Premium Brands Holdings Corp T.PBH

TD Reaction

[retiredcf]

As this is a flash report, there's potential for them to raise their current $160 target. GLTA

Premium Brands Holding Corp.

(PBH-T) C$105.28

Q4/21 First Look: Solid Q4 and Outlook Despite Op. Environment Event

• PBH reported Q4/21 adj. EBITDA of $113.4mm vs. $87.7mm last year (+29%), in line with consensus of $113mm (range of $106mm to $117mm) and guidance of $106mm to $119mm.

• The company announced that it will increase its quarterly dividend by 10.2% to $0.70 per share ($2.80 per share on an annualized basis).

• Subsequent to the quarter, the company announced that it had closed another four acquisitions.

• CC Details: 1:30 p.m. ET today. Dial-in # [phone]. ID: 4991117

  Impact: POSITIVE

  Overall, a strong performance despite the well-known operating challenges. Here are what we believe to be some of the initial key Q4/21 takeaways:

• Revenues (beat): In addition to price inflation (~40% of growth in each segment), Specialty Foods (SF) and Premium Food Distribution (PFD) reported normalized organic volume growth rates (OVGR) of 5.8% and 1.2%, respectively, driven by:

  • SF (beat): Growth initiatives in artisan sandwich, meat snack, cooked meat and

    charcuterie, including the ongoing ramp of its U.S. platform. Absent supply chain disruptions and labour shortages, OVGR would have been closer to 10% (i.e. ~$29.4mm in lost sales opportunities).

  • PFD (beat): We would attribute most of the beat to a bigger contribution from M&A and successful price increases due to a more dynamic pricing model.

• Adjusted EBITDA (in line with consensus): SF/PFD EBITDA beat our estimates by 8%/6%, mostly driven by strong top line growths.

• More M&A announced: Subsequent to the quarter, PBH completed four acquisitions that the company expects will contribute in excess of US$35mm in revenue, annually. M&A opportunities remain plentiful.

  Overall, the results reflect ongoing strong execution and our view that there are very few CPG companies in North America with a better organic revenue growth outlook and/or M&A opportunities than PBH. The shares have been weak, due to uncertainty around the supply chain and high Omicron-related absenteeism. The shares are now trading at ~12.0x forward EBITDA vs. their two-year average of ~14.5x and we expect a positive reaction on the back of these results.

  2022 Outlook (Above Consensus)

  The company released its guidance for fiscal 2022:

• Sales: $5.6 billion to $5.85 billion

• EBITDA: $510 million to $530 million