Premium Brands Holdings Reports Record Sales and Growth

Premium Brands Holdings ((TSE:PBH)) has held its Q2 earnings call. Read on for the main highlights of the call.

Premium Brands Holdings’ recent earnings call painted a generally positive outlook, underscored by strong sales and organic growth, particularly in the U.S. market. Despite facing challenges such as margin pressure from commodity inflation and a contraction in U.S. sandwich initiatives, the company highlighted record sales and strategic investments as key positive aspects.

Record Sales Achieved

The company reported record sales for the quarter, reaching $1.9 billion, which marks an impressive increase of $212 million or 12.5% compared to the second quarter of 2024. This achievement underscores the company’s robust sales strategies and market presence.

Strong Organic Growth

Organic volume growth played a significant role in the sales increase, contributing $82 million. The company saw a combined organic volume growth rate of 21% in its premium protein and artisan bakery products, highlighting the effectiveness of its product offerings.

Successful U.S. Market Initiatives

Initiatives focused on the U.S. market, particularly in premium protein and artisan bakery products, generated $58 million in organic volume growth. These initiatives achieved impressive organic growth rates of 15% and 98%, respectively, demonstrating the company’s strategic focus on expanding its U.S. footprint.

Adjusted EBITDA Growth

The company reported an increase in adjusted EBITDA, reaching $177.1 million, which is a 7.6% rise compared to the second quarter of 2024. This growth reflects the company’s ability to enhance its profitability despite challenging market conditions.

Capital Investment and Capacity Expansion

Significant investments were made in expanding production capacities, including a new sandwich assembly plant in Cleveland, Tennessee, and a recently acquired cooked protein production facility in Owasso, Oklahoma. These investments are expected to support future growth and operational efficiency.

Debt Leverage Improvement

The company’s total debt-to-EBITDA ratio improved to 4.2:1, showing a 0.4 turn improvement compared to the first quarter of 2025. This improvement indicates better financial health and a stronger balance sheet.

Free Cash Flow Increase

Premium Brands Holdings generated $80.2 million in free cash flow, marking a 6.6% increase compared to the second quarter of 2024. This increase in cash flow provides the company with more flexibility for future investments and shareholder returns.

Margin Pressure from Commodity Inflation

The company faced margin pressure due to higher-than-expected inflation in beef and chicken prices, which affected overall profitability. This challenge highlights the ongoing volatility in commodity markets.

U.S. Sandwich Initiatives Contraction

The U.S. sandwich initiatives experienced a 2.3% contraction, attributed to a tough year-over-year comparison following a major product launch in the previous year. This contraction indicates the challenges in maintaining growth momentum in certain segments.

Adjusted EBITDA Margin Decline

The adjusted EBITDA margin fell by 50 basis points to 9.2% compared to the second quarter of 2024. However, when normalizing for raw material cost inflation, the margin stands at 10.1%, reflecting the company’s underlying profitability.

Forward-Looking Guidance

Looking ahead, Premium Brands Holdings remains optimistic about its growth trajectory. The company aims to continue leveraging organic volume growth, strategic acquisitions, and price adjustments to sustain its financial performance. With a dividend of $0.85 per share declared for the third quarter of 2025, the company is on track to meet its long-term financial goals, despite the challenges posed by raw material cost pressures.

In summary, Premium Brands Holdings’ earnings call highlighted a generally positive sentiment, driven by record sales and strategic investments. While challenges such as commodity inflation and segment-specific contractions were noted, the company’s robust growth strategies and financial improvements provide a solid foundation for future success.