Lad`ies and gentlemen, thank you for standing by, and welcome to the Premium Brands Holdings Corporation second quarter 2021 earnings conference call. At this time, all participants are on a listen- only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, George Paleologou, CEO and President of Premium Brands, and Will Kalutycz, CFO of Premium Brands. Thank you, Mr. Paleologou, you may begin. Thank you, Christy. Welcome everyone to our 2021 second quarter conference call. With me today here is our CFO, Will Kalutycz. Our presentation today will follow the deck that was posted on our website this morning. You can also access it by clicking on the link of our press release issued this morning. As we had some technical difficulties this morning, I will give it 60 seconds to allow you to download the presentation, which is on our website, dated August 2021. We're now on slide five, which outlines key highlights for the quarter. Despite the many challenges facing us, we reported excellent results for the quarter and year- to- date. In general, food service demand came back strongly during the quarter and is now running at or slightly ahead of pre-pandemic levels. Our meat snack, charcuterie, cooked protein, and sandwich platforms are performing well and are ahead of plan. Our seafood platform, which includes Clearwater Seafoods, had an excellent quarter and delivered record results for the quarter and year- to- date. We're very well- positioned to capitalize on favorable consumer trends in both retail and food service. We have invested heavily in seafood over the past few years. Our assets, people, and products are best in class. We very much look forward to reporting back to you on our various growth initiatives in seafood as we go forward. We're now on slide six. As you can see, our acquisition pipeline remains very active and robust and w e expect to complete many more transactions in the months and years to come. We're now on slide seven. We're very pleased to issue our second comprehensive ESG report titled Healthy Planet, Healthy Food, Healthy People. We're committed to meeting or exceeding our various goals and objectives stated in the report, including achieving net zero carbon emissions by 2030. Our full ESG report can be found on our website at www.premiumbrandsholdings.com. We're now on slide eight, nine, and 10. Our organic growth is driven by our passion to innovate and disrupt the traditional food chain. We're bringing great quality, new and innovative products to market, and customers and consumers are responding very favorably. Meat snacks, charcuterie, cooked protein, value-added seafood, and sandwiches are shown on slide eight, nine, and 10, are driving our organic growth and have a long runway to continue to grow for many years to come. I will now pass the presentation to our CFO, Will Kalutycz, who will update you on our financial results for the quarter. Will? Thanks, George, and welcome everyone. Before I begin, I would like to remind you that some of the statements made on today's call may constitute forward-looking information and our actual results may differ materially from what we discuss. Please refer to our MD&A for fiscal 2020 and for the second quarter of 2021, as well as other information on our website for a broader description of the risk factors that could affect our performance. I will now turn to slide 12 of the presentation, starting with our sales for the quarter. We generated CAD 1.234 billion in sales, which was an increase of CAD 258 million or 26% from our sales in the second quarter of 2020. The main drivers of this were our general organic growth across a range of products. I'll talk a bit more about that later. Recovery from the impacts of COVID in the second quarter of 2020, which was roughly CAD 85 million. Acquisitions, which accounted for about CAD 84 million of our growth and s elling price inflation of roughly CAD 58 million. Most of which was in our Premium Food Distribution Group, which has very dynamic pricing models and cost-plus structures that allowed them to pass on the current inflationary environment in terms of commodity costs very quickly. Challenges in the quarter for our sales consisted mainly of depreciation of the Canadian dollar and the impact of that on the translation of our U.S.-based businesses. The impact of that was roughly CAD 58 million on our sales for the quarter. On a COVID-normalized basis, our sales for the quarter would have been close to CAD 1.3 billion, representing an increase of about CAD 177 million over our Q2 2020 normalized for COVID sales of CAD 1.1 billion. Again, the key drivers of that being the organic growth I'll talk about shortly. In terms of organic growth rates, on a year-over-year basis for the quarter, we generated total organic growth of close to 18%. Once you exclude the impacts of the COVID recovery, our overall organic growth was about 9.3%, and that consisted of very strong growth in our Specialty Foods segment, which generated about 12.5% organic growth, and then a much lower growth rate in our Premium Food Distribution Group of about 2.7% as that group continues to get impacted by the COVID-related impacts on the food service segment. Turning to the next slide, which outlines all of our major growth initiatives across our six platforms. We've highlighted in yellow the key initiatives that contributed to the organic growth in the second quarter. You can see in our Seafood segment, it was two key initiatives, our new Saco facility, lobster processing facility in Maine, and COVID recovery. Our Distribution Group was primarily COVID recovery. In our Protein group, by far the single biggest driver were our U.S. meat snack initiatives, which are going incredibly well, but also Italian charcuterie, cooked protein, mainly our Concord chicken bites program, and COVID recovery also contributed to the platform's organic growth. In terms of our Sandwich platform, it was firing on all cylinders with its various sandwich initiatives in QSR, retail, and C-store, as well as its charcuterie slicing initiatives all having stellar organic growth. The last point on this slide is really the fact that a lot of the growth initiatives in play that we're working on, i.e., the ones that are not highlighted in yellow, will be future drivers of our growth so w e see a lot of runway ahead in terms of future growth. Turning to slide 14, just a little bit on the COVID recovery in the quarter, which was about CAD 85 million. You can see it consisted of roughly CAD 91 million of recovery of food service-related sales and offset by a loss of some of the retail bump sales we saw in the second quarter of last year. Looking at our individual segments, you can see most of the recovery was in our Specialty Foods segment and in particularly the QSR segment, which you see as that strong food service recovery. We saw some recovery in our Premium Food Distribution Group as the food service economy started reopening through the quarter and we saw a return in demand in the food service segment. Turning to slide 15, the continuing COVID impact that was reflected in our normalized sales numbers I discussed earlier. In looking at the chart on the left, you can see in Q2 2020 the dramatic impact COVID had on our business, CAD 132 million in sales. For the second quarter of 2021, we estimate a continuing impact of roughly CAD 48 million. Turning to the charts on the right-hand side of the slide, you can see most of that continuing impact is in our Premium Food Distribution Group with the still returning or recovery of the food service segment to come being the big component of that, and then a little bit of cruise line business we're expecting to come back in the later part of the year. Down below in the Specialty Foods segment, you can see the ongoing impact is relatively small, a little over CAD 16 million, and most of that is associated with the airline industry. Turning to slide 16, our weekly sales trends, the gold bar being our weekly sales for 2019, the blue bar our weekly sales for 2020, and the green bar our weekly sales for 2021. You can see the momentum of the second quarter has continued strongly into the third quarter. As the food service segment continues to open up, hopefully with the reopening of the economy, that should be even a further driver of that momentum in our sales growth. Turning to slide 17, now showing for the last 11 years+ our TTM annual sales. You can see our 2021 trailing 12-month sales of CAD 4.4 billion nicely exceeded our 2020 normalized for COVID sales of CAD 4.269 billion. Looking at our 2021 trailing 12 months sales normalized for COVID, we would have been close to CAD 4.6 billion in sales. With the release of our second quarter results, we also reinstated our annual sales and adjusted EBITDA guidance. For 2021, we are projecting total sales of between CAD 4.7 billion and CAD 4.85 billion. We made the range relatively wide to allow for the uncertainty associated with the specific timing of the launch of a variety of new sales initiatives, mainly the items I showed earlier on the slide of all our growth initiatives. Turning to slide 18 and looking at our EBITDA performance. For the quarter, we generated CAD 112.2 million in EBITDA, an increase of CAD 45 million or roughly 67% over second quarter of 2020. The key drivers of that were our sales growth, acquisitions, including about CAD 13.3 million in investment income from Clearwater, the reversal of COVID-related costs from the second quarter of 2020, which was approximately CAD 11 million, mainly consisting of supply disruptions, thank-you bonuses, and plant inefficiencies in the second quarter of 2020. Finally, also production efficiency improvements through automation and continuous improvement across mainly our protein group, but also our sandwich group. Offsetting those positive factors were six negative factors. First off was our continued investment in plant, sales, and administration infrastructure to support both our current and future growth. The biggest challenge of the quarter by far was commodity cost inflation, net of selling price increases. For our Premium Food Distribution Group, it was a slightly positive factor as they have very dynamic pricing, as I mentioned earlier, as well as cost-plus pricing models. They were able to pass on a lot of the commodity cost inflation experienced over the quarter very quickly. It was a major impact on our Specialty Foods segment and in particular, our protein group, which because of the nature of their business and dealing with a number of retailers, there's generally a timeline associated with putting through the price increases needed to address the rising commodity cost environment. There was some wage inflation in the quarter, particularly in our U.S. sandwich businesses as they're addressing some of the labor tightness in that market and then also in translation of our U.S. businesses into Canadian dollars was impacted by the stronger Canadian dollar. Rounding out the list was a bit of incentive-based compensation accrual increases and some general cost inflation. Normalizing for the impacts of COVID, our adjusted EBITDA for the quarter was CAD 121 million, representing about a CAD 14 million or 13% increase over our 2020 normalized EBITDA of about CAD 107 million. In terms of EBITDA margins for the quarter, it was 9.1%, which was below our expectations primarily due to the commodity cost impacts. Normalizing for those, we would have been close or even above our 10% target for the quarter. Similarly, for the COVID normalized number, our EBITDA margin was roughly 9.4% and certainly would have been in excess of 10% normalizing for the commodity cost impacts in our protein group. Turning over to the next four slides, just to give you a sense of the trend in a number of key commodities purchased by our companies. The first slide on slide 19 shows a basket of pork products purchased by our companies. Pork is the largest component for our protein platform. You can see the inflationary trend there. We've listed the demand and supply factors on the right-hand side, but really the key driver of the inflation has really been the reopening of the economy with the food service segment in particular. The next slide shows a basket of beef products. Beef is the largest component for our distribution platform. Again, a very inflationary environment going into Q3. Q2, there was that unusual spike, but overall, certainly a continued inflationary environment for beef. Next slide is lobster, which is a significant cost or input for our seafood group, and lobster is certainly at absolute record highs right now, as you can see from this chart. The final chart is for salmon. Again, another key input for our seafood group. 2019, there was some noise in the numbers from supply disruption. The green line, which is 2021, has really been driven by demand and the reopening of the economy. Overall, again, what made this quarter unique from a commodities perspective was any one particular commodity was inflationary, but never have we seen a situation where everything was so inflationary. Turning to slide 23, a trend in our annual EBITDA, again for the last 11 years in the trailing 12 months. Similar to our sales, you can see our trailing 12 months 2021 EBITDA is now in excess of our 2020 EBITDA, normalizing for the impact of COVID. If you normalize our 2021 trailing 12 months EBITDA for COVID, we would've been in excess of CAD 400 million in trailing 12 months EBITDA. F or 2021, we are projecting an adjusted EBITDA margin of approximately 9%. We have been a bit bearish on this number on the basis that we expect to see some continued margin pressure on our protein platform businesses, again, due to the timeline associated with them putting through price increases to address cost inflation, as I mentioned earlier. Turning to slide 24, our earnings for the quarter were CAD 53.5 million, an increase of CAD 32.3 million or 152% from the second quarter of 2020. Key driver of that was our EBITDA growth, offset with some associated incremental taxes and some amortization associated with the sale and leaseback transaction we did in the quarter. Normalizing for COVID, our earnings would've been CAD 60.1 million for the quarter, representing a CAD 14 million increase, or roughly 31% over the 2020 COVID normalized number. In terms of EPS for the quarter, we generated CAD 1.23 per share in earnings per share, a CAD 0.66 per share or 116% increase over the second quarter of 2020. On a normalized basis, our EPS was CAD 1.38, representing a CAD 0.15 per share or 12% increase from the normalized Q2 2020 number. Turning to slide 25, a little bit about Clearwater. Certainly our most significant CapEx allocation we've made yet. Clearwater continues to generate very strong momentum in their business. You can see their sales are nicely up, roughly CAD 33 million or 31% from the second quarter of 2020 to CAD 139 million. The key driver of that really was the reopening of the economies, particularly in North America and in China. That was offset a little bit by some deflationary impact of the stronger Canadian dollar, as a lot of their sales are in U.S. dollars, as well as some continuing impact on their whelk business due to some COVID related inventory issues in their key markets. From an EBITDA perspective, Clearwater generated CAD 28 million for the quarter, up roughly CAD 14 million or 96% from the second quarter of last year. Certainly comparing it to 2019, also strongly up from about CAD 26 million in that year. Very solid performance by Clearwater, driven by their organic growth and in particularly the selling price inflation being driven by the reopening of the economy b ecause unlike many of our other business, because Clearwater is a harvester of many of its species and has a relatively fixed cost, that inflationary impact pretty well flows directly to their EBITDA. A very positive contributor to the quarter. Also some good strong operation efficiencies, generally relating to less at-sea days resulting from better catch rates. Offsetting that was the negative Canadian dollar. Similarly to the selling price inflation, the impact of the dollar flows straight down into their EBITDA. The translation of the U.S. dollar sales obviously was a negative. Also for the products they do procure, those were higher driven by the commodity cost inflation and then also some increased incentive accruals. In terms of net earnings for the quarter, Clearwater generated CAD 2.5 million. Our 50% equity interest in that was roughly CAD 1.2 million, which is well ahead of our expected plan. We expected negative equity earnings for the quarter in our original business plan. Clearwater doing very well and nicely exceeding the plan built into our IRR modeling. Turning to page 26. In terms of capital allocation for the quarter, we allocated just a little over CAD 100 million in capital. CAD 16.5 million of that was to our 35%-40% owned REIT structures, which associate with the sale and leaseback I mentioned earlier. We spent about CAD 82 million on, or allocated CAD 82 million to new capital projects, namely the expansion of our Hempler's facility to add additional meat snack and premium processed meats capacity. Expansion at our Oberto operation to increase their meat snack capacity. The addition of two automated lines in our sandwich plants, both for capacity and production efficiency improvements. Finally, the expansion of our Buddy's sandwich plant in Minnesota. In terms of actual expenditures for the quarter, we spent roughly CAD 44 million on IRR 15% based projects. Again, CAD 16.5 million for the REITs and roughly CAD 25 million for project CapEx. Again, these are all projects that we expect to generate at least a 15% internal rate of return after tax, unlevered, and usually using a 10-year+ business model. Subsequent to the quarter, we allocated another CAD 110 million for two acquisitions, one which closed subsequent to the quarter, Mermax, a Quebec-based food manufacturing and distribution business, and then Maid-Rite, which we have a signed agreement, and we're just going through the closing conditions before it can be completed. For the year-to-date, so far, we have allocated roughly CAD 931 million in capital and spent CAD 725 million of that. Turning to slide 27, our liquidity. Our balance sheet continues to remain strong with our senior debt EBITDA ratio at 2.1: 1, which is below our long-term targeted range at 2.5- 3: 1, and our total debt EBITDA ratio of 3.4: 1, again, well below our long-term targeted range of 4- 4.5: 1. Our unused credit capacity at the end of the quarter was roughly CAD 470 million, giving us great flexibility to continue on with our various capital allocation strategies. Turning to the final slide of the financial update, our free cash flow. We generated record free cash flow of the quarter of CAD 238 million. This is roughly a CAD 50 million increase over our 2020 free cash flow, driven a lot by the drop-off of the second quarter of 2020, which was severely impacted by COVID. From a free cash flow per share, we generated CAD 5.79 for the trailing 12 months, again, a record level, up CAD 0.92 per share, or roughly 19% from 2020. Our payout ratio for the trailing 12 months was 43.6%. If you normalize this for total shares outstanding versus weighted shares outstanding at our current new dividend rate, our payout ratio would have been 46.5%. With that concludes the financial update, and I will now turn the call over to Christine. Christy? [Non-English content] please press star and then number one. Once again, please press star then your number one on any audio question. Our first question comes from the line of Derek Lessard. Hi, Derek. Mr. Lessard, your line is open. I'll start out better than you guys. It seems like you guys did a great job, or at least you were pretty successful in pushing through some price. Just wondering, number one, if you've experienced any customer pushback, and number two, I was just wondering, do you think the additional pricing actions that you've taken are going to cover most of the inflation in the system right now? Yeah, Derek, you have to remember a couple of things. As we said during the last conference call, the majority of our business is either cost plus, for example, our sandwich business is generally cost plus, and the food service, the premium distribution side of our business tends to be very dynamic. Pricing tends to be very dynamic, right? Again, a big part of our business generally is not impacted by commodity inflation that much. As Will mentioned, the one area where we faced challenges was the protein group. Generally speaking, we've faced inflationary trends in the past. In the case of our protein group, we've demonstrated that we can move prices up. We just have to abide by the notice periods that we have to give our different customers, generally from 30- 90 days. In general terms, we feel comfortable that our price increases are sticky and that our margins in the protein division will normalize. Okay. That's helpful. How do you guys feel, or what's your view on the current outlook of the inflationary pressure? Well, our sense, again, it depends on the different commodities, Derek, and as you know, there's a number of factors that drive the commodity pricing. To tell you the truth, we don't spend a lot of time trying to predict the market. In general terms, we're disciplined. We follow commodity pricing, and we are at the premium end of the spectrum. We would like to think that consumers buy our products for reasons other than price. Generally speaking, we try to run our business in as dynamic an environment as possible when it comes to pricing. We tend to push prices up when commodities go up and then bring them down, of course, as commodities come down. Okay, one last one from me. Just maybe if you could comment on the labor situation, how you're dealing with it in your various facilities throughout North America. Labor is a challenge for a lot of our facilities, a lot of our businesses. It's a challenge for a lot of industries today in North America. We are dealing with these issues effectively. There's not a lot of labor around willing to work these days. In some cases, we're working diligently to encourage the different governments to allow more immigration into North America. Different businesses have different initiatives, community engagement in certain communities that we rely on for labor. Various initiatives in place, as I said earlier, very dynamic. It's a challenge for everybody, and we're managing. During the quarter, we've turned away business opportunities because ultimately we have to make sure that we don't overwork and we don't overstress our existing labor. Hopefully, that'll pass with COVID, I guess, and the labor challenges will diminish. Okay. Thanks, gentlemen. Thanks, Derek. Your next question comes from the line of Martin Landry. Hi. Good morning. Good` morning, Martin. Good morning, Martin. My first question is on your distribution business. You do mention in your press release that it's been impacted by a decline in live lobster sales at retailers. Wondering if you can discuss this a little bit more, this dynamic, and more importantly, has this continued post-quarter end? Yeah. What the impact was on what we call featuring, Martin, where the retailer takes the product and it's a bit of a loss leader for them, but drives volume or people into their stores. Because the, as I mentioned earlier, lobster prices were at such record highs, retailers cut back on a lot of that type of featuring. It really is a temporary or transitory impact. The interesting part and the upside in it is, Ready, which is the primary business that was impacted, continues their procurement. The lobsters don't go away. They've actually positioned themselves quite nicely for the back half of the year by putting away a lot of high-quality product, which hopefully will generate some nice sales opportunities with the seasonality of that product, particularly in China. Yeah, it was a negative in the quarter, but we're optimistic for the year it's going to be a positive factor. Okay. Thank you. Overall, we're wondering what you've seen so far in Canada. Ontario was shut down for most of Q2, now it's fully reopened. Have you seen a similar uptick in Ontario or in Canada than what you've seen from the reopening in the U.S.? Definitely. Particularly, in the latter part of the second quarter. That was part of what drove our sales growth, of course. Generally speaking, as economies open up in Ontario and Quebec, in B.C., Alberta, etc., e tend to see that almost immediately with regards to our food service-focused businesses. June for us was very strong when it came to the food service channel. Would you say that for the summer, have things returned to a near normal level for business? Based on the June trends that we saw and some of the current trends that we see, yes. Okay. Yeah. The big question mark there, though, Martin, will be food service has different elements to it, and a key driver of food service in the fourth quarter are large events and t hat's still a big uncertainty, unknown, right? How that's going to play out. That's the part that is a big question mark still. Yeah. Understood. Okay. Thank you. Thank you, Martin. Your next question comes from the line of Stephen MacLeod. Thank you. Good afternoon, guys. Hey, Stephen. Hi Steve. Hi. I just had a couple of questions that I wanted to follow up on. On the organic growth drivers, Will, on that chart on slide 13, you have all those growth initiatives that are yet to play out. I'm just curious if you can give a little bit of color, and that might be a difficult question, but just a little bit of color around the timing of those growth initiatives, and even if there's a way to quantify what it might all mean in terms of revenues. Well, we're not giving specific guidance. A lot of this stuff is 2022 stuff. We're not talking about guidance for 2022. Again, it's a broad range, Stephen. All the different things are different timing. Some of them are COVID-related impacts that have delayed things. Some are just, it takes time to develop these new concepts and brands and products. It's a real wide gamut of factors. Generally, even driving towards meeting our goal in 2023, as we've stated. Yeah. Okay. That makes sense. Again, really the point we just wanted to say, there's meat snacks, sandwiches, charcuterie, some of our seafood initiatives that have been driving our growth are just a part of the formula of what's going to get us to that CAD 6 billion number. There's a lot of other stuff in the pipeline. Right. Lots of levers to pull on. Okay. Exactly. Okay. That's great. Then, with respect to the margin outlook for 2021, just given the inflationary backdrop, I'm just wondering, you have a point estimate for the 9% margin, but can you talk a little bit about what the potential goalpost would be around exceeding that number or potentially falling short of that number? Outside of that number, really our focus is 2023 and exceeding that 10% target we set for ourselves. As we showed last quarter, we're well into the plan and are very bullish on meeting or exceeding that target. Okay. Sales de-leveraging is a key part of it. In the short term, as I mentioned for the quarter, the impact of the commodities, which for us is completely transitory, we would have exceeded that 10% number for the quarter. Then, it's just a question of sales de-leveraging from there. Okay. That's great. Maybe just finally, you announced a couple of acquisitions in the quarter. Just curious, is it safe to assume that we assume margins of those deals are in line with the segments that they're going to fall into and a re you able to provide any more specific color around the timing of closing? Yeah. In terms of closing, it's really an unknown because it's a process of going through getting consents and things like that involve third parties. You really can't control that. We're optimistic it's going to be this quarter, the third quarter, but you can never say for sure. In terms of margins, yes, that's a very fair comment. They're very reflective of the segments they're in. Okay. That's great. Thanks, guys, and congratulations. Thank you. Thanks, Steve. Your next question comes from the line of David Newman. Hey, guys. Hey, David. Yeah. Hi, David. I've got a sort of a 30,000 ft question. When you think about when you went into COVID, I think George made the comment that you have food at home, and it's a bit of a trade-off between the two. We're living in this strange, hybrid world where people obviously saved a lot of money through the pandemic. Is there going to be a period that you think there could be above normal growth for a couple of years because of the hybrid world that we live in, where people, obviously food away from home, they want to enjoy going out for dinner, but at the same time, because they do work from home for more days, that they're going to have larger baskets, more premium quality products and things like that? Yeah. Again, good observations, David. My view, and that's been my view for the last 20 years, is that premiumization is here to stay. Consumers are getting a lot smarter. They're reading the ingredient decks. They demand better quality. They demand better eating experiences in general. That's the trend that we benefited from, as you know, and you've followed us for some time, so, and we've been talking about premiumization. I think that COVID has accelerated the premiumization of the food space, and I think that's one of the reasons why we're seeing such robust demand for a lot of our premium products, including premium seafood as well. In regards to consumer patterns, it just depends on COVID and whether COVID is going to be leaving us. Who knows. I think that we're seeing a tremendous amount of pent-up demand by consumers to go out and consume food outside of home today as we speak. Assuming the consumer feels confident to go out, I think that trend will continue. We're predicting a very robust demand, and we are seeing very robust demand in QSR, white tablecloth, and casual dining. All these channels today are doing extremely well as consumers get more confident in terms of going out. As you go towards your target of CAD 6 billion, CAD 600 million EBITDA, which now looks very achievable, do you think for the next couple of years, you could be over-indexing on that sort of 4%-6% OBGR that you guys forecast? Absolutely, David. Our expectation in the short term, being sort of one to two years out, is certainly built into our projections that we shared with the market to be above that 4%- 6% range. We sort of conservatively modeled out for 2023, 6%. We're certainly well positioned to exceed it. Yeah. My comment, David, is that as I've mentioned on previous calls in the past, we're not that concerned about demand in general. We have great innovation. Consumers are looking for these wonderful, innovative, convenient to consume products. There's a lot of demand from our customers and consumers for our product, and you're seeing that in our organic growth rates. We are concerned, of course, with supply chain disruptions and labor shortages and all of those things but d emand for our products is robust. Yeah, if I look out food service coming back, but I think you guys flagged like CAD 70 million, CAD 80 million just on airlines and cruise lines, which I know the forward bookings for both airlines, transit traffic at the airports has picked up. You've got cruise line bookings that look very strong according to Carnival and Royal Caribbean. As I look at that business, that could be 2022. Is that kind of how you're thinking about it? Yeah, I think those are valid observations, David. Again, depending on what happens with the pandemic, of course, but absolutely. We're starting to see some movement with regards to those channels. With airlines, David, we're actually a little more bullish. Cruise line is a 2022 story for us, because there's a lot of inventory in the system from when the ships had to shut down, a lot of frozen inventory. For the airline industry, we're slightly bullish on Q3. We're seeing a real strong interest there in revamping programs and getting back to the way things used to be, at least in sort of the business and first class sections that we service. Perfect. Last one from me, guys, how much do you think you may have left either deferred or lost on the table, or off the table, I should say, just given the labor bottlenecks or pinch points? How material? It's a material number. It's a tough one. We tried to actually estimate it, David, but the problem is our sandwich group was in the strange situation of, they were sitting down with their customers and having to negotiate how much they could provide the customer, and the customer just says, "We'll take what you can make." It was an environment where we know we could have sold a lot more product if we didn't have the labor bottlenecks, but what that number is, it's just too hard to put a specific to. I'll give you a number, David. Again, as Will said, it's not based on anything hard. I know we've said no to a few customers. I know we've put some customers on allocation, et cetera, but probably between CAD 25 million and CAD 50 million. Okay. Very good. Excellent. Onward and upward, guys. Thank you, David. Your next question comes from the line of George Doumet. Good morning, guys. Congrats on managing a pretty tough backdrop. Thanks. My question was around the labor piece, the constraint there. Thanks for providing that CAD 20 million-CAD 50 million number. Maybe following in on there, just wondering, George, what gives you confidence that some of this could be structural and we can get those CAD 20 million-CAD 50 million+ revenues in the back half of the year? Anything you're seeing there? Well, you have to sort of remember, George Paleologou, that we've got a lot of automation and robotic types of initiatives, particularly in the sandwich platform. Those initiatives are going really well. We've talked about some of the competitive advantages of our sandwich platform, and part of that advantage is the fact that they provide labor saving solutions for their customers, right? If you assume that a lot of the QSRs and a lot of the restaurants out there are having labor issues, and they do, they're looking for labor solutions, which our sandwich platform is well positioned to provide to them. It shouldn't surprise anybody that they're getting lots of opportunities. Ultimately, mid to longer term, we feel that automation will give us those type of solutions, right? We're heavily investing in automation and robotics and those type of things to get us there. The generation two lines, the generation three lines. We're actually in the process of looking at another sandwich facility, fully automated facility to help us keep up with the growth. Automation would give us those solutions. Geor ge, I'd add in the shorter term, too. We're cautiously optimistic that both in Canada and the U.S., as the subsidies go away, immigration opens up. That should help in the more near term with some of the labor issues. Like I say, being cautiously optimistic there. Okay, great. I just want to follow up on your comment, George, on maybe another sandwich plant. Can you talk a little bit about where, what end market, what geography, what channel you'd like to see that plant servicing? Well, again, it's preliminary at this point, George, but it does reflect the fact that we are seeing a lot of demand and a lot of opportunities in the segment. Our thinking is that it would be near one of our plants in the U.S. to make sure that they share resources and management teams. Probably will be maybe in Columbus, maybe in Phoenix. Okay, thanks for that. It looks like pork is our biggest exposure to inability to pass through, given that it's strong on the protein segment. It's had a really strong move quarter end. I know there's a lot that goes into that 9% margin guidance, but can you maybe talk to our ability to maybe stock up in terms of inventory pre-buying or maybe pass through price before the move? Any color you can give us on that big move in pork and that impact? Yeah, that's a tough one, George, because it's pretty hard to go to our customers and put price increases through in anticipation of something. You're generally always going to see a lag. Like George says, we're confident. We have no concerns that we won't get the margins back to where they are, but you're always going to have that short-term impact. Again, I mentioned earlier when we talked about our guidance for the year being a bit bearish on that 9%, that's partly what's baked into it, is our concern with the trends we're seeing in pork and the fact that if it does continue on, there will be some lag there. Okay. Just one last one from me. I saw a medium-sized acquisition in the seafood area in your exhibit that it's been there for a bit. I think it's in the advanced stages. I just want to get your thoughts, George, on what's the ideal acquisition in seafood. Is it ground fish? Is it something different, or will you double down on shellfish? Just wondering your views in terms of what would you like to add to the PB ecosystem. Yeah. Again, as I mentioned before, George, for us, it's really about improving our market share in terms of some of the species we're in, both in terms of Clearwater and Premium Brands. I think you know that we've invested a lot in the lobster space and in the value-added lobster space as well and doing well there. Again, in terms of, have to look at the species we're in, and hopefully finding opportunities where we increase our market share in those segments. We also have plans for the West Coast here. We have a couple of seafood businesses on the West Coast that are benefiting from the West Coast fisheries, and we've got some initiatives in place, and we are in some discussions to grow that business by acquisition. Okay, got it. Thanks for the answers. Good luck. Thank you, George. Your next question comes on the line of John Zamparo. Thank you. Good morning. Good morning. Hey, I wanted to ask about the ESG report and the net zero emissions goal, and I appreciate the additional color on the topic, but I wanted to hone in on the financial implications of this. I'm wondering if you can talk about how you plan to communicate these improvements and these changes to customers, and can you give some broad goalposts on what the implementation costs might be or what the cadence of that might be? Ultimately, is that baked into your 2023 outlook as well? In terms of 2023, certainly, the next two years, we've said as our target is developing a very specific plan to get to our 2030. In terms of just like, if we took the easy way and just bought carbon credits or something like that, say, John, you're looking at an impact of CAD 2 million-CAD 3 million. Not materially, and that's kind of a worst-case scenario. Our objective is continuous improvement, working with our businesses on how to reduce their energy usage, and we've seen some great ideas, and that will be a key factor which will bring that cost down over time. We don't see it as something that's going to materially impact our 2023 targets at all. If anything, like I say, a lot of these initiatives ultimately result in cost savings. If you have a chance to read the ESG report, the message comes through several times that so much of this stuff just makes good business sense, and that's how we're approaching a lot of our energy efficiency savings initiatives. Okay. Thank you for that. The press release referenced a term, it said "sudden shifts in demand." I'm just wondering if you can elaborate on what categories this was in particular, and how that impacted the quarter? Yeah, John, it's generally there's a change of demand from one channel to the other. For example, if the economies open up and the restrictions go away, all of a sudden you're seeing sudden and abrupt changes in demand towards the QSR, white table cloth, C-store, etc. The times we live in, usually, we're used to gradual changes in demand based on seasonality. Today as we speak, change in demand happened because of the removal of COVID related restrictions, right? When that happens, demand comes back extremely strongly. Got it. Okay. Thank you. A couple housekeeping questions. First on the cash flow statement, you spent about CAD 22 million in the quarter in advances to associates. Is that going to Clearwater or is that something else? Yeah, a portion of that is Clearwater, absolutely, and the accrued interest. Okay, thank you. Lastly, working capital, it's a relatively material drag in the quarter. I know this bounces around year-to-year, and I assume a good portion of that was the fact that you're not collecting on the Clearwater interest. Is there any other color you can provide on this? Yeah. Again, you can't compare it to 2020, John. 2020 was a bit of an anomaly. If you go back to 2019 and you look at the year- to- date, it sort of follows the same trend that you see year- to- date. Again, year to date is a better indicator because things can easily shift from quarter to quarter. The difference between the trend between 2019 and 2021 year to date is really two factors. One is, it's exactly what you mentioned, the Clearwater accrual on the interest, and then the second is just general growth in the business. Okay, understood. That's helpful. That's it for me. Thank you. Thanks, John. Thanks, John. We do have a question that just came into queue from Sabahat Khan. Thanks, Anna. Good afternoon. I just wanted to quickly chat on the margin guide for the year, which is at 9%. It is comparing, I guess, to 2019 pre-Clearwater times. Looks like the operating margin or the operating segment margins are probably a bit lower than 2019. I just want to understand, is that really just a commodity headwind or is it just because it's a bit of a transitional year with COVID? Just want to understand kind of the bridging of the gap or just what the impacts are. It's commodity, Sabahat. Again, sales de-leveraging has been helping to offset some of the commodities impact. Otherwise, if we'd been at the same sales level since 2019, you would have seen a much more negative impact on the margins. It is definitely commodities. I guess the 10% guide sort of by 2023 implies that the commodities are probably at a more normalized level, and I know would there be need for some additional operating leverage in there as well? Yeah. In terms of the 2023 objective, again, in a normalized commodity environment based on the expectations, the modeling we've shared with the market in the past, we expect to exceed that 10% quite nicely, giving us some flexibility that if there is some sort of commodity issues, we should be able to absorb that and still hit our 10% target. Okay. Just one quick one. I think back when the IFRS 16 came in, the quarterly impact was about, I think, CAD 8 million. I just want to check what that might be today given the sales mix factors and any other changes in the business. Sorry, you cut out there towards the end, Sabahat. Can you say that again? Yep. Just the IFRS 16 impact on the EBITDA line. I think when the impact started in 2019, it was about CAD 8 million a quarter. Would you have the current number where that might be today? Again, you can pull that out of the statement of cash flow. I don't have the number off the top of my head, but I would guess it's probably today in the CAD 13 million-CAD 14 million range. Again, that falls out of the cash flow statement. I can walk through with that with you if you want after the call. That'd be great. All right. Thanks so much for that. That's it for me. Okay. Thank you. Your next question comes on the line of Kyle McPhee. Hi, guys. Just one quick one. Specific to the Clearwater Lobster business, I know the integration is well underway with your lobster business. I'm just looking for an update on when you will start flowing the entire Clearwater business through your P&L full consolidation, contrasting the equity method for the rest of the Clearwater business. I know that was on the comm, I'm just looking for a timing update when we'll see that. Yeah, sure. Kyle, in terms of the Clearwater Lobster business, the commitment or the structuring is we will be getting CAD 10 million of EBITDA out of Clearwater to compensate us for that business. In terms of the specific structure of that, we're still modeling out what the best way is. Our Ready Seafood team and our Clearwater teams have been working together on what parts make the most sense, what parts should stay, what parts should be moved over. That process is ongoing, and it kind of got delayed a little bit by the chaos in the industry over the last three or four months. We still want to have that issue dealt with before the end of the year, but unfortunately, I don't have much more of an update for you on it than that. The coordination of the lobster business between the two groups, Kyle, is going really well. Very well. Got it. Okay. I guess it's fair to say your guidance for the year would not include that CAD 10 million of EBITDA. No. No, you are correct. Okay. All right. That's it. Thanks, guys. Thanks, Kyle. Thanks, Kyle. Mr. Paleologou, do you have any closing remarks? I'd like to thank everybody for attending, and have a great summer. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect at this time.