Premium Brands Q2 2026 Prepared Remarks Earnings Report

Premium Brands EPS Results

• Actual EPS: C$1.53
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Premium Brands Revenue Results

• Actual Revenue: $2.38 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Premium Brands Announcement Details

• Quarter: Q2 2026 Prepared Remarks
• Date: 8/6/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 6:30AM ET

Premium Brands (TSE:PBH) Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. The company's business segments include Specialty Foods, Premium Food Distribution, and Corporate. The Specialty Foods segment consists of its specialty food manufacturing businesses, which contributes about two-thirds of the group revenue; the Premium Food Distribution segment consists of the company's distribution and wholesale businesses; the Corporate segment includes the company's head office activities along with its finance and information systems. Its geographical segments are the United States and Canada.

Premium Brands Q2 2026 Prepared Remarks Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record sales and earnings growth: Second-quarter sales rose 26.3% to CAD 2.4 billion, while adjusted EBITDA increased 29.5% to CAD 225 million and adjusted EPS rose 17.7% to CAD 1.53.
• Positive Sentiment: U.S. growth initiatives are gaining traction: Specialty Foods generated 10.7% organic volume growth, led by 25% growth in the U.S. Protein Group, while the meat stick business grew 83.2%.
• Positive Sentiment: Cash flow and leverage improved: The company generated CAD 68 million in second-quarter net free cash flow after four years of negative results, and reduced its debt-to-EBITDA ratio to 3.8x from 4.3x at year-end 2025.
• Positive Sentiment: Major capital cycle is nearing completion: Only CAD 41.6 million remains to be spent on the CAD 1.1 billion investment plan, which management says created more than CAD 2 billion of new sales capacity; startup and restructuring costs are also expected to decline.
• Negative Sentiment: Full-year guidance was reduced: 2026 revenue guidance is now CAD 9.1–9.3 billion and adjusted EBITDA guidance is CAD 840–870 million, reflecting delayed product launches and promotions, weaker food-service demand, and the exit from unprofitable sales.

Presentation

[George Paleologou, President and CEO at Premium Brands]

Welcome everyone to our 2026 second quarter conference call. With me here today is our CFO, Will Kalutycz. Our presentation will follow the deck that was posted on our website this morning. You can also access it by clicking on the link included in this morning's press release. Our second quarter results represent a key inflection point for our company as we demonstrated meaningful progress on a number of financial and strategic objectives, while executing well on our various growth and operational initiatives. This progress is validating the potential value to be created from our most recent capital spending cycle, which began in 2022 and involves a complete transformation of our manufacturing footprint and ability to service the U.S. market. The issue of how ambitious this CapEx cycle was has at times been met with skepticism by the market at large.

[George Paleologou, President and CEO at Premium Brands]

Today, I'm going to spend a few minutes explaining its merits and potential rewards. The capacity we built over the past few years was not created to produce the foods of the past, but rather the foods of the future. This was done to position us to take advantage of the emerging new food order, which I talk about in my most recent letter to shareholders. Current consumer trends towards cleaner, healthier, and more nutrient-dense foods are disrupting the traditional CPG space in ways that we have not seen before, and in turn is creating white space selling opportunities for companies like ours. Demand for most of our core product categories such as meat sticks, cooked protein, sandwiches, artisan breads, and kettle-cooked meal solutions is growing rapidly while demand for traditional, highly processed CPG foods is contracting.

[George Paleologou, President and CEO at Premium Brands]

For this reason, we're enjoying the most robust business development pipeline in our history, and consequently, we have never been more excited about our business and its prospects. More importantly, we're also starting to show tangible progress on several key financial metrics as we capitalize on these growth opportunities, including growing net free cash flow and an improving balance sheet. Over the next few quarters, we will continue to leverage the new production capacity we have built as we onboard new business and new customers, which in turn will generate not only incremental free cash flow, but also improved margins and most importantly, improved rates of return on our capital invested. As part of this process, we're also rationalizing older plants that are at or near the end of their economic lives.

[George Paleologou, President and CEO at Premium Brands]

Over the next 12 months, we expect to close four older facilities while commissioning two brand-new plants, one in the GTA area and one in Auburn, Maine, with this rationalization creating significant incremental shareholder value through productivity improvements and scale-related efficiencies. We are now on slide four, which outlines certain key highlights for the quarter and the year. As I mentioned earlier, we are showing significant improvements in both our steady state and net free cash flows. Will discuss these more in detail later on. Our Specialty Food Group's core U.S. growth initiatives delivered 10.7% organic volume growth for the quarter, driven by our Protein Group's leveraging of newly acquired or built capacity. Including acquisitions, Specialty Foods total U.S. sales grew by CAD 432.2 million to CAD 1.2 billion for the quarter, representing 71.2% of its total second quarter sales as compared to 63.5% in the second quarter of 2025.

[George Paleologou, President and CEO at Premium Brands]

As I mentioned earlier, we now have the most robust pipeline of business development opportunities in our history with a full slate of launches, LTOs, and new listings and rollouts scheduled over the coming quarters. This, along with our new production capacity and best-in-class innovation capabilities, will result in significant value creation over the next two years. For the record, we are not concerned about the exact timing of these activities as this is often outside of our control. During the quarter, we made significant progress in improving our balance sheet with our debt to EBITDA ratio dropping to 3.8:1 from 4.3:1 at the end of 2025. Overall, we're pleased with our progress so far and are very much on track to meet or exceed our five-year plan of CAD 10 billion in sales and CAD 1 billion of EBITDA by the end of 2027.

[George Paleologou, President and CEO at Premium Brands]

Turning to slide five. This slide shows the depth of our manufacturing footprint. The red dots represent new capacity built or acquired over the last 4+ years. You can see that the focus of our investment strategy has been the U.S. market. We're now on slides six to 11. For this quarter, we're featuring our premium stick business. Meat sticks is a key product area for us and a core competence. Our sticks are without question best in class as we continue to lead the premium stick market in Canada and are a leading player in the U.S. market. For the second quarter, our meat stick business grew by 83.2%. More recently, we have launched the Italia line of meat sticks made at our facility in Yorkton, Saskatchewan.

[George Paleologou, President and CEO at Premium Brands]

The Italia sticks are a super premium dry cure stick that is also shelf stable and going by my family's reaction to them, they are highly addictive. I will now pass the presentation to our CFO, Will Kalutycz, who will update you on our financial results for the quarter. Will?

[Will Kalutycz, CFO at Premium Brands]

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 27th, 2025, as well as other information on our website for a broader description of the risk factors that could affect our performance. Turning to slide 13. Our sales for the quarter from continuing operations were a record CAD 2.4 billion, up CAD 495 million or 26.3% as compared to the second quarter of 2025.

[Will Kalutycz, CFO at Premium Brands]

This increase was primarily driven by three factors. The first, and most significant, was acquisitions, which accounted for CAD 354.5 million of the increase. Organic volume growth made up another CAD 74.5 million of our growth, and selling price increases, primarily relating to beef-based products, contributed CAD 59.9 million.

[Will Kalutycz, CFO at Premium Brands]

The main driver of organic volume growth was the continued success of our Specialty Foods segment's U.S. market-focused initiatives, which generated CAD 82.4 million in organic volume growth, representing an organic volume growth rate of 10.7%, as mentioned by George earlier. Slide 14 shows a breakdown of our core U.S. growth initiatives by group. As you can see, our U.S. Protein Group initiatives generated a very solid 25% organic volume growth rate in the quarter, driven by meat snacks and protein. This was partially offset by a contraction in our Custom Culinary Solutions Group's volumes due to a large limited time sandwich promotion by a customer ending in the fourth quarter of 2025. The replacement promotions not scheduled to launch until early next year. Turning to slide 15.

[Will Kalutycz, CFO at Premium Brands]

Our adjusted EBITDA for the quarter was CAD 225 million, representing an increase of CAD 51.2 million, or 29.5%, as compared to the second quarter of 2025. The major drivers of this improvement were acquisitions, organic volume sales growth, and past selling price increases coming into effect. These are partially offset by higher operating overheads associated with new production capacity brought online by our Protein and Custom Culinary Solutions Group's. Slide 16 shows our startup and restructuring costs by quarter for the last eight quarters. You can see that these costs have dropped dramatically in recent quarters as almost all the new capacity expansion projects associated with our four-year plus CAD 1.1 billion project CapEx plan are now achieving base operating parameters. Looking forward to the second half of 2026, we expect these costs to continue to decline.

[Will Kalutycz, CFO at Premium Brands]

Turning to slide 17, our adjusted earnings and earnings per share from continuing operations for the quarter were CAD 79.6 million and CAD 1.53 per share, respectively, with these metrics increasing by 37.2% and 17.7%, respectively, as compared to the second quarter of 2025. The improvement in our profitability is due to the growth in our adjusted EBITDA, partially offset by higher depreciation, lease, and interest costs associated with the major investments we have been making in production capacity.

[Will Kalutycz, CFO at Premium Brands]

Our net earnings for the quarter were CAD 70.9 million as compared to CAD 27.9 million in the second quarter of 2025, representing an increase of CAD 43 million or 154%. This increase was driven by our higher adjusted earnings as well as a CAD 73.9 million gain on the sale of Shaw Bakers and a CAD 30 million fee received from Clearwater with respect to certain lobster related assets and sales.

[Will Kalutycz, CFO at Premium Brands]

These factors were partially offset by a loss of CAD 53.1 million in connection with the shutdown of a value-added beef processing facility in Ontario and our associated exit from certain unprofitable sales. Slide 18 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 range of CAD 9.1 billion-CAD 9.3 billion. We revised our revenue guidance from last quarter based on three factors, namely delays in certain new product launches, including a customer's decision to push several large promotions originally planned for the second half of 2026 out to early 2027, exiting certain unprofitable sales in conjunction with the shutdown of the value-added beef processing facility I mentioned earlier. Weakening consumer demand in certain segments of the food service channel.

[Will Kalutycz, CFO at Premium Brands]

You can see from the chart that despite our revised guidance, we are still expecting to generate very strong growth in the back half of 2026. Slide 19 shows our annual adjusted EBITDA for each of the last eight years, as well as the trailing 12 months ended the second quarter of 2026, and our 2026 projected adjusted EBITDA based on our guidance range of CAD 840 million-CAD 870 million. We also revised our adjusted EBITDA guidance based primarily on our revised revenue forecast. Similar to what we showed in the previous revenue chart, you can see we are also expecting to generate very strong growth in our adjusted EBITDA in the back half of 2026. Slide 20 shows our project CapEx for the last 14 quarters.

[Will Kalutycz, CFO at Premium Brands]

These expenditures peaked in 2023, 2024, and have been steadily coming down as we near the end of the major investment cycle we started in 2022. In the second quarter, we had total capital expenditures from continuing operations of CAD 59 million, consisting of CAD 18.3 million for project CapEx included in our CAD 1.1 billion investment plan, CAD 21.6 million for other project CapEx. Note the combined total of these two is shown in the chart, and CAD 19.1 million for maintenance CapEx.

[Will Kalutycz, CFO at Premium Brands]

Looking forward, we have only CAD 41.6 million left to spend to complete our CAD 1.1 billion investment plan, which will in total have created over CAD 2 billion of new sales capacity. The next slide shows our steady state free cash flow and steady state free cash flow per share. These measures are based on our free cash flow before the impact of capital being invested for future growth.

[Will Kalutycz, CFO at Premium Brands]

In 2023 and 2024, these metrics were significantly impacted by additional lease and interest costs associated with the major investment cycle we started in 2022. 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 in a meaningful way. This trend continued into the first half of 2026 and is expected to accelerate through the balance of the year. In terms of our net free cash flow, which is our free cash flow after investments made in working capital, startup and restructuring costs and project CapEx, the second quarter represents a major inflection point, with us generating CAD 68 million in net free cash flow after four years of negative net free cash flow.

[Will Kalutycz, CFO at Premium Brands]

Looking forward to the second half of 2026, we expect this trend to accelerate as we continue to leverage our new production capacity. This final slide shows our debt-to-EBITDA ratios for the last six quarters. As George mentioned earlier, you can see that we are making steady progress improving these ratios with both ratios now 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 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. 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.

Participants

Executives

• George Paleologou, President and CEO
• Will Kalutycz, CFO