CA - Premium Brands Holdings Corporation (PRBZF) Q4 2023 Earnings Call Transcript

2024-03-15 16:55:07 ET

Premium Brands Holdings Corporation (PRBZF)

Q4 2023 Results Conference Call

March 15, 2024 01:30 PM ET

Company Participants

George Paleologou - President, CEO & Director

William Kalutycz - Chief Financial Officer

Conference Call Participants

Martin Landry - Stifel

Derek Lessard - TD Cowen

George Doumet - Scotiabank

Vishal Shreedhar - National Bank

Kyle McPhee - Cormark Securities

John Zamparo - CIBC

Chris Li - Desjardins

Stephen MacLeod - BMO Capital Markets

Saba Khan - RBC Capital Markets

Presentation

George Paleologou

Welcome, everyone, to our 2023 Fourth Quarter Conference Call. With me here today is our CFO, Will Kalutycz. Our presentation today will follow the deck that was posted on our website this morning. You can also access it by clicking on the link of our press release issued this morning.

We're now on Slide 4, which outlines certain key highlights for the quarter and the year. Fourth quarter revenue came in at $1.55 billion, representing an $80.1 million decrease for the quarter. Normalizing for the extra week in 2022, sales for the fourth quarter were up $1.4 million. In general terms, our Canadian businesses underperformed during the quarter due to a difficult macroeconomic environment in Canada as consumers traded down to lower cost meals or shopped at discount banners, where we're under indexed.

Our Specialty Food Group's U.S. focused initiatives outperformed during the quarter, delivering 9.3% organic volume growth, driven by sandwich, protein and specialty-baked goods, while our overall organic volume growth in Canada was a negative 4.3%. Despite the consumer demand headwinds in the Canadian market, which should not come as a surprise to anyone, given Canada's weak economic growth numbers and the challenging macroeconomic backdrop, we are very confident that we remain on track and that our progress in the U.S. validates our long-term capital allocation strategies of focusing on this important market.

For the quarter, our U.S. growth initiatives generated $581 million in sales, while for the year, they generated $2.3 billion in sales and annual growth rate of 10.1%. We expect our U.S. organic growth to accelerate over the next few quarters as new capacity ramps up. 2023 was our 20th consecutive year of delivering record top-line growth and adjusted EBITDA. This is despite the many challenges that we faced along the way. Over the past 20 years, we have evolved from a small regional company based in Western Canada into a diversified food platform, with 115 facilities located across Canada, the U.S. and Europe.

Our growth and our diversification, combined with our entrepreneurial culture and great people, helped us to navigate the unique challenges we faced over the past 20 years, including the pandemic, hyperinflation and COVID-related supply chain disruptions and tight labor markets, and is currently helping us to manage the challenging macroeconomic environment in Canada. Overall, we remain on plan to achieve or exceed our five-year plan of $10 billion in sales and $1 billion of EBITDA by the end of 2027, and we have never been more excited and optimistic about our future.

We are now on Slides 5 to 7. We are pleased to report that several capital projects are at or very near completion, as you can see on these slides. This new state-of-the-art capacity is mainly focused on supporting our various sales growth initiatives in the U.S.

We are now on Slide 8. I have included here some pictures of products launched recently by Concord Meats. Concord, which is based in Ontario, joined the PB ecosystem in 2018 and has more than doubled its sales over the past five years. Concord is expertly run by the talented entrepreneurs that founded it and has incredible runway for further growth in both Canada and especially the U.S. Over the past five years, their sales in the U.S. have grown from $7.8 million in 2018 to $115 million. Many of the Concord products launched into the U.S. market in recent years have trajectories to become $100 million SKUs assuming capacity availability....

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