Premium Brands (PBH-T) just reported revenue of $2.4 billion for the second quarter, a record for the company, and more good news may be on the horizon: the price of a major commodity could be dropping.

“While we haven’t reflected it in our outlook, we did mention it in our MD&A (management’s discussion and analysis) that we are starting to see possible cracks in the beef market, so there could be some upside in our outlook from that if that continues to develop, like early signs seem to be indicating,” George Paleologou, chief executive officer and president of Richmond, B.C.-based Premium Brands said during the company's second quarter earnings call.

However, when asked by an analyst when this potentially softening market would be reflected to is customers, the company was reluctant to commit.

“In terms of giving it back to customers, it depends on how far it falls. At some point, we’re always very transparent with our customers, and similar with when prices are going up, that transparency helps us put through price increases, and as they come down, we’ll pass those on,” Will Kalutycz, chief financial officer said during the same earnings call.

“If the retail price points come down, we will benefit from more volume,” he added.

Record-breaking quarterly revenue

But this wasn’t the only good news for the company as Q2 was eye-opening: $2.4 billion in revenue which represented an increase of 26.3 per cent, or $495 million, versus the same quarter last year.

The company’s sales were also strong in the U.S., according to Paleologou, as it recorded an organic volume growth rate of 10.7 per cent in the quarter. “We’ve done and executed a lot of great innovation. We’ve launched a bunch of products with customers in the U.S.,” he said.

Premium Brands has such retail brand names as Pillers, Leadbetters and Lou’s Kitchen, with operations in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and in six U.S. states. It has more than 22,000 customers for its wide-ranging line of products, and through its food distribution companies.

With this recent successful set of financial results, that is leading to the new growth.

“We prove out the demand with one customer. It does really well. It gets noticed, and then we have opportunities to sell products to other customers. If you visit the U.S. today, we’ve got products in all states, and we continue to add SKUs (stock-keeping unit) with all the major retailers,” Paleologou said.

Delays shift revenue 

However, the success is tempered with caution following the delay of a major limited time offer (LTO).

“We had to make some assumptions in the original numbers, and they turned out to be a little bit off in terms of the timing. On the LTO side, it’s with a major QSR (quick-service restaurant) customer, and they’re going through some internal changes. This just got pushed down the list,” Kalutycz said.

This meant that some expected revenue will be realized in the next quarter, he said.

Overall, “our U.S. sales space is doing well,” Kalutycz said. “You saw we generate 25 per cent organic volume growth on our protein initiatives in the U.S. There is no sign of slowdown there. It just continues to be strong.”

Delays with new products are also expected to further impact future results, according to Kalutycz.

“We had two major launches happening in the back half of the year. It launched but the customer went with a phased-in approach instead of an all-out bang approach with all their stores across the U.S. But it’s a phased event launch, that’ll push a little bit of the growth more in Q4 versus Q3.”

The firm is also excited about another initiative. “It’s a 1,500-store launch, so we’re pretty excited by that, and that’s going to happen in Q4. So those factors will push a little bit of the growth into to Q4 versus Q3. But we’re still expecting Q3 to be a solid growth quarter,” Kalutycz said.

While the company has been in purchasing mode recently, it may be scaled back, at least in terms of keeping this top of mind for the greater market.

“We are the acquirer of choice for a lot of companies. A lot of companies come to us, and we’re in a lot of discussions. As we’ve gotten bigger and we’re getting more attention, when we disclose that we’re in an advanced stage of discussions with different companies, there’s a lot of speculation going on, and it impacts our confidentiality agreements,” Paleologou said.

While it didn’t point to any specific deals, the search for new growth is ongoing.

“Ultimately, we are acquisitive. We’re always looking to partner with good companies.”