Q4 2024 Premium Brands Holdings Corp Earnings Call - Pre Recorded

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Operator: With me here is our CFO, Will Kalutycz. Our presentation will follow the deck that was posted on our website this morning. Later this morning, we will hold a separate live Q&A session at 1030 a.m. PST. Details to the call can be found on our press release posted on our website. We are now on slide three, which outlines certain key highlights for the year and the fourth quarter. We made solid progress during 2024 and we're well positioned to meet or exceed our 2027 sales and adjust the db.targets of $10 billion in sales and $1 billion with spec.

George: With me here is our CFO, Will Kalutycz. Our presentation will follow the deck that was posted on our website this morning. Later this morning, we will hold a separate live Q&A session at 10:30 AM PST. Details to the call can be found on our press release posted on our website. We are now on slide 3, which outlines certain key highlights for the year and the Q4. We made solid progress during 2024, and we're well-positioned to meet or exceed our 2027 sales and adjusted EBITDA targets of CAD 10 billion in sales and CAD 1 billion respectively. Our sales for the year increased by CAD 210 million, or 3.3%, to CAD 6.5 billion, while our adjusted EBITDA margins expanded by 30 basis points to 9.2%. This is the third consecutive year that we have expanded our adjusted EBITDA margin, which was 8.4% back in 2022.

Our presentation will follow the deck that was posted on our website. This morning.

Later this morning, we will hold a separate live Q&A session at 10 30 am PST.

Details to the call can be found on our press release posted on our website.

We are now on slide three which outlines certain key highlights for the year and the fourth quarter we.

We made solid progress during 2024, and we are well positioned to meet or exceed our 2027 sales and adjusted EBITDA targets of $10 billion in sales and $1 billion respectively.

Our sales for the year increased by $210 million or three 3% to $6 5 billion, while our adjusted EBITDA margins expanded by 30 basis points to nine 2%.

George Doumet: Our sales for the year increased by $210 million or 3.3% to $6.5 billion, while our adjusted EBITDA margins expanded by 30 basis points to 9.2%. This is the third consecutive year that we have expanded our adjusted EBITDA margin, which was 8.4% back in 2022. Our success in 2024 was driven by our Protein, Sandwich, and Bakery Groups initiatives in the U.S. We have invested $814 million over the past three years to expand the production capacity of these businesses who are now leveraging this capacity to expand successful regional products nationally and to win new business with new customers and channels.

This is the third consecutive year that we have expanded our adjusted EBITDA margin, which was eight four.

Percent back in 2022.

Our success in 2024 was driven by a protein sandwich and bakery group's initiatives in the U S. We have invested $814 million over the past three years to expand the production capacity of these businesses, who are now leveraging this capacity to expand success.

George: Our success in 2024 was driven by our Protein Group, Sandwich Group, and Bakery Group initiatives in the US. We have invested CAD 814 million over the past 3 years to expand the production capacity of these businesses, who are now leveraging this capacity to expand successful regional products nationally and to win new business with new customers and channels. Looking forward, the momentum of our US-focused sales initiatives continues to build, and we're very excited by what lies ahead for 2025. In terms of the Canadian market, 2024 started slow as consumers felt the impact of high inflation and high interest rates. Things improved in the back half of the year and the Q4 in particular, as interest rates came down with our Canadian businesses generating 1.7% in organic growth for the Q4.

Full regional products nationally and to win new business with new customers and channels.

Looking forward the momentum of our U S focused sales initiatives continues to build and we're very excited by what lies ahead for 2025 in.

George Doumet: Looking forward, the momentum of our U.S.-focused sales initiatives continues to build, and we're very excited by what lies ahead for 2025. In terms of the Canadian market, 2024 started slow as consumers felt the impact of high inflation and high interest rates. Things improved in the back half of the year and the fourth quarter in particular as interest rates came down with our Canadian businesses generating 1.7% in organic growth for the fourth quarter. We're very pleased with our track record of raising our dividend by 10% or more annually over the past 10 years. Normally, we would be increasing our dividend rate at the start of a new year.

In terms of the Canadian market 2024 started slow as consumers felt the impact of high inflation and high interest rates.

Things improved in the back half of the year and the fourth quarter in particular as interest rates came down with our Canadian businesses generally generating one 7% inorganic growth for the fourth quarter.

We're very pleased with our track record of raising our dividend by 10% or more annually over the past 10 years normally we would be increasing our dividend rate at the start of a new year. However for 2025, given the current uncertainty around tariffs, we decided that the prudent thing to do.

George: We're very pleased with our track record of raising our dividend by 10% or more annually over the past 10 years. Normally, we would be increasing our dividend rate at the start of a new year. However, for 2025, given the current uncertainty around tariffs, we decided that the prudent thing to do is to hold off until we have better clarity on how the current chaotic situation is going to settle out. We are now on slide 4. Our recent acquisitions of Casa, NSP Quality Meats, Italia Salami Company, and Denmark Sausage, all of which were in the advanced column in our Q3 presentation, provide us with much-needed capacity in several high-growth product categories that are benefiting from a variety of favorable consumer trends. Looking forward, you can see here that our acquisition pipeline continues to remain as robust as ever, and we're in many discussions and conversations.

George Doumet: However, for 2025, given the current uncertainty around tariffs, we decided that the prudent thing to do is to hold off until we have better clarity on how the current chaotic situation is going to settle out. We are now on slide four. Our recent acquisitions of Casa, NSP Quality Meats, Italia Salami Company and Denmark Sausage, all of which were in the advanced column in our third quarter presentation, provide us with much needed capacity in several high growth product categories that are benefiting from a variety of favorable consumer trends. Looking forward, you can see here that our acquisition pipeline continues to remain as robust as ever and we are in many discussions and conversations.

Is to hold off until we have better clarity on how the current chaotic situation is going to settle out.

We are now on slide four.

Our recent acquisitions of Cassa, NSP quality meats, Italian Salami company, and Denmark sausage all of which we are in the advanced column in our third quarter presentation provide us with much needed capacity in several high growth product categories that are benefiting from a variety.

A favorable consumer trends.

Looking forward, we can see here that our acquisition pipeline continues to remain as robust as ever and we are in many discussions and conversations as we have demonstrated with our most recent transactions any acquisitions, we make will not stretch our balance sheet and under no circumstances will we deviate from the <unk>.

George Doumet: As we have demonstrated with our most recent transactions, any acquisitions we make will not stretch our balance sheet and under no circumstances will we deviate from the financial discipline that we have demonstrated in the past. We are now on pages 5 to 9.

George: As we have demonstrated with our most recent transactions, any acquisitions we make will not stretch our balance sheet, and under no circumstances will we deviate from the financial discipline that we have demonstrated in the past. We are now on pages 5 to 9. Over the past few months, talk of trade wars and tariffs have dominated the daily news headlines. As we speak, there is a lot of uncertainty as to how these issues will be resolved, and we certainly hope that in the end, reason and good economics and common sense will prevail. At Premium Brands, we have always adhered to the principle of manufacturing locally and regionally in the jurisdictions that we sell in, and to the extent possible, we prefer to avoid the crossing of borders with our products.

<unk> discipline that we have demonstrated in the past.

We are now on pages five to nine.

The past few months talk of trade wars, and tariffs have dominated the daily news headlines as we speak there is a lot of uncertainty as to how these issues will be resolved and we certainly hope that in the end reason and good economics and common sense will prevail.

George Doumet: Over the past few months, talk of trade wars and tariffs have dominated the daily news headlines. As we speak, there is a lot of uncertainty as to how these issues will be resolved, and we certainly hope that in the end, reason and good economics and common sense will prevail. At Premium Brands, we have always adhered to the principle of manufacturing locally and regionally in the jurisdictions that we sell in, and to the extent possible, we prefer to avoid the crossing of borders with our products. This meant that as we expanded our business into the U.S., we chose to purchase or build facilities in the U.S.

Our premium brands, we have always adhere to the principle of manufacturing locally and regionally in the jurisdictions that we sell in and to the extent possible we preferred to avoid the crossing of borders with our products.

This meant that as we expanded our business into the U S. We chose to purchase or build facilities in the U S to service. This key market. However over the past five years. We have also invested in building state of the art capacity in Canada, but only to mainly service that Canadian and overseas markets.

George: This meant that as we expanded our business into the US, we chose to purchase or build facilities in the US to service this key market. However, over the past 5 years, we have also invested in building state-of-the-art capacity in Canada, but only to mainly service the Canadian and overseas markets. Slide 5 shows you the locations of our facilities in Canada and the US with a lot of our US-based capacity purchased or built over the past 5 years. If we had known that tariffs were imminent 5 years ago, we would not have acted very differently. For this reason, we're certain that we can manage the various risks related to this issue, and we believe that this issue will not impact us materially over the long term. We do have some exposure as some of our businesses in Canada export to the US and vice versa.

George Doumet: to service this key market. However, over the past five years, we have also invested in building state-of-the-art capacity in Canada, but only to mainly service the Canadian and overseas markets. Slide five shows you the locations of our facilities in Canada and the U.S. with a lot of our U.S.-based capacity purchased or built over the past five years. If we had known that tariffs were imminent five years ago, we would not have acted very differently. For this reason, we're certain that we can manage the various risks related to this issue, and we believe that this issue will not impact us materially over the long term.

Yes.

Slide five shows you the locations of our facilities in Canada, and the U S with a lot of our U S based capacity purchase or built over the past five years.

If we had known that tariffs were imminent five years ago, we would not have acted very differently.

For this reason, we're certain that we can manage the various risks related to this issue and we believe that this issue will not impact us materially over the long term, we do have some exposure as some of our businesses in Canada export to the U S and vice versa. For example, our USB.

George Doumet: We do have some exposure, as some of our businesses in Canada export to the U.S., and vice versa. For example, our U.S.-based sandwich plants export into Canada, while our cooked protein facilities in Canada ship certain products to the U.S. We're confident that our planned redundancy on either side of the border will enable us to transition the manufacturing of most products across borders if we needed to.

<unk> sandwich plants export into Canada, while our cooked protein facilities in Canada ship certain products to the U S. We are confident that our plan to redundancy on either side of the border will enable us to transition the manufacturing of most products across borders if we needed to.

George: For example, our US-based sandwich plants export into Canada, while our cooked protein facilities in Canada ship certain products to the US. We're confident that our plant redundancy on either side of the border will enable us to transition the manufacturing of most products across borders if we needed to. I will now pass it to Will for more color on our financial results for the quarter. Will?

I'll now pass it to will for more color on our financial results for the quarter will.

William Kalutycz: I will now pass it to Will for more colour on our financial results for the quarter. Will? Thanks, George.

Speaker Change: 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 and our future results may differ materially from what we discussed please refer to our MD&A for the 13 and 52 weeks ended December 28 2020.

Will Kalutycz: 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, and our future results may differ materially from what we discuss. Please refer to our MD&A for the 13 and 52 weeks ended 28 December 2024, as well as other information on our website for a broader description of the risk factors that could affect our performance. Turning to slide 11. Our sales for the quarter were a record CAD 1.64 billion, up CAD 84 million, or 5.4%, as compared to the Q4 2023. This increase was driven primarily by four factors. The most significant of these was CAD 55 million in organic volume growth from the US-focused sales initiatives that George referred to earlier.

William Kalutycz: Before I begin, I would like to remind you that some of the statements made on today's call may constitute forward-looking information, and our future results may differ materially from what we discuss. Please refer to our MD&A for the 13 and 52 weeks ended December 28, 2024, as well as other information on our website for a broader description of the risk factors that could affect our performance.

Speaker Change: For as well as other information on our website for a broader description of the risk factors that could affect our performance.

Speaker Change: Turning to slide 11.

Speaker Change: Our sales for the quarter were a record $1 64 billion up.

William Kalutycz: Turning to slide 11, our sales for the quarter were a record $1.64 billion, up $84 million or 5.4% as compared to the fourth quarter of 2023. This increase was driven primarily by four factors. The most significant of these was $55 million in organic volume growth from the U.S.-focused sales initiatives that George referred to earlier. The other factors were $45 million in selling price increases, which were primarily in response to higher lobster and to a lesser extent beef, chicken and egg costs. Currency translation gains of $25 million. and $13 million of organic volume growth in Canada, driven by several factors including a stronger consumer environment.

Speaker Change: Up $84 million or five 4% as compared to the fourth quarter of 2023.

Speaker Change: This increase was driven primarily by four factors. The most significant of these was $55 million in organic volume growth from the U S focused sales initiatives that George referred to earlier.

Speaker Change: The other factors were $45 million and selling price increases, which were primarily in response to higher lobster and to a lesser extent beef chicken and egg costs.

Will Kalutycz: The other factors were CAD 45 million in selling price increases, which were primarily in response to higher lobster and, to a lesser extent, beef, chicken, and egg costs, currency translation gains of CAD 25 million, and CAD 13 million of organic volume growth in Canada, driven by several factors, including a stronger consumer environment. These factors were partially offset by two significant but temporary challenges. The larger of these was lower lobster sales, which were the result of a poor Maine fishery, combined with certain customer orders being pushed out to Q1 2025. The other factor was a decline in sandwich sales volumes with a major food service customer due to reduced sales in its stores. On a positive note, we did see an improving sales trend with this customer in the quarter, and in particular, when compared to Q3 2024.

Speaker Change: Currency translation gains of $25 million.

Speaker Change: And $13 million of organic volume growth in Canada, driven by several factors, including a stronger consumer environment.

These factors were partially offset by two <unk>.

William Kalutycz: These factors were partially offset by two significant but temporary challenges. The larger of these was lower lobster sales, which were the result of a poor main fishery combined with certain customer orders being pushed out to the first quarter of 2025. The other factor was a decline in sandwich sales volumes with a major food service customer due to reduced sales in its stores. On a positive note, we did see an improving sales trend with this customer in the quarter and in particular when compared to the third quarter of 2024. Furthermore, we remain confident that we will see our sales volumes with this customer return to growth later in 2025.

Speaker Change: Significant but temporary challenges.

Speaker Change: The larger of these was lower lobster sales, which were the result of a poor main fishery combined with certain customer orders being pushed out to the first quarter of 2025.

Speaker Change: The other factor was the decline in sandwich sales volumes with a major foodservice customer due to reduced sales in its stores.

Speaker Change: On a positive note, we did see an improving sales trend with this customer in the quarter and in particular when compared to the third quarter of 2024.

Speaker Change: Furthermore, we remain confident that we will see our sales volumes with this customer returned to growth later in 2025.

Will Kalutycz: Furthermore, we remain confident that we will see our sales volumes with this customer return to growth later in 2025. Slide 12 shows the organic volume growth rates of our Protein Group, Sandwich Group, and Bakery Group's sales initiatives in the US. You can see that our Protein Group and Bakery Group US sales grew at organic volume growth rates in excess of 20%, generating just under CAD 50 million of organic volume growth. After adjusting for the impact of the Sandwich Group's major customer I referred to earlier, this group generated about CAD 5 million of organic volume growth, which is well below its historic level of growth, mainly due to its next series of major product launches not taking effect until 2025.

Speaker Change: Slide 12 shows the organic volume growth rates of our protein sandwich and bakery groups sales initiatives in the U S.

William Kalutycz: Slide 12 shows the organic volume growth rates of our protein, sandwich, and bakery groups sales initiatives in the U.S. You can see that our Protein and Bakery Group U.S. sales grew at organic volume growth rates in excess of 20%, generating just under $50 million of organic volume growth. After adjusting for the impact of the sandwich group's major customer I referred to earlier, this group generated about $5 million of organic volume growth, which is well below its historic level of growth, mainly due to its next series of major product launches not taking effect until 2025.

Speaker Change: You can see that our protein and bakery group U S sales grew at organic volume growth rates in excess of 20% generating just under $50 million of organic volume growth.

Speaker Change: After adjusting for the impact of the Sandwich group's major customer I referred to earlier. This group generated about $5 million of organic volume growth, which is well below its historic level of growth mainly due to its next series of major project product launches not taking effect until 2025.

Speaker Change: Slide 13 shows our annual sales for each of the last 15 years, which have grown at a compounded annual growth rate of 19, 5% as well as the midpoint of our 2025 revenue guidance range of $7 2 billion to.

William Kalutycz: Slide 13 shows our annual sales for each of the last 15 years, which have grown at a compounded annual growth rate of 19.5%, as well as the midpoint of our 2025 revenue guidance range of $7.2 billion to $7.4 billion. You can see our historic track record of steady growth over this period. In terms of 2025, the projected growth is driven by accelerating organic volume growth associated with our Protein Sandwich and Bakery Group's U.S. sales initiatives. recent acquisitions, and the continued stabilization of the Canadian market. Selling price inflation and currency translation also contributed to our projected growth, but to a much lesser extent.

Will Kalutycz: Slide 13 shows our annual sales for each of the last 15 years, which have grown at a compounded annual growth rate of 19.5%, as well as the midpoint of our 2025 revenue guidance range of CAD 7.2 billion to CAD 7.4 billion. You can see our historic track record of steady growth over this period. In terms of 2025, the projected growth is driven by accelerating organic volume growth associated with our Protein Group, Sandwich Group, and Bakery Group's US sales initiatives, recent acquisitions, and the continued stabilization of the Canadian market. Selling price inflation and currency translation also contributed to our projected growth, but to a much lesser extent. Turning to slide 14, our adjusted EBITDA for the quarter was CAD 148.7 million, representing an increase of CAD 11.5 million, or 8.4%, as compared to Q4 of 2023.

Speaker Change: To seven 4 billion.

Speaker Change: You can see our historic track record of steady growth over this period in.

Speaker Change: In terms of 2025, the projected growth is driven by accelerating organic volume growth associated with our protein sandwich and bakery group's U S sales initiatives.

Speaker Change: Recent acquisitions and the continued stabilization of the Canadian market.

Speaker Change: Selling price inflation and currency translation also contributed to our projected growth by to a much lesser extent.

Speaker Change: Turning to slide 14, our adjusted EBITDA for the quarter was $148 7 million.

William Kalutycz: Turning to slide 14, our adjusted EBITDA for the quarter was $148.7 million, representing an increase of $11.5 million, or 8.4%, as compared to the fourth quarter of 2023. Positive factors impacting our adjusted EBDOT included our organic sales volume growth and improved production efficiencies across a number of our plants. These were partially offset by a variety of factors including higher discretionary compensation accruals and additional plant overhead associated with recent capacity expansion.

Speaker Change: Renting an increase of $11 5 million or eight 4% as compared to the fourth quarter of 2023.

Speaker Change: Positive factors impacting our adjusted EBITDA included our organic sales volume growth and improved production efficiencies across a number of our plants.

Will Kalutycz: Positive factors impacting our adjusted EBITDA included our organic sales volume growth and improved production efficiencies across a number of our plants. These were partially offset by a variety of factors, including higher discretionary compensation accruals and additional plant overhead associated with recent capacity expansions. Slide 15 shows our annual adjusted EBITDA for each of the last 15 years, which has grown at a compounded annual growth rate of 20.8%, as well as the midpoint of our 2025 adjusted EBITDA guidance range of CAD 680 to 700 million. Similar to our 15-year sales trend, you can see our historic track record of steady growth over this period. In terms of 2025, our projected growth is driven by sales volume gains and continued production efficiency improvements.

Speaker Change: These were partially offset by a variety of factors, including higher discretionary compensation accruals, an additional plant overhead associated with recent capacity expansions.

Speaker Change: Slide 15 shows our annual adjusted EBITDA for each of the last 15 years, which has grown at a compounded annual growth rate of 28% as well as the midpoint of our 2025 adjusted EBITDA guidance range of $680 million two seven.

William Kalutycz: Slide 15 shows our annual adjusted EBITDA for each of the last 15 years, which has grown at a compounded annual growth rate of 20.8%, as well as the midpoint of our 2025 adjusted EBITDA guidance range of $680 million to $700 million. Similar to our 15-year sales trend, you can see our historic track record of steady growth over this period. In terms of 2025, our projected growth is driven by sales volume gains and continued production efficiency improvement.

Speaker Change: $100 million.

Speaker Change: Similar to our 15 year sales trend you can see our historic track record of steady growth over this period.

Speaker Change: In terms of 2025, our projected growth is driven by sales volume gains and continued production efficiency improvements.

Speaker Change: Turning to slide 16, our.

Speaker Change: Our adjusted earnings and earnings per share for the quarter were $46 4 million.

William Kalutycz: Turning to slide 16, our adjusted earnings and earnings per share for the quarter were $46.4 million and $1.05 per share respectively, up from $37.9 million and $0.85 per share respectively in the fourth quarter of 2023. These increases were driven by the growth in our adjusted EBITDA, as well as an $11.5 million after-tax impact from a change in the estimated useful life of certain production assets. These factors were partially offset by higher depreciation, interest and lease costs associated with the major capacity expansion projects George mentioned earlier.

Will Kalutycz: Turning to slide 16, our adjusted earnings and earnings per share for the quarter were CAD 46.4 million and CAD 1.05 per share, respectively, up from CAD 37.9 million and CAD 0.85 per share, respectively, in Q4 of 2023. These increases were driven by the growth in our adjusted EBITDA, as well as a CAD 11.5 million after-tax impact from a change in the estimated useful life of certain production assets. These factors were partially offset by higher depreciation, interest, and lease costs associated with the major capacity expansion projects George mentioned earlier. Slide 17 shows our annual adjusted earnings and earnings per share for each of the last 15 years, which have grown at compounded annual growth rates of 18.4% and 11%, respectively. You can see that for the last 2 years, these metrics have been down.

Speaker Change: And $1 <unk> per share respectively.

Speaker Change: Up from $37 $9 million and 85 per share respectively in the fourth quarter of 2023.

Speaker Change: These increases were driven by the growth in our adjusted EBITDA as well as our 11 $5 million after tax impact from a change in the estimated useful useful life of certain production assets.

Speaker Change: These factors were partially offset by higher depreciation interest and lease costs associated with the major capacity expansion projects George mentioned earlier.

George: Slide 17 shows our annual adjusted earnings and earnings per share for each of the last 15 years, which have grown at compounded annual growth rates of 18, 4% and 11% respectively.

William Kalutycz: Slide 17 shows our annual adjusted earnings and earnings per share for each of the last 15 years, which have grown at compounded annual growth rates of 18.4% and 11% respectively. You can see that for the last two years these metrics have been down. This is due to a combination of higher depreciation, interest and lease costs associated with recent major capacity expansion projects, as well as a higher interest rate environment.

You can see that for the last two years. These metrics have been down. This is due to a combination of higher depreciation interest and lease costs associated with recent major capacity expansion projects as well as a higher interest rate environment.

Will Kalutycz: This is due to a combination of higher depreciation, interest, and lease costs associated with recent major capacity expansion projects, as well as a higher interest rate environment. Looking forward, while we do not provide specific adjusted earnings and earnings per share guidance, we do expect both these metrics to reach record levels in 2025, based primarily on the projected growth in our adjusted EBITDA. Turning to Slide 18. For the quarter, we spent CAD 80.3 million on capital expenditures, consisting of CAD 48.7 million on major project CapEx, CAD 20.1 million in smaller project CapEx, and CAD 11.5 million on maintenance CapEx. We define project CapEx as investments that are expected to generate an unlevered after-tax internal rate of return of 15% or greater. All other capital expenditures are classified as maintenance CapEx.

George: Looking forward, while we do not provide specific adjusted earnings and earnings per share guidance. We do expect both of these metrics to reach record levels in 2025 based primarily on the projected growth in our adjusted EBITDA.

William Kalutycz: Looking forward, while we do not provide specific adjusted earnings and earnings per share guidance, we do expect both these metrics to reach record levels in 2025 based primarily on the projected growth in our adjusted EBITDA.

George: Turning to slide 18 for the quarter, we spent $83 million on capital expenditures consisting of $48 $7 million on major project Capex $21 million in smaller project, Capex and $11 5 million on maintenance Capex.

William Kalutycz: Turning to slide 18, for the quarter, we spent $80.3 million on capital expenditures, consisting of $48.7 million on major project capex, $20.1 million in smaller project capex, and $11.5 million on maintenance capex. We define project CapEx as investments that are expected to generate an unlevered after-tax internal rate of return of 15% or greater. All other capital expenditures are classified as maintenance CapEx. Primarily, all our major project capital expenditures in the quarter were on investments to increase the capacities and, in many cases, operating efficiencies of our protein and sandwich groups businesses to support their U.S.-focused growth initiatives.

George: We defined project Capex is investments that are expected to generate an unlevered after tax internal rate of return of 15% or greater all other capital expenditures are classified as maintenance capex.

George: Primarily all our major project capital expenditures in the quarter were on investments to increase the capacities and in many case operating efficiencies of our protein and sandwich groups businesses to support their U S focused growth initiatives.

Will Kalutycz: Primarily, all our major project capital expenditures in the quarter were on investments to increase the capacities, and in many cases, operating efficiencies of our Protein Group and Sandwich Group businesses to support their US-focused growth initiatives. Looking forward, based on our approved major project CapEx pipeline, we expect to invest another CAD 145 million on these projects over the next 4 quarters. Also, during the quarter, we completed two asset sales. One involved the sale of a vacant piece of land for CAD 26 million, and the other was the sale and leaseback of a recently expanded production facility located in the state of Washington for approximately CAD 94 million. Slide 19 shows some of the key metrics we use to assess our financial position.

George: Looking forward based on our approved major project Capex pipeline, we expect to invest another $145 million on these projects over the next four quarters.

William Kalutycz: Looking forward, based on our approved major project CapEx pipeline, we expect to invest another $145 million on these projects over the next four quarters.

George: Also during the quarter, we completed two asset sales one involved the sale of a vacant piece of land for $26 million and the other was the sale and leaseback of our recently expanded production facility located in the state of Washington, Washington for approximately $94 million.

William Kalutycz: Also, during the quarter, we completed two asset sales. One involved the sale of a vacant piece of land for $26 million, and the other was the sale and lease-back of a recently expanded production facility located in the state of Washington for approximately $94 million.

George: Slide 19 shows some of the key metrics, we use to assess our financial position.

William Kalutycz: Slide 19 shows some of the key metrics we use to assess our financial position. Our debt leverage levels increased slightly as compared to the last quarter, with our senior debt to EBITDA ratio going from 3.4 to 1 to 3.5 to 1, and our total debt to EBITDA ratio, which includes our subordinate convertible debentures, increasing from 4.4 to 1 to 4.5 to 1. The increases in both metrics were due to a rapid weakening of the Canadian dollar relative to the U.S. dollar towards the end of the quarter. This resulted in our U.S. denominated debt being valued much differently than our U.S.

George: Our debt leverage levels increased slightly as compared to the last quarter with our senior debt to EBITDA ratio going from three four to one to three five to one and our total debt to EBITDA ratio, which includes our subordinate convertible debentures, increasing from four 4% to 1245.

Will Kalutycz: Our debt leverage levels increased slightly as compared to the last quarter, with our senior debt-to-EBITDA ratio going from 3.4 to 1 to 3.5 to 1, and our total debt-to-EBITDA ratio, which includes our subordinate convertible debentures, increasing from 4.4 to 1 to 4.5 to 1. The increases in both metrics were due to a rapid weakening of the Canadian dollar relative to the US dollar towards the end of the quarter. This resulted in our US-denominated debt being valued much differently than our US-denominated cash flows being used to service it. Normalizing for this anomaly, our senior debt-to-EBITDA and total debt-to-EBITDA ratios for the quarter are 3.3 to 1 and 4.3 to 1, respectively. While these levels are an improvement from Q3 2024, they are still above the long-term targeted ranges we have set for them. They are, however, well within our shorter-term operating parameters.

George: Two one.

George: The increases in both metrics were due to a rapid week rapid weakening of the Canadian dollar relative to the U S dollar towards the end of the quarter.

George: This resulted in our U S denominated debt being valued much differently than our U S denominated cash flows being.

George: Being used to service it.

William Kalutycz: denominated cash flows. being used to service it. Normalizing for this anomaly, our Senior Debt to EBITDA and Total Debt to EBITDA ratios for the quarter are 3.3 to 1 and 4.3 to 1, respectively. While these levels are an improvement from the third quarter of 2024, they are still above the long-term targeted ranges we have set for them. They are, however, well within our shorter-term operating parameters.

George: Normalizing for this anomaly, our senior debt to EBITDA and total debt to EBITDA ratios for the quarter, our three three to one and $4 three to one respectively. While these levels are an improvement from the third quarter of 2024. They are still above the long term targeted ranges, we have set for them.

George: However, well within our shorter term operating parameters.

George: In terms of liquidity, we finished the quarter in a strong position with $583 million in unused credit capacity.

William Kalutycz: In terms of liquidity, we finished the quarter in a strong position with $583 million in unused credit capacity.

Will Kalutycz: In terms of liquidity, we finished the quarter in a strong position with CAD 583 million in unused credit capacity. Subsequent to the quarter, we've completed an offering of convertible debentures resulting in net proceeds of CAD 144 million. The cash from the offering will be used to pay down our senior revolving credit facility, which will then be used to repay CAD 172.5 million in convertible debentures coming due at the end of April. The next and final slide shows a variety of our free cash flow and dividend metrics over the last 18 years. For 2024, our payout ratio was above our long-term target of 50% or less. However, looking forward, we expect to be below this target in 2025 based on our projections for record free cash flow and free cash flow per share.

George: Subsequent to the quarter, we completed an offering of convertible debentures, resulting in net proceeds of $144 million.

William Kalutycz: Subsequent to the quarter, we completed an offering of convertible debentures resulting in net proceeds of $144 million. The cash from the offering will be used to pay down our senior revolving credit facility, which will then be used to repay $172.5 million in convertible debentures coming due at the end of April.

George: The cash from the offer offering will be used to pay down our senior revolving credit facility, which will then be used to repay $172 5 million in convertible debentures coming due at the end of April.

George: The next and final slide shows the variety of our free cash flow and dividend metrics over the last 18 years for 2024, our payout ratio was above our long term target of 50% or less however, looking forward, we expect to be below this target in 2025.

William Kalutycz: The next and final slide shows a variety of our free cash flow and dividend metrics over the last 18 years. For 2024, our payout ratio was above our long-term target of 50% or less. However, looking forward, we expect to be below this target in 2025 based on our projections for record free cash flow and free cash flow per share.

George: Based on our projections for record free cash flow and free cash flow per share.

George: Subsequent to the fourth quarter, we declared a dividend of <unk> 85 per share for the first quarter of 2025.

William Kalutycz: Subsequent to the fourth quarter, we declared a dividend of $0.85 per share for the first quarter of 2025.

Will Kalutycz: Subsequent to Q4, we declared a dividend of CAD 0.85 per share for Q1 of 2025. This concludes our presentation. Please join us on our Q&A conference call later today at 10:30 AM Vancouver time, 1:30 PM Toronto time. Thank you.

George: This concludes our presentation. Please join us on our Q&A Conference call. Later today at 10 30, a M. Vancouver time 130 PM Toronto time. Thank you.

Operator: This concludes our presentation, please join us on our Q&A conference call later today at 10.30am Vancouver time, 1.30pm Toronto time. Thank you.