Premium Brands Q3 Earnings Call Highlights

Key Points

• Premium Brands posted record third-quarter results: Revenue rose 22% to CAD 2.38 billion and adjusted EPS increased 8% to CAD 1.38. However, slower organic volume growth and Stampede’s weaker-than-planned performance weighed on results.
• Net free cash flow reached CAD 196 million, helping reduce the debt-to-EBITDA ratio to 3.6 times from 3.8 times. Management said stronger cash generation supports debt reduction and potential share repurchases.
• The company maintained its 2026 guidance of CAD 9.1–9.3 billion in revenue and CAD 840–870 million in adjusted EBITDA. It also secured nearly CAD 170 million in new business, with launches expected over the next two quarters.

Premium Brands TSE: PBH reported record third-quarter sales and adjusted earnings, while a slowdown in organic volume growth and weaker demand at its Stampede business weighed on results.

The food company generated CAD 196 million in net free cash flow during the quarter and reduced its debt-to-EBITDA ratio to 3.6 times from 3.8 times in the previous quarter. Management said the improvement provides more flexibility for debt reduction and share repurchases.

Premium Brands also maintained its 2026 financial outlook and said it expects U.S. organic volume growth to return to double digits in 2027. The company secured almost CAD 170 million in new business late in the quarter, with the associated product initiatives expected to launch over the next two quarters.

Revenue and earnings rise

Third-quarter revenue from continuing operations increased 22% year over year to CAD 2.38 billion. Chief Financial Officer Will Kalutycz said acquisitions contributed CAD 349.6 million to the increase, while selling price increases added CAD 50.5 million and organic volume growth contributed CAD 20.6 million.

Adjusted EBITDA rose 22% to CAD 213 million, with the margin holding at 9%. Adjusted earnings per share from continuing operations climbed 8% to CAD 1.38 from CAD 1.28 a year earlier. Kalutycz said higher EBITDA was partly offset by increased depreciation, lease and interest costs associated with recent capacity investments.

Organic volume growth in the specialty food segment was 1.3%, including 2.5% growth from major U.S. sales initiatives. The latter figure was down from 10.7% in the prior quarter. Management said much of the slowdown had been anticipated, with U.S. protein initiatives growing approximately 14% but Custom Culinary Solutions declining 8%, primarily in sandwiches.

The sandwich business was affected by softer quick-service restaurant and convenience-store traffic, the timing of promotions and delayed customer launches. In Canada, volumes were relatively flat as retail growth was offset by softer foodservice demand. The Premium Food Distribution segment posted 0.5% organic volume growth, which Kalutycz attributed to a more challenging foodservice environment.

Stampede and restructuring costs weigh on results

Management said unexpectedly softer demand from some key foodservice customers at Stampede, along with delayed savings from imported beef procurement initiatives, contributed to sales and adjusted EBITDA falling short of expectations.

Kalutycz said Stampede grew nearly 15% year over year, but its adjusted EBITDA was approximately CAD 12 million below the company’s internal plan. The largest portion of the shortfall related to the delayed procurement savings, which the company expects to begin realizing in the first quarter of 2027.

Restructuring costs rose sequentially to CAD 9.5 million. Kalutycz attributed the increase to two new sandwich initiatives at Raybern’s and startup challenges as Concord transferred some production between plants. He said restructuring costs are expected to resume a downward trend in the fourth quarter.

Cash flow supports debt reduction and buybacks

After four years of negative net free cash flow, Premium Brands generated CAD 68 million in the second quarter and CAD 196 million in the third. Kalutycz said management believes the improvement reflects a structural change in the company’s cash-generating capabilities as its major investment cycle winds down.

The company reiterated its goal of reducing debt to three times EBITDA or better in 2027. It has also generated approximately CAD 250 million from non-core asset and investment monetizations and said it remains on track toward a target of more than CAD 1 billion in proceeds.

Premium Brands repurchased and canceled 10,100 shares under its recently introduced normal course issuer bid, which targets approximately 1 million shares. Kalutycz said trading blackouts limited activity and that the company expects to be more active with repurchases going forward.

Outlook maintained

Premium Brands maintained its 2026 guidance for revenue of CAD 9.1 billion to CAD 9.3 billion and adjusted EBITDA of CAD 840 million to CAD 870 million. Kalutycz said expected benefits from moderating beef and other protein costs in the fourth quarter would offset some of the third-quarter softness.

Management said the company remains on track to exceed its targets of CAD 10 billion in sales and CAD 1 billion in EBITDA by the end of 2027, although those targets may need adjustment as earnings-producing assets are sold.

Concord Premium Meats’ new facility in the Greater Toronto Area is expected to become operational in the first quarter of 2027. Three smaller plants will be consolidated into the facility, which management said will reduce overhead and operating costs while doubling capacity in certain product categories.

About Premium Brands (TSE:PBH)

Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations across Canada and the United States.

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