Lassonde Industries Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to LaSonda Industries 2025 First Quarter Earnings Conference Call. Corporations press release reporting financial results was published yesterday after the market closed. It can be found on its website at lasonda.com, along with the MD&A and financial statements. These documents are available on CDAR Plus as well. 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 difficulties hearing the conference, please press star and 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 statements section of the MD&A for further information. Also note that all figures expressed on today's call are in Canadian dollars unless otherwise stated and that most amounts have been rounded to ease the presentation. Finally, we advise that the presentation will refer to non-IFRS measures or ratios, mostly to ease comparability between periods. Reconciliations to IFRS measures are provided in the appendix to the presentation and in the corporation's MD&A. I would like everyone, I would like to remind everyone that this conference call is being recorded on Friday, May 9th, 2025. I would now like to turn the conference over to Vince Tempano, Chief Executive Officer.

Good morning, ladies and gentlemen. I'm here with Eric Jem, Chief Financial Officer of LaSonde Industries. Thank you for joining us for this discussion of the financial and operating results for our first quarter ended March 29, 2025. Please turn to slide four. LaSonde began 2025 on a positive note, delivering solid sales and operating profit growth despite ongoing uncertainty. Sales increased 22.8% to $700 million, with growth reaching 9.3% without the foreign exchange impact and the recently acquired Summer Garden business. This performance reflects market share gains in both Canadian and U.S. beverage activities, driven respectively by effective merchandising and our Build Back plan. Meanwhile, in specialty food, we delivered another strong EBITDA margin in the quarter thanks to both our legacy business and Summer Garden. Now let's turn to slide five for a closer look at operations beginning with U.S. beverage activities. Lassonde sustained its momentum, gaining market share in this first quarter as volume increased 10% in a market that contracted slightly. Keys to this gain were the execution of build-back initiatives through increased distribution with new and existing customers, which in turn drove better network efficiencies, as well as the contribution of our new single serve line in North Carolina. You may recall that this line encountered certain mechanical issues during the first quarter. These issues have largely been addressed, and the line is now producing at a pace aligned with our expectations. We anticipate reaching full production rate by the end of the second quarter. I'm also pleased to report that our strategic investment initiatives remain on schedule and on budget. These include the construction of a new facility in New Jersey and the relocation of certain production assets from a U.S. co-packer to our North Carolina hub, where we're investing an additional $20 million. This investment will see us establish our first ever in-house juice box production in the US. Turning to Canadian beverage activities on slide six, we are witnessing the benefits of the price adjustments that were mostly implemented last year. We have continued to successfully execute on pricing to offset key commodity inflation. As part of our productivity initiatives, we have significantly enhanced efficiency by deploying new high-speed juice box lines. These new lines are replacing five older ones, allowing us to deliver higher output more efficiently. Lassonde also benefited from effective merchandising. New product innovation launched Road 2024 and a rising consumer sentiment to buy Canadian. This combination contributed to solid market share gains across our branded and private label portfolio despite a market contraction, most notably within refrigerated orange juice. With respect to growing demand for Canadian products, we launched our new Canadian to the Core campaign. This umbrella campaign shines the spotlight on our Canadian brands, including Oasis and its There's No Taste Like Home tagline, and it continued until a few weeks ago in digital, print, and outdoor, while still present on pack and in store marketing. Importantly, we also recently commissioned our new bag-in-a-box of septic packaging lines slightly ahead of schedule. Our initiative received positive response, which validates our view of strong potential in this market. As I mentioned last quarter, this new technology offers convenient dispensing, which makes it ideal for a wider range of customers in food service, such as quick-serve restaurants and convenience stores. Additional bulk of septic packaging formats are also available and will support sales to industrial customers like food manufacturers. This investment represents a significant step forward and allows us to expand our presence and deliver efficient, customizable beverage solutions to the food service channel across North America and expand our reach with industrial supply. Let's turn to specialty food on slide seven. During the first quarter of 2025, we continued to integrate our North American activities. Overall, we saw positive top and bottom line growth within our legacy specialty food business, while Summer Garden had another solid quarter with sales of $55.5 million and EBITDA of $13.5 million, representing a margin of 24%. As for legacy operations, our growth momentum continued in retort products mainly for premium glass jar soups and sauces, buoyed by continued category growth in the premium segment and through growth in our key customers by new product launches and expansion of our Canadian business as we continue to balance our portfolio and drive Canadian business by innovation and new customers. We are also continuing our evaluation of targeted investments to accelerate growth by enhancing specialty food production capacity. This includes the ongoing assessment of a potential plant expansion in Ohio to support future growth, lower costs, while also supporting our long-standing strategy of producing closer to our customers. Before turning the call over to Eric, let me highlight organization changes that support the continued evolution of our operating model, starting with the creation of our new North America beverage division on slide eight. This division comprises our two U.S. beverage business units, our flagship beverage business in Canada, and our newly consolidated North America food service business unit. To lead this division, Amanda Burns was appointed Chief Commercial Officer, North American Beverages. Amanda previously served as President, U.S. Private Label, where she played a key role in developing and executing Project Eagle, our initiative to revitalize U.S. beverage activities. Gabriela Arriaga was appointed Chief Marketing Officer for North American Beverages. Her mandate includes establishing best practices, capturing synergy, and building a growth-oriented portfolio through innovation. In parallel, Gabby remains General Manager of our U.S. National Brands Business Unit. Turning to slide nine, Elizabeth Hill was named General Manager of Private Label Beverages USA. Having joined Lausanne 22 years ago, she has extensive experience in sales and marketing, building dynamic teams, and stimulating growth through a focus and commitment to helping customers achieve their objectives. In Canada, Martin Lozier was named General Manager, Beverages Canada. Since joining Lausanne in 2008, Martin has held various senior management positions, including the last two years as Senior Vice President of Financial Planning and Analysis, where he played a key role by directing and overseeing all commercial-related finance activities across each division. I now turn the call over to Eric for a review of quarter one results. Eric. Well, thank you, Vince.

Good morning, everyone. Let's turn to slide 10 for our first quarter sales, which amounted to $700 million, up 22.8% versus last year. Excluding summer gardens, and a favorable foreign exchange impact, sales increased 9.3%, reflecting a higher sales volume in the U.S. and mostly the ongoing effect of pricing adjustments in Canada. Moving to slide 11, gross profits reached $183 million, or 26.2% of sales, up from $150 million a year ago, also representing 26.2% of sales. Excluding Summer Garden, gross profit dollars increased 7.1% and, as anticipated, the gross profit margin contracted to 24.9% due to our cost of certain inputs, mainly oranges and, to a lesser extent, pineapples and apples, and accelerated depreciation expenses of certain U.S. assets. These factors were partly upset by lower PET resin costs and a more favorable sales mix in the U.S. SG&A expenses were $140 million, up from $115 million last year. Excluding SG&A expenses coming from Summer Garden, they've increased by $9 million, up 8%. These reflecting the currency conversion effect of expenses from our U.S. legacy entities, higher outbound transportation costs, mainly in the U.S., in part due to higher volume, and higher finished goods warehousing costs. Excluding items that impact comparability, adjusted to bid VA increased 36% to $71 million, or 10.2% of sales, from $52 million, or 9.2% of sales last year. Adjusted profit attributable to the corporation shareholders was $27 million, or $4 per share, compared to $25 million, or $3.68 per share last year. Turning to cash flow on slide 12. Operating activities required $60 million in Q1 2025 versus generating $11 million last year. This variation mainly reflects more important working capital requirement this year versus last, essentially due to higher raw material inventories from advanced purchases of apple concentrate to secure prices and supply. Higher finished goods inventory, mainly for our Canadian beverage unit, in anticipation of greater demand and also reflecting the timing effect of certain shipment for our Canadian food unit. An unfavorable change of $16 million in settlement of derivative instrument associated with FCOJ this year versus last. The payment in the quarter of $35 million of payable at December 31st. that were associated with capital expenditures projects. These were only $8 million at the end of the quarter, resulting by itself in a net outflow of $26.4 million in the quarter. And then a slightly higher DSO, essentially due to timing. All of these elements were partly upset by higher EBITDA. The days of operating working capital ratio stood at 55 days. which is above the historical range due to higher days of inventory outstanding at 92 days and to a lesser extent higher DSO at 23 days. We expect the ratio to revert to its historical range by the end of 2025 as the inventory situation normalizes. Capital expenditure total $79 million in Q1 of 2025, including US dollar $34 million or $48 million Canadian related to the construction of the New Jersey facility. This project remains on track and on budget, representing capex of approximately US dollar $100 million in 2025. As a result, we expect capex to reach up to 9% of sales in 2025. Turning to our balance sheet on slide 13, Lausanne net debt total $587 million. at the end of the first quarter versus $449,000 three months earlier. The increase is attributable to a draw on both revolving Canadian and U.S. revolving operating credit to finance inventory and CapEx. As anticipated, the net debt-to-adjusted-dividend ratio increased, reaching 2.021 at the end of the first quarter 2025, notably reflecting the U.S. CapEx program and an elevated level of working capital. All things being equal, we anticipate the leverage ratio to range between 2 and 2.5 to 1 until the end of 2026, remaining well within our comfort zone of less than 3.25 to 1. Ladies and gentlemen, I turn the call back to Vince for the outlook.