Premium Brands (PBH) Q4 2024 earnings summary

Executive summary

• Achieved record annual and Q4 2024 sales and adjusted EBITDA, with U.S. growth initiatives gaining momentum and Canadian market stabilizing.

• 2025 revenue guidance implies $7.2B–$7.4B, with $500M from organic growth, mainly driven by U.S. programs and some recovery in Canada and exports to Asia.

• Issued 2025 sales and adjusted EBITDA guidance, declared a $0.85/share quarterly dividend, and completed several acquisitions, including Denmark Sausage.

• Well positioned to mitigate impacts from potential Canada/U.S. trade disputes, with mitigation strategies in place.

• Four recent acquisitions are expected to be highly accretive and did not deteriorate the balance sheet.

Financial highlights

• Q4 2024 revenue reached $1,639.1M, up from $1,554.7M in Q4 2023; organic volume growth rate was 5.2%.

• 2024 full-year revenue was $6,470.5M, with adjusted EBITDA of $593.7M (margin 9.2%).

• Contribution margins for organic growth are projected at 27%-28%, with higher margins in protein and bakery segments.

• Free cash flow for the trailing four quarters was $250.8M; payout ratio increased to 60.5%.

• Working capital increased by CAD 86M in Q4, mainly due to receivables and inventory from acquisitions and strategic beef purchases.

Outlook and guidance

• 2025 adjusted EBITDA guidance is $680M–$700M, with midpoint $690M; targeted mid-term EBITDA margin is 10%.

• Organic volume growth in Canada is conservatively projected at 2%-3% for 2025, with internal expectations slightly higher.

• Food service channel in the U.S. is expected to contract in early 2025, returning to growth in the second half.

• Free cash flow is expected to reach record levels in 2025, driven by lower CapEx and higher EBITDA.

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