Premium Brands Holdings remains focused on M&A after the Canadian food manufacturer completed two protein deals during the second quarter.

Announcing results for the three months to 25 June and the fiscal year to date, Premium Brands revealed the business snapped up Ohio-based cooked protein business King’s Command Foods and has also acquired the remaining 50% share in Golden Valley Farms, a deli-meats maker in Ontario.

President and CEO George Paleologou disclosed on a proceeding call with analysts that the two deals amounted to a transaction value of CAD86.5m (US$67.3m). King’s Command “adds capacity and market reach to our cooked meats platform, while the purchasing of the other 50% of Golden Valley that we did not previously own will enable us to more seamlessly expand our dry curing capacity”, he said.

For a business that has been acquisition hungry in recent years, Paleologou indicated he is still open to further M&A after the King’s Command and Golden Valley deals. “Our acquisition pipeline remains robust and we expect to complete many more transactions in the months and years to come,” he said.

Premium Brands raised its sales revenue guidance after reporting a 23.1% increase in the second quarter to CAD1.5bn. The company now expects to post full-year net sales of CAD5.75bn to CAD 6.00bn, compared to a prior estimate of CAD5.6-5.85bn.

Adjusted EBITDA rose 16.6% in the three months to CAD130.8m. Premium Brands kept its outlook for the metric at CAD510-530m.

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By GlobalData

Adjusted EPS climbed 12.2% to CAD1.38.

Finance chief Will Kalutycz explained revenue was boosted by selling-price inflation amounting to CAD134.4m during the second quarter, with a total of CAD490m taken in pricing over the past four quarters.

“Acquisitions accounted for CAD114.1m of our growth, a weaker Canadian dollar relative to the US dollar, which resulted in the favourable translation of our US operations, contributed CAD20.1m to our growth and organic volume growth contributed CAD16.6m”, he said.

Paleologou described how the pandemic-related “explosion in consumer discretionary spending which clogged up supply chains around the world is slowing down, adding that “this means more labour availability for the consumer staples and service industries”.

Kalutycz also provided some nuggets on materials inflation: “I should note the difference between our selling- price inflation and our direct material wage and freight inflation was a positive CADS3.5m, which shows a good trend relative to the first quarter when that same calculation was a negative CAD2m.”

The CFO said chicken was the most sensitive input cost out of the protein components, one he described as the “most challenging”.

“Significant cost inflation has continued from the first quarter through most of the second quarter. The good news is, we have seen a break in this commodity and that break seems to be continuing and could be positive upside in our outlook for 2022, if that trend continues,” Kalutycz explained.

For the first half, Premium Brands sales revenue climbed 23.6% to CAD2.8bn, while adjusted EBITDA rose 16.3% to CAD226.6m. Adjusted EPS was up 15.9% at CAD2.26.

Paleologou outlined some positives around price versus volumes and forward-looking commodity inflation.

“We’ve tested a lot of very high price points given the degree of the underlying inflation, and volumes held. You never know how volumes are going do until the retail price goes to a certain level and we’re very pleased with the way the volumes held overall,” he said.

“The good thing today is most of the underlying commodities that we’re using have crested and they’re going down. So that’ll give us lots of ability to feature, promote, innovate, etc, which is what we do very well. So, again, lots of positives with regards to the trends there.”