Q2 2020 Premium Brands Holdings Corp Earnings Call
Please standby.
Good day, ladies and gentlemen, and welcome to the premium brands Holdings Corporation's second quarter 2020 earnings call. As a reminder, this call is being recorded.
This time, all participants are any listen only mode. Following the presentation, we will conduct a question and answer session.
That time for just contrast to press Star one to register for question.
First sisters during the call today, Please press star zero on your telephone.
Our speakers will be George Kelly logo, CEO, and president of premium brands and locally CFO of premium brand. It is now my pleasure to introduce your host George Kelly local. Please go ahead, Sir Thanks, Lisa and good morning, everyone welcome to our 2022nd quarter Conference call.
I would like to start today's call by thanking my 9000 could be associates.
Continued to do an amazing job everyday and every week producing the suits needed to feed the nourish our fellow citizens.
I feel very privileged to have such a great and dedicated group.
Their commitment to the cards and their hard work and dedication during these uncertain in volatile times is greatly appreciate it.
Turning to our results our second quarter numbers for a satisfactory given to carve it 19 related disruptions to our business.
Did not fully reflect the many reasons. We're so excited about our future as they did not tell the story.
Despite the many challenges we face to in the quarter due to the carbon 19 pandemic. We remain excited this ever bought a business and are encouraged by the momentum we're taking it to the third quarter driven by the reopening of the economy and the return to some level of normalcy.
I will now turn the presentation over to our CFO will conclude itch, who will review our financial results for the quarter after which I will make a few brief comments followed by chewing well.
Thanks, George and good morning, everyone before discussing our results for the quarter I would like to caution you that to the extent, we make forward looking statements during our presentation, our forecasts and assumptions are subject to change.
Actual results May vary please see our 2019.
Second quarter at 2020.
Mdna filings spoke of which can be found on SEDAR website, www dot seater dot com for details on some of the factors that could cause actual results to differ from our current expectations.
Turning to our results.
Revenue for the core grew by $31.2 million for 3.3% to a record $976.6 million. Despite our company facing their most challenging operating environment in its history.
The increase was driven by approximately $93 million, some organic volume growth in certain areas of our business.
Business acquisitions, which accounted for $30 million at the increase $25 million in selling price inflation and $15 million in exchange related inflation.
These factors were partially offset by approximately $132 million in cold in 19 related sales impacts.
The $93 million in organic volume growth, which was driven by new customer initiatives in the seafood and sandwich categories as well as successful new product launches translates to a growth rate of 9.8%.
This is in line with the growth rates of 13.8% and 7.4% in the first quarter. This year and the fourth quarter last year, respectively, and above our long term targeted range of 4% to 6%.
The 132 million dollar Kobin 19 sales impact related mainly to the partial or full shutdown of a number of our customers operating in the food service and QSR channels.
Partially offset by unusually high demand for certain products in the retail channel.
Our adjusted EBITDA for the quarter fell to $67.1 million from 88.2 million in the second quarter 2019, due to cold at 19 related issues, mainly be hundred 32 million dollar sales impact and $10.9 million.
Net transitory costs, which is after $3.5 million in coated 19 related marketing and travel cost savings.
These items were partially offset by some general margin expansion, resulting from a combination of past selling price increases inventory strategies used to hedge gains commodity cost volatility and declines in the cost of certain sea food commodities.
Overall, the impact is Colgate 19 related factors on our adjusted EBITDA was most severe in April with our May and June results, each showing subs substantial sequential improvement.
Our adjusted EBITDA margin was 6.9% versus 9.3% in the second quarter 2019.
The decrease of 240 basis points was driven by a variety of factors, including one.
Net loss of sales volume associated with the cobot 19 sales impacts.
To the 10.9 million in net transitory cobot 19 related costs and three sales mix changes as a portion of the cobot 19 related impact on our foodservice and QSR channel sales was partially offset by the effective businesses pursuing new but lower margin sales opportunities.
[music].
The general margin expansion I outlined earlier helped to lessen the impact of these factors.
Our adjusted earnings per share for the quarter decreased to 57 cents per share from $1.10 per share in the second quarter at night 2019, due to the cold and 19 factors that impacted our adjusted EBITDA.
In terms of raw outlook for 2020, while we continued to see steady improvement in the performance and stability of our businesses, we're not providing any sales or adjusted EBITDA guidance. At this time based on their still being considerable uncertainty the certainty about what the impacts of coated 19 will be.
For the remainder of the year, we do however, based on current circumstances expect the current trends of improvement to continue subject to the normal seasonality of our businesses.
Despite the near term uncertainty remains we remain confident in meeting or exceeding our 2023 sales and adjusted EBITDA targets of $6 billion and $600 million respectively.
So this and we expect substantially all of the impacts of coven 19 to be transitory.
Organic growth initiatives, largely remain intact, albeit with some delays and many of our businesses have develop additional new sales opportunities as well as strengthens customer and supplier relationships as a result of the crisis.
Furthermore, we are now resuming our acquisition and Capex growth strategies, both of which had been temporarily put on hold due to pandemic related concerns.
Turning to our financial position, we went into the Cobot 19 crisis with a solid financial position and continue to maintain the pain, a conservative balance sheet and strong liquidity.
Our senior debt to adjusted EBITDA ratio at the ended the quarter was 2.7 to one which is within our long term target range of 2.5 to one to 3.0 to one and we had approximately $380 million unutilized credit capacity.
Subsequent to the quarter, we completed a combined common share and convertible debenture offering that resulted in net proceeds of $308.7 million. This increased our unutilized credit capacity to approximately $690 million reduced our pro forma Q2 senior debt to adjusted.
EBITDA ratio to 1.5 to one and position us to resume our acquisition and Capex growth strategies, while maintaining a very conservative balance sheet.
In terms of capital expenditures during the quarter. We spent 19.5 million on a variety of capital projects that were either relatively small or initiated prior to the coal that 19 crisis, including a 41000 square foot expansion of our artist and bakery in Langley BCP.
Several meat snack capacity expansions, adding additional Chicago to retreat pack capacity at our renal sandwich plant and the installation of automated production lines at our Phoenix Sandwich plant.
With the resumption of our Capex based growth strategy. We also announced that we are in the process of assessing five major capital projects with a combined preliminary estimated cost of $87 million.
Subject to these projects meeting our minimum internal rate of return threshold of 15% on an after tax unlevered basis, we expect them to commence over the next two quarters and to be completed between the fourth quarter of 2021, and the fourth quarter of 2022.
Turning to dividends during the quarter, we declared a dividend of $21.7 million.
Were 57.75 cents per share, which on an annualized basis works out to $2.31 per share.
Our free cash flow for the trailing 12 months was $161.3 million as compared to dividends of $82.7 million, resulting in a payout ratio of 51.3%.
While our payout ratio was up relative to 38% to 43% range than it has been at in recent years.
We were pleased that it was still near our general target of 15%. Despite facing one of the most challenging economic environments in recent history.
Ill pass the presentation back to George Thank you will.
We began to the quarter with the economy in full lockdown with many of our foodservice in QSR customers, having to shut down their businesses.
Rather than panicking reacted to this extreme situation based on our core values and are focused on creating long term sustainable value.
We have voided mass layoffs and cost cutting as much as possible and instead prioritize the health and safety of our people stay close to our customers and suppliers and helps support there well being of our communities around us.
While many of our business has suffered greatly financially during April we remain steadfast in our belief that demand with return and debt.
And that we needed to be well positioned to meet our customer needs when it did.
Sure enough demand came back strongly in may and virtually overnight many of our businesses saw their plans go from being idle to full capacity with their staff working long hours to meet customer needs.
This trend continued into June with several of our businesses not only meeting their budgets, but also delivering record results.
We're also very pleased to see progress once again being made on a number of key growth initiatives.
Including.
In the category, so fresh and value added seafood artisan sandwiches meat snacks premium drag to it means and cook proteins.
Our overall sales growth for the quarter. Despite April being the most challenging months our business has ever experienced its indicative of the momentum we gains for May and June.
We continue to disrupt a traditional food space catering to the needs and wants of health conscious consumers for willing to pay for quality and great taste.
Our focus on quality transparency innovation and social values is resonating with an increasing number of consumers and driving demand for our products.
We believe that covered 19 will accelerate this trend as more people realize that a healthy diet. This important to maintain a strong immune system and defending against diseases such as covered 19th.
Looking past Cavatt 19, I have no doubt that our company will emerge from this crisis stronger and more resilient as we're uniquely positioned with our decentralized and to print aerial culture.
Which pushes decision making to the front lines are unique ecosystem, which provides support and resources and allows our businesses to focus on the long term and our diversified business portfolio.
Our acquisition pipeline also remains especially robust and we expect to execute a number of transactions during the second half of the year.
Covered 19 as motivated many more successful flitter into printers to reach out to join our unique ecosystem.
We are delighted and honored to be able to offer them ownership solutions that preserve their operational independence, while providing them access to our extensive resources and best in class services.
We'll now turn it back to Lisa for the Q on a segment of the presentation Lisa.
Thank you if you would like to ask a question. Please press star one on your telephone keypad. As a reminder, if you are on a speakerphone. Please make sure your mute options turned off to allow your signal to reach our equipment and again that is star one.
We'll take our first question from Johnson pilot CDAI BC.
Thanks, Good afternoon guys.
You mentioned in the press release, you lost sales in the Sandwich platform, but you success, we pivoted to getting new customers.
And those treatments and lower margins, so I guess two parts.
Are these relationships are clients you plan to maintain or do you view that the stock absolution.
The way you can you get the margins on those products to where do you like.
Yes.
Yes, the answer is obviously.
We believe that some of the bit the business will be sustainable over the long term.
Some of that business, the new business was lower margin only because.
Effectively we went out then pursued the business.
On an urgent basis.
As QSR gets back on track, obviously, we're prioritizing our incumbent customers.
But but we do plan to.
Continue with some of the business that week we.
We pivoted to but not all of it.
Right now.
The fact is that we probably got a little more demand than we have the ability to supply given some of the labor challenges that we still have in certain facilities.
Particularly in the us.
Okay. That's helpful. Thanks, and then on your food service customers with roughly a third of overall sales from last year I think split between.
40 to 60 between specialty and distribution, but but those foodservice sales you have a number of what percent would come from quick service versus casual are fine dining just because it does seem like the farmers really outperformed this environment.
Yes, the quick service sales John will all be primarily in the special specialty Foods segment foodservice sales, that's mainly QSR.
Got it okay.
Absent for me.
Yes. So if you look at that chart in the eight in the that's where you see that breakdown rate.
Got it okay. Thanks, and then last one from me you mentioned April being the most challenging once you've seen and then.
Notable improvement in May and June can you give us incentive how organic volumes performs throughout the quarter by month than it is it fair to say that July has said seed incremental improvements versus what you saw in June.
Yes so.
The best way to illustrate that John is on our website. There is a updated investor presentation, We show our weekly sales.
Year over year flat year over year, and so you really see the trend you saw a dramatic decline through April and then.
Sort of hitting a trough at the end of April and since then we've seen a steady improvement.
For the last 11 weeks, we've been consistently sort of on a year over year basis similar to levels, we where it started in the first quarter.
And Thats continuing through July.
Okay got it that's very helpful. Thanks, I'll get back thank you.
Sure.
Well take our next question from George domain with Scotiabank.
Hi, guys. Congrats on everybody border on just a follow up on the trend of July improvement.
Can you guys, maybe talk about what areas of strength, you've seen what pockets you see stretched in terms of July present, july's through the same store as the QSR and talking about.
Yeah, Hi, George.
As we've mentioned earlier, George we began to see a pickup in QSR QSR was effectively shut down in April.
It's a big channel for us for many many reasons. So we began to see a little bit a pickup in.
In in May, which share, which helped our revenue and sales numbers of course, but but June was mostly back to normal.
Most of QSR had had opened.
By then or or you know up to 80 or 90% El pen. So we had a significant.
Pickup in demand that through the QSR channel.
QSR for us did better than we anticipated I think there was a lot of pent up demand.
So and we're seeing those trends continue into July and August.
Okay.
No child has been recent commentary.
I guess from struggles with the breakfast category I mean, you saw with Dunkin' salt with Mcdonalds.
Probably because the stay at home, but I'm. Just wondering are you guys do not impact at all and you're not the part and sandwich platform.
You should think that every day parts or any commentary there.
Our.
Demand from the QSR channeling in general George and again, we would do deal with many many major banners is has been very strong for us in many many cases.
Based on the demand that we see we're actually shorting that channel today, which is amazing to us in terms of how far we've come from.
From a pill.
You know again I can only comment on what we see in terms of demand side, but demand from the QSR channel.
As a very strong I mean back to your original question. The other channels that suffered greatly in April of course with.
The complete locked down of the economy was the C store channel in both Canada into us and end with everybody or almost everybody, taking driving holidays as opposed to fly and holidays, where we're seeing a lot of pickup in demand in the indices store channel in North America.
That's helpful. It's one off my Mic can you maybe.
Q2 part question can you maybe give us your outlook in the input cost inflation environment I know, it's been pretty active in the first half, but can you give us your outlook on the second now.
And how much you're thinking about 25 million.
He agrees that we took.
Given that some of the place you came off how much is about.
Hold on to the backhouse.
Thanks.
Well I'm going to add to your second question first George in terms of the inflation in the quarter. A good portion of that was the price increases we put through back at the end of Q2, beginning in Q3 last year in response to the staff issues that.
Specific to the port complex and and what happened in China. So.
So those are those are sustainable those are long term changes that were made in and has been maintained and as we go into the back half the year will ask Jeff and issues around that and the impact it had on commodities really kind of went away in the first half of the year or the second quarter anyways. So so were.
Im very conservative are concerned about that emerging again in the quarter. So we intend to maintain those selling price increases, but and year over year basis, you're not going to see that inflationary impact because those legacy those those price increases were in Q3 last year.
In terms of your first what was your first question sorry George.
Just a general view on you see an inflation in the back up at all I could see but the baby care commodity cost yes. So.
I get a similar to an earlier question I'd refer you to our Investor update there is a great slide in there that shows what happened in the two or a bigger commodity complexes pork and beef what happened in those over the last quarter and what an incredibly volatile challenging environment.
It was during the quarter those have come back there is sort of tracking back in line or even below 2019 levels. So that's the current trend.
But the big subject in the Big unknown is how is south Korean and Chinese demand for North American protein going to play out in the back of the year now that's really what's going to drive inflation, depending on what happens there.
Okay got it great. Thanks represents good luck.
Thank you George Thanks, Jordan.
Our next question comes from David Neumann working hard can you. Please go ahead.
Good morning, guys.
Hey, David Good morning to southern results overall, a very impressive.
Just one last question on on the topline there were some programs I think you use sort of put on I know that we're in a throws of almost being launched a I don't think unlike some of the rayburn's programs and Duncan and a few other ones are are the ones that were put on hold our they back operating in.
That contributed as well into the June period in July.
Yes, so again a lot of these launches are taking place as we speak David.
A lot of them were delayed mainly because of our inability to visit customers and to the demos and due to do promotions and all those things a lot of these things.
And on hold because everybody was working out of their homes, but we are seeing a lot of activity now we've launched a number of programs into both C store flop and and we will be launching.
And number of initiatives.
In the near future. So there's a lot of activity now within that group a lot of innovation.
And we're happy to see some traction with regards to.
Customers, taking meetings and and obviously given us.
Oh opportunities.
Great and further and further to that gave it in terms of your question on how much of an impact was in the quarter a lot of that stuff did not impacted quarter a bit the organic growth that we saw in the second quarter was driven by a lot of initiatives. We've been talking about for the last couple of quarters, you know, what we've been doing with their seafood businesses, particularly.
In the us.
Some new listings in Canada in the sea food category, some some new products launched in the Cook protein.
A lot of things that had been in the works and contributing to our growth going into the quarter as well.
Okay, and so did that.
I would expect those to serve contributing kind of any a second quarter second half kind of third quarter second half kind of thing.
Okay. That's it for a new stuff that George is talking about right. Okay any children to margins, obviously hold on my phone.
[music].
You never get up right [laughter], just able to marches on specialty foods, obviously, a little more in lower relative margins and frankly I understandable. He had to replace some of the activity levels as you move into the second half here and.
And specialty foods I'm thinking on how how are the margin playing out.
As these new programs kick in as you get sort of contribution margin on a fixed cost absorption on that what is sort of a near term and long term outlook on so the margins overall.
Yes, I'll just start.
David by saying that you have to remember that.
Coal was you know was not a trick months in every respect effectively.
A lot of our customers who are in a complete locked down and.
We made decisions based on trying to keep our employees busy we took on businesses that were low margin are relatively low margin again and you know their results in April our are effectively skewing our numbers.
As we get back to normal you will see some normality back to the the numbers, but I will pass it back to will to give you a more complete answer okay.
I do we do expect to see some improvement like George says because April was set to Chen challenging months. So some improvement in the back half, but the reality is that there's still.
Key channels that are back to normal so that's impacting sales mix, particularly in food service some of our airline business.
And then also cobot costs, we do expect those to continue on for at least the third quarter, possibly the fourth and we'll see how that plays so we don't expect to get back to sort of original expectations, but we do expect improvement in the second half relative to the second quarter.
Okay, and then last one from me guys. Just on me on the PFP side same same question I think it kind of alluded to the answer there anyway, well, but I wish I was really kind of a remarkable resilience to this business and it didnt remarkably well in the face of full service restaurants being shutdown in them. They also so it's a very surprising and.
Three positive result, so just in terms of attribution between there was like three buckets that you sort of identified there the lower teeth in commodity costs, some favorable inventory positions and and some procurement benefits are also.
How what was just live action fusion, there and how sustainable might that be.
Certainly well it some of those impacts, particularly like on the sea food deflation, which is which is help helped offset a lot of those costs.
Certainly as we continue to experience the the channels that are being impacted continuing to mid Pac by coal, but we do expect those benefits to sustain because they're somewhat related for example to key commodity salmon and lobsters.
Which were favorably helping on the commodity cost side is because there are so focused on food service. So until we start seeing our foodservice coming back we should continue to see the pickup on the other side dare to some extent.
The inventory hedging.
That's a tough one you know when a.
A discussion earlier with George so much is predicated upon what how protein.
Complex plays out in the second half with SAP.
We're still we're still fairly heavy on inventory and well positioned I'm coming out of the second quarter. So that that should continue to allow us to whether any spikes or.
Normality east, but the reality is today the market is somewhat settled in and a little more.
On a year over year basis comp for lack of a better term and then how long that how long do you have an inventory kind of exhaustive the exhaust inventory they built up.
Well, it's it's kind of an ongoing process. So of you've got a buffer so when they're spikes in the price you you don't need to go into the market and the rally the market's constantly fluctuating in this constant change and so you sort of you use the dips to try and replenish your hedges and you use your long positions.
Whether the spikes.
It's a it's a function of how long the spike goes on whether we can whether they're not in how low the gifts go in terms of how much we replenish the inventory. So it's not a sort of a simple we have X amount to see us through two X date.
Got it and last one guys I just squeeze it in here it does trump of providing support to the Maine lobster industry healthy guys. I mean, it's obvious but you know in the absence of an export market lease supporting that of local lobster marketing and name, where I think 80% of might lobsters.
Procured in U.S.
Not in material event or issue for us that David Okay. Very good thanks, guys Great result.
Thanks, David Thanks, David.
Well take our next question from Todd Cohen with RBC capital markets.
Thanks, and good afternoon, maybe just following up on the commentary around the premium food distribution segment and the results. There I guess based on her comments should we read into it that this was maybe largely associated with.
Food and the lobster business and.
Probably more of a U.S. kinda, driven oh performance or how would you attribute kinda them just trying to figure out kind of big products or the type of customer that helped to deliver these results are shut down here.
Yes, again first of all by had I would say would be both Canada into us I can't say enough about our.
Distribution group and how they have gone out and pivoted and found new customers.
In both Canada into Us Weve.
Weve retained.
A couple of two very large shot customers, which we believe.
To be to be sustainable you have to remember and the fact that back to above what we've gone through some.
Some food manufacturer as we're able to keep.
Service levels very high and some some have had issues and.
No I can't say enough about the.
Group and.
How well theyve executed in terms of a.
Jumping in what they would they were opportunities and as a result, they've they've retain some.
I'm very large customers, which we believe is business that will be sustainable.
And that is on kind of the lots trend seen foodsaver broadly for PMT.
Broadly for foot broadly for the distribution group.
Okay, and then led but definitely weighted to the sea food side somewhat but but also it's interesting is.
In terms of the margin performance that was definitely across the segments.
And we know our hedging strategies helped a lot with.
Margins in the more traditional protein categories, while the benefits I talked about earlier in terms of salmon in lobster helped our seafood margins. So the margin performance was driven right across the business and you have to remember behalf that we've we've made significant capital investments in.
That group over the last couple of years and.
So we were able we had sufficient capacity to take on new customers, which is a significant significant.
Okay, and then just given that these are new customers are you seeing the trends for this segment also sort of continue through Q3.
And maybe not at these levels process, but still I guess.
Improvement continuing.
Yes, so so far so good.
Okay, and then on the specialty food side, the commentary around sandwiches or I guess should we read that to me that you know as of Q3. This time, which is kinda who is now up your review or is it. The segment is up Baton Rouge sandwiches are directionally better than where there were a few months ago.
There are currently running at levels that are above last years.
Okay and that they have driven by some of the.
They had challenges in the second quarter.
It was not a great quarter for them things improved.
In May and June as we as we've stated and they continue to improve in.
Into July August and as we speak today, they're running ahead of last year.
Okay last one for me could you maybe for what kind of similar commentary on.
The for the composition of the quarter across meat snacks and belly needs. How did those trends change more most of the categories falling the similar trajectory at this point.
Our protein group, which is skewed mostly towards.
Retail and club.
How did a very good quarter and continues to do extremely well.
You know a outside of some capacity challenges, we probably could have delivered better better numbers, even though it's a lot of great demand for some of our.
Unique value added.
Meat products, including meat snacks dry cured me.
And of course of course Cook proteins.
Thank you.
Well take our next question from the Shreedhar with National Bank.
Hi, Thanks for taking my question.
There are some food you alluded to earlier and I missed the cold weather related costs related to.
Thank you bonuses and a safety measures so on and so forth did you say that sticks in its entirety for for that could be for the next quarters here.
Well it will it won't be to the extent it was in the second quarter because.
Things like the thank you bonuses those will start some businesses tailing off.
There was sort of fixed costs us putting in safety processes in the facilities there were inefficiencies associated with the shutdown and startup of certain facility. So there were a lot of things that happened in the second quarter that will not continue but but a portion of those costs will so thank you bonuses are run.
Going into the third quarter for some businesses.
We have continuing.
Some inefficiencies with with some labor instability, particularly the U.S., where where we're having some problem sourcing labor. So some will continue but it won't be to the extent as it wasn't the second quarter.
Okay.
[music].
Just moving on here to the demand to be on.
The question at the demand through the quarter, you know I would like many or earn I'm surprised by just how quickly things turns and just wondering.
Management takes a few steps back.
Would they consider this demand to set any impact from good work from home dynamic and perhaps put barbecueing at home more more than usual in this season.
Stimulus is going to factor. This these are softer than men do CBS Youssef completing a wait and subsequent.
Subsequent periods.
Yes, it's an interesting question Michelle you know when when we took our partner sales and tried to analyze okay. What was the impact of Covance on our business.
One of the areas, we had to delve into was the retail category because we definitely saw some unusual strength there driven by by like you say stay at home behavior, but also driven by the weather because if you recall last year one of the issues that are protein business struggled with.
Was really poor weather in eastern Canada and versus this year, it's been fantastic weather. So we had to make a call of how much was weather related how much was sort of this unusual demand and I think we aired on the side of conservatism.
Much we put into organic growth versus the cobot impact, but all all that was taking into account. When we came up with that differentiation between what was organic and what was cove at related.
Got it okay.
And just again switching gears here.
In the media supported that.
Retailers are looking to produce.
And as I knew feeds on suppliers.
Those things tend to represent across the industry when they're announced so wondering if you see that come into your business in the sense a pressure that we should have foreseen.
Hi, Ken it's typical of course of the normal dealing send back and forth relationships with the different customers I mean, that's that's my only comment today.
Okay. Thank you for the coming.
Thank you Michelle.
Well take our next question from Stephen Macleod with BMO capital markets.
Thank you good afternoon guys.
Yes Stephen.
Hi, I'm sorry, if you gave some of those color already but I just wanted to get a sense of where you saw from an end market perspective, some relative pockets of strength and weakness through the quarter and where we are today.
Well as I mentioned earlier.
We've QSR was nonexistent in April and began to pick up in a in.
In May end up by June.
To our surprise it was back to normal.
That's what we saw I mean this is based on on on our demand.
You know surprisingly, we were shorting customers some customers, saying enjoy some QSR customers in June.
So we were surprised you know from our own perspective, we were.
Prepared for a very slow.
Second quarter.
Effectively that turned out to be April one month and in May and June were.
Relatively close to normal outside of Will's comments around startup in.
And getting organized again to to meet demand.
Also in terms of what I said earlier the C store channel was extremely slow in April as people stayed at home and.
And isolated at the at home.
He store channel was very slow and as soon as school.
Closed.
And you know people decided to take driving holidays as compared to a and local local staycations and those type of things.
This flying holidays.
We began to see.
It picked up in C store demand as well and you know I would say that club store demand remained strong throughout the entire quarter.
Great. Thank you and then you talked about the acquisition pipeline.
Any more color you can give around sort of what kind of target you're looking for and is there way to quantify like what the acquisition pipeline looks like today versus what it looked like sort of pre called it.
Yeah, It's if I mentioned didn't buy in my prepared comments, Steve and it's it's extremely robust we have.
Many acquisitions into pipeline as we've.
Stated earlier, we put everything on hold effectively.
So we're really backed up you know we have a very large M&A team here.
And they're rearing to go and you know we will have a very very.
Busy second half the year.
Completing transactions.
Also in terms or what I said in my prepared remarks.
Covered 19, hi in our view has has motivated even more successful put foot interpreters to say listen this is Scott cost for this is difficult.
Maybe I want to join up with that with premium brands have the benefits of joining the PB ecosystem.
And I'll still run my business. So we are extremely busy we're in a lot of discussions and we have a lot on the go.
Well that's great. Thank you very much.
Thanks, Steve Steve.
As a reminder, everyone that is star one to ask a question well take our next question from Derek will start with TD Securities.
Yes, Thanks, and good afternoon, guys again.
First of course, but congrats on managing that I.
I just have one question most my questions but.
Then if you could comment maybe on.
Really the pot pie.
Thank you all that.
Just wondering if you've had any I guess pushed out.
Most more what recently.
Yes, I would say Derek that that we are in very very unusual circumstances and again my comment. This is really in terms of in North American market right clearly certain channels have.
A lot of demand, there's a lot of demand.
By consumers to shop in certain channels. So.
The same time, you've got an industry the food industry in particular.
So having a tremendous amount of labor issues related to carve it 19.
So so so you know a lot of customers are trying to keep the shelves full.
So it's really an environment, where you know we're doing our best too.
No I feel orders and.
And run our plants as efficiently as possible.
In many cases many.
Manufacturers have very high absentee issues.
They are not able to meet orders and we.
We have to step in anyway. It's the these are unusual at times and.
No I you know PK, we I would say that everybody's rational to the extent that they serve run up in protein prices like there was with beef prices.
Our customers understand because they have to pay extra as well for some of their fresh beef or pork needs as well so.
It's a very different environment, where really it's about producing it's about maintaining business continuity.
And it's about making sure that the shelves are full in a in a difficult operating environment in general.
Okay. That's it for me thanks.
Thank you thanks, Sir.
We have a follow up question, David Neumann working hard Inc. Please go ahead.
Hi, guys just a quick follow up here if you look at the environment George in terms of the the obviously the challenge is the primary processing and died through this environment.
Do you think there was some permanent long term changes here, where youre business model might resonate more and be able to operate more nimbly in an environment, where we saw the challenges. These guys say and tied into that Ari your capex that you're putting in 87 million.
Is it because you use that as an opportunity in this environment.
I think the fact that David is that.
Whenever or wherever people congregated, because they were essential services effectively.
There were covered 19 related issues, so I wouldnt, even though the primary industry got a Lotta press every company that that remained open it's on essentially industry of course, including hospitals in restaurants that had issues with covered 19, so so I.
I don't I don't anticipate that there'll be any permanent.
Changes in terms of the industry, we've all faced challenges some more than others.
So of course, but back you know I would say that everybody.
Faced that covered 19 related challenges.
I'm worried ticketing, the 85 or $87 million toward.
Yes, there, they're really sort of traditional avenues, we've invested in their meat snacks.
Cooked protein.
Premium processed meats, they're really driven by our current strategies nothing to do with what's happened in the primary market. Okay. Thanks.
Thank you David.
And that does conclude today's question and answer session I would like to turn the call back over to George Clooney logo for any additional or closing remarks.
Thank you Lisa I'd like to thank everybody for attending today. Thank you very much.
And that does conclude today's presentation. Thank you for your participation you may now disconnect.
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