Lassonde Industries Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to LaSonde Industries' 2024 Fourth Quarter and Year-End Earnings Conference Call. The corporation's press release reporting its financial results was published yesterday after market closed. It can be found on its website at lasonde.com, along with the MD&A and financial statements. These documents are available on CDAR Plus as well. A presentation supporting this conference call was also posted on the website. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time. Before turning to management's pre-recorded remarks, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Please refer to the forward-looking statement section of the MD&A for further information. I would like to remind everyone that this conference call is being recorded on Friday, March 28, 2025. I will now turn the conference over to Vince Campano, Chief Executive Officer.

Good morning, ladies and gentlemen. I'm here with Eric Gemm, Chief Financial Officer of LaSonde Industries. Thank you for joining us for this discussion of the financial and operating results for our fourth quarter and fiscal year ended December 31st, 2024. Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated. Now, let's turn to slide four. Lausanne delivered solid performance in 2024, generating record financial results with sales of over $2.6 billion and adjusted EBITDA of $276 million. Importantly, all divisions contributed to these results. Our build-back plan for the U.S. business is progressing well, with volume rising 10% while demonstrating market share growth relative to a category that saw a slight decline. In Canada, our team executed pricing against record highs in orange juice and concentrates while mitigating its effects with innovation and solid promotion plans. Our specialty food business also closed the year with solid year-over-year top and bottom-line performance. Additionally, we diligently continued to execute our multi-year strategy aimed at diversifying and growing in the North America food and beverage market. First, we expanded the scope of our specialty food business by acquiring Summer Garden Food Manufacturing last August, which gave us a broader product portfolio of premium sauces and condiments, including the adjacent sugar-free barbecue sauce segments. Second, we commissioned several new production lines, such as a single-serve line in North Carolina and two high-speed juice box lines in Rougemont, to add capacity to support growth initiatives and in-source more production. Third, we laid the foundation for future growth in our U.S. beverage business by announcing a significant $220 million multiyear investment program. This includes constructing a new facility in New Jersey to replace the existing one and enhancing North Carolina's role as an important strategic hub for us in the United States. These investments will not only drive efficiency and boost our production capabilities, but will also create job opportunities and support economic growth in both regions. I want to take this occasion to thank all employees for their hard work and dedication which allowed Lassonde to achieve this outstanding performance. Eric is going to provide financial details on our fourth board in a moment, but please turn to slide five for a closer look at operations. As noted earlier, we are pleased with the volume increases stemming from our Build Back plan for U.S. beverage activities. We grew business volume with existing customers and with new customers, such as a prominent Northeast-based convenience store chain, onboarded earlier in the year. In North Carolina, you may recall we had some disruption from Hurricane Elaine in late September. This led to a 15-day plant closure, followed by an additional three to four weeks of recovery before we could return to a usual production pace. With this said, after operations resumed, The ramp-up of the single-serve line encountered certain mechanical issues that prevented us from meeting our planned schedule on build-back initiatives, resulting in missed opportunities. These issues lingered into the first quarter, but they now have been mostly resolved, and the line is nearly back to planned production output for our primary PAC formats. Having said this, we have fallen behind schedule to reach full production rates, and we are now looking at achieving this target by the end of this first half. On the efficiency side, the ongoing insourcing of an increasing volume of aseptic juice boxes combined with improved efficiency and higher volume has helped us further reduce conversion costs. Turning to slide six for an update on our strategic investment initiatives. First, the construction of our new facility in New Jersey is on schedule. At this time, all key equipment has been ordered, and we have appointed all principal contractors. The detailed engineering design work is being completed, and as we received the town's permitting approval earlier in March. As a reminder, we expect to progressively transfer existing production activities beginning in 2026 and to complete this transition in 2027. In parallel, the relocation of certain production assets from a coal packer to our North Carolina hub also remains on schedule for completion in the second half of 2025. This project will unlock additional volume for U.S. branded products and allow us to transfer some production currently handled by our Canadian network closer to customers. Turning to Canadian beverage activities on slide seven, we successfully executed on pricing to offset record levels of orange inflation. We also mitigated inflation through innovation to reduce our exposure to orange and productivity improvements with a new high-speed line. More recently, we launched a new marketing campaign to take advantage of shifting shopping behaviors across the country. The campaign is aimed at celebrating our Canadian roots by promoting Lausanne's strong national and regional brands as Canadian to the core. Our flagship Oasis brand is also a vital part of this campaign. where the brand's heritage will be reinforced through a new tagline, there's no taste like home. Moreover, I am very proud to say that BrandSpark is named Oasis as Canada's most trusted brand in the fruit juice category for the third consecutive year. Another key objective of our Canadian beverage business is to grow its reach in the food service channel. Supporting this goal, we are investing $10 million in Rougemont, to introduce a new bag-in-a-box aseptic packaging line for beverage dispensers to be commissioned in the second half of 2025. The packaging format offers convenient dispensing, which makes it ideal for a wider range of food service customers, such as microbreweries and large-scale caterers. This investment represents a significant step forward and should allow us to expand our presence and deliver customizable beverage solutions to the food service channel across North America. Furthermore, this technology enables us to expand our reach to include industrial aseptic juice supply. Now let's turn to specialty food on slide eight. This was the first quarter with a full contribution from Summer Garden, which generated sales of $55.7 million and EBITDA of $12.5 million, representing a solid margin of over 22%. Legacy operations, meanwhile, once again achieved solid sales growth in retort products, mainly for premium glass jar soups and sauces, and strong performance in the broth category. Since closing the acquisition of Summer Garden, we have focused on onboarding personnel, as well as identifying revenue and cost synergies. We are currently evaluating investments to accelerate growth, including scenarios to enhance production capacity to capitalize on identified opportunities. This includes the ongoing assessment of the potential for further plant expansion in Ohio that would enable us to continue our strategy of producing close to our customers. Integrations are never easy, but I am very pleased with how the teams have come together. We've been able to structure a business that embraces the LaSonde operating model while ensuring the preservation of the entire Summer Garden team and leveraging our respective know-hows. This gives me great confidence in our ability to strengthen our position as a leader in the North America specialty food industry. I now turn the call over to Eric for a review of our quarter four results. Eric. Hey, thank you, Vince.

Good morning, everyone. Before I begin, please note that most amounts have been rounded to ease the presentation. Also note that I will refer to non-IFRS measures or ratio, mostly to ease comparability between periods. Reconciliations to IFRS measures are provided in the appendix to our presentation. Fourth quarter results reflect the inclusion of Southern Garden for the entire period, as well as the effects related to the purchase price allocation, which was completed during the quarter. Details of the allocation can be found in section five of the MD&A. Let's turn to slide nine for our fourth quarter sales. which amounted to $738 million, up 22% versus last year. Excluding acquired entities and a favorable foreign exchange impact, sales increased 10.7%, reflecting a higher sales volume in the US and pricing adjustments in Canada, mainly for private label products. Moving to slide 10. Gross profit reached $193 million. representing 26.1% of sales, up from 153 million a year ago, or 25.2% of sales. Excluding acquired entities, gross profit rose 10.6%, driven by a higher volume, the run rate effect of pricing adjustment, lower conversion costs, despite challenges from Hurricane Elaine, and startup costs of our new single-serve line, both impacting our North Carolina facility. The net improvement results from the overall efficiency improvement, including in sourcing in Canada of production of aseptic juice boxes for our U.S.-branded business. These were partially offset by higher input costs, mainly orange juice and concentrate. SG&A expenses were $150 million, up from $120 million last year. Excluding expenses from acquired entities, SG&A increased by $14 million, or 12%, reflecting higher outbound transportation and finished goods warehousing costs, mainly for our U.S. operation, driven in part by a volume effect. Higher expenses related to our strategy and its deployment, partly offset by lower selling and marketing expenses, mostly in Canada. Excluding items that impact comparability, adjusted EBITDA increased 51% to $80 million or 10.8% of sales from 53 million or 8.7 of sales last year. Adjusted profit attributable to corporation shareholder came in at $35 million or $5.13 per share compared to 21 million or $3.14 per share last year. Looking briefly at annual results on slide 11, sales rose 12.4% to reach $2.6 billion. Excluding acquired entities and ethics, the increase was 7.1%. Pro forma sales, assuming the acquisition of Summer Garden had taken place on January 1st, 2024, totaled $273 billion. Adjusted EBITDA amounted to $276 million, or 10.6% of sales, up from $207 million, or 9% of sales, in 2023. If the Summer Garden acquisition had been completed on January 1, 2024, adjusted EBITDA for the year would have been $307 million, or 11.2% of sales. Adjusted profit attributable to the corporation shareholders reached $130 million, or $19.05 per share, compared to $90 million, or $13.18 per share last year. Turning to cash flow on slide 12. Operating activities generated $76 million in the fourth quarter of 2024 versus $78 million last year as a lower cash generation from working capital this year versus last. and higher taxes and interest paid were partly offset by higher EBITDA and the net withdrawal of certain excess amounts invested in our defined benefit pension plans. For the year, operating activities generated $234 million, up from $220 million in 2023. The days of operating working capital ratio stood at 38 days in Q4 2024. This is slightly below the historical range, mainly due to higher days of payable reflecting certain amounts payable related to certain capital expenditure projects. We expect the ratio to increase throughout 2025 but to remain within historical range. Capital expenditures total $30 million in Q4 and $116 million for the year, including U.S. $13 million related to the construction of the New Jersey facility. This project will accelerate over the next quarters and represent capex of approximately U.S. $100 million this year. As a result, we expect capex to reach up to 9% of sales in 2025. Turning over to our balance sheet on slide 13. The SONnet debt. totaled $449 million at the end of the fourth quarter versus $456 million three months earlier. The net debt to adjusted EBITDA ratio stood at 1.6 to 1 at the end of Q4 2024 versus 1.8 to 1 three months earlier. Considering the U.S. multiyear CapEx program and all things being equal, we anticipate the leverage ratio to range between 2 and 2.5 to 1 from the first half of 2025 until the end of 2026. Ladies and gentlemen, I turn the call back to Vince for the outlook.