Premium Brands (TSE:PBH) maintained its outlook and expressed confidence in its 2027 growth targets, even as weaker foodservice demand and a delayed procurement initiative at its Stampede business contributed to a third-quarter shortfall against internal plans.
During the company’s third-quarter 2026 earnings call, CFO Will Kalutycz said Stampede’s sales were about CAD 20 million below plan and its EBITDA missed plan by roughly CAD 12 million. He attributed the gap to softer sales to some foodservice customers, a customer promotion that moved into the fourth quarter and a procurement initiative now expected to launch in January 2027.
Despite the shortfall, Stampede’s sales rose nearly 15% from a year earlier, with about half of that increase coming from organic growth, Kalutycz said. Its EBITDA also increased year over year, and he expects that growth to continue in the fourth quarter.
Growth initiatives underpin 2027 targets
Kalutycz said the company sees a path to its 2027 targets of CAD 10 billion in sales and CAD 1 billion in EBITDA, largely through new business in its Specialty Foods group. Premium Brands has confirmed approximately CAD 170 million of business launching through the fourth quarter and into 2027, he said.
That amount is part of more than CAD 900 million in sales initiatives the company is actively pursuing with customers. Kalutycz said the projects carry contribution margins ranging from at least 20% to as high as 40%, with the overall range in the high 20s to low 30s.
Asked about approximately CAD 800 million to CAD 900 million in potential sales initiatives for next year, Kalutycz estimated that 30% to 40% would come from the run rate of existing initiatives, with the remainder from new programs. He cautioned that there are no guarantees, though he said many discussions are well advanced.
CEO and President George Paleologou said six major initiatives launched around the end of the third quarter had little impact on that period because they began late. Their success remains uncertain, he said.
Kalutycz also said the expiration of a major limited-time offer had weighed on growth throughout 2026. The promotion, which began in late 2024 and ran through 2025, represented a CAD 100 million product for the company, he said.
Foodservice softness offsets retail strength
Paleologou said Premium Brands’ Canadian business was flat in the third quarter, with weakness in foodservice offset by strength in retail and club channels. He noted lower foot traffic and reduced average spending at some restaurant banners.
In response to an analyst’s question, Kalutycz said Stampede’s approximately 7% EBITDA margin in the quarter was the reason the company did not show the margin leverage expected from its organic growth. Excluding Stampede, he said, margins showed incremental improvement.
Management expects some benefit in the fourth quarter from declining protein costs. Kalutycz said the company did not meaningfully benefit from market deflation in the third quarter because of inventory positions and transfer timing. Beef and chicken are expected to be the main sources of relief in the fourth quarter, he said.
Premium private-label products are another growth area. Paleologou said the business has been growing in the mid-teens overall for Premium Brands, which is in discussions with large retailers about additional products. Kalutycz said contribution margins on premium private label are generally in line with the company’s other businesses, despite lower gross margins, because selling and marketing costs are also lower.
Asset sales and debt reduction
Premium Brands has realized approximately CAD 250 million toward its CAD 1 billion asset monetization objective, Paleologou said. The amount came from selling a pair of bakery investments ahead of plan, at mid-teen multiples and for more than the company had budgeted. Premium Brands is also evaluating options for its distribution business.
Paleologou said the company is comfortable with reaching, and potentially exceeding, the CAD 1 billion objective based on its current pipeline. He added that monetizations could affect the CAD 10 billion revenue target depending on their timing.
Management identified debt reduction and share buybacks as its main capital-allocation priorities. Kalutycz said Premium Brands expects to reach its leverage target of three times or better in 2027, potentially by the middle of the year or the third quarter. Paleologou said the company is in acquisition discussions across its platforms but is not prioritizing deals over buying back its own stock.
At Stampede, the delayed procurement initiative could generate CAD 25 million to CAD 30 million in annual savings, Kalutycz said. Premium Brands would share some of those savings with customers and suppliers. The initiative is expected to provide an immediate benefit once operational, with no ramp-up period, he said.
About Premium Brands (TSE:PBH)
Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations across Canada and the United States.
