Lassonde Industries Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to LaSonde Industries' 2025 Third Quarter Earnings Conference Call. The corporation's press release reporting its financial results was published yesterday after market close. It can be found on its website at lasonde.com along with the MD&A and financial statements. These documents are available on Cedar 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 the operator assistance at any time. Before turning to management's pre-recorded remarks, please be advised that this conference call will contain forward statements that are forward-looking and subject to a number of risk 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. 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, be advised 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 of the presentation and in the corporation's MD&A. I would like to remind everyone that this conference call is being recorded on Friday, November 7th of 2025. I will now turn the conference over to Vincent Panno, Chief Executive Officer.

Good morning, ladies and gentlemen. I am 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 third quarter ended September 27, 2025. Now, please turn to slide four. Lassonde delivered another solid performance in the third quarter, which is a testament to its ability to meet customer and consumer needs through its broad and diverse product portfolio and through a continued commitment to service excellence. Sales increased 8.3% to $724 million. As anticipated, sales growth was less than in previous periods, as we lapped the Summer Garden acquisition and the commissioning of the North Carolina single serve line partway through the quarter, and as we faced some industry-wide demand-related headwinds. Still, we grew our sales in each business unit and generated an increase of nearly 23% in operating profit. These achievements mainly reflect strong execution on pricing, as well as a better sales mix within our private label offering. Now let's turn to slide five for a closer look at operations, beginning with U.S. beverage activities. Lassonde maintained its market position in the third quarter. While the overall category was down low single digits, as consumer spending reflects weaker confidence, given the current macroeconomic context, volume for U.S. brands remained relatively steady and our private label volume contracted slightly. Our performance was also consistent with what we've seen in the market with competitor brands outperforming private label due to a temporary price gap contraction earlier this year as we led with pricing in response to Apple and other commodity inflation and tariffs. With this said, we are now seeing branded competitors implement pricing actions which we believe should restore normal price gaps and support private label category performance. Our business is well positioned to benefit from a shift back to private label as consumers increasingly seek value in these uncertain economic times. In the quarter, we also successfully completed the installation of production assets being relocated from a U.S. co-packer to our North Carolina facility and we're in the process of ramping up operations. These assets represent our first ever in-house juice box production in the United States, which should improve reliability and reduce cost in servicing U.S. customers. We also expect to unlock additional volume for both U.S.-branded and private label products by improving capacity and throughput on the assets. As for the construction of a new facility in New Jersey, I am pleased to report that we have broken ground following the reception of permitting during the quarter. The project remains on schedule and on budget with a phase transfer of the existing production activities from the current facility beginning in late 2026 and to be completed in 2027. Turning to slide six, our Canadian beverage activities continued to gain market share, outpacing the category. with overall market contraction remaining consistent with prior quarters in the mid-single-digit range. Our performance was driven by solid promotional support for our national brands, new distribution gains mainly in the chilled category, and a continued buy Canadian sentiment, which we continue to support with our Canadian to the core campaign through in-store merchandising. We also benefited from a favorable shift in the composition of our private label sales mix. Our focus on innovation to reduce commodity exposure also continues to generate positive results, mainly with nectars and drinks, as well as through new distribution in the chilled category. Moving on to food service on slide seven. Our food service activities had a solid quarter with once again double-digit sales increase over last year. Growth was driven by volume gains with broad-line distributors in the U.S. and by improved penetration of national accounts in Canada. As for our new bag-in-a-box of septic packaging line, our focus is on developing customized formulas for new accounts. Following positive response, we are now making solid progress in our discussions with customers and are engaging in bids. We see strong potential in this market given the uniqueness and value-add of our offering with convenient dispensing and bulk aseptic packaging. As we've noted in past remarks, food service is a significant growth opportunity as we estimate it represents roughly half of consumer spending on food and beverages, whereas our split between retail and food service has historically been around 90-10. Now let's turn to specialty food on slide eight. In the third quarter, we sustained our integration efforts within our North American specialty food network with the objective of capturing additional efficiencies and synergies. As an example, after reviewing our manufacturing processes and installing new equipment at our Ohio plant to eliminate a bottleneck, we achieved increased throughput. Summer Garden contributed sales of $48.1 million for the full quarter versus $26.7 million over seven weeks last year. Its EBITDA margin reached 16%, reflecting seasonal volume fluctuations and the timing of promotional activities. EBITDA margin for the first nine months of 2025 remained robust, approaching 21%. Summer Garden's focus also remains on finalizing its consumer-focused brand strategy, addressing opportunities to expand brand distribution, and launch new innovation. As for legacy operations, overall volume held relatively steady and profitability continued to grow with sustained momentum in the glass jar sauce category. We continue to refine our strategy to drive sustainable and profitable growth within the specialty food market while enhancing service for our U.S. customers. We remain excited about the long-term growth potential of this segment, supported by ongoing initiatives to fortify our capabilities across both operations. I now turn the call over to Eric for a review of quarter two results. Eric. Thank you, Vince.

Good morning, everyone. Let's turn to slide nine. for our third quarter sales, which amounted to $724 million, up 8.3% versus last year. Excluding Summer Garden and a favorable foreign exchange impact, sales increased 5%, reflecting the favorable impact of pricing adjustment and a positive shift in the private label sales mix in Canada. Moving to slide 10. Gross profit reached $198 million. or 27.3% of sales, up 10% versus $180 million a year ago, or 26.9% of sales. Excluding Summer Garden, gross profit dollars increased 4% year-over-year for a gross profit margin of 26.8%, reflecting the favorable impact of selling price adjustment and a positive shift in the sales mix. These factors were partially offset by higher costs for certain inputs, such as orange, apple, pineapple concentrates, an increase in certain conversion costs in the U.S., mostly related to the deployment of new assets in North Carolina, and to reduce absorption due to lower production volume and the accelerated depreciation expense of certain U.S. assets. SG&A expenses were $140 million, up from $133 million last year. Excluding expenses from Summer Garden, SG&As held steady as increases in certain administrative and selling and marketing expenses, finished goods were arousing costs, mainly in Canada, and amortization expenses resulted from the commissioning of the new Canadian ERP were offset by lower transportation costs to deliver products to clients and a decrease in performance-related compensation. Excluding items that impact comparability, Adjusted EBITDA increased 25% to $86 million, or 11.9% of sales, from 69 million, or 10.4% of sales last year. Adjusted profits attributable to the corporation shareholder reached $40 million, or $5.84 per share, a record-level quarterly adjusted EPS, increasing 29% from 31 million. or $4.53 per share last year. Turning to working capital on slide 11. The days of operating working capital ratio stood at 55 days, down from 59 days in quarter two. This decline was mainly due to an increase in days payable outstanding as we return to normal purchasing patterns. Meanwhile, days of inventory outstanding remain stable at 85 days, which is slightly elevated for a third quarter. While the ratio stands above historical range levels of approximately 46 days at the end of a third quarter, our objective is to bring it near the upper limit of the historical range by the end of 2025, given current inventory holding strategies. As a reminder, We may temporarily elect to strategically leverage our balance sheet to secure certain inventory availability and or lock in costs ahead of anticipated supplier price increases. Now on slide 12. Operating activities generated $118 million in Q3 of 2025, up from $87 million last year. This improvement is mainly due to higher EBITDA and higher cash generated from working capital, notably through a lower accounts receivable, which normalized following a temporary effect on timing of invoicing due to the earlier rollout of the new Canadian ERP, and to lower inventory, as significant volume acquired earlier this year are gradually being depleted. These factors were partly offset by a $14.2 million combined increase in interest and income taxes paid. CAPEX totaled $35 million in Q3 2025 and $142 million since the beginning of the year. We still expect CAPEX to reach up to 7% of sales in 2025, including approximately now $57 million U.S. for the construction of the New Jersey facility and up to $20 million U.S. for the redeployment of our juice box lines in North Carolina. Turning to our balance sheet on slide 13, Lausanne's net debt totaled $550 million at the end of the third quarter, down from $618 million three months earlier. The decrease mainly reflects cash flow generated by working capital. As a result, the net debt-to-adjustability ratio improved to 1.7 to 1 at the end of Q3 2025, compared to 2 to 1 at the end of the previous quarter. All things being equal, the leverage ratio should range between 2 and 2.5 to 1 until the end of 2026, but we anticipate being near the lower end of the range. This remains well within our comfort zone of less than 3.25 to 1. I'll now turn the call back to Vince for the outlook. Vince.