Premium Brands Q2 Earnings Call Highlights

Premium Brands said its second-quarter results marked an inflection point as the company began to generate stronger free cash flow from a multiyear capital-spending program designed to expand its manufacturing footprint and U.S. market capacity. The company reported record sales from continuing operations of C$2.4 billion for the quarter, up C$495 million, or 26.3%, from the second quarter of 2025. Adjusted EBITDA rose 29.5% to C$225 million, while adjusted earnings from continuing operations increased 37.2% to C$79.6 million, or C$1.53 per share. Management said the results reflected progress in leveraging capacity created through a capital investment program that began in 2022. The program involved more than C$1.1 billion in project capital expenditures and was intended to transform the company’s production network and strengthen its ability to serve U.S. customers. The company said consumer demand for cleaner, healthier and more nutrient-dense food products is creating opportunities in categories including meat sticks, cooked proteins, sandwiches, artisan breads and kettle-cooked meal solutions. Management contrasted that demand with contracting demand for more traditional, highly processed consumer packaged goods. Specialty Foods’ core U.S. growth initiatives generated organic volume growth of 10.7% during the quarter. Including acquisitions, the group’s U.S. sales increased by C$432.2 million to C$1.2 billion, representing 71.2% of its second-quarter sales, compared with 63.5% a year earlier. Will Kalutycz, Premium Brands’ CFO, said acquisitions accounted for C$354.5 million of the company’s overall sales increase. Organic volume growth contributed C$74.5 million, while selling-price increases, primarily related to beef-based products, added C$59.9 million. Within the company’s U.S.-focused operations, the Protein Group recorded 25% organic volume growth, driven by meat snacks and protein products. That performance was partially offset by lower volumes in the Custom Culinary Solutions Group after a customer’s large limited-time sandwich promotion ended in the fourth quarter of 2025. Replacement promotions are not scheduled to begin until early next year, management said. The company also highlighted its meat-stick business, which grew 83.2% in the second quarter. Premium Brands recently launched its Italia line of shelf-stable, dry-cured meat sticks, produced at its Yorkton, Saskatchewan, facility. Management said the recently added capacity was built for emerging food categories rather than legacy products. Premium Brands expects to continue onboarding new business and customers over coming quarters, with the additional v. Premium Brands reduced its 2026 revenue outlook by roughly C$200 million and adjusted EBITDA outlook by about C$30 million, attributing the changes to delayed U.S. customer programs, softer Canadian foodservice demand and the exit of a low-margin Ontario facility—not weaker underlying operations. Several major U.S. initiatives have shifted into late 2026 or early 2027, including a quick-service restaurant limited-time offer and two retail launches. Despite the delays, U.S. protein volumes grew 25% organically, and management said capacity remains available with no excess launch-related inventory. Management expects stronger second-half margins and free cash flow, supported by operating efficiencies, lower capital spending and improving working capital. The company is targeting leverage of 3× EBITDA or better by early to mid-2027 while consolidating facilities and optimizing its largely sold-out C$2 billion capacity pipeline.