Lassonde Industries TSE: LAS.A reported second-quarter sales of CAD 738 million, compared with CAD 742 million a year earlier, as softer private-label volumes in Canada and portfolio rationalization offset gains in other areas of the business. Despite the modest sales decline, the company posted a 16% increase in gross profit, supported by lower orange concentrate costs, pricing actions and a more favorable product mix.
Chief Executive Officer Vince Timpano said the company operated against a backdrop of macroeconomic uncertainty and pressure on consumer demand, while also lapping a strong prior-year period that benefited from “Buy Canadian” sentiment. He said Lassonde’s diversified portfolio continued to perform well despite category-volume declines in measured channels.
Profitability Improved as Commodity Costs Eased
Gross profit rose to CAD 228 million from CAD 196 million in the prior-year quarter. Excluding the favorable foreign-exchange effect, gross profit increased CAD 29 million, or 15%. Chief Financial Officer Francis Trudeau said lower commodity costs were the largest contributor to the improvement, followed by selling-price adjustments and changes in sales mix.
Trudeau said the company has taken an “aggressive position on hedging” for orange concentrate, with most hedging positions ending near the end of 2026. However, he cautioned that current margins may be elevated relative to historical levels and remain subject to volatility in freight, transportation, fuel and PET resin costs.
Selling, general and administrative expenses increased to CAD 157 million from CAD 141 million, driven by higher transportation costs tied to fuel surcharges, higher performance-related compensation and certain administrative expenses.
The company recorded CAD 30 million in impairment charges during the quarter, including CAD 27 million associated with a customer-relationship intangible asset in its U.S. specialty food operations. Trudeau said the impairment followed contractual changes with a customer that will lower production volumes and related profits. He emphasized that the charge was specific to the customer relationship and did not indicate deterioration in the goodwill of the U.S. specialty food business.
Adjusted EBITDA, excluding items affecting comparability, rose 19% to CAD 101 million, or 13.7% of sales, from CAD 84 million, or 11.4% of sales, a year earlier. Profit attributable to shareholders fell to CAD 27 million, or CAD 3.95 per share, from CAD 34 million, or CAD 5.03 per share. Adjusted profit attributable to shareholders increased 36% to CAD 51 million, or CAD 7.45 per share.
Beverage Businesses Navigate Softer Category Demand
In U.S. beverages, Lassonde said it grew volumes and gained market share despite category declines. The company began recovering distribution that had been temporarily affected by earlier supply constraints, although private-label demand remained soft. Its Apple & Eve branded business benefited from distribution gains with national retailers in the Midwest and West, particularly in single-serve and juice-box formats.
The company said construction of its new New Jersey facility remains on schedule, with equipment installation underway. Lassonde expects to begin gradually transferring production from its current facility by late 2026 and complete that phase during the first half of 2027.
In Canada, the company said it retained category leadership despite mid-single-digit category-volume declines and a difficult comparison with the prior year. National brands outperformed the category, aided by shelf-stable products and single-serve formats. Private-label volumes were weaker due to a major customer’s go-to-market strategy and Lassonde’s discontinuation of selected product lines.
Trudeau said discontinued lower-margin or non-strategic Canadian beverage product lines accounted for about CAD 8 million in quarterly sales. In discussing the company’s revised sales outlook, he cited three factors: product-line discontinuations, customer-specific market changes and the fading benefit of last year’s Buy Canadian demand, as well as broader category softness.
Foodservice and Specialty Food Initiatives Continue
Lassonde said foodservice volumes across North America remained constrained by weaker away-from-home dining demand. Still, the company expanded private-label beverage offerings through U.S. broadline distributors and began supplying customized beverages to a Canadian quick-service restaurant chain through its bag-in-box aseptic platform. Timpano said initial results from that relationship exceeded early expectations, with volumes expected to ramp in the second half.
In specialty food, both Canadian and U.S. operations recorded gains led by premium and super-premium pasta sauces. Summer Garden increased volumes for third-party pasta-sauce brands, while G Hughes remained the leading better-for-you barbecue sauce brand, according to the company.
Lassonde completed a G Hughes brand refresh and transitioned packaging at the manufacturing level. It also expanded a previously announced Canadian mass-merchant distribution agreement and secured distribution with a national food retailer.
Regarding the customer contract change in U.S. specialty foods, Timpano said Lassonde has secured replacement volume equal to more than 50% of the expected 2027 shortfall through multi-year agreements, with negotiations underway for an additional 25%. Trudeau said the replacement business involves multiple customers and that the company is confident it can backfill the lost volume quickly. He said volume effects are expected in the third and fourth quarters of 2026, while pricing effects have already been seen this year.
Outlook and Capital Allocation
Excluding foreign exchange and major external disruptions, Lassonde now expects 2026 sales to be slightly below 2025 levels. Timpano said the company will prioritize profitable sales rather than volume growth for its own sake as it manages uncertain consumer spending, input costs, logistics conditions and tariff developments.
The company expects orange concentrate costs, and to a lesser extent apple concentrate costs, to be lower than last year based on observed spot prices. However, it expects Middle East-related conditions to create inflationary pressure on transportation and PET resin costs.
Operating cash flow totaled CAD 78 million in the quarter, compared with a CAD 3 million use of cash in the prior year. Net debt declined to CAD 451 million from CAD 474 million at the end of the first quarter, and the net-debt-to-adjusted-EBITDA ratio improved to 1.22-to-1.
Lassonde also announced its intention to launch a normal course issuer bid, subject to Toronto Stock Exchange approval, to repurchase for cancellation up to 200,000 Class A subordinate voting shares over 12 months. Timpano said the move reflects management’s view that the shares are undervalued and its confidence in the company’s long-term prospects.
About Lassonde Industries (TSE:LAS.A)
Lassonde Industries Inc is engaged in the development, manufacturing, and marketing of ready-to-drink fruit and vegetable juices and drinks. It also acts as a producer of store brand shelf-stable fruit juices and drinks in the United States and a major producer of cranberry sauces. The company operates through a single segment being the development, manufacturing, and marketing of a wide range of ready-to-drink juices and drinks; frozen juice concentrates; and specialty food products; and the importation, packaging, and marketing of selected wines from several countries of origin.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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