SOURCE: Premium Brands Holdings Corporation

Premium Brands Holdings Corporation

March 10, 2016 07:00 ET

Premium Brands Holdings Corporation Announces Record Fourth Quarter 2015 Results and Increase in Dividend

VANCOUVER, BC--(Marketwired - March 10, 2016) -  Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today its results for the fourth quarter of 2015.

HIGHLIGHTS FOR THE QUARTER

  • Record fourth quarter revenue of $400.3 million representing a 26.1% increase as compared to the fourth quarter of 2014. For the year, revenue increased by $262.8 million or 21.5% to a record $1.5 billion.
  • Record fourth quarter adjusted EBITDA of $31.5 million representing a 62.7% increase as compared to the fourth quarter of 2014. For the year, adjusted EBITDA increased by $34.0 million or 43.8% to a record $111.6 million. 
  • Record earnings from continuing operations for the fourth quarter of $13.6 million or $0.53 per share as compared to $1.3 million or $0.06 per share for the fourth quarter of 2014. 
  • Record rolling four quarters free cash flow of $81.1 million resulting in a dividend to free cash flow ratio of 43.1%.

The Company also announced that it will be increasing its quarterly dividend by 10.1% to $0.380 per share ($1.52 per share annually) from $0.345 per share ($1.38 per share annually). The increase will commence for the dividend period ending March 31, 2016 with the first dividend under the new rate being payable on April 15, 2016. Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2016 or a subsequent year is an eligible dividend for the purposes of the Enhanced Dividend Tax Credit System.

               
SUMMARY FINANCIAL INFORMATION    
               
(In thousands of dollars except per share amounts and ratios)
               
  13 Weeks   13 Weeks   52 Weeks   52 Weeks
  Ended   Ended   Ended   Ended
  Dec 26,   Dec 27,   Dec 26 ,   Dec 27,
  2015   2014   2015   2014
               
Revenue 400,303   317,368   1,484,577   1,221,798
Adjusted EBITDA 31,513
  19,374   111,640   77,618
Earnings from continuing operations 13,583
  1,294   16,549   12,667
EPS from continuing operations 0.53
  0.06   0.68   0.58
Adjusted earnings from continuing operations 13,561
  4,676   44,111   21,516
Adjusted EPS from continuing operations 0.53
  0.21   1.81   0.98
               
               
      Rolling Four Quarters Ended
          Dec 26,   Dec 27,
          2015   2014
               
Free cash flow         81,147   57,374
Declared dividends         34,968   27,768
Declared dividend per share         1.3800   1.2500
Payout ratio         43.1%   48.4%
               

"2015 was a pivotal year for us as we move closer towards our goal of becoming one of North America's leading specialty foods companies. Our record annual sales and adjusted EBITDA of $1.5 billion and $111.6 million, respectively, which were both well ahead of the five year targets we set three years ago, are a testament to how far we have come," said Mr. George Paleologou, President and CEO.

"For the quarter, the improvement in our results on a year over year basis continued to accelerate as we move towards fully realizing the expected returns on several major capital investments and acquisitions made over the last three years. Our sales for the quarter grew by 26.1% to a record $400.3 million while our adjusted EBITDA grew by 62.7% to a record $31.5 million.

"Looking forward to 2016, we expect some of our more recent investments, such as our new sandwich plant in Columbus, to continue to drive solid year over year improvement in our top and bottom line performance. Furthermore, we are anticipating a more favorable operating environment for a number of our businesses that were impacted in 2015 by several significant challenges including major economic downturns in certain regions of Canada and rising raw material costs that were the result, in part, of the dramatic fall in the Canadian dollar," stated Mr. Paleologou.

"I should note that our improved performance in 2015, in light of the challenges faced by some of our businesses, was due to the geographic, product and channel diversification strategies that we have built into our business model. The resulting balance has enabled us to consistently grow our sales and cash flow over the last ten years despite facing a broad variety of economic and industry specific issues," added Mr. Paleologou.

"Acquisitions, and the synergies generated from them, have and will continue to play a significant role in achieving our growth and profitability objectives. Looking forward, we have a full pipeline of opportunities and expect 2016 to be a very active year on this front," said Mr. Paleologou.

"Our most recent dividend increase demonstrates the confidence we have in our business and our unwavering commitment to share the value being created with our long term shareholders," added Mr. Paleologou.

About Premium Brands

Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Isernio's, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's, Freybe and Expresco.

RESULTS OF OPERATIONS

In prior quarters the Company reported on two reportable segments, Retail and Foodservice, as well as corporate costs (Corporate). Due to changes that have occurred in recent years within the businesses making up these two segments, the Company has renamed them. Going forward, the Retail segment will be referred to as the Specialty Foods segment and the Foodservice segment will be referred to as the Premium Food Distribution segment. Other than the revised names, which better reflect the nature of the underlying businesses, no other changes have been made to the reportable segments.

Revenue

(in thousands of dollars except percentages)

  13 weeks ended 
Dec 26, 2015
  %
  13 weeks ended
Dec 27, 2014
  %
  52 weeks ended 
Dec 26, 2015
  %
  52 weeks ended 
Dec 27, 2014
  %
Revenue by segment:                              
  Specialty Foods 274,425   68.6%   198,877   62.7%   979,131   66.0%   763,751   62.5%
   Premium Food Distribution 125,878   31.4%   118,491   37.3%   505,446   34.0%   458,047   37.5%
   Consolidated 400,303   100.0%   317,368   100.0%   1,484,577   100.0%   1,221,798   100.0%
                               

Specialty Foods' revenue for the fourth quarter of 2015 as compared to the fourth quarter of 2014 increased by $75.5 million or 38.0% primarily due to: (i) $37.5 million of organic growth across a range of products with a significant portion of it coming from its convenience food initiatives; (ii) a $19.2 million increase in the translated value of its U.S. based businesses' sales resulting from a decline in the value of the Canadian dollar; and (iii) $18.8 million of sales resulting from the acquisitions of Isernio's and Expresco earlier in 2015.

Specialty Foods' revenue for 2015 as compared to 2014 increased by $215.4 million or 28.2% primarily due to the factors outlined above as well as some selling price inflation earlier in the year. Excluding the impact of acquisitions, exchange translation and selling price increases, Specialty Foods' organic growth for 2015 was 13.7%.

For 2016, the Company expects (see Forward Looking Statements) Specialty Foods' organic growth to be at the top end or exceed the Company's long-term targeted range of 6% to 8% due to a range of factors including a variety of consumer trends that are benefiting many of its businesses. These trends include (i) growing demand for higher quality foods made with simpler more wholesome ingredients and/or with differentiating attributes such as all natural ingredients, antibiotic free, no added hormones and organic; (ii) increased reliance on convenience oriented foods both for on-the-go snacking as well as for easy home meal preparation; (iii) healthier eating including reduced sugar consumption and increased emphasis on protein; (iv) increased snacking in between and in replacement 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.

Premium Food Distribution's revenue for the fourth quarter of 2015 as compared to the fourth quarter of 2014 increased by $7.4 million or 6.2% primarily due to: (i) selling price increases that were implemented in the latter part of 2014 and in 2015 in response to historically high commodity raw material costs; and (ii) the acquisition of Ocean Miracle, an Ontario based seafood distribution business, in the fourth quarter of 2014 which accounted for $2.4 million of the increase. Excluding the impact of these factors, Premium Food Distribution's sales for the quarter declined by approximately $3.4 million primarily due to: (i) reduced trading opportunities in its Worldsource food brokerage business; and (ii) lower foodservice sales in northern Alberta resulting from the economic impact that lower oil commodity prices has had on this region.

Premium Food Distribution's revenue for 2015 as compared to 2014 increased by $47.4 million or 10.3% primarily due to the factors outlined above but with its growth also being negatively impacted by a below average west coast sockeye salmon fishery in 2015 relative to a very strong fishery in 2014. Excluding the impact of selling price increases and acquisitions, Premium Food Distribution's revenue for 2015 as compared to 2014 was down 1.4%.

For 2016, the Company expects (see Forward Looking Statements) Premium Food Distribution's organic growth to be at or slightly below the bottom end of the Company's long-term targeted range of 6% to 8% as growth from a variety of new initiatives, as well as stronger foodservice sales in parts of British Columbia, are expected to be partially offset by continuing weakness in its Alberta foodservice sales.

Gross Profit

(in thousands of dollars except percentages)

  13 weeks ended 
Dec 26, 2015
  %
  13 weeks ended
Dec 27, 2014
  %
  52 weeks ended 
Dec 26, 2015
  %
  52 weeks ended 
Dec 27, 2014
  %
Gross profit by segment:                              
  Specialty Foods 56,749   20.7%   40,264   20.2%   203,672   20.8%   152,614   20.0%
  Premium Food Distribution 19,734   15.7%   17,323   14.6%   81,072   16.0%   75,865   16.6%
  Consolidated 76,483   19.1%   57,587   18.1%   284,744   19.2%   228,479   18.7%
                               

Specialty Foods' gross profit as a percentage of its revenue (gross margin) for the fourth quarter of 2015 as compared to the fourth quarter of 2014 was up slightly due to a range of factors including improved operating efficiencies in its protein and bakery businesses that were the result of: (i) higher sales volumes; and (ii) a major restructuring of its deli meat operations that was completed in 2014. Partially offsetting these factors were temporary operating inefficiencies associated with the ramp up in production at a new sandwich production facility in Columbus, Ohio.

Specialty Foods' gross margin for 2015 as compared to 2014 increased primarily due to: (i) improved operating efficiencies as outlined above; (ii) a general easing of its commodity raw material costs, albeit this was partially offset by longer term purchase commitments and a weaker Canadian dollar as most of Specialty Foods' commodity raw materials are U.S. dollar based; and (iii) selling price increases implemented by its protein businesses in 2014 and early 2015 in response to record high commodity raw material costs. These factors were partially offset by temporary operating inefficiencies at its new sandwich production facility as outlined above.

Premium Food Distribution's gross margin for the fourth quarter of 2015 as compared to the fourth quarter of 2014 increased primarily due to: (i) an unusual $0.9 million inventory write down in the fourth quarter of 2014; and (ii) higher margins on seafood products resulting from a general improvement in market conditions. 

Premium Food Distribution's gross margin for 2015 as compared to 2014 decreased primarily due to continuing record increases through most of 2014 and 2015 in its commodity beef raw material costs, which are significantly impacting the selling margins of its foodservice business. Premium Food Distribution has been able to recover most of these increases through higher selling prices, however, due to the extent of the increases it has not been able to achieve its historic gross margins of 17% plus.

Looking forward (see Forward Looking Statements), Premium Food Distribution expects its commodity beef raw material costs to begin decreasing in 2016 and, correspondingly, is projecting an improvement in its gross margin for 2016. 

Selling, General and Administrative Expenses (SG&A)

(in thousands of dollars except percentages)

  13 weeks ended 
Dec 26, 2015
  %
  13 weeks ended
Dec 27, 2014
  %
  52 weeks ended 
Dec 26, 2015
  %
  52 weeks ended 
Dec 27, 2014
  %
SG&A by segment:                              
  Specialty Foods 27,035   9.9%   22,121   11.1%   101,342   10.4%   88,636   11.6%
  Premium Food Distribution 14,781   11.7%   14,151   11.9%   59,236   11.7%   54,529   11.9%
  Corporate 3,154       1,941       12,526       7,696    
  Consolidated 44,970   11.2%   38,213   12.0%   173,104   11.7%   150,861   12.3%
                                 

Specialty Foods' SG&A for the fourth quarter of 2015 as compared to the fourth quarter of 2014 increased by $4.9 million primarily due to: (i) the acquisitions of Isernio's and Expresco; (ii) increased discretionary employee compensation associated with growth in the Company's free cash flow; (iii) incremental costs associated with its organic sales growth including higher advertising, promotion and freight costs as well as additional sales and administration infrastructure; and (iv) an increase in the translated value of Specialty Foods' U.S. based businesses' SG&A resulting from a decline in the value of the Canadian dollar.

Specialty Foods' SG&A for 2015 as compared 2014 increased by $12.7 million primarily due to the factors outlined above partially offset by cost savings resulting from the rationalization and subsequent sale of its direct-to-store delivery network for the convenience store channel in 2014.

Specialty Foods' SG&A as a percentage of its revenue for 2015 as compared to 2014 decreased mainly due to the fixed nature of certain costs relative to its organic revenue growth.

Premium Food Distribution's SG&A for the fourth quarter of 2015 as compared to the fourth quarter of 2014 increased by $0.6 million due to a variety of factors including: (i) increased discretionary employee compensation accruals associated with growth in the Company's free cash flow; (ii) the acquisition of Ocean Miracle; and (iii) $0.2 million in severance payments associated with the restructuring of its Harlan Fairbanks concessionary products business' sales force.

Premium Food Distribution's SG&A for 2015 as compared to 2014 increased by $4.7 million primarily due to the factors outlined above as well as additional sales and administration infrastructure added in 2014.

Premium Food Distribution's SG&A as a percentage of its revenue for 2015 as compared to 2014 remained relatively stable as benefits resulting from the fixed nature of certain costs relative to its organic revenue growth were offset by severance payments associated with the restructuring of its Harlan Fairbanks concessionary products business' sales force and additional sales and administration infrastructure added in 2014.

Corporate SG&A for the fourth quarter of 2015 as compared to the fourth quarter of 2014 as well as for 2015 as compared to 2014 increased by $1.2 million and $4.8 million respectively, primarily due to increased discretionary employee compensation accruals associated with the growth in the Company's free cash flow and exchange losses on U.S. dollar denominated liabilities.

Adjusted EBITDA

(in thousands of dollars except percentages)

  13 weeks ended 
Dec 26, 2015
  %
  13 weeks ended
Dec 27, 2014
  %
  52 weeks ended 
Dec 26, 2015
  %
  52 weeks ended 
Dec 27, 2014
  %
Adjusted EBITDA by segment:                              
  Specialty Foods 29,714   10.8%   18,143   9.1%   102,330   10.5%   63,978   8.4%
  Premium Food Distribution 4,953   3.9%   3,172   2.7%   21,836   4.3%   21,336   4.7%
  Corporate (3,154)       (1,941)       (12,526)       (7,696)    
  Consolidated 31,513   7.9%   19,374   6.1%   111,640   7.5%   77,618   6.4%
                                 

The Company's adjusted EBITDA as a percentage of sales (EBITDA margin) of 7.9% for the fourth quarter was only slightly below its targeted range of 8.0% to 8.5% despite: (i) the seasonality of its business which generally results in its fourth quarter margins being below its average margins for the year; (ii) temporary operating inefficiencies, albeit significantly less than earlier in the year, associated with the ramp up in production at its new sandwich plant in Columbus; and (iii) below average margins in its Premium Food Distribution business due to record high commodity beef raw material costs.

The Company's EBITDA margin for 2015 of 7.5% was below its targeted range of 8.0% to 8.5% primarily due to: (i) temporary operating inefficiencies associated with the ramp up in production at the new Columbus sandwich plant; and (ii) below average margins in its Premium Food Distribution business due to record high commodity beef raw material costs.

Looking forward (see Forward Looking Statements) the Company expects its EBITDA margin for 2016 to be within its targeted range of 8.0% to 8.5% based on: (i) continued improvement in the operating performance of the Columbus sandwich plant; (ii) improved operating efficiencies resulting from its projected organic sales growth; (iii) a reduction in certain commodity beef raw material costs; and (iv) the impact of its recently acquired Isernio's and Expresco businesses.

Interest and other financing costs

The Company's interest and other financing costs for the fourth quarter of 2015 as compared to the fourth quarter of 2014 and for 2015 as compared to 2014 decreased primarily due to a reduction in the Company's total funded debt resulting from: (i) the conversion of primarily all of its 7.00% debentures at the end of 2014; (ii) the conversion of primarily all of its 5.75% debentures in the second quarter of 2015; (iii) the conversion of primarily all of its 5.70% debentures in the fourth quarter of 2015; and (iv) reduced senior debt levels.

   
   

Premium Brands Holdings Corporation
 
Consolidated Balance Sheets  
(in thousands of Canadian dollars)  
           
  December 26, 2015     December 27, 2014  
Current assets:          
  Cash and cash equivalents 11,270     9,453  
  Accounts receivable 159,879     116,544  
  Inventories 141,589     121,693  
  Prepaid expenses 6,437     5,798  
  Other assets 1,025     763  
  320,200     254,251  
           
Capital assets 227,287     203,340  
Intangible assets 79,663     71,545  
Goodwill 209,470     174,846  
Investment in associates 9,320     9,517  
Deferred income taxes -     22,257  
Other assets 10,227     3,391  
  856,167     739,147  
           
Current liabilities:          
  Cheques outstanding 6,796     6,353  
  Bank indebtedness 3,886     -  
  Dividend payable 9,407     6,978  
  Accounts payable and accrued liabilities 133,836     102,598  
  Current portion of long-term debt 3,685     2,645  
  Current portion of provisions 1,920     1,746  
  159,530     120,320  
           
Long-term debt 202,794     211,292  
Puttable interest in subsidiaries 26,283     17,900  
Deferred revenue 4,494     4,520  
Provisions 4,126     4,556  
Pension obligation 1,400     1,437  
Deferred income taxes 15,491     -  
  414,118     360,025  
           
Convertible unsecured subordinated debentures 121,837     174,549  
           
Equity attributable to shareholders:          
  Deficit (57,937 )   (36,838 )
  Share capital 345,222     227,247  
  Equity component of convertible debentures -     1,744  
  Reserves 32,369     11,804  
  Non-controlling interest 558     616  
  320,212     204,573  
  856,167     739,147  
           
           
   

Premium Brands Holdings Corporation
 
Consolidated Statements of Operations  
(in thousands of Canadian dollars except per share amounts)  
             
    52 weeks ended December 26, 2015     52 weeks ended December 27, 2014  
             
Revenue   1,484,577     1,221,798  
Cost of goods sold   1,199,833     993,319  
Gross profit before depreciation, amortization, plant start-up and restructuring costs, and other income   284,744     228,479  
             
Selling, general and administrative expenses before depreciation, amortization, plant start-up and restructuring costs, and other income   173,104     150,861  
    111,640     77,618  
             
Plant start-up and restructuring costs   2,924     20,299  
Other income   -     (4,703 )
    108,716     62,022  
             
Depreciation of capital assets   25,301     19,874  
Amortization of intangible assets   4,459     4,356  
Amortization of other assets   5     5  
Interest and other financing costs   17,651     20,556  
Amortization of financing costs   226     253  
Acquisition transaction costs   223     266  
Change in value of puttable interest in subsidiaries   5,887     1,996  
Accretion of provisions   494     342  
Unrealized gain on foreign currency contracts   (100 )   (400 )
Equity income in associates   (60 )   (52 )
Other   -     655  
Earnings before income taxes   54,630     14,171  
             
Provision for (recovery of) income taxes            
  Current   3,258     (3,538 )
  Deferred   13,303     5,042  
  Deferred tax provision resulting from CRA settlement   21,520     -  
    38,081     1,504  
Earnings from continuing operations   16,549     12,667  
Loss from discontinued operation, net of income taxes   (4,913 )   (1,275 )
             
Earnings   11,636     11,392  
             
Earnings (loss) for the year attributable to:            
  Shareholders   11,694     11,426  
  Non-controlling interest   (58 )   (34 )
             
    11,636     11,392  
             
Earnings (loss) per share from:            
  Continuing operations:            
    Basic   0.68     0.58  
    Diluted   0.68     0.57  
Discontinued operation - basic and diluted   (0.20 )   (0.06 )
Earnings attributable to shareholders - basic and diluted   0.48     0.52  
             
             
   

Premium Brands Holdings Corporation
 
Consolidated Statements of Cash Flows  
(in thousands of Canadian dollars)  
           
  52 weeks ended December 26, 2015     52 weeks ended December 27, 2014  
           
Cash flows from (used in) operating activities:          
  Earnings from continuing operations 16,549     12,667  
  Items not involving cash:          
    Depreciation of capital assets 25,301     19,874  
    Amortization of intangible and other assets 4,464     4,361  
    Amortization of financing costs 226     253  
    Change in value of puttable interest in subsidiaries 5,887     1,996  
    Gain on sales of capital assets (173 )   (4,682 )
    Accrued interest income (17 )   (21 )
    Net unrealized gain on foreign currency contracts (100 )   (400 )
    Equity income in associates (60 )   (52 )
    Deferred revenue (232 )   716  
    Accretion of convertible debentures, long-term debt and provisions 4,048     3,261  
    Non-cash loss on sale of routes -     137  
    Deferred income taxes 34,823     5,042  
  90,716     43,152  
  Change in non-cash working capital (17,135 )   (20,283 )
  73,581     22,869  
  Discontinued operation:          
    Discontinued operation (net of income taxes) (4,913 )   (1,275 )
    Items not involving cash (1,317 )   (250 )
  67,351     21,344  
           
Cash flows from (used in) financing activities:          
  Long-term debt - net (14,801 )   88,686  
  Bank indebtedness and cheques outstanding 2,176     (28,803 )
  Proceeds from convertible debentures - net of issuance costs 65,740     -  
  Repayment of convertible debentures (4,260 )   -  
  Dividends paid to shareholders, net of dividends received from cancelled shares (32,538 )   (27,653 )
  Share issuance and financing costs (232 )   (1,026 )
  16,085     31,204  
           
Cash flows from (used in) investing activities:          
  Capital asset additions (29,368 )   (47,065 )
  Business acquisitions (43,002 )   (2,885 )
  Payments to shareholders of non-wholly owned subsidiaries (1,746 )   (801 )
  Payment of provisions (1,250 )   (2,347 )
  Purchase of shares for employee share loans (7,500 )   -  
  Net change in share purchase loans and notes receivable 314     (326 )
  Investment in associates -     (1,860 )
  Distribution from associates 257     344  
  Proceeds from sale and leaseback of asset -     10,200  
  Net proceeds from sales of assets 652     168  
  (81,643 )   (44,572 )
           
Increase in cash and cash equivalents 1,793     7,976  
Effects of exchange on cash and cash equivalents 24     40  
Cash and cash equivalents - beginning of year 9,453     1,437  
           
Cash and cash equivalents - end of year 11,270     9,453  
           
           

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 thousands of dollars) 13 weeks ended Dec 26, 2015   13 weeks ended Dec 27, 2014   52 weeks ended Dec 26, 2015   52 weeks ended Dec 27, 2014  
                 
Earnings before income taxes 19,670   (72 ) 54,630   14,171  
Other income -   -   -   (4,703 )
Plant start-up and restructuring costs -   6,723   2,924   20,299  
Depreciation of capital assets 6,343   5,622   25,301   19,874  
Amortization of intangible assets 1,205   1,016   4,459   4,356  
Amortization of other assets 1   1   5   5  
Interest and other financing costs 3,833   5,319   17,651   20,556  
Amortization of financing costs 61   58   226   253  
Acquisition transaction costs 52   78   223   266  
Change in value of puttable interest in subsidiaries 661   208   5,887   1,996  
Accretion of provisions 118   80   494   342  
Unrealized loss (gain) on foreign currency contracts (200 ) (400 ) (100 ) (400 )
Equity loss (income) in associates (231 ) 86   (60 ) (52 )
Other gains and losses -   655   -   655  
Consolidated 31,513   19,374   111,640   77,618  
                 
                 

Free Cash Flow

(in thousands of dollars) 52 weeks ended Dec 26, 2015     52 weeks ended Dec 27, 2014  
           
Cash flow from operating activities 67,351     21,344  
Changes in non-cash working capital 17,135     20,283  
Acquisition transaction costs 223     266  
Plant start-up and restructuring costs 2,924     20,299  
Capital maintenance expenditures (6,486 )   (4,818 )
Free cash flow 81,147     57,374  
           
           

Adjusted Earnings per Share from Continuing Operations

(in thousands of dollars except per share amounts)   13 weeks ended Dec 26, 2015   13 weeks ended Dec 27, 2014   52 weeks ended Dec 26, 2015   52 weeks ended Dec 27, 2014  
                   
Earnings from continuing operations     13,583     1,294     16,549     12,667  
                           
Plant start-up and restructuring costs     -     6,723     2,924     20,299  
Other income     -     -     -     (4,703 )
Acquisition transaction costs     52     78     223     266  
Accretion of provisions     118     80     494     342  
Additional change in puttable interest expense resulting from SJ Fine Foods minority shareholder buyout     -     -     3,688     -  
Unrealized gain on foreign currency contracts     (200 )   (400 )   (100 )   (400 )
Income tax recovery     -     (1,378 )   -     (1,378 )
Other     -     655           655  
      13,553     7,052     23,778     27,748  
                           
Current and deferred income tax effect of above items     8     (2,376 )   (1,187 )   (6,232 )
Non-cash write-down of deferred income tax assets resulting from CRA settlement     -     -     21,520     -  
                           
Adjusted earnings from continuing operations     13,561     4,676     44,111     21,516  
                           
Weighted average shares outstanding     25,510     22,170     24,436     22,063  
                           
Adjusted earnings per share from continuing operations   $ 0.53   $ 0.21   $ 1.81   $ 0.98  
                           
                           

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 March 9, 2016, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements.

Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of finished products sourced from third party manufacturers; (v) changes in the Company's relationships with its larger customers; (vi) access to commodity raw materials; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; (x) execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its growth initiatives; (xv) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xvi) the loss and/or inability to attract key senior personnel; (xvii) fluctuations in the interest rates associated with the Company's funded debt; (xviii) failure or breach of the Company's information systems; (xix) financial exposure resulting from credit extended to the Company's customers; (xx) the malfunction of critical equipment used in the Company's operations; (xxi) livestock health issues; (xxii) international trade issues; and (xxiii) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's 2015 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking statements in this document are made as of March 9, 2016 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking statements in this press release.

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