Premium Brands Holdings Corp

Premium Brands Holdings Corp (TSX: PBH) is a Food & Drug Retailers company based out of Canada. The Company is engaged in the business of manufacturing speciality food and distribution of premium food products. The Company also operate wholesale operations in the United States and Canada.

Recent News

On 25^th June 2020, Premium Brands Holdings announced the signing of an agreement with Scotiabank, Cormark Securities Inc, CIBC Capital Markets, BMO Capital Markets and National Bank Financial Inc as joint bookrunners to raise $300 million through private placing for general corporate purposes and fund acquisitions in the future.

Financial Highlights – Q1 Financial Year 2020 (28^th March 2020, CAD, Million)

(Source: Quarterly Report, Company Website) 

In the first quarter of the financial year 2020, driven by an increase in organic sales volume, the revenue increased by 20.4 per cent to CAD 935 million (Q1 FY2019: CAD 776.6 million). The Gross profit stood at CAD 181 million in the first quarter of the financial year 2020 (Q1 FY2019: CAD 159.6 million). The Company delivered strong adjusted EBITDA of CAD 64.3 million for the period. The earnings before tax stood at CAD 15.6 million in Q1 FY2020 (Q1 FY2019: 11.7 million), reflecting strong revenue and adjusted EBITDA. The Group’s earnings stood at CAD 12.2 million in Q1 FY2020 (Q1 FY2019: CAD 10 million). The basic and diluted earnings per share stood at $0.33 for the Q1 FY2020 (Q1 FY2019: $0.30). The cash and cash equivalents balance declined to CAD 11.2 million as on 28^th March 2020 from CAD 18.4 million as on 28^th December 2019.

Share Price Performance

Daily Chart as of 10 July 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Premium Brands Holdings Corp shares closed at CAD 87.32 at the time of writing after the market close on 10 July 2020. Stock's 52 weeks High is CAD 102.68 and Low is CAD 62.79.

Key Risks

Liquidity and interest rate risks may impact the business operations. The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the Company.

Conclusion

The Company has shown an increase in financial performance in the first quarter of the financial year 2020. Both the top-line and the bottom-line performance have increased, with improved profitability for the period. The Group needs to manage the operating expenses unless it results in further deterioration in financial performance in the coming years. The Company operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening the balance sheet and return with capital discipline and reducing its costs to preserve cash. PBH activities are negatively impacted by the elimination of air travel, shutdown of cruise line industry, decline on the consumption of seafood and disruptions in the supply chain.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of CAD 87.32 (as on 10 July 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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