VANCOUVER, BC, May 13, 2024 /CNW/ - 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 2024. FIRST QUARTER HIGHLIGHTS Record first quarter revenue of $1.46 billion representing a 2.2%, or $31.3 million, increase as compared to the first quarter of 2023 in a seasonally slow quarter Solid progress on Specialty Foods' core U.S. growth initiatives in sandwiches, protein and baked goods, which for the quarter generated an organic volume growth rate of 9.7% and total sales of $580.8 million Record first quarter adjusted EBITDA1 of $121.0 million representing a 9.3%, or $10.3 million, increase as compared to the first quarter of 2023 An 8.3% adjusted EBITDA margin, up from 7.7% in the first quarter of 2023 Specialty Foods' adjusted EBITDA margin continues to normalize reaching 9.5% for the quarter, a 90-basis point improvement as compared to the first quarter of 2023 First quarter adjusted EPS1 of $0.54 per share representing a 15.6%, or $0.10 per share decrease as compared to the first quarter of 2023 Sales and adjusted EBITDA guidance for 2024 was reaffirmed Declared a dividend of $0.85 per common share for the second quarter of 2024 1    The Company reports its financial results in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.  Adjusted EBITDA and adjusted EPS are non-IFRS financial measures.  Reconciliations and explanations for all non-IFRS measures are included in the Non-IFRS Financial Measures section of this press release. QUESTIONS AND ANSWERS SESSION The Company will hold a Q&A session on its first quarter 2024 results today at 10:30 a.m. Vancouver time (1:30 p.m. Toronto time).  Management's pre-recorded remarks and an investor presentation that will be referenced on the conference call are available here or by navigating through the Company's website at www.premiumbrandsholdings.com. Access to the Q&A session may be obtained by calling the operator at (289) 514-5100 or (800) 717-1738 (Conference ID: 94615) up to ten minutes prior to the scheduled start time. For those who are unable to participate, a recording of the conference call will be available through to 12:00 a.m. Toronto time on June 13, 2024 at (888) 660-6264 (passcode: 94615#).  Alternatively, a recording of the conference call will be available at the Company's website at www.premiumbrandsholdings.com. SUMMARY FINANCIAL INFORMATION (In millions of dollars except per share amounts and ratios) 13 weeks   ended   Mar 30,   2024   13 weeks   ended   Apr 1,   2023   Revenue 1,461.8 1,430.5 Adjusted EBITDA1 121.0 110.7 Earnings 6.3 5.9 EPS 0.14 0.13 Adjusted earnings1 24.0 28.6 Adjusted EPS1 0.54 0.64 Trailing Four Quarters Ended   Mar 30,   2024   Apr 1,   2023   Free cash flow1 251.0 273.0 Free cash flow per share 5.65 6.13 Declared dividends 141.1 128.3 Declared dividend per share                     3.16 2.87 Payout ratio1 56.2 % 47.0 % 1    Reconciliations for all non-IFRS measures are included in the Non-IFRS Financial Measures section of this press release. "Over the last three years, we have made significant capital investments in building the capacity needed to support our U.S. growth initiatives in protein, sandwiches and artisan baked goods.  With many of these projects now coming online, we are starting to see their potential as shown in our record sales and adjusted EBITDA for the quarter, despite facing a challenging macroeconomic backdrop in Canada," said Mr. Paleologou, President and CEO.  "Correspondingly, the key driver of our performance was our U.S. growth initiatives, which generated organic volume growth of almost 10% even though they are still in the early stages of development. "Looking forward, as we move into our busier second and third quarters, we expect these initiatives to continue building momentum based on the broad range of new customer and product listing opportunities in the works," added Mr. Paleologou. "In terms of the Canadian market, despite the difficult economic environment, we did make some progress in stabilizing our specialty foods sales, which generated organic volume growth of 1.1% as compared to a 4.3% contraction in the previous quarter.  We are also seeing some positive signs for our lobster businesses with a solid start to the first Canadian fishery of 2024," said Mr. Paleologou.  "Correspondingly, we are reaffirming our previous 2024 sales and adjusted EBITDA guidance. "On the acquisitions front, we continue to enjoy a robust deal pipeline and while we didn't complete any transactions during the quarter we are working on several exciting opportunities that we expect to close in the coming quarters," added Mr. Paleologou. SECOND QUARTER 2024 DIVIDEND The Company also announced that its Board of Directors approved a cash dividend of $0.85 per share for the second quarter of 2024, which will be payable on July 15, 2024 to shareholders of record at the close of business on June 28, 2024. Unless indicated otherwise in writing at or before the time the dividend is paid, each dividend paid by the Company in 2024 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 across Canada and the United States.   www.premiumbrandsholdings.com RESULTS OF OPERATIONS The Company reports on two reportable segments, Specialty Foods and Premium Food Distribution, as well as non-segmented investment income and corporate costs (Corporate).  The Specialty Foods segment consists of the Company's specialty food manufacturing businesses while the Premium Food Distribution segment consists of the Company's differentiated distribution and wholesale businesses as well as certain seafood processing businesses.  Investment income includes interest and management fees generated from the Company's businesses that are accounted for using the equity method. Revenue (in millions of dollars except percentages) 13 weeks ended Mar 30, 2024 % (1) 13 weeks ended Apr 1, 2023 % (1) Revenue by segment: Specialty Foods 987.4 67.5 % 948.8 66.3 % Premium Food Distribution                     474.4 32.5 % 481.7 33.7 % Consolidated 1,461.8 100.0 % 1,430.5 100.0 % (1) Expressed as a percentage of consolidated revenue. Specialty Foods' (SF) revenue for the quarter increased by $38.6 million or 4.1% primarily due to: (i) organic volume growth of $53.0 million representing an organic volume growth rate (OVGR) of 5.6%; and (ii) a $0.3 million increase in the translated value of sales generated by SF's U.S. based businesses due to a slightly weaker Canadian dollar.  These factors were partially offset by: (i) selling price deflation of $13.1 million relating primarily to a cost-plus contract with a major foodservice customer; and (ii) the shutdown of SF's Creekside Custom Foods business as its capacity is transitioned to our rapidly growing Global Gourmet kettle business – this resulted in $1.6 million of lost sales, primarily in the fresh sandwich category. SF's OVGR was driven by its core U.S. sales growth initiatives in sandwiches, protein and baked goods, which generated an OVGR of 9.7% and total sales of $580.8 million for the quarter.  This performance was despite experiencing temporarily lower sandwich sales growth while a customer implements a new merchandising strategy – normalizing for this factor the OVGR for SF's core U.S. sales growth initiatives is 12.2%. SF's OVGR was negatively impacted by: (i) a below normal OVGR in Canada of 1.1% mainly due to general weakness in consumer spending in the retail and foodservice channels; and (ii) reduced beef jerky product sales due to a combination of factors including consumer price sensitivity and high selling prices resulting from high beef commodity input costs.  SF expects (see Forward Looking Statements) these challenges to be transitory and in the meantime is implementing a variety of strategies to counter them including targeted promotion, product development, and developing new markets. Premium Food Distribution's (PFD) revenue for the quarter decreased by $7.3 million or 1.5% due to a sales volume contraction of $25.5 million.  This was partially offset by: (i) selling price inflation of $15.8 million relating primarily to lobster-based products; and (ii) business acquisitions, which generated $2.4 million in growth. The contraction in PFD's sales volume was primarily due to lobster supply shortages caused mainly by a decline in the Maine lobster catch of approximately 20% in the third quarter of 2023 and a poor southwest Nova Scotia fishery in the fourth quarter of 2023.  The decreases in both fisheries, which were the result of unusually cold waters and poor weather that prevented vessels from harvesting, are expected (see Forward Looking Statements) to be transitory.  Excluding the impacts of the lobster supply issue, PFD's sales were flat as the success of several retail salmon features, driven by large Atlantic salmon harvests on the east coast of Canada, were offset by lower Canadian premium beef and seafood sales caused by weaker consumer spending. Gross Profit (in millions of dollars except percentages) 13 weeks ended Mar 30, 2024 % (1) 13 weeks ended Apr 1, 2023 % (1) Gross profit by segment: Specialty Foods 223.0 22.6 % 199.3 21.0 % Premium Food Distribution                     74.7 15.7 % 70.5 14.6 % Consolidated 297.7 20.4 % 269.8 18.9 % (1) Expressed as a percentage of the corresponding segment's revenue. SF's gross profit as a percentage of its revenue (gross margin) for the quarter increased by 160 basis points primarily due to: (i) a combination of lower raw material input costs and selling price increases on certain products; (ii) production efficiency improvements resulting from investments in automation, continuous improvement projects and a more stable labor market; and (iii) sales leveraging benefits associated with SF's organic volume growth.  These factors were partially offset by: (i) wage inflation; and (ii) investments in additional plant infrastructure to support SF's current and future growth. PFD's gross margin for the quarter increased by 110 basis points primarily due to higher margins on lobster-based products resulting from: (i) lower than normal margins in the first quarter of 2023; and (ii) a generally improved pricing environment caused by a shortage of supply. Selling, General and Administrative Expenses (SG&A) (in millions of dollars except percentages) 13 weeks ended Mar 30, 2024 % (1) 13 weeks ended Apr 1, 2023 % (1) SG&A by segment: Specialty Foods 129.4 13.1 % 117.8 12.4 % Premium Food Distribution                     50.7 10.7 % 48.1 10.0 % Corporate 9.5 8.3 Consolidated 189.6 13.0 % 174.2 12.2 % (1) Expressed as a percentage of the corresponding segment's revenue. SF's SG&A as a percentage of sales (SG&A ratio) for the quarter increased by 70 basis points primarily due to: (i) wage inflation; and (ii) higher outside storage costs, which were mostly the result of providing a major customer with additional services, the cost of which is recovered through increased selling prices on applicable products.  These factors were partially offset by the sales leveraging benefits associated with SF's organic growth. PFD's SG&A ratio for the quarter increased by 70 basis points primarily due to the impact of sales deleveraging associated with the contraction in its sales volumes. Adjusted EBITDA (1) (in millions of dollars except percentages) 13 weeks ended Mar 30, 2024 % (2) 13 weeks ended Apr 1, 2023 % (2) Adjusted EBITDA by segment: Specialty Foods 93.6 9.5 % 81.5 8.6 % Premium Food Distribution 24.0 5.1 % 22.4 4.7 % Corporate (9.5) (8.3) Interest Income from Investments                 12.9 15.1 Consolidated 121.0 8.3 % 110.7 7.7 % (1) Adjusted EBITDA is a non-IFRS financial measure.  Reconciliation and explanations are included in the Non-IFRS Financial Measures section of this press release. (2) Expressed as a percentage of the corresponding segment's revenue. Plant Start-up and Restructuring Costs Plant start-up and restructuring costs consist of expenses associated with: (i) the start-up of new production capacity; (ii) the reconfiguration of existing capacity to gain efficiencies and/or additional capacity; and/or (iii) the restructuring of a business to improve its profitability. The Company expects (see Forward Looking Statements) these investments to result in improvements in its future earnings and cash flows. During the first quarter of 2024, the Company incurred $10.8 million in plant start-up and restructuring costs relating primarily to the following projects, all of which are expected to expand its capacity and/or generate improved operating efficiencies (see Forward Looking Statements): Start-up of a new cooked protein capacity in Versailles, Ohio Reconfiguration of a cooked protein facility in Scranton, Pennsylvania, including the addition of another cooked products production line Start-up of a new 91,000 square foot artisan bakery in San Francisco, California Reconfiguration of a meat snack facility in Kent, ...