Premium Brands Holdings Corp T.PBH.DB.G

CIBC Preview

[retiredcf]

Currently have a $120.00 target, one of the lowest on the Street. GLTA

EQUITY RESEARCH
May 3, 2022 Flash Research
PREMIUM BRANDS HOLDINGS
CORPORATION

Q1/22 Preview: Inflation Test Continues

PBH will report Q1 results before market open on Friday, May 6, with a call
that afternoon at 1:30 p.m. ET. Dial-in is 833-300-9218 or 647-689-4551
(passcode: 3093083).

PBH (-16% YTD) has underperformed the staples index (+6%), which we
attribute to PBH’s exposure to food cost increases, delays in passing through
pricing, and potential for consumers trading down to lower-priced items.
Roughly 65% of PBH’s sales feature dynamic pricing (adjusted in 1-2
weeks), but these skew lower-margin. Specialty Foods’ (SF) GM%, which
generates 65% of GM$, declined over 170 bps Y/Y in both Q3 and Q4, while
CPI escalated to 8.5% on average in Q1, ~200 bps higher than in Q4.

We expect the 2022 EBITDA guide of $510MM-$530MM may be reduced
this quarter owing to persistent inflation, or M&A contributions could be
required to reach the goal. For Q1, we forecast 4% organic volume growth
(OVG) in SF, and 6% OVG in Premium Food Distribution (PFD). Pricing
(+11%) and M&A (+10%) are the largest drivers of our +24% sales forecast.

We expect key topics for the call will include consumer response to price
increases, an updated inflation forecast, and commentary on M&A potential
given current leverage (3.3x forward EBITDA) and limited cash flow expected
this year.

[Defiance2050]

This analyst seems massively focused on proving their point. It is rather unlikely that there will be continuous inflation that will never be caught up but what would ever happen if prices went down during a period.  If a company sells 100 units at $1 and makes $0.10 a unit or $10 is it better than one that sells the same 100 units at $1.20 a unit and makes $0.11 or $11. Over the long run