Hey, everyone, and thank you for joining us for this Premium Brands Holdings Corporation third quarter 2026 Q&A session. My name is Jim, and I will be your moderator on behalf of Premium Brands. As a reminder, today's question- and- answer session will be conducted electronically. To signal for a question, please press star followed by the digit one on your telephone keypad. Joining us today on the call will be CEO and President George Paleologou, as well as CFO Will Kalutycz. Mr. Paleologou, you may begin, sir.
Thank you, Jim. Good afternoon and welcome everyone to our 2026 third quarter conference call. With me here today is our CFO, Will Kalutycz, and our Chief Investor Relations Officer, George Doumet. Hopefully, you have had a chance to listen to our prerecorded remarks posted on our website earlier this afternoon. We will now take your questions.
Thank you. We will take our first question today from the line of Luke Hannan at Canaccord.
Thanks. Good afternoon, guys. I apologize, you may have talked about this in the prepared remarks, but can we just unpack what exactly happened, I guess, during Q3? Was there another delay in the limited-time offers, and that is what led to the contraction in the organic volume growth rate in Specialty Foods in the U.S.? If so, can you just frame up for us the overall sensitivity, I guess, maybe, of the foodservice channel, or specifically the LTOs that you guys have in the foodservice channel? Because I think what everyone is trying to figure out from here is, maybe, is it still realistic to have the guidance in place that you do for 2027 in light of what seems to be a deteriorating macro?
Yeah. Hey, Luke, it's Will. A lot to unpack there. Starting with the U.S. initiatives and the growth rate there, that was roughly within plan. We knew there were going to be some headwinds from the promotions and a temporary lull in some of the customer initiatives in Q3. In the prepared remarks, George talks a little bit about some of the things that are turning. We've got about CAD 170 million now of expected confirmed business with customers that are launching through Q4 and into 2027. Any surprise in the numbers wasn't from the U.S. initiative. It was more focused around our Stampede business. Stampede has seen some softness in their foodservice sales, so they had about a CAD 20 million miss from plan in the quarter, and a chunk of that was the foodservice segment, some of their customers.
Some of their customers are doing really well. Some of them are struggling. They're working with the customers that are struggling to help address some of the consumer price point issues resulting from a challenging environment. Part of it was just a promotion with one of their bigger customers that was moved from Q3 to Q4. We'll pick that up in Q4. That was really the sales story for the quarter in our Specialty Foods group. On the EBITDA side, again, it was our Stampede business, and they missed plan. Before I get into that, I do want to make it clear, Stampede, on a year-over-year basis, had a spectacular quarter. Their sales were up almost 15% year-over-year, and half of that was organic growth. The business itself is doing well.
It's just not doing as well as we were planning on. On the EBITDA side, they missed plan by about CAD 12 million. These are all Canadian dollars. Most of that, two-thirds of that, is a special procurement initiative they're working on. They were close to it. It got delayed a little bit. That was about, like I say, two-thirds of our EBITDA miss of CAD 12 million from Stampede, or about roughly CAD 5 million, CAD 6 million, or CAD 5 million. That is something that we have now confirmed. Unfortunately, it's going to carry through to Q4, but it's confirmed to launch in January 2027, so we're very excited about that. There's going to be some great procurement savings around the initiative. The rest of the EBITDA was just the sales miss, the contribution margin from the sales miss.
That's really the story of the numbers in the quarter.
Okay, thanks. The second part of that question, though, is framing up for us the 2027 guidance. Specifically, I mean, it seems like the macro has taken a step back here, and naturally, you guys are seeing headwinds as it relates to your business. What can you unpack, I suppose, the building blocks of how it is that you get from where the business is today, we'll call it CAD 840 million of EBITDA this year, to the CAD 1 billion that you expect to get for 2027?
Yeah. Really, the story is around sales, Luke. The initiatives we're working on are all in our Specialty Foods group. They're all at contribution margins from minimal 20% to as high as 40% on some of our big growth initiatives, but sort of in that high 20s, low 30s overall. The story is the sales and getting the sales, getting to our CAD 10 billion target. We see a very clear path to that. As I mentioned earlier, we've confirmed about CAD 170 million in new business now launching. Including that CAD 170 million, there's a total of over CAD 900 million of sales initiatives we are actively working with customers and expect to launch a few more through into 2027. So that's really the core of the story. Yeah, a little bit of a lull in the third quarter.
Like I say, other than the Stampede side of things, really no surprises. In terms of the consumer environment and consumer weakness that you may read in some of the headlines, we're seeing that in our distribution business a bit. We're seeing it a bit in our foodservice exposure and Stampede a bit. But our core retail initiatives, we're dealing with all the customers that are winning in today's market, Costco, Trader Joe's, Aldi, and many, many great customers. The areas that are driving our growth are new distribution points, so new customers, new geographical areas, and that's why we continue to be bullish on 2027.
Okay, got it. Thanks. I'll pass the line.
Thanks, Luke.
Our next question will come from Derek Lessard at TD Cowen.
Hey, good afternoon, everybody, and congratulations, George, on the new role. Great to see the free cash flow momentum here. There was a nice working capital release, and aside from the inventories, which I guess everybody was expecting, there was a big increase in the payables, Will. Could you maybe just talk about where that increase is coming from?
Yeah, it's just timing of payments, Derek. Nothing in particular. Yeah, really, it's just timing.
Okay, fair enough. Just maybe one last one. It seems like the language around your CAD 1 billion in asset divestitures or monetization seems to have changed a little bit. Wondering if you could maybe just qualify what you guys mean by progressing ahead of plan.
Well, to this point, Derek, we've monetized about CAD 250 million worth of non-core assets and investments, basically by selling a couple of bakery investments ahead of plan, and actually, we realized more than we had budgeted. Both of them were sold in mid-teen multiples, which we're very happy with. Then, I think that we've commented about assessing or evaluating options for our distribution business as well. So we're in the process now of evaluating options there. So again, we feel very comfortable about getting to that CAD 1 billion and even exceeding it based on what we have in the pipeline right now.
Okay. Thanks, everybody.
Hey, Derek, before you go, I realized when you're looking at the AP amount and you see that absolute increase, it's mostly driven by Stampede. The acquisition of Stampede.
Got it. Thanks, Will.
Yep.
Our next question will come from Martin Landry at Stifel.
Hi, good afternoon, guys. My apologies, I haven't had a chance to listen to the opening remarks, but I want to understand a little bit your revenue and your EBITDA trajectory. Your revenues are up 22% year-over-year, but your EBITDA, you're not seeing. Your EBITDA margin is flat at 9% on a year-over-year basis. Can you help me understand a little bit, why aren't we seeing a little bit of leverage at the EBITDA line?
Yeah, it's quite simple, Martin. It's Stampede. Stampede's EBITDA margins in the quarter were around 7%. If you exclude Stampede from the calculation, you do see that incremental improvement you would expect with some of the organic growth in the quarter.
Okay, thank you. Echoing Luke's questions, it sounds like the consumer is a little bit frugal right now. Wondering what you are seeing. Historically, you had a lower exposure to the discount grocers in Canada. I believe that exposure has increased in recent years. Can you talk a little bit about what you are seeing from your clients and from the end consumer in terms of response to price increases and demand?
Yeah. So, Martin, I think we have mentioned that Canada was flat for us in the third quarter. We had some weakness in the foodservice channel, as Will talked earlier, and some strength in the retail and club channels. Again, we were flat in Canada. With the acquisition of Stampede, we have more foodservice exposure in the U.S., of course. Yeah, there is no question that foot traffic is down, and some of the average spend in certain banners is down as well. Again, clearly, there is some weakness there in the foodservice channel. As Will said earlier, with regards to retail and club, our numbers remain strong. I just want to remind you that really the themes that we have been investing in, premiumization and convenience, we are very strong in terms of having capacity to cater to different and protein, of course.
We are in a very good position to cater to large customers that are looking to launch premium private label products. It is a big growth area for us. We have been benefiting from having the right capacity to produce those type of products. So that generally describes the environment we are in today.
Okay, that is helpful. Maybe just a last question for me. How does your commodity costs align with your selling price right now for Q4? Is there a disconnect, or are they pretty much aligned?
Absolutely. In fact, one of the reasons we feel confident about Q4 and not changing our guidance in the quarter is we are starting to see some deflation across the protein complex. We really didn't benefit from that. It started in Q3, but we really didn't benefit from it because of inventory positions. We are now starting to see that benefit.
Okay. Thank you.
Thanks, Martin.
Our next question will come from Bahamin Abdolpanah at Ventum Financial.
Hi, George and Will, and congratulations, George, on the new position. Thanks for taking my question. I want to stay on the guidance. First, you maintain the guidance. Is it fair to assume that realistically you are aiming for the lower end of the guidance this year? Looking to the next year, we are looking for around CAD 800 million of extra revenue to get to our target. Can you break down in how much of that 800 would be stuff that were pushed from this year to next year, and how much would be new programs initially programmed for next year, and around the timing of that? What are the risks on those revenues?
Yeah. In terms of the run rate for sort of run rate sales initiatives going into 2027 versus new growth initiatives, I would break the CAD 800 million-CAD 900 million from next year, probably about 30/70, 30% run rate and 70% new initiatives. 30%-40%, in that range for the run rate initiatives.
On the risks of the new programs, how timing sensitive are those for the next year?
Again, there are no guarantees when it comes to these initiatives, but a lot of them we're well along, and that's what's giving us the confidence in getting them across the finish line.
When those programs are launched, are there like a ramp up in generating EBITDA or startup costs, or are they contributing from the beginning?
Well, it's a good question, Bahamin, because it depends on the nature of the launch. For instance, we launched at the end of this quarter, or we were developing through the quarter, and it launched towards the end of the quarter, about CAD 60 million in new sandwich initiatives. They were quite complex products, and that's what contributed partly to our startup cost increases in the quarter. But the reality is now most products don't have that level of complexity, and correspondingly, we would not normally expect any sort of material startup costs with them. A lot of the growth next year is based around cooked protein products, which we've worked through a lot of those issues now. Our core frozen sandwich programs, again, we've worked through a lot of those issues. Our sticks programs, we've worked through a lot of those.
The one area where we are planning some startup disruption costs for next year are our kettle programs. We've got a really full pipeline of kettle products, soups, and meal preparation products. We've got the new Hancock plant coming on stream this quarter, Q4. So there will be some associated with that, but we don't expect it to be outrageous or anything.
Thank you. Very helpful. One last one before I pass the line. With the monetization being ahead of the plan, does that monetization impact the target of CAD 10 billion in revenue? Is it material in that? Should we adjust for that or not really?
Yeah, I comment on that in the prepared comments. Again, depending on the timing, it may have an impact, yes.
Thank you very much. I'll pass the line.
Thank you. Thanks, Bahamin.
Our next question will come from Ty Collin at CIBC.
Hey, Ty.
Hey. Thanks for taking my questions, everyone. I just wanted to return to the outlook around organic volume growth and the comments of expecting that to reaccelerate to double digits next year. I think you are tracking closer to a mid-single-digit rate this year in Specialty Foods. I think the hope is that this year would have been a little stronger from that standpoint. I guess, what gives you the confidence that you can actually double that rate next year and avoid some of the unknown unknowns you experienced this year with delays and consumer headwinds and otherwise?
Yeah. One of the big things hitting our growth rate this year, and particularly in our Custom Culinary Solutions group, is just we had a major LTO in 2025 that was far more successful than anyone expected. It was actually at the end of 2024. It ended up going for the full year. We do not have other LTOs of that significance in our system. That ended last year. So that has been a headwind all year. That was a CAD 100 million SKU for us.
Really, you have got that going away, and at the same time, a lot of the stuff we have been working on as we have been ramping up the capacity over the last couple years, a lot of the stuff we have been working on has now moved from that sort of early stage bucket in the way we look at things to either highly likely or actually confirmed. It is all that together that gives us that confidence in 2027.
Okay, got it. Thanks. Just around capital allocation priorities, you talked about the CAD 1 billion of proceeds that you are hoping to realize from some of these asset monetizations. If you kind of had that CAD 1 billion in hand at this point, how would you kind of rank order your priorities, and how would you think about buybacks, M&A, and dividends specifically?
Ty, again, just want to make sure you understand, we have already realized CAD 250 million of that CAD 1 billion. We have already closed those monetizations, and we have realized the CAD 250 million, right? Just again, in terms of prioritization, obviously, we have stated that we would like to get our debt down. We think our debt will come down very quickly with the free cash flow that we are generating from operations. We are confident that that will happen in 2027 at some point, even if we do not sell anything else, or if we do not monetize any other assets, but we will, of course. Beyond that, as we stated in our prepared remarks, we are going to focus on buying back our stock. We think at these levels, it is a very good allocation of our capital. So those are mainly our two priorities.
Okay, thanks. All the best.
Thank you. Thanks, Ty.
Our next question will come from Michael Glen at Raymond James.
Hey. Just to start, I just want to circle in on the Q4 guidance. If I look at the implied ranges, it does seem to imply a bump up to, say, a 10%-10.5% EBITDA margin in Q4. I just want to make sure I fully understand all the elements that come into play in Q4 that lead to that increase.
Yeah. So it is again the consistent drivers of the margin improvement we have shown in the past, and that, Michael, is organic volume growth, which we really see from our U.S. initiatives, the third quarter being the trough. So that starts coming back in the fourth quarter. And the commodity discussion we had earlier.
Okay.
Around the, sorry, the protein commodities, to be more specific.
Okay. So then for 3Q, was protein commodities, they were quite a sizable drag in 3Q, protein?
No. In the third quarter, they were relatively stable. We didn't get the benefits of the deflation you've been seeing in the market, and that's largely just because of inventory positions, transfer time, those sorts of factors. We do start to see that and expect that in the fourth quarter. The surprise in the third quarter, which will continue into the quarter four, was the Stampede procurement initiative that got delayed until January 2027.
Okay. Then maybe just on the balance sheet, a few quarters ago, you used to provide a slide with the acquisition opportunities. Would you be able to provide some insight into the M&A pipeline right now? Would you characterize any discussions you're in right now as advanced or active at this point?
Yeah. As I mentioned earlier, we're not prioritizing acquisitions right now. We are in many discussions in all our platforms. Having said that, we find it very hard to justify buying, making acquisitions instead of buying back our stock. So our major focus beyond paying down the debt is to buy back the stock at this point in time.
Okay. Thanks for taking the question.
Thanks, Michael.
Our next question will come from John Zamparo at Scotiabank.
Hey, John.
Hey, John.
Hey, guys. The guide for this year, can you say what it assumes Stampede does in terms of EBITDA?
Yeah, we don't give specific guidance on Stampede's EBITDA.
Okay. Maybe just directionally, though, it assumes some growth. Is that fair to say?
Oh, yeah. No, no, absolutely.
Yeah.
Absolutely. In Q3, it was year-over-year growth in Stampede EBITDA as well, and we do expect that to continue in Q4. Again, part of their miss in the quarter was the sales element, which we will make some good progress there because part of that was a promotion that was moved from Q3 to Q4.
Right. Okay. Understood. Then, coming back to the pipeline of products, just for rest of this year, to get to the 2026 EBITDA guide, do you need any new initiatives to begin that are not yet in place for the last, call it, eight weeks of this year?
In large part, no. The only uncertainty, John, would be in terms of the specific timing and the significance of the initial launch. We have had in the past surprises where customers have decided to do it on a regional basis instead of all at once and things like that, and some of those factors are still being figured out.
We launched six major initiatives around the end of the third quarter. They did not have an impact, unfortunately, in the third quarter because they were launched late in the quarter. Again, some uncertainty obviously as to how successful they will be, but they have been launched.
Okay, that is helpful. One last one. The Custom Culinary Solutions category, the OVGR for that category, I think it was down in high single digits. Was that entirely the product of the sandwich LTO that you referred to, Will, or were there other contributing factors?
Yeah, the vast majority of it was promotion.
Yeah. Okay. Thank you very much. That is enough.
Okay. Thanks, John.
We'll take our next question from Chris Li at Desjardins.
Good afternoon, everyone.
Hey, Chris.
Hello. George, I was intrigued by your comment around the emergence of the premium private label business in the U.S., and obviously it is very on trend. Just wondering, how big is it right now for PBH, and how big do you think the opportunity could be longer term?
Yeah. It is a very, very significant opportunity, Chris. I think that historically in the U.S., private label was maybe around 10% of the market. Today, over the last five years, it has gone to about 20% of the market. If you sort of assume that it will follow European trends, in our view, it will get up to 40% of the market. So, it is a significant growth area, and it is one where we have had a lot of success. We have state-of-the-art facilities. We have always been focusing on premiumization. It is part of our DNA. We are in a very, very good position to provide customers with premium private label solutions. So, it is a fast-growing area of our business, and probably it has been growing for us in the mid-teens overall.
Okay, that is helpful. Would you say the contribution margins on that business, would that be comparable to your other U.S. businesses?
Yeah, it is, Chris. The reality is a lot of our growth in the U.S. has been with premium private label. So, yeah, it is interesting. The gross margins are lower, but you do not have the selling and marketing costs associated with it. So ultimately, the contribution margins are in line based on the platform you are running in. So obviously, sandwich is lower than protein, which is lower than bakery.
Part of our confidence, Chris, with regards to the 2027 guidance is that we're in many, many discussions, of course, with very, very large retailers about providing them with premium private label solutions. Those are very large pieces of business.
Got it. Okay. Yeah, that makes sense. I have one on Stampede. Would love to hear more about the new imported beef procurement initiatives. What exactly are you guys doing there, and how much could the benefits, I guess, be for EBITDA next year once they start to come on?
Hey, Chris. What we're doing is very unique and will give us a fantastic competitive advantage, so we can't give any details on it. The savings potentially CAD 25 million-CAD 30 million a year. It is a very large number, which we'll share with our customers and some with our suppliers as well. We won't benefit entirely from that, but there'll be a big benefit.
Okay, perfect. My last very quick question, I guess for Will, is as you think about the OVGR for Q4, I guess, especially for business, where do you think that will land? Is it back to sort of that mid-single-digit point?
Yeah, it is certainly going to be much better than this quarter, but it will not be as good as Q3. You are not going to be far off from that.
Okay, great. Thank you very much and all the best.
Thank you.
Thanks, Chris.
And a reminder to our phone audience, if you would like to ask a question or if you have a follow-up, it is star and one on your telephone keypad. We will hear next from the line of Ryland Conrad at RBC Capital Markets.
Yeah, thanks very much. Just following up on the procurement initiative, is that kind of CAD 25 million-CAD 30 million per year also including any benefits for your legacy protein platform?
No, this is quite unique to, at least initially, to Stampede, but it is a great point, Ryland. Once we get it up and running and it is working, yeah, our other businesses will explore it where the particular raw materials make sense.
Okay, great. Just on the deflation in beef that you have seen kind of into Q4, is that simply just being driven by the market opening up to more imports, or are you beginning to see any signs of kind of consumer demand disruption there?
Yeah, certainly the opening of the U.S. market has helped. That is definitely a factor, but there does seem to be some consumer demand impact in there as well. We see that with our foodservice customers that they are shifting to other proteins or ordering smaller quantities of proteins. So it is a sort of all of the above.
Okay, got it. Lastly for me, could you give us an update on whether leverage is still just tracking towards the 3x or better target? I think you previously said early to mid-2027, along with just any puts and takes that might impact that timeline.
Yeah, we still fully expect to hit that target next year. We have sort of pulled back and been a little more conservative, and we are just calling for 2027. But yeah, potentially mid to third quarter next year is definitely a realistic possibility.
Okay, awesome. Thanks, guys.
Thanks, Ryland.
We'll move next to Luke Hannan at Canaccord.
Thanks. I wanted to go back quickly on the topic of deflation in the commodity complex you're seeing, or specifically, I guess, proteins that you're seeing. I imagine most of that is attributable to pork because we've seen a decline in pork values, but it sounds like you're also talking about beef as well. Can you just say directionally which of those has been more meaningful of late?
Well, in Q3, beef was not at all helpful, or it was stable in Q3 for us just because of inventory position. Q4, it's really beef and chicken. Those are the key ones. Pork, we'll see some benefit there, but over time, pork has just become a smaller and smaller component of our raw materials.
Got it. Thanks. I wanted to go back to the CAD 1 billion of monetization target, and maybe it's a higher-level question. What was it that initially, what characteristics, what criteria, I guess, did you assess within the business that made you determine, hey, these particular segments might make sense for us to divest versus keep? Secondly, is it possible that the scope of that, the criteria as it relates to that, expands in the near term as well as you progress on those monetizations?
Yeah, again, as I said in my prepared remarks, Luke, we are taking a look at all of our investments and all of our platforms. You have to remember that we started in Canada and grew across Canada from west to east and built up our business on a west to east basis. Then we began expanding in the U.S., and the U.S. has been a very good market for us. We've grown a lot there. I think it's like 72% of our business in Specialty Foods today, even though it's a new market for us. We still think that we're in early stages in that market, and we see a lot of opportunities to grow.
It makes sense for us to take a look at our different businesses and different platforms, and to the extent that we have some platforms that are more mature, it might make sense for us to look for strategic alternatives for them and take that capital and invest that in a high-growth, high-return market, which we find the U.S. to be.
Got it. Thanks. I'll pass the line.
And we'll take a follow-up from the line of Derek Lessard at TD Cowen.
Yeah, just one follow-up for me. Just on the procurement initiative, you said it was delayed. I was just curious when you expect it to start contributing, one, and then two, when you expect it to ramp up fully.
It was expected to start in Q3, Derek, Q3 2026. This involved finding the right partners and making sure that they can execute the program. Unfortunately, it was delayed. That process was delayed. It will be operational in Q1 2027 now.
Okay. Thank you.
And sorry, just a follow-up comment, Derek . It is immediately beneficial. There is no ramp-up associated with it.
Ladies and gentlemen, this does conclude the Q&A for the Premium Brands Holdings Corporation third quarter 2026 earnings call. It is my pleasure to turn the floor back to you, Mr. Paleologou, for any additional or closing remarks that you have.
Thank you, Jim. I know it has been a long day for everybody. Thanks, everybody, for attending. All the best.
Ladies and gentlemen, this does conclude our session. We thank you all for your participation. You may now disconnect your lines.