This article first appeared on GuruFocus .
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Lassonde Industries Inc ( LSDAF ) delivered strong gross profit growth of 16% in Q2 2026, driven by effective revenue management, improved product mix, and moderating input costs.
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The company's U.S. beverage business outperformed the category, growing volumes and gaining market share despite overall category volume declines.
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Adjusted EBITDA increased 19% to $101 million, with adjusted profit per share up 36% year-over-year, reflecting strong operational execution.
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The company has already secured replacement volume representing more than 50% of the expected 2027 shortfall from a customer contract change, with advanced negotiations for an additional 25%.
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Lassonde Industries Inc ( LSDAF ) announced a normal course issuer bid to repurchase up to 200,000 shares, reflecting confidence in long-term prospects and a strong balance sheet with a low leverage ratio of 1.22:1.
Negative Points
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Lassonde Industries Inc ( LSDAF ) revised its 2026 sales outlook to be slightly below last year's level due to macroeconomic uncertainty and softer consumer demand.
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The company recorded $30 million in impairment charges, including $27 million related to a customer relationship intangible asset in its U.S. Specialty food operations due to contractual changes.
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Industry volumes remain under pressure, with category volume declines in both Canada and the United States, particularly affecting private label demand.
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The company faces inflationary pressures on transportation costs and PET resin costs due to geopolitical developments in the Middle East, which could impact margins.
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Canadian private label volumes were softer due to changes in a major customer's go-to-market strategy and targeted portfolio optimization actions, including product line discontinuations.
Q & A Highlights
Q: Can you provide a bridge to quantify the main buckets that explain the strong gross margin expansion of 440 basis points year-over-year? A: Francis Trudeau, CFO: The main story of the quarter is commodity costs, which is the largest component of the increase. The second component is price, though it had less of an impact versus previous quarters. The third main component is mix, driven by our innovation efforts and working with clients on better product mix. All divisions contributed positively to the year-over-year improvement.
Q: You've moved your sales outlook to slightly below 2025 levels, but first-half adjusted EBITDA is up 16%. Do you see the top-line erosion offsetting all that growth, or are there savings buckets to manage growth in the back half? A: Francis Trudeau, CFO: It's difficult to quantify the impact right now due to the volatile external environment, including commodity costs and the upcoming USMCA negotiations. We are on the good side of commodity costs currently, but changes in the latter half of the year are difficult to quantify. We remain happy with our margin levels compared to the market.
Q: Can you provide more color on the $30 million impairment charge related to a customer relationship in U.S. Specialty Foods? Is this a market trend that could reoccur? A: Francis Trudeau, CFO: This is definitely not a market trend. When we acquired Summer Garden, we had significant concentration with one client. Additional capacity was added in the market, and the client decided to diversify risk while continuing our relationship. We signed a three-year agreement, but volume decreased significantly, leading to the impairment. This provides an opportunity to diversify, and we've already backfilled 50% of the volume, working on the rest.
Q: What is the bridge between your prior sales guidance and the new expectation of slightly below 2025 levels? What are the biggest drivers? A: Francis Trudeau, CFO: There are three main buckets. First, our intentional discontinuation of lower-margin product lines (baby food, frozen, glass) accounts for about a third of the delta. Second, specific market elements with a major customer changing their go-to-market strategy, combined with last year's Buy Canadian benefit from a supplier's supply chain issues. Third, category softness and the year-over-year normalization of Buy Canadian sentiment.
Q: You announced a normal course issuer bid, the first in four years. What has changed to make you go forward with the buyback, and should it be a regular part of returning capital? A: Francis Trudeau, CFO: The last few years have been very CapEx intensive, including the Summer Garden acquisition and the New Jersey project. Now is good timing as CapEx levels are finalizing. Our leverage is very low and conservative, allowing us to do this buyback without compromising our ability to pursue M&A or other projects. It reflects our confidence in long-term prospects and belief that shares are undervalued.
Q: Can you comment on the evolution of demand and volumes through Q2 and into July? Any month-over-month trends to highlight? A: Vince Timpano, CEO: The category is still price-led in both Canada and the U.S. In the U.S., dollars were up about 2.5% while category volume was down about 4.5% to 4.7%. In Canada, the category was down about 3.5%. The dynamics haven't changed much quarter-over-quarter. Consumers are concerned about affordability, with units per trip down. High-end consumers are still buying at premium levels, while lower-income consumers are buying fewer units per trip. We expect these trends to continue through the year.
Q: Regarding the contractual change in Specialty Foods, is the 50% volume replacement secured with one or more customers, and how confident are you in getting 100% replacement? A: Francis Trudeau, CFO: The replacement volume is through multiple customers. We are very confident in filling the shortfall quickly, having already backfilled rapidly in just a few months. The timing for the volume impact is in Q3 and Q4 of fiscal 2026, and we are confident it will not have a material impact.
Q: What is the proportion of your orange juice concentrate needs that are hedged for 2026, and to what extent can you benefit from continued price declines? A: Francis Trudeau, CFO: We have taken an aggressive position on hedging given what we've seen in recent months. We are well protected right now, with most of our hedging positions ending toward the end of this year.
Q: Is the current gross margin level sustainable, or are there pressures that may bring it down sequentially in Q3 and Q4? A: Francis Trudeau, CFO: We always focus on profit dollars, not profit margin. Current margins are on the high side versus recent quarters. We still see pockets of improvement in our network, but the environment is very volatile with pressure on freight, transportation, and input costs. Sustainability is difficult to answer given the volatility. Vince Timpano, CEO, added that transportation costs and PET resin are impacted by the Middle East situation, which counterbalances the benefits from lower orange concentrate costs.
Q: How do the margins on the backfill volumes compare with the lost customer business in Specialty Foods? A: Francis Trudeau, CFO: We don't discuss margins by client. We are backfilling volumes, and the impact will depend on productivity, mix, and the type of business. We are not providing details on that at this time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
