Premium Brands Holdings Corporation (PBH) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Bruce Hodge, and I am the Chairman of the Board of Directors of Premium Brands Holdings Corporation. I will be chairing this meeting. From coast to coast to coast, from country to country, I would like to begin by acknowledging the indigenous peoples of all the lands that we are on today. Here in Richmond, I would like to acknowledge that we are gathered on the traditional territory of the Coast Salish peoples. Welcome to the Annual General Meeting of Shareholders of Premium Brands Holdings Corporation. In order to ensure that this meeting covers all required business in an efficient manner, we have prearranged with Will Kalutycz, our Chief Financial Officer; and Gwun Yee, our Director Legal, to move and second, respectively, the motions of the business of this meeting. This procedure is in no way intended to discourage any comments and/or questions from shareholders who are present today. Please note that questions can only be submitted through the LUMI AGM platform. Please note that only eligible shareholders are entitled to vote at this meeting. Eligible shareholders are defined as registered shareholders who held their shares in the name as at the close of business on Friday, March 18, 2022, the record date of this meeting, or their validly appointed proxy holders. Please also note that voting is open for any shareholders to vote their shares if they have not already submitted a proxy. We encourage you to vote your shares prior to the meeting using the instructions found on Pages 9 through 11 of the information circular. Shareholders who have already voted their shares by proxy do not need to vote their shares at this meeting, unless they wish to change their vote previously made by proxy. The meeting will now come to order. Douglas Goss will be acting as Secretary and Counsel for this meeting. Sandy Hunter of TSX Trust Company will be acting as scrutineer. The notice and access notification to shareholders representing this meeting was mailed to the shareholders of the corporation in accordance with National Instrument 54-101 on April 4, 2022, as evidenced by the affidavit of mailing of [ Lynne Sheet Pearson ] of TSX Trust Company, the registrar and transfer agent of the corporation. The affidavit of mailing of [ Lynne Sheet Pearson ] will be annexed to the minutes of this meeting as Appendix 1. As you have already received a copy of the notice of this meeting, I would suggest the motion dispensing with the reading of the notice.

I move that the reading of the notice of this meeting be dispensed with.

I second the motion.

Are there any objections to this motion? As no objections have been raised, I declare the motion carried. And with proof of service and the notice calling this meeting duly tabled, I direct a copy of the notice, together with proof of service, be kept by the Secretary with the records of this meeting. The bylaws of the corporation provide that a quorum for the transaction of business at any meeting of shareholders shall be 2 persons, present in person or by means of telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, and each vote entitled to vote at the meeting and holding or representing by proxy not less than 10% of the votes entitled to be cast at the meeting. I have received the scrutineer's report on attendance and confirm that this criterion has been satisfied. I therefore declare that there is a quorum present at this meeting. The scrutineers' report will be attached to the minutes of this meeting as Appendix 2. I now declare that this meeting is regularly called and properly constituted for transaction of business. There will be an opportunity to ask questions regarding each resolution in turn, noting that questions may only be submitted through the LUMI AGM platform. As Chair, I will pause for the appropriate amount of time to allow shareholders to submit their questions. Once discussion on all items of business have been concluded, I will give you a minute to enter your votes and then declare voting closed on all resolutions. The results of this meeting will be released today and will be available on our website. We will run through each of the items on the agenda in turn, responding to questions on that item of business while it is before the meeting. I now declare the polls open on all resolutions. The next item of business is presentation of the corporation's audited financial statements for the financial year ended December 25, 2021, together with the accompanying report of the auditors. The corporation's financial statements for the financial year ended December 25, 2021, together with the auditor's report thereon and management's discussion and analysis regarding same, were filed on SEDAR on March 10, 2022, and are available for viewing and are printing at no charge on the SEDAR website at www.sedar.com. Copies of the corporation's financial statements, together with the auditor's report, were also made available on corporation's transfer agent, TSX Trust Company's website. As you no doubt have had an opportunity to review this material, I would request a motion dispensing with the reading of the financial statements and the auditor's report.

I move that reading of the corporation's financial statements for the financial year ended December 25, 2021, together with the auditors' report thereon, be dispensed with.

I second the motion.

Are there any objections to the motion? As there are no objections to the motion, I declare the motion carried. The next item of business is the appointment of PricewaterhouseCoopers LLP as auditors of the corporation, and I ask for a motion in this regard.

I move that PricewaterhouseCoopers LLP, chartered professional accountants at Vancouver British Columbia, be appointed as auditors of the corporation until the close of the next annual meeting or until a successor is appointed at a remuneration to be determined by the Board of Directors of the corporation.

I second the motion.

This motion is now open for discussion. You have heard the motion. And if there's no further discussion, I would ask that anyone who has not previously voted their shares in this regard, please do so. The results of this vote will be announced later in the meeting once all of the votes have been tabulated. The next item of business is fixing the number of positions on the corporation's Board of Directors. I would request a motion in this regard.

I move that the number of directors of the corporation to be elected at this meeting be fixed at not more than 8.

I second the motion.

You have heard the motion. And if there's no further discussion, I would ask that anyone who has not previously voted their shares in this regard, please do so. The results of this vote will be announced later in the meeting once all of the votes have been tabulated. It is now in order to proceed with the election of directors. Management's nominees for election of directors of the corporation are listed on Pages 18 through 25 of the corporation's information circular. They are Sean Cheah, Johnny Ciampi, Dr. Marie Delorme, myself, Kathleen Keller-Hobson, Hugh McKinnon, George Paleologou and Mary Wagner. The shareholders of the corporation have been asked to either vote for or withhold their vote for the election of each of the management's individual nominees. Each director elected today will hold office effective as of the completion date of this meeting, until the close of the next Annual Meeting of Shareholders or until their successor is duly elected or appointed, unless their office is earlier vacated in accordance with the Articles of the Corporation or unless they become disqualified to act as a director. Proxies have been received sufficient to elect all of the management nominees. If any shareholders present have other nominees that they would wish to propose for consideration, the Board would be pleased to receive their names for consideration for future elections. In light of this, are there any further nominations? I now declare the nominations closed.

I move that Sean Cheah, Johnny Ciampi, Dr. Marie Delorme, Bruce Hodge, Kathleen Keller-Hobson, Hugh McKinnon, George Paleologou and Mary Wagner be appointed as directors of the corporation to hold office until the close of the next Annual Meeting of Shareholders or until each of their successors is elected or appointed.

I second the motion.

You have heard the motion. And I would ask that anyone who has not previously voted their shares in this regard, please do so now. The results of this vote will be announced later in the meeting once all of the votes have been tabulated. The next item of business is approval of the advisory resolution respecting the corporation's approach to executive compensation. As outlined on Pages 7 and 8 of the information circular, the Board, through the Compensation and Human Resources Committee, is responsible for formulating and monitoring the effectiveness of the corporation's executive compensation program. The Board believes that the corporation shareholders should have an opportunity to express their opinion on the corporation's executive compensation program by voting for or against the resolution set out on Page 7 of the information circular. As this is an advisory vote, the results of this vote will not be binding upon the Board. However, the Board and the Compensation and Human Resources Committee will consider the outcome of the vote as part of their ongoing review of the corporation's executive compensation program. In order to meet the requirements of the Canada Business Corporations Act, this resolution must be passed by a majority of votes cast by the shareholders of the corporation. As all of you have had a chance to review the resolution prior to the meeting, I would request a motion dispensing with the formal reading of this resolution.

I move that formal reading of the resolution approving the corporation's approach to executive compensation found on Page 7 of the information circular be dispensed with.

I second the motion.

Are there any objections to this motion? As there are no objections to this motion, I declare the motion carried. I would ask that anyone who has not previously voted their shares regarding this resolution, please do so. The results of this vote will be announced later in the meeting once all votes have been tabulated. I would now advise that we are closing the polls. It is now 1:41, Pacific -- p.m. Pacific Time. I will close the boards with respect to all resolutions within 30 seconds to allow all online votes to catch up. [Voting]

Okay. The polls are now closed. While the ballots are being tallied, we will receive a brief update on the corporation's operations from George Paleologou, our President and Chief Executive Officer; and Will Kalutycz, our Chief Financial Officer.

Thank you, Bruce, and welcome, everyone, to our 2022 AGM. Our CFO, Will Kalutycz, and I are going to take you through a formal presentation, followed by Q&A. This is now our third AGM by video. Hopefully, next year, we will see you all in person. The slides here are available on our website as well. On Slide 2, our standard disclaimers, as usual on Slides 2 and 3. We're now on Slide 4. As you can see, our sales for 2021 came in at $4.9 billion, up from $200 million back in 2004. We began with 8 operations located mainly in Western Canada, and we now -- we have now expanded across Canada and the U.S. with 111 operations overall. Through our investment in Clearwater Seafoods, we now have operations in Argentina and the U.K. We also have an investment in a dry cured meats company located in Parma, Italy. Over the years, we have grown every metric consistently and steadily despite the many headwinds that came our way. We have also grown our free cash flow per share to $6.05 per share, up from $0.78 a share back in 2004. We're now on Slide 5. Our vision remains simple and straightforward. We invest in innovative and entrepreneurial food companies that are making great-tasting nutrient-dense products with a passion for their communities and what is best for our planet. All of our capital allocation decisions and innovation are driven by this simple vision. We're now on Slide 6. Even with the most recent volatility in the capital markets, we have delivered a 21.1% compounded annual return to our long-term shareholders since 2004 through growing dividends per share and capital appreciation. We're now on Slide 7. We invest our capital carefully, deliberately and responsibly in targeted segments of the food industry. We back incredibly passionate and talented people, and we support them over the long term. We don't buy businesses to flip them. We encourage innovation in new products and processes, and we work diligently to build large moats around our various businesses. We're now on Slide 8. Our second comprehensive ESG report is due to come out in June of this year. We're on track to achieve carbon neutrality by 2030. We're also committed to producing authentic fruit that is healthy, nutrient-dense and minimally processed. We take climate change very seriously, and we believe that our passion for regenerative agriculture and the sustainable stewardship of our fisheries combined with our stated objectives to help reduce food waste will improve both the environment and human health and also help reduce food insecurity. We continue to believe strongly that healthy humans and a healthy planet are 2 sides of the same coin. We're now on Slide 9. While focusing on the social part of ESG, we would like to show you a short video about the significance of our partnership with Membertou First Nation and the Mi'kmaq Coalition in acquiring Clearwater Seafoods. We believe that this transaction represents a reconciliation at its very best. But Mi'kmaq partners can also teach us a great deal about environmental stewardship and the decisions are focused on the next 7 generations and not just on today's. The video is narrated by Chief Terry Paul of the Membertou First Nation, who played a leading role in this historical, transformative and groundbreaking transaction. [Presentation]

We're now on Slide 10. This slide provides you with a list of the many resources and attributes available to partners that joined the PB ecosystem. As stated many times, we're not a roll-up, an integrator or a consolidator. We identify emerging trends and white-space opportunities, and we invest in innovative specialty food businesses that share our views, and we help them build scale to become much larger. Let's -- now on Slide 11. The chart shows you how diverse we are by product and by species. This diversity enables us to better manage commodity risks and makes us more agile and more resilient. You can clearly see the emergence of seafood as our top commodity input. We're certain that seafood is the emerging protein in North America and at the intersection of a number of key consumer megatrends. We're now on Slide 12. Our global supply chain is shown here on Slide 12. During 2021, some global supply chain slowed down and, in some cases, ceased completely. So global diversification was the key for us. Our supply chain teams travel the world looking for partners that share our values and our vision. And these relationships are leveraged for the benefit of the entire PB Ecosystem. Now on Slide 13. Sales channel and customer diversification are key strategic objectives for all of our platforms. Our progress over the years in this area was a key factor in helping manage through the various COVID-related shutdowns of channels like food service, airlines and cruise lines. Slide 14. The map shows the location of our various operations around the world. Our U.S.-based sales continue to grow, and we continue to see tremendous opportunities to grow our business in the U.S. for many years to come. Slide 15. We are very active with acquisitions during 2021, and we remain very active in 2022. We have already completed 4 transactions so far, and all of our platforms are currently working on several accretive acquisitions to help grow and diversify their businesses. Slide 17. This slide shows you the various businesses under each platform. That one, while Slide 18 gives you an idea as to the size of each platform. As promised many years ago, 4 of our 6 platforms are at or are closing in on being billion-dollar platforms. Slides 19 to 23. Our protein group faced a lot of headwinds during 2021, including labor shortages, inflation and supply chain disruptions, but they persevered and are well positioned for when things go back to normal. The next few slides show you some of the exciting new products we launched during 2021 or will launch in 2022. We're now Slide 24. Our sandwich platform had a good year in 2021. It grew its business by 17% while diversifying across different sales channels and finding new customers. We're continuing to invest in automation and robotics as a way of building on our many competitive advantages in this space. The following video shows you our newly installed Generation 3 line in Phoenix, Arizona. Another Generation 3 line will be installed in Reno later this year, increasing capacity while reducing our reliance on labor. A third Generation 3 line is in order. [Presentation]

We're now on Slides 26 and 27. We call it our sandwich platform, but they assemble much more than sandwiches. We're a leading assembler of single-serve meals; for food [ re-trays ]; breakfast sandwiches; fillet steak sandwiches; and with the recent acquisition of Leonetti's, we have now added and rolled products like calzones and strombolis to our portfolio. We're now on Slide 28. Our bakery platform is small relative to the size of Premium Brands but has a long runway ahead of it. Our Canadian business has just completed a major expansion of its capacity at its Stuyver's facility in Langley, BC, while our U.S.-based business, which is called Shaw Bakers, is currently investing in a new facility in the Bay Area. Slide 29. Shaw Bakers is getting tremendous traction as U.S. consumers discover its artisan, innovative and great-tasting, best-in-class products as shown here on Slide 29. Slide 30, our culinary group made excellent progress during 2021 after its transformative deal with Global Gourmet during 2020. Global Gourmet is a leading soup protein mix and sauce business and is currently launching several new products in both Canada, U.S. and in Asia. Slide 31, Slide 32. Global Gourmet seafood soups utilizing clams and lobster meat from the PB seafood ecosystem will be launched in Asia later this year. On Slide 32, we're pleased to show you our new artisan pizza line under the Rocky Mountain Flat Bread brand name and a pasta meal kit SKU currently being launched by Duso's. Slide 33. Our distribution business came back nicely during 2021 as foodservice and out-of-home dining returned. This platform is very well positioned to benefit from the reopening of the economy as consumers resume their normal activities. Slides 34 and 35. As the picture show, our various distribution businesses added capacity during 2020 and '21 and are very well positioned for growth as the pandemic subsides. Slide 36. Our seafood platform took shape during 2021, leveraging recent acquisitions and capital investments. Including our equity investments, sales of this platform reached $1.5 billion in 2021. Our seafood platform is vertically integrated from ocean to plate and is very well positioned to continue to grow through its direct access to best-in-class sustainable seafood resources and by leveraging favorable consumer trends. This slide on Slide 37 demonstrates Clearwater's progress over the past year. Due mainly to strong demand for its products and higher pricing, sales grew by 13.7%, while EBITDA grew by 53.7%. Clearwater is a well-managed company with an excellent management team with access to some of the best shellfish seafood resources in the world. These products are in high demand and are highly coveted around the world. Slide 38. Clearwater combines its access to some of the world's leading seafood resources with best-in-class automated and efficient operations. The following video demonstrates some of the Clearwater's unique processing at sea technologies while providing you with an update on its progress working within the PB Ecosystem. It is still early days, but we're very excited with the organic and acquisition opportunities we're seeing to help grow and improve Clearwater's business model for the benefit of all stakeholders. [Presentation]

We're now on Slide 39 and 40. Our investment thesis is that the majority of the seafood space is very commoditized and that Clearwater has a unique opportunity to lead in the areas of value-added and branded. The next 2 slides show you some examples of its value-added products. These slides also show you some of the progress we're making in value adding and branding certain seafood products. We believe that we have a unique opportunity to connect the end consumer with the entire supply chain demonstrating environmental stewardship, sustainability and traceability in an area of the food space that often lacks these important attributes. I will now pass it back to Will for the financial part of the presentation.

Thanks, George, and welcome, everyone. I am on Slide #42, just talking a bit about our sales for 2021. As George mentioned, we had sales of $4.931 billion. That was an increase of $862.8 million or 21% from 2021. That 21% was in line with our 11-year CAGR of about 22.4% for our sales growth. Looking ahead to 2022, we provided guidance of $5.6 billion to $5.85 billion. We've shown on the chart at the midpoint of that of $5.725 billion. And assuming that number, that would represent growth for 2022 of $793 million or roughly 16%. And that's before any additional acquisitions this year. Turning to the next slide, #43, gives you a bridge of how we got from 2020's number to 2021's number. You can see acquisitions accounted for roughly $358 million of the growth; price inflation, $307 million of the growth. It was an incredibly inflationary market in 2021 and with average price increases across our portfolio of about 7.5%. And most of that $375 million came in the second half of the year. Organic volume growth accounted for $327 million of our growth. This was an organic volume growth rate of 8%. Included in that 8% is some recovery from lost sales in 2020 due to COVID and the impacts of that. Normalizing for that, our organic volume growth was 6.3%, which was above our long-term targeted range of 4% to 6%, but well below our potential. And 4 primary reasons for being below our potential. One was because of all of the inflation in 2021, many of our businesses did less featuring as a way to manage their margins while they were putting through price increases. Also, we had a variety of supply chain and labor shortage issues that hampered our ability and resulted in higher customer shortages. And then finally, the impacts of the pandemic on our foodservice sales. The last factor impacting our sales in 2021 was the exchange translation of our U.S. operations, because of the higher Canadian dollar that resulted in a reduction in our sales of about $131 million. So after that, that brings us to our sales for the year of $4.931 billion. Turning to the next slide, 44. This slide is an inventory of our major growth initiatives across our 6 platforms. The items highlighted in yellow represent initiatives that contributed to our growth in 2021. And the unhighlighted items, along with the highlighted items are all future growth drivers. So you can see there's a lot of fascinating and exciting stuff in the pipeline. Turning to Slide 45 and talking a little bit about our EBITDA. EBITDA for 2021 came at $430.7 million. That was an increase of $118 million or roughly 38% from 2020. You can see that's a much accelerated rate of growth from our 11-year CAGR of 22.2%. And as we look forward to 2022, we've provided guidance of $510 million to $530 million for EBITDA. Assuming the midpoint of that range of $520 million, that would be growth of about $89 million this year or roughly 21%. So right in line with our 11-year CAGR. And again, that's before any additional acquisitions in 2022. Turning to Slide 46, just a little bit of an analysis of our margins for the year. In the total column on the far right, our EBITDA margin for 2021 was 8.7%. That was a 100 basis point increase from 2020, but far below our long-term target or targeted 10% EBITDA margin range. And there's really 3 factors that contributed to the shortfall from our 10% target. One was a lost sales contribution from the challenges I mentioned earlier, namely the featuring -- the supply chain disruption, labor shortages and the COVID impacts. And then the 2 other factors that we wanted to highlight on this slide. One was just the impacts of inflation. And that's the middle section of the slide. You can see we put through the $307 million in price increases. However, our direct material costs, wages and freight costs increased by about $346 million, resulting in about $39 million of reduction in our EBITDA. And when you look at our 2 platforms, our 2 reporting segments, Specialty Foods and Premium Food distribution, you can see the different stories there. If we look at Specialty Foods, you can see that there was about a $50 million negative impact on our EBITDA, and that's due primarily to one reason, and that is much of their businesses to large retailers and there's a natural price -- a natural delay in getting price increases through. That delay results in some short-term margin impacts, and that's what you're seeing there. So ultimately, as those pricing -- prices come through, we'll see our margins normalize in that segment. In our Premium Food Distribution Group, you can see they more than offset the increase in their costs with selling price increases with a positive EBITDA impact. The Premium Food Distribution Group, a much more dynamic pricing model, and they're able to pass on those price increases immediately. So overall, the short-term impacts of inflation was about 137 basis points impact on our margin. And again, we expect to fully recover this as our pricing strategies unfold in 2022. Next factor highlighted on the sheet is our outside storage costs. George mentioned the supply disruptions, significant factor in 2021. As a method to mitigate those impacts, our businesses took on larger inventory positions. This helped also manage inflation to some degree, but that came with a cost of additional outside storage costs, and that was about a 15 basis point impact on our EBITDA margin. So if you look at our EBITDA margin for the year comparing it to that 10% target, if you normalize for just those 2 factors on the sheet, the inflation and the outside storage, we would have actually hit our target at 10%. So as you'll see later on, we are very bullish on meeting that target. Turning to the next slide, Slide 47. The next 5 slides just show you how extreme of an inflationary environment it was in 2021. The 5 slides outline the 5 basic commodity segments that we source raw materials in. The first chart is the Pork segment. The green line represents 2021; the blue line, 2020; and the gold line, 2019. You could just see the record levels of pricing in 2021. Next slide, Slide 48. Again, the green line represents 2021. This is for beef commodities we purchase. And again, same trend, you can see the record high levels in 2021. Slide 49 is for chicken, probably the most extreme of the commodity increases we saw in 2021. You can see that with that green line again. And then the last 2 -- the next 2 slides, lobster on Slide 50 and salmon on Slide 51, both show the same trends, a little less impact on us versus the first 3 commodities. Beef, pork and chicken are primarily purchased in our Specialty Foods segment and used in our branded products where you have those pricing delays versus the lobster and salmon are in our seafood segment, which is in our Premium Food Distribution Group, much more dynamic pricing models, and as a result, not as concerning, but still a challenge. Turning to Slide 52. Looking at our earnings for the year, we came in at $194.8 million of earnings. That was a $76.3 million or 64% increase from 2020 and again, driven by the improvement in our EBITDA. And you can see that rate of increase was far in excess of our 11-year CAGR of 25.2%. In terms of EPS, we came in at $4.48 per share. That was an increase from 2020 of $1.43 per share or 47%. We don't provide guidance -- forward guidance on earnings. But given what we're expecting in EBITDA, we do expect a significant improvement in our earnings as well in 2022. Turning to Slide 53 and looking at our 5-year targets. So over the last 12 years, we set 5-year targets 3x. The first time in 2010, we set a target for 2015 of $1 billion in sales. We exceeded that by 2014, so a year ahead of schedule. At that time, we set our target to $2 billion in sales by 2019. Again, by 2018, we exceeded that target with $3 billion in sales. And at that time, set our current target of $6 billion in sales and $600 million or 10% EBITDA margin. Looking at -- turning to Slide 54 and just looking how we're performing to our 5-year target. You can see if we look at our midpoint of our 2022 guidance of $5.725 billion and add 6% organic growth for 2023, a very conservative number relative to our historic organic growth, and this includes inflation. Unlike our organic volume growth rate, that's -- adding that 6%, you can see we'll easily exceed our $6 billion target, and that's without any further acquisitions this year or next year. Slide 55 shows you a similar calculation for our targeted EBITDA, our '22 guidance of $520 million. Adding the contribution margin for the incremental growth at 6% takes us to over $600 million in EBITDA and meeting our 10% EBITDA target. Turning to our balance sheet on Slide 56. We ended 2021 with a very solid balance sheet and good liquidity. Our total debt-to-EBITDA ratio, which includes our convertible debentures, was 3.6:1. That was at the bottom end of our long-term target range of 3.5 to 4.0:1. And our senior debt-to-EBITDA ratio was 2.7:1, which was right in the middle of our long-term targeted range of 2.5 to 3.0:1. And again, the difference between those 2 ratios just being the exclusion of our convertible debentures in our senior debt ratio. In terms of liquidity, we ended the year with $485 million in available credit capacity. Slide 57 outlines our history -- a history of our convertible debentures. We really view it as an equity strategy. That's one of the reasons we separated out in our covenant calculations, with our objective always being to get the convertible debenture converted into equity before it matures. We've done 9 issuances. You can see 7 of those 9 have almost fully converted, with the most recent being in 2021. Our Series F was converted $105 million of the $113 million outstanding, leaving us with only 2 convertible debentures outstanding, both of them having long-term maturity dates. Overall, it's been a very successful strategy for us, and we estimate that the anti-dilutive impact on our share price from this strategy to be roughly $15 per share. Turning to Slide 58, our cash flow. For the year, we generated $263 million in free cash flow, an increase of $74.5 million or 39.5% from 2020. Our free cash flow per share increased to $6.05, up $1.18 or 24.2% from 2020. And our payout ratio fell to 42.3%, giving us lots of flexibility there in terms of future dividend increases. And on that front, in 2022, after the fiscal 2021 year, we announced our eighth consecutive double-digit increase in our dividend, bringing it to an annual rate of $2.80 per share or $0.70 per quarter. Turning to Slide 59 and capital allocation. This slide outlines our project capital expenditures for the year. We define that project capital expenditure as generally earning 15% IRR, internal rate of return or greater, and that's on an after-tax unlevered basis, generally using a 10-year plus model. So you can see in 2021, we invested roughly $114 million in project capital expenditures, 14 of them being major projects, as we've listed on the slide here. And 12 of those 14 all being projects that come online in 2022, i.e., future growth drivers. They're all growth related. Turning to Slide 60, capital allocation and acquisitions. As George mentioned, it was our second biggest year on record for acquisitions at roughly $714 million. And again, for these acquisitions, we run with the same metric of 15% internal rate of return after tax, unlevered with generally 10-year-plus business models. Subsequent to the year, also, as George mentioned, we did complete 4 additional acquisitions for about $42 million of invested capital. Turning to the last slide, our return on net assets from our investments. For 2021, our RONA was 10.6%, below our long-term target of 15%. Now we did expect a lower-than-targeted RONA for 2021, not this low, and I'll come back to that in a sec. If you look at the nature of our RONA historically, we generally go through significant investment events. Then because of our 10-year-plus modeling, it takes some time for those investments to start generating the return. And then we see those returns until we go into our next investment cycle. So if you look at the period from 2010 to 2013, relative to the size of our company at that time, that was a very significant investment period for us. And then you see the jump in our RONA from 2013 to 2016 as we started realizing those investments. And then we went into another significant investment cycle from 2016 to 2019. Starting in 2020, we would expect to start seeing those returns from those investments. They cause that short-term pressure, much like 2010 to 2013. However, there's just been an incredible amount of noise over the last couple of years with COVID and all of the issues related to that with supply chain disruptions, labor shortages and inflation. If you strip that out, you can see within the underlying business, there has been solid progress, and easily, this year would have been, without those impacts, a 13% to 14% RONA, which is kind of the trend or the track we would have expected outside of those events. That concludes the financial update for 2021. And with that, I will pass it over to the commentator.

Thanks, George. Well, my name is Doug Ross, and I'm the Corporate Secretary for the Corporation and the Secretary for this meeting. I'm pleased to advise the shareholders that with respect to the matters to be voted on today, the shareholders have voted by a margin of at least 99.3%, fixed the number of directors elected at this meeting at no more than 8. The shareholders have also voted by a margin of 98.3% to approve the appointment of PricewaterhouseCoopers LLP as auditors of the corporation for the ensuing year and have authorized the directors of the corporation to fix the remuneration of the auditors. I'm also pleased to advise that each of our director nominees has been elected by a margin of at least 90% and currently, effective upon completion of this meeting, each will hold office until the next annual meeting of shareholders or until their successor is duly elected or appointed, unless their office is earlier vacated in accordance with articles of the corporation, unless they become disqualified to act as a director. I'm very pleased to congratulate Sean Cheah, Johnny Ciampi, Dr. Marie Delorme, Bruce Hodge, Kathleen Keller-Hobson, Hugh McKinnon, George Paleologou and Mary Wagner on the reappointment to the corporation's Board of Directors. I'm also pleased to advise that the shareholders have approved the corporation's approach to executive compensation by a margin of at least 96.43%, which meets the majority standard required for the passage of this resolution. Accordingly, I declare this resolution to be carried and would ask a copy of the resolution be attached to the minutes of this meeting as Appendix 3. I'd also advise the shareholders that a full and complete reported voting results with respect to this meeting will be prepared and filed on SEDAR later this afternoon.

Thank you, Doug. I would ask the Secretary of this meeting to attach the direction of votes received by proxy from TSX Trust Company to the minutes of this meeting as Appendix for. Now if there's no further business to be brought before the meeting, I would ask for a motion to terminate the meeting.

I move that the meeting terminate.

I second the motion.

Are there any objections? As there are no objections, I declare the motion carried. I declare the meeting terminated. Thank you all for participating in this meeting today.