Lassonde expects sales growth slightly above 10% for 2025 amid volatile commodity costs

Earnings Call Insights: Lassonde Industries Inc. (LAS.A:CA) Q3 2025

MANAGEMENT VIEW

* Vincent Timpano, Chief Executive Officer, stated that "Lassonde delivered another solid performance in the third quarter," highlighting an 8.3% sales increase to $724 million and a nearly 23% rise in operating profit. Timpano attributed these results to "strong execution on pricing as well as a better sales mix within our private label offering." He noted that every business unit experienced sales growth, though sales growth was less than in previous periods due to lapping the Summer Garden acquisition and commissioning of the North Carolina single-serve line partway through the quarter.
* Timpano reported that Lassonde maintained market position in U.S. Beverage activities, observing that "volume for U.S. brands remained relatively steady and our private label volume contracted slightly" while competitor brands outperformed 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."
* Timpano shared that the company completed the installation of production assets relocated from a U.S. co-packer to the North Carolina facility, representing Lassonde’s "first ever in-house juice box production in the United States, which should improve reliability and reduce cost in servicing U.S. customers."
* Timpano also announced the groundbreaking for a new facility in New Jersey, indicating the project "remains on schedule and on budget with a phased transfer of the existing production activities... beginning in late 2026 and to be completed in 2027."
* In Canadian beverage activities, Timpano said Lassonde "continued to gain market share, outpacing the category with overall market contraction remaining consistent with prior quarters in the mid-single-digit range," driven by promotional support, new distribution gains, and a favorable shift in private label sales mix.
* For Food Service, Timpano cited "double-digit sales increase over last year" and progress with the bag-in-a-box aseptic packaging line, describing Food Service as a "significant growth opportunity."
* Regarding Specialty Food, Timpano reported that Summer Garden contributed $48.1 million in sales for the full quarter and reached a 16% EBITDA margin, with the segment’s EBITDA margin for the first nine months of 2025 approaching 21%.
* Eric Gemme, CFO & Senior VP, stated, "Gross profit reached $198 million or 27.3% of sales, up 10% versus $180 million a year ago or 26.9% of sales."
* Gemme noted, "Adjusted profit 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."

OUTLOOK

* Timpano reiterated expectations of "a sales increase slightly above 10%, excluding currency fluctuations," for 2025, supported by a full year contribution from Summer Garden, increased volume, targeted promotional spending, and the buy Canadian sentiment.
* The company expects continued focus on private label volume build-back in the U.S., new facility construction, innovation in Canada to reduce commodity exposure, and expansion in Food Service and Specialty Food.
* Timpano stated, "The cost of orange juice and concentrates as well as apple and pineapple concentrates are expected to remain volatile through the fourth quarter as are other inputs affected by tariffs."

FINANCIAL RESULTS

* Sales for the third quarter amounted to $724 million, up 8.3% versus last year.
* Gross profit was $198 million or 27.3% of sales. Excluding Summer Garden, gross profit dollars increased 4% year-over-year for a margin of 26.8%.
* SG&A expenses were $140 million, up from $133 million last year.
* Adjusted EBITDA increased 25% to $86 million or 11.9% of sales from $69 million or 10.4% of sales last year.
* Operating activities generated $118 million in Q3, up from $87 million last year.
* CapEx totaled $35 million in Q3 and $142 million year-to-date.
* Net debt totaled $550 million, down from $618 million three months earlier, with a net debt to adjusted EBITDA ratio of 1.7:1 at the end of Q3 2025.

Q&A

* Luke Hannan, Canaccord Genuity: Asked about the impact of pineapple shortages, the materiality of pineapple relative to cost of sales, and the company’s hedging strategy for commodities. Eric Gemme responded, clarifying that pineapple, while not as material as apple or orange, "affects volume, not dramatically like an orange or an apple could do, but the mix, the quality of the mix of our product is affected, and it was really a question of price of the commodity and availability."
* Hannan also inquired about hedging at lower spot prices. Gemme answered, "we will remain within our hedging policies and procedure... we have our view in terms of where the market is and where it could go."
* Hannan questioned the sales mix shift in private label in Canada. Gemme explained, "we had an elevated level of chilled sales in Canada."
* Hannan asked about price gap normalization between private label and branded products. Timpano said, "we are starting to see gaps restore back to normalized levels in the United States."
* Martin Landry, Stifel: Queried about U.S. price increases and tariffs. Timpano confirmed, "there are commodity increases that are built into the price increases. But in addition... there's also a tariff component there as well."
* Landry asked about organic growth expectations for Q4. Gemme referred to the full-year outlook, noting that achieving 10% growth would likely reflect a "decline versus last year."
* Etienne Larochelle, Desjardins: Asked about the Buy Canada movement and progress on North Carolina plant production. Timpano and Gemme confirmed the positive sentiment remains and that relocated lines are now producing as anticipated.

SENTIMENT ANALYSIS

* Analysts’ tone focused on clarifying commodity cost impacts, hedging strategy, price gap normalization, and organic growth pacing; overall, their sentiment was neutral, with questions aiming to address drivers behind margin and growth sustainability.
* Management’s tone during prepared remarks was confident, repeatedly referencing "solid performance," "well positioned," and "excited about the long-term growth potential." In Q&A, responses remained composed and explanatory, with occasional clarifications such as "to be clear," especially around hedging and commodity cost impacts.
* Compared to the previous quarter, management maintained a steady level of confidence in both prepared remarks and Q&A, while analysts continued a neutral, fact-finding approach.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language remained consistent, reiterating a sales increase slightly above 10% for the full year, with similar strategic priorities in both quarters.
* Management maintained a focus on private label volume recovery, margin protection, and facility investments; the previous quarter emphasized the initial ramp-up and permitting for new facilities, while the current quarter highlighted the completion of some relocation and groundbreaking in New Jersey.
* Key metric changes include a higher adjusted EPS and improved net debt, while CapEx and net debt to adjusted EBITDA ratio both improved this quarter.
* Analysts’ focus remained on growth sustainability, commodity volatility, and margin impact, with similar tone and confidence as the previous quarter.

RISKS AND CONCERNS

* Management cited persistent volatility in the cost of orange, apple, and pineapple concentrates, as well as uncertainty around tariffs and trade.
* Pineapple concentrate shortages were identified as a challenge, resulting in lost sales opportunities and potential continued supply constraints.
* Management’s mitigation strategies include ongoing hedging, innovation to reduce commodity exposure, pricing adjustments, and strategic inventory management.
* Analysts raised concerns about commodity shortages, hedging policy flexibility, and the sustainability of promotional and pricing strategies.

FINAL TAKEAWAY

Lassonde Industries emphasized its resilience in a challenging environment, achieving record adjusted EPS and significant profit growth in Q3 2025. With expectations for sales growth slightly above 10% for the year, the company remains focused on capacity investments, margin protection, and innovation across its beverage and specialty food businesses, while monitoring volatile commodity markets and executing on strategic initiatives to support long-term growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/las.a:ca/earnings/transcripts]

MORE ON LASSONDE INDUSTRIES

* Lassonde Industries Inc. (LAS.A:CA) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4840652-lassonde-industries-inc-las-a-ca-q3-2025-earnings-call-transcript]
* Seeking Alpha’s Quant Rating on Lassonde Industries [https://seekingalpha.com/symbol/LAS.A:CA/ratings/quant-ratings]
* Historical earnings data for Lassonde Industries [https://seekingalpha.com/symbol/LAS.A:CA/earnings]
* Dividend scorecard for Lassonde Industries [https://seekingalpha.com/symbol/LAS.A:CA/dividends/scorecard]
* Financial information for Lassonde Industries [https://seekingalpha.com/symbol/LAS.A:CA/income-statement]