CORRECTION - Premium Brands Holdings Corporation Announces Record First Quarter 2016 Results and Declares Second Quarter 2016 Dividend

VANCOUVER, BC--(Marketwired - May 12, 2016) -  In the news release, "Premium Brands Holdings Corporation Announces Record First Quarter 2016 Results and Declares Second Quarter 2016 Dividend" issued earlier today by Premium Brands Holdings Corporation (TSX: PBH), we are advised by the company that the Selling, General and Administrative Expenses (SG&A) and Adjusted EBITDA financial tables were incorrect. Complete corrected text follows. 

Premium Brands Holdings Corporation Announces Record First Quarter 2016 Results and Declares Second Quarter 2016 Dividend

VANCOUVER, BC -- May 12, 2016 -- Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today its results for the first quarter of 2016.

HIGHLIGHTS FOR THE QUARTER

• Record first quarter revenue of $381.0 million representing a 16.1% increase as compared to the first quarter of 2015
• Record first quarter adjusted EBITDA of $25.1 million representing a 32.8% increase as compared to the first quarter of 2015
• Record first quarter earnings and earnings per share of $9.2 million and $0.34 per share, respectively
• Record rolling four quarters free cash flow of $86.6 million resulting in a dividend to free cash flow ratio of 43.5%
• During the first quarter the Company increased its annual dividend rate to $1.52 per share
• Subsequent to the quarter the Company acquired substantially all of the assets and business undertakings of C&C Packing Inc. and its affiliate, Premier Meat Packers (2009) Inc. (collectively "C&C Foods") for total consideration of approximately $146.0 million
• Also subsequent to the quarter the Company issued $86.3 million of convertible debentures bearing interest at 4.65% and maturing in April 2021
• Also subsequent to the quarter the Company declared a quarterly dividend of $0.38 per share

SUMMARY FINANCIAL INFORMATION

(In millions of dollars except per share amounts and ratios) 13 Weeks 13 Weeks Ended Ended Mar 26, Mar 28, 2016 2015 Revenue 381.0 328.3 Adjusted EBITDA 25.1 18.9 Earnings from continuing operations 9.2 3.5 EPS from continuing operations 0.34 0.15 Rolling Four Quarters Ended Mar 26, Dec 26, 2016 2015 Free cash flow 86.6 81.1 Declared dividends 37.7 35.0 Declared dividend per share 1.4150 1.3800 Payout ratio 43.5% 43.2% 

"The first quarter of the year is generally a challenging one due to the seasonality inherent in many of our businesses. We are, however, very pleased with our overall results for the quarter and with the fact that they were right on plan. Looking forward, we are well positioned to meet or exceed our growth and profitability objectives for 2016," said Mr. George Paleologou, President and CEO.

"The continuing year-over-year improvement in our top and bottom lines is being driven by several sustainable factors including our leadership in capitalizing on a number of developing consumer trends. These trends include growing demand for higher quality foods made with simpler more wholesome ingredients and an increasing reliance on healthy convenience oriented foods both for on-the-go snacking as well as for easy home meal preparation.

"Also driving our improved results are the significant investments we have made over the last couple of years in improving the efficiency and capacity of many of our businesses," added Mr. Paleologou.

"We are also very pleased to have completed the acquisition of C&C Foods subsequent to the quarter and are now working with their management team to capture cost synergies and to accelerate the growth of their business through organic initiatives and by acquisition. I have no doubt that once again we have partnered with a very talented, best-in-class management team," said Mr. Paleologou.

"In terms of future acquisitions, we are looking at a wide variety of opportunities and I fully expect that we will be announcing additional transactions in the coming months," said Mr. Paleologou.

SECOND QUARTER 2016 DIVIDEND

The Company's Board of Directors approved a cash dividend of $0.38 per share for the second quarter of 2016, which will be payable on July 15, 2016 to shareholders of record at the close of business on June 30, 2016.

Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2016 or a subsequent year is an eligible dividend for the purposes of the Enhanced Dividend Tax Credit System.

ABOUT PREMIUM BRANDS

Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Isernio's, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's, Freybe, Expresco, C&C Packing and Premier Meats.

RESULTS OF OPERATIONS

Revenue

13 13 (in millions of dollars except percentages) weeks weeks ended ended Mar 26, Mar 28, 2016 2015 Revenue by segment: Specialty Foods 262.2 68.8% 215.5 65.6% Premium Food Distribution 118.8 31.2% 112.8 34.4% ---------------------------------------------------------------------------- Consolidated 381.0 100.0% 328.3 100.0% ============================================================================ 

Specialty Foods' revenue for the first quarter of 2016 as compared to the first quarter of 2015 increased by $46.7 million or 21.7% primarily due to: (i) $18.5 million of sales resulting from the acquisitions of Isernio's Sausage and Expresco Foods in the third quarter of 2015; (ii) $15.4 million of organic volume growth across a range of products with a significant portion coming from convenience food initiatives; (iii) a $12.1 million increase in the translated value of its U.S. based businesses' sales due to a lower Canadian dollar as compared to the first quarter of 2015; and (iv) approximately $0.7 million in net selling price increases that were implemented in response to rising raw material costs. Excluding the impact of acquisitions, exchange translation and net selling price increases, Specialty Foods' organic volume growth for the quarter was approximately 7.1%.

For 2016, the Company expects (see Forward Looking Statements) Specialty Foods' organic volume growth to be at the top end or exceed the Company's long-term targeted range of 4% to 6% (6% to 8% after including net selling price increases) due to a range of factors including a variety of consumer trends that are benefiting many of its businesses.

Premium Food Distribution's revenue for the first quarter of 2016 as compared to the first quarter of 2015 increased by $6.0 million or 5.3% primarily due to approximately $4.8 million in net selling price increases that were implemented in response to rising raw material costs. In volume terms, Premium Food Distribution's revenue grew by approximately 1.0% relative to the first quarter of 2015 as strong growth in its sales of seafood and a variety of new highly differentiated protein products were partially offset by the impact on its Alberta and Saskatchewan foodservice operations of the economic slowdowns in these regions.

For 2016, the Company expects (see Forward Looking Statements) Premium Food Distribution's organic volume growth to be at or slightly below the bottom end of the Company's long-term targeted range of 4% to 6% (6% to 8% after including net selling price increase) as solid growth from a variety of new product initiatives, including seafood and antibiotic free protein products, as well as stronger foodservice sales in southern British Columbia, are expected to be partially offset by the impact of continuing weakness in the Alberta and Saskatchewan economies.

Gross Profit

(in millions of dollars except percentages) 13 % 13 % weeks weeks ended ended Mar 26, Mar 28, 2016 2015 Gross profit by segment: Specialty Foods 48.1 18.3% 41.4 19.2% Premium Food Distribution 18.5 15.6% 17.3 15.3% ---------------------------------------------------------------------------- Consolidated 66.6 17.5% 58.7 17.9% ---------------------------------------------------------------------------- 

Specialty Foods' gross profit as a percentage of its revenue (gross margin) for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to: (i) operating inefficiencies in its two U.S. sandwich plants which were the result of start-up costs associated with the launch of a large number of new products; and (ii) a significant increase in certain turkey raw material costs resulting from a temporary supply imbalance in the Canadian market. Normalizing for these two factors, Specialty Foods' gross margin for the quarter was 19.7%.

Premium Food Distribution's gross margin for the first quarter of 2016 as compared to the first quarter of 2015 was relatively stable as favorable raw material cost benefits resulting from a strengthening Canadian dollar were largely offset by an unusually large spike in certain beef raw material costs.

Over the last number of quarters Premium Food Distribution's gross margin has been below its historic level of approximately 17% due to unusually significant increases in raw material beef costs which, in the latter part of 2015, were further exacerbated by the weakening of the Canadian dollar. Looking forward (see Forward Looking Statements), Premium Food Distribution expects raw material beef costs, in Canadian dollar terms, to begin decreasing in the coming months and, correspondingly, is projecting an improvement in its gross margins for the remainder of 2016.

Selling, General and Administrative Expenses (SG&A)

(in millions of dollars except percentages) 13 % 13 % weeks weeks ended ended Mar 26, Mar 28, 2016 2015 SG&A by segment: Specialty Foods 24.9 9.5% 22.8 10.6% Premium Food Distribution 14.7 12.4% 14.2 12.6% Corporate 1.9 2.8 ---------------------------------------------------------------------------- Consolidated 41.5 10.9% 39.8 12.1% ---------------------------------------------------------------------------- 

Specialty Foods' SG&A as a percentage of sales for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to: (i) the fixed nature of a variety of costs relative to its organic revenue growth; (ii) reduced discretionary employee compensation associated with growth in the free cash flow of certain businesses; and (iii) the timing of discretionary marketing and promotion costs.

Premium Food Distribution's SG&A as a percentage of sales for the first quarter of 2016 as compared to the first quarter of 2015 decreased slightly mainly due to the fixed nature of a variety of costs relative to its organic revenue growth.

Corporate SG&A for the first quarter of 2016 as compared to the first quarter of 2015 decreased by $0.9 million mainly due to unrealized exchange gains on U.S. dollar denominated liabilities.

Adjusted EBITDA

(in millions of dollars except percentages) 13 % 13 % weeks weeks ended ended Mar Mar 26, 28, 2016 2015 Adjusted EBITDA by segment: Specialty Foods 23.2 8.8% 18.6 8.6% Premium Food Distribution 3.8 3.2% 3.1 2.7% Corporate (1.9) (2.8) ---------------------------------------------------------------------------- Consolidated 25.1 6.6% 18.9 5.8% ============================================================================ 

The Company's targeted EBITDA margin for 2016 is expected (see Forward Looking Statements) to be within the range of 8.0% to 8.5%. This target was set several years ago when its EBITDA margin was approximately 6.5% and since then the Company has made steady progress with its adjusted EBITDA margin improving to 7.5% in 2015. With the continued improvement in the Company's adjusted EBITDA margin in the first quarter of 2016, its adjusted EBITDA margin for the trailing twelve months is 7.7%.

Looking forward (see Forward Looking Statements), the impact of the Company's acquisition of C&C Foods subsequent to the quarter is expected to result in a decrease in the Company's adjusted EBITDA margin due to C&C Foods, as a distribution business, generating lower margins relative to the Company's current adjusted EBITDA margin. However, the Company still expects to be within its targeted range for 2016 based on: (i) expected improvements in the operating performance of its U.S. sandwich plants, which were impacted in the first quarter by the launch of several new products; (ii) a general improvement in operating efficiencies in a number of the Company's businesses resulting from projected organic sales growth; (iii) a reduction in certain raw material beef costs which, due to their historically high levels, are impacting Premium Foods Distribution's gross margins; and (iv) the continuing positive impact of its recently acquired Isernio's Sausage and Expresco Foods businesses.

Interest and other financing costs

The Company's interest and other financing costs for the first quarter of 2016 as compared to the first quarter of 2015 decreased primarily due to reduced debt levels resulting from: (i) the conversion of convertible debentures into common shares throughout 2015 and in the first quarter of 2016; and (ii) principal payments made on the Company's senior debt.

---------------------------------------------------------------------------- Premium Brands Holdings Corporation ---------------------------------------------------------------------------- Consolidated Balance Sheets (Unaudited and in millions of Canadian dollars) March December March 26, 26, 28, 2016 2015 2015 Current assets: Cash and cash equivalents 4.2 11.3 10.8 Accounts receivable 140.7 159.9 109.8 Inventories 143.7 141.6 135.0 Prepaid expenses 6.6 6.4 8.1 Other assets 0.5 1.0 1.0 ---------------------------------------------------------------------------- 295.7 320.2 264.7 Capital assets 225.1 227.3 206.7 Intangible assets 82.1 79.7 71.3 Goodwill 205.2 209.5 176.0 Investment in associates 9.6 9.3 9.5 Deferred income taxes - - 21.3 Other assets 9.8 10.2 3.3 ---------------------------------------------------------------------------- 827.5 856.2 752.8 ---------------------------------------------------------------------------- Current liabilities: Cheques outstanding 4.2 6.8 4.3 Bank indebtedness 5.9 3.9 - Dividend payable 10.8 9.4 8.1 Accounts payable and accrued liabilities 129.2 133.9 108.6 Current portion of long-term debt 1.3 3.7 2.5 Current portion of provisions 1.9 1.9 1.8 ---------------------------------------------------------------------------- 153.3 159.6 125.3 Long-term debt 183.8 202.8 215.6 Puttable interest in subsidiaries 26.3 26.3 17.9 Deferred revenue 4.4 4.4 4.5 Deferred income taxes 18.9 15.5 - Provisions 4.2 4.1 4.7 Pension obligation 1.5 1.4 1.4 ---------------------------------------------------------------------------- 392.4 414.1 369.4 Convertible unsecured subordinated debentures 99.6 121.8 154.0 Equity attributable to shareholders: Deficit (59.5) (57.9) (40.6) Share capital 367.8 345.2 248.1 Equity component of convertible debentures - - 1.0 Reserves 26.6 32.4 20.3 Non-controlling interest 0.6 0.6 0.6 ---------------------------------------------------------------------------- 335.5 320.3 229.4 ---------------------------------------------------------------------------- 827.5 856.2 752.8 ---------------------------------------------------------------------------- 

---------------------------------------------------------------------------- Premium Brands Holdings Corporation --------------------------------------------------------------------------- Consolidated Statements of Operations (Unaudited and in millions of Canadian dollars except per share amounts) 13 13 weeks weeks ended ended March March 26, 28, 2016 2015 Revenue 381.0 328.3 Cost of goods sold 314.4 269.6 ---------------------------------------------------------------------------- Gross profit before depreciation and amortization 66.6 58.7 Selling, general and administrative expenses before depreciation, amortization, and plant start-up costs 41.5 39.8 ---------------------------------------------------------------------------- 25.1 18.9 Plant start-up costs - 2.9 ---------------------------------------------------------------------------- 25.1 16.0 Depreciation of capital assets 6.7 5.7 Amortization of intangible assets 1.2 1.0 Interest and other financing costs 3.3 4.8 Amortization of financing costs 0.1 0.1 Acquisition transaction costs 0.2 - Change in value of puttable interest in subsidiaries 0.7 0.3 Accretion of provisions 0.1 0.1 Unrealized loss (gain) on foreign currency contracts 0.7 (0.2) Equity income in associates (0.3) (0.1) ---------------------------------------------------------------------------- Earnings before income taxes 12.4 4.3 Provision for income taxes Current 1.1 0.2 Deferred 2.1 0.6 ---------------------------------------------------------------------------- 3.2 0.8 ---------------------------------------------------------------------------- Earnings from continuing operations 9.2 3.5 Discontinued operation - 0.1 ---------------------------------------------------------------------------- Earnings 9.2 3.6 ============================================================================ Earnings attributable to: Shareholders 9.2 3.6 Non-controlling interest - - ---------------------------------------------------------------------------- 9.2 3.6 ============================================================================ Earnings per share (basic and diluted) from: Continuing operations 0.34 0.15 Discontinued operation - - Earnings attributable to shareholders 0.34 0.16 ============================================================================ Weighted average shares outstanding (in millions) Basic 27.2 22.7 Diluted 27.4 22.8 

---------------------------------------------------------------------------- Premium Brands Holdings Corporation ---------------------------------------------------------------------------- Consolidated Statements of Cash Flows (Unaudited and in millions of Canadian dollars) 13 weeks 13 weeks ended ended March 26, March 28, 2016 2015 Cash flows from (used in) operating activities: Earnings from continuing operations 9.2 3.5 Items not involving cash: Depreciation of capital assets 6.7 5.7 Amortization of intangibles and other assets 1.2 1.0 Amortization of financing costs 0.1 0.1 Change in value of puttable interest in subsidiaries 0.7 0.3 Unrealized loss (gain) on foreign currency contracts 0.7 (0.2) Equity income in associates (0.3) (0.1) Deferred revenue (0.1) - Accretion of convertible debentures, long-term debt, and provisions 0.4 0.7 Deferred income taxes 2.1 0.6 ---------------------------------------------------------------------------- 20.7 11.6 Change in non-cash working capital 12.0 0.2 Discontinued operation - 0.1 ---------------------------------------------------------------------------- 32.7 11.9 ---------------------------------------------------------------------------- Cash flows from (used in) financing activities: Long term debt - net change (21.9) 3.5 Bank indebtedness and cheques outstanding (0.6) (2.0) Dividends paid to shareholders (9.4) (7.0) Repayment of convertible debentures - (0.2) ---------------------------------------------------------------------------- (31.9) (5.7) ---------------------------------------------------------------------------- Cash flows from (used in) investing activities: Capital asset additions (7.5) (4.5) Payments to shareholders of non-wholly owned subsidiaries (0.4) (0.6) Net change in share purchase loans and notes receivable 0.1 0.1 Distribution from associate - 0.1 ---------------------------------------------------------------------------- (7.8) (4.9) ---------------------------------------------------------------------------- Change in cash and cash equivalents (7.0) 1.3 Effects of exchange on cash and cash equivalents (0.1) 0.1 Cash and cash equivalents, beginning of period 11.3 9.4 ---------------------------------------------------------------------------- Cash and cash equivalents, end of period 4.2 10.8 ---------------------------------------------------------------------------- 

NON-IFRS FINANCIAL MEASURES

The Company uses certain non-IFRS financial measures including adjusted EBITDA and free cash flow, which are not defined under IFRS and, as a result, may not be comparable to similarly titled measures presented by other publicly traded entities, nor should they be construed as an alternative to other earnings measures determined in accordance with IFRS. These non-IFRS measures are calculated as follows:

Adjusted EBITDA

(in millions of dollars) 13 weeks 13 weeks ended ended Mar 26, Mar 28, 2016 2015 Earnings before income taxes 12.4 4.3 Plant start-up and restructuring costs - 2.9 Depreciation of capital assets 6.7 5.7 Amortization of intangible assets 1.2 1.0 Interest and other financing costs 3.3 4.8 Amortization of financing costs 0.1 0.1 Acquisition transaction costs 0.2 - Change in value of puttable interest in subsidiaries 0.7 0.3 Accretion of provisions 0.1 0.1 Unrealized loss (gain) on foreign currency contracts 0.7 (0.2) Equity income in associates (0.3) (0.1) ---------------------------------------------------------------------------- Consolidated adjusted EBITDA 25.1 18.9 ---------------------------------------------------------------------------- 

Free Cash Flow

(in millions of dollars) 52 weeks 13 weeks 13 weeks Rolling ended ended ended Four Dec 26, Mar 26, Mar 28, Quarters 2015 2016 2015 Cash flow from operating activities 67.4 32.7 11.9 88.2 Changes in non-cash working capital 17.1 (12.0) (0.2) 5.3 Acquisition transaction costs 0.2 0.2 - 0.4 Plant start-up costs 2.9 - 2.9 - Maintenance capital expenditures (6.5) (2.0) (1.2) (7.3) ---------------------------------------------------------------------------- Free cash flow 81.1 18.9 13.4 86.6 ============================================================================ 

FORWARD LOOKING STATEMENTS

This press release contains forward looking statements with respect to the Company, including its business operations, strategy and financial performance and condition. These statements generally can be identified by the use of forward looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.

Although management believes that the expectations reflected in such forward looking statements are reasonable and represent the Company's internal expectations and belief as of May 12, 2016, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements.

Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of finished products sourced from third party manufacturers; (v) changes in the Company's relationships with its larger customers; (vi) access to commodity raw materials; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; (x) execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its growth initiatives; (xv) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xvi) the loss and/or inability to attract key senior personnel; (xvii) fluctuations in the interest rates associated with the Company's funded debt; (xviii) failure or breach of the Company's information systems; (xix) financial exposure resulting from credit extended to the Company's customers; (xx) the malfunction of critical equipment used in the Company's operations; (xxi) livestock health issues; (xxii) international trade issues; and (xxiii) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's 2015 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking statements in this document are made as of May 12, 2016 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking statements in this press release.

For further information, please contact:
George Paleologou
President and CEO
or
Will Kalutycz
CFO
(604) 656-3100
www.premiumbrandsholdings.com