Premium Brands Holdings Corporation Announces Record Third Quarter 2017 Results and Declares Fourth Quarter 2017 Dividend
VANCOUVER, Nov. 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 third quarter of 2017.
HIGHLIGHTS FOR THE QUARTER
- Record third quarter revenue of $557.6 million representing a 15.9% increase as compared to the third quarter of 2016
- Record third quarter adjusted EBITDA of $49.5 million representing a 12.5% increase as compared to the third quarter of 2016
- Record third quarter adjusted earnings and adjusted earnings per share of $23.3 million and $0.78 per share, respectively, representing 8.9% and 6.8% increases as compared to the third quarter of 2016
- Record trailing four quarters free cash flow of $135.5 million resulting in a dividend to free cash flow ratio of 36.2%
- Commenced sales at the end of the quarter of a major lead order for the Company's new sandwich production facility in Phoenix, AZ
- Invested in three new business: Partners, A Tasteful Choice Company; Leadbetter Foods Inc.; and Skilcor Food Products
- Entered into letters of intent for several significant acquisitions that are expected to be completed before the end of the year
- 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 |
13 weeks |
39 weeks |
39 weeks |
|
| Revenue |
557.6 |
481.0 |
1,613.2 |
1,324.9 |
| Adjusted EBITDA |
49.5 |
44.0 |
142.9 |
109.2 |
| Earnings |
21.3 |
21.2 |
63.3 |
48.8 |
| EPS |
0.72 |
0.72 |
2.13 |
1.72 |
| Adjusted earnings |
23.3 |
21.4 |
66.8 |
50.2 |
| Adjusted EPS |
0.78 |
0.73 |
2.25 |
1.76 |
| Trailing Four Quarters Ended |
||||
| Sep 30, |
Dec 31, |
|||
| 2017 |
2016 |
|||
| Free cash flow |
135.5 |
121.5 |
||
| Declared dividends |
49.1 |
44.5 |
||
| Declared dividend per share |
1.64 |
1.52 |
||
| Payout ratio |
36.2% |
36.6% |
||
"Although we are pleased to report another quarter of record sales and EBITDA we know that we could have done much better had it not been for a number of transitory factors that impacted both our top and bottom line results", said Mr. George Paleologou, President and CEO. "Of particular note were delays in the launch of several major sales initiatives, including a significant lead order for our new 212,000 square foot sandwich facility in Phoenix, AZ that did not start shipping until the very end of the quarter.
"Our top line was also impacted by unusually poor weather in Ontario and Quebec that resulted in a significant decline in sales of grilling and other outdoor activity related protein products such as burgers, skewers, premium sausages and steaks.
"Our ability to continue to grow our business and generate record results despite these challenges was the direct result of our product mix, market geography and market segment diversification strategies. Furthermore, the entrepreneurial nature of all of our businesses ensured that those specifically affected by these challenges were able to react quickly and innovatively to help mitigate the impact on them.
"We are also pleased to report that we completed three acquisitions during the quarter. Early in the quarter we announced our investment in Seattle based Partners, a leading manufacturer of artisan crackers. Towards the end of the quarter we completed the acquisitions of two Ontario based businesses: Leadbetter Foods, a manufacturer of specialty fresh and processed protein products, and Skilcor Food Products, a manufacturer of cooked protein products. Our unique ability to develop customized ownership solutions that address the personal objectives of talented entrepreneurs while ensuring their businesses continue to grow and prosper was a key element in completing these transactions.
"So far this year we have invested $46.3 million in new businesses and expect to announce several more transactions before the end of the year. In addition, we have signed letters of intent with a number of other businesses that we expect will make 2018 another very busy year for acquisitions.
"For additional 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.
FOURTH QUARTER 2017 DIVIDEND
The Company's Board of Directors approved a cash dividend of $0.42 per share for the fourth quarter of 2017, which will be payable on January 15, 2018 to shareholders of record at the close of business on December 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, Leadbetter, Skilcor, 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 ended Sep 30, 2017 |
% |
13 weeks ended Sep 24, 2016 |
% |
39 weeks ended Sep 30, 2017 |
% |
39 weeks ended Sep 24, 2016 |
% |
||
| Revenue by segment: |
|||||||||
| Specialty Foods |
329.7 |
59.1% |
274.5 |
57.1% |
961.9 |
59.6% |
809.7 |
61.1% |
|
| Premium Food Distribution |
227.9 |
40.9% |
206.5 |
42.9% |
651.3 |
40.4% |
515.2 |
38.9% |
|
| Consolidated |
557.6 |
100.0% |
481.0 |
100.0% |
1,613.2 |
100.0% |
1,324.9 |
100.0% |
|
Specialty Foods' (SF) revenue for the third quarter of 2017 as compared to the third quarter of 2016 increased by $55.2 million or 20.1% primarily due to: (i) business acquisitions, which accounted for $42.2 million of the increase; (ii) $23.2 million in organic volume growth representing a growth rate of 8.5%; and (iii) $0.9 million in selling price increases. These were partially offset by: (i) SF's exit from approximately $4.8 million of lower margin sales as part of a process to reallocate its production capacity to more sustainable and higher margin sales opportunities (the Sales Mix Strategy); and (ii) a $6.3 million decrease in the translated value of its U.S. based businesses' sales resulting from a stronger Canadian dollar.
SF's organic volume growth for the quarter was driven primarily by increased sales of artisan sandwiches, meat snacks and premium processed meats. Its organic volume growth rate of 8.5%, while being above the Company's long-term targeted range of 4% to 6%, was below what was expected due to two significant, but transitory, challenges, namely: (i) delays in the launch of several major new sales initiatives including a significant lead order for SF's new 212,000 square foot sandwich facility in Phoenix, AZ that did not start shipping until the very end of the quarter; and (ii) unusually poor weather in Ontario and Quebec that impacted sales of grilling and other outdoor activity related protein products such as burgers, skewers and premium sausages.
For the first three quarters of 2017 as compared to the first three quarters of 2016 SF's revenue increased by $152.2 million or 18.8% primarily due to: (i) business acquisitions, which accounted for $124.6 million of the increase; and (ii) $58.9 million of organic volume growth representing a growth rate of 7.3%. These increases were partially offset by: (i) $8.4 million in selling price reductions; (ii) a $7.5 million decrease in the translated value of its U.S. based businesses resulting from a stronger Canadian dollar; and (iii) SF's exit from approximately $15.4 million of lower margin sales as part of its Sales Mix Strategy.
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%. This is based on a variety of factors, including the launch of new sales initiatives in the fourth quarter and a return to normal weather patterns in central Canada.
Premium Food Distribution's (PFD) revenue for the third quarter of 2017 as compared to the third quarter of 2016 increased by $21.4 million or 10.4% primarily due to: (i) business acquisitions, which accounted for $14.1 million of the increase; and (ii) $7.3 million in organic volume growth representing a growth rate of 3.5%.
The primary drivers of PFD's organic volume growth for the quarter were: (i) the expansion of its western Canada foodservice distribution network into niche segments of the retail market; (ii) the expansion of its non-distributive sales to national and regional restaurant chains; and (iii) the capture of additional market share in the Greater Toronto Area foodservice market, primarily in the seafood product category. Its organic volume growth rate, which was expected to exceed the Company's long-term targeted range of 4% to 6%, fell short due to three temporary challenges, namely: (i) unusually poor weather in central Canada that impacted its Quebec based protein wholesale business' sales to retailers of BBQ oriented products; (ii) exceptionally poor sockeye and pink salmon fisheries on the west coast of British Columbia; and (iii) lower wholesale seafood sales resulting from supply disruptions caused by several major hurricanes on the U.S. east coast.
For the first three quarters of 2017 as compared to the first three quarters of 2016 PFD's revenue increased by $136.1 million or 26.4% primarily due to: (i) business acquisitions, which accounted for $105.1 million of the increase; (ii) $25.0 million of organic volume growth representing a growth rate of 4.9%; and (iii) $6.0 million in selling price increases that were implemented in response to higher input costs for a variety of seafood and other protein commodities.
Looking forward (see Forward Looking Statements) the Company is reducing its guidance for PFD's 2017 organic volume growth based on the challenges it faced in the third quarter. It is now expecting PDF's organic volume growth for 2017 to be within its long-term targeted range of 4% to 6%. Longer term the Company is expecting PFD to 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 ended Sep 30, 2017 |
% |
13 weeks ended Sep 24, 2016 |
% |
39 weeks ended Sep 30, 2017 |
% |
39 weeks ended Sep 24, 2016 |
% |
||
| Gross profit by segment: |
|||||||||
| Specialty Foods |
66.2 |
20.1% |
58.2 |
21.2% |
206.1 |
21.4% |
162.9 |
20.1% |
|
| Premium Food Distribution |
36.3 |
15.9% |
33.1 |
16.0% |
104.4 |
16.0% |
83.3 |
16.2% |
|
| Consolidated |
102.5 |
18.4% |
91.3 |
19.0% |
310.5 |
19.2% |
246.2 |
18.6% |
|
SF's gross profit as a percentage of its revenue (gross margin) for the third quarter of 2017 as compared to the third quarter of 2016 decreased by 110 basis points to 20.1%. Excluding the impact of acquisitions, SF's gross margin decreased by 60 basis point primarily due to: (i) increased overhead costs associated with its new sandwich plant in Phoenix; (ii) a spike in the cost of certain pork and chicken raw material commodities; and (iii) interim operating inefficiencies at its artisan bread bakery in Langley, BC while it rationalizes production among its various baking facilities. The impact of these temporary challenges was partially offset by: (i) production efficiencies associated with SF's organic volume growth as well as a variety of continuous improvement projects; and (ii) 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 three quarters of 2017 as compared to the first three quarters of 2016 SF's gross margin increased by 130 basis points to 21.4%. Excluding the impact of acquisitions, SF's gross margin increased by 180 basis point primarily due to improved production efficiencies and sales mix changes partially offset by the challenges that occurred in the third quarter.
PFD's gross margins for the third quarter of 2017 as compared to the third quarter of 2016 and for the first three quarters of 2017 as compared to the first three quarters of 2016 were relatively stable as the benefits of a variety of long-term initiatives focused on expanding PFD's margins, including increasing the utilization rates of its custom cutting facilities and optimizing its product mix, were offset by temporary challenges associated with the cost of certain raw material commodities.
Selling, General and Administrative Expenses (SG&A)
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks ended Sep 30, 2017 |
% |
13 weeks ended Sep 24, 2016 |
% |
39 weeks ended Sep 30, 2017 |
% |
39 weeks ended Sep 24, 2016 |
% |
||
| SG&A by segment: |
|||||||||
| Specialty Foods |
29.7 |
9.0% |
26.5 |
9.7% |
95.6 |
9.9% |
78.7 |
9.7% |
|
| Premium Food Distribution |
20.5 |
9.0% |
18.4 |
8.9% |
62.0 |
9.5% |
51.0 |
9.9% |
|
| Corporate |
2.8 |
2.4 |
10.0 |
7.3 |
|||||
| Consolidated |
53.0 |
9.5% |
47.3 |
9.8% |
167.6 |
10.4% |
137.0 |
10.3% |
|
SF's SG&A as a percentage of sales (SG&A ratio) for the third quarter of 2017 as compared to the third quarter of 2016 decreased by 70 basis points to 9.0%. Excluding the impact of acquisitions, SF's SG&A ratio decreased by 40 basis point primarily due to the fixed nature of a variety of costs relative to SF's organic revenue growth.
SF's SG&A ratio for the first three quarters of 2017 as compared to the first three quarters of 2016 was relatively flat. Excluding the impact of acquisitions, SF's SG&A ratio increased by 50 basis points primarily due to: (i) increased costs associated with investments made in expanding its sales and management infrastructure to support its continued growth; and (ii) increased discretionary marketing costs associated with the promotion of higher margin branded products.
PFD's SG&A ratio for the third quarter of 2017 as compared to the third quarter of 2016 was relatively flat. Excluding the impact of acquisitions, PFD's SG&A ratio increased by 40 basis points primarily due to investments made in expanding its sales force and distribution infrastructure to support its continued growth.
PFD's SG&A ratio for the first three quarters of 2017 as compared to the first three quarters of 2016 decreased by 40 basis points. Excluding the impact of acquisitions, PFD's SG&A ratio was flat as the benefits of the fixed nature of a variety of costs relative to its organic revenue growth were offset by investments made in expanding its sales force and distribution infrastructure to support its continued growth.
Corporate SG&A for the third quarter of 2017 as compared to the third quarter of 2016 increased by $0.4 million primarily due to increased staffing levels needed to support the Company's acquisition and information technology strategies.
Corporate SG&A for the first three quarters of 2017 as compared to the first three quarters of 2016 increased by $2.7 million primarily due to: (i) increased staffing levels needed to support the Company's acquisition and information technology strategies; and (ii) increased accruals associated with the Company's long-term incentive employee compensation plans.
Adjusted EBITDA
| (in millions of dollars except percentages) |
|||||||||
| 13 weeks ended Sep 30, 2017 |
% |
13 weeks ended Sep 24, 2016 |
% |
39 weeks ended Sep 30, 2017 |
% |
39 weeks ended Sep 24, 2016 |
% |
||
| Adjusted EBITDA by segment: |
|||||||||
| Specialty Foods |
36.5 |
11.1% |
31.7 |
11.5% |
110.5 |
11.5% |
84.2 |
10.4% |
|
| Premium Food Distribution |
15.8 |
6.9% |
14.7 |
7.1% |
42.4 |
6.5% |
32.3 |
6.3% |
|
| Corporate |
(2.8) |
(2.4) |
(10.0) |
(7.3) |
|||||
| Consolidated |
49.5 |
8.9% |
44.0 |
9.1% |
142.9 |
8.9% |
109.2 |
8.2% |
|
The Company's adjusted EBITDA for the third quarter of 2017 as compared to the third quarter of 2016 increased by $5.5 million or 12.5% to $49.5 million. While this amount represents a new third quarter record for the Company, it was below what was expected due to a number of temporary factors, as outlined above, which impacted both the Company's sales and gross margin.
The Company's adjusted EBITDA for the first three quarters of 2017 as compared to the first three quarters of 2016 increased by $33.7 million or 30.9% resulting in a trailing four quarters (TFQ) adjusted EBITDA of $188.5 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 or the reconfiguration of existing capacity to gain efficiencies and/or additional capacity. The Company expects (see Forward Looking Statements) these projects to result in significant improvements in its future earnings and cash flows.
During the first three quarters of 2017, the Company incurred $3.9 million in plant start-up costs for the following projects:
Phoenix Plant Project
The Company invested $3.7 million in the commissioning of a new 212,000 square foot sandwich production facility in Phoenix, AZ. This amount consists of: (i) $1.9 million for pre-start-up plant overhead, employee recruiting, training and other production set-up costs; and (ii) $1.8 million for normally expected labor and yield inefficiencies associated with running new production lines.
Looking forward (see Forward Looking Statements), the Company expects to complete the Phoenix Plant Project in the fourth quarter of 2017 at a total cost of approximately $5.0 million.
Bakery Reconfiguration Project
The Company invested $0.2 million in the reconfiguration of production between its two legacy artisan bakeries (one in Langley, BC and the other in Delta, BC) and its newest artisan bakery, which it acquired at the end of 2016 as part of the purchase of Island City Baking. This amount consists primarily of severance costs associated with employee changes.
Looking forward (see Forward Looking Statements), the Company expects to complete the Bakery Reconfiguration Project in the second quarter of 2018 at a total cost of approximately $1.0 million.
Interest and Other Financing Costs
The Company's interest and other financing costs for the third quarter of 2017 as compared to the third quarter of 2016 was flat despite an increase in its net funded debt due to approximately $1.5 million in accretion of long-term debt in the third quarter of 2016 (the Accretion Decrease) that was the result of the early conversion of certain convertible debentures.
The Company's interest and other financing costs for the first three quarters of 2017 as compared to the first three quarters of 2016 increased by $2.8 million primarily due to an increase in its net funded debt partially offset by the Accretion Decrease.
| Premium Brands Holdings Corporation |
||||
| Consolidated Balance Sheets |
||||
| (in millions of Canadian dollars) |
||||
| September 30, |
December 31, |
September 24, |
||
| Current assets: |
||||
| Cash and cash equivalents |
14.0 |
19.4 |
5.4 |
|
| Accounts receivable |
194.8 |
180.9 |
166.6 |
|
| Inventories |
207.8 |
170.4 |
169.2 |
|
| Prepaid expenses |
9.1 |
7.5 |
5.8 |
|
| Other assets |
0.4 |
0.5 |
0.6 |
|
| 426.1 |
378.7 |
347.6 |
||
| Capital assets |
287.8 |
251.7 |
233.1 |
|
| Intangible assets |
148.4 |
149.8 |
123.0 |
|
| Goodwill |
340.4 |
320.3 |
277.6 |
|
| Investment in associates |
11.7 |
9.5 |
9.6 |
|
| Other assets |
10.9 |
11.1 |
9.5 |
|
| 1,225.3 |
1,121.1 |
1,000.4 |
||
| Current liabilities: |
||||
| Cheques outstanding |
8.6 |
12.4 |
7.1 |
|
| Bank indebtedness |
4.8 |
0.2 |
1.2 |
|
| Dividends payable |
12.6 |
11.4 |
11.3 |
|
| Accounts payable and accrued liabilities |
176.3 |
155.8 |
154.1 |
|
| Current portion of long-term debt |
1.9 |
2.2 |
1.2 |
|
| Current portion of provisions |
20.5 |
2.1 |
2.1 |
|
| Current portion of puttable interest in subsidiaries |
6.0 |
4.8 |
- |
|
| 230.7 |
188.9 |
177.0 |
||
| Long-term debt |
209.4 |
152.2 |
182.9 |
|
| Puttable interest in subsidiaries |
29.4 |
27.4 |
27.3 |
|
| Provisions |
1.8 |
20.8 |
20.5 |
|
| Deferred revenue |
6.7 |
4.3 |
4.3 |
|
| Pension obligation |
1.7 |
1.5 |
1.7 |
|
| Deferred income taxes |
48.3 |
44.8 |
31.9 |
|
| 528.0 |
439.9 |
445.6 |
||
| Convertible unsecured subordinated debentures |
256.5 |
254.8 |
146.7 |
|
| Equity attributable to shareholders: |
||||
| Deficit |
(7.7) |
(33.3) |
(42.1) |
|
| Share capital |
433.5 |
429.9 |
425.2 |
|
| Reserves |
15.0 |
29.3 |
24.5 |
|
| Non-controlling interest |
- |
0.5 |
0.5 |
|
| 440.8 |
426.4 |
408.1 |
||
| 1,225.3 |
1,121.1 |
1,000.4 |
||
| Premium Brands Holdings Corporation |
||||||
| Consolidated Statements of Operations |
||||||
| (in millions of Canadian dollars except per share amounts) |
||||||
| 13 weeks ended September 30, 2017 |
13 weeks ended September 24, 2016 |
39 weeks September 30, 2017 |
39 weeks ended September 24, 2016 |
|||
| Revenue |
557.6 |
481.0 |
1,613.2 |
1,324.9 |
||
| Cost of goods sold |
455.1 |
389.7 |
1,302.7 |
1,078.7 |
||
| Gross profit before depreciation and amortization |
102.5 |
91.3 |
310.5 |
246.2 |
||
| Selling, general and administrative expenses before depreciation and amortization |
53.0 |
47.3 |
167.6 |
137.0 |
||
| 49.5 |
44.0 |
142.9 |
109.2 |
|||
| Plant start-up costs |
2.6 |
- |
3.9 |
- |
||
| 46.9 |
44.0 |
139.0 |
109.2 |
|||
| Depreciation of capital assets |
8.0 |
6.9 |
22.3 |
20.1 |
||
| Amortization of intangible assets |
2.5 |
1.9 |
7.4 |
5.2 |
||
| Interest and other financing costs |
5.4 |
5.4 |
15.9 |
13.1 |
||
| Acquisition transaction costs |
0.1 |
- |
0.5 |
0.5 |
||
| Change in value of puttable interest in subsidiaries |
1.2 |
0.8 |
4.4 |
2.5 |
||
| Accretion of provisions |
0.3 |
0.3 |
0.8 |
0.7 |
||
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
||
| Equity loss (income) in associates |
- |
(0.1) |
0.3 |
(0.4) |
||
| Earnings before income taxes |
29.4 |
28.8 |
87.4 |
66.8 |
||
| Provision (recovery) for income taxes |
||||||
| Current |
10.1 |
2.6 |
21.8 |
6.2 |
||
| Deferred |
(2.0) |
5.0 |
2.3 |
11.8 |
||
| 8.1 |
7.6 |
24.1 |
18.0 |
|||
| Earnings |
21.3 |
21.2 |
63.3 |
48.8 |
||
| Earnings (loss) attributable to: |
||||||
| Shareholders |
21.3 |
21.3 |
63.3 |
48.9 |
||
| Non-controlling interest |
- |
(0.1) |
- |
(0.1) |
||
| 21.3 |
21.2 |
63.3 |
48.8 |
|||
| Earnings per share: |
||||||
| Basic |
0.72 |
0.72 |
2.13 |
1.72 |
||
| Diluted |
0.71 |
0.72 |
2.12 |
1.71 |
||
| Weighted average shares outstanding (in millions): |
||||||
| Basic |
29.7 |
29.4 |
29.7 |
28.5 |
||
| Diluted |
29.9 |
29.6 |
29.9 |
28.6 |
||
| Premium Brands Holdings Corporation |
||||||
| Consolidated Statements of Cash Flows |
||||||
| (in millions of Canadian dollars) |
||||||
| 13 weeks ended September 30, 2017 |
13 weeks ended September 24, 2016 |
39 weeks September 30, 2017 |
39 weeks ended September 24, 2016 |
|||
| Cash flows from (used in) operating activities: |
||||||
| Earnings |
21.3 |
21.2 |
63.3 |
48.8 |
||
| Items not involving cash: |
||||||
| Depreciation of capital assets |
8.0 |
6.9 |
22.3 |
20.1 |
||
| Amortization of intangible assets |
2.5 |
1.9 |
7.4 |
5.2 |
||
| Change in value of puttable interest in subsidiaries |
1.2 |
0.8 |
4.4 |
2.5 |
||
| Gain on disposal of assets |
- |
- |
(0.1) |
- |
||
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
||
| Equity loss (income) in associates |
- |
(0.1) |
0.3 |
(0.4) |
||
| Deferred revenue |
0.1 |
- |
2.0 |
(0.1) |
||
| Non-cash financing costs |
0.7 |
2.0 |
2.1 |
2.9 |
||
| Accretion of provisions |
0.3 |
0.3 |
0.8 |
0.7 |
||
| Deferred income taxes (recovery) |
(2.0) |
5.0 |
2.3 |
11.8 |
||
| 32.1 |
38.0 |
104.8 |
92.2 |
|||
| Change in non-cash working capital |
(4.1) |
10.5 |
(31.9) |
23.6 |
||
| 28.0 |
48.5 |
72.9 |
115.8 |
|||
| Cash flows from (used in) financing activities: |
||||||
| Long-term debt – net |
11.9 |
(11.5) |
55.5 |
(20.9) |
||
| Bank indebtedness and cheques outstanding |
(0.1) |
(8.4) |
(2.1) |
(2.9) |
||
| Convertible debentures – net of issuance costs |
- |
- |
- |
82.3 |
||
| Dividends paid to shareholders |
(12.6) |
(11.0) |
(36.5) |
(31.2) |
||
| Repayment of convertible debentures |
- |
(0.7) |
- |
(0.7) |
||
| Other |
0.1 |
- |
0.1 |
(0.6) |
||
| (0.7) |
(31.6) |
17.0 |
26.0 |
|||
| Cash flows from (used in) investing activities: |
||||||
| Capital asset additions |
(12.0) |
(9.0) |
(49.1) |
(26.1) |
||
| Business acquisitions |
(28.4) |
(6.6) |
(40.2) |
(118.4) |
||
| Payments to shareholders of non-wholly owned subsidiaries |
(0.5) |
(0.3) |
(2.3) |
(1.7) |
||
| Payment of provisions |
- |
- |
(1.7) |
(1.7) |
||
| Investment in associates |
(2.7) |
- |
(2.7) |
- |
||
| Net change in share purchase loans and notes receivable |
0.1 |
- |
0.3 |
0.4 |
||
| Distribution from associates |
0.1 |
(0.1) |
0.2 |
0.1 |
||
| Net proceeds from disposal of assets |
- |
0.2 |
0.2 |
0.2 |
||
| Other |
0.1 |
- |
0.1 |
(0.4) |
||
| (43.3) |
(15.8) |
(95.2) |
(147.6) |
|||
| Change in cash and cash equivalents |
(16.0) |
1.1 |
(5.3) |
(5.8) |
||
| Effect of exchange on cash and cash equivalents |
(0.1) |
- |
(0.1) |
(0.1) |
||
| Cash and cash equivalents – beginning of period |
30.1 |
4.3 |
19.4 |
11.3 |
||
| Cash and cash equivalents – end of period |
14.0 |
5.4 |
14.0 |
5.4 |
||
| Interest and other financing costs paid |
1.5 |
2.3 |
10.8 |
8.8 |
||
| Income taxes paid |
6.3 |
0.3 |
22.2 |
1.0 |
||
NON-IFRS FINANCIAL MEASURES
The Company uses certain non-IFRS financial measures including adjusted EBITDA, free cash flow, adjusted earnings and adjusted earnings per share, which are not defined under IFRS and, as a result, may not be comparable to similarly titled measures presented by other publicly traded entities, nor should they be construed as an alternative to other earnings measures determined in accordance with IFRS. These non-IFRS measures are calculated as follows:
Adjusted EBITDA
| (in millions of dollars) |
13 weeks ended Sep 30, 2017 |
13 weeks ended Sep 24, 2016 |
39 weeks ended Sep 30, 2017 |
39 weeks ended Sep 24, 2016 |
| Earnings before income taxes |
29.4 |
28.8 |
87.4 |
66.8 |
| Plant start-up costs |
2.6 |
- |
3.9 |
- |
| Depreciation of capital assets |
8.0 |
6.9 |
22.3 |
20.1 |
| Amortization of intangible assets |
2.5 |
1.9 |
7.4 |
5.2 |
| Interest and other financing costs |
5.4 |
5.4 |
15.9 |
13.1 |
| Acquisition transaction costs |
0.1 |
- |
0.5 |
0.5 |
| Change in value of puttable interest in subsidiaries |
1.2 |
0.8 |
4.4 |
2.5 |
| Accretion of provisions |
0.3 |
0.3 |
0.8 |
0.7 |
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
| Equity loss (income) in associates |
- |
(0.1) |
0.3 |
(0.4) |
| Consolidated adjusted EBITDA |
49.5 |
44.0 |
142.9 |
109.2 |
Free Cash Flow
| (in millions of dollars) |
53 weeks ended Dec 31, 2016 |
39 weeks Ended Sep 30, 2017 |
39 weeks ended Sep 24, 2016 |
Rolling Four Quarters |
| Cash flow from operating activities |
149.9 |
72.9 |
115.8 |
107.0 |
| Changes in non-cash working capital |
(21.4) |
31.9 |
(23.6) |
34.1 |
| Acquisition transaction costs |
1.6 |
0.5 |
0.5 |
1.6 |
| Plant start-up costs |
- |
3.9 |
- |
3.9 |
| Maintenance capital expenditures |
(8.6) |
(7.9) |
(5.4) |
(11.1) |
| Free cash flow |
121.5 |
101.3 |
87.3 |
135.5 |
Adjusted Earnings and Adjusted Earnings per Share
| (in millions of dollars except per share amounts) |
13 weeks ended Sep 30, 2017 |
13 weeks ended Sep 24, 2016 |
39 weeks ended Sep 30, 2017 |
39 weeks ended Sep 24, 2016 |
| Earnings |
21.3 |
21.2 |
63.3 |
48.8 |
| Plant start-up costs |
2.6 |
- |
3.9 |
- |
| Acquisition transaction costs |
0.1 |
- |
0.5 |
0.5 |
| Accretion of provisions |
0.3 |
0.3 |
0.8 |
0.7 |
| Unrealized loss on foreign currency contracts |
- |
- |
- |
0.7 |
| 24.3 |
21.5 |
68.5 |
50.7 |
|
| Current and deferred income tax effect of above items |
(1.0) |
(0.1) |
(1.7) |
(0.5) |
| Adjusted earnings |
23.3 |
21.4 |
66.8 |
50.2 |
| Weighted average shares outstanding |
29.7 |
29.4 |
29.7 |
28.5 |
| Adjusted earnings per share |
0.78 |
0.73 |
2.25 |
1.76 |
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 November 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 November 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.
Share this article