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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Premium Brands Holdings Corp

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Post by retiredcfon Nov 05, 2021 9:09am

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Post# 34091071

TD Upgrade

Premium Brands Holding Corp.

(PBH-T) C$135.84

Still Best-in-class Event

Adjusting our forecasts mostly to reflect the Westmorland acquisition contribution. The net impact is an ~1% increase in our 2022 and 2023 EBITDA estimates. We have reduced our 2021 EBITDA estimate by 1% to reflect higher mix towards lower-margin distribution sales and cost inflation within the Specialty Foods segment. Our target price increases to $160.00 (up from $150.00) after rolling valuation out another quarter.

Impact: POSITIVE

The Q3/21 results highlight the reason why PBH remains one of our top picks. Overall, there is no change to our positive long-term outlook.

Absent the cost inflation across a variety of production inputs mostly in SF, which we expect is transitory, PBH still has best-in-class organic sales growth, driven by new sales initiatives, capacity investments, and strategic acquisitions.
We are forecasting improved EBITDA margins in 2022 and 2023, driven by: 1) ongoing post-COVID-19 normalization; 2) sales deleveraging due to higher production volumes; and 3) production efficiencies.
Clearwater has shown significant progress in the months since PBH acquired a 50% interest, highlighted by a 670bps jump in gross margin driven by: 1) stronger pricing environment; 2) operational efficiencies; 3) disciplined selling strategy; and 4) leveraging PBH's own seafood market intelligence. In the long term, we expect PBH to capitalize on numerous synergy (revenue) opportunities, including the proprietary access to scarce seafood products.
PBH has emerged from the pandemic with a much stronger balance sheet and liquidity position. As a result, we expect PBH to continue to pursue an accelerated M&A cadence over the months. Subsequent to the quarter, PBH announced the closing of two acquisitions that would collectively add ~$250mm/ $20mm in incremental sales/EBITDA. The M&A pipeline remains full with potential targets accounting for ~$1.4bln in sales in the advance or active stages.

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 to continue recommending to investors to buy PBH shares.