Premium Brands Q1 2026 Prepared Remarks Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2026

Key Takeaways

  • Positive Sentiment: Record Q1 results with CAD 2.1 billion in sales and CAD 171.5 million adjusted EBITDA, reflecting strong multi-year growth (sales up ~40% vs two years ago) and a 24.6% increase vs Q1 2025.
  • Positive Sentiment: U.S. expansion drove performance — Specialty Foods U.S. delivered ~9.9% organic volume growth (US protein initiatives ~22.7% organic growth), U.S. sales reached CAD 1.5 billion, and the Kettle business is expected to exceed CAD 100 million this year with longer-term scaling potential.
  • Positive Sentiment: Startup and restructuring costs fell sharply as new production capacities hit base operating parameters, and management expects materially improved operating margins with substantially lower 2026 restructuring charges.
  • Positive Sentiment: Company reaffirmed 2026 guidance of CAD 9.25B–CAD 9.55B revenue and CAD 870M–CAD 910M adjusted EBITDA and remains on track to exceed its 5‑year targets of CAD 10B sales and CAD 1B EBITDA.
  • Negative Sentiment: The jerky category is contracting due to high beef costs and consumer price sensitivity, and higher depreciation/lease/interest from recent investments partially offset profitability improvements.
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Earnings Conference Call
Premium Brands Q1 2026 Prepared Remarks
00:00 / 00:00

There are 2 speakers on the call.

Operator

Welcome everyone to our 2026 first quarter conference call. With me here today 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 off our press release issued this morning. Since our founding back in 2000, 2001, we evolved from a small western Canadian food company to a much larger organization with operations across North America, producing great foods with clean and natural ingredients and leading positions in many specialty and other on-trend food categories sold in diverse geographies in multiple channels. Over the past couple of years, we faced not one, but many Black Swan events, including of course tariffs, commodity hyperinflation, supply chain disruptions, and consumer confidence-related challenges.

Operator

Despite these headwinds, we continued to pivot, adjust, and move forward and always emerge bigger, stronger, and more profitable. This is evidenced by the fact that our sales and EBITDA for the first quarter in 2026 came in at CAD 2.1 billion and CAD 171.5 million respectively, up substantially from just 2 years ago when our first quarter sales and EBITDA came in at CAD 1.46 billion and CAD 121.5 million. Despite the many challenges we faced over the last couple of years, our sales grew by 40%, while our EBITDA increased by 41.1%. Today, we're bigger, more resilient, and more diversified. Combined with our strong culture and our passionate partner entrepreneurs, we're very well positioned to accelerate our growth in North America and in some cases, even globally.

Operator

We continue to be in the early innings in the U.S. market, and we see many more opportunities to continue to grow our business there organically and by acquisition. Our strategy continues to be to look for white space opportunities driven by identifying enduring and emerging consumer trends and investing in them before everyone else, and we will continue on this path for the foreseeable future. In most of our core categories like sandwiches, cooked and raw skewers, meat sticks and meat snacks, specialty bakery and much more, we have established ourselves as a leading player either in Canada or the U.S. or both, and have scaled them substantially. Looking forward, we have never been more excited about our product innovation pipeline and our ability to execute it with existing and new customers and channels. We're now on slide 3, which outlines certain key highlights for the quarter.

Operator

We executed Specialty Foods group's core U.S. growth initiatives well during the quarter, delivering 9.9% organic volume growth driven by our sandwich protein and specialty bakery groups leveraging newly acquired or newly built capacities. Including acquisitions, Specialty Foods total U.S. sales grew by CAD 363.9 million to CAD 1.5 billion for the quarter, representing 73% of its total first quarter sales. This percentage, as well as our organic volume growth, would have been even higher had certain national product launches and LTO events with key customers not been delayed to later quarters this year. In Canada, our specialty food segment generated 3.8% organic volume growth and is slightly ahead of plan for the year.

Operator

We also made excellent progress ramping up new capacities across the company, and we're very pleased to report that our restructuring charges for 2026 will come in substantially lower than in the last couple of years. As volume, throughput, and product mix are optimized, we expect our operating margins to show material improvements, and we will begin to compare favorably with the operating margins at our legacy facilities. Overall, we're pleased with our progress so far, and we're on track to exceed our 5-year plan of CAD 10 billion in sales and CAD 1 billion of EBITDA. We will be providing further details and guidance on our 2027 targets and beyond later this year as geopolitical challenges and related uncertainties begin to subside. Our CFO, Will Kalutycz, will give you more color on our quarter and our annual results later in the presentation.

Operator

We're now on slide 4. As you can see, our acquisition pipeline remains very active, and we expect to complete many more transactions in the months and in the years to come. We will, however, ensure that any transactions completed in the near term will not stretch our balance sheet in any way. We're now on slide 5. The map on slide 5 shows the locations of our various operations in North America. The red dots represent the locations of production facilities that were built, added to, or acquired over the past couple of years to mainly support our U.S. growth. You can see that we have completely transformed our manufacturing footprint across North America. We're now on slides 6 to 8. For this quarter, we're featuring our Kettle business, which is relatively a new business in our portfolio and is part of our custom culinary solutions platform.

Operator

Its new facility in Auburn, Maine is nearing completion and will complement its two Canadian Kettle facilities that are operating at near capacity. Once in operation, the new facility will help support our overall growth in the U.S. for many years to come and will leverage its proprietary access to best-in-class inputs from our seafood and protein businesses. Overall, our Kettle business will do in excess of CAD 100 million in revenue this year, selling its best-in-class products globally and is well on its way to becoming our next billion-dollar platform. I will now pass it, the presentation, to our CFO, Will Kalutycz, who will update you on our financial results for the quarter. Will?

Speaker 1

Thanks, George. 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 future results may differ materially from what we discuss. Please refer to our MD&A for the 13 and 52 weeks ended December 27, 2025, as well as other information on our website for a broader description of the risk factors that could affect our performance. Before getting into our results for the quarter, please note that we have accounted for Shaw Bakers as a discontinued operation and accordingly restated prior year's numbers to reflect this. We completed the sale of Shaw in late April. Turning to Slide 10.

Speaker 1

Our sales for the quarter from continuing operations were a record CAD 2.1 billion, up CAD 405 million or 24.6% as compared to the first quarter of 2025. This increase was driven by three factors. The first and most significant was acquisitions, which accounted for CAD 280 million of the increase. Organic volume growth made up another CAD 95 million of our growth, and selling price increases, primarily related to beef-based products, contributed CAD 59 million. These increases were partially offset by a currency translation impact of CAD 29 million resulting from year-over-year strength in the Canadian dollar.

Speaker 1

The main driver of our organic volume growth was the continued success of our Specialty Foods segment's U.S. market-focused initiatives in premium protein, sandwiches, and artisan baked goods, which generated CAD 72 million in organic volume growth, representing an organic volume growth rate of approximately 10%. The balance of our organic volume growth came from a variety of successful sales initiatives in Canada, partially offset by the continued contraction of our jerky sales as this product category is being impacted by several factors, including high beef costs and consumer price sensitivity. Slide 11 shows a breakdown of our core U.S. growth sales initiatives by group. Note that based on the sale of Shaw Bakers, we have consolidated our previously reported sandwich, bakery, and culinary platforms into a single new group called Custom Culinary Solutions or CCS. The Kettle business George mentioned earlier is part of this group.

Speaker 1

As you can see, our US protein initiatives generated a very solid 22.7% organic volume growth rate in the quarter, driven by meat snacks and cooked protein. This was partially offset by a small contraction in our CCS group's volumes due to a large limited time sandwich promotion by a customer ending in the fourth quarter of 2025, and the replacement promotions not scheduled to launch until later this year. Looking forward, we expect our US sales initiatives to continue to be the major driver of our organic volume growth. Turning to slide 12. Our adjusted EBITDA for the quarter was CAD 171 million, representing an increase of CAD 36 million or 26.7% as compared to the first quarter of 2025.

Speaker 1

The major drivers of this improvement were acquisitions, organic volume sales growth, past selling price increases coming into effect, and improved plant efficiencies. These are partially offset by higher operating overheads associated with new production capacity brought online by our protein and CCS groups. Slide 13 provides a breakdown of our startup and restructuring costs by initiative by quarter for the last seven quarters. You can see, as George mentioned earlier, our startup and restructuring costs in the quarter fell dramatically as compared to the fourth quarter of 2025. This is due to most of our major capacity projects now achieving base operating parameters. Correspondingly, we expect our startup and restructuring costs for 2026 to be dramatically lower as compared to 2025, which was a very busy year for commissioning new capacity and launching new sales initiatives. Turning to Slide 14.

Speaker 1

Our adjusted earnings and earnings per share from continuing operations for the quarter were CAD 42.6 million and CAD 0.83 per share, respectively, with these metrics increasing by 36.1% and 18.6% respectively as compared to the first quarter of 2025. 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, lease, and interest costs associated with the major investments we have been making to support our U.S. growth initiatives.

Speaker 1

Slide 15 shows our annual revenue from continuing operations for each of the last eight years as well as our 2026 projected revenue based on our guidance of CAD 9.25 billion-CAD 9.55 billion, which is unchanged from last quarter. You can see that we have a solid track record of consistent growth, generating a 7-year compounded annual growth rate at the end of 2025 of almost 14%. Or if acquisitions are excluded, 9.6%.

Speaker 1

Furthermore, in each year, we reached a new record high. Slide 16 shows our annual adjusted EBITDA for each of the last eight years, as well as our 2026 projected adjusted EBITDA based on our guidance range of CAD 870 million-CAD 910 million, which is also unchanged from last quarter. Similar to our revenue story, we have a solid track record of consistently growing our adjusted EBITDA, generating a seven-year compounded annual growth rate at the end of 2025 of over 13%. Slide 17 shows our project CapEx for the last 13 quarters. You can see that these peaked in 2023, 2024, have steadily been coming down as we near the end of the major investment cycle we started in 2022.

Speaker 1

In the first quarter, we had total capital expenditures of CAD 51 million, consisting of CAD 18 million of major project CapEx, CAD 16 million for smaller project CapEx. Note the combined total of these is shown in the chart, and CAD 17 million for maintenance CapEx. Looking forward, we have only CAD 55 million left to spend on major project CapEx, after which we will have invested approximately CAD 1.1 billion in new production capacity, capable of supporting over CAD 2 billion of sales growth. The next slide shows our steady-state free cash flow. We define this as our free cash flow before the impact of capital being invested for future growth.

Speaker 1

In 2023 and 2024, our steady-state free cash flow was significantly impacted by additional lease and interest costs associated with the major investment cycle we have been in. You can see, however, that in 2025, we reached a key inflection point as we started leveraging the new capacity associated with this investment cycle. This trend continued into the first quarter and is expected to accelerate through the balance of 2026. This slide also shows another important point, and this is just how steady the core cash flow is from our legacy operations. You can see that despite all the challenges of the past four years, our legacy operations continue to generate a solid level of cash flow.

Speaker 1

This is why we've been able to declare almost CAD 1.3 billion in dividends since we started paying them back in 2005. The final slide shows our debt to EBITDA ratios for the last 5 quarters, as well as a pro forma first quarter ratio that reflects the impact of the Shaw Bakers divestiture. You can see that we are making steady progress improving these ratios with the pro forma ratios being within our short-term objectives of 3 to 1 or better for our senior debt ratio and 4 to 1 or better for our total debt to ratio. Looking forward, we expect to achieve our longer-term targeted total debt to EBITDA ratio of 3 to 1 or better by early to mid-2027. That concludes our presentation.

Speaker 1

Please join us on our Q&A conference call later today at 10:30 A.M. Vancouver time or 1:30 P.M. Toronto time. Thank you.

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