Premium Brands (TSE:PBH) executives said the company finished fiscal 2025 with strong sales growth and improving fourth-quarter profitability despite what management described as significant commodity inflation headwinds, particularly record-high beef costs for most of the year and higher chicken costs in the first half.
On the company’s year-end conference call, CEO George Paleologou and CFO Will Kalutycz highlighted expanded production capacity across North America, continued momentum in U.S.-focused sales initiatives, and the integration of a major post-year-end acquisition. They also discussed a definitive agreement signed this week to sell a majority interest in Shaw Bakers as part of a non-core asset monetization strategy.
2025 performance and commodity inflation pressures
The CEO reiterated that the company manages the business for the long term and said leadership believes the inflationary pressures are transitory. He said pricing actions, combined with normalization in commodity markets, are expected to bring margins back toward historical levels.
Fourth-quarter results driven by organic volume growth
Kalutycz reported record fourth-quarter sales of CAD 1.9 billion, up CAD 258 million, or 15.7%, from the fourth quarter of 2024. He broke down the increase as follows:
- CAD 151 million from organic volume growth
- CAD 76 million from acquisitions
- CAD 39 million from selling price increases (primarily beef-based products)
- Partially offset by a CAD 8 million currency translation impact due to a stronger Canadian dollar year over year
According to the CFO, the main driver of organic volume growth was the continued success of the specialty food segment’s U.S. market-focused initiatives in premium protein, sandwich, and artisan bakery products. Those initiatives generated CAD 117 million of organic volume growth in the quarter, representing an organic volume growth rate of more than 18%. Additional organic growth came “primarily from the sale of processed lobster inventory built up over the course of 2025,” he said.
By group, Kalutycz said the company’s core U.S. growth initiatives delivered fourth-quarter organic volume growth rates of 20.1% in protein, 12.5% in sandwich, and 62.2% in bakery. For the full year, he said the U.S. initiatives generated CAD 370 million in organic volume growth, a 14.8% organic volume growth rate, and management expects these initiatives to remain the major driver of overall organic volume growth.
Adjusted EBITDA for the quarter was CAD 179.5 million, up CAD 30.8 million, or 20.7%, from the prior-year quarter. Kalutycz cited organic volume growth and sales growth as key drivers, along with lower discretionary compensation. Those positives were partially offset by higher operating overheads tied to new production capacity in the protein, sandwich, and bakery groups.
He added that specialty foods margins improved versus the prior quarter as the gap between selling price increases and beef and wage inflation narrowed, but margins “were still below targeted levels.” He attributed this to price increases being phased in over the quarter and some increases delayed into the first quarter of 2026. Even with those pressures and “below-average margins” on lobster sales, Premium Brands increased its adjusted EBITDA margin by 40 basis points to 9.5% in the fourth quarter.
Adjusted earnings and adjusted earnings per share for the quarter were CAD 57.6 million and CAD 1.29 per share, respectively, up 24.4% and 22.9% from the fourth quarter of 2024. Kalutycz said the improvement was primarily driven by higher adjusted EBITDA and, to a lesser extent, lower interest rates, partially offset by higher depreciation, lease, and interest costs associated with investments in new production capacity.
Stampede acquisition and U.S. footprint expansion
Paleologou said that after fiscal 2025, Premium Brands completed what he called the largest acquisition in its history, bringing Stampede Culinary Partners into the company. He said Stampede’s plant network and management team are expected to support growth in the value-added protein group, which he described as the company’s largest of six platforms.
He also pointed to Stampede’s sous vide cooking capabilities and said it helps position Premium Brands to offer “all cooking technologies” to retail, club, and foodservice customers across North America. Paleologou said demand for cooked protein is growing and “accelerating” as consumers and foodservice operators seek convenience and ease of execution without sacrificing key attributes.
Management said the onboarding of Stampede has “gone very well,” and the company expects to report on progress as Stampede leverages Premium Brands’ product solutions, resources, and services to expand offerings to new and existing customers, channels, and geographies.
On the geographic mix, the CEO said U.S. sales represented 68% of specialty food segment sales in the fourth quarter and 67% for the year. With Stampede included, the company expects that figure to move into the 70% to 80% range in 2026.
Shaw Bakers divestiture, 2026 guidance, and capital allocation
Paleologou said the company signed a definitive agreement this week to sell its 74% interest in Shaw Bakers. He said Premium Brands occasionally invests in startups or early-stage businesses and noted Shaw Bakers grew sales “from very little to $100 million,” positioning itself as a leading USDA premium laminated dough company in North America. The CEO said the sale aligns with the company’s non-core asset monetization strategy and that the buyer is a “well-established and very reputable bakery company.”
Kalutycz provided 2026 guidance of CAD 9.25 billion to CAD 9.55 billion in sales and CAD 870 million to CAD 910 million in adjusted EBITDA, noting the sales guidance reflects the sale of Shaw Bakers. He also said 2025 sales of CAD 7.48 billion came in at the top end of the company’s prior guidance range, while 2025 adjusted EBITDA of CAD 672 million was within its guidance range.
On capital spending, Premium Brands reported fourth-quarter capital expenditures of CAD 54.4 million, including CAD 21.3 million in major project CapEx, CAD 15.4 million in smaller project CapEx, and CAD 17.7 million in maintenance CapEx. For the year, it spent CAD 159.5 million on project CapEx and CAD 59.5 million on maintenance CapEx. Kalutycz said project CapEx is defined as investments expected to generate an unlevered after-tax internal rate of return of 15% or greater.
Kalutycz said project CapEx has declined in recent quarters as the company nears the end of its major investment cycle. He said management expects to spend another CAD 67 million on major projects over the next three quarters, after which Premium Brands will have invested in approximately CAD 2 billion of incremental sales capacity relative to 2024 sales of CAD 6.5 billion.
On leverage, Kalutycz said senior debt-to-EBITDA improved by 0.2 turns from the prior quarter due to a CAD 172.5 million convertible debenture issuance completed in anticipation of the Stampede acquisition. Total debt-to-EBITDA was flat quarter over quarter, as improved adjusted EBITDA was offset by higher inventory levels tied to finished goods builds for 2026 initiatives in meat sticks, cooked protein, and kebabs. While leverage remains above midterm targets, he said it is within shorter-term operating parameters and that the company expects progress toward a goal of total debt leverage of three-to-one or better, supported by adjusted EBITDA growth and the Shaw Bakers sale.
Premium Brands generated record free cash flow of CAD 82.9 million in the quarter, up CAD 18.6 million, or 28.9%, from the fourth quarter of 2024. Free cash flow per share rose to a record CAD 1.86, up 28.3%. Following the quarter, the company declared a dividend of CAD 0.85 per share for the first quarter of 2026.
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.
