SOURCE: Premium Brands Holdings Corporation

Premium Brands Holdings Corporation

November 06, 2014 07:00 ET

Premium Brands Holdings Corporation Announces Third Quarter 2014 Results

VANCOUVER, BC--(Marketwired - November 06, 2014) - 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 2014.

HIGHLIGHTS

  • Revenue for the quarter increased by 15.2% to $330.4 million as compared to $287.0 million for the third quarter of 2013. 
  • Adjusted EBITDA for the quarter increased to $24.0 million as compared to $21.8 million in the third quarter of 2013 despite continued record high input commodity protein costs. 
  • Earnings for the quarter of $4.7 million or $0.21 per share as compared to $5.2 million or $0.25 per share for the third quarter of 2013. Excluding plant start-up and restructuring costs associated with the Company's new 180,000 square foot sandwich production facility in Columbus, Ohio, its earnings for the quarter were $8.4 million or $0.38 per share.
  • The Company declared a quarterly dividend of $0.3125 per share.
  • Rolling four quarters free cash flow of $53.2 million resulting in a dividend to free cash flow ratio of 52.0%.
  • During the quarter the Company started production at its new 180,000 square foot sandwich production facility in Columbus, Ohio.
   
SUMMARY FINANCIAL INFORMATION  
            
(In thousands of dollars except per share amounts and ratios)  
  
  13 weeks 13 weeks 39 Weeks  39 Weeks  
  Ended Ended Ended  Ended  
  Sep 27, Sep 28, Sep 27,  Sep 28,  
  2014 2013 2014  2013  
       
Revenue 330,434 286,955 919,564  795,065  
Adjusted EBITDA 24,019 21,774 61,593  55,547  
Earnings 4,692 5,180 10,261  11,669  
EPS 0.21 0.25 0.47  0.56  
            
    Rolling Four Quarters Ended  
      Sep 27,  Dec 28,  
      2014  2013  
       
Free cash flow     53,152  49,247  
Declared dividends     27,656  26,498  
Declared dividend per share     1.25  1.2315  
Payout ratio     52.00 %53.80 %
       

"We are very pleased to report another quarter of strong growth in both our sales and adjusted EBITDA," said Mr. George Paleologou, President and CEO. "In particular, we are pleased that the strategies we have been implementing over the last several months to deal with the rapid run-up in our input commodity protein costs are starting to be reflected in our adjusted EBITDA. This once again demonstrates the resilience of our company and the ability of our business model to deal with any headwinds and challenges that come our way.

"Our adjusted EBITDA is also starting to reflect some of the potential we expect to realize from the significant investments we have made over the last two years in major business restructuring initiatives and capital projects. These include the integration of our Freybe and Piller's acquisitions with our deli group of businesses, the rationalization of our NDSD business' distribution network and the construction of incremental production capacity for several of our businesses. With many of these projects now complete they are starting to make a significant contribution to our earnings and, over the next several years, will be key drivers of sustainable growth in our top and bottom lines. 

"We are also pleased to report that our North American Sandwich Group's new 180,000 square foot production facility in Columbus, Ohio is now fully operational and in the ramp-up stage of its business plan. This new state-of-the-art facility not only provides us with much needed production capacity to service our existing customers, but also ideally positions us to aggressively grow our sandwich business in the eastern U.S. and eastern Canada. In the short term we are, however, experiencing the start-up costs typical of a project of this nature.

"On the acquisition front we remain very active. We have a number of promising opportunities that we are looking at and expect to expand our portfolio of great specialty food businesses in the near future," 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, Quality Fast Foods, Gloria's Best of Fresh, Direct Plus, National Direct-to-Store Distribution (NDSD), Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's and Freybe.

RESULTS OF OPERATIONS

 
Revenue
 
(in thousands of dollars except percentages)
 
  13 weeks ended
 Sep 27,
2014
 % 13 weeks ended
 Sep 28,
2013
 % 39 weeks ended
 Sep 27,
2014
 % 39 weeks ended
 Sep 28,
2013
 %
             
Revenue by segment:
 Retail 204,292  61.8% 178,963  62.4% 580,008  63.1% 491,591  61.8%
 Foodservice 126,142  38.2% 107,992  37.6% 339,556  36.9% 303,474  38.2%
 Consolidated 330,434  100.0% 286,955  100.0% 919,564  100.0% 795,065  100.0%
              

Retail's revenue for the third quarter of 2014 as compared to the third quarter of 2013 increased by $25.3 million or 14.2% primarily due to organic growth across a range of products and customers partially offset by a $2.5 million decrease in sales resulting from the sale of a portion of Retail's NDSD business (see Plant Start-up and Restructuring Costs). Retail's sandwich business, in particular, generated significant growth in both Canada and the U.S. primarily due to the introduction of a variety of new products by one of its major customers.

Retail's revenue for the first three quarters of 2014 increased by $88.4 million or 18.0% as compared to the first three quarters of 2013 primarily due to: (i) net organic growth of $72.4 million, representing an average growth rate of 14.7%; and (ii) the acquisition of Freybe Gourmet Foods Ltd. at the end of the first quarter of 2013 which accounted for $16.0 million of the increase.

Retail's organic growth rate for the first three quarters of 2014 was well above the Company's targeted range of 6% to 8% primarily due to: (i) selling price increases that were implemented by several of its businesses in response to a record rise in the cost of a variety of input commodity proteins (see Gross Profit); and (ii) an increase in the translated value of Retail's U.S. based businesses' sales resulting from a decline in the value of the Canadian dollar. Excluding these factors, Retail's organic growth for the first three quarters of 2014 was slightly above the Company's net of inflation targeted range of 4% to 6%.

Looking forward (see Forward Looking Statements), the Company is expecting Retail's organic growth to continue exceeding its targeted range for the remainder of 2014 based on (i) the factors outlined above; and (ii) continued implementation of a variety of growth initiatives including several production capacity expansion projects.

Foodservice's revenue for the third quarter of 2014 as compared to the third quarter of 2013 increased by $18.2 million or 16.8% primarily due to: (i) organic growth of $13.9 million, representing an average growth rate of 13.8%; (ii) the acquisition of Reddi Foods which accounted for $1.8 million of the increase; and (iii) increased sales in its Worldsource food brokerage business of $2.5 million resulting from improved trading opportunities and average higher selling prices for beef and pork products.

Foodservice's revenue for the first three quarters of 2014 increased by $36.1 million or 11.9% as compared to the first three quarters of 2013 primarily due to: (i) organic growth of $28.7 million, representing an average growth rate of 10.0%; (ii) the acquisition of Reddi Foods which accounted for $3.6 million of the increase; and (iii) increased sales in its Worldsource food brokerage business of $3.8 million resulting from improved trading opportunities and average higher selling prices for beef and pork products.

Foodservice's organic growth rate for the first three quarters of 2014 was above the Company's targeted range of 6% to 8% mainly due to: (i) selling price increases that were implemented by several of its businesses in response to a record rise in the cost of a variety of input commodity proteins (see Gross Profit) and (ii) increased salmon sales in the third quarter due to a strong west coast salmon fishery. These increases were partially offset by lower than expected growth in Foodservice's sales volume during the first half of 2014 due mainly to poor weather conditions across much of the Prairies and Ontario. Excluding the impact of selling price increases, Foodservice's organic growth for the first three quarters of 2014 was within the Company's net of inflation targeted range of 4% to 6%.

Looking forward (see Forward Looking Statements), the Company is expecting Foodservice's organic growth to exceed or be at the high end of its targeted range of 6% to 8% for the remainder of 2014 based on: (i) selling price increases associated with the record rise in the cost of input commodity proteins; and (ii) continued execution of a variety of growth initiatives.

 
Gross Profit
 
(in thousands of dollars except percentages)
 
  13 weeks ended
 Sep 27,
2014
 % 13 weeks ended
 Sep 28,
2013
 % 39 weeks ended
 Sep 27,
2014
 % 39 weeks ended
 Sep 28,
2013
 %
             
Gross profit by segment:            
 Retail 41,170  20.2% 38,038  21.3% 112,364  19.4% 105,726  21.5%
 Foodservice 21,420  17.0% 20,232  18.7% 58,542  17.2% 56,243  18.5%
 Consolidated 62,590  18.9% 58,270  20.3% 170,906  18.6% 161,969  20.4%
              

Retail's gross profit as a percentage of its revenue (gross margin) for the third quarter of 2014 as compared to the third quarter of 2013 decreased primarily due to: (i) a significant portion of its volume sales growth coming from products that are sold on a cost plus basis. These products generally have lower than average gross margins since the customer assumes the risk associated with changes in raw material costs; (ii) significant increases in the cost of a variety of raw materials that resulted in lower gross margins on products sold on a cost plus basis; and (iii) extremely high costs for a variety of input commodity proteins, which in many cases were 40% to 50% higher than their respective costs in the third quarter of 2013. Most of the impact of this last factor was, however, offset by higher selling prices (see Revenue).

Retail's gross margin for the first three quarters of 2014 as compared to the first three quarters of 2013 decreased primarily due to: (i) an extremely rapid rise in the cost of a variety of input commodity proteins during the first half of 2014; (ii) increased sales of lower gross margin products sold on a cost plus basis as discussed above; and (iii) the impact of higher raw material costs on the gross margins of products sold on a cost plus basis.

Looking forward (see Forward Looking Statements), the Company expects Retail's margins to increase over the next several quarters based on: (i) improved capacity utilization in several of its recently completed production facilities as some of its newer sales growth initiatives begin to generate results; (ii) continued improvement in deli meat product margins as Retail further adjusts its selling prices to account for historically high input commodity protein costs; (iii) plant efficiency benefits associated with the Company's various restructuring projects (see Plant Start-up and Restructuring Costs) and (iv) in the longer term, a return to normal levels in the cost of input commodity proteins that are currently at historically high levels. These positive factors will, however, be partially offset by the impact of continued strong growth in Retail's sales of products sold on a cost plus basis, which typically have lower gross margins.

Foodservice's gross margin for the third quarter of 2014 as compared to the third quarter of 2013 and for the first three quarters of 2014 as compared to the first three quarters of 2013 decreased primarily due to increases in the cost of a variety of input commodity proteins, in general, and certain premium beef commodities, in particular. During the third quarter, Foodservice was able to almost fully recover increases in its input commodity protein costs; however, due to the extent of the increases, it was unable to immediately raise its selling prices sufficiently to return to its historic gross margin levels.

Looking forward (see Forward Looking Statements), although the Company expects Foodservice's margins to improve over the next several quarters, they will likely remain below normal levels until mid-2015 due to expected continued volatility and supply issues for premium beef products.

 
Selling, General and Administrative Expenses (SG&A)
 
(in thousands of dollars except percentages)
 
  13 weeks ended
 Sep 27,
2014
% 13 weeks ended
 Sep 28,
2013
% 39 weeks ended
 Sep 27,
2014
% 39 weeks ended
 Sep 28,
2013
%
         
SG&A by segment:
 Retail 22,623 11.1% 23,289 13.0% 67,883 11.7% 65,143 13.3%
 Foodservice 13,878 11.0% 12,926 12.0% 40,378 11.9% 37,761 12.4%
 Corporate 2,070   1,439   5,755   4,676  
 Consolidated 38,571 11.7% 37,654 13.1% 114,016 12.4% 107,580 13.5%
          

Retail's SG&A for the third quarter of 2014 as compared to the third quarter of 2013 decreased by $0.7 million due to: (i) a temporary reduction in discretionary marketing and advertising programs as part of a strategy to partially mitigate the impact on its gross margin of record high input commodity protein costs (see Gross Profit); and (ii) the sale of NDSD's Quebec operations (see Plant Start-up and Restructuring Costs). These decreases were partially offset by increased variable selling costs, including freight, associated with Retail's organic sales growth (see Revenue). 

Retail's SG&A for the first three quarters of 2014 as compared to the first three quarters of 2013 increased by $2.7 million primarily due to: (i) additional SG&A associated with the acquisition of Freybe Gourmet Foods Ltd. at the end of the first quarter of 2013; and (ii) increased variable selling costs associated with Retail's organic sales growth. These increases were partially offset by the factors that resulted in a decrease in SG&A in the third quarter as discussed above.

Retail's SG&A as a percentage of its revenue for the first three quarters of 2014 as compared to the first three quarters of 2013 decreased mainly due to: (i) the fixed nature of certain costs relative to the growth in its revenue (see Revenue); and (ii) decreased discretionary marketing and advertising spending as discussed above.

Foodservice's SG&A for the third quarter of 2014 as compared to the third quarter of 2013 and for the first three quarters of 2014 as compared to the first three quarters of 2013 increased primarily due to: (i) increased variable selling costs, including freight, associated with its organic sales growth (see Revenue); and (ii) additional sales and administrative infrastructure needed to support a variety of growth initiatives.

Other Income

Other income for the first three quarters of 2014 consists of a $4.7 million gain resulting from the Retail segment's sale and leaseback of a distribution centre in Surrey, BC in the first quarter.

Other income for the first three quarters of 2013 consists of a $1.2 million gain resulting from the Retail segment's sale of vacant land in Edmonton, AB in the third quarter.

 
Adjusted EBITDA
 
(in thousands of dollars except percentages)
 
  13 weeks
ended
 Sep 27,
2014
 %  13 weeks
ended
 Sep 28,
2013
 %  39 weeks
ended
 Sep 27,
2014
 %  39 weeks
ended
 Sep 28,
2013
 %
                
Adjusted EBITDA by segment:
Retail 18,547  9.1%  15,907  8.9%  49,184  8.5%  41,741  8.5%
Foodservice 7,542  6.0%  7,306  6.8%  18,164  5.3%  18,482  6.1%
Corporate (2,070 )   (1,439 )   (5,755 )   (4,676 ) 
Consolidated 24,019  7.3%  21,774  7.6%  61,593  6.7%  55,547  7.2%
 
Adjusted EBITDA before other income by segment:
Retail 18,547  9.1%  14,749  8.2%  44,481  7.7%  40,583  8.3%
Foodservice 7,542  6.0%  7,306  6.8%  18,164  5.3%  18,482  6.1%
Corporate (2,070 )   (1,439 )   (5,755 )   (4,676 ) 
Consolidated 24,019  7.3%  20,616  7.2%  56,890  6.2%  54,389  6.8%
                

The Company's adjusted EBITDA before other income for the third quarter of 2014 as compared to the third quarter of 2013 increased by $3.4 million or 16.5% to $24.0 million primarily due to: (i) the Company's sales growth (see Revenue); (ii) improved operating efficiencies associated with the reconfiguration of the Company's deli meats production capacity (see Plant Start-up and Restructuring Charges); and (iii) the turnaround of NDSD's business (see Plant Start-up and Restructuring Charges). These increases were partially offset by lower than normal margins on certain products resulting from record high input commodity protein costs (see Gross Profit). 

The Company's adjusted EBITDA before other income for the first three quarters of 2014 as compared to the first three quarters of 2013 increased by $2.4 million or 4.6% to $56.9 million primarily due to the factors impacting the third quarter as discussed above. Similarly, these factors were partially offset by lower than normal margins on certain products resulting from record high input commodity protein costs. The impact of the record high input commodity protein costs was, however, much more severe in the first half of 2014 as compared to the third quarter of 2014 due to: (i) most of the increases in the related commodities occurred in the first half of 2014; and (ii) the delays associated with increasing selling prices, such as customer notice periods, occurred mainly in the first half of 2014.

Looking forward (see Forward Looking Statements), the Company expects its adjusted EBITDA for the last quarter of 2014 as compared to the last quarter of 2013 to show continued improvement based on:

  • Additional selling price increases being implemented in the fourth quarter of 2014 (see Gross Profit);
  • Stabilization of commodity pork markets;
  • Continued improvement in the performance of its deli meat businesses with the completion of the Deli Capacity Project (see Plant Start-up and Restructuring Costs);
  • Steady growth in a number of the Company's businesses that is expected to result from capital projects completed in 2012, 2013 and 2014. These include Stuyver's new artisan bakery, Deli Chef's new sandwich plant, Centennial Foodservice's new seafood processing facility and SK Food Group's new sandwich plant; and
  • Continued improvement in the performance of NDSD with the completion of the NDSD Reconfiguration Project (see Plant Start-up and Restructuring Costs).

Interest and other financing costs

The Company's interest and other financing costs for the third quarter of 2014 as compared to the third quarter of 2013 and for the first three quarters of 2014 as compared to the first three quarters of 2014 increased by $0.7 million and $1.9 million, respectively, primarily due to an increase in the Company's funded debt resulting from the Company's project capital expenditure initiatives.

Plant Start-up and Restructuring Costs

Plant start-up and restructuring costs consist of costs associated with the start-up of new production capacity and/or the significant restructuring of one or more of the Company's businesses. The Company expects these projects to result in significant improvements in its future earnings and cash flows.

           
Project 13 weeks
ended
 Sep 27,
2014
13 weeks
ended
Sep 28,
2013
39 weeks
ended
Sep 27,
2014
39 weeks
ended
Sep 28,
2013
Expected
Completion
Date
      
U.S. Sandwich Capacity 5,562 - 8,582 - Q4-2014
Deli Capacity - 3,869 3,449 6,360 Complete
NDSD Reconfiguration - 311 1,375 1,958 Complete
New Seafood Facility Start-up - - - 210 Complete
Other 170 12 170 183 Q4-2014
  5,732 4,192 13,576 8,711  
      

U.S. Sandwich Capacity Project

This project, which involves the reconfiguration of the Company's U.S. based sandwich production capacity including the construction of a new 180,000 square foot production facility in Columbus, OH, will provide much needed incremental sandwich production capacity as well as improved efficiencies at the Company's other U.S. sandwich plant in Reno, NV.

The first phase of the project was completed in the third quarter with the new Columbus plant commencing production in August. The second and final phase of the project, consisting of reconfiguring production between the Columbus and Reno plants to maximize efficiencies, is expected to be completed in the fourth quarter of 2014.

Deli Capacity Project

This project involved the reconfiguration of the Company's deli meats production capacity in western Canada including: (i) the shutdown of an older facility in Richmond, BC; (ii) a major realignment of a new facility in Langley, BC acquired in 2013 as part of the acquisition of Freybe Gourmet Foods; (iii) the transfer of the Langley plant's distribution to the Company's distribution centre in Surrey, BC; and (iv) the start-up of a new distribution operation in Calgary, AB.

This project, which increased the Company's deli meats production capacity and significantly improved its operating efficiencies, was completed in the second quarter of 2014.

NDSD Reconfiguration Project

This project involved the restructuring and rationalization of NDSD, the Company's direct-to-store distribution (DSD) business for the convenience store industry. The project was initiated to address the impact that a variety of factors, including the proliferation of quick serve restaurants, was having on consumer demand for food products sold through the convenience store channel.

The major elements of the initiative, which consisted mainly of streamlining NDSD's distribution infrastructure so that it could be profitable on a lower sales volume, were completed in 2013. The restructuring costs incurred in 2014 consist mainly of final employee severance payments and the write-down of inventory made obsolete by the reconfiguration. 

In the third quarter of 2014, the Company sold its NDSD business' Quebec operations to a well-established Quebec based distributor (Martel) as part of a new strategic alliance. Under this alliance:

  • Martel will combine some of its existing operations with NDSD's Quebec operations to create a stronger and more efficient direct-to-store distribution network for the Quebec convenience store market;
  • Martel will be the exclusive distributor of the Company's sandwiches and meat snacks to direct-to-store distribution customers in Quebec; and
  • Martel will source primarily all of its sandwiches and meats snacks sold to the convenience store industry from the Company.

New Seafood Facility Start-up Project

This project, which consisted of the start-up of a new seafood processing facility in Richmond, BC and the subsequent integration of a business acquired from Harbour Marine in 2013, was completed in the first quarter of 2013.

  
FREE CASH FLOW 
  
(in thousands of dollars) 52 weeks
ended
Dec 28, 2013
 39 weeks
ended
Sep 28, 2013
 39 weeks
 ended
 Sep 27, 2014
 Rolling
Four
Quarters
 
         
Cash flow from operating activities 15,156  13,787  9,444  10,813  
Changes in non-cash working capital 22,663  16,975  21,192  26,880  
Sale of redundant property 2,413  -  -  2,413  
Acquisition transaction costs 560  534  188  214  
Plant start-up and restructuring costs 12,749  8,711  13,576  17,614  
Capital maintenance expenditures (4,294 )(3,209 )(3,697 )(4,782 )
Free cash flow 49,247  36,798  40,703  53,152  
         

FORWARD LOOKING STATEMENTS

This discussion and analysis 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 5, 2014, 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.

Factors that could cause actual results to differ materially from the Company's expectations include, among other things: (i) seasonal and/or weather related fluctuations in the Company's sales; (ii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iii) changes in the cost of raw materials used in the production of the Company's products; (iv) changes in the cost of products sourced from third party manufacturers and sold through the Company's proprietary distribution networks; (v) risks associated with the Company's conversion from a publicly traded income trust to a publicly traded corporation, including related changes in Canada's income tax laws; (vi) changes in the Company's relationships with its larger customers; (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; and (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its various growth initiatives; and (xv) labour related issues including potential labour disputes with employees represented by labour unions and labour shortages. Details on these risk factors as well as other factors can be found in the Company's 2013 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking information in this document is made as of November 5, 2014 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking information in this document.

   
Premium Brands Holdings Corporation  
Consolidated Balance Sheets  
(Unaudited and in thousands of dollars)  
           
  September 27,
 2014
 December 28, 2013  September 28,
2013
 
       
Current assets:          
 Cash and cash equivalents 5,026  1,437  2,903  
 Accounts receivable 109,971  92,880  91,729  
 Inventories 134,481  108,729  114,749  
 Prepaid expenses 5,881  7,746  5,506  
 Other assets 356  358  93  
  255,715  211,150  214,980  
Capital assets 201,789  177,275  177,833  
Intangible assets 72,178  75,099  75,816  
Goodwill 169,999  168,925  167,130  
Investment in associates 9,801  7,949  8,195  
Deferred income taxes 23,738  26,697  25,633  
Other assets 3,066  3,222  4,120  
  736,286  670,317  673,707  
Current liabilities:          
 Cheques outstanding 6,495  5,689  3,977  
 Bank indebtedness -  29,466  25,946  
 Dividend payable 6,956  6,863  6,859  
 Accounts payable and accrued liabilities 112,153  94,288  102,188  
 Current portion of long-term debt 2,534  113,222  163,095  
 Current portion of convertible unsecured subordinated debentures 7,693  -  -  
 Current portion of provisions 1,168  2,219  2,994  
 Current portion of puttable interest in subsidiaries -  -  2,000  
 Other -  -  100  
  136,999  251,747  307,159  
Long-term debt 203,415  11,938  11,824  
Puttable interest in subsidiaries 15,564  14,498  14,143  
Deferred revenue 3,625  1,103  1,226  
Provisions 2,799  3,820  4,120  
Pension obligation 754  653  1,983  
  363,156  283,759  340,455  
Convertible unsecured subordinated debentures 167,193  177,057  122,042  
           
Equity attributable to shareholders:          
 Deficit (30,305 )(19,816 )(14,803 )
 Share capital 226,195  221,994  221,767  
 Equity component of convertible debentures 1,744  1,744  1,747  
 Reserves 7,693  4,929  1,822  
 Non-controlling interest 610  650  677  
  205,937  209,501  211,210  
  736,286  670,317  673,707  
       
       
   
Premium Brands Holdings Corporation  
Consolidated Statements of Operations  
(Unaudited and in thousands of dollars except per share amounts)  
              
  13 weeks ended
September 27,
 2014
 13 weeks ended
September 28,
 2013
 39 weeks ended
September 27,
 2014
 39 weeks ended
September 28,
 2013
 
         
Revenue 330,434  286,955  919,564  795,065  
Cost of goods sold 267,844  228,685  748,658  633,096  
Gross profit before depreciation and amortization 62,590  58,270  170,906  161,969  
Selling, general and administrative expenses before depreciation and amortization 38,571  37,654  114,016  107,580  
Other income -  (1,158 )(4,703 )(1,158 )
  24,019  21,774  61,593  55,547  
Depreciation of capital assets 5,215  4,586  14,411  13,014  
Amortization of intangible assets 1,113  1,092  3,340  3,272  
Amortization of other assets 1  1  4  4  
Interest and other financing costs 5,178  4,514  15,237  13,353  
Amortization of financing costs 48  84  195  238  
Acquisition transaction costs 44  62  188  534  
Change in value of puttable interest in subsidiaries 989  681  1,788  1,163  
Accretion of provisions 80  201  262  305  
Unrealized loss (gain) on foreign currency contracts (200 )500  -  200  
Unrealized loss on interest rate swap contracts -  100  -  100  
Plant start-up and restructuring costs 5,732  4,192  13,576  8,711  
Reversal of provision -  (762 )-  (762 )
Equity income in associates (79 )(381 )(138 )(376 )
Earnings before income taxes 5,898  6,904  12,730  15,791  
Provision for (recovery of) income taxes             
 Current (1,298 )1,073  (607 )2,279  
 Deferred 2,504  651  3,076  1,843  
  1,206  1,724  2,469  4,122  
Earnings 4,692  5,180  10,261  11,669  
              
Earnings (loss) for the period attributable to:             
 Shareholders 4,643  5,246  10,301  11,791  
 Non-controlling interest 49  (66 )(40 )(122 )
  4,692  5,180  10,261  11,669  
              
Earnings per share             
 Basic 0.21  0.25  0.47  0.56  
 Diluted 0.21  0.25  0.47  0.56  
              
Weighted average shares outstanding (in 000's)             
 Basic 22,115  21,234  22,027  21,057  
 Diluted 22,224  21,347  22,136  21,171  
          
          
   
Premium Brands Holdings Corporation  
Consolidated Statements of Cash Flows  
(Unaudited and in thousands of dollars)  
              
  13 weeks ended
September 27,
 2014
 13 weeks ended
September 28,
 2013
 39 weeks ended
September 27,
 2014
 39 weeks ended
September 28,
 2013
 
         
Cash flows from operating activities:             
Earnings 4,692  5,180  10,261  11,669  
 Items not involving cash:             
  Depreciation of capital assets 5,215  4,586  14,411  13,014  
  Amortization of intangible and other assets 1,114  1,093  3,344  3,276  
  Amortization of financing costs 48  84  195  238  
  Change in value of puttable interest in subsidiaries 989  681  1,788  1,163  
  Gain on disposal of capital assets (26 )(1,174 )(4,694 )(1,215 )
  Accrued interest income (6 )(6 )(17 )(19 )
  Unrealized loss (gain) on foreign currency and interest rate swap contracts (200 )600  -  300  
  Equity income in associates (79 )(381 )(138 )(376 )
  Deferred revenue 138  (149 )(36 )(397 )
  Accretion of convertible debentures, long-term debt and provisions 818  795  2,446  2,198  
  Reversal of provision -  (762 )-  (762 )
  Change in value of cash conversion option liability -  -  -  (170 )
  Deferred income taxes 2,504  651  3,076  1,843  
  15,207  11,198  30,636  30,762  
Change in non-cash working capital (18,366 )(9,484 )(21,192 )(16,975 )
  (3,159 )1,714  9,444  13,787  
Cash flows from financing activities:             
 Long-term debt - net 48,587  3,875  81,098  30,339  
 Bank indebtedness and cheques outstanding (24,268 )5,084  (28,660 )16,815  
 Dividends paid to shareholders (6,925 )(6,602 )(20,700 )(18,960 )
 Purchase of 7.00% Debentures under normal course issuer bid -  -  -  (219 )
 Other (851 )(15 )(851 )(69 )
  16,543  2,342  30,887  27,906  
Cash flows from investing activities:             
 Capital asset additions (11,637 )(5,458 )(40,820 )(12,222 )
 Business acquisitions -  (347 )(1,702 )(54,189 )
 Payments to shareholders of non-wholly owned subsidiaries (179 )(32 )(774 )(896 )
 Payment of provisions (10 )(242 )(2,336 )(742 )
 Collection of share purchase loans and notes receivable 98  32  179  124  
 Investment in associates -  -  (1,860 )(2,638 )
 Promissory note from associate -  -  -  500  
 Distribution from associate -  -  146  -  
 Net proceeds from sale and leaseback of asset -  -  10,200  25,000  
 Net proceeds from sale of other assets 29  2,452  165  2,507  
  (11,699 )(3,595 )(36,802 )(42,556 )
Increase (decrease) in cash and cash equivalents 1,685  461  3,529  (863 )
Effects of exchange on cash and cash equivalents 89  (80 )60  8  
Cash and cash equivalents - beginning of period 3,252  2,522  1,437  3,758  
Cash and cash equivalents - end of period 5,026  2,903  5,026  2,903  
         
         

Contact Information

  • For further information, please contact:

    George Paleologou
    President and CEO
    (604) 656-3100

    Will Kalutycz
    CFO
    (604) 656-3100

    www.premiumbrandsholdings.com