What Lassonde Industries (LAS.A) Said on Its Q3 Earnings Call

Key Points

• Sales declined, but adjusted earnings per share increased: Third-quarter sales fell to C$713 million from C$724 million, while adjusted EPS rose to C$5.94 from C$5.84. Lower fruit commodity costs and a favorable sales mix lifted gross profit, although adjusted EBITDA slipped to C$84 million.
• Plant disruptions constrained production and added costs: Mechanical issues in North Carolina and temporary problems at the New Jersey facility limited output and increased conversion and freight costs; some effects may persist into Q4. The US$200 million New Jersey facility project remains on budget, with production transfers expected to begin near year-end and continue through most of 2027.
• Management expects a challenging sales outlook: Fiscal 2026 sales are forecast to be slightly below the prior year excluding foreign exchange, amid affordability pressures and weak volumes. Customer contract changes will affect 2027 sales; Lassonde has secured about 70% of replacement volume, but whether the remainder can be replaced on historical terms is uncertain.

Lassonde Industries TSE: LAS.A reported higher third-quarter gross profit and adjusted earnings per share despite lower sales, as production disruptions at two U.S. beverage plants and weak category volumes weighed on the business.

Sales for the quarter ended Sept. 26, 2026, fell to C$713 million from C$724 million a year earlier. Excluding a favorable foreign exchange effect, sales declined 2.3%, Chief Financial Officer Francis Trudeau said on the company’s earnings call.

Adjusted profit attributable to shareholders rose to C$41 million, or C$5.94 per share, from C$40 million, or C$5.84 per share, a year earlier. Adjusted EBITDA slipped to C$84 million, or 11.7% of sales, from C$86 million, or 11.9% of sales.

Gross profit increased to C$206 million from C$198 million, helped by lower orange and apple commodity costs and a more favorable sales mix. Higher conversion costs, PET resin costs and lower volumes partly offset those benefits. Selling, general and administrative expenses rose C$9 million to C$149 million, primarily because of higher transportation and other expenses.

Production problems constrain growth

Chief Executive Officer Vince Timpano said mechanical problems shut a single-serve line in North Carolina for approximately 20 days, while aging equipment at Lassonde’s existing New Jersey facility caused temporary disruptions and suboptimal production.

The company shifted some production to other facilities, including plants in Canada, to serve existing customers. That response increased conversion and transportation costs and limited Lassonde’s ability to pursue growth opportunities, particularly in single-serve formats, Timpano said.

Trudeau declined to quantify the disruptions’ effect on quarterly EBITDA, but said conversion costs and freight were the main components. He cautioned that suboptimal production could continue to affect results in the fourth quarter.

Management said the North Carolina situation was improving, although the line was operating at a reduced rate. Asked whether the issue would be resolved by year-end, both Trudeau and Timpano said yes.

The gradual transfer to a new New Jersey facility is expected to begin near the end of the fourth quarter and continue through most of 2027. Timpano said the US$200 million project remained on track and on budget. Trudeau said the transfer could not be accelerated because the facility was still being built and production lines would move sequentially.

Lassonde expects to exclude usual startup costs at the new facility from adjusted EBITDA and adjusted earnings per share, treating them as items affecting comparability between periods.

Sales outlook and customer changes

Management reiterated that fiscal 2026 sales are expected to be slightly below the prior year’s level, excluding foreign exchange effects. Trudeau said affordability concerns were likely to keep consumer demand and volumes under pressure in the coming months.

He also said contractual changes involving an important specialty food customer would affect 2027 sales. Lassonde has secured approximately 70% of the replacement volume for 2027 and is discussing the balance, but it remains uncertain whether the volume can be replaced on historical business terms. Timpano said most of the replacement volume secured so far comes from new third-party relationships.

Higher crude oil prices are expected to continue pressuring transportation and PET resin costs, partly offset by favorable commodity costs, Trudeau said. He added that the benefit from lower orange and apple costs had been significantly offset by other expenses.

Brands and market trends

In U.S. beverages, Timpano said Apple & Eve gained distribution with national retailers in the Midwest and West, while reduced-sugar juice boxes helped the brand expand in certain channels. Lassonde’s U.S. brands gained share, he said, though private-label performance was in line with the category.

In Canada, Oasis gained volume and market share in chilled beverages, while shelf-stable volumes were affected by changes in retailers’ promotional strategies. Timpano said Lassonde’s overall Canadian share had recently declined, although it remained above 2024 levels and had improved in the latest four-week period.

In specialty food, third-party premium and super-premium pasta sauce brands posted volume growth in both Canada and the U.S., supported by earlier distribution gains. Timpano also said G. Hughes non-barbecue specialty sauces delivered double-digit sales growth, while the brand faced greater competition in U.S. barbecue sauce.

Cash flow and spending

Operating activities generated C$63 million in the quarter, down from C$118 million a year earlier, primarily reflecting differences in working capital movements. Capital expenditures totaled C$55 million, and management continued to project 2026 spending at about 7% of sales, including approximately C$87 million for the New Jersey project.

Trudeau said 2027 capital spending would remain above its historical range but fall below 2026 as a percentage of sales. Net debt was C$456 million at quarter-end, and the net debt-to-adjusted EBITDA ratio was 1.25 to 1. Since reinstating its share repurchase program in August, Lassonde had bought back more than 68,000 shares for C$15.8 million as of the call.

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.

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