Q4 2022 Premium Brands Holdings Corp Earnings Call

Speaker 1: Next Author Tony production of the TV production of the PBS To the fax

Speaker 2: Corporation, 4th Quarter 2022 Earnings Conference Call. At this time, I will enter in the only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator.

Speaker 2: This call is being recorded on Thursday, March 16, 2023. I would now like to turn the conference over to George Paliologu, CEO and President of Premium Brands. Please go ahead.

Speaker 3: Thank you, Ina.

Speaker 3: Welcome everyone to our 2022 fiscal year and fourth quarter conference call.

Speaker 3: With me here today is our CFO , Will Kaludich.

Speaker 3: Our presentation will follow the deck that was posted on our website this morning.

Speaker 3: Will is going to help us unpack the numbers for the fourth quarter and the year shortly, followed by a more in-depth discussion of our new five-year plan.

Speaker 3: We're now on slide four, which outlines certain key highlights for the quarter and the year.

Speaker 3: Some of the headlines of the quarter are as follows. Results for the quarter were unplanned despite the various well-publicized headwinds including inflation, supply chain disruptions and labor shortages.

Speaker 3: On a more positive note, we continue to see evidence that life and the world are normalizing after three years of unusual volatility and economic and industry dislocations.

Speaker 3: We're delighted to share our new five-year plan and related targets, which call for us to reach $10 billion in sales and $1 billion of EBITDA by the end of 2027.

Speaker 3: We will have more discussion on this later on in the presentation.

Speaker 3: Clearwater had an excellent quarter and delivered record EBITDA for the year of about $130 million on sales of approximately $600 million.

Speaker 3: Both our platforms did well during the quarter, benefiting from improving business conditions, including better labour availability and easing supply chain issues. Our charcuterie, cooked protein, artisan sandwich and specialty bakery businesses performed very well, while our centre-of-the-plate best-in-class protein offerings continued to drive the growth to its old prime.

Speaker 3: report the completion or near completion of several capital projects that will solve a number of capacity challenges facing our businesses. We're pleased to have purchased approximately 167,000 shares for cancellation or an NCIB at very compelling prices that's benefiting all shareholders.

Speaker 3: For the ninth year in a row, we announced yet another double digit increase in our quarterly and annual dividend. At PB, we'll have to share our growth and our value creation with our long-term shareholders through dividend increases as a way of cushioning the blow of unprecedented market and stock price volatility.

Speaker 3: We remain very confident that our decentralized entrepreneurial business model combined with our great people and culture will continue to drive above average returns for our long-term shareholders through increasing dividends and capital appreciation for many more years to come.

Speaker 3: Now we're on slide five. As you can see on slide five, we remain an acquisitor of choice and our pipeline continues to be robust with many exciting small and larger projects and opportunities.

Speaker 3: Acquisitions remain a key part of our growth strategy over the next few years and we expect to complete many more transactions in the future. I will now pass it on to Will. Will? Thanks, George. Before I begin, I would like to remind you that some of the statements made on today's call may constitute forward-looking information.

Speaker 4: and our future results may differ materially from what we discuss. Please refer to our mDNA for the 14 and 52 weeks ended December 31, 2022, as well as other information on our website for a broader description of the risk factors that could affect our performance.

Speaker 4: We are now on slide 7. Our sales for the quarter were 1.6 billion dollars. That was an increase of roughly 289 million or 21.5% from 2021. There were five key drivers of our growth. First was there was an extra week in the quarter.

Speaker 4: due to our year-end falling on December 31st, which resulted in 14 weeks versus the normal 13. This accounted for about $80 million of our growth.

Speaker 4: Selling price inflation was another $61.9 million of our growth.

Speaker 4: Organic volume was 60.8 million of our growth and that was driven as George mentioned earlier by our sandwich initiatives, cooked protein, artisan baked goods, value-added processed lobster products and a reclassing of certain warehousing rental income.

Speaker 4: Acquisitions accounted for $43.8 million of our growth.

Speaker 4: and a weaker Canadian dollar relative to the US dollar, $42.9 million.

Speaker 4: Turning over to slide three, or sorry eight.

Speaker 4: Our organic volume growth for the quarter was 4.5%.

Speaker 4: You can see from the chart over the last three quarters we've improved our growth rates.

Speaker 4: consecutively, nicely, rising from 1.3% back in Q2 up to 4.5%. So we are now in our long-term targeted range of 4 to 6%, but there are still four main factors holding us back from reaching our potential of exceeding our long-term target.

Speaker 5: First was Q4 is generally a lower growth quarter just for seasonal factors.

Speaker 6: Next was our protein branded businesses were impacted particularly by a shift in spending by consumers from retail to food service.

Speaker 7: We continue to experience turkey supply challenges both in Canada and the US.

Speaker 8: This knocked about 60 basis points off of our organic volume growth rate.

Speaker 9: And finally, we have seen slower growth or relatively flat sales in certain categories, mainly beef jerky and certain cooked protein categories, which is a positive from previous quarters where we actually were seeing some demand destruction.

Speaker 10: that is now levelled and year-over-year roughly flat. And as we see some stability in commodities, we expect to see growth resume there in 2023.

Speaker 11: Turning to slide 9.