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 and country to country, I would like to begin by acknowledging the indigenous peoples of all of the lands that we are on today. Here in Richmond, BC, I would like to acknowledge that we are gathered on the traditional territory of the Coast Salish peoples. Welcome to the Annual Meeting of the Shareholders of Premium Brands Holdings Corporation, which is being held in person and virtually by webcast. 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 to second, respectively, the motions of business at this meeting. This procedure is in no way intended to discourage any comments or questions from shareholders who are present today. Shareholders and proxy holders who have logged into the LUMI Web platform with their control numbers may ask questions during the meeting by clicking on the Ask a Question button displayed on their screens and following the instructions to submit them in writing. Shareholders who are attending the meeting in person may ask a question directly to the Chairman. 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 their name at the close of business on Tuesday, March 17, 2026, the record date of this meeting or their validly appointed proxy holders. If any shareholder or proxy holder who is present in person and has not yet registered their attendance with TSX Trust Company, please do so now. Registered shareholders and duly appointed proxy holders who have logged in the LUMI Web platform with their control numbers and who have not voted and wish to vote during the meeting may vote live throughout the meeting until the voting is closed. Voting is now open online for any eligible shareholders to vote their shares if they have not already submitted a proxy. We encourage you to vote your shares prior to the start of the meeting using the instructions found on Pages 11 through 16 of the management information circular. If you are an eligible shareholder and attending this meeting in person, ballots for each matter were provided by the scrutineer to all registered shareholders and proxy holders when you registered. If you did not receive ballots upon registration, please raise your hand and the scrutineer will provide them to you now. To complete your ballots, if you are in favor of the motion, mark an X in the box opposite the words for. If you are against the motion or wish to withhold your vote on the motion, mark an X in the box opposite the words against or withhold, as the case may be. Please sign your name and if you're a proxy holder, indicate the name of the shareholder for whom you are a proxy and confirm that the number of voting shares you or your ballot represents. The ballots will be collected by the scrutineer following the last motion once the online polls have closed. Appendix D of the management information circular sets out the text of 2 shareholder proposals. Proposal 1 requests that the Board adopt and disclose a policy, which provides that if any director nominee received votes representing 20% or more of the votes cast against or withheld in an uncontested election that the Board conduct a formal review of the circumstances underlying such vote and publicly disclose a summary of findings and any responsive actions taken. Proposal 2 requests the Board adopt and disclose a policy requiring the company to regularly disclose individual director voting records on material Board decisions. Material Board decisions are defined in the first paragraph of proposal #2. Appendix D of the management information circular also sets out the Board's responses to both shareholder proposals and the recommendation that shareholders vote against proposal #1 and proposal #2. The corporation is proposing that formal reading of the 2 shareholder proposals be waived and that both proposals proceed directly to a vote. The meeting will now come to order. Douglas Goss will be acting as Secretary and Counsel for this meeting. Deanna Guilfoyle of TSX Trust Company will be acting as scrutineer. The notice and access notification to shareholders respecting this meeting was mailed to shareholders of the corporation in accordance with Instrument 54-101 on April 1, 2026, as evidenced by the confirmation of mailing of TSX Trust Company, the registrar and transfer agent of the corporation. The confirmation of mailing of TSX Trust Company will be annexed to the minutes of this meeting as Appendix 1. As you have all received a copy of the notice calling this meeting, I would request a motion dispensing with the reading of the notice.

I move that reading of the notice of the 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 of the notice calling for 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 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 scrutineers' report on attendance and confirm that this criterion has been satisfied. I therefore declare that there is a quorum present at the 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 if a shareholder is not attending the meeting in person, questions may only be submitted by eligible shareholders or their validly appointed proxy holders -- proxy holder appointees via text through the LUMI AGM platform. Instructions on how to submit your questions can be found on Page 16 of the management information circular. We would ask that all questions or comments, whether submitted online or in person, be related to the matters currently before the meeting. If there are questions pertinent to meeting matters that are unanswered this afternoon due to time constraints, management will post answers to a representative set of such questions online. As Chair, I will pause for the appropriate amount of time to allow eligible shareholders and/or their proxy holders to submit their questions. Once discussion on all items have been -- 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 the 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 each item of business while it is before the meeting. I now declare the poll open on all resolutions. The next item of business is presentation of the corporation's audited financial statements for the financial year ended December 27, 2025, together with the accompanying report of the auditors. The corporation's financial statements for the financial year ended December 27, 2025, together with the auditor's report thereon and the management's discussion and analysis regarding same were filed on SEDAR on March 19, 2026, and are available for viewing and/or printing at no charge on the SEDAR+ website at www.sedarplus.ca. Copies of the corporation's financial statements, together with the auditor's report thereon were also made available on the 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 auditor's report.

I move that reading of the corporation's financial statements for the financial year ended December 27, 2025, together with the auditor's 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 of 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.

The motion is now open for discussion. You have heard the motion. And if there is 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 the votes have been tabulated. It is now in order to proceed with the election of directors. Management's nominees for election as directors of the corporation are listed on Pages 17 through 30 of the management information circular, together with information on their relevant experience. They are Johnny Ciampi, Thomas Dea, Dr. Marie Delorme, John Hatherly, myself, Bruce Hodge, Hugh McKinnon, George Paleologou and Mary Wagner. The shareholders of the corporation have been asked to either vote for or against their vote for the election of each of management's individual nominees. Each director elected today will hold office effective as of the completion 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 management's nominees. If any shareholders present have other nominees they 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? Okay. I now declare the nominations closed.

I move that Johnny Ciampi, Thomas Dea, Dr. Marie Delorme, John Hatherly, Bruce Hodge, 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 Page 9 of the management 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. 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 as set out on Page 9 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 you have all had a chance to review the resolution prior to this 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 9 of the management information circular be dispensed with.

I second the motion.

Are there any objections to this motion? As there are no objections to the 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 the votes have been tabulated. The next item of business is consideration of the shareholder proposal #1 as set out forth in Appendix D of the management information circular. As you have all had a chance to review the shareholder proposal #1, I would ask a motion dispensing with the formal reading of shareholder proposal #1.

I move that formal reading of shareholder proposal #1 found in Appendix D of the management information circular be dispensed with.

I second the motion.

The Board of Directors carefully considered shareholder proposal #1 and on the basis of their review and for the reasons outlined in Appendix D, the Board recommends that shareholders vote against this proposal. The next item of business is consideration of shareholder proposal #2 as set forth in Appendix D of the management information circular.

I move that formal reading of shareholder proposal #2 found in Appendix D of the management information circular be dispensed with.

I second the motion.

The Board of Directors carefully considered shareholder proposal #2. For all of the reasons outlined in the response to proposal #2, the Board of Directors continues to recommend that shareholders vote against shareholder proposal #2. I would ask that anyone who has not previously voted their shares regarding either shareholder proposal #1 or shareholder proposal #2, please do so at this time. The results of this vote will be announced later in the meeting once all the votes have been tabulated. I would now advise that we are closing the polls. It is 2:00 p.m. Pacific Time. I will close the polls with respect to all resolutions in 30 seconds to allow all online votes to catch up. [Voting]

The online polls are now closed. The scrutineer will now collect all the ballots. 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 2026 AGM. Our CFO, Will Kalutycz and I are going to take you through a formal presentation followed by Q&A. On Slides 2 and 3, we have our standard disclaimers as usual. Slide 4, our sales for fiscal '25 came in at a record $7.5 billion, up from $6.5 billion in '24 and $182 million back in 2004 when we started this journey. Our guidance for 2026 projects our revenue to be in the $9.25 billion to $9.55 billion range and includes Stampede Culinary Partners, which was acquired on January 4 this year. Our free cash flow per share was $6.60 per share for the year. We're making great progress towards our 5-year targets, and we're confident that including the acquisition of Stampede and after the sale of Shaw Bakers, we will exceed both revenue and EBITDA targets for '27 of $10 billion and $1 billion in EBITDA, respectively. We have shared some of the value created over the years by returning over $1.3 billion of capital back to our shareholders as dividends. We're now on Slide 5. We remain true to our vision no matter the black swan events that come our way. We invest in entrepreneurial food companies run by great people that are making delicious nutrient-rich products with a passion for their communities and what is best for our planet. All of our investments and capital allocation decisions are consistent with this vision. Slide 6. Despite the recent weakness in our share price, we have delivered a 16.5% compound annual return to our long-term shareholders since 2004 through dividends and capital appreciation. We're now on Slide 5 (sic) [ Slide 7 ]. We invest capital in targeted segments of the food industry and help to bring transformational change to the businesses we invest in and their industries. We partner with talented people, and we support them over the long term as they transform their good food businesses into great food businesses. Slides 8 and 9. We have been executing our core strategies as listed on Slide 8 for over 20 years now. And our growth, as shown on Slide 9, speaks for itself. Since 2004, our revenue has grown 37fold. And given our recent capital investment program and as demonstrated by our recently reported results, we expect this growth to continue and even accelerate in the future. Slide 10. Our sixth ESG report is due to come out later this year. We're making good progress in all areas of ESG, and we will continue our ESG journey as it is based on sound business and ethical principles. In our view, aspiring to make the world healthier and a better place is a good thing. We're very proud to be producing authentic food that is healthy, nutrient dense and minimally processed. Now on Slide 11. These are some of the resources and services that we bring to our new partners that join the PB Ecosystem. All resources and services are offered to our partners free of charge. We are now on Slide 12. Our global supply chain is shown here on Slide 15 (sic) [ Slide 13 ]. Our supply chain teams travel the world, looking for partners that share our values, and these relationships are leveraged for the benefit of the entire PB Ecosystem. On this slide, the map shows the locations of our various operations in North America. Our U.S.-based sales and footprint continue to grow. For Q1 '26, sales of our U.S.-based businesses comprised 73% of the sales of our Specialty Food division, up from 68% in Q1 '25 and 62% in Q1 '24. We expect this number to continue to grow substantially. The red dots are facilities that we have constructed, added to or acquired in the past couple of years. You can see clearly here that over the past couple of years, we have completely transformed our manufacturing footprint. Slide 14. We remain active on acquisitions. Our acquisition pipeline remains full, and we're in many discussions and conversations with companies that wish to partner with us or join our unique ecosystem. In early 2026, we completed the acquisition of Stampede, which was our largest acquisition in history. Slide 15. This slide shows you the size of each one of our platforms. 3 of our 4 platforms now exceed $1 billion in sales. Slide 16. We have unparalleled knowledge of the food space at the senior management level. We know that we're being subjective on this point, but we're certain that our deep bench and extensive experience in the food business is second to none. In Slides 17 to 20, this year, we are featuring our Kettle and our Stick businesses. Our Kettle business sells soups, sauces and dips globally and is currently expanding its manufacturing footprint in the U.S. Our Stick business leveraged new capacity we've added last year in Canada and the U.S. to successfully execute the largest launch in our company's history. I will now pass it to Will for the financial part of the presentation.

Thanks, George, and welcome, everyone. Turning to Slide 22. This chart shows our annual revenue for each of the last 8 years as well as our 2026 projected revenue based on our guidance of $9.25 billion to $9.55 billion. You can see that we have a solid track record of consistent growth, generating a 7-year compounded annual growth rate at the end of 2025 of almost 14% or if acquisitions are excluded, 9.6%. Furthermore, in each year, we achieved a new high with our 2025 sales coming in at a record $7.5 billion, as George mentioned earlier. These results are despite facing many significant challenges over the years, including the pandemic, recessions, high inflation, trade disputes and various industry-specific issues. Looking out beyond 2026 to 2027, which is the last year in our current 5-year plan, we are expecting to exceed our revenue target of $10 billion through a combination of organic growth and our recent acquisition of Stampede Culinary Partners. Slide 23 provides a breakdown of the drivers of our growth in 2025. Organic growth made up $661 million of the increase, consisting of $463 million in volume gains, representing an organic volume growth rate of 7.6% and $198 million in pricing. Acquisitions were the other major factor, which contributed almost $300 million to our growth last year. The major driver of our organic volume growth was our various protein sandwich and baked goods initiatives in the U.S. market, which generated $370 million of growth, representing an organic volume growth rate of 14.8%. As a result of our continued strength in this market, in 2025, it accounted for almost 67% of our Specialty Foods segment's total sales. We also generated $103 million of organic volume growth in the Canadian market and $19 million of growth from a variety of other initiatives, including our Lobster product strategies. Partially offsetting these gains was a $29 million decrease in our Turkey sales as this product category continues to be challenged by several issues, including high feed prices and consumer price sensitivity. Slide 24 shows our annual adjusted EBITDA for each of the last 8 years as well as our 2026 projected adjusted EBITDA based on our guidance range of $870 million to $910 million. Similar to our revenue story, we also have a solid track record of consistently growing our adjusted EBITDA, generating a 7-year compounded annual growth rate at the end of 2025 of over 13%. Furthermore, in each year, we also achieved a new record high, including in 2020 when the pandemic caused significant chaos in our industry, albeit the 2020 year-over-year increase was modest. For 2025, our adjusted EBITDA is a record $672 million, resulting in an adjusted EBITDA margin of 9%. Despite our consistent posting of record results, our adjusted EBITDA and margins have been negatively impacted in recent years by 2 major factors. The first, which I will talk more about later in the presentation, is the major capital investment cycle that we embarked on in 2022. This has resulted in significant increases in production overhead and other ramp-up costs in advance of leveraging the new capacity to grow our sales and adjusted EBITDA. The second factor is a number of very unusual events that I mentioned earlier. These events, all in a very narrow time frame added a lot of the noise to our results, which were already being impacted by our major capital investment cycle. As we look forward to 2026 and 2027, we expect the growth in our adjusted EBITDA to accelerate as we leverage new investments in production capacity and emerge from the recent unusual challenges. Correspondingly, we are expecting to exceed our 5-year planned adjusted EBITDA for 2027 of $1 billion. This next slide shows our adjusted earnings and EPS for each of the last 8 years. Here, the story gets a little more complex. Unlike the consistent trends in our revenue and adjusted EBITDA, our earnings have been much more volatile as the capital investment cycle I mentioned earlier hit our earnings even harder than our adjusted EBITDA because of incremental depreciation, lease expense and interest. High interest rates at the peak of our investment cycle further compounded the situation. The positive news is the inflection point you can see in 2025 with our adjusted earnings and EPS increasing by 15.8% and 14.8%, respectively. As we look forward and continue leveraging our expanded capacities, we expect this positive trend to accelerate. The next 3 slides show why for the last 4 years, our net free cash flow has been negative and why we are expecting this to reverse to being significantly positive in 2026 with this trend accelerating in 2027. We define net free cash flow as our free cash flow after deducting investments made to generate future incremental cash flows. These investments consist of capital expenditures to support future growth, which we call project CapEx, start-up and restructuring costs needed to bring new investments up to base operating parameters and incremental net working capital needed to support growth. This first slide shows our project CapEx for the last 12 quarters. You can see that these peaked in 2023, 2024 and have steadily been coming down as we near the end of this investment cycle. At the end of 2025, we had only $67 million left to spend on major projects, after which we will have invested approximately $1.1 billion in new production capacity capable of supporting over $2 billion of sales growth. Turning to the next slide. This slide shows our start-up and restructuring costs over the last 4 years, which totaled almost $177 million. At the end of 2025, almost all of our major projects were achieving base operating parameters, which means no more start-up and restructuring-related costs. And for those projects that weren't, we're close to doing so. Correspondingly, we expect our start-up and restructuring costs for 2026 to drop dramatically. Slide 28 shows our investments in net working capital over the last 4 years, which totaled $523 million. Looking forward, we expect the growth in our net working capital to slow significantly now that the volatility associated with new product launches and incremental production capacity is built into our net working capital profile. So as you can see from the last 3 slides, over the last 4 years, we have invested approximately $1.8 billion in the future, which is why we have been generating negative net free cash flow. This slide shows that we are starting to generate a return on this investment. The chart shows that what we define as our steady-state free cash flow. This is essentially our cash flow before the impact of capital being invested in future growth. Similar to what you saw in our adjusted earnings slide, 2025 shows that we are at a key inflection point with our steady-state free cash flow and steady-state free cash flow per share increasing by 17.5% and 16.7%, respectively. As we leverage our new production capacity to grow our sales and adjusted EBITDA, we expect these trends to accelerate. Furthermore, the combination of the acceleration of our steady-state free cash flow and us nearing the end of our investment cycle is going to result in us generating significant net free cash flow. This slide also shows another very important point, and this is just how steady the core cash flow is from our legacy operations. You can see that despite all the challenges of the past 4 years, our legacy operations continue to generate a solid level of cash flow. This is why we've been able to declare almost $1.3 billion of dividends since we started paying them back in 2005. For 2005, we maintained our dividend rate at $0.85 per share per quarter or $3.40 per share annually. This final slide shows our debt-to-EBITDA ratios. During 2025, we made some progress on improving these. However, the impact of a major Avian influenza outbreak earlier in the year and record beef input costs in the later part of the year resulting from major changes to U.S. trade policies put us a bit behind plan. We estimate the impact of these events on our adjusted EBITDA resulted in our ratios being approximately 0.2 turns higher than they would have been otherwise. We also show on a pro forma basis the impact of our debt ratio -- on our debt ratios of our recent sale of Shaw Bakers, which closed in 2026. Looking forward, we are targeting to get our total debt-to-EBITDA ratio to 3.0:1 or better by early to mid-2027. This concludes the formal management presentation. I will now turn the meeting back to Doug.

Thanks, Will. There isn't any questions online. And if there isn't any questions here, seeing none, I'll proceed to let you know what the vote is. The shareholders have voted by a margin of 98.48% to fix the number of directors at 8. And accordingly, effective upon completion of the annual 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 the articles of the corporation. Accordingly, I congratulate each of Johnny Ciampi, Thomas Dea, Dr. Marie Delorme, John Hatherly, Bruce Hodge, Hugh McKinnon, George Paleologou and Mary Wagner on their reappointment to the corporation's Board of Directors. I'd also advise that shareholders have approved the corporation's approach to executive comp by margin of at least 98.4%, which meets the required standard for the passage of the resolution. I declare the resolution to be carried and ask that a copy of the resolution be attached to the minutes. The shareholders have also rejected shareholder proposal #1 by a margin of at least 87.3%, which means the majority standard required for passage of this resolution has not been met. The shareholders have also rejected shareholder proposal #2 by a margin of at least 99.1%, which means the majority standard required for the passage of this resolution has also not been met. A full complete report of voting results with respect to this meeting will be prepared and filed on SEDAR+ later this afternoon. Bruce, I'll turn it back to you.

Thanks, 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 4. Before we wrap up today, I'd like to take a moment to recognize 2 valued members of our Board who are stepping down, Kathleen Keller-Hobson and Sean Cheah. Kathleen, after 11 years of dedicated service, we want to thank you for the incredible impact you've had on this organization. Your background as a lawyer and your deep expertise in corporate governance has helped shape how we operate at a fundamental level. You brought clarity, rigor and best practices to the Board, and your influence will continue to be felt long after your departure. We're truly grateful for your commitment and the steady guidance you have provided over the years. Sean, thank you as well for your 6 years on the Board. You brought thoughtful perspective and energy to our discussions, and we've all benefited from your contributions. While we're sorry to see you go, we're also excited for what's ahead. Your decision to pursue building a company focused on healthy organic baby food is both inspiring and very much in line with your entrepreneurial spirit. We wish you every success in the next chapter. Both of you, thank you for your time, your insight and your dedication to this organization. It's been a privilege to work alongside you, and you leave with our sincere appreciation and wishes. 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 be terminated.

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 for all participating in the meeting today.