Lassonde Industries Q2 Earnings Call Highlights

Lassonde Industries Q2 sales fell to CAD 738 million from CAD 742 million, but gross profit increased 16% and adjusted EBITDA rose 19% to CAD 101 million, helped by lower orange concentrate costs, pricing actions and a favorable product mix. U.S. beverages gained volume and market share, while Canadian private-label volumes and foodservice demand weakened. Lassonde also recorded a CAD 30 million impairment tied to a U.S. specialty-food customer contract change, but has already secured replacement volume covering more than half of the expected 2027 shortfall. Management lowered its outlook and strengthened its balance sheet: Lassonde now expects 2026 sales to be slightly below 2025 as it prioritizes profitable growth amid uncertain consumer demand and input costs. Operating cash flow improved to CAD 78 million, net debt declined to CAD 451 million, and the company plans to seek approval for a buyback of up to 200,000 Class A shares.

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.

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.