Second Quarter 2021 Conference Call - August 5, 2021 - Premium Brands ...
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Second Quarter 2021
Conference Call
August 5, 2021
Disclaimer
This presentation is not intended to form the basis of any investment decision and should not be considered as a recommendation by
Premium Brands Holdings Corporation (the “Company”) or any other person in relation to the Company’s business or the securities
of the Company. This presentation is not, and nothing in it should be construed as, an offer, invitation or recommendation in respect
of the securities of the Company, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, any of the
Company’s securities in any jurisdiction. Neither this presentation nor anything in it shall form the basis of any contract or
commitment. This presentation is not intended to be relied upon as advice to investors or potential investors and does not take into
account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in
consultation with a professional advisor of their choosing when deciding if an investment is appropriate.
Extraordinary Times Extraordinary Team 2
2
Forward Looking Statements
This presentation contains forward looking statements with respect to the Company, including its business operations, strategy and
financial performance and condition, proposed acquisitions and plans and objectives of or involving the Company. While management
believes that the expectations reflected in such forward looking statements are reasonable and represent the Company’s internal
expectations and belief as of the date of this presentation, there can be no assurance that such expectations will prove to be correct as
such forward looking statements involve unknown risks and uncertainties beyond the Company’s control which may cause its actual
performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed
or implied by such forward looking statements. Forward looking statements generally can be identified by the use of the words “may”,
“could”, “should”, “would”, “will”, “expect”, “intend”, “plan”, “estimate”, “project”, “anticipate”, “believe” or “continue”, or the negative thereof
or similar variations. Forward looking statements in this presentation include statements with respect to the Company’s expectations
regarding: (i) the Company’s sales ; (ii) the Company’s operational and business improvement initiatives; (iii) the Company's organic
growth; (iv) labor challenges; (v) the Company’s projected revenues and EBITDA; (vi) the Company’s acquisition pipeline; (vii) the
Company’s expectations relating to COVID-19; (viii) the Company's projected investment income; and (ix) the expected rate of return on
the Company’s acquisitions and capital expenditures.
Forward looking statements are based on a number of key expectations and assumptions made by the Company, including, without
limitation the expectations and assumptions outlined in the Company’s MD&A for the 13 and 52 weeks ended December 26, 2020, a copy
of which is filed electronically through SEDAR and is available online at www.sedar.com. Although the forward looking statements
contained in this presentation are based on what the Company’s management believes to be reasonable assumptions, the Company
cannot assure investors that actual results will be consistent with such forward looking statements.
Forward looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or
results. Factors that could cause actual results to differ materially from the Company’s expectations are outlined in the Company’s MD&A
for the 13 and 52 weeks ended December 26, 2020. Readers are cautioned that the foregoing risks and uncertainties are not exhaustive.
Forward looking statements reflect management’s current beliefs and are based on information currently available to the Company.
Unless otherwise indicated, the forward looking statements in this presentation are made as of the date of this presentation 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 presentation.
By delivery of this presentation, the Company is not making any representation or warranty, express or implied, as to the fairness,
accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. By accepting this
presentation, the recipient agrees that the Company shall not have any liability for any representation or warranty, express or implied,
contained in, or for any omission from, this presentation.
Extraordinary Times Extraordinary Team 3
3
Today’s Presenters
• George Paleologou
President & Chief Executive Officer
• Will Kalutycz
Chief Financial Officer
Extraordinary Times Extraordinary Team 4
Key Messages
• Record Q2 results despite ongoing challenges including acute commodity inflation, labor shortages and supply
chain disruptions
• Foodservice channel demand back to pre-pandemic levels while QSR channel demand is now running well ahead
• Seafood platform benefited from the return of foodservice demand in North America and delivered record growth
and EBITDA
• Clearwater continues to outperform plan and is well-positioned to deliver record results for the year
• Results driven by strong pricing and excellent cost management
• North American branding, marketing and product innovation strategies gaining traction
• Co-ordination initiatives with PB ecosystem on track
• Sandwich platform is benefiting from robust demand in the QSR and retail channels
• New capacity being considered to meet future demand
• Charcuterie assembly business benefiting from favorable consumer trends
• Labor shortages continue to be a major challenge
• Progress made on several efficiency and automation initiatives
• Acquisition activity remains very robust
• Published 2021 ESG report titled “Healthy Planet, Healthy Food, Healthy People”
Extraordinary Times Extraordinary Team 5
Acquisition Opportunities (millions of dollars except transactions)
Platform Advanced Active Early Stage Opportunity Inactive Total
# Sales # Sales # Sales # Sales # Sales # Sales
Seafood 1 130 2 90 7 1,006 4 277 5 339 19 1,842
Distribution 3 43 2 160 4 1,070 1 873 4 125 14 2,271
Protein 2 121 1 20 12 936 7 469 16 1,751 38 3,297
Sandwich - - - - 1 13 2 1,433 2 524 5 1,970
Bakery - - 2 10 3 238 2 63 4 230 11 541
Culinary 1 25 - - 1 30 5 155 - - 7 210
7 319 7 280 28 3,293 21 3,270 31 2,969 94 10,131
Extraordinary Times Extraordinary Team 6
Extraordinary Times Extraordinary Team 7
Extraordinary Times Extraordinary Team 8
Extraordinary Times Extraordinary Team 9
Extraordinary Times Extraordinary Team 10
Q2-2021 Financial Update Extraordinary Times Extraordinary Team 11
Quarter Sales Performance (millions of dollars except percentages)
Long-term targeted organic
volume growth rate (4% - 6%)
50.0%
1,400.0 1,286.3 Drivers
1,234.7
40.0% • Organic volume growth – $89.7
1,200.0 1,109.0
• COVID recovery – $84.6m
945.4 976.6
1,000.0 30.0% • Acquisitions of Allseas, Starboard,
Distribution Côte-Nord,
761.5 Confederation Freezers and
800.0
20.0% Global Gourmet – $83.7m
• Selling price inflation – $58.2m
600.0
10.0%
Challenges
400.0
• A stronger CAD, which resulted in
0.0% lower translated values for US
200.0 based businesses – $58.2m
- -10.0% Lost opportunities
2018 2019 2020 2020N 2021 2021N
• Capacity constraints
Covid Impact Revenue (LHS)
Growth rate (RHS) Organic Volume Growth rate (RHS)
Extraordinary Times Extraordinary Team 12Major Organic Growth Drivers
Seafood Distribution Protein Sandwich Bakery Culinary
• Ready lobster • Frandon capacity • US meat snack sticks • Leveraging IP and • US expansion • Global Gourmet /
procurement expansion • Italian charcuterie in North American • Stuyver’s plant Gourmet Chef
initiatives • Viandex expansion US and Canada leading capacity to expansion synergies
• CFG (aka GTA initiatives grow in the grocery, • Costco international
• US burger strategy • COVID recovery
initiative) foodservice c-store and QSR
• IMS geographical • Pro2Go snack line • US expansion
and retail initiatives channels
expansion into ON • Seafood counter
including protein and • Expresco new • Supporting legacy
• National healthcare foodservice skewers solutions including
branded product customers’ growth
strategy meal kits
strategies • Concord Chicken • Charcuterie
• Non-distributive Bites • Clearwater synergies
• New Saco facility packaging
foodservice sales of
• Maximum DSD • US fresh kabobs • COVID recovery
differentiated protein
solutions for grocers products • Expansion of DSD
• Maximum US network into central
• COVID recovery
expansion Canada
• Clearwater synergies
• Branded value-added • Lou’s RTE meals
initiatives • COVID recovery
• Allseas retail sushi
program
• National retail
seafood programs
• COVID recovery
• Clearwater synergies
Extraordinary Times Extraordinary Team 13COVID Sales Impact (millions of dollars)
Recovered COVID Sales Impact
90.9
90.0 84.6
69.3
70.0 65.5
50.0
30.0 25.4
15.3
10.0 2.9
(10.0) (7.2)
(10.1)
(30.0)
Premium Food Distribution Specialty Foods PBH Total
Foodservice Retail Total
Extraordinary Times Extraordinary Team 14COVID Sales Impact (millions of dollars)
Premium Food Distribution
20.0
-
(9.0)
(23.7) (19.2)
(31.4)
(20.0) (42.8)
(46.7)
PBH Consolidated
$
(40.0)
20.0
6.6
-
(60.0)
(20.0) (33.6)
(52.8) (45.8) (47.9)
(40.0)
(80.0)
(60.0) Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21
(132.4)
$ (80.0)
(100.0) Specialty Foods
20.0
(120.0)
15.6
(140.0) -
(9.9) (10.0)
(160.0) (16.4)
(26.6)
Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 (20.0)
$ (40.0) (85.7)
(60.0)
(80.0)
(100.0)
Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21
Extraordinary Times Extraordinary Team 15Weekly Sales Trend
120,000
100,000
80,000
$000's
60,000
40,000
20,000
-
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
1
3
5
7
9
Week #
2019 PBH Total 2020 PBH Total 2021 PBH Total
Extraordinary Times Extraordinary Team 16Revenue Trend (millions of dollars except percentages)
2010 to 2021 TTM CAGR is 22.2%
70.0%
5,000.0 4,585.6
4,269.0 4,401.8 60.0%
4,068.9
Long-term targeted
4,000.0 growth rate (6% - 8%)
Revenue guidance of 3,649.4
$4.70b to $4.85b 50.0%
3,025.8
3,000.0 40.0%
2,198.3
30.0%
1,857.5
2,000.0
1,484.5
1,221.8 20.0%
960.1 1,043.0
1,000.0 794.3
535.2 10.0%
- 0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020N 2021 TTM 2021
TTM-N
Revenue (LHS) Covid Impact Growth rate (RHS) Organic Growth rate (RHS)
Extraordinary Times Extraordinary Team 17Quarter EBITDA Performance (millions of dollars except percentages)
Positive factors
• Sales growth
140.0 12.0%
• Acquisitions, including $13.3m in
121.0 investment income from
120.0 112.2 11.0% Clearwater
107.1
• Reversal of COVID related costs
10.0%
100.0 88.2 • Production efficiency
81.1 improvements
9.0%
80.0 Negative factors
67.1
8.0% • Investment in plant, sales and
60.0 administration infrastructure to
7.0% support current and future growth
40.0 • Commodity cost inflation net of
6.0% selling price increases
• Wage inflation
20.0 5.0%
• A stronger CAD, which resulted
in lower translated values for US
- 4.0% based businesses
2018 2019 2020 2020N 2021 2021N
• Incentive based compensation
EBITDA (LHS) Covid Impact Margin (RHS)
• General cost inflation
Extraordinary Times Extraordinary Team 18Commodity Trends – Pork
Demand factors
Pork Index Chart • Reopening of economies in
9.0 North America and Asia
8.0 • Substitution
7.0 • Disposable income
6.0 • Price inflation
USD 5.0
Based Supply factors
4.0
Index • Labor shortages
Per lbs 3.0
• Low starting inventories
2.0
• Rising feed costs (lower
1.0 weights)
0.0 • China ASF recovery
week 13 week 26 week 39 week 52
Other factors
• ASF in Germany
• New supply sources
• Index is comprised of a weighted basket of the following pork products: legs, 72% trim and bellies
• Source: USDA
Extraordinary Times Extraordinary Team 19Commodity Trends – Beef
Beef Index Chart
18.0 Demand factors
• Reopening of economies in
16.0 North America and Asia
14.0 • Seasonality
USD
Based • Chinese consumer
Index 12.0 • Disposable income
Per lbs • Price inflation
10.0
Supply factors
8.0
• Labor shortages
6.0 • Droughts – US, Australia
• Lower weights
4.0
week 13 week 26 week 39 week 52 • JBS shutdown
2019 2020 2021
• Index is comprised of a weighted basket of the following beef products: striploins, top butts, inside rounds, and 50%, 85% and 90% trims
• Source: USDA
Extraordinary Times Extraordinary Team 20Commodity Trends – Lobster
Lobster Index Chart
35.0
Demand factors
30.0 • Reopening of economies
in North America and
25.0 Asia
USD • Low starting inventories
Based (processed products)
20.0
Index
• Disposable income
Per lbs
15.0 • Price inflation
Supply factors
10.0 • Strong spring landings in
Canada
5.0
week 13 week 26 week 39 week 52
2019 2020 2021
• Index is comprised of a weighted basket of the following lobster products: 4-5oz tails, claws and knuckles
• Source: Urner Barry
Extraordinary Times Extraordinary Team 21Commodity Trends – Salmon
Canadian Whole Atlantic Salmon Index Chart
6.0
5.0
CAD
Based
Index Per 4.0
lbs
3.0 Demand factors
• Reopening of economies in
2.0 North America and Asia
• Disposable income
• Index is comprised of following salmon products: west coast Atlantic, 12-14 pound
• Source: Urner Barry Supply factors
Chilean Salmon Index Chart • West coast shutdowns
8.0 • Chilean algae and labor
7.0 issues
• Air freight challenges
6.0
CAD
Based 5.0
Index Per
lbs 4.0
3.0
2.0
week 13 week 26 week 39 week 52
2019 2020 2021
• Index is comprised of following salmon products: farmed, fillet, fresh, Chile Atl.,D-Trim, FOB Miami,2-3 lbs.
• Source: Urner Barry
Extraordinary Times Extraordinary Team 22EBITDA Trend (millions of dollars except percentages)
2010 to 2021 TTM CAGR is 23.2% (Pre IFRS-16: 21.8%) 12.0%
500.0
11.0%
413.6
10.0%
400.0 369.6 375.9
EBITDA guidance
of 9% margin 312.6 9.0%
307.7
300.0 280.2
8.0%
190.2
200.0 7.0%
154.8
111.6 6.0%
100.0 69.3 77.6
66.8
54.9
42.0 5.0%
- 4.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020N 2021 2021
TTM TTM-N
EBITDA (LHS) IFRS-16 impact (LHS) Covid Impact Margin (RHS)
Extraordinary Times Extraordinary Team 23Quarter Adjusted Earning Performance
(millions of dollars except per share amounts and percentages)
Positive factors
• EBITDA growth
Negative factors
• Increased normalized income taxes
• Increased amortization of right of use
70.0 assets and accretion of lease obligations
60.1 $1.40 primarily due to Confederation sale &
60.0 53.5 leaseback
$1.20
50.0 45.9 Other considerations
$1.00 • EPS is still being impacted by a
38.4 38.5 conservative balance sheet resulting from
40.0
$0.80 recent equity raises
30.0 Adjusted earnings is based on net earnings
$0.60
21.2 adjusted on a net of taxes basis for the
20.0 following items
$0.40
• Acquisition costs
10.0 $0.20 • Accretion on contingent consideration
• Puttable interest
- $-
• Amortization of intangibles relating to
2018 2019 2020 2020N 2021 2021N
acquisitions (customer names)
Adjusted Earnings (LHS) Covid impact (LHS) Adjusted EPS (RHS) • Restructuring costs
• Equity losses / earnings
• Change in fair value of option liabilities
relating to convertible debentures
• Unusual one-time tax and other gains /
losses
Extraordinary Times Extraordinary Team 24Clearwater Results (millions of dollars)
Q2-2021 % Q2-2020 %
Sales Impacts
Sales 138.9 100.0% 106.0 100.0%
• Positive: reopening of economies in
Gross profit 41.2 29.7% 23.7 22.4% North America and Asia (China in
SG&A 13.2 9.5% 9.4 8.9% particular) which drove higher volumes
and prices
EBITDA 28.0 20.2% 14.3 13.5%
Depreciation 10.4 8.0 • Negative: stronger CAD relative to the
Amortization 1.9 0.9 USD
Interest - senior 2.5 8.1 • Negative: decline in whelk exports
Non-controlling interest - 1.1
Unrealized FX (4.2) (12.5)
Other (0.1) (1.0) EBITDA Impacts
17.5 9.7
• Positive: organic growth
Interest – s/h 11.6 - • Positive: selling price inflation
Management & quota fees 6.3 -
Acquisition costs 0.7 - • Positive: operational efficiencies
Taxes (3.6) (0.8) • Negative: stronger Canadian dollar
Net earnings (loss) 2.5 10.5 • Negative: higher shore prices for
Pre-close earnings - 10.5 procured products
2.5 - • Negative: higher incentive
Ownership 50.0% - compensation accruals
Equity pick up 1.2 -
Extraordinary Times Extraordinary Team 25Capital Allocations (in millions of dollars except percentages)
Capital
Group Investment Expected IRR
Allocation
During the Quarter
Acquired C.H. Rich Distribution 1.7 1.7
Investment in REIT (recent sale & leaseback) Corporate 16.5 16.5
Piller’s Brantford expansion Protein - 5.4
50,000 sf expansion of Hempler’s Ferndale plant Protein US25.7 1.4
Oberto smokehouse expansion Protein US4.7 0.5
Oberto plant improvement projects Protein - 0.2
>15%
Concord Montreal cooking (oven) line Protein - 1.2
Two Gen 3 automated sandwich lines Sandwich US22.9 2.7
Buddy’s plant expansion Sandwich US11.9 1.3
Stuyver’s expansion Bakery - 2.6
Smaller project capex Cons - 10.1
Total in CAD – based on 1.26 exchange rate 100.4 43.6
Subsequent to the Quarter
Acquired Mermax Distribution -
110.1 >15%
Signed purchase agreement for Maid-Rite – subject to consents Protein -
Year-To-Date
931.5 725.5 >15%
Extraordinary Times Extraordinary Team 26Liquidity (millions of dollars except ratios)
1,020.0 5.5
Top end of targeted Q2-2021:
total debt to
920.0 5.0 • Completed sale & leaseback
EBITDA ratio
resulting in $150.0m in net
820.0 4.5 proceeds
Q1-2021:
720.0 4.0 • Increased senior credit facility
Top end of targeted
by $200m to $1.2b
senior debt to
620.0 EBITDA ratio 3.5
Q4-2020:
• $287.7m share issuances at
520.0 3.0
$97.55 per share
420.0 2.5 Q3-2020:
• $150.0m convertible debenture
320.0 2.0 offering – 7 year maturity,
$142.40 conversion price
220.0 1.5 • $172.5m in share issuances at
$86.30 per share
• Redemption of $86.3m in
120.0 1.0
4.65% debentures – $80.8m
was converted at $85.60 per
20.0 0.5 share
Available Credit (LHS) Total Debt to EBITDA (RHS) Senior Debt to EBITDA (RHS)
Extraordinary Times Extraordinary Team 27Free Cash Flow (millions of dollars except per share amounts and percentages)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 TTM 2021
Payout ratio 106.4% 77.7% 69.6% 70.6% 65.2% 59.4% 53.0% 53.9% 48.4% 43.2% 36.6% 38.5% 38.1% 43.1% 48.7% 43.6%
Dividend per share $1.18 $1.18 $1.18 $1.18 $1.18 $1.18 $1.18 $1.23 $1.25 $1.38 $1.52 $1.68 $1.90 $2.10 $2.31 $2.43 $2.54
Dividend increase - - - - - - - 4.2% - 10.4% 10.1% 10.5% 13.1% 10.5% 10.1% 10.0% 10.0%
Free cash / share 1.37 1.56 1.71 1.62 1.81 2.02 2.23 2.32 2.60 3.32 4.22 4.41 5.08 4.97 4.87 5.79
$9.00
240.0
220.0 $8.00
200.0 • $626.0m in declared dividends since July 2005
$7.00
• 2006 to 2021TTM FCF CAGR is 19.8%
180.0
• 2006 to 2021TTM FCF / share CAGR is 10.5%
$6.00
160.0
140.0 $5.00
120.0
$4.00
100.0
80.0 $3.00
60.0 $2.00
40.0
$1.00
20.0
- $0.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
TTM
Free Cash Flow (LHS) Dividend per share (RHS) Free Cash Flow per share (RHS)
Extraordinary Times Extraordinary Team 28Questions Extraordinary Times Extraordinary Team 29
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