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Premium Brands Holdings Corporation reported its third-quarter 2025 earnings, revealing a mixed financial performance. The company posted a revenue of 2 billion dollars, surpassing expectations, while earnings per share (EPS) fell short of forecasts. Despite record sales, the stock dropped nearly 4% in pre-market trading, reflecting investor concerns over the earnings miss.
Key Takeaways
- Premium Brands achieved record quarterly sales of 2 billion dollars, a 19.1% increase year-over-year.
- EPS was reported at 1.27 dollars, below the forecasted 1.44 dollars.
- The company’s stock declined by 3.99% following the earnings release.
- Strategic investments in new facilities and product innovation are driving growth.
- The company aims to reach 10 billion dollars in revenue by 2027.
Company Performance
Premium Brands demonstrated robust growth in the third quarter, with sales rising significantly due to organic volume growth, acquisitions, and strategic price increases. The company’s focus on consumer trends, such as increased protein consumption and convenience, has positioned it well in the evolving food landscape. However, the earnings miss has raised concerns about cost management and profitability.
Financial Highlights
- Revenue: 2 billion dollars, up 19.1% year-over-year
- Earnings per share: 1.27 dollars, a 14.4% increase from the previous year
- Adjusted EBITDA: 179.1 million dollars, up 12.4%
- Free cash flow: 85 million dollars, up 18.2%
Earnings vs. Forecast
Premium Brands reported an EPS of 1.27 dollars, missing the forecast of 1.44 dollars by 11.81%. In contrast, revenue exceeded expectations, with actual figures reaching 1.99 billion dollars against a forecast of 1.9 billion dollars, a positive surprise of 4.74%.
Market Reaction
Following the earnings release, Premium Brands’ stock price dropped by 3.71 dollars, or 3.99%, to 89.33 dollars. This decline reflects investor disappointment with the EPS miss, despite strong revenue growth. The stock remains within its 52-week range, suggesting potential resilience amid broader market trends.
Outlook & Guidance
Looking ahead, Premium Brands plans to continue its investment in growth initiatives, targeting EBITDA margins of 10-12% by 2027. The company also aims to reduce debt levels and monetize certain assets to strengthen its financial position.
Executive Commentary
George, an executive at Premium Brands, emphasized the company’s strategic direction, stating, "We will continue to go where the puck is going to be and not where it’s been." This reflects the company’s proactive approach to market trends and innovation.
Risks and Challenges
- Supply chain disruptions could impact production and delivery timelines.
- Rising input costs may pressure margins and profitability.
- Market saturation in key segments could limit growth potential.
- Macro-economic uncertainties may affect consumer spending patterns.
Premium Brands remains focused on executing its growth strategy, with significant investments in new facilities and product innovation. However, the recent earnings miss highlights the challenges of balancing growth with profitability.
Full transcript - Premium Brands Holdings Corporation (PBH) Q3 2025:
George, CEO or Senior Executive: Welcome everyone to our twenty twenty five Third Quarter Conference Call. Thank you for joining us today. With me here is our CFO, Will Kaludic. Our presentation will follow the deck that was posted on our website this morning. We’re now on Slide three, which outlines key highlights for the quarter.
We delivered industry leading growth this quarter, driven by the momentum of our core growth initiatives in The U. S, which on a combined basis delivered organic volume growth of over 24%. Our growth is especially noteworthy in the context of the slowing revenue trends for most of our peers. As mentioned in my most recent letter to shareholders titled The Future of Food is in the Past, consumer taste and lifestyles are changing fast, resulting in shifting purchasing patterns and changing consumer preferences. The investments we have been making in state of the art capacity to produce the products consumers are demanding position us well to capitalize on this changing landscape.
Since our founding in early two thousand, we have been investing in three major consumer trends, increased protein consumption, premiumization and convenience. As a result, we’re uniquely positioned to offer customers the healthy and nutritious protein centric product solutions they’re looking for, made in state of the art facilities featuring industry leading automation, technology and food safety. We’re very excited by what we see in terms of future demand for our products driven by these major trends. And we believe that this elevated demand will continue to accelerate and gain even more momentum in the future. The third quarter was not without its challenges.
And while very high chicken raw material costs subsided as expected, beef raw inputs reached record highs. In addition to the North American cattle herd being at near historic lows, imports from Mexico and Brazil that normally help balance supply and demand were disrupted due to several issues including cattle disease issues in Mexico and trade related challenges with Brazil. While we’re taking the necessary targeted pricing actions needed to restore our margins, we’re also focused on various cost reduction initiatives through continuous improvement, automation and capacity expansion and optimization. Overall, we’re very pleased with our progress during the third quarter as our various financial performance metrics speak for themselves. We’re very well positioned to continue to deliver record top and bottom line results despite the black swan events that occasionally come our way, and we remain steadfast in our conviction on the value we will be creating by leveraging our recent capacity investments to capitalize on the major food trends that are driving demand for our best in class products.
We will continue to go where the puck is going to be and not where it’s been and correspondingly expect to see our growth and the value we’re creating continue to accelerate. This gives us conviction that we will reach or even exceed our five year targets of $10,000,000,000 in revenue and 10% to 12% EBITDA margins by 2027. We look forward to discussing our plan for 2026 early in the New Year and then presenting you with our next five year plan in early twenty twenty seven. We’re now on Slide four. Although we did not close any acquisitions during the quarter, our acquisition pipeline remains full and we’re involved in many active discussions with talented food entrepreneurs and legacy owners that are looking to join our unique ecosystem of best in class specialty food companies.
This is because they know that we will respect their legacies and company cultures and that we would take a long term view in investing and in managing our business. I would also like to announce that we have now begun the strategic process of monetizing certain assets and investments. We hope to have some announcements soon in this regard, but we will make no further comments at this time. We’re now on Slides five and six, which include pictures of two plants, one located in Ontario, Canada and the other in Washington State. These plants have been significantly expanded recent years and are both involved in executing the biggest product launch in our history.
Both plants use state of the art technology and feature advanced automation and the high standards of food safety. The launch is in full swing as we speak, and you can now buy these products all across The U. S. Canada will be shipping in December and will be available in stores in January 26. I will now pass it to Will.
Thanks, George. Before I begin, I would like to remind you that some of
Will Kaludic, CFO: the statements made on today’s call constitute forward looking information and our future results may differ materially from what we discuss. Please refer to our MD and A for the thirteen fifty two weeks ended 12/28/2024, as well as other information on our website for a broader description of the risk factors that could affect our performance. Turning to Slide eight, our sales for the quarter were a record $2,000,000,000 up $319,000,000 or 19.1% as compared to the 2024. This increase was driven by four factors. The first and largest was our organic volume growth, which accounted for $172,000,000 of the increase.
Acquisitions made up another $73,000,000 of our growth. Selling price increases, primarily relating to beef and to a lesser extent chicken based products contributed $62,000,000 to our growth. And finally, a currency translation benefit of $12,000,000 resulting from year over year weakness in the Canadian dollar made up the balance of the increase. Our organic volume growth in the quarter was driven mainly by the continued success of our U. S.
Market focused initiatives in premium protein, sandwich and artisan bakery products, which generated $146,000,000 in organic volume growth, representing an organic volume growth rate of over 24%. The balance of our organic volume growth was driven by our Canadian protein and seafood distribution businesses, which continued to benefit from the stabilization of consumer behavior in the retail and foodservice channels. An increase in lobster product revenue resulting from certain sales normally occurring in the second quarter being pushed to the third quarter also contributed to our organic volume growth. Slide nine shows a breakdown of our core U. S.
Growth initiatives by group. As you can see, our protein sandwich and bakery groups all generated very solid results for the quarter with organic volume growth rates of 21%, 2457% respectively. On a year to date basis, our core U. S. Growth initiatives have generated organic volume growth of two fifty two million dollars representing an organic volume growth rate of 13.7%.
Looking forward, given the strong and increasing momentum of our U. S. Sales initiatives, we expect to see continued improvement in our overall organic volume growth in the coming quarters. Turning to Slide 10. Our adjusted EBITDA for the quarter was $179,100,000 representing an increase of $19,700,000 or 12.4% as compared to the 2024.
The major drivers of this improvement were our organic volume sales growth and improved operating efficiencies. These were partially offset by the impact on our protein group of rising raw material costs, mainly beef and higher operating overheads associated with new production capacity brought on by our protein sandwich and bakery groups. Normalizing for the impact of raw material cost inflation on our protein group, our adjusted EBITDA for the quarter is $188,100,000 representing an adjusted EBITDA margin of 9.5%. As George discussed earlier, we expect the impact of raw material cost inflation to be temporary, but in the meantime are pursuing a variety of initiatives, including targeted selling price increases to get the contribution margins on our protein products back to normal levels. Slide 11 shows our startup and restructuring costs for the three most recent quarters.
Third quarter costs reached $19,000,000 driven by: one, the ramp up issues associated with the major product launch George referred to earlier two, the start up of our new 352,000 square foot sandwich production facility in Cleveland, Tennessee three, the reconfiguration of a deli meats plant in Waterloo, Ontario and four, a variety of smaller initiatives implemented to bring on incremental capacity to support our continued growth. Looking forward, we expect the third quarter to be the peak in these costs and should see them steadily decrease over the coming quarters. Turning to Slide 12, our adjusted earnings and earnings per share for the quarter were $56,800,000 and $1.27 per share respectively, with both metrics increasing by 14.4% as compared to the 2024. The improvement in our profitability is due primarily to the growth in our adjusted EBITDA and to a much lesser extent lower interest rates. These factors were partially offset by higher depreciation, interest and lease costs associated with the major investments we have been making in new production capacity to support our U.
S. Growth initiatives, which we estimate were approximately $0.30 per share for the quarter. Turning to Slide 13, we spent $46,000,000 in capital expenditures in the quarter consisting of $15,000,000 on major project CapEx, dollars 18,000,000 in smaller project CapEx and $13,000,000 on maintenance CapEx. We define project CapEx as investments that are expected to generate an unlevered after tax internal rate of return of 15% or greater. All other capital expenditures are classified as maintenance CapEx.
Primarily all our major project CapEx expenditures in the quarter were investments to increase the production capabilities and capacities and in many case operating efficiencies of our protein sandwich and bakery groups. Slide 14 shows our project CapEx for each of the last eleven quarters. You can see the dramatic downturn in expenditures in recent quarters as we near the end of our most recent major CapEx investment cycle. Looking forward, we expect to spend over the next four quarters another $92,000,000 on major projects, after which these will provide us approximately $2,000,000,000 of incremental sales capacity relative to our 2024 sales of $6,500,000,000 Slide 15 shows some of the key metrics we use to assess our financial position. Our debt leverage levels increased slightly as compared to last quarter with our senior debt to EBITDA ratio going from 3.3:one to 3.4:one and our total debt to EBITDA ratio, which includes our subordinate convertible debentures increasing from 4.2:one to 4.3:one.
These increases were due to two factors. The first was a rapid weakening of the Canadian dollar relative to the U. S. Dollar towards the end of the quarter. This resulted in our U.
S. Dollar denominated debt being valued much differently than the U. S. Dollar denominated cash flows being used to service it. Normalizing for this anomaly, our senior debt to EBITDA and our total debt to EBITDA ratios for the quarter are 3.3:one and 4.2:one respectively.
The second challenge was excess inventory levels largely resulting from delayed product launches. This too increased our ratios by 0.1 turns. Partially offsetting these factors was growth in our EBITDA, which reduced our debt ratios by 0.1 turns. While our debt ratio levels remain above our midterm targets, they are well within our shorter term operating parameters. Looking forward, we expect to delever our balance sheet in the coming quarters, driven by growth in our adjusted EBITDA and a variety of other initiatives, including efforts to reduce the amount of inventory held by our businesses as major project launches are completed.
In terms of liquidity, we finished the quarter in a strong position with $528,000,000 of unused credit capacity. The next and final slide shows a variety of our free cash flow and dividend metrics over the last eleven plus years. For the quarter, we generated a record $85,000,000 in free cash flow, up $13,000,000 or 18.2% as compared to the 2024. Similarly, our free cash flow per share for the quarter increased to a record $1.9 per share, representing a 17.3% increase as compared to the 2024. These increases reflect the early stages of us generating returns and the investments we have been making in new production capacity in recent years.
In terms of dividends, subsequent to the quarter, we declared a dividend of $0.85 per share for the 2025. That concludes our presentation. Please join us on our Q and A conference call later today at 10:30 a. M. Vancouver time, 01:30 p.
M. Toronto time. Thank you.
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