Premium Brands (TSE:PBH) executives used the company’s fourth-quarter and year-end 2025 conference call to discuss their 2026 outlook, including the cadence of expected revenue and EBITDA growth, the impact of beef and lobster input costs, and how recent program launches and divestitures factor into cash flow and leverage goals.
2026 outlook: growth expected to ramp through the year
Management guided to 2026 revenue of roughly CAD 9.4 billion at the midpoint, which they said implies significant year-over-year growth. CFO Will Kalutycz told analysts the company expects a “ramp up across the year,” layered on top of typical seasonality. He described the first quarter as the softest quarter of the year, the fourth quarter as the next softest, and the second and third quarters as seasonally stronger—meaning year-over-year dollar growth should be higher in Q2 and Q3.
- Protein Group: By the end of Q1, management expects per-product margins to be back to normal levels as final price increases flow through.
- Lobster group (within Premium Food Distribution Group): Q1 is expected to remain tough as the company works through issues from 2025 and high-cost inventory, but management said it expects to be through that inventory by the end of Q1 and see margin normalization in Q2, then steadier results through the rest of the year.
Consumer and channel trends: “clean protein” vs. foodservice price sensitivity
CEO George Paleologou said he is seeing a shift away from “ultra-processed foods” and toward more wholesome foods with natural ingredients, adding that demand is shifting toward protein—particularly “clean protein,” an area where the company believes it is well positioned. He cited changes in U.S. program requirements (including school lunch, military food programs, and SNAP) as contributing to these broader category trends.
When asked about trade-down behavior, Paleologou said Premium Brands has seen changes in where consumers shop (for example, some movement from mainstream retail to club), but he said the company is not seeing meaningful changes in how consumers eat.
Kalutycz added that the company is seeing a more price-sensitive consumer in foodservice, where customers are seeking price-based solutions—something he said is typical in economically challenged periods. He also noted the company’s U.S. growth investments are primarily oriented around retail, limiting exposure to that foodservice sensitivity in the U.S.
Input costs, pricing, and margins: beef inflation expected; lobster a key Q4 headwind
On beef costs, Kalutycz said the company expects beef to be inflationary in 2026 due to strong demand and tight North American supply, and that this is embedded in guidance. He said volatility in the back half of 2025 was amplified by tariff-related developments involving Brazil, calling those “black swan” events that were not anticipated. Excluding such events, he said management is comfortable with its 2026 pricing strategies.
In response to questions about Q4 margin performance, Kalutycz said the largest single driver of consolidated gross margin pressure in the quarter was the lobster group. He quantified the impact by comparing selling price increases against lobster procurement inflation, which he said was a CAD 6.5 million negative in Q4.
He also noted that within specialty foods, Protein Group margins were still below where they should be because pricing increases tied to higher beef costs were still being realized. In addition, management cited CAD 10 million of incremental overhead associated with the Tennessee facility and other new capacity coming online, partially offset by strong organic volume growth, including 18% organic volume growth from U.S. growth initiatives in the quarter.
When asked how the company priced beef products, Kalutycz said Premium Brands generally did not price off the peak inflation levels seen mid-2025, instead positioning pricing between current levels and the prior peak to maintain flexibility as beef inflation is expected in 2026. Paleologou added that, despite historically high beef prices, beef demand in volume terms has continued to rise—something he said is atypical versus prior commodity cycles.
Program launches and restructuring costs
Management said a major meat stick launch that ramped in Q4 exceeded both its expectations and the customer’s expectations, but it also constrained capacity, at times preventing other pipeline programs from launching. Paleologou declined to discuss specific SKU margins for competitive reasons, while Kalutycz said the program operates on a cost-plus structure, supporting targeted margins.
Kalutycz said the scale and multi-plant nature of the launch contributed significantly to restructuring costs in the quarter, as the company prioritized strict quality standards during ramp-up and incurred elevated waste while addressing equipment issues. He said those restructuring costs related to the program are expected to “drop off dramatically” in Q1 as the ramp issues have been worked through.
Looking ahead, Kalutycz said 2026 restructuring costs should be “much lower” than in 2025. He attributed higher-than-planned 2025 restructuring costs to two major items: labor transition challenges at Shaw facilities (a CAD 5.7 million variance in the quarter) and waste tied to the stick launch. He said Shaw-related restructuring should largely cease after near-term carryover, and that the Tennessee project is complete, with the Piller’s project expected to extend into Q2.
Portfolio actions: Shaw Bakers sale, Stampede expectations, cash flow and leverage
Management addressed questions on the Shaw Bakers divestiture and related guidance adjustments. Kalutycz said the sale would not be reported as discontinued operations because the business is not material, and results will be reflected from the day the company sold it. He also said guidance excludes Shaw Bakers, noting CAD 170 million of sales were removed from the outlook. For 2026, he said the company had been budgeting about CAD 21 million of EBITDA before restructuring costs for Shaw, with roughly CAD 20 million expected in the last three quarters, and those amounts were pulled from guidance.
Paleologou clarified the company owned 74% of Shaw and that Premium Brands will fully exit its investment through the transaction; he said the CAD 114 million in proceeds relate to the company’s 74% stake.
On the Stampede acquisition, management reaffirmed its expectations. Paleologou said the business was expected to generate CAD 90 million of EBITDA in 2026, plus CAD 8 million of synergies, for total contribution of CAD 98 million, and said the company still “feel[s] very good about that.” While acknowledging Stampede’s foodservice exposure, he said customers have been seeking more product solutions and limited-time-offer (LTO) activity, which Stampede is positioned to support. He also noted Stampede has club and retail exposure that is growing.
On free cash flow, Kalutycz said working capital was impacted by a purposeful inventory build, including roughly CAD 70 million of inventory for three key protein programs (bites, sticks, and kebabs) to support summer demand. Excluding that build, he said days purchases in inventory were about 57, with a target closer to 55. He said the company expects free cash flow to improve starting in Q2 as inventory is liquidated.
Regarding leverage, management reiterated its target to reach a total debt-to-EBITDA ratio of three times or better by the end of 2026 or early 2027. Kalutycz said the primary drivers are expected EBITDA growth as capacity investments are leveraged and some debt paydown enabled by improved free cash flow. He added the Shaw transaction should reduce leverage by roughly 0.2 to 0.3 turns. Additional divestitures of non-core assets, if completed, could further accelerate deleveraging, and Paleologou said the company is in discussions about exiting non-core investments and businesses, with expectations to close more transactions in 2026, though timing is uncertain.
About Premium Brands (TSE:PBH)
Premium Brands Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. The company’s business segments include Specialty Foods, Premium Food Distribution, and Corporate. The Specialty Foods segment consists of its specialty food manufacturing businesses, which contributes about two-thirds of the group revenue; the Premium Food Distribution segment consists of the company’s distribution and wholesale businesses; the Corporate segment includes the company’s head office activities along with its finance and information systems.
-plc-logo-1200x675.JPG){kind=logo}
