Lassonde (0OO) Q3 2026 Earnings Report

The call presented a mixed picture. Lassonde delivered gross profit and adjusted EPS growth, maintained strong positions in several branded and premium categories, secured most of the 2027 replacement volume and continued progressing its major New Jersey facility investment. However, these positives were offset by a 2.3% sales decline excluding foreign exchange, lower adjusted EBITDA, substantially lower operating cash flow, soft industry and private label volumes, production disruptions, higher conversion and freight costs, and an outlook for continued demand pressure and slightly lower fiscal 2026 sales. Overall, the positive operational and strategic developments were balanced by significant near-term execution and market challenges.

Management reiterated that fiscal 2026 sales will be slightly below last year's level, excluding the impact of foreign exchange, while 2027 sales will reflect contractual changes with one important specialty food customer; approximately 70% replacement volume for 2027 has been secured, but uncertainty remains about the ability to replace that volume at historical business terms. Higher crude oil prices are expected to continue putting pressure on transportation and PET resin costs, partially offset by favorable commodity costs. Conversion costs in the U.S. beverage network will remain higher for the balance of 2026 and early '27, with temporary disruptions possible until the New Jersey transfer is complete; usual start-up costs are expected, and these items will be excluded from adjusted EBITDA and adjusted EPS, while the North Carolina situation is expected to be resolved by year-end. CapEx is still projected to reach up 7% of sales in 2026, including approximately USD 87 million for the New Jersey project, and 2027 CapEx should be above historical range, but below 2026 as a percentage of sales; the leverage ratio is expected to remain well below the internal maximum threshold of 3.25:1.