Core Viewpoint - The rising cost of beef has prompted Premium Brands Holdings to lower its annual adjusted EBITDA forecast, although the company still anticipates an increase in adjusted EBITDA for the year [1][2]. Financial Performance - Premium Brands now projects adjusted EBITDA for 2025 to be between C$670-680 million ($478.1-485.2 million), down from the previous estimate of C$680-700 million [2]. - In 2024, the group's adjusted EBITDA was C$593.7 million [2]. - The company reported record third-quarter adjusted EBITDA of C$179.1 million, a 12.4% increase compared to the third quarter of 2024 [3]. - Third-quarter revenue reached C$1.99 billion, reflecting a year-on-year increase of 19.1%, with organic volume growth of 10.1% [3]. - Despite record adjusted EBITDA, the company's margins were below expectations due to double-digit cost inflation in key beef raw materials [3]. Strategic Outlook - The company believes the current challenges with beef prices are transitory and is implementing targeted pricing actions and new procurement initiatives to restore margins [4]. - Premium Brands aims to achieve a mid-term targeted annual adjusted EBITDA margin of 10% [4]. - The acquisitions pipeline is described as robust, with several transactions expected to close in the next quarter or two [4]. Acquisitions and Financial Strategy - The company is committed to deleveraging its balance sheet throughout 2025 and fiscal 2026, with any acquisitions being conducted within this framework [5]. - Recent acquisitions include Denmark Sausage for US$21 million and three other companies announced in December [5]. Recent Losses - Premium Brands reported a third-quarter loss of C$1.7 million, compared to a profit of C$25.4 million in the same period the previous year [6]. - For the first nine months of the year, net earnings were C$28.8 million, down from C$84.2 million in the first nine months of 2024 [6].

Financial Data and Key Metrics Changes - The company reported enterprise revenues excluding fuel surcharge of $1.3 billion, a 10% increase year over year [22] - Adjusted income from operations was $57 million, reflecting a 9% year-over-year increase [22] - Adjusted diluted earnings per share for the second quarter was 21 cents [23] Business Line Data and Key Metrics Changes - Truckload revenue, excluding fuel surcharge, was $622 million, up 15% year over year, driven by acquisitions and higher revenue per truck per week [24] - Intermodal revenues, excluding fuel surcharge, were $265 million, a 5% increase year over year, attributed to volume growth [25] - Logistics revenue, excluding fuel surcharge, totaled $340 million, up 7% from the previous year, driven by the Cowen acquisition [26] Market Data and Key Metrics Changes - The company experienced a 30% year-over-year volume growth in Mexico, which was a key driver for second quarter growth [18] - The dedicated segment now represents about 70% of the truckload fleet, indicating a strategic shift towards dedicated capacity [13] Company Strategy and Development Direction - The company is focused on restoring margins and maximizing through-cycle returns while leaning into areas of differentiation for growth [7][15] - The long-term strategy includes shifting towards dedicated and variable cost capacity to improve earnings resilience [15] - Recent acquisitions, including Cowen Systems, are expected to contribute positively to income from operations [20] Management's Comments on Operating Environment and Future Outlook - The management anticipates economic uncertainty to persist, but expects the freight environment to continue moving towards recovery [21] - There is a belief that strong execution on structural improvements will drive earnings higher in 2025 [22] - The company is monitoring trade policy and broader economic uncertainty as part of its guidance considerations [29] Other Important Information - The company is targeting over $40 million in cost reductions, with synergies from Cowen Systems expected to fully materialize by 2026 [12] - The net debt leverage improved to 0.6 times at the end of the quarter, down from 0.8 times [29] Q&A Session Summary Question: Long-term truckload target of 12% to 16% - Management indicated that the dedicated business is performing resiliently, while the network business requires price recovery to reach long-term targets [38][40] Question: Peak season development and guidance - Management noted a wide range of behaviors among customers regarding peak season, with intermodal peak surcharges already in place [44][45] Question: Competitive environment in segments - Management acknowledged that mid-sized competitors are exiting the market, which could lead to a meaningful amount of capacity leaving the truckload space [66][70] Question: Impact of gain on sale in truckload - The company expects a modest impact from gains on the sale of equipment, with improvements anticipated in the second half of the year [95][96] Question: Intermodal growth and rail consolidation - Management emphasized the importance of strategic partnerships and differentiation in intermodal services, particularly in light of potential rail consolidation [100][102]