Premium Brands Holdings Corp T.PBH

Alternate Symbol(s): PRBZF | T.PBH.DB.G | T.PBH.DB.H | T.PBH.DB.I

Consumer Defensive Packaged Foods

Premium Brands Holdings Corporation is a Canada-based company, which owns a range of specialty food manufacturing and differentiated food distribution businesses with operations across Canada and the United States. The Company operates through two segments: Specialty Foods and Premium Food Distribution. The Specialty Foods segment consists of its specialty food manufacturing businesses. The Premium Food Distribution segment consists of its differentiated distribution and wholesale businesses as well as certain seafood processing businesses. It provides servicing to approximately 22,000 customers. The logo and its family of brands and businesses includes Harvest Meats, Hempler's, Piller's, Grimm's Fine Foods, Freybe, Isernio's, Expresco and SJ Fine Foods. The Company operates in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and in Arizona, Minnesota, Mississippi, Nevada, Ohio and Washington.

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Post by retiredcfon Aug 10, 2021 11:25am

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Post# 33678185

TD Upgrade

A very quiet BB. Initated a position on this morning's checkback. GLTA

Premium Brands Holding Corp.

(PBH-T) C$129.00

Marching Towards Five-year 10% Margin Target Event

Adjusting our forecasts mostly to reflect some margin fine-tuning, partially offset by the Q2 beat and acquisition contribution. The net impact is an ~0.5% decrease in our EBITDA estimates across our forecast horizon. Our higher EPS estimates reflect lower depreciation estimates. However, our target price increases to $150.00 (up from $145.00) after rolling valuation out another quarter.

Impact: POSITIVE

The Q2/21 results highlight the reason why PBH remains one of our top picks. Overall, there is no change to our positive long-term outlook.

Best-in-class organic sales growth, driven by new sales initiatives, investments in capacity, and strategic acquisitions. A stronger recovery in the foodservice and airline/cruise channel would provide upside to our estimates.
Forecasting improved EBITDA margins, driven by: 1) ongoing post-COVID-19 normalization; 2) sales deleveraging due to higher production volumes; and 3) production efficiencies. We expect higher input costs for a range of commodities and wage inflation to pressure margins, although the company appears to have been quite successful so far in putting through price increases (it outperformed in this area in Q2/21, in our view).
Clearwater showing encouraging signs highlighted by a 730bps jump in gross margin driven by: 1) easier y/y comparables; 2) operational efficiencies; 3) stronger pricing environment; 4) disciplined selling strategy; and 5) leveraging PBH's own seafood market intelligence. We expect the company to make considerable progress on acquisition-related synergies going forward.
PBH has emerged from the pandemic with a much stronger balance sheet and liquidity position. As a result, we expect PBH to pursue an accelerated M&A cadence over the next 12-18 months. Subsequent to the quarter, PBH announced two acquisitions that would add ~$125mm in incremental sales.

TD Investment Conclusion

In our view, there are very few CPG companies in North America with a better organic revenue growth outlook and/or M&A opportunities than PBH. Consequently, we still see sufficient upside from here to continue recommending to investors to buy PBH shares, particularly on any weakness tied to temporary inflation concerns.