Premium Brands Holdings Corporation

Welcome, everyone, to our 2025 year-end conference call. Thank you for joining us today. With me here is our CFO, Will Kaludich. Our presentation will follow the deck that was posted on our website this morning. Later this morning, we will hold a separate live Q&A session at 10.30 a.m. PST. Details to the call can be found on our press release as posted on our website. We're now on slide three. which outlines some of the key highlights for the year and the fourth quarter. We finished 2025 strongly, strategically, operationally, and financially, despite significant commodity inflation headwinds throughout the year, and more specifically, record high beef costs for most of the year and substantial chicken cost increases in the first half of the year. As we have often stated, we manage our business for the long term, and are confident these headwinds are transitory and that our pricing actions combined with normalization of commodity markets will bring our margins back to historical levels. Overall, 2025 was another transformational year for premium brands as we commissioned, expanded, or acquired substantial new plant capacity across North America to support our continued industry-leading growth. Correspondingly, We're well positioned to meet or exceed our 2027 sales and adjusted EBITDA targets of $10 billion and $1 billion, respectively. Sales for the year increased by just over a billion dollars, or 15.6% to $7.5 billion, while our adjusted EBITDA margin came in at 9%, a 20 basis point decrease as compared to 2024, mainly due to beef and to a lesser extent, chicken commodity cost inflation. Subsequent to 2025, we completed the largest acquisition in our history with Stampede Culinary Partners joining our ecosystem of great food companies. Stampede's extensive plant network and accomplished management team will play a pivotal role in supporting the growth of our value-added protein group, the largest of six platforms. From a personal perspective, I'm delighted to do a call out to our entire protein platform, which when combined with Stampede is one of the most exciting food platforms in North America. This is at a time when protein, and more specifically premium meat protein, is increasingly being recognized as the leading nutrient source for optimum human health. Everyone I know is increasing their protein intake, and we're uniquely positioned to offer consumers and customers best-in-class protein-based products for all eating occasions for both home and out-of-home consumption. I can assure you that the favorable positioning of our protein platform did not happen by accident and that we have been preparing for this moment for a long time. As we have stated in the past, the food is medicine movement is taking over in North America and consumers are shifting from ultra-processed foods, high in sugars and healthy fats, artificial colors and flavors, and preservatives to clean, nutrient-rich, protein-centric foods that improve their overall health and well-being. And as I stated in my 2024 CEO letter to shareholders, an increasing number of consumers are no longer being swayed by the usual confusing and misleading messages of the past, and instead are basing their decisions on their own personal health markers measured in real time on their wearable devices. They say that knowledge and data is power, and the power today definitely belongs to consumers who are looking for foods that improve their health markers and contribute to their journeys towards better health. Stampede complements our other protein business in many ways, including extensive sous vide cooking capabilities that position us to offer all cooking technologies to our retail, club, and food service customers across North America. As I said earlier, this comes at a time when demand for cooked protein is not only growing but accelerating as consumers and food service operators are looking for convenience and ease of execution without sacrificing flavor, texture, nutritional value, or aesthetic attributes. Stampede operates a national network of best-in-class facilities across the U.S. and offers customers customized product and service solutions at both the regional and national levels. The onboarding of Stampede to premium brands and to our protein platform has gone very well, and we look forward to reporting Stampede's progress in the future as it begins to leverage PB product solutions, resources, and services to expand its offerings to new and existing customers, channels, and geographies. This week, we entered into a definitive agreement to sell our 74% interest in Shaw Bakery. Occasionally, we will make investments in startups or early-stage companies if we believe in the management team and are aligned with their vision. Since its inception, Shaw's management team has executed a very successful growth strategy and has positioned its business as the leading USDA premium laminated dough company in North America, with its sales growing from very little to 100 million U.S. As part of a recently announced non-core asset monetization strategy, we're pleased to be selling Shaw Bakers to a well-established and very reputable bakery company that will help take Shaw's business to the next level. Our CFO, Will Kaludich, will give you more color on our results for the quarter and the year later on in the presentation. We're now on slide four. You can see here that our acquisition pipeline continues to be very active and that we're in several discussions and conversations. As we have demonstrated in the past, including the Stampede acquisition, any new acquisitions will be done in the context of us achieving our stated long-term financial objectives. Slide 5 showcases our Stampede portfolio of ready-to-eat and ready-to-cook products, while demonstrating the diversity and versatility of their extensive offerings and capabilities. We're now on slides 6 to 8. Slide 6 shows you the location of our facilities in Canada and the U.S., with the dots in red showing the facilities that we have added to our plant network during the past couple of years. You can see that the number of facilities in the U.S. has expanded substantially and that we're now much better able to support our U.S. growth from state-of-the-art and modern U.S. domiciled capacity as shown on slides seven and eight. U.S. sales made up 68% of our specialty food segments sales in the fourth quarter, and 67% for the year. With the purchase of Stampede, we expect this number to be in the 70% to 80% range in 2026. I will now pass it to Will.

Thanks, George. Before I begin, I would like to remind you that some of the statements made on today's call may constitute board-looking information, and our future results may differ materially from what we discussed. Please refer to our MD&A for the 13 and 52 weeks ended December 27, 2025, as well as other information on our website for a broader description of the risk factors that could affect our performance. Turning to slide 11. Our sales for the quarter were a record $1.9 billion, up $258 million or 15.7% as compared to the fourth quarter of 2024. This increase was driven by three factors. The first and most significant was organic volume growth, which accounted for $151 million of the increase. Acquisitions made up another $76 million of our growth, and selling price increases, primarily related to beef-based products, contributed $39 million. These increases were partially offset by a currency translation impact of $8 million resulting from year-over-year strength in the Canadian dollar. The main driver of our organic volume growth in the quarter was the continued success of our specialty food segments, U.S. market-focused initiatives in premium protein, sandwich, and artisan bakery products, which generated $117 million in organic volume growth, representing an organic volume growth rate of over 18%. The balance of our organic volume growth came primarily from the sale of processed lobster inventory built up over the course of 2025. Slide 12 shows a breakdown of our core U.S. growth sales initiatives by group. As you can see, our protein, sandwich, and bakery groups all generated very solid results for the quarter, with organic volume growth rates of 20.1%, 12.5% and 62.2% respectively. For the year, our core U.S. growth initiatives generated organic volume growth of $370 million, representing an organic volume growth rate of 14.8%. Looking forward, we expect our U.S. sales initiatives to continue to be the major driver of our overall organic volume growth. Turning to slide 13, Our adjusted EBITDA for the quarter was $179.5 million, representing an increase of $30.8 million, or 20.7%, as compared to the fourth quarter of 2024. The major drivers of this improvement were our organic volume sales growth and lower discretionary compensation. These were partially offset by higher operating overheads associated with our new production capacity brought on line by our protein sandwich and bakery groups. In terms of cost inflation impacts, while the difference between the selling price increases our specialty food segment realized in the quarter and the impacts of commodity beef and wage cost inflation improved significantly as compared to the last quarter, specialty foods margins were still below targeted levels. This was due to a combination of price increases being phased in over the course of the quarter and some increases being delayed to the first quarter of 2026. Despite this challenge, as well as below average margins on our lobster product sales, we were still able to prove our adjusted EBITDA margin for the quarter by 40 basis points resulting in a 9.5% EBITDA margin for the quarter. Slide 14 shows in U.S. dollars an index comprised of some of the main beef commodities used by our specialty food segments businesses. You can see that the cost in the third and fourth quarters of 2025, which are represented by the green line, were at all-time record highs. Slide 15 provides a breakdown of our startup and restructuring costs by initiative, by quarter for the last six quarters. In the fourth quarter of 2025, costs for our Shaw Bakers and our major new product launch initiatives ended up being higher than planned due to a range of challenges, which resulted in an increase in total startup and restructuring costs as compared to the previous quarter. The good news is that all but one of our major projects are now finished or will be shortly, with the remaining project expected to be completed in the second quarter of 2026. As George mentioned earlier, 2025 was a very key year in commissioning new capacity and launching new sales initiatives that will accelerate growth in our top and bottom lines for the next couple of years. Turning to slide 16, our adjusted earnings and earnings per share for the quarter were $57.6 million and $1.29 per share, respectively, with these metrics increasing by 24.4% and 22.9% respectively as compared to the fourth quarter of 2024. The improvement in our profitability is due primarily to the growth in our adjusted EBITDA and to a much lesser extent, lower interest rates. These factors were partially offset by higher depreciation, lease, and interest costs associated with the major investments we have been making in new production capacity. Slide 17 shows our annual sales for the last eight years, which have grown at a compounded annual growth rate of almost 14%. as well as our 2026 sales guidance of $9.25 billion to $9.55 billion. Note that our 2026 guidance reflects the sale of Shaw Bakers. As George mentioned earlier, our 2025 sales as compared to 2024 increased by $1 billion or 15.7% to $7.48 billion. This was at the top end of our 2025 guidance range of $7.4 billion to $7.5 billion. Slide 18 shows our annual adjusted EBITDA for the last eight years, which has grown at a compounded annual growth rate of over 13%, as well as our 2026 adjusted EBITDA guidance of $870 million to $910 million. Our 2025 adjusted EBITDA as compared to 2024 increased by $79 million or 13.2% to $672 million. This was within our 2025 guidance range of $670 million to $680 million. Slide 19 shows our annual adjusted earnings. and EPS for the last eight years, which have grown at compounded annual growth rates of 8.2% and 3.4% respectively. These lower growth rates relative to our sales and adjusted EBITDA growth rates are due to the CapEx-related investment costs I mentioned earlier that have resulted in higher depreciation, lease, and interest costs. Our 2025 annual adjusted earnings and EPS as compared to 2024 increased by 15.8% and 14.8% respectively. Looking forward, we expect the improvement in these metrics to accelerate significantly as we leverage our investment and production capacity to grow our business. Turning to slide 20, we spent $54.4 million in capital expenditures in the quarter. consisting of $21.3 million on major project CapEx, $15.4 million on smaller project CapEx, and $17.7 million on maintenance CapEx. We define project CapEx as investments that are expected to generate an unlevered after-tax internal rate of return of 15% or greater. All other capital expenditures are classified as maintenance CapEx. Primarily, all of our major project CapEx in the quarter were on investments to increase the production capacities and, in many cases, operating efficiencies of our protein sandwich and bakery groups. For the year, we spent $159.5 million on project CapEx and $59.5 million on maintenance CapEx. Slide 21 shows our project CapEx for each of the last 12 quarters. You can see the significant downturn in expenditures in recent quarters as we near the end of our most recent major CapEx investment cycle. Looking forward, we expect to spend over the next three quarters another $67 million on major projects, CapEx, after which we will have invested in approximately $2 billion of incremental sales capacity relative to our 2024 sales of $6.5 billion. Slide 22 shows some of the key metrics we used to assess our financial position. Our senior debt EBITDA leverage level improved by 0.2 terms as compared to last quarter due to a $172.5 million convertible debenture issuance that we completed in anticipation of the Stampede acquisition. Our total debt EBITDA leverage was flat as compared to last quarter as an approximate 0.2 turns improvement resulting from growth in our adjusted EBITDA was offset by the impact of higher inventory levels associated with finished inventory builds to support our 2026 meat stick, cooked protein, and kebab sales initiatives. While our gap ratio levels remain above our mid-term targets, they are well within our shorter-term operating parameters. Looking forward, in the coming quarters, we expect to make significant progress towards our goal of total debt leverage of 3 to 1 or better, driven by a variety of factors, including growth in our adjusted DP dot and the sale of Shaw Bakers. The next and final slide shows a variety of our free cash flow and dividend metrics over the last eight years. For the quarter, we generated a record $82.9 million in free cash flow, of $18.6 million or 28.9% as compared to the fourth quarter of 2024. Similarly, our free cash flow per share for the quarter increased to our record $1.86 per share, representing a 28.3% increase as compared to the fourth quarter of 2024. These increases reflect the early stages of us generating returns on the investments we've been making in new production capacity. In terms of dividends, subsequent to the quarter, we declared a dividend of $0.85 per share for the first quarter of 2026. That concludes our presentation. Please join us on our Q&A conference call later today at 10.30 a.m. Vancouver time, 1.30 p.m. Toronto time. Thank you.