Premium Brands (PBH) Q2 2024 Prepared Remarks earnings summary

Executive summary

• Achieved record Q2 revenue of $1.7 billion, up 4.4% year-over-year, and record adjusted EBITDA of $164.6 million, up 8.0%, driven by strong U.S. Specialty Foods growth and stabilization in Premium Food Distribution.

• Specialty Foods segment delivered 12.9% organic volume growth, with U.S. sales of $661.4 million.

• Capital investments and new U.S. capacity fueled growth, supporting a five-year plan targeting $10 billion in revenue and 10%-12% EBITDA margins by 2027.

• No acquisitions closed in the quarter, but several are in advanced due diligence.

• Declared a Q3 2024 dividend of $0.85 per share, payable October 15, 2024.

Financial highlights

• Quarterly sales reached a record $1.7 billion, up $71.8 million from Q2 2023, with $62.4 million from organic volume growth and $6.1 million from price inflation.

• Adjusted EBITDA was $164.6 million, up 8% year-over-year; adjusted EBITDA margin rose to 9.7%, a six-year Q2 high.

• Adjusted earnings were $56.9 million ($1.28/share), up from $56.3 million ($1.27/share) in Q2 2023.

• Q2 net earnings were $52.5 million, up from $33.9 million in Q2 2023; basic EPS was $1.18 versus $0.76.

• Free cash flow for the trailing four quarters reached $257.9 million; payout ratio at 56.1%.

Outlook and guidance

• 2024 revenue guidance maintained at $6.65–$6.85 billion and adjusted EBITDA at $630–$650 million, with results expected at the lower end due to delayed product launches and weaker foodservice demand.

• Five-year targets reaffirmed: $10 billion revenue and $1 billion adjusted EBITDA by 2027.

• Projected record free cash flow per share in 2024, supported by EBITDA growth and stable interest rates.

• Expect significant improvement in adjusted earnings and EPS as interest rates moderate and capital investments are leveraged.