Premium Brands (PBH) Q3 2024 (Q&A) earnings summary

Executive summary

• Achieved record Q3 revenue of $1.67 billion, up 1.3% year-over-year, and record adjusted EBITDA of $159.4 million, up 0.4% year-over-year.

• Adjusted EPS declined 12.6% to $1.11 per share compared to Q3 2023, reflecting margin pressures and one-time items.

• No cancellations or renegotiations in the business development pipeline; onboarding delays are due to large customer processes, with a robust pipeline expected to drive growth in 2025.

• QSR segment in the U.S. experienced a slowdown, but strategies are in place for recovery, and growth opportunities exist in club and international markets.

• Declared a Q4 dividend of $0.85 per share, payable January 15, 2025.

Financial highlights

• Q3 revenue: $1,666.9 million (Q3 2023: $1,644.9 million); 9M revenue: $4,831.4 million (9M 2023: $4,706.3 million).

• Q3 adjusted EBITDA: $159.4 million (Q3 2023: $158.8 million); 9M adjusted EBITDA: $445.0 million (9M 2023: $421.9 million).

• Revenue from the largest QSR customer was approximately CAD 196 million for the quarter, down 6% year-over-year.

• Organic volume growth in U.S. Specialty Foods, excluding the large customer, was up 8% in the quarter.

• Adjusted earnings were $49.4 million, with adjusted EPS of $1.11, down from $56.4 million and $1.27 in Q3 2023.

Outlook and guidance

• No longer expects 2024 revenue and adjusted EBITDA to meet prior guidance ($6.65–$6.85B revenue, $630–$650M EBITDA) due to sales challenges and delayed product launches.

• 2025 guidance will be provided with Q4 results; high single-digit or better organic volume growth is expected in U.S. Specialty Foods, excluding the large customer.

• Maintains 2027 targets of $10 billion in sales and at least 10% adjusted EBITDA margin.

• Margin expansion is anticipated in Specialty Foods, driven by strong contribution margins from new growth platforms.

• Q4 is expected to show incremental improvement year-over-year as new initiatives begin to contribute.