Maple Leaf Foods Q2 2026 Earnings Report

Maple Leaf Foods EPS Results

• Actual EPS: C$0.44
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Maple Leaf Foods Revenue Results

• Actual Revenue: $1.02 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Maple Leaf Foods Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 12, 2026
• Conference Call Time: 8:00AM ET

Maple Leaf Foods (TSE:MFI) Inc is a consumer-packaged meats company. It produces prepared meats and meals, fresh pork, and poultry and turkey products. The company also has agribusiness operations. These operations supply livestock to the meat products business operations. Its main markets are Canada, the United States, Japan, and China. The key brands are Maple Leaf and Schneiders, Maple Leaf Prime Naturally, Shopsy, Mitchell's Gourmet Food, Larse, Parm, and Hygrade.

Maple Leaf Foods Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 adjusted EBITDA rose 4.8% to CAD 137.1 million, while the margin expanded 40 basis points to 13.4%, as pricing, operating efficiencies, and favorable mix offset inflation and lower prepared-foods volume.
• Positive Sentiment: Poultry sales increased 7.1%, supported by volume growth, stronger channel mix, pricing, and continued market-share gains for Maple Leaf Prime; management expects this momentum to continue.
• Positive Sentiment: Management reaffirmed its 2026 outlook for mid-single-digit revenue growth and adjusted EBITDA of CAD 520–540 million, citing easing pricing-related volume pressure, protein-snacking distribution gains, sustainable-meat growth, and Fuel for Growth savings.
• Negative Sentiment: Prepared-foods sales declined 2% following pricing actions and the exit of lower-margin private-label volumes, while elevated costs for meat inputs, packaging, freight, labor, and ingredients are expected to pressure the second half; Q3 is expected to be the year's seasonal margin low point.
• Neutral Sentiment: Free cash flow was an outflow of CAD 18.9 million in Q2 because of working-capital timing and higher tax payments, although leverage remained investment-grade at 2.2 times net debt to adjusted EBITDA and the company continued share repurchases and dividend payments.

Presentation

[Operator]

Good morning, everyone. Welcome to Maple Leaf Foods' second quarter 2026 financial results conference call. As a reminder, this conference call is being webcast and recorded. Please note that there will be a question and answer session following the formal remarks. Instructions for participating in the Q and A will be provided following the conclusion of the formal presentation. I would now like to turn the conference call over to Omar Javed, Vice President of Investor Relations at Maple Leaf Foods.

[Omar Javed, VP of Investor Relations at Maple Leaf Foods]

Thank you, and good morning, everyone. Before we begin, I would like to remind you that some 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 second quarter 2026 MD&A and financial statements and other information on our website for a broader description of operations and risk factors that could affect the company's performance. We have also uploaded our second quarter 2026 investor presentation to our website. As always, the investor relations team will be available after the call for any follow-up questions you may have. With that, I will turn the call over to our President and CEO, Curtis Frank.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Okay, thank you, Omar, and good morning, everyone. Joining me today is our Chief Financial Officer, David Smales. I will begin our call this morning with the key messages from the quarter, provide a strategic and operational update, and share some context for how we see the balance of the year playing out. Dave will then review the financial results and balance sheet in more detail, and I will return after his remarks to offer a few closing thoughts before we open the line for your questions. The headline today is straightforward. Disciplined execution continues to strengthen our business, and we delivered another solid quarter. We grew revenue for the seventh consecutive quarter, expanded adjusted EBITDA margin by 40 basis points to 13.4%, and increased adjusted EBITDA by approximately 5%.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Revenue growth moderated this past quarter to 1.6%, primarily reflecting a temporary volume response to pricing in prepared foods and the roll-off of certain lower margin private label volumes. As we expected, pricing actions resulted in a near-term volume response, which is normal for CPG food categories, and we expect will normalize as the year progresses. Importantly, strong poultry growth, improved mix, and the full quarter benefit of pricing helped offset lower prepared foods volumes. Within prepared foods, sales declined 2%, but profitability improved. The next phase of our Fuel for Growth program, focused on operational excellence across our manufacturing network, is continuing to deliver the benefits we expected, and our protein snacking innovation platform continues to gain traction, led by Mighty Protein and Greenfield protein kits, with distribution gains in Canada, the U.S., and into new channels such as gas and convenience.

[Curtis Frank, President and CEO at Maple Leaf Foods]

As a result, pricing, operating efficiencies, and favorable mix more than offset lower volumes and input cost inflation, leading to improved profitability in prepared foods. In poultry, sales increased 7.1%, supported by volume growth, improved channel mix, and favorable pricing. Demand for value-added and sustainable poultry remained resilient. Maple Leaf Prime continued to gain market share, and London Poultry continues to be supportive of improved mix and future growth. We were pleased that both prepared foods and poultry contributed to earnings growth in Q2, where adjusted EBITDA was approximately CAD 137 million, up nearly 5% year-over-year, and our adjusted EBITDA margin expanded by 40 basis points to 13.4%, driven by stronger operating efficiency and better mix across our portfolio. These results demonstrate the continued strengthening of our focused CPG business and the benefits of improved efficiency across our modern manufacturing and supply chain network.

[Curtis Frank, President and CEO at Maple Leaf Foods]

To summarize where we are at through the first half of 2026, revenue has now increased approximately 4% to nearly CAD 2 billion. Adjusted EBITDA has increased more than 5% to approximately CAD 260 million, our adjusted EBITDA margin has expanded to more than 13%, and we have continued to execute against our disciplined capital allocation priorities, returning CAD 78 million to shareholders through our quarterly dividend, which has increased by 10.5%, and share repurchases under our NCIB.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Our first half performance keeps us on track to deliver our full year 2026 outlook, which we are reaffirming today as we continue to expect mid-single-digit revenue growth for the year, adjusted EBITDA in the range of CAD 520 million-CAD 540 million, maintaining an investment-grade balance sheet while sustaining a disciplined approach to capital allocation, and capital investment of approximately CAD 160 million-CAD 180 million for the full year with spending weighted toward the second half and focused on maintenance, productivity, technology, and automation. Turning to our second half, while we do not provide quarterly guidance, I would like to once again provide some context with respect to how we see the balance of the year playing out. First and foremost, our focus remains on executing our strategic blueprint.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Our experienced team is focused on advancing our proven growth strategies and delivering on our productivity playbook, which is active across the business.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Food inflation naturally remains an area of active management focus. Geopolitical developments continue to affect energy markets and transportation costs, and we are also managing for elevated costs across pork bellies, beef inputs, chicken inputs, turkey inputs, along with packaging and ingredients. We responded through pricing and/or trade program adjustments, promotional optimization, and continued discipline in managing our own costs. While these actions have created a temporary volume response, which is again, quite normal in CPG, we do expect trends to normalize as the year progresses. I would also remind you of the seasonality patterns of the new Maple Leaf Foods business following the spin-off of Canada Packers. While revenue is typically lowest in the first quarter and then remains relatively consistent through the balance of the year, raw material input costs are often higher in the second half.

[Curtis Frank, President and CEO at Maple Leaf Foods]

This can create some variability in margins from quarter-to-quarter, as we've seen in recent years, particularly in the third quarter. We view this as normal phasing, and it does not change our full-year expectations. Finally, as we look ahead, our confidence in delivering our full-year outlook is supported by several clear and tangible drivers. Continued strength in poultry, improving volume and revenue trends in prepared foods as pricing effects moderate, growing distribution and velocity across our innovation platform, accelerating sustainable meats growth in the U.S., relaunching the Yves brand in Canada, and delivering continued operating efficiency through our Fuel for Growth and operational excellence programs. The fundamentals of the business remain strong and our priorities are clear. With that, I will now turn it over to Dave to walk through the financial results in a bit more detail. David?

[David Smales, CFO at Maple Leaf Foods]

Thank you, Curtis, and good morning, everyone. I'll comment on results for the second quarter before turning to cash flow and balance sheet. Sales in the quarter were CAD 1.02 billion, an increase of 1.6% compared to last year. Sales growth was driven by poultry, where sales increased by 7.1%, partially offset by a decrease of 2% in prepared foods. In poultry, the sales increase was driven by higher food service and retail volumes, improved channel mix, and pricing, which were partially offset by increased trade promotion spending. Prepared food sales declined due to lower volume and increased trade promotion spending, partially offset by pricing, related party revenue, and improved product mix. Adjusted EBITDA of CAD 137.1 million increased by 4.8% versus the second quarter of last year, with an adjusted EBITDA margin of 13.4%, improving 40 basis points over the same quarter last year.

[David Smales, CFO at Maple Leaf Foods]

Profitability improved as pricing, better operating efficiency, and favorable mix more than offset input cost inflation, increased trade promotion spending, and lower volume. SG&A expenses were CAD 104.5 million in the quarter, compared to CAD 99.6 million last year. The increase was driven by the timing of advertising and promotional expenses and higher consulting fees. Earnings from continuing operations were CAD 40.8 million for the quarter, or CAD 0.33 per basic share, compared to CAD 39 million or CAD 0.31 per basic share in Q2 last year. Adjusted earnings were CAD 53.9 million or CAD 0.44 per basic share, compared to CAD 41.4 million or CAD 0.33 per basic share last year. The increase in adjusted earnings was driven by higher gross profit and reduced interest expense due to lower debt levels, partially offset by higher SG&A and income tax expense.

[David Smales, CFO at Maple Leaf Foods]

Capital expenditures were CAD 23.3 million in the quarter, compared to CAD 24.7 million in the same period last year. Year-to-date capital expenditures were CAD 44.6 million, compared to CAD 49.8 million last year. The decrease reflects 2025 spending related to Canada Packers prior to the spin-off, largely offset by an increase in maintenance capital projects this year in continuing operations. Looking ahead, and consistent with our 2026 guidance, we expect capital investments for the full year to be in the range of CAD 160 million-CAD 180 million, with spend focused on maintenance and productivity enhancement initiatives. Free cash flow in the quarter was an outflow of CAD 18.9 million, compared to an inflow of CAD 216 million last year.

[David Smales, CFO at Maple Leaf Foods]

Removing the impact of discontinued operations, which contributed CAD 57.7 million of cash inflow in the second quarter of last year, the decrease was largely a result of timing of investment in working capital, which in the reverse of last year's profile, was weighted to the first half of the year in 2026, as well as higher income tax payments, partially offset by lower interest payments. Consistent with our stated capital allocation priorities, our leverage ratio remains well within an investment-grade range. Net debt to trailing 12-month adjusted EBITDA ratio was 2.2x at the end of the quarter, compared with 2.1x a year ago. While free cash flow in the quarter reflected timing-related investment in working capital and tax payments, our underlying annual cash generation and investment-grade balance sheet provide flexibility to execute a balanced approach to capital allocation.

[David Smales, CFO at Maple Leaf Foods]

Year-to-date, we returned CAD 78 million in capital to shareholders through a combination of our quarterly dividend, which increased by 10.5% from the prior year, and the repurchase of approximately 0.8 million shares under the NCIB. We intend to remain active with the NCIB to a minimum offset the impact of dilution from our stock-based compensation plan. As Curtis mentioned in his remarks, we are reaffirming our 2026 guidance and as such, expect to deliver mid-single digit revenue growth and adjusted EBITDA in the range of approximately CAD 520 million-CAD 540 million while maintaining balance sheet discipline and executing a balanced approach to capital allocation. I'll now turn the call back to Curtis.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Okay. Thank you, Dave. Let me close with a few key messages. First, the transformation of Maple Leaf Foods is clearly complete. The work and capital required to create the focused business that we had envisioned are now largely behind us, and the benefits of operating as a purpose-driven, protein-focused, brand-led consumer packaged goods company are increasingly evident in our performance. Second, despite a challenging operating environment, we delivered a solid second quarter and a strong first half. Through the first half of 2026, sales have increased approximately 4%, adjusted EBITDA has grown more than 5%, and our adjusted EBITDA margin reached 13.4% this past quarter. This is clear evidence that the transformation we've undertaken is translating into stronger financial performance. Third, the drivers of our second half performance are tangible and already underway. We expect volume performance to improve as recent pricing effects moderate.

[Curtis Frank, President and CEO at Maple Leaf Foods]

We have momentum across the poultry business. Our sustainable meats portfolio continues to differentiate us. The protein snacking innovation platform is unlocking new avenues for growth, and our Fuel for Growth and operational excellence programs are set to continue to deliver. Finally, we are reaffirming our 2026 outlook as our strategy, our assets, and our team remained aligned to deliver long-term value for our shareholders as we continue building toward our 2030 financial ambitions. Before concluding, I'd like to recognize the release of our 2025 integrated report on June 18th. The report reinforces the connection between financial performance, sustainability leadership, and shared value creation. It highlights progress against several areas, including our sixth consecutive year as a carbon neutral company. Sustainability remains integral to our identity and our purpose, and we continue to believe that long-term financial performance and long-term sustainability go hand in hand.

[Curtis Frank, President and CEO at Maple Leaf Foods]

I want to thank the entire Maple Leaf Foods team for your continued execution, commitment to our values, and dedication to serving our customers and consumers each and every day. Thank you. Operator, we can now open the line for questions, please.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two, and if you're using a speakerphone, please lift the handset before pressing any keys. Our first question comes from John Zamparo with Scotiabank.

[John Zamparo, Analyst at Scotiabank]

Thank you very much. Good morning. I wanted to ask about the prepared foods results, and I wonder if you got a sense of a change in the state of the consumer in the quarter. The reason for the question is historically, I think MFI considers itself to be playing in the value channel. If there's trade down, Maple Leaf would be a beneficiary of that. So was the volume response more sensitive to pricing this time around? If so, I wonder what you think the reasons for that are.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Hi. Good morning, John. Thanks for the question. I'll start with the positive news, I think, in the quarter, which was we have 1.6% growth overall, and it was our seventh consecutive quarter of top-line sales growth. So we continue to see the resiliency of the playbook that we're operating in the market as a positive and constructive. The declines in revenue within the prepared meats component of the business in around 2% weren't a surprise to us within the quarter. There were two factors that contributed to that. The first is essentially the roll-off of certain kind of lower margin private label businesses, which kind of ebb and flow through the portfolio in small ways throughout the year. That wasn't necessarily a surprise to us.

[Curtis Frank, President and CEO at Maple Leaf Foods]

And probably more importantly, what the implications of the pricing actions that we've taken in Q1 in two forms, a regular price increase and then following up obviously later on with the fuel components of pricing. It's very normal in consumer packaged goods for that to have a volume impact, not just for Maple Leaf, for our industry, but very normal in consumer packaged goods. That was the case in our first full quarter after the pricing in Q2. We fully expect that will normalize as the year kind of progresses. What's been, again, positive is the resiliency of the margin in particular and the fact that we delivered 13.4% inside the quarter, which is reflective of the fact that that pricing has taken hold in the market in a constructive way. We think the rest of the year will normalize as it plays out.

[Curtis Frank, President and CEO at Maple Leaf Foods]

It's not a material change in the consumer environment. We're still seeing a consumer under stress, and they're certainly feeling the effects of inflation, but that's no different than what we've experienced over the past number of quarters.

[John Zamparo, Analyst at Scotiabank]

Okay. That's helpful. Thank you. I wanted to ask about pork costs and these keep declining in Q2 and into Q3. I wonder if we should be encouraged by the potential for margin expansion in the second half beyond even what you've seen in the first half, and to what extent should we see that in Q3 as opposed to Q4?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. It's an excellent question. I'm glad you asked it. We've been obviously reluctant to provide quarterly guidance, so we won't do that today. But in my comments, I did give some context with respect to how we see the year playing out and, inside of that, we continue to provide some context that Q3, from a seasonality perspective, is likely to be the lower watermark from a margin perspective in our year. I think it's important to be transparent with those things. I would really caution you and others not to use the pork cutout as a proxy for the margins in the Maple Leaf CPG business. There are a number of reasons for that, John. The first is we don't buy the pork cutout, we buy select cuts of the pork cutout. So that's important.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Bacon, as an example, is on a formula, as we've communicated in the past, so it kind of ebbs and flows with markets. But more importantly, pork raw materials are a little bit less than 25% of our overall input costs. Things like beef, turkey, chicken, packaging and ingredients, freight and storage, labor, and plant overheads all play a material role in our overall cost structure as well. Yes, in the near term, we've seen some favorability in the pork cutout, and that's a positive thing, I think. But in almost all of those other areas, beef, turkey, chicken, packaging and ingredients, freight and storage, labor, we're expecting costs to be increased in the second part of the year relative to a year ago.

[Curtis Frank, President and CEO at Maple Leaf Foods]

The other important thing is pork markets have already started to shift, and despite the fact that there's some year-over-year favorability in the cutout as an example, Q3 is still forecasted to be higher sequentially from Q2. Hopefully that's important and added context for you. The most important part for us from an operating point of view is that despite the inflation that exists in the market with the pricing we've now put forward between what we've executed in the early part of the year and what we have planned for our promotional investments in the back part of the year, we feel really well-positioned with the pricing we have in the market for the balance of the year, and that's the very reason that we were reiterating our guidance here today.

[John Zamparo, Analyst at Scotiabank]

Okay. That's very helpful. Thank you for that. I'll get back in the queue.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thanks, John.

[Operator]

Our next question is from George Doumet with Ventum Financial.

[George Doumet, Analyst at Ventum Financial]

Yeah. Good morning, guys. Curtis, can you double-click a little bit on that 2% decline at prepared meats? Just wondering which categories perhaps you saw the most pressure in, some of the brighter spots in the quarter, and maybe just how those trends are running Q3 to date. Thanks.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. I think, George, it was fairly broad-based, which again, is very common and normal following pricing changes like that. There were bright spots, things like the progress that we're making in our protein snacking portfolio, in particular, the innovation we brought forward, the distribution that's expanding. Those tend to be, if you're familiar with the packages, maybe a little bit lighter from a volume perspective, but contribute in an outsized way from a revenue and margin perspective. That was certainly a bright spot within the quarter. We certainly don't view the change as necessarily negative, more normal, kind of what we experienced in Q2, and the focus is really on making sure that we have the right plans in place for the second half of the year to be well-positioned.

[Curtis Frank, President and CEO at Maple Leaf Foods]

From a category perspective, I don't think there's anything necessarily insightful category to category, maybe outside of the positive momentum behind the innovation platform and protein snacking. That's kind of really the story from my perspective. The other thing that I would mention, maybe since you brought it up, the positive aspects is, interestingly, our sustainable meat sales overall, in a very difficult consumer environment in the second quarter, sales were up on our brands. Think about the branded sustainable meats portfolio up in and around mid-single digits and volumes were positive as well. Not everything has been negatively affected in the consumer environment. I think the fact that we have a differentiated portfolio of products is also shining through in a lot of areas. That gives us optimism, obviously, for the second part of the year.

[George Doumet, Analyst at Ventum Financial]

Okay. Q3 to date, it seems that it is trending pretty similar, right?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Say that again, George. Sorry.

[George Doumet, Analyst at Ventum Financial]

Yeah. The prepared meats. I know you guys typically don't give guidance, but quarter to date, like Q3 month in, are we kind of running similar levels?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Very similar. The color I would give maybe is a very modest improvement from Q2, which is positive. I think we have to be careful not to react to three or four weeks. We should be thinking about this as how the balance of the year is going to play out over a longer period of time as the consumer environment continues to hopefully improve, but more importantly, the effects of the pricing moderate.

[George Doumet, Analyst at Ventum Financial]

Okay, thanks. My next one's for Dave. A big working capital drag in the quarter. I believe you called out some seasonality maybe not being the case last year versus this year. Maybe a little bit more color there. After factoring in working capital, should we expect around CAD 200 million plus of free cash this year? Do we expect to fully return that to shareholders? Thanks.

[David Smales, CFO at Maple Leaf Foods]

Yeah, thanks, George. You are right, some seasonality in the working capital, which is the reverse of what we saw last year in terms of timing. We should see the impact of that as we go through the year. We do not give annual free cash flow guidance, but I would point you to our comments over the five-year period from Investor Day where we talked about CAD 1.7 billion-CAD 1.8 billion of free cash flow over that five years. Obviously within that would imply pretty healthy annual cash flows. No reason why 2026 would not be in line with that from an overall generation perspective. It is just a question of seasonality in terms of first half versus second half.

[George Doumet, Analyst at Ventum Financial]

Okay, thank you.

[Operator]

We have our next question from Derek Lessard with TD Cowen.

[Evan Frantzeskos, Analyst at TD Cowen]

Hey, guys, it's Evan in for Derek. Most of my questions have been answered. I just wanted to touch on the poultry revenues. They were strong once again, even though you're now lapping some tough comps. I was just wondering if you could talk a bit about the sustainability of that growth in light of the fact that you're going to be lapping even tougher comps in Q3.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. Thanks, Evan, for the question. To your point, the results in poultry were positive. That's a continuation of the momentum that we've experienced over the last number of quarters and truthfully expect to continue into the future. I would describe it really as the benefit of consumer demand colliding with the positive impacts that we're getting from London Poultry. We have really strong consumer demand for poultry. It's on the right side of all consumer trends today. Protein, GLP-1s, and a very positive, healthy protein for consumers. Very strong consumer demand. The fact that we have London Poultry in place and I would argue, the best operating asset in the Canadian market, augmented by our operation in Edmonton, where the team's doing a fantastic job.

[Curtis Frank, President and CEO at Maple Leaf Foods]

We're able to support growth relative to the market in an outsized way, which has benefited us not just from volume as poultry allocations grow from consumer demand, but also in positive mix in the business. I think we noted even in our materials, it was another positive quarter of market share gain with our Maple Leaf Prime brand. It was a really positive quarter overall, but that's, I think to your point, not the headline story. We've got really strong momentum in poultry, and we expect that to continue.

[Operator]

Derek, did you have anything further?

[Evan Frantzeskos, Analyst at TD Cowen]

No, that's it for me. Thank you.

[Operator]

Thank you.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thank you.

[Operator]

Our next question is from Vishal Shreedhar with National Bank.

[Vishal Shreedhar, Analyst at National Bank]

Hi. Thanks for taking my questions. I want to get your perspective on the guidance and the maintaining of the guidance of the mid-single-digit growth and the EBITDA guidance. There seems to be implied acceleration in EBITDA growth and revenue growth in H2. At the same time, you are indicating the seasonality in Q3 and the inflationary pressures. Maybe you could give me broad building blocks for the H2 story and help me understand why management remains so confident in the outlook for 2026.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah, thanks, Vishal. Good morning. There is a number of reasons we continue to be confident from an annual perspective. You could start with the fact that on a year-to-date basis, we are growing at 4%, so very close to within the mid-single-digit kind of range. Secondly, at CAD 260 million of EBITDA, that is tracking on a run rate basis within our guidance range. There are some things that give us further confidence, though, that I think are important for the second half of the year, that I can maybe walk you through, as you said, in broad strokes. The first is the continued strength in poultry, and I just commented on that, so I will not repeat my comments, but it continues to be a very positive environment in the poultry business. The second is the easing of the volume impacts from pricing in prepared foods.

[Curtis Frank, President and CEO at Maple Leaf Foods]

That is an important part of our back half story. As I said earlier, will play out as the year progresses, and we remain confident in that. The third, from a revenue growth perspective, is the distribution and velocity gains that we are picking up on the protein snacking innovation platform in particular, where we are expanding distribution in both Canada and the U.S. Think of everything from multi-packs in the traditional retail channel beyond the single-serve stick, which are growing in distribution today, penetrating over 1,500 gas and convenience locations that we have not historically had a presence in. Expanding our reach in the club channel in a pretty significant way, and also in the dollar channel in a pretty significant way. Also growing in the United States, where we have expanded with three customers to have national distribution in the United States.

[Curtis Frank, President and CEO at Maple Leaf Foods]

One club operator moving from three regions to eight. So protein snacking alone is a very attractive part of the business. We do expect to continue to accelerate growth in the United States, and that is positive. We are relaunching, it was in our materials, but I think it is important to call out, we are relaunching the Yves brand, which had a very loyal Canadian consumer following and was by far the brand and market share leader in the Canadian market. So from a revenue growth perspective, those are very important parts of our back half of the year. From a margin point of view, there are a few things that I think are equally important. The first is we will have the full impact of the pricing in the second half of the year.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Keep in mind, that was really only implemented in the full quarter of Q2, so partially part of the way through Q1. We really only had the full quarter benefit in Q2, and that will obviously play out, as well as the platform that we have operating under our Fuel for Growth portfolio of cost reduction initiatives, which I think you saw really shine through this quarter, despite the fact that even though we had positive growth, almost 2%, revenue was a little lighter than we would've liked, but the Fuel for Growth platform really contributed in a way that allowed us to not only sustain but widen our margins by 40 basis points. When you take all those things together, we put them into the context of the back half of the year and we continue to have confidence in our outlook for 2026.

[Vishal Shreedhar, Analyst at National Bank]

Okay. Thank you for that detailed color. Last quarter, Curtis, and I know you've implemented pricing in the past, and you've seen the consumer response in the past, so this isn't new to you, but last quarter you suggested that pricing responses typically take a quarter or two to be digested by the consumer, and the associated elasticity effect. Is that still what you anticipate in 2026, and we should anticipate return to growth in prepared foods around Q4, if not latter part of Q3?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah, I think broadly I would stand behind those comments. That's historically been our experience, Vishal, and I don't see anything today that would lead me to a different perspective. So that's been our historical experience, and I think that would be a reasonable way to think about the back part of this year.

[Vishal Shreedhar, Analyst at National Bank]

Thank you.

[Operator]

We have our next question from Irene Nattel with RBC Capital Markets.

[Irene Nattel, Analyst at RBC Capital Markets]

Thanks. Good morning, everyone. Just a couple of follow-up questions, please. Sticking with the question of price, you had planned on implementing price prior to the surge in fuel and the other input costs that you called out. Is there a possibility that you are going to need to take more price later in the year, or have you got it covered here?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thanks, Irene. We believe we have it covered here through the combination of pricing we took earlier in the year, the changes we made to either increasing prices or adjusting our trade promotion programs with the fuel surcharge and some tactical pricing that we have already moved to implement and mobilized to implement in the back part of this year that have already been communicated and moved into market. I guess things can change, but based on everything we know today, Irene, we feel like we are very well positioned for the inflation we are going to face for the back part of this year. If something changes, we will obviously adapt accordingly, including into next year. For the balance of this year, we feel like we are well positioned.

[Irene Nattel, Analyst at RBC Capital Markets]

That is great. Thank you. Clearly, snacking is a big push this year on the innovation side. Should we be anticipating any new product introductions as we head into the back to school season in some of your more traditional categories or channels?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. We typically try to talk about those after they come, just even from a competitor perspective, but I am happy to give you a little bit of color. Number one is really expanding the snacking platform. I have talked about that this morning, but there are a couple of exciting things that we are augmenting that with in the back part of this year. That includes expanding our charcuterie lineup under our Fantino & Mondello brand, which is an important part of our portfolio. We are extending the Maple Leaf Natural Selections brand into protein kits as well, in a little bit different way against the Natural Selections brand, which we are excited about. We are launching additions to our Schneiders breakfast portfolio.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Think of things like breakfast egg white bites and breakfast egg white sandwiches. We are excited about that from a consumer relevance and a protein consumption perspective.

[Curtis Frank, President and CEO at Maple Leaf Foods]

We are relaunching, as I said earlier, the Yves brand in the Canadian market, so that is something that is creating some excitement inside of the organization. I had an opportunity to eat them last week. They were fantastic. We are pretty excited about the launch that we are bringing to Canada, and we have some new products coming out in the fall with our partners in the United States market. The combination of what we are doing with the innovation that has already been in market, which I would remind everyone, it is important to continue to support. It takes time to scale up both distribution and velocity and exciting new product launches like that. It is not necessarily a one quarter thing. It is going to give us benefits for a longer period of time.

[Curtis Frank, President and CEO at Maple Leaf Foods]

But that focus on kits combined with the exciting launches that we have coming out in the fall, I think are going to be constructive to our back half as well.

[Irene Nattel, Analyst at RBC Capital Markets]

That is great. Thank you. And then just one final. One of the things that you did not mention in some of the puts and takes in the quarter is weather, but we have been hearing from other companies in the food space that the late start to summer had a negative impact on barbecue categories where, of course, you are strong. Just wondering whether there was any of that in Q2, and if so, how has that evolved in Q3?

[Curtis Frank, President and CEO at Maple Leaf Foods]

I try not to take credit when it's sunny, and I try not to complain when it rains. I'm sure it, in some ways, had an impact on our quarter, Irene, but I wouldn't view it as a material driver.

[Irene Nattel, Analyst at RBC Capital Markets]

Understood. Thank you.

[Operator]

We have our next question from Tamy Chen with BMO Capital Markets.

[Tamy Chen, Analyst at BMO Capital Markets]

Hi. Good morning. Thanks for the question. I wanted to ask on the poultry side, Curtis, would you say right now the quota allocations, I believe they've been not keeping up with the strong consumer demand for poultry. Can you confirm that that's still the case? Has it been getting closer, allocation-wise, to catching up with demand? Can you confirm that the way the system works is that you have to accept whatever amount of allocation that you get? What would happen then if we get to a point where the allocation starts to exceed demand?

[Curtis Frank, President and CEO at Maple Leaf Foods]

I will answer your second part of your question first, if that is okay, Tamy. Poultry allocations are use it or lose it thing. Yes, we have to use the poultry that is allocated to us or run the risk of losing the availability of those volumes. Obviously, our focus is on using it, and we do, to be clear, and we do. That was why the London Poultry asset was so important for us. The ability to take higher levels of poultry allocations and translate them into value-added sales was one of the very reasons that the asset was so important to be constructed. Clearly we are seeing the benefits of that. I think markets never really want a gas pedal brake effect, oversupplied or undersupplied. Our goal, and I think the industry's goal, is to always be in balance.

[Curtis Frank, President and CEO at Maple Leaf Foods]

I think we are in a reasonable place from that perspective today. There continues to be strong demand, so you are always catching up to consumer demand. I would encourage all of us, including the industry, not to over-rotate to that the goal is always to be in a reasonable place from a supply and demand perspective. I think, for the balance, that is where we are today.

[Tamy Chen, Analyst at BMO Capital Markets]

Okay. I see. My follow-up is, in terms of your promotional spend trade investments, how should we think about that going forward? Do you anticipate it to be fairly similar to the first half, or do you expect it to accelerate? Thank you.

[Curtis Frank, President and CEO at Maple Leaf Foods]

I think for the most part, pretty stable from the first half. Pretty stable. To be clear, that is still challenging from a consumer perspective. We are still investing more than what we would consider optimized, even in the first part of this year, to get the volume and share response that we are satisfied with. If you looked at it maybe on a historical view over the last number of years, promotional allowances are elevated and promotional intensity is elevated given the inflationary environment we are in. I guess I would answer it by coming back to the annual guidance and saying, look, we do not expect that it will be a material change H1 to H2, as an example. It remains elevated as compared to historical levels.

[Curtis Frank, President and CEO at Maple Leaf Foods]

It is something obviously with the pricing we have taken. I guess maybe the added color I should offer is with the pricing we have taken, we are monitoring it very closely and we stay close to the consumer response, consumer insight, volume revenue trends. We are always trying to optimize our offer to the consumer. So we will be paying particular careful attention to that through our revenue management practice in the back half of the year. That is kind of normal business practice for us.

[Tamy Chen, Analyst at BMO Capital Markets]

Right. Okay. Got it. Thank you.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thank you.

[Operator]

We have our next question from Chris Li with Desjardins.

[Chris Li, Analyst at Desjardins]

Oh, good morning. Thanks for all the comments so far. Very helpful. I wanted to, sorry if you mentioned this already, but wondering if you can share what was the impact on the revenue from the roll-off of the lower margin private label during the quarter?

[Curtis Frank, President and CEO at Maple Leaf Foods]

We don't and probably wouldn't break it out separately. Like I said, the private label business, try to keep it as stable as we can. It's part of our portfolio. Through the year, customers ultimately make merchandising decisions that can impact the portfolio. These were, in the big picture, a small amount of changes. One of the things I didn't comment on earlier, but I'll add now is a good portion of that we've already secured back in another area for the back part of this year that will kind of onward later this year. It's unfortunate that we have to talk about two things rather than one inside of a quarter. That happens from time to time, but for the most part, I don't view it as a structural issue and won't be material to our year.

[Chris Li, Analyst at Desjardins]

Okay. That's very helpful. Just a quick one on the U.S. We noticed, I think your revenue in the U.S. was down around 4%. Can you give us some context, sort of what the fundamentals in that business during the quarter?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. A good portion of that private label business was inside of the U.S. market, so that's contributing as well. The plant protein category continues to face headwinds. The positive, I think, operating environment in the United States would be our Greenfield Natural Meat Co. brand, just to be balanced. That brand is growing, in the last 12 months in the United States at a greater rate than 10%, and has been kind of operating in the mid-single digit range more recently. So we continue to see positive in the Greenfield Natural Meat Co. brand, our flagship raised without antibiotics and sustainable meats brand in the U.S. Unfortunately, in the last quarter, that was more than offset by some changes in our private label portfolio and some sustained headwinds in the plant protein category.

[Chris Li, Analyst at Desjardins]

Okay. That is helpful. My last question, maybe just on capital allocation. Obviously, your balance sheet remains very strong with leverage well below your 3x target. Can you just maybe provide your latest thinking about a special dividend? Also on the M&A side, how is the pipeline right now, and how is valuation overall?

[Curtis Frank, President and CEO at Maple Leaf Foods]

Dave would maybe take that one.

[David Smales, CFO at Maple Leaf Foods]

Yes. So, obviously from a capital allocation perspective, we remain very focused on the playbook we rolled out as part of the investor day, where we have a balanced approach that includes increasing our annual dividend, which we did earlier this year. We have bought back around 800,000 shares under the NCIB program in the first half, versus 700,000 in the whole of last year. So that continues to be part of the program. Obviously, we have not announced anything in terms of other discretionary return of capital, but you can be sure that that is part of our playbook. At the right time, we will execute on return of capital based on the strength of our balance sheet, as you noted, plus the cash flow generation that we anticipate.

[David Smales, CFO at Maple Leaf Foods]

Nothing to announce today other than it continues to be a key focus area for us, and you should expect to see us be active. In terms of M&A, obviously we are tracking the market closely. I think valuations today are reasonable. I think certainly for the size of acquisitions that we are looking at. Remember, we are not looking at anything transformational. We are looking at tuck-in type acquisitions, and I would say valuations in that space are fairly reasonable today.

[Chris Li, Analyst at Desjardins]

Great. Thank you very much.

[David Smales, CFO at Maple Leaf Foods]

The proof will be in the pudding as and when we have specific targets and look to execute. But as we track the market, it looks fairly reasonable today.

[Chris Li, Analyst at Desjardins]

Great. Thanks again.

[Operator]

We have our next question from Martin Landry with Stifel.

[Martin Landry, Analyst at Stifel]

Hi, good morning. Most of my questions have been answered, but I was wondering if you could give us an update on your Fuel for Growth initiative, what you have in plan for the coming quarters, and where your capacity utilization is at now.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah. We've done some very important work in our Fuel for Growth platform, much of which is paying dividends in our results today. Let's start with that. The work that's been done to date is really focused on reorganizing our SG&A, which we did last year, has been focused on a procurement project that positioned us well from a strategic procurement point of view. We've right-sized the organizational and leadership structures in our manufacturing plants. Those have all been a positive. We're now in the phase where we're engaging in an operational excellence initiative within the manufacturing facilities. That's going particularly well. We continue to get really strong operating results and really strong operating efficiencies on a year-to-date basis, and we expect that to continue into the second half. That's positive from my perspective.

[Curtis Frank, President and CEO at Maple Leaf Foods]

We're also investing very strategically and thoughtfully in technology and automation, mostly in the manufacturing plants in this particular case, that are driving reasonable capital investments that allow us to operate well within our annual guidance from a capital perspective, but contributing financial results as we expected. Those are the focus areas for this year. I think, as I said, contributing to our results now will contribute to the results in the second half. As we look to next year and beyond, we're continuing the work to evaluate the manufacturing network on a more broad-based basis, and capacity utilization and optimizing the assets within the network. That continues to be an important part of the work that's in progress, but there's nothing specific that I would offer or comment on today.

[Martin Landry, Analyst at Stifel]

Perfect. Thank you, and best of luck.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thank you. Thanks, Martin.

[Operator]

Our next question is from Luke Hannan with Canaccord Genuity.

[Luke Hannan, Analyst at Canaccord Genuity]

Thanks. Good morning, everyone. Just one question for me. I wanted to ask about the snacking innovation platform. Curtis, you talked about some of the distribution gains that you received within the U.S. Can you just frame up for us specifically with snacking innovation, what white space opportunity there still exists for you there? Then maybe secondly, on the performance of the Mighty Protein sticks, has there been any tailwind that you guys can discern as a result of poultry or chicken being a relatively more affordable alternative compared to beef, where it seems like inflation still remains pretty high? Thanks.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Yeah, for sure. Thanks. From a white space perspective, there's still lots. The reality is, our execution, I think, has been good in our stronghold, which is Canadian retail, but we're still building distribution off a base that's not yet optimized from a white space perspective. We're closing week after week, month after month, distribution gaps in the Canadian retail market. That's just execution, and the team's doing a good job, and we're going to continue to accelerate that. That's the mainstay of our business. Within club, within the club channel, tends to be a high volume, high velocity, and a great place to build brand awareness and brand recognition, just given the traffic and the consumer experience in club. As I said earlier, in the Canadian market, we're expanding our single-serve offering in the club channel. That's positive. We've landed some pretty significant business.

[Curtis Frank, President and CEO at Maple Leaf Foods]

It's still white space because it's contributing in a small amount, but it will continue to have an impact in the dollar channel. That's really white space for us because it's not a channel that we participate in in a material way. So having a shelf-stable offering in protein snacking in the dollar channel is white space for us. I talked about gas and convenience and adding 1,500 locations. That's 1,500 incremental net new locations for us that didn't exist in the past, and we still have tons of white space in the gas and convenience distribution channel. That hasn't typically been a stronghold for us. Building capabilities, not just with this expanding the distribution of this product is important, but it also gives us a platform to launch further products into that channel and expand our reach, which I see as very material white space for us.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Again, very positive. Then the U.S. has what I would describe as a mountain of white space. I talked about three examples where we've gained national distribution. That's very significant for us operating in the United States to gain national distribution with three retailers, plus the ramping up of the club channel from three regions to eight in the U.S. So lots of white space, not just from a distribution perspective, but continuing to turn the velocity dial. You asked about species and whether poultry was more attractive because it was more affordable. I think perhaps that plays a role, but I think what's most important is we have a really important consumer insight here, which is healthy protein snacking is here to stay.

[Curtis Frank, President and CEO at Maple Leaf Foods]

The fact that we have 10 or 12 g of protein, 100 calories in a meat stick that's portable on the go, I think is what's winning the day less so than the protein species inside of it. Although chicken is, poultry is clearly attractive to consumers these days. We are looking at expanding the portfolio beyond one species, being chicken in this particular case, which I think is important to continue to create new and exciting news for the consumer. So lots of white space, lots of excitement from the team extends beyond meat sticks into protein kits. We still view that as protein snacking and protein snacking on the go, and there, too, there's significant white space.

[Luke Hannan, Analyst at Canaccord Genuity]

That's great. Thank you very much.

[Operator]

We have our last question from Ty Collin with CIBC.

[Ty Collin, Analyst at CIBC]

Hey, good morning. Just one question for me. I am wondering if you could speak to demand in the food service channel and whether you have seen any incremental pressure there. Thanks.

[Curtis Frank, President and CEO at Maple Leaf Foods]

We haven't seen any incremental pressure. I'd say I think demand in the food service channel for us continues to be stable. We have very positive working relationships with our food service partners and continuing to stay relatively stable demand from our perspective. We are always looking to build our business within the food service channel. It's an important channel for us in terms of strategic customer relationships. But I think relatively stable for the most part would be the way to describe it.

[Ty Collin, Analyst at CIBC]

Okay, great. Thanks. That's all.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Thanks, Ty.

[Operator]

This concludes the question and answer session. I will now turn the call over to Mr. Frank for closing remarks.

[Curtis Frank, President and CEO at Maple Leaf Foods]

Okay, thank you, everyone, for joining. I would close with gratitude for joining our call today. This is a quarter where we managed to grow the top line again for the seventh consecutive quarter. We've expanded our adjusted EBITDA margin by 40 basis points to 13.4%, which in the difficulty of the operating environment we're pleased with and proud of. Our year-to-date performance continues to be quite strong relative to our expectations of the year. As such, we're obviously reiterating our 2026 guidance, and we'll look forward to giving you an update following our third quarter results. Thank you again for joining us today.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Omar Javed, VP of Investor Relations
• Curtis Frank, President and CEO
• David Smales, CFO

Analysts

• John Zamparo, Analyst at Scotiabank
• George Doumet, Analyst at Ventum Financial
• Evan Frantzeskos, Analyst at TD Cowen
• Vishal Shreedhar, Analyst at National Bank
• Irene Nattel, Analyst at RBC Capital Markets
• Tamy Chen, Analyst at BMO Capital Markets
• Chris Li, Analyst at Desjardins
• Martin Landry, Analyst at Stifel
• Luke Hannan, Analyst at Canaccord Genuity
• Ty Collin, Analyst at CIBC