," added Mr. Paleologou.  "We are very pleased with how our seafood strategies are unfolding and how we are positioned in this very exciting segment of the food industry, which is benefiting from a number of long-term sustainable consumer trends.  Our investments in product innovation, industry leading management teams and best-in-class operating assets, combined with our targeted acquisitions strategy, have positioned us well to be a global leader in seafood.

"Our Distribution platform grew its sales for the quarter by 23% while generating organic growth of 15%.  This platform continues to strengthen its position as Canada's leading specialty distributor of protein and seafood solutions to the foodservice industry and to increase its sales of differentiated protein and seafood products and solutions to retailers across Canada", said Mr. Paleologou.  "We expect this platform to easily exceed $1 billion in sales next year, from less than $400 million just six years ago.

"We are also pleased to announce that subsequent to the quarter we completed the acquisitions of Maid-Rite Specialty Foods and Westmorland Fisheries.  Both businesses are truly best-in-class in what they do and will perfectly complement our Protein and Seafood platforms, respectively.  It is with great pleasure that I welcome their talented and entrepreneurial management teams into our ecosystem.  We are very much looking forward to working with them to help take their businesses to the next level."

"Over the last year we have made significant progress towards the targets we set three years ago of achieving $6 billion in sales and $600 million in EBITDA by 2023," stated Mr. Paleologou.  "With the continued strengthening of the trends that have helped drive our success over the last decade, the investments in capacity that we have either recently completed or are underway, and our full pipeline of acquisition opportunities, we now expect to exceed these targets," added Mr. Paleologou.

FOURTH QUARTER 2021 DIVIDEND

The Company also announced that its Board of Directors approved a cash dividend of $0.635 per share for the fourth quarter of 2021, which will be payable on January 17, 2022 to shareholders of record at the close of business on December 31, 2021.

Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2021 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 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.  Investment income includes interest and management fees generated from the Company's businesses that are accounted for using the equity method.

Revenue

(in millions of dollars except percentages)
	13 weeks ended Sep 25, 2021	% (1)	13 weeks ended Sep 26, 2020	% (1)	39 weeks ended Sep 25, 2021	% (1)	39 weeks ended Sep 26, 2020	% (1)
Revenue by segment:
Specialty Foods	776.3	57.9%	710.3	64.5%	2,207.7	61.6%	1,989.1	66.0%
Premium Food Distribution	565.5	42.1%	390.8	35.5%	1,378.6	38.4%	1,023.6	34.0%
Consolidated	1,341.8	100.0%	1,101.1	100.0%	3,586.3	100.0%	3,012.7	100.0%
(1)     Expressed as a percentage of consolidated revenue.

Specialty Foods' (SF) revenue for the quarter increased by $66.0 million or 9.3% primarily due to: (i) selling price inflation of $39.6 million, which was driven by increases implemented in reaction to inflationary pressures across a broad range of production inputs; (ii) organic volume growth of $38.9 million representing a growth rate of 5.5%.  After adjusting for the reversal of approximately $10.8 million of transitory pandemic related sales in the third quarter of 2020, SF's normalized organic volume growth rate (OVGR) is 7.0%; and (iii) business acquisitions, which accounted for $7.1 million of SF's growth.  These factors were partially offset by a $19.6 million reduction in the translated value of sales generated by SF's U.S. based businesses due to a stronger Canadian dollar – approximately 48.4% of SF's revenue for the quarter was generated by these businesses.

SF's normalized OVGR of 7.0% was driven primarily by its artisan sandwich, meat snack, cooked meat and charcuterie growth initiatives, including the ramping up of its U.S. expansion and the launch of several new product lines.  While this rate is above SF's long-term targeted range of 4% to 6%, it was lower than expected because of: (i) reduced featuring of products in the retail channel as a result of production labor shortages and as a transitory measure to manage the impact of record high cost inflation; and (ii) supply chain and labor shortage challenges experienced by some of its larger customers.  SF's growth rate was also impacted by asset related production capacity constraints experienced by several of its businesses, which are being addressed with a variety of initiatives including investing in additional production capacity.

SF's revenue for the first three quarters of 2021 increased by $218.6 million or 11.0% primarily due to: (i) organic volume growth of 10.8% or approximately 9.2% after normalizing for the estimated impacts of the pandemic; (ii) net selling price inflation of $61.6 million; and (iii) business acquisitions, which accounted for $32.7 million of the increase; partially offset by a $89.8 million reduction in the translated value of sales generated by the Company's U.S. based businesses.

Premium Food Distribution's (PFD) revenue for the quarter increased by $174.7 million or 44.7% due to: (i) business acquisitions, which accounted for $88.8 million of PFD's growth; (ii) selling price inflation of $81.0 million, which was driven by increases implemented in reaction to inflationary pressures across a broad range of procured products and production inputs; and (iii) organic volume growth of $12.7 million representing a growth rate of 3.2%.  After adjusting for approximately $11.4 million in sales recoveries associated with the easing of pandemic related restrictions in the U.S. and Canada, PFD's normalized OVGR is 0.3%.  These factors were partially offset by a $7.8 million reduction in the translated value of sales generated by PFD's U.S. based businesses due to a stronger Canadian dollar.

PFD's normalized OVGR of 0.3% is below its long-term target of 4.0% to 6.0% primarily due to: (i) a significant decline in live lobster featuring by retailers because of record high lobster prices; (ii) lower exports to Asia as a result of supply chain disruptions within that region; and (iii) on an overall basis, PFD's foodservice focused businesses still being in recovery mode and not yet generating organic growth relative to 2019 sales levels.  Normalizing for the factors relating to less live lobster featuring and lower exports, PFD's OVGR is 6.2%, which was driven by: (i) leveraging its new lobster processing facility to develop sales opportunities in the retail and foodservice channels; and (ii) the continued development of new supply and product solutions for the retail channel, an initiative that has benefited from customer relationships developed during the pandemic.

PFD's revenue for the first three quarters of 2021 increased by $355.0 million or 34.7% primarily due to: (i) business acquisitions, which accounted for $205.9 million of the increase; (ii) net selling price inflation of $134.2 million; and (iii) organic volume growth of 3.6% or approximately 2.9% after normalizing for the estimated impacts of the pandemic; partially offset by a $21.6 million reduction in the translated value of sales generated by the Company's U.S. based businesses.

Gross Profit

(in millions of dollars except percentages)
	13 weeks ended Sep 25, 2021	% (1)	13 weeks ended Sep 26, 2020	% (1)	39 weeks ended Sep 25, 2021	% (1)	39 weeks ended Sep 26, 2020	% (1)
Gross profit by segment:
Specialty Foods	156.9	20.2%	155.8	21.9%	456.2	20.7%	423.5	21.3%
Premium Food Distribution	84.5	14.9%	57.9	14.8%	211.6	15.3%	154.6	15.1%
Consolidated	241.4	18.0%	213.7	19.4%	667.8	18.6%	578.1	19.2%
(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 decreased by 170 basis points primarily due to: (i) significantly higher costs for a broad range of production inputs, which exceeded SF's selling price increases due to a portion of the selling price increases taking effect part way through the quarter and further increases taking effect after the quarter; (ii) wage inflation; (iii) freight inflation; and (iv) additional outside storage costs associated with inventory strategies used to help mitigate the impact of rising production input costs and industry wide supply chain disruptions.  These factors were partially offset by: (i) sales leveraging associated with SF's organic growth; (ii) the reversal of transitory pandemic related costs incurred in the third quarter of 2020; and (iii) improved plant efficiencies resulting from investments in automation and a variety of continuous improvement projects. 

SF's gross margin for the first three quarters of 2021 decreased by 60 basis points primarily due to the factors outlined above partially offset by unusually low margins in the second quarter of 2020 as a result of lost sales leveraging caused by pandemic related shutdowns of large portions of the U.S. and Canadian economies.

PFD's gross margins for the quarter increased by 10 basis points primarily due to: (i) higher margins generated by recently acquired businesses; and (ii) sales leveraging associated with its organic growth, including a favorable sales mix impact resulting from a partial recovery of PFD's sales to the fine dining segment of the foodservice channel.  These factors were partially offset by significantly higher costs for a broad range of procured products and production inputs.  PFD was able to more than offset these increased costs with selling price increases (in general, PFD's businesses are able to implement selling price increases quicker than SF's businesses due to the more dynamic pricing structures that are inherent to their segments of the food industry) but did not maintain the same margin percentage due to a variety of factors including providing its customers with time to adapt to the higher price environment and a portion of its business being structured on a cost-plus basis.

PFD's gross margins for the first three quarters of 2021 increased by 20 basis points primarily due to the factors outlined above as well as unusually low margins on certain live seafood products in the first quarter of 2020 because of pandemic related demand destruction in Asia.

Selling, General and Administrative Expenses (SG&A)

(in millions of dollars except percentages)
	13 weeks ended Sep 25, 2021	% (1)	13 weeks ended Sep 26, 2020	% (1)	39 weeks ended Sep 25, 2021	% (1)	39 weeks ended Sep 26, 2020	% (1)
SG&A by segment:
Specialty Foods	85.9	11.1%	83.6	11.8%	254.8	11.5%	242.9	12.2%
Premium Food Distribution	42.5	7.5%	32.7	8.4%	118.5	8.6%	97.4	9.5%
Corporate	5.0		4.4		16.2		15.1
Investment Income	(14.6)		(0.5)		(39.0)		(2.2)
Consolidated	118.8	8.9%	120.2	10.9%	350.5	9.8%	353.2	11.7%
(1)     Expressed as a percentage of the corresponding segment's revenue.

SF's SG&A for the quarter increased by $2.3 million primarily due to: (i) additional variable selling costs associated with SF's organic growth; (ii) freight and wage inflation; (iii) business acquisitions; and (iv) higher travel costs, which were unusually low in the third quarter of 2020 because of pandemic related restrictions; partially offset by: (i) lower discretionary marketing costs as a result of unusually high marketing costs in the third quarter of 2020 and some of SF's businesses using reduced promotion as a transitory measure to manage the impact of record high cost inflation across a broad range of production inputs; (ii) reduced incentive-based compensation accruals; and (iii) a lower translated value of the SG&A associated with the Company's U.S. based businesses due to a stronger Canadian dollar.

SF's SG&A for the first three quarters of 2021 as compared to the first three quarters of 2020 increased by $11.9 million primarily due to: (i) additional variable selling costs associated with SF's organic growth; (ii) freight and wage inflation; and (iii) business acquisitions; partially offset by: (i) reduced discretionary marketing costs; and (ii) a lower translated value of the SG&A associated with the Company's U.S. based businesses due to a stronger Canadian dollar.

SF's SG&A as a percentage of sales (SG&A ratio) for the quarter and for the first three quarters of 2021 both decreased by 70 basis points primarily due to: (i) sales leveraging; and (ii) lower discretionary marketing costs; partially offset by freight and wage inflation.

PFD's SG&A for the quarter increased by $9.8 million primarily due to: (i) business acquisitions; and (ii) additional variable and infrastructure costs associated with PFD's organic growth.

PFD's SG&A for first three quarters of 2021 as compared to the first three quarters of 2020 increased by $21.1 million primarily due to: (i) the factors outlined above; and (ii) higher incentive-based compensation; partially offset by pandemic related travel cost savings and government wage subsidies.

PFD's SG&A ratios for the quarter and for the first three quarters of 2021 both decreased by 90 basis points primarily due to sales leveraging.

Investment income for the quarter increased by $14.1 million primarily due to interest and management fees relating to the acquisition of a 50% interest in Clearwater.

Adjusted EBITDA

(in millions of dollars except percentages)
	13 weeks ended Sep 25, 2021	% (1)	13 weeks ended Sep 26, 2020	% (1)	39 weeks ended Sep 25, 2021	% (1)	39 weeks ended Sep 26, 2020	% (1)
Adjusted EBITDA by segment:
Specialty Foods	71.0	9.1%	72.2	10.2%	201.4	9.1%	180.6	9.1%
Premium Food Distribution	42.0	7.4%	25.2	6.4%	93.1	6.8%	57.2	5.6%
Corporate	(5.0)		(4.4)		(16.2)		(15.1)
Investment Income	14.6		0.5		39.0		2.2
Consolidated	122.6	9.1%	93.5	8.5%	317.3	8.8%	224.9	7.5%
(1)     Expressed as a percentage of the corresponding segment's revenue.

The Company's adjusted EBITDA for the quarter increased by $29.1 million or 31.1%.  Normalizing for the impact of the pandemic, which is estimated to be $7.6 million, consisting of $6.8 million in lost margin on approximately $32.8 million of continuing sales impacts and transitory pandemic related costs of $0.8 million, the Company's adjusted EBITDA and adjusted EBITDA margin for the quarter are approximately $130.2 million and 9.5%, respectively.

The Company's adjusted EBITDA for the quarter was in line with its expectations with the adjusted EBITDA of its PFD segment exceeding expectations, mainly due to a stronger than expected recovery of its foodservice channel sales, and its SF segment lagging expectations, mainly due to production input cost inflation and lower organic volume growth.  Correspondingly, due to SF's lower margins and the changes in sales mix, i.e. higher than expected PFD sales and lower than expected SF sales, the Company's adjusted EBITDA margin for the quarter was lower than expected.

The Company's adjusted EBITDA for the first three quarters of 2021 increased by $92.4 million or 41.1% to $317.3 million.  Normalizing for the impact of the pandemic, which is estimated to be $26.1 million, consisting of $28.9 million in lost margin on approximately $126.5 million of continuing sales impacts and $2.8 million of offsetting cost savings, mainly associated with reduced travel and discretionary spending, the Company's adjusted EBITDA and adjusted EBITDA margin for the first three quarters of 2021 are approximately $343.4 million and 9.2%, respectively.

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 2021, the Company incurred $1.0 million in plant start-up and restructuring costs primarily related to: (i) a 42,000 square foot expansion of the Company's artisan bakery in British Columbia; and (ii) the installation of a new cooking line at the Company's cooked protein plant in Quebec.

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 Oct 2, 2021	13 weeks ended Oct 3, 2020	39 weeks ended Oct 2, 2021	39 weeks ended Oct 3, 2020
Clearwater:
Sales	158.4	133.7	391.2	340.0
Gross profit	53.1	35.8	123.8	83.0
SG&A	13.0	10.4	35.6	31.0
	40.1	25.4	88.2	52.0
Depreciation	9.7	10.0	26.7	25.0
Amortization	1.4	1.0	4.3	3.0
Interest – senior debt	3.1	7.5	10.1	22.3
Non-controlling interest	0.5	1.5	1.9	5.1
Unrealized foreign exchange (gain) loss	6.5	(6.9)	(2.8)	5.5
Other	(0.1)	0.3	(0.2)	1.1
	19.0	12.0	48.2	(10.0)
Interest – shareholder debt	12.4	-	32.4	-
Payments to shareholders	11.8	-	23.5	-
Acquisition costs	-	1.0	12.8	1.0
Closing risk fee paid to Premium Brands	-	-	2.4	-
Income taxes	(1.6)	(1.5)	(4.8)	0.4
Earnings (loss)	(3.6)	12.5	(18.1)	(11.4)
Pre-close earnings (loss)	-	12.5	(4.3)	(11.4)
	(3.6)	-	(13.8)	-
Ownership	50.0%	-	50.0%	-
Clearwater net equity earnings (loss)	(1.8)	-	(6.9)	-
Other net equity earnings (loss)	1.0	(0.3)	1.2	(2.1)
Equity earnings (loss) in investment in associates	(0.8)	(0.3)	(5.7)	(2.1)

Clearwater Seafoods Incorporated (Clearwater)

Clearwater's sales for the quarter increased by $24.7 million primarily due to the easing of pandemic related restrictions and a corresponding reopening of economies in North America and Asia, which drove higher volumes and prices for many of the species sold by Clearwater including clams, lobsters, and scallops.  This was partially offset by: (i) a stronger Canadian dollar relative to the U.S. dollar and Euro as a significant portion of Clearwater's sales are denominated in these currencies; (ii) a decline in crab sales because of reduced procurement opportunities as well as pandemic related restrictions on the export of certain products to Asia by Clearwater's operations in Scotland; and (iii) the timing of landings.

Clearwater's gross margin for the quarter increased by 670 basis points to 33.5% primarily due to: (i) a strong pricing environment, which was driven by several factors including increased demand associated with the reopening of economies in North America and Asia; (ii) improved operating efficiencies resulting from larger catch sizes per sea-day as well as the reversal of pandemic related inefficiencies incurred in the third quarter of 2020; and (iii) foreign currency impacts including realized gains on hedges.  These factors were partially offset by the reversal of pandemic related government subsidies received in the third quarter of 2020. 

Clearwater's SG&A increased by $2.6 million primarily due to: (i) higher discretionary compensation accruals associated with its improved performance as well as a change in the method used to account for its long-term incentive plan; (ii) the reversal of pandemic related government subsidies received in the third quarter of 2020; and (iii) increased professional fees driven by a variety of items including BREXIT related issues and the timing of billings.

Sales and Adjusted EBITDA Outlook

See Forward Looking Statements for a discussion of the risks and assumptions associated with forward looking statements.

2021

The Company's sales and adjusted EBITDA outlooks for 2021 do not incorporate any provisions for potential future acquisitions.

For 2021, the Company expects (see Forward Looking Statements) its sales to be between $4.70 billion and $4.85 billion and its adjusted EBITDA to be between $423.0 million and $436.5 million, which is consistent with the Company's previously released outlook on August 5, 2021.  While the Company's overall guidance targets remain unchanged, it does expect its adjusted EBITDA margin for 2021 to be lower than the previously forecasted 9% as a result of: (i) sales mix changes, namely its PFD segment's revenue is exceeding the Company's earlier expectations while, for the reasons outlined above, its SF segment's revenue is lagging its earlier expectations; and (ii) continued cost inflation across a variety of production inputs.  The acquisitions of Maid-Rite and Westmorland subsequent to the quarter are not expected to have a material impact on the Company's results for 2021 based on: (i) the seasonality of these businesses; and (ii) the timing of the transactions.

5 Year Plan

The Company continues to make solid progress on the execution of its growth and value creation strategies and remains confident (see Forward Looking Statements) it will achieve or exceed the five-year targets set in 2018 of $6 billion in sales and $600 million in adjusted EBITDA.  While pandemic related factors continue to impact some of its businesses, substantially all of these impacts are expected to be temporary.  Furthermore, the pandemic has enabled many of its businesses to develop new sustainable sales opportunities as well as strengthen customer and supply chain relationships, all of which will enhance its ability to achieve its five-year targets (see Forward Looking Statements).

Premium Brands Holdings Corporation
Consolidated Balance Sheets
(in millions of Canadian dollars)
	Sep 25, 2021	Dec 26, 2020	Sep 26, 2020
Current assets:
Cash and cash equivalents	24.9	363.0	192.7
Accounts receivable	478.1	387.0	358.6
Inventories	513.6	448.8	417.0
Prepaid expenses and other assets	21.8	25.8	17.7
	1,038.4	1,224.6	986.0
Capital assets	579.9	524.9	530.0
Right of use assets	442.6	328.5	315.8
Intangible assets	512.3	517.9	514.8
Goodwill	872.6	853.4	819.7
Investments in and advances to associates	560.2	74.2	75.1
Other assets	17.5	18.4	18.0
	4,023.5	3,541.9	3,259.4
Current liabilities:
Cheques outstanding	19.4	19.1	13.8
Bank indebtedness	2.2	-	2.9
Dividends payable	27.7	25.2	23.4
Accounts payable and accrued liabilities	420.8	369.3	370.1
Puttable interest in subsidiaries	27.1	28.1	27.6
Current portion of long-term debt	6.7	9.5	7.5
Current portion of lease obligations	30.1	26.2	26.2
Current portion of provisions	11.5	16.4	10.0
	545.5	493.8	481.5
Long-term debt	806.4	525.6	549.9
Lease obligations	456.4	342.7	329.0
Deferred revenue	2.8	2.8	2.8
Provisions	57.3	57.2	59.3
Pension obligation	1.7	1.6	1.2
Deferred income taxes	93.2	94.5	75.6
	1,963.3	1,518.2	1,499.3
Convertible unsecured subordinated debentures	456.0	425.7	424.5
Equity attributable to shareholders:
Retained earnings	22.8	11.2	13.5
Share capital	1,563.6	1,569.7	1,290.5
Reserves	17.8	17.1	31.6
	1,604.2	1,598.0	1,335.6
	4,023.5	3,541.9	3,259.4

Premium Brands Holdings Corporation
Consolidated Statements of Operations
(in millions of Canadian dollars except per share amounts)
	13 weeks ended  Sep 25,  2021	13 weeks ended Sep 26, 2020				39 weeks ended Sep 25, 2021		39 weeks ended Sep 26, 2020
Revenue	1,341.8	1,101.1				3,586.3		3,012.7
Cost of goods sold	1,100.4	887.4				2,918.5		2,434.6
Gross profit before depreciation, amortization and plant start-up       and restructuring costs	241.4	213.7				667.8		578.1
Selling, general and administrative expenses before depreciation,       amortization and plant start-up and restructuring costs	118.8	120.2				350.5		353.2
	122.6	93.5				317.3		224.9
Plant start-up and restructuring costs	-	0.7				1.0		6.2
Depreciation of capital assets	18.4	16.8				53.2		49.3
Amortization of intangible assets	6.8	6.5				20.2		19.3
Amortization of right of use assets	9.5	7.9				26.8		23.5
Accretion of lease obligations	5.1	3.7				13.9		11.1
Interest and other financing costs	11.7	9.9				33.0		32.4
Change in fair value of option liabilities	2.6	-				26.9		-
Acquisition transaction costs	1.4	1.4				5.8		4.3
Accretion of provisions	1.8	2.4				5.4		6.0
Equity loss in investments in associates	0.8	0.3				5.7		2.1
Change in value of puttable interest in subsidiaries	-	0.5				0.5		(3.8)
Clearwater closing risk fee	-	-				(2.4)		-
Acquisition bargain purchase gain	-	-				(1.8)		-
Provisions not earned	-	-				-		(2.0)
Earnings before income taxes	64.5	43.4				129.1		76.5
Provision for income taxes (recovery)
Current	18.1	1.8				55.1		14.1
Deferred	(0.5)	6.9				(20.7)		2.0
	17.6	8.7				34.4		16.1
Earnings	46.9	34.7				94.7		60.4
Earnings per share:
Basic	1.08	0.88				2.18		1.59
Diluted	1.07	0.88				2.17		1.58
Weighted average shares outstanding (in millions):
Basic	43.5	39.2				43.5		38.0
Diluted	43.6	39.4				43.6		38.2

Premium Brands Holdings Corporation
Consolidated Statements of Cash Flows
(in millions of Canadian dollars)
	13 weeks ended  Sep 25,  2021	13 weeks ended Sep 26, 2020				39 weeks ended Sep 25, 2021		39 weeks ended  Sep 26, 2020
Cash flows from (used in) operating activities:
Earnings	46.9	34.7				94.7		60.4
Items not involving cash:
Depreciation of capital assets	18.4	16.8				53.2		49.3
Amortization of intangible assets	6.8	6.5				20.2		19.3
Amortization of right of use assets	9.5	7.9				26.8		23.5
Accretion of lease obligations	5.1	3.7				13.9		11.1
Change in value of puttable interest in subsidiaries	-	0.5				0.5		(3.8)
Equity loss in investments in associates	0.8	0.3				5.7		2.1
Change in fair value of option liabilities	2.6	-				26.9		-
Non-cash financing costs	1.6	1.4				4.3		3.9
Accretion of provisions	1.8	2.4				5.4		6.0
Deferred income taxes (recovery)	(0.5)	6.9				(20.7)		2.0
Acquisition bargain purchase gain	-	-				(1.8)		-
Provisions not earned	-	-				-		(2.0)
Other	-	-				-		0.1
	93.0	81.1				229.1		171.9
Change in non-cash working capital	(39.2)	57.4				(141.7)		53.9
	53.8	138.5				87.4		225.8
Cash flows from (used in) financing activities:
Long-term debt, net	10.1	(125.1)				283.8		(68.3)
Payments for lease obligations	(14.5)	(10.3)				(37.0)		(30.3)
Bank indebtedness and cheques outstanding	(1.3)	(10.9)				2.5		(24.6)
Dividends paid to shareholders	(27.7)	(21.7)				(80.6)		(63.1)
Repayment of convertible debentures	-	(5.4)				-		(5.4)
Proceeds from issuance of convertible debentures -net of            issuance costs	-	143.5				-		143.5
Common shares issued as a result of public offering and            concurrent private placement – net of issuance costs	-	165.2				-		165.2
	(33.4)	135.3				168.7		117.0
Cash flows from (used in) investing activities:
Capital asset additions	(31.4)	(22.1)				(100.0)		(70.9)
Business acquisitions	(6.1)	(43.4)				(185.1)		(56.4)
Payment of provisions	(8.4)	(8.9)				(14.7)		(15.9)
Proceeds from sale-leaseback	-	-				150.0		6.4
Net change in share purchase loans and notes receivable	0.2	1.3				0.7		2.1
Payments to shareholders of non-wholly owned subsidiaries	-	(0.4)				(0.6)		(1.0)
Payment for settlement of puttable interest of non-wholly            owned subsidiary	(0.7)	(21.5)				(0.9)		(21.5)
Investment in and advances to associates – net of            distributions	26.7	(0.7)				(443.6)		(11.3)
	(19.7)	(95.7)				(594.2)		(168.5)
Change in cash and cash equivalents	0.7	178.1				(338.1)		174.3
Cash and cash equivalents – beginning of period	24.2	14.6				363.0		18.4
Cash and cash equivalents – end of period	24.9	192.7				24.9		192.7
Interest and other financing costs paid	7.6	6.9				27.4		27.6
Income taxes paid	6.2	1.1				29.2		10.7

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 ended Sep 25, 2021	13 weeks ended Sep 26, 2020	39 weeks ended Sep 25, 2021	39 weeks ended Sep 26, 2020
Earnings before income taxes	64.5	43.4	129.1	76.5
Plant start-up and restructuring costs	-	0.7	1.0	6.2
Depreciation of capital assets	18.4	16.8	53.2	49.3
Amortization of intangible assets	6.8	6.5	20.2	19.3
Amortization of right of use assets	9.5	7.9	26.8	23.5
Accretion of lease obligations	5.1	3.7	13.9	11.1
Interest and other financing costs	11.7	9.9	33.0	32.4
Change in fair value of option liabilities	2.6	-	26.9	-
Acquisition transaction costs	1.4	1.4	5.8	4.3
Change in value of puttable interest in subsidiaries	-	0.5	0.5	(3.8)
Accretion of provisions	1.8	2.4	5.4	6.0
Equity loss in investments in associates	0.8	0.3	5.7	2.1
Clearwater closing risk fee	-	-	(2.4)	-
Acquisition bargain purchase gain	-	-	(1.8)	-
Provisions not earned	-	-	-	(2.0)
Adjusted EBITDA	122.6	93.5	317.3	224.9

Free Cash Flow

(in millions of dollars)	52 weeks ended Dec 26, 2020	39 weeks ended Sep 25, 2021	39 weeks ended Sep 26, 2020	Rolling Four Quarters
Cash flow from operating activities	227.3	87.4	225.8	88.9
Changes in non-cash working capital	15.6	141.7	(53.9)	211.2
Lease obligation payments	(40.8)	(37.0)	(30.3)	(47.5)
Business acquisition transaction costs	5.6	5.8	4.3	7.1
Clearwater closing risk fee	-	(2.4)	-	(2.4)
Plant start-up and restructuring costs	8.2	1.0	6.2	3.0
Income taxes on sale and leaseback transaction	-	15.5	-	15.5
Maintenance capital expenditures	(27.1)	(22.0)	(18.9)	(30.2)
Free cash flow	188.8	190.0	133.2	245.6
Declared dividends				108.2
Payout ratio				44.1%

Adjusted Earnings and Adjusted Earnings per Share

(in millions of dollars except per share amounts)	13 weeks ended Sep 25, 2021	13 weeks ended Sep 26, 2020	39 weeks ended Sep 25, 2021	39 weeks ended  Sep 26, 2020
Earnings	46.9	34.7	94.7	60.4
Plant start-up and restructuring costs	-	0.7	1.0	6.2
Business acquisition transaction costs	1.4	1.4	5.8	4.3
Accretion of provisions	1.8	2.4	5.4	6.0
Provisions not earned	-	-	-	(2.0)
Equity loss from associates in start-up	0.8	0.3	5.7	2.1
Change in value of puttable interest in subsidiaries	-	0.5	0.5	(3.8)
Amortization of intangibles associated with acquisitions	6.8	6.5	20.2	19.3
Change in fair value of option liabilities	2.6	-	26.9	-
Clearwater closing risk fee	-	-	(2.4)	-
Acquisition bargain purchase gain	-	-	(1.8)	-
	60.3	46.5	156.0	92.5
Current and deferred income tax effect of above items, and       unusual tax recovery	(2.5)	(4.5)	(13.4)	(9.4)
Adjusted earnings	57.8	42.0	142.6	83.1
Weighted average shares outstanding	43.5	39.2	43.5	38.0
Adjusted earnings per share	1.33	1.07	3.28	2.19

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 4, 2021, there can be no assurance that such expectations will prove to be correct as such forward looking statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements. 

Forward looking statements generally can be identified by the use of the words "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.  Forward looking statements in this press release include statements with respect to the Company's expectations and/or projections on its: (i) revenue; (ii) adjusted EBITDA; (iii) plant start-up and restructuring costs; (iv) income tax rates; (v) dividend policy; (vi) capital expenditures and business acquisitions; (vii) senior debt capacity utilization; (viii) convertible debentures; (ix) impacts of the COVID-19 pandemic; * liquidity outlook; (xi) equity earnings or loss in investment in associates; and (xii) 5 year plan.

Some of the factors that could cause actual results to differ materially from the Company's expectations are outlined in the Company's MD&A for the 13 and 39 Weeks Ended September 25, 2021.

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 press release.  Readers are cautioned that this information is not exhaustive.

• The general economic conditions in Canada and the United States will return to pre-pandemic levels in the medium term and will continue to show steady improvement in the short term as pandemic related restrictions are eased.
• The Company's businesses impacted by the pandemic will recover from the resulting disruptions in the medium term and, to the extent there are ongoing changes in their operating costs resulting from the crisis, will be able to recover these through increased selling prices.
• The Company's organic growth initiatives will progress in line with previous expectations post the pandemic.
• The average cost of the basket of food commodities purchased by the Company will stabilize and start to moderate in the short to medium term relative to recent increased volatility and inflationary trends.
• 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 will be able to access sufficient skilled and unskilled labor at reasonable wage levels.
• 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 access sufficient goods and services for its manufacturing and distribution operations.
• 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 differentiating attributes such as antibiotic free, no added hormones or use of organic ingredients; (ii) increased reliance on convenience oriented foods both for on-the-go snacking as well as easy home meal preparation; (iii) healthier eating including reduced sugar consumption and increased emphasis on protein and seafood; (iv) increased snacking in between and in place of meals; (v) increased interest in understanding the background and stories behind food products being consumed; and (vi) increased social awareness on issues such as sustainability, sourcing products locally, animal welfare and food waste.
• 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.
• The Company's average interest cost on floating rate debt will remain relatively stable in the near to medium future.
• 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 in order 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 4, 2021 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 [phone]

Related Links

www.premiumbrandsholdings.com