Q4 2024 Lassonde Industries Inc Earnings Call
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Lassonde Industries 2024 fourth quarter and year-end earnings conference call. The corporation's press release reporting its financial results was published yesterday after market closed. It can be found on its website at Lassonde.com, along with the MD&A and financial statements. These documents are available on CDAR Plus as well. A presentation supporting this conference call was also posted on the website. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions.
Good morning, ladies and gentlemen, thank you for standing by.
Peloton industries 2020 for fourth quarter and year end earnings conference call.
The Corporation's press release reporting its financial about what's published yesterday after market close.
It can be found on its website at <unk> dot com, along with the MD&A and financial statements.
These documents are available on SEDAR as well.
A presentation supporting this conference call was also posted on the website.
At this time all participants are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
Instructions will be provided at that time for you to queue up for questions.
Operator: If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time.
If anyone has any difficulties hearing the conference. Please press star followed by zero for operator assistance at any time.
Operator: Before turning to management's pre-recorded remarks, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. please refer to the Forward Looking Statements section of the MD&A for further information.
Before turning to management prerecorded remarks, please be advised that this conference call will contain statements that are forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
Please refer to the forward looking statements section of the MD&A for further information.
Operator: I would like to remind everyone that this conference call is being recorded on Friday, March 28, 2025.
I would like to remind everyone that this conference call is being recorded on Friday March 28 2025.
Vince Campano: I will now turn the conference over to Vince Campano, Chief Executive Officer. Good morning, ladies and gentlemen. I'm here with Eric Jem, Chief Financial Officer of Lassonde Industries. Thank you for joining us for this discussion of the financial and operating results for our fourth quarter and fiscal year ended December 31st, 2024. Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated. Now let's turn to slide four. Lassonde delivered solid performance in 2024, generating record financial results with sales of over $2.6 billion and adjusted EBITDA of $276 million.
Speaker Change: I will now turn the conference over to Vince can panel Chief Executive Officer.
Speaker Change: Good morning, ladies and gentlemen.
Eric Chang: Here with Eric Chang Chief Financial Officer of let's find industries. Thanks.
Speaker Change: Thank you for joining us for this discussion of the financial and operating results for our fourth quarter.
Speaker Change: And fiscal year ended December 31, 2024.
Speaker Change: Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated.
Speaker Change: Now, let's turn to slide four.
Speaker Change: Lasalle leveraged solid performance in 2024 generating record financial results with sales of over $2 $6 billion.
Speaker Change: And adjusted EBITDA of $276 million.
Vince Campano: Importantly, all divisions contributed to these results. Our build-back plan for the U.S. business is progressing well, with volume rising 10% while demonstrating market share growth relative to a category that saw a slight decline. In Canada, our team executed pricing against record highs in orange juice and concentrates while mitigating its effects with innovation and solid promotion plans. Our specialty food business also closed the year with solid year-over-year top and bottom line performance. Additionally, we diligently continue to execute our multi-year strategy aimed at diversifying and growing in the North America food and beverage market. First, we expanded the scope of our specialty food business by acquiring Summer Garden Food Manufacturing last August, which gave us a broader product portfolio of premium sauces and condiments, including the adjacent sugar-free barbecue sauce segment.
Speaker Change: Importantly, all divisions contributed to these results are billed back plan for the U S business is progressing well with volume rising, 10%, while demonstrating market share growth relative to a category that saw a slight decline.
Speaker Change: In Canada, our team executed pricing against record highs in Orange juice concentrates, while mitigating its effects with innovation and solid promotion plans.
Speaker Change: Our specialty food business also closed the year with solid year over year top and bottom line performance.
Speaker Change: Additionally, we diligently continued to execute our multi year strategy aimed at diversifying and growing in the North America food and beverage market.
Speaker Change: First we expanded the scope of our specialty food business by acquiring summit Garden food manufacturing last August, which gave us a broader product portfolio of premium sauces, and condiments, including the adjacent sugar free barbecue sauce segment.
Vince Campano: Second, we commissioned several new production lines such as a single serve line in North Carolina and two high-speed juice box lines in Rougemont to add capacity to support growth initiatives and in source more production. Third, we laid the foundation for future growth in our U.S. beverage business by announcing a significant $220 million multi-year investment program. This includes constructing a new facility in New Jersey to replace the existing one and enhancing North Carolina's role as an important strategic hub for us in the United States. These investments will not only drive efficiency and boost our production capabilities, but will also create job opportunities and support economic growth in both regions.
Speaker Change: Second we commissioned several new production lines, such as a single serve line in North Carolina, and two high speed juice box lines, and ruche mall to add capacity to support growth initiatives and in source more production.
Speaker Change: Third we laid the foundation for future growth in our U S beverage business by announcing a significant 220 million dollar multi year investment program.
Speaker Change: This includes constructing a new facility in new Jersey to replace the existing one and enhancing north Carolina's role as an important strategic hub for us in the United States.
Speaker Change: These investments will not only drive efficiency and boost our production capabilities, but will also create job opportunities and support economic woes in both regions.
Vince Campano: I want to take this occasion to thank all employees for their hard work and dedication which allowed Lassonde to achieve this outstanding performance. Erica is going to provide financial details on our fourth quarter in a moment, but please turn to slide five for a closer look at operations. As noted earlier, we are pleased with the volume increases stemming from our Build Back plan for U.S. beverage activity. We grew business volume with existing customers and with new customers, such as a prominent Northeast-based convenience store chain onboarded earlier in the year. In North Carolina, you may recall we had some disruption from Hurricane Elaine in late September.
Speaker Change: I want to take this occasion to thank all employees for their hard work and dedication, which allowed <unk> to achieve this outstanding performance Eric.
Speaker Change: Eric is going to provide financial details on our fourth quarter in a moment, but please turn to slide five for a closer look at operations.
Speaker Change: As noted earlier, we are pleased with the volume increases stemming from our build back plan for our U S beverage activities.
Speaker Change: We grew business volume with existing customers and with new customers such as a prominent northeast base convenience store chain on boarded earlier in the year.
Speaker Change: In North Carolina, you May recall, we had some disruption from hurricane Alain in late September.
Vince Campano: This led to a 15-day plant closure, followed by an additional three to four weeks of recovery before we could return to our usual production pace. with this set. After operations resumed, the ramp-up of the single-serve line encountered certain mechanical issues that prevented us from meeting our planned schedule on build-back initiatives, resulting in missed opportunities. These issues lingered into the first quarter, but they now have been mostly resolved, and the line is nearly back to planned production output for our primary pack format. Having said this, we have fallen behind schedule to reach full production rates, and we are now looking at achieving this target by the end of this first half.
Speaker Change: This led to a 15 day plant closure, followed by an additional three to four weeks of recovery before we could return to usual production pace.
Speaker Change: With this said.
Speaker Change: After operations resumed the ramp up of the single serve line encountered certain mechanical issues that prevented us from meeting our planned schedule on build back initiatives, resulting in missed opportunities.
Speaker Change: These issues lingered into the first quarter, but they now have been mostly resolved and the line is nearly back to planned production output for our primary pack formats having.
Speaker Change: Having said this we have fallen behind schedule to reach full production rates and we are now looking at achieving this target by the end of this first half.
Vince Campano: On the efficiency side, the ongoing insourcing of an increasing volume of aseptic juice boxes combined with improved efficiency and higher volume has helped us further reduce conversion costs. Turning to slide six for an update on our strategic investment initiative. First, the construction of our new facility in New Jersey is on schedule. At this time, all key equipment has been ordered and we have appointed all principal contractors. The detailed engineering design work is being completed, and as we received the town's permitting approval earlier in March. As a reminder, we expect to progressively transfer existing production activities beginning in 2026 and to complete this transition in 2027.
Speaker Change: On the efficiency side, the ongoing in sourcing of an increasing volume of aseptic juice boxes, combined with improved efficiency and higher volume has helped us further reduce conversion costs.
Speaker Change: Turning to slide six for an update on our strategic investment initiatives first the construction of our new facility in New Jersey is on schedule.
Speaker Change: At this time all key equipment has been ordered and we have appointed all principal contractors. The detailed engineering design work is being completed and as we received the town's permitting approval earlier in March.
Speaker Change: As a reminder, we expect to progressively transfer existing production activities beginning in 2026 and to complete this transition in 2027.
Vince Campano: In parallel, the relocation of certain production assets from a coal packer to our North Carolina hub also remains on schedule for completion in the second half of 2025. This project will unlock additional volume for U.S. branded products and allow us to transfer some production currently handled by our Canadian network closer to customers. Turning to Canadian beverage activities on slide 7, we successfully executed on pricing to offset record levels of orange inflation. We also mitigated inflation through innovation to reduce our exposure to orange and productivity improvements with a new high-speed line. More recently, we launched a new marketing campaign to take advantage of shifting shopping behaviors across the country.
Speaker Change: In parallel the relocation of certain production assets from a co packer to our North Carolina hub also remains on schedule for completion in the second half of 2025.
Speaker Change: This project will unlock additional volume for U S branded products and allow us to transfer some production currently handled by our Canadian network closer to customers.
Speaker Change: Turning to Canadian beverage activities on slide seven we successfully executed on pricing to offset record levels of orange inflation.
Speaker Change: We also mitigated inflation through innovation to reduce our exposure to orange and productivity improvements with a new high speed line.
Speaker Change: More recently, we launched a new marketing campaign to take advantage of shifting shopping behaviors across the country.
Vince Campano: The campaign is aimed at celebrating our Canadian roots by promoting Lassonde's strong national and regional brands as Canadian to the core. Our flagship Oasis brand is also a vital part of this campaign. Where the brand's heritage will be reinforced through a new tagline, there's no taste like home. Moreover, I am very proud to say that BrandSpark is named Oasis as Canada's most trusted brand in the fruit juice category for the third consecutive year. Another key objective of our Canadian beverage business is to grow its reach in the food service channel. Supporting this goal, we are investing $10 million in Rougemont to introduce a new bag-in-a-box aseptic packaging line for beverage dispensers to be commissioned in the second half of 2025.
Speaker Change: The campaign is aimed at celebrating our Canadian roots by promoting Lasalle on strong national and regional brands as Canadian to the core.
Speaker Change: Our flagship Oasis brand is also a vital part of this campaign, where the brand's heritage will be reinforced through a new tagline theres no tastes like home.
Speaker Change: Moreover, I am very proud to say the brand spark is named Oasis as Canada's most trusted brand in the fruit juice category for the third consecutive year.
Speaker Change: Another key objective or a Canadian beverage businesses to grow its reach in the foodservice channel.
Speaker Change: Supporting this goal, we are investing $10 million and Rouge mom to introduce a new bag in a box aseptic packaging line for beverage dispensers to be commissioned in the second half of 2025.
Vince Campano: The packaging format offers convenient dispensing, which makes it ideal for a wider range of food service customers, such as microbreweries and large-scale caterers. This investment represents a significant step forward and should allow us to expand our presence and deliver customizable beverage solutions to the food service channel across North America. Furthermore, this technology enables us to expand our reach to include industrial aseptic juice supply. Now let's turn to specialty food on slide eight. This was the first quarter with a full contribution from Summer Garden, which generated sales of $55.7 million dollars and EBITDA of $12.5 million dollars, representing a solid margin of over 22 percent.
Speaker Change: The packaging format offers convenient dispensing, which makes it ideal for a wider range of foodservice customers, such as microbreweries or large scale caterers.
Speaker Change: This investment represents a significant step forward and should allow us to expand our presence and deliver customizable beverage solutions to the foodservice channel across North America.
Furthermore, this technology enables us to expand our reach to include industrial aseptic juice supply.
Speaker Change: Now lets turn to specialty food on slide eight.
Speaker Change: This was the first quarter with a full contribution from summer garden, which generated sales of $55 $7 million and EBITDA of $12 $5 million, representing a solid margin of over 22%.
Vince Campano: Legacy Operations, meanwhile, once again achieved solid sales growth in retort products, mainly for premium glass jar soups and sauces and strong performance in the broth category. Since closing the acquisition of Summer Garden, we have focused on onboarding personnel, as well as identifying revenue and cost synergies. We are currently evaluating investments to accelerate growth, including scenarios to enhance production capacity to capitalize on identified opportunities. This includes the ongoing assessment of the potential for further plant expansion in Ohio that would enable us to continue our strategy of producing closer to our customers. Integrations are never easy, but I am very pleased with how the teams have come together.
Speaker Change: Legacy operations. Meanwhile, once again achieved solid sales growth in retort products, mainly for premium glass jar, soups and sauces and strong performance in the broth category.
Speaker Change: Since closing the acquisition of summer Garden, we are focused on onboarding personnel as well as identifying revenue and cost synergies. We are currently evaluating investments to accelerate growth, including scenarios to enhance production capacity to capitalize on identified opportunities. This includes the ongoing assess.
Speaker Change: Estimate of the potential for further plant expansion in Ohio that will enable us to continue our strategy of producing close to our customers.
Speaker Change: Integrations are never easy, but I am very pleased with how the teams have come together.
Vince Campano: We've been able to structure a business that embraces the Lassonde operating model while ensuring the preservation of the entire Summer Garden team and leveraging our respective know-how.
Speaker Change: We've been able to structure business that embraces the Lasalle and operating model, while ensuring the preservation of the entire summer garden team and leveraging our respective knowhow.
Vince Campano: This gives me great confidence in our ability to strengthen our position as a leader in the North America specialty food industry.
Speaker Change: This gives me great confidence in our ability to strengthen our position as a leader in the North America specialty food industry I now turn the call over to Eric for a review of our quarter four results Eric Hey, Thank you Vince good morning, everyone.
Eric Jem: I now turn the call over to Eric for a review of our quarter four results. Eric. Hey, thank you, Vince. Good morning, everyone. Before I begin, please note that most amounts have been rounded to ease the presentation. Also note that I will refer to non-IFRS measures or ratio, mostly to ease comparability between periods. Reconciliations to IFRS measures are provided in the appendix to our presentation. Four-quarter results reflect the inclusion of Suburban Gardens for the entire period, as well as the effects related to the purchase price allocation, which was completed during the quarter. Details of the allocation can be found in Section 5 of the MD&A.
Eric Chang: Before I begin. Please note that most amounts have been rounded to ease the presentation.
Eric Chang: Also note that I will refer to non ifr S measures or ratio, mostly to east comparability between periods.
Eric Chang: Filiation two I FRS measures are provided in the appendix to our presentation.
Eric Chang: Fourth quarter results reflect the inclusion of summer garden for the entire period as well as the effects related to the purchase price allocation, which was completed during the quarter.
Eric Chang: Details of the allocation can be found in section five of the MBNA.
Eric Jem: Let's turn to slide 9 for our fourth quarter sales, which amounted to $738 million, up 22% versus last year. Excluding acquired entities and a favorable foreign exchange impact, sales increased 10.7%, reflecting a higher sales volume in the U.S. and pricing adjustments in Canada, mainly for private label products.
Eric Chang: Let's turn to slide nine for our fourth quarter sales, which amounted to $738 million up 22% versus last year.
Eric Chang: Excluding the acquired entities and a favorable foreign exchange impact.
Eric Chang: Sales increased 10, 7%, reflecting a higher sales volume in the U S and pricing adjustments in Canada, mainly for private label products.
Eric Jem: Moving to slide 10. Gross profit reached $193 million, representing 26.1% of sales, up from $153 million a year ago, or 25.2% of sales. Excluding Acquired Entities Gross profit rose 10.6%, driven by a higher volume. The Run Rate Effect of Pricing Adjustment lower conversion costs despite challenges from Hurricane Elaine and starter costs of our new single-serve line, both impacting our North Carolina facility. The net improvement results from the overall efficiency improvement, including in sourcing in Canada of production of aseptic juice boxes for our U.S. branded business. These were partially upset by higher input costs, mainly ore introduced and consolidated.
Eric Chang: Moving to slide 10.
Eric Chang: Gross profit reached $193 million, representing 26, 1% of sales up from 153 million a year ago or 25, 2% of sales.
Eric Chang: Excluding the acquired entities.
Eric Chang: <unk> profit rose, 10.6% driven by a higher volume.
Eric Chang: The run rate effect of pricing adjustment.
Eric Chang: Lower conversion costs, despite challenges from Hurricane Lane and startup costs of our new single serve line, both impacting our North Carolina facility.
Eric Chang: The net improvement results from the overall efficiency improvement, including in sourcing in Canada of production of aseptic juice boxes for our U S branded business.
Eric Chang: These were partially offset by higher input costs, mainly orange juice and concentrate.
Eric Jem: SG&A expenses were $150 million, up from $120 million last year. Excluding expenses from acquired entities, SG&A increased by $14 million or 12%, reflecting higher outbound transportation and finished goods warehousing costs, mainly for our U.S. operation, driven in part by a volume effect. Higher expenses related to our strategy and its deployment, partly offset by lower selling and marketing expenses, mostly in Canada. Excluding items that impact comparability, adjusted EBITDA increased 51% to $80 million, or 10.8% of sales from 53 million or 8.7% of sales last year.
Eric Chang: SG&A expenses were $150 million up from 120 million last year.
Eric Chang: Excluding expenses from acquired entities, SG&A increased by $14 million or 12%, reflecting higher outbound transportation and finished good warehousing costs.
Eric Chang: For our U S operation driven in part by a volume effect ire expenses related to our strategy and its deployment.
Eric Chang: Partially offset by lower selling and marketing expenses, mostly in Canada.
Eric Chang: Excluding items that impact comparability, adjusted EBITDA increased 51% to $80 million or 10, 8% of sales from $53 million or $8 seven of salads last year.
Eric Jem: Adjusted profit attributable to corporation shareholder came in at $35 million or $5.13 per share compared to $21 million or $3.14 per share last year.
Eric Chang: Adjusted profit attributable to corporation shareholder came in at $35 million or $5 13 per share compared to 21 million or $3.14 per share last year.
Eric Jem: Looking briefly at annual results on slide 11. Sales rose 12.4% to reach $2.6 billion. excluding acquired entities and ethics, the increase was 7.1%. Proforma South, assuming the acquisition of Summer Garden had taken place on January 1st, 2024, totaled $273 billion. Adjusted EBITDA amounted to $276 million or 10.6% of sales up from $207 million or 9% of sales in 2023. If the summer garden acquisition had been completed on January 1, 2024, adjusted EBITDA for the year would have been $307 million or 11.2% of sales.
Eric Chang: Looking briefly at and well results on slide 11.
Eric Chang: Sales rose 12, 4% to reach $2 $6 billion.
Eric Chang: Excluding acquired entities and FX the increase was seven 1%.
Eric Chang: Pro forma cells, assuming the acquisition of summer Garden had taken place on January one 2024 total $273 billion.
Eric Chang: Adjusted EBITDA amounted to $276 million or 10, 6% of south up from $207 million or 9% of sales in 2023.
Eric Chang: If the summer Garden acquisition had been completed on January one 2000, and wait for adjusted EBITDA 40 year would have been $307 million or 11.2% ourselves.
Eric Jem: Adjusted profit attributable to the corporation's shareholders reached $130 million, or $19.05 per share, compared to $90 million, or $13.18 per share last year.
Eric Chang: Adjusted profit attributable to the corporation shareholders reached $130 million or $19.05 per share compared to $90 million or $13.18 per share last year.
Eric Jem: Turning to cash flow on slide 12. Operating activities generated $76 million in the fourth quarter of 2024 versus $78 million last year as a lower cash generation from working capital this year versus last, and a higher taxes and interest paid were partly offset by higher EBITDA and a net withdrawal of certain excess amounts invested in our defined benefit pension plans. For the year, operating activities generated $234 million, up from $220 million in 2023. The days of operating working capital ratio stood at 38 days in Q4 2024. This is slightly below the historical range, mainly due to higher days of payable reflecting certain amounts payable related to certain capital expenditure projects.
Eric Chang: Turning to cash flow on slide 12.
Eric Chang: Operating activities generated $76 million in the fourth quarter of 2024 versus $78 million last year as a lower cash generation from working capital this year versus last and a higher taxes and interest paid were partly offset by higher EBITDA and a net withdrawal of certain excess amount.
Eric Chang: <unk> invested in our defined benefit pension plans 40 year operating activities generated $234 million up from $220 million in 2023.
Eric Chang: The days of operating working capital ratio stood at 30 days in Q4 2024. This is slightly below the historical range, mainly due to higher days of payable, reflecting certain amounts payable related to certain capital expenditure projects.
Eric Jem: We expect the ratio to increase throughout 2025, but to remain within historical range. Capital expenditures totaled $30 million in Q4 and $116 million for the year, including U.S. $13 million related to the construction of the New Jersey facility. This project will accelerate over the next quarters and represent CapEx of approximately US$100 million this year. As a result, we expect CapEx to reach up to 9% of sales in 2025.
Eric Chang: We expect the ratio to increase throughout 2025, but to remain within historical range.
Eric Chang: Capital expenditures totaled $30 million in Q4, and $116 million 40 year, including U S $13 million related to the construction of the New Jersey facility.
This project will accelerate over the next quarters and represent Capex of approximately U S. Dollar hundred millions. This year as a result, we expect capex to reach up to 9% of sales in 2025.
Eric Jem: Turning over to our balance sheet on slide 13. Lassonde net debt totaled $449 million at the end of the fourth quarter versus $456 million three months earlier. The net debt to adjusted a bid-to-year ratio stood at 1.621 at the end of Q4 2024 versus 1.821 three months earlier. Considering the U.S. multi-year CAPEX program and alting being equal, we anticipate the leverage ratio to range between 2 and 2.5 to 1 from the first half of 2025 until the end of 2026.
Eric Chang: Turning over to our balance sheet on slide 13.
Eric Chang: Lasalle net debt totaled $449 million at the end of the fourth quarter versus 456 million three months earlier.
Eric Chang: The net debt to adjusted EBITDA ratio stood at one six to one at the end of Q4 2024 versus one eight to one three months earlier.
Vince: Considering the U S multiyear Capex program, and all things being equal we anticipate the leverage ratio to range between two and 2521 from the first half of 2025 until the end of 2026, ladies and gentlemen, I turn the call back to Vince 40 outlook.
Vince Campano: Ladies and gentlemen, I turn the call back to Vince for the out. Thank you, Eric. Please turn to slide 14. We are entering 2025 with cautious optimism as we continue executing our strategic plan amid geopolitical uncertainty. For U.S. beverage activities, our priorities remain focused on building back our private label volume, ramping up the North Carolina single-serve line, and pursuing capacity expansion initiatives. For Canadian beverage activities, we will continue to fortify our leadership by supporting initiatives that foster growth through innovation, including the launch of our popular Del Monte Nectar's into a convenient 200 mil juice box format channel expansion for a new food service initiative targeted marketing investments, including our new campaign launched in March.
Vince: Thank you Eric.
Vince: Please turn to slide 14.
Vince: We are entering 2025 with cautious optimism as we continue executing our strategic plan amid geopolitical uncertainty.
Vince: For U S beverage activities, our priorities remain focused on building back our private label volume ramping up the North Carolina single serve line in pursuing capacity expansion initiatives.
Vince: For Canadian beverage activities, we will continue to fortify our leadership by supporting initiatives at foster growth through innovation, including the launch of our popular del Monte vectors into a convenient 200 mill juice box format channel expansion through our new food service initiatives targeted marketing investments, including our new campaign launch.
Vince Campano: The campaign will be executed across outdoor print social platforms and will be supported through in-store merchandising and now unpack initiatives and through productivity improvement. In specialty food, we will continue onboarding Summer Gardens activities by leveraging our strengths and expertise across our North American network, capturing synergies, and reinvesting to support long-term growth. We are also pursuing our assessment of expanding the Ohio facility, which would enable Lassonde to grow capacity, reduce costs and capture long-term growth opportunities.
Vince: In March the campaign will be executed across outdoor print social platforms and will be supported through in store merchandising and Alan pack initiatives and through productivity improvements and specialty food. We will continue onboarding summer gardens activities by leveraging our strengths and expertise across our North American network.
Vince: Capturing synergies and reinvesting to support long term growth.
Vince: We are also pursuing our assessment of expanding that the Ohio facility, which would enable assigned to grow capacity reduce cost and capture long term growth opportunities now.
Vince Campano: Now let's move to slide 15 for our sales outlook. In 2025, we expect to achieve a sales increase of approximately 10% excluding currency fluctuation. This growth will reflect a full-year contribution from Summer Garden as opposed to less than five months in 2024, the run rate effect of existing and planned selling price adjustments, and sequential sales volume improvement related to the pace of our U.S. build-back plan, additional volume available from our new single-serve line, and demand normalization. we will stay vigilant in monitoring cost inflation for certain commodities such as orange and apple concentrates, which we expect to remain volatile through 2025.
Vince: Now, let's move to slide 15 for our sales outlook.
Vince: In 2025, we expect to achieve a sales increase of approximately 10% excluding currency fluctuations. This growth will reflect a full year contribution from summer garden as opposed to less than five months in 2024, the run rate effect of existing and planned selling price adjustments and sequential sale.
Vince: Volume improvement related to the pace of our U S build back plan.
Vince: Additional volume available from our new single serve line and demand normalization.
Vince: We will stay vigilant in monitoring cost inflation for certain commodities, such as Orange and Apple concentrates, which we expect to remain volatile through 2025.
Vince Campano: There has been a noticeable pullback in orange concentrate costs in the last month. This situation is mostly caused by speculative trading rather than significant changes in fundamentals, much like the pricing spike experienced in 2024. This being said, if prices remain at these levels, we should benefit from lower costs at the end of our hedging horizon. However, a recent surge in apple juice concentrate costs due to global supply shortages will cause a margin contraction in the first quarter given a lag between sudden rising costs and subsequent pricing adjustments.
Vince: There has been a noticeable pullback in orange concentrate costs in the last month. This situation is mostly caused by speculative trading rather than significant changes in fundamentals much like the pricing spike experienced in 2024.
Vince: This being said if prices remain at these levels, we should benefit from lower costs at the end of our hedging horizon.
Vince: However, a recent surge in Apple juice concentrate costs due to global supply shortages will cause a margin contraction in the first quarter given the lag between sudden rising costs and subsequent pricing adjustments.
Vince Campano: Turning to slide 16, another important consideration is the threat of a North American trade dispute. Because of this uncertainty, transportation and warehousing costs have risen and are expected to continue increasing at least for the first half of 2025. Supply chain disruptions may also affect us as the market adapts to new realities. To give further context, in 2024, slightly more than 10% of our sales consisted of products made in Canada and sold in the United States, while a nominal level of products are made in the US and sold in Canada. As for ingredients, approximately 80% of raw materials used in Canada are imported, with Brazil as the leading supplier, followed by the United States.
Turning to slide 16, another important consideration is the threat of a north American trade dispute.
Vince: Because of this uncertainty transportation and warehousing costs have risen and are expected to continue increasing at least for the first half of 2025.
Vince: Supply chain disruptions may also affect us as the market adapts to new realities.
Vince: To give further context in 2020 for slightly more than 10% of our sales consisted of products made in Canada and sold in the United States, while a nominal level of products are made in the U S and sold in Canada.
Vince: As for ingredients approximately 80% of raw materials used in Canada are imported with Brazil, as the leading supplier followed by the United States in the U S. 40% are imported with Turkey is the largest contributor followed by Brazil.
Vince Campano: In the U.S., 40% are imported with Turkey as the largest contributor, followed by Brazil. We will also be assessing our indirect exposures based on the scope of any potential terrorist. Our long-standing strategy of producing close to our customers has strengthened our North American network. The initiatives put forward this past year reflect this strategy and should further reduce our operating risk and improve supply chain stability. We have prepared mitigation measures to maintain a strong competitive position and an optimal cost structure. However, the timing, duration, and evolution of tariffs may affect our measures. Given the time required to implement them, we expect any negative impact to be more heavily weighted in the initial months following tariff enactment.
Vince: We will also be assessing our indirect exposures based on the scope of any potential tariffs.
Vince: Our long standing strategy of producing close to our customers has strengthened our north American network. The initiatives put forward. This past year reflect this strategy and should further reduce our operating risk and improve supply chain stability.
Vince: We have prepared mitigation measures to maintain a strong competitive position and an optimal cost structure. However.
Vince: However, the timing duration and evolution of terrorists may affect our measures.
Vince: Given the time required to implement them, we expect any negative impact to be more heavily weighted in the initial months following tariff enactment and.
Vince Campano: In closing, on slide 17. Despite a more volatile macroeconomic backdrop, we expect our momentum to continue.
Vince: In closing on slide 17.
Vince: Despite a more volatile macro economic backdrop, we expect our momentum to continue.
Vince Campano: Although the threat of terrorists may impact consumer demand and the global supply chain, we have prepared measures to mitigate these effects to the extent possible. Driven by a strong product portfolio and talented teams, Lassonde is well positioned to sustain growth in 2025 and beyond.
Vince: Although the threat of tariffs may impact consumer demand in the global supply chain. We are prepared measures to mitigate these effects to the extent possible.
Vince: Driven by our strong product portfolio and talented teams Lasalle is well position to sustain growth in 2025 and beyond. This concludes our prepared remarks. We are now pleased to answer your questions.
Vince Campano: This concludes our prepared remarks.
Operator: We are now pleased to answer your questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key.
Vince: We will now begin the question and answer session.
Vince: To ask a question you May Press Star then one on your Touchtone phone.
Vince: If you are using a speakerphone please pick up your handset before pressing Ricky.
Operator: Is it any time? Your question has been addressed and you would like to withdraw your question. Please press star then 2.
Vince: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our wraps.
Vince: At this time, we will pause momentarily to assemble our roster.
Martin Laundrie: The first question today comes from Martin Laundrie with Stiefel. Please go ahead. Good morning, Vince and Eric. Good morning, I think. Congratulations on your results. It's great to see the strong EBITDA and EPS growth.
Speaker Change: The first question today comes from Martin Landry with Stifel. Please go ahead.
Good morning, Vince and Eric.
Speaker Change: Good morning.
Speaker Change: Congratulations on your results.
Speaker Change: And it's great to see.
Speaker Change: The strong EBITDA and EPS growth.
Vince Campano: My first question is on your revenue growth assumption in your guidance. You're saying that you expect revenues to increase by 10% year over year. I was wondering, of that 10% increase, what's the percentage point that comes from organic growth, and how much pricing is embedded in that assumption? I don't have the number Andy Martin, so I'll give me a few minutes and I'll be able to get back to you on this one. But you should assume most likely. A Canadian dollar 125 is acquisition related, right? If you do a run rate, some regard. $150 million U.S.
Speaker Change: My first question is on your revenue growth assumption.
Speaker Change: In your guidance, you're saying that you expect revenues to increase by 10%.
Speaker Change: Year over year.
Speaker Change: I was wondering.
If at that 10% increase what's the percentage point that comes from organic growth and how much pricing is embedded in that assumption.
Speaker Change: I don't have that number Andy Mustangs. So all the lab give me a few minutes and I will.
Speaker Change: I won't be able to get back to you on this one.
Speaker Change: But you should assume most likely.
Speaker Change: A Canadian dollar $1 25 is acquisition related but if you do a run rate some regard.
$250 million of U S business, we had them.
Vince Campano: business. We had them with us for five months.
Vince Campano: So if you were to do the 512 So, sorry, 812 of that and then apply some growth, let's say use a 10% that we're giving and that would give you the acquisition growth portion and then the rest would be organic growth. Okay, so for Summer Garden, do you expect revenue growth or are your revenues stable since you acquired the company? No, no, that's what I'm saying. You should apply again from a guidance perspective. We're saying 10%. Let's apply to 10% on this.
Speaker Change: Four five months. So if you were to do that yet five wealth.
Speaker Change: So of course, we're 812 of that and then apply some growth, let's say use of 10% that we're giving.
Speaker Change: That would give you the.
Speaker Change: Acquisition growth per Se portion and then the rest would be organic growth.
Speaker Change: Okay.
Speaker Change: For Summer Garden do you expect the revenue growth or your revenue stable since you acquired the company.
Speaker Change: No no that's what I'm, saying you should apply again from a guidance perspective, we're saying, 10% less supply to 10% on this one.
Vince Campano: It's not clear, so maybe we revisit it a little later. How much pricing is embedded in that 10% increase? Well, that's, that's. versus volume.
Speaker Change: Okay.
Speaker Change: So it's not clear.
Speaker Change: Maybe we can revisit that little later.
Speaker Change: How much pricing is embedded in that 10% increase.
Speaker Change: Well that's that's.
Speaker Change: Versus volume.
Vince Campano: So, Martin, let me get back to you on the 10%, how much is acquisition related, how much is volume related, and how much is price related, okay? Okay, so we'll get back to you during your Q&A session or towards the end.
Speaker Change: So let me let me get back to you on the 10% how much is.
Speaker Change: Acquisition related how much is volume related and how much was price related okay.
Speaker Change: Okay.
Speaker Change: You'll get back to you during your Q&A session or towards yet okay.
Vince Campano: Okay, maybe just continuing on the revenue guidance, like how is this going to evolve over the year? Is it fair to say that the growth rate is going to be a little higher in H1 given summer garden and then slow down a little bit in H2? That would be the right assumption, I think. Yeah, because some regard, and of course, the first two quarter, it was going to be a. In addition to our revenue, then price increases, there's a run rate effect of last year, and then there are some price increases that have been taken already in the first quarter and volume is mainly our single-serve line in the U.S., again, contributing revenue for the first half while it was deployed in the back end of last year.
Speaker Change: Okay. Okay.
Speaker Change: Maybe just continuing on the revenue.
Speaker Change:
Speaker Change: The guidance like how is this going to evolve over the year and.
Speaker Change: Is it fair to say that.
Speaker Change: The quote rates going to be a little higher in H, one given summer garden, and then slow down a little bit nature.
Speaker Change: That would be the right assumption.
Speaker Change: Yes, because some regarding of course, the first two quarter.
Speaker Change: What's going to be a.
Speaker Change: In addition to our revenue Dan price increases there is a run rate effect.
Speaker Change: Of last year, and then there are some price increases that have been taken already in the first quarter and volume is mainly our single serve line.
Speaker Change: In the U S again contributing revenue for the first half.
Speaker Change: While it was deployed in the back end of last year.
Vince Campano: So that's a fair assumption that is most likely in that first. Okay.
Speaker Change: So that's a fair assumption that is most of that being the first.
Speaker Change: Okay, and then on your gross margin, there's a lot of moving parts.
Martin Laundrie: And then on your gross margin, there's a lot of moving parts. Transportation seems to be a bit of a headwind. Orange concentrates have gone down, but you seem to be hedged. Apple concentrate has gone up, and you don't seem to be hedged there.
Speaker Change: Transportation seems to be.
Speaker Change: A bit of a headwind.
Speaker Change: Orange concentrate have gone down, but you seem to be hedged.
Speaker Change: Apple concentrate has gone up and you don't seem to be hedged there. So.
Vince Campano: So, and you don't give a gross margin guidance per se, but It's not clear reading your outlook whether you expect gross margin pressure overall or gross margin expansion because the summer garden should be accretive. So, how should we think about your gross margin in 2025? So, but as you know, we don't give guidance. However, since we are very close to our first quarter end, so we have some visibility in here and given the price of Apple that really spiked. at the end of last year, 2024. And this is basically the material that we've purchased. So we came in in the first quarter with higher cost of price, higher cost of Apple, which from a pricing perspective, because it was really a spike, an unexpected spike, we were not able to turn around and get the pricing right away.
Speaker Change: And you don't give a.
Speaker Change: Gross margin guidance for C, but.
Speaker Change: Sure.
Speaker Change: It's it's it's it's not clear reading your outlook, whether you expect gross margin pressure overall, our gross margin expansion because it's some of our garden should be accretive so like how should we think about your gross margin in 2025.
Speaker Change: So, but they have you know we don't give guidance however.
Speaker Change: We are very close to our first quarter and so we have some visibility in here and given the rights of Apple that really spiked.
Speaker Change: Towards the end of last year 2024.
Speaker Change: And this is basically the material that we've purchased.
Speaker Change: So we came in in the first quarter with higher cost of price a higher cost of Apple, which from a pricing perspective, because it was really a spike an unexpected spike.
Speaker Change: We were not able to turn around and get the pricing right away but.
Vince Campano: But we've deployed pricing since then. So in March, we've deployed pricing in the market to cover for this cost of Apple. So, but we still look at the quarter with a little bit of a pitch having to absorb this higher cost of Apple and not having the price increase. So we, as I said, we don't give guidance, but at the same time, we have enough visibility. And the last thing we want to do is to surprise you. So that's why we said, okay, let's be mindful of this as you make your assessment of the quarter itself.
Speaker Change: But we've deployed pricing since then so in March we've deployed pricing in the market to cover for this cost of Apple So, but we still look at the quarter with a little bit of a pitch having to absorbed as higher cost of Apple and not having to price increase though.
Speaker Change: We as I said, we don't give guidance, but at the same time, we have enough visibility and the last thing we want to do is to surprise you. So that's why we said okay, let's be mindful of this as you make your assessment.
Speaker Change: The quarter itself.
Vince Campano: Because again, the price increase will cover for those. So, the situation we're in for the first quarter, if you look at 2022, 2023, there was a bit of the team, right? We had cost increase followed by price increase and what's creating a bit of a lack there. Of course, the Apple is not as pervasive as the 2022 situation.
Speaker Change: Because again the price increase will cover four dose.
Speaker Change: The higher cost.
Speaker Change: The situation we're in for the first quarter.
Speaker Change: If you look at 2022 2000 that we have between the team right. We had cost increase followed by pricing reason was creating a bit of a lag.
Speaker Change: Of course, the Apple is not as pervasive as the 2022 situation.
Martin Laundrie: And again, I don't want to guide, but it's not necessarily from a margin perspective for the first quarter, the run rate that you have observed in 2026 or in the back end of 2026 with Summer Garden, that's when it's like 24 with Summer Garden, maybe it's more somewhere in between. So that's as far as I will go, Martin, but I just didn't want to surprise anybody in a few weeks with a bit of a contraction in margin. Yeah, no, that's that's super helpful for Q1. I'm just a little bit unclear as to how the rest of the year evolves.
Speaker Change: And again I don't want to guide, but it's not necessarily from a margin perspective for the first quarter.
Speaker Change: The run rate that you did absorb 2026 or in the back end of 2026 week Summer Garden 'twenty 'twenty four with summer Garden.
Speaker Change: Maybe it's more.
Speaker Change: Somewhere in between.
Speaker Change: So that's as far I will go my statement.
Speaker Change: The new one surprise anybody in.
Speaker Change: Few weeks with a bit of a contraction in margin.
Speaker Change: Yes.
Speaker Change: Household for Q1.
Speaker Change: I'm, just a little bit unclear as to how the rest of the year evolves. Eric is is there anything you can now but any color you can give us for the rest of the year.
Eric Jem: Eric, is is there anything you can help us? Any color you can give us for the rest of the year? Again, no guidance, but you saw the progression of our margin over the year. You see the effect over the years. We see the effect of summer garden, bringing a good margin and there are measures that we've deployed. So, I think you have to look at the effort that we are deploying that start to pay off. And then a bit later during the year, we're going to deploy our to box lines in North Carolina. That should as well bring some savings.
Speaker Change: Again, no guidance update but you saw the progression of our margin a word a year you see the effect over the years, we see the effect of subsea garden, bringing a good margin and der Meritor. We've deployed so I think you have to look at.
Speaker Change: The effort that we are.
Speaker Change: Deploying that start to pay off and then a bit later during the year, we are going to deploy our too.
Speaker Change: Jewel box lines in North Carolina that shows as well bring some savings so yes.
Eric Jem: So. bearing any other surprises. We are still aiming at growing our EBITDA through growing our margins. We believe that we're, again, bearing any surprises, we are, we're still on track.
Speaker Change: Barring any other surprises.
Speaker Change: We are still aiming at growing our EBITDA growing our a through growing our margin.
Speaker Change: We believe that we're again barring any surprises we are.
Speaker Change: We're still on track.
Speaker Change: Okay.
Martin Laundrie: Okay, that's helpful. Thank you very much and best of luck. Thank you, Marta, and I will get back during this call with, I'm almost done with the breaking down of organic versus acquisition growth.
Speaker Change: Okay. Okay. That's helpful. Thank you very much and best of luck.
Speaker Change: So.
Speaker Change: Thank you and I will get back during the skull with almost done with the.
Speaker Change: The breaking down of organic versus.
Speaker Change: Acquisition growth.
Luke Honan: The next question comes from Luke Honan with Canaccord Genuity. Please go ahead. Thanks and good morning everyone.
Speaker Change: The next question comes from Luke Hannan with Canaccord Genuity. Please go ahead.
Speaker Change: Thanks, and good morning, everyone I wanted to start with the.
Luke Honan: I wanted to start with the outlook and more specifically the outlook for commodities. Eric, I know this is probably too big of an assumption but just for the sake of argument, if we assume that apple juice and apple concentrate prices hold flat with where they are right now, does the pricing that you took in March, does that fully catch you up as of Q2 we'll say? In other words, are you going to be happy with your margins?
Speaker Change: The outlook and more specifically the outlook for commodities.
Speaker Change: Right.
Speaker Change: <unk>.
Speaker Change: Probably to build them.
Speaker Change: I just wanted to take a markman.
Speaker Change: And Apple concentrate prices.
Speaker Change: With where they are right now is the pricing that we took.
Speaker Change: In March does that fully.
Speaker Change: Got you up.
Speaker Change: We will say it in other words are you going to be happy with your margin as it plays that you had smoother.
Speaker Change: Look it's very difficult to hear you. So can you repeat the question.
Luke Honan: It's very difficult to hear you so can you repeat the question? Yeah, sorry, I'll repeat that. So, assuming that you guys get that apple juice and apple concentrate prices hold flat with where they are right now, will the pricing that you took in March be able to fully catch you up from a product margin perspective? I realize it's probably a bold assumption. I'm just trying to understand if mechanically the price increases that you've apple juice costs that you've seen thus far.
Speaker Change: Alright.
Speaker Change: So.
Speaker Change: Assuming that you guys yet.
Speaker Change: Apple juice and Apple concentrate prices.
Speaker Change: Flat with where they are right now.
Speaker Change: The pricing that you took in March be able fully catch you up from a product margin perspective, I realize it's probably a board.
Speaker Change: Trying to understand that.
Speaker Change: Mechanically the price increases that you've taken thus far should be enough to offset.
Speaker Change: The higher concentrate in applebee's.
Speaker Change: Sure.
Eric Jem: Exactly, so now we understand your question. So the answer is yes, we feel that we have better visibility now given the contract. So in the last quarter of 2024, we're at the end of our 2024 contract. Now we have visibility on our 2025 contracts, visibility on our cost of materials. So we believe that we are at this pricing at the moment, we're at the right place.
Speaker Change: Exactly so and now we understand your question. So the answer is yes, we feel that we have better visibility now given that the contracts open ended enough.
Speaker Change: And the last water of 2024, where at the end of our 2024 contract now we have visibility on our 2025 contracts visibility on our cost of materials. So we believe that we are displacing at the moment, where the right place.
Luke Honan: Okay, great. Thanks for that.
Okay, great. Thanks for that and then the second question on the commodities is related.
Luke Honan: And then the second question on the commodities is relating to orange juice. So I think you mentioned you should benefit from the orange concentrate, orange juice prices coming down over the course of the last couple of months, but you are hedged. So how should we think about the benefit that you get from that, either from a magnitude perspective or a timing perspective or both in 2025?
Speaker Change: I think you mentioned you should benefit from.
Speaker Change: This large concentrated orange juice prices coming down over the course of the last couple of months you are hedged. So how should we think about the benefit that you get from that either from a magnitude perspective, or a timing perspective or both.
Speaker Change: In 2025.
Eric Jem: Okay, so let's start with. The back end of 2025, and you have this information in the MD&A, 70% of our orange need is hedged. And, of course, I'm not going to disclose the price of our hedging, but we believe that we are in a good position in there. Now, the question is for the remaining 30%. Are we going to be able to secure that at the current market price?
Speaker Change: Okay, So let's start with.
Speaker Change: The back end of 2025 and you have this information.
Speaker Change: In the MD&A.
Speaker Change: 70% of our Orange need is hedged.
Speaker Change: Of course, I'm not going to disclose the price of our hedging, but we believe that we are a good position in there so.
Speaker Change: Now the question is for the remaining 30%.
Speaker Change: Are we going to be able to secure that.
Speaker Change: The current market price. This is where again, we don't want to speculate.
Eric Jem: This is where, again, we don't want to speculate. We are not.
Speaker Change: Right.
Speaker Change: We are not sure.
Eric Jem: at www.LassondeIndustriesInc.com Visibility on our cost. The pricing that we have in the market. We are okay with it, and we'll need to see how much the $2 and what, 50 pounds. level stick versus going back to maybe something above the tree. But again, from a pricing perspective, we are in the right place with the cost profile that we have and the visibility on the cost we have. Yep, understood.
Speaker Change: Sure the price will remain at this level, because fundamental would probably take us to a bit higher so long story short on this one at the moment we have a good.
Speaker Change: Visibility on our cost.
Speaker Change: <unk>.
Speaker Change: Pricing that we have in the market we are okay with that.
Speaker Change: <unk>.
Speaker Change: We'll need to see how.
Speaker Change: How much the two daughter and with 50 pounds.
Speaker Change: Level stick versus going back to maybe something about the treaty.
Speaker Change: But again from a pricing perspective are we arent the right place with a cost profile that we have and the visibility on cost we have.
Speaker Change: Yes.
Luke Honan: Okay, so switching gears to summer garden bed. The margin, I think it was a 22% EBITDA margin that you delivered during the quarter. Annually, we know this business is sort of high-teen, so is that just benefits that you've already gotten from integration, or is that more just seasonality playing out there?
Speaker Change: Okay, So switching gears to summer garden.
Speaker Change: The margin I think it was at 22% EBITDA margin that you delivered during the quarter annually. We know this business sort of high teens. So is that just the benefits that you've already gotten from integration or is that more just seasonality.
Speaker Change: Sure.
Eric Jem: So, I think it's a tale of three cities. First, the fourth quarter, remember, I remind you that this is a soft business and fourth quarter is a good business for this. It's a good quarter for this type of business. So there's a bit of seasonality. Second, when we announced the acquisition, we were incurred on 12 months as of May, and the business has grown a little bit since then. So there's a bit of a push in there. And yes, and again, I don't want to say that there's a lot of synergies in there because we want to reinvest those synergies, but yeah, there's a bit of an effect of working together, part of this market.
Speaker Change: So.
Speaker Change: I think it's a tale of three cities first the fourth quarter.
Speaker Change: Remember I remind you that this is a soft business in fourth quarter is a good.
Speaker Change: Business, where it is it's a good quarter for this type of business. So there's a bit of seasonality in their.
Speaker Change: Second when we announced the acquisition we were incurred on 12 month as of May <unk>.
Speaker Change: The business has grown a little bit since then so theres a bit of a push in there.
Speaker Change: Yes, and again I don't want to say that it has a lot of synergies in there because we want to reinvest those synergies.
Speaker Change: There's a bit of an effect of working together part of this margin.
Luke Honan: And the last thing, when we've announced... The adjustment of the data that I've quoted, I want it to be conservative. So I really had a sharp pencil when I determined what would be the, what is the adjusted, what is the equated in this position. Okay, appreciate that. Thanks.
Speaker Change: And then the last thing when we've announced the.
Speaker Change: Adjusted EBITDA in our quoted I wanted to be conservative.
Speaker Change: So I really had a sharp pencil when I E.
Speaker Change: Determined what would be the.
Speaker Change: What is the adjusted EBITDA quoted in dispositions.
Speaker Change: Okay I appreciate that the last last question then I'll pass the line here.
Luke Honan: So, last question and then I'll pass the line here.
Luke Honan: You mentioned specialty foods, potential specialty foods expansion in Ohio and moving around some assets on that.
Speaker Change: Specialty foods potential specialty foods expansion.
Speaker Change: Hi.
Speaker Change: Some assets on that can you frame up for us.
Vince Campano: Can you frame up for us when you might make a definitive decision on when that happens and then also maybe the magnitude of investment required to expand capacity there? Thank you.
Speaker Change: You might make a definitive decision on when that happens.
Speaker Change: So maybe the magnitude of investments required to expand capacity there. Thank you.
Vince Campano: Hey, Luke, it's Vince. I'm going to answer that question. It isn't to be determined. There's a lot of factors at play. I mean, we're concluding on the assessment. I'd like to be able to conclude that assessment within the back half of 2025. Having said that, we've also got a lot of factors that impact decisions, including things like tariffs. And so for us, we're pretty optimistic that we will conclude on the assessment. We'll probably be talking to you in the back half of 2025 in terms of where we net it out on that assessment.
Speaker Change: Hey look it's been so I'm going to answer that question.
Speaker Change: It is a to be determined theres a lot of factors at play I mean, we're concluding on the assessment I'd like to be able to conclude that assessment within the back half of 2020.
Speaker Change: Five having said that we've also got a lot of factors that impact decisions, including things like tariffs and so for US we're pretty optimistic that we will conclude on the assessment, we'll probably be talking to you in the back half of 2025 in terms of where we netted out on that assessment I'm going to take you back as well to the.
Vince Campano: I'm going to take you back as well to the strategy, which is our commitment to produce closer to the customer. And that has been really, really helpful for us as a company. And when we acquired Summer Garden, we acquired it as our first footprint from a manufacturing perspective in the United States. And we know the market opportunity is there for growth within the United States. So it stands to reason that allows us to both maximize our assets, existing assets, and to grow beyond that. So I've given you a bit of a long answer there, but my hope is that we're concluded on that assessment in the back half.
Speaker Change: Our strategy, which as you know our commitment to produce closer to the customer and that has been really really helpful for us as a company and.
Speaker Change: And when we acquired summer Garden, we acquired it as our first footprint from a manufacturing perspective in the United States that we know the market opportunity is there for growth within the United States. So it stands to reason that expanding capacity.
Speaker Change: Allows us to both maximize our assets existing assets and to grow beyond that so.
Speaker Change: I've given you a bit of a long answer there, but my hope is is that were concluded on that assessment in the back half.
Luke Honan: That's great. Thank you very much, guys. I'll pass the line. Thanks, Luke.
Speaker Change: That's great. Thank you very much guys I'll pass the line, Thanks, Luke and look and while we're still on this let me get back to Martin's question and I'm sure. All of you are interested so let's go back to the guidance on revenue, we're calling about 10% out of a $2 6 billion or so let's assume that it's $260 million.
Vince Campano: And, Loken, while we're still on this, let me get back to Martin's question. And I'm sure all of you are interested. So, let's go back to the guidance on revenue. We're calling about 10% out of a $2.6 billion. So, let's assume that it's $260 million. Roughly speaking, about 50% should come from acquisition growth, and then about the rest, let's split that 50-50 between volume growth, mainly our single-serve line in North Carolina, and the other 50 is pricing. and the Build Back plan.
Speaker Change: Walter.
Speaker Change: Roughly speaking about 50% will come from acquisition growth and then about the Ras let's split that 50 50 between volume growth, mainly our single serve line in North Carolina in the under 50 is price increase and the build back plan and to build out and develop that market yet.
Speaker Change: Okay.
Vishal Sridhar: The next question comes from Vishal Sridhar with National Bank. Please go ahead. Hi, thanks for taking my questions.
Vishal <unk>: The next question comes from Vishal <unk> with National Bank. Please go ahead.
Vishal <unk>: Hi, Thanks for taking my questions I'm wondering if you could give us context on two seemingly competing factors the benefit of Bycatch, Canada, and what you're seeing.
Vishal Sridhar: I'm wondering if you could give us context on two seemingly competing factors, the benefit of Buy Canada and what you're seeing in your results there, and weakening consumer confidence and how your categories respond. that consumer fatigue and.
Speaker Change: In your results, there and and weakening consumer confidence and hydro categories respond.
Vishal <unk>: To that consumer fatigue.
Vishal <unk>: <unk>.
Vince Campano: So, Michelle, let me jump on that. It's Vince. A couple of things. The Buy Canadian sentiment allows Lassonde to go from strength to strength. I mean, as you know, it is our flagship market. We've got strong brands. We've got a leading share position through our strategy in both brand and private label. What I would say in terms of the bi-candidate sentiment is we are seeing it with respect to more recently fourth quarter results from a Nielsen perspective. Obviously, there's a lot of activity that we've got in play in terms of the innovation that we're putting in the market, the promotion calendar, which is quite strong.
Vince: So vishal, let me jump on that its Vince a couple of things.
Vince: By Canadian sentiment allows <unk> to go from strength to strength.
Vince: As you know it is our flagship market.
Vince: And we've got strong brands, we've got a leading share position through our strategy in both brand and private label.
Vince: What I would say in terms of the buy Canada sentiment as we are seeing it with respect to more recently at fourth quarter results from the Nielsen perspective.
Vince: Obviously, there's a lot of activity that we've got in play in terms of the innovation that we're putting into the market the.
Vince: Promotion calendar, which is which is quite strong.
Vince Campano: But what I will tell you is when you take a look at both the Canadian and the U.S. business, is what I want to touch on here, is in a market that has actually been fairly resilient. And what I mean by resilient on that point is that the U.S. is down about low single digit, call it negative one. Past four weeks, past 12 weeks, past 52 weeks, we outpaced the market in the United States in group share. in Canada very similar. What you will see, however, and this is in the more recent four weeks, is the category continues to be saw from a tonnage perspective.
Vince: But what I will tell you is when you take a look at both the Canadian and the U S business is what I want to touch on here.
Vince: In a market that has actually been fairly resilient and what I mean by resilient on that perspective and that point is that the U S is down about low single digit call. It negative one.
Vince: Hi.
Vince: Past four weeks past 12 weeks past 52 weeks, we outpaced the market in the United States and group share.
Vince: In Canada very similar.
Vince: What you will see how we're bringing this isn't in the more recent four weeks as the category continues to be soft from a tonnage perspective, it's down what I would describe it as.
Vince Campano: It's down what I would describe as high. Sorry, I put it probably in that 3 to 5% range, which is pretty consistent with what we've shared in prior quarters, but what you will see is an acceleration of our growth. in that in that last four-week period where we're seeing high single-digit growth in a market that's down for three to five percent. So we're growing market share and there's an element of that in terms of by-candidate sentiment. What I'm going to say as well, Michelle, is this is well before the kickoff of our consumer campaign. And, you know, for us, we are going to be very mindful of the opportunity to shift with consumers' sentiments.
Vince: Hi.
Vince: Sorry, I put it probably in that 3% to 5% range, which is pretty consistent with what we've shared in prior quarters, but which you will see is an acceleration of our growth.
Vince: In that in that last four week period, where we're seeing high single digit growth in a market that's down four 3% to 5%. So we're growing market share and there is an element of that in terms of by candidate sentiment what I'm going to say as well. The shell is this as well before the kickoff of our consumer campaign.
Vince: And for US we are going to be very mindful of the opportunity to shift with consumers sentiments were going to reinforce the fact that we're strong in that we've got 107 year history, you've got heritage in the Canadian marketplace.
Vince Campano: We're going to reinforce, you know, the fact that we're strong and that we've got a 107-year history. We've got heritage in the Canadian marketplace with facilities across Canada. Now, I say that because... We've got facilities in both Canada and the United States, and the activities that we put in place, you know, are intended to follow consumer sentiment in both markets. I mean, that's important for us as a North American company. But in Canada, currently, we see the sentiment, and we think it'll accelerate, and we're reinforcing that through our campaign.
Vince: With facilities across Canada.
Vince: Now I say that because.
Vince: We've got facilities, both Kennedy United States and the activities that we've put in place.
Vince: Are intended to fall while consumer sentiment in both markets I mean, that's important for us as a north American company, but in Canada. Currently we see the sentiment and we think it will accelerate and we're reinforcing that through our campaign in as far as reduced consumer confidence, we see that and I think that those are just risk that could.
Vince Campano: In as far as reduced consumer confidence, you know, we see that, and I think that those are just risks that, you know, could potentially play out as the year goes on. But what I would do is turn our attention back to the past few years, where we faced risks like this before, which is inflation and the threat of recession and consumer spend pullback. And this is where I talk about the power of our portfolio and the fact that we're diversified as an organization across juices and juice drinks, across package formats, across various channels that allow us to actually serve all of that as a hedge, including our representation in both brand and private label.
Vince: Retention play out as the year goes on but what I would do is turn our attention back to the past few years, where we face risk like this before which is inflation and the threat of a recession and consumer spend pullback.
Vince: And this is where I talked about the power of our portfolio and the fact that we're diversified as an organization across juices and <unk> strengths across package formats across various channels that allow us to actually serve all of that as a hedge including our representation in both brand and private label.
Vince Campano: So your point on those two competing factors are well called out. Clearly, we're watching the consumer sentiment piece of it. But again, what we've got is mitigations in We're going to leverage the strength of our portfolio as a means to offset that. Thank you for that fulsome answer.
So youre pointing to on those two competing factors are well called out clearly we're watching the consumer sentiment piece of it but again, what we've got is mitigation and planning again, we're going to leverage the strength of our portfolio as a means to offset that.
Vince: Thank you for that fulsome answer.
Vince Campano: I just wanted to lean on your historical perspective again. In this industry, when you have commodity volatility like we had in orange juice concentrate and the price falls. What does the industry do? Do they keep the margin gains or do they give it all back? And how should I expect that to unfold? What I would say to you is as much as you'd like to keep it, the market's fairly efficient. The reality is we participate in a fairly competitive market. And so, you know, because of that, when you look at it historically, you should assume some efficiencies.
Vince: I just wanted to lean on your historical perspective again so.
Speaker Change: This industry when you have commodity volatility like we're doing work, we had an orange juice concentrate and the price falls.
Speaker Change: What does the industry to keep the margin gains or did they give it all back and how should I expect that to unfold.
Speaker Change: What I would say to you is as much as you'd like to keep it the market's fairly efficient.
Speaker Change: The reality is we participate in a fairly competitive market.
Speaker Change: And so.
Speaker Change: Because of that when you look at it historically you should assume some efficiencies I hope.
Vince Campano: I hope, you know, you always hope that there's discipline in the market to ensure that that efficiency doesn't result in anything that I would deem as being irresponsible on either side. But again, I think you should just assume that it's an efficient market and things tend to flow is the way that I would describe that in a nutshell.
Speaker Change: You always hope that there is discipline in the market to ensure that that efficiency doesn't result in anything that I would deem as being irresponsible on either side, but again I think you should just assume that it's an efficient market and things tend to flow.
Speaker Change: It's the way that I would describe it and Michelle.
Vishal Sridhar: I appreciate that and also want to get your perspective on on tariffs. Now, granted, I understand it's uncertain environments and it's difficult to say with precision how Lassonde will respond, but nonetheless, the market still has to assign. indications of what it believes.
Speaker Change: I appreciate that and also want to get your perspective on.
On tariffs.
Speaker Change: Granted I understand it it's uncertain diamond from and it's difficult to say with precision how lithography respond but nonetheless.
Speaker Change: Nonetheless, the market still has assigned.
Speaker Change: Indications of what it believes so.
Vince Campano: What I was interested in is why management said they were constructive on the year ahead, notwithstanding such a significant portion of your inputs exposed from different geographies, which may be subject to terror. So maybe you could just help me understand at a high level what drives that confidence. And when I'm asking this question, in the back of my mind, I'm thinking that Lassonde has been taking pricing over the last few years to cover the commodity volatility. And pricing is a strategy, again, at some point, the consumer may balk at further pricing. So I was hoping you could put that all together to me and what gives you a constructive view on the year ahead.
Speaker Change: What I was interested in is why management said they were.
Speaker Change: Constructive on the year ahead notwithstanding.
Speaker Change: A significant portion of your inputs.
Speaker Change: Exposed.
Speaker Change: From different geographies, which may be subject to tariffs. So maybe you could just help me understand at a high level what drives that confidence.
Speaker Change: What I am asking this question on the back of my mind I'm thinking that.
Speaker Change: The fund has been taking pricing over the last few years to cover the commodity volatility.
Speaker Change: Pricing as a strategy again at some point.
Speaker Change: <unk> bulk.
Speaker Change: Further pricing so.
Speaker Change: I was hoping you could put that altogether and what gives you a constructive view on the year ahead.
Speaker Change: So.
Vince Campano: The. complex question on, but let me unbundle that for you. So, because you have to look at the U.S. itself, which is the initiator of those tariffs. In the U.S., we procure about 40, 60% in country, about 40% outside. And again, in the end, we're providing you sources of that. The main country for sourcing in the U. S. is Turkey, which seems not to be affected by tariff so far. And then there are a few other countries. So. On this, it's going to be like any other player in the market, they source from the same regions that we source and all of the players will have to face the same cost increase due to tariff.
Speaker Change: They are.
Speaker Change: Complex question, but let me unbundle that for you. So because you have to look at the U S itself.
Speaker Change: Initiator of those tariffs in the U S. We procure.
Speaker Change: <unk>.
Speaker Change: 40%, 60% in country about 40% outside in again, and maybe it anywhere providing new sources of debt. The main country for sourcing in the U S is Turkey, which seems not to be affected by tariff. So far and then there are a few other countries. So.
Speaker Change: On this.
Speaker Change: It's going to be like any other player in the market. They source from the same regions that we source and all of the player will have to face the same cost increased due to tariff.
Vince Campano: And unfortunately, and as it's been said everywhere, the consumer... at the end of the day. we mostly, you know, I try not to..... Yes, we do source products from the US... Not as much currently.... It's still a significant country in terms of supplier and yes, here again, we'll try to mitigate that. But for Canada, we have to deal as well with a weaker currency and any tariff that the Canadian government will impose on the US. And here again, we'll try to mitigate through formulation, portfolio optimization, network optimization, try to produce as much as possible in Canada for Canada and the US for the US.
Speaker Change: And unfortunately, and as it's being said everywhere the consumer will have to at the end of the day.
Speaker Change: Assume a good portion of that cost of course, we will try to do everything we can from a mitigation perspective before getting to price, but at the end of the day and like any of our competitor will have to pass on price and that's.
Speaker Change: Unfortunate reality now if you turn around and look at Canada, while Canada, when we in source product and now it's mainly from the U S. Yes, we do source product from the U S not as much.
Speaker Change: It's still a significant country in terms of supplier.
Speaker Change: Yes, and that's a.
Speaker Change: Here again, we'll try to mitigate that but for Canada to deal as well with a weaker currency.
Speaker Change: And any.
Speaker Change: Any tariff that the Canadian government William told was on the on the U S.
Speaker Change: And here again, we'll try to mitigate through formulation portfolio optimization network optimization try to produce as much as possible in Canada from Canada into the U S and the U F or the U S. At the end of the day, there will be an increased cost and here again I'll have to pass it on and unfortunately consumer all of us will have to.
Vince Campano: But at the end of the day, there will be an increased cost. And here again, I'll have to pass it on. And unfortunately, consumer, all of us will have to absorb. And that's it. And then the last piece, Vishal, and again, for a complete disclosure, again, in our MDMA, we are working with an integrated network. And as you heard us over the past few years, right, we are using Canada to help in source products. We are selling from Canada, especially in specialty food, to the U.S. market. So we do have some finished goods that are manufactured in Canada and sold in the U.S.
Speaker Change: Absorbed.
Speaker Change: The cost of these tariffs.
Speaker Change: And.
Speaker Change: And then the last piece are Vishal and again for complete disclosure again, our M. DNA, we are working with an integrated network and as you heard us over the past few year right. We're using Canada to help in source product from the United States, we are selling from Canada.
Speaker Change: Especially in specialty food to the U S market. So we do have some finished goods that are manufactured in Canada and sold in the U S. So that's another exposure for us that being said if you look at the actions we've been taking recently and that we are we have discussed a bit earlier.
Vince Campano: So that's another exposure for us. That being said, if you look at the action we've been taking recently, and that we have discussed a bit earlier with our lines in North Carolina, then we're going to bring production from Canada to the United States, which will reduce that exposure. Now we are talking about Boardman or Summer Garden, our location in the production facility in Summer Garden. We are looking at expansion here again to help us close the gap and manufacture locally as much as possible. So manufacture in Canada for Canada, manufacture in the U.S. for the U.S.
Speaker Change: With our lines in <unk>.
Speaker Change: North Carolina, then we're going to bring production from Canada to the United States, which will reduce that exposure now we are talking about boardman or summer gardens or location.
Speaker Change: Production facility in some regard.
Speaker Change: We are looking at expansion here again to help us close that gap and manufacturer locally as much as possible. So manufacturing, Canada for Gander manufacturer in U S or the U S. So these are the type of actions that we're taking to try to mitigate as much as possible any tariff if there. If there is a let me just build.
Vince Campano: So these are the type of actions that we're taking to try to mitigate as much as possible any tariff, if tariff there is on food.
Vince Campano: Let me just build on one thing on the expansion point. Not all of this is tied to a back half assessment to talk about further expansion of a facility and new lines. What I can tell you from a synergy perspective. is the capabilities that Lassonde has, has been able to work with the summer garden team and through improved processes and activities, we've found efficiencies and we've actually improved capacity. So to the extent that we can actually increase capacity and better leverage the existing assets, then it also gives us more flexibility to consider production that's in Canada for the U.S.
Speaker Change: One thing on the expansion point.
Speaker Change: Not all of this is tied to a back half assessment to talk about further expansion of our facility in new lines. What I can tell you from a synergy perspective is the capabilities that <unk> has has been able to work with the summer garden team and through improved processes and activities. We've found efficiencies and we have actually improved.
Speaker Change: So to the extent that we can actually increase capacity.
Speaker Change: Sure.
Speaker Change: And better leverage the existing assets then it also gives us more flexibility to consider production that's in Canada for the U S and considering that production within the United States to support that so we don't have to wait for a back half assessment in terms of the things that we're trying to do we're already doing things to actually grow capacity. So that we've got more flexibility.
Vince Campano: and considering the production within the United States to support that. So we don't have to wait for a back half assessment in terms of the things that we're trying to do. We're already doing things to actually grow capacity so that we've got more flexibility in the downhill. Thank you.
Speaker Change: In the downhill.
Speaker Change: Thank you.
Operator: As a reminder, if you would like to ask a question, please press star then 1 to join the question queue.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to join the question queue.
Frederic Tremblay: The next question comes from Frederic Tremblay with Desjardins. Please go ahead. Thank you. I wanted to maybe first come back on the growth at Summer Garden. It was mentioned as a factor in Q4. I'm just wondering if you can maybe detail on the recent growth and future growth expectations as well. What's the... What's sort of the contribution or effect of new customers or existing customers? Where's the growth coming from largely there? Is there one that's more impactful than the other so far? on future games. So, in the fourth quarter, it was mainly growing. Summer Garden mainly grew with existing costs.
Speaker Change: Your next question comes from Patrick Chen Luo with Goldstar song. Please go ahead.
Speaker Change: Thank you I wanted to maybe first come back on the growth.
Speaker Change: At some regard then it was mentioned that.
Speaker Change: A factor in Q4.
Speaker Change: Just wondering if you could maybe detail on the recent growth in future growth expectations as well.
Speaker Change: What's sort of the contribution or effect of new customers or existing customers, whereas the growth coming from.
Speaker Change: Largely there is there one that's more impactful than the other so far and sort of your expectation.
Speaker Change: On future gains.
Speaker Change: So in the fourth quarters was mainly growing some regarding mainly.
Speaker Change: Existing customers. So we have not started to deploy our revenue synergy.
Frederic Tremblay: So we have not started to deploy our revenue synergy element in there. Okay, and any thoughts on when that part of the synergies might be a factor? So, we're finalizing, maybe you want to, finalizing our study in terms of. Yeah, thanks, Arc.
Speaker Change: Element in there.
Speaker Change: Okay.
Speaker Change: Any thoughts on when that.
Speaker Change: Part of the synergies might might be a factor.
Speaker Change: So we're finalizing with finalizing our study in terms of.
Ark: Yes, I'll with progressive yeah. Thanks, Ark, So fredrik, you've heard me talk in the past about starting a.
Vince Campano: So, Frederick, you've heard me talk in the past about starting a a strategy, a strategic review of the summer garden and the specialty foods business, our legacy business in determining where to from here. And so we've nearly concluded on that activity. We just need a little bit more time to sort of solidify that. And as I said, on back half expansion assessment, we'll come back to you and start talking with some more specificity on the project has told us. What I can tell you though is that the categories that we've acquired, we see potential for growth.
Ark: Our strategy of strategic review of the summer Garden, and specialty foods business, our legacy business and determining where to from here and so we were nearly concluded on that activity.
Ark: We just need a little bit more time to sort of solidify that and as I said on back half expansion assessment, we'll come back to you to start talking with smart some more specificity on the back half in terms of what that project is told us what I can tell you. Though is is that the categories that we've acquired we see.
Vince Campano: Barbecue sauce is an area that we think we have potential for growth. When you look at the US, I would largely say the US strategy there is to frankly build distribution. and further diversify our business across customers within the United States. And we think there's an opportunity there for us to grow that. This is before you think about Canada's synergy in terms of the role that the barbecue sauce category might play and to what extent J. Hughes can extend into Canada. When you take a look at the pasta sauce market robust growth that you continue to see, you know, the category all up might be low single-digit growth, but the categories in which we've acquired and we're going to continue to participate and play in the premium to super premium categories, and the consumer has not only proven to be resilient, the fact is that we're seeing double-digit growth in those segments.
Ark: Potential for growth barbecue sauces in area that we think we have potential for growth. When you look at the U S had with largely say the U S strategy there is to frankly build distribution.
Ark: And further diversify our business across customers within the United States, and we think Theres an opportunity there for us to grow that.
Ark: This is before you think about Canada synergy in terms of the rule that the barbecue sauce category might play into what extent Gpus can extend into Canada.
Ark: When you take a look at the pasta sauce market robust growth that you continue to see.
Ark: The category all up might be low single digit growth, but the categories in which we've acquired and we're going to continue to participate and play in the premium Super premium categories and the consumer has not only proven to be resilient and the fact is is that we're seeing double digit growth in those segments and so that's an opportunity for us.
Frederic Tremblay: And so that's an opportunity for us also within the U.S. to frankly build the brands, build brands awareness, and also organically figure out how to expand distribution market. Again, that's well before we consider opportunities to leverage our synergies and start to build a capability in Canada. So more to follow on that one, Frederick, but the opportunity for growth we continue to feel quite positive about. Great, appreciate that coverage there.
Ark: Also within the U S to frankly build the brands build brand awareness and also organically figure out how to expand distribution.
Ark: It's market again, that's well before we consider opportunities to leverage our synergies and start to build the capability in Canada. So more to follow on that one project, but the opportunity for growth we continue to feel quite positive about.
Ark: Okay.
Ark: Great I appreciate the color there maybe.
Eric Jem: Maybe more of a modeling question here on your depreciation and amortization. I noticed that there's guidance for $115 million in 2025. Eric, you feel that that's a good run rate for the company as a whole going forward as well in 2026 and beyond? Or is there any sort of one-time accelerated depreciation in 2025 that we should take into account? So, when we announced our New Jersey. We are running 3.0 1.5 million dollar work on our existing Plan. With $6 million u.S. That being said, if you look at The investment we did last year. sorry, 23 and 24, we will start to amortize those.
Ark: Maybe more of a modeling question here on <unk>.
Ark: On your depreciation and amortization I noticed that the guidance for 115 million in 2025.
Ark: Eric do you feel that that's a good run rate for the company as whole going forward as well in 2026 and beyond or is there any sort of one time accelerated depreciation in 2025 that we should take into account.
Ark: So what we announced our.
Ark: In New Jersey.
Ark: Plant, we said that for the next 10 quarter, we would have one $5 million worth of accelerated depreciation on our existing fund to a write down $6 million of U S that being said if you look at the major investment we've done last year.
Ark: That's great 'twenty, three and 'twenty four.
Ark: We will start to who homered ties, though so I think it's a good anchor point to grow, but recognizing that theres a bit of a onetime.
Eric Jem: So I think it's a good anchor point to grow, but recognizing that there's a bit of a one-time in this year, this one in 15, that will be substituted, replaced by more amortization or depreciation of existing or a new campaign. And the new plan right in New Jersey by 2027, it's a 200 million dollar US that will be amortized between, of course, a component between. Building, which will be a longer amortization and then equipment based on the nature of the equipment between anywhere between 10, 15 to 20 years. So, we'll on guidance on these on these elements will come later by 2026 and 2027.
Ark: And this year. It is one of the 15 that will be.
Ark: Substituted replaced by.
Ark: More.
Ark: Amortization or depreciation that existing.
Ark: Yes.
Ark: Or new Capex.
Ark: And the new plan right in New Jersey by 2027, it's a 200 million dollar U S that will be amortize between of course a component between.
Ark: Building, which will be a longer amortization and then equipment based on the nature of the equipment between anywhere between 10 and 15 to 20 years. So we'll lap on guidance on these on.
Ark: These elements will come later bank by 2026 and 2027.
Eric Jem: Okay, great. And then just for your model for your model, I think you're the 115 is a good anchor point and then think about some growth in there in the future. Okay, perfect.
Ark: Okay, Great and then just lastly for your model for your model I think you are the 115 is a good anchor point and then think about some growth in there in the future.
Ark: Okay perfect.
Eric Jem: And lastly for me on input costs, I mean there's been a lot of discussion on Orange and Apple, rightfully so, but just wanted to maybe look at the specialty food business and their input. main ingredients. Any comments there on, you know, supply availability and the cost of these, their main inputs? Anything to flag there? So the main input for that business is when you think about the red sauce, of course, tomato, so tomato, nothing special. We're always at the mercy of crop. A few years ago, California was a challenge, but we source, again, California, we source from Canada, we source from Italy, so I don't feel anything special or don't hear anything special in tomato.
Ark: And then lastly for me on input costs I mean, there's been a lot of discussion on Orange and Apple rightfully. So, but just wanted to maybe look at the specialty food business and their input.
Ark: Main ingredient any comments there on.
Ark: Supply availability and the cost per lead.
Ark: Their main inputs anything to flag there.
Ark: So the main input to that business is when you think about the red sauce of course tomato.
Ark: So tomato.
Speaker Change: Nothing special in the last few years, but we're always at the mercy of prop.
Speaker Change: The few years ago, California was a challenge, but we source again, California, we source from Canada, we source from.
Speaker Change: So I don't feel anything special or don't hear anything special in tomato.
Speaker Change: Dan.
Eric Jem: Then, when you think about the cream sauce, and of course, it's dairy, so dairy are sourced from Canada and from the United States. So, on this one, I think local sourcing in both countries should be sufficient. And then what else do you have in the cream sauce? You have some starch, starch is a bit of a commodity, but again, we don't have a concern. There's nothing. houses that we should be concerned by starch growing. Great. Thanks for that. And then we have a bit of eggs, but again, eggs, not that much, and it's mainly Canadian.
Speaker Change: When you think about the cream sauce and of course, it's dairy so.
Speaker Change: Dairy are sourced from Canada and from the United States. So on this one.
Speaker Change: I think local sourcing in both countries should be sufficient.
Speaker Change: And then what else do you have into cream sauce, you have some starch stocks is a bit of a commodity.
Speaker Change: But again, we don't have concern there is nothing that flu.
Speaker Change: Those that we should be concerned by starch.
Speaker Change: Growing.
Speaker Change: Great. Thanks, and then abate again eggs are not that much and it's mainly a Canadian yes. Okay.
Eric Jem: Yeah. Perfect.
Operator: That's all I had. Thank you. Okay, later. This concludes our question and answer session.
Speaker Change: Perfect. That's all I had thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Vince and panel for any closing remarks.
Vince Campano: I would like to turn the conference back over to Vince Tempano for any closing remarks. Well, thank you for joining us this morning, and we look forward to speaking with you again at our next quarterly call. Have a great day and have a great weekend. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Vince: Well. Thank you for joining us this morning, and we look forward to speaking with you again at our next quarterly call.
Speaker Change: Great day and have a great weekend. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation will now disconnect.
Speaker Change: [music].