Thank you, Joanna. Good morning and welcome everyone to our 2026 first quarter conference call.

With me here today is our CFO, Will Kalutycz. Hopefully, you've had a chance to listen to our prerecorded remarks posted on our website this morning.

We will now take your questions. Joanna?

Hey, everyone. Great— Hey, Kyle.

Great update, and nice to see all the moving pieces increasingly coming together here to push earnings up. I want to dig in on some of the moving pieces that will allow us to better understand your free cash flow profile in the coming quarters and into next year.

I have some capex budget questions. You've already given the larger project capex budget for the next 4 quarters, $55 million.

What will that larger project bucket look like beyond that? Is it essentially going to 0 given the larger projects are done?

Then, for the smaller projects, how should we think about that? You didn't give a budget for it.

Will it stay around $70 million a year in line with prior comments, or will that also tail off for a period of time?

In terms of the major projects, as we talked about in the presentation, we've got about $55 million left to spend on that, and then we're through all the things that have been approved and are in the pipeline. Our intent is that in the future, any projects we manage will be in that bucket of other, which right now we refer to the smaller bucket.

That's 70. What will happen over time, maybe that bucket will creep up a little bit, $70-$80 million, as we have to add capacity here and there, but you're not going to see a repeat of what we've been through in the last 4 years.

We just don't see anything like that in the next couple of years. We're exiting 2025 with about 1.5, close to 1.5 billion of sales capacity once the GTA project is online, we're well positioned for the next couple of years.

Just to confirm, while you're sinking the remaining large project budget, do you also expect to still be sinking the $70 million-ish per year this year for the smaller stuff?

Oh yeah. Absolutely.

We've got over 110 plants in the system, and they're always adding a line or doing an improvement to a line to increase efficiency. Those types of projects are constantly ongoing.

We're always looking to improve the plants, refine capacity, and that's just part of that. We do consider it project capex because all of these smaller projects do generate returns.

They're not like maintenance capex where you're really just replacing an old machine with a new machine and you're no better off. These smaller projects are incremental cash flow to the company in the future.

Got it. Okay.

Beyond everything we've just talked about, the only other bucket is maintenance capex, $70 to $75 million a year. Maybe just confirm there's nothing else.

Maybe a capital release from one last sale leaseback this year. Is that right?

Yeah. We do expect to complete the GTA facility sale leaseback in the fourth quarter of this year.

Our expectations is $60 to $65 million in proceeds from that.

Got it. Okay.

Then last thing impacting free cash flow conversion, the plant startup and restructuring costs. Nice to see it was down a lot in Q1.

Will it stay down in Q2 and beyond to very thin numbers, or will it spike back up with some of the big product launches you have?

Absolutely. We expect it to continue to trend down from the Q1 level.

If you took Q1 and annualized that 4 times, we'll be well below that for 2026.

Got it. Okay.

Thank you. I'll pass the line.

Thanks, Kyle.

Hi. Good morning, George and Will.

Hey, Martin.

I want to just dig a little bit into some of the call-outs you've made in your press release. You're calling out delays in timing of promotional events and also of new product launches.

Just wondering if you could give us a bit more color on that and if it's possible to quantify the impacts.

The biggest item, Martin, is we did have a very successful promotion through the course of 2025 with a customer in the QSR channel, and that came to an end in 2025. We had expected new programs to replace it coming in towards the end of Q1, Q2.

Those have now been pushed out to Q3, Q4. We did see that impact of that falling off, and we're not going to see the impact of the benefit to Q3 to Q4 this year.

It was really the one big program that was the challenge. This is in our sandwich group or what we call now our Custom Culinary Solutions group, and the other factor was another major QSR customer, just the timing of shipments to them.

We'd had a significant increase in sales to them in the fourth quarter of last year. We thought most of that was related to just inventory builds, but it turns out some of it was the timing of sales, and so that impacted Q1, but that should largely go away in Q2.

The bottom line, Martin, is that we have a very robust pipeline of LTOs in the US with retail and foodservice customers, right? This is an environment where customers in foodservice and retail are looking for LTOs to drive traffic to their locations.

We have capacity now. Again, we build inventory for these LTOs.

Ultimately, we don't control the exact timing of these LTOs, right? To the extent that they happen, then it gets kind of lumpy for that particular period, right?

If it's delayed, again, we see the impact of that, right? We are in a lot of LTO-type of activities in our platform.

Understood. Okay.

Just if you can share any color on Q2 so far. Some grocers are talking about Canadians trading down, discount banners doing better than traditional banners.

Just trying to see if you're seeing anything impacting your sales.

We would generally agree with those comments, Martin. Again, this is not new to Canada.

I would say that our mix with regards to both retail and foodservice is changing a little bit for the reasons that you mentioned. No issues there.

Okay. Are you still under-indexed with discount banners, or is your distribution in discount banners in Canada more or less the same as traditional banners?

I would say that we're not as under-indexed as before. We've picked up a lot of business.

As you saw, our business in Canada has grown in the quarter. Organic growth was a little bit above what we expected.

That's because we're picking up business in the discount channel.

Okay. Super.

Thank you and best of luck.

Thank you, Martin.

Thanks, Martin.

Oh, good morning, George and Will. Hope you guys are doing well.

Hey, Chris.

Hey, Chris.

My first question is, I was wondering on the cost side in terms of obviously fuel, freight, packaging, and etc., I was wondering if you can share with us how are you guys managing those cost pressures, and then what's the potential impact on the business for this year?

Again, Chris, I think we've talked about it in the past. We obviously try to as much as possible provide dynamic pricing to our customers.

It's not that we're not familiar with inflation. With regards to some of our core commodities like beef, for example, and with chicken last year, we saw tremendous inflation, but ultimately, we take actions with regards to pricing and obviously restore margins through pricing.

That's very helpful. My follow-up question is just in terms of the non-core investments, in the press release you mentioned that's still ongoing.

I was curious, I think you did disclose a number of a billion dollars in net proceeds over the longer term. I was wondering if you can elaborate on the timing on that and the reason for putting a number in the press release.

We're in a number of discussions, Chris, and we've got a pretty good idea as to where we'll end up. It'll probably take a couple of years, but again, we're in a number of monetization-type of discussions.

In some cases, we're taking on partners in some of our platforms, and we felt very comfortable with that number, we wanted to convey that to the market.

That's helpful. I'll get back into the queue and all the best.

Thanks, Chris.

Thank you.

Hi, guys. I wanted to talk a little bit about the Specialty Foods margins.

Really strong performance there, I just wanted to know, are we caught up on beef, and can you quantify the increase from the plant overhead costs and the higher storage costs and maybe when do you expect those to go away?

In terms of the higher costs, George, they're not going to go away. The storage costs, which was the smaller component of it, will, as we work through the inventories we built in Q1 through the course of the year.

The plant overhead is associated with the additional capacity coming on. Really now the key is to leverage that overhead, right?

Those plant expenses, they'll continue to grow, but at a very lesser rate relative to the growth we're expecting in our contribution margins from sales growth. It's really leveraging that expense now to grow our EBITDA.

In terms of the overall margins in Specialty Foods, yeah, they were generally in line with our expectations. We've been catching up, as we've talked over the last couple of quarters, with beef pricing.

A lot of that came into effect during the first quarter. We have a little bit more still to work on going forward, but really it's been a catch-up play on beef pricing.

The other comment I have, George, in regards to margins, again, as we've built a lot of new capacity, invested in many many new lines to support our growth, and with regards to the ramp-up of plants, we're starting to basically see the light at the end of the tunnel with regards to running the plants at scale, which obviously helps. Then, we're in the process now of driving what we call internally operational excellence, right?

Which are, basically get the metrics right, get the productivity right, the yield right, the quality right, and all of those things. Those should drive margin expansion in the future.

That's helpful. George, in your prepared remarks, you mentioned the kettle business, I think sales are running north of $100 million, there's a plan for that platform to become the next billion-dollar platform.

I'd love to hear your thoughts on that, how do we get there, where can we see M&A to support that growth? You just want to pay attention, you guys have done that in the past, and you've seen a lot of growth in other platforms.

I'd love to unpack that a little bit if you can.

The run rate of that business today is in excess of $100 million, George, and again, we love that business. It exports globally, exports to Asia.

We lack capacity. When we invested in our supply chain with the acquisition of our 50% ownership of Clearwater and also our then 50% ownership of North Delta Seafood, I think we told the market that we were looking to basically guarantee our access to best-in-class supplies, and we're probably the only company in this space that has guaranteed access to exceptional raw material, mainly coming from the seafood side of our business.

We've leveraged that to grow substantially, and we have a lot of demand for our soups, sauces, and dips in the US. Unfortunately, we don't have a lot of capacity.

We're in the latter stages of completing our expansion in Auburn, Maine, of the plant there. We put together a great management team, and as we speak, we probably have a $100 million pipeline of opportunities that we're looking at.

Again, the plant will be ready in the fall, and we're looking forward to executing that capacity.

What should we think about the margin profile of those products, George? Superior to kind of Specialty Foods in line, or any thoughts there?

They're about average, George. Their contribution margins are in the 25% range, some of the more unique specialty mark products get as high as 30%, and we view that business long-term consistent with our other legacy specialty good food businesses should be averaging EBITDA of 13% to 14%.

Helpful. It's

one quick one if I may, just to follow up the cost question earlier. On working capital, can you maybe help us, it does fluctuate, it's been a drag last couple of years, but can you maybe help us, Will, just frame that line item, I guess, for the year?

It's interesting, George. We used in working capital in the quarter, I think it was about $113 million in the quarter.

Of that, our Stampede business, our recent acquisition, was $96 million of it. Stampede's business, they have a large component of it that is fixed pricing for their customers on an annual basis.

A core part of their strategy for hedging the margins on that business is they do take these large inventory positions at the beginning of the year, and then use that inventory over the course of the year to service their customers. It's a bit different than most of our other businesses, and hence the big impact on Q1.

The interesting thing, and I think this is a real indication for how you're going to see our free cash flow in 2026, because as 2026 unfolds, that working capital is going to be converted to cash by the end of the year, and year-over-year, you're not going to see that impact by the end of Q4. If you look at Q1 and you strip out the impact of Stampede, we actually showed what we call our net free cash flow, positive net free cash flow, and it's been a while since we've had that.

We always talk about what we define in the presentation as our steady-state free cash flow where we exclude our investment in the future, we exclude project capex, restructuring, and net working capital usages. Even once you subtract those to come up with what we call net free cash flow, in Q1, it was actually a positive number taking out the Stampede effect.

Like I say, it's a unique situation to their business. We feel looking forward to 2026, it's going to be the first time in 5 years that we generate substantial net free cash flow.

Extremely helpful. Thank you.

George.

Hey, good morning, George and Will. Thanks for taking my questions.

Hey, Ty.

Hey, Ty.

Hey. Just to start off, lobster margins were a pretty material drag within distribution this quarter again.

I think previously you talked about working through some higher-cost inventories in Q1, just looking for an update on how far through that process you are and what sort of improvement you're expecting in Q2 and throughout the rest of the year.

It really, Ty, it's going to depend on how the fisheries go. Year-over-year, their margins were down slightly, but they're relatively stable.

You had some pluses and minuses on mix versus catch rates, but really it's going to be catch rates that drive it because it's a situation where when you have poor catches, it drives up the shore price, and that creates margin challenges for the group. Now, the positive is we're in some fisheries now, the Canadian fisheries, and they seem to be going well, so that's setting the stage for better margins for lobster.

It's really going to be a function of the fisheries.

Also, Ty, I just want to remind everybody that there's still tariffs to China as well, which appear to be coming off at some point. Those should help as well.

Great. That's helpful.

Then, I think last quarter, you guys were kind of indicating your expectation that Specialty Foods organic volume growth would land around 10% for the full year. Just curious whether that view has changed at all given some of the dynamics discussed on the call today around promo timing and whatnot.

Two comments there, Ty, is we do, due to the LTO discussion we had earlier, we do expect to push some growth that we were expecting in Q2 into Q3, Q4. That will take a little bit of growth out of our Specialty Foods for the year, but we're still expecting high single digits for the Specialty Foods group.

It has come off a little bit because of the timing of those LTOs, but it's still going to have strong growth for the year.

Thanks. All the best.

Thanks, Ty.

Hey, thanks. Good morning, guys.

Hey, Luke.

Hey, Luke.

Hey, I just wanted to follow up on the promos or the LTOs. What was this driven by, I guess?

Was this just a change in scheduling on behalf of foodservice customers? Is that in response to what's going on with the consumer, or is there something else at play there?

There is always different dynamics, Luke, depending on the customer and the channel. I would say from my perspective, given the war, which appears to be over, hopefully it's over, and also the high gas prices, probably some of the customers decided to delay.

There's always different reasons depending on the customer and the channel.

The big one that impacted Q1, Ty, the business itself had some internal issues, nothing to do with the program, that they were just working through. They're largely through them now, that's stabilized.

That's what gives us confidence that they will happen in the back half of the year. Like George says, there's a whole number of factors that are driven by the customer that goes into that timing.

Our view, Luke, and my sort of advice is that what's important is really the LTO pipeline, and there's not much we can do ultimately about the timing of the launch. Our biggest launch in our history was delayed a couple of quarters.

Ultimately, it took place, we've executed it, and it's done extremely well, right? We're not in control of the timing.

We're not going to pretend that we are, but our pipeline of LTOs is very healthy.

Got it. Thanks for that.

Then I did want to follow up also, George, I think you had mentioned that the organic volume growth rate that you saw in Specialty Foods in the Canadian business was above your expectations. That was in part because of the exposure that you guys have to discount as well, but also how much of that growth can be explained by the new meat stick program that you guys launched late last year and the roll-out amongst the Canadian store base there?

It's a small component, Luke, because the launch was towards the end of the year. Oh actually, no.

It was towards the end of January. It was in January,

yeah. Yeah.

That was a component, but a small component of it. The biggest component, if you wanted to call out one single factor, was actually our kettle business.

Like George says, we're doing really well in that channel, and particularly with some of the large club chains, and yeah, so that was probably the biggest single growth driver in the quarter.

Thanks. Maybe on the— Hey, and

sorry, just to clarify, Luke, in Canada.

Yep, got it. Thanks.

Then I did want to dig in a little bit deeper there as well just on the meat stick program. You guys have been very happy with it.

I think your customers have been very happy with it. Is it too early to now be thinking about potential expansion there, I guess, just as far as maybe different flavors or other SKUs that can be added there?

We've recently did some taste tests on some new innovation that we want to bring to market, and again, some very very exciting products. I think it's well established now that we have great knowledge and expertise in this area, this stick has done extremely well.

It is best in class. We're challenged a little bit by capacity.

Again, we have capacity left in the system, but some of these launches are very large as we found out. There's a lot going on.

We're excited to say that there is more coming, more flavors, more species. We're actually launching an amazing bison stick in the US under the Roam Free brand, which we think will do really, really well.

We love the stick category. We produce the best quality consistently in North America in our view, and yeah, we're seeing lots of opportunities there.

Great. Last one, and then I'll pass the line.

Just on Stampede, if I remember correctly, it's $8 million of synergies that you guys were targeting for this year. Just curious if you can share anything on that front.

Oh

yeah, we're well on our way to hitting that target for the year, Luke.

That's great. Thank you very much.

Thank you, Luke.

Thank you. Good afternoon, guys.

Or morning.

Hey, Steve.

Hey, Stephen.

Hey, Will. Hey, George.

I just want to follow up quickly on the Specialty Foods outlook for 2026 on the top line. Understanding around the promotional shift into Q3 and Q4, but and on top of the kind of high single-digit volume growth that you're talking about for '26, do you also still have price to pass through or is most of that price now passed through, through the end of Q1?

Just to be clear, that high single digits is volume growth, right, Stephen? Not

dollar

not dollar growth.

Yes.

Yeah. Absolutely.

As I mentioned, on the beef side, we've caught up a lot as you saw and that drove some of our Specialty Foods margin expansion year-over-year in the quarter. There's still some work to do there, you will still see some price gains.

I don't suspect it's going to be as large as it was in Q1, but there still will be continued gains. As George talked earlier, we are sort of working through potential pricing around other inflationary factors like fuel.

Right. Okay.

That's helpful. Thanks, Will.

Then just kind of high level or taking a step back, just thinking around the commentary around you're through your capex cycle, executing on the capacity initiatives you have in place. Is it now reasonable to think that 13% to 14% Specialty Foods margin may come into view sometime over the next 12, 18, 24 months, something like that?

Absolutely on the back end of your estimated range. It's really now leveraging that remaining 1.4, $1.5 billion of capacity that we've built.

That's what's going to margin up the business. That'll unfold over '26, '27.

I would suspect by the end of '27, we're at run rates like that.

Stephen, from my perspective, as I said earlier, as I look at our portfolio today, our products, and our margins, and operations, I would say that operational excellence will get us there.

Right. Okay.

That's helpful. Then maybe just a clarifying point just on the $1.5 billion of sales capacity.

Is that reflecting capacity that's currently not filled at all, or is there a portion of it that is sort of being ramped up?

No, that's what was available at the start of 2026, including the capacity of our new GTA facility, which won't come online till the end of the year. I'm looking at that total capex spend of about $1.1 billion, and that's created about $2 billion of sales capacity, and between '24 and '25, we've used about a half roughly a half a billion of that sales capacity.

Right.

Okay. That's helpful clarity.

Thanks, Will. Great.

Thanks, guys. Appreciate it.

Thank you.

Thank you. Good morning, George and Will.

Hey,

John.

I wanted to return to your production footprint. Appreciate the details so far.

I wonder if you could give us an idea approximately, let's fast forward maybe 1 or 2 quarters or maybe even to year-end, but I wonder what capacity utilization you're at on some of your key categories like meat sticks and sandwiches and bakery and charcuterie.

Again, it depends on many factors, John. I would say we have a lot of capacity left in our sandwich platform with the build-out of the Cleveland, Tennessee plant and the addition of lines there and some reconfigurations of the other plants.

We have quite a bit of capacity left in our stick business, but we believe that we will fill it relatively quickly given the innovation pipeline we have in place. will probably be tapped out by the end of the year with regards to stick capacity, and we're actually looking at maybe some opportunities to purchase more capacity or add more capacity.

Again, haven't made any decisions yet, but we're looking at that. The rest is basically covers different areas like obviously our kettle business, and our bakery business, and our process meats business.

In general terms, as Will said, at the beginning of the year, we had 1.5 billion of capacity left, and I've commented on some of the high-growth areas.

Okay. Thank you for that.

I want to follow up on the OVGR question, and I wonder should we interpret your answer as the likeliest outcome is Q4 is probably going to be the highest result for OVGR this year, followed by Q3, followed by Q2? Is that comment you made earlier, was that relevant to specialty or US specialty?

They'll be close, but yeah, probably Q4 will be weighted larger. Q3 is a better seasonal quarter, you've got that tailwind.

Q4 we would expect to be on a percentage year-over-year basis higher than Q3.

Okay. That's US or consolidated?

Oh,

that's Specialty Foods consolidated. US is the big driver.

Got it. Okay.

Then lastly, I wonder if you could say for this quarter where incremental margins landed relative to your typical range on incremental sales? I think it's 25% to 40% is typically the range, where that landed in Q1.

Yeah. It was roughly in line.

It was a little bit lower. I think it worked out for the Specialty Foods group around 22% to 23%, which we would have expected sort of 25% to 30% range.

The factor being sales mix. The jerky category, which we've been talking about, was down quite a bit in the quarter.

Just more and more customers are shifting shelf space to sticks on top of the high beef prices, consumer sensitivity challenges. That was a fairly big number in the quarter, and that's a very high-margin product.

That's what brought the overall contribution margin down maybe a little bit lower than what you would expect.

That's helpful. I'll leave it there.

Thank you very much.

Okay. Thanks, John.

Thanks, John.

Hi. Thanks for taking my questions.

On Duso's, is that— Hi, Vishal. Good afternoon.

Is that about $100 million in terms of the value anticipated that I'm getting from the balance sheet, and what is the magnitude of Duso's on the P&L?

Oh no, no, no. Sorry, all the value in that you're extrapolating, Vishal, is in Shaw Bakers.

Duso's is a very small business. It's really I hate to say this, but it's almost a rounding error.

It

less than one-tenth of that, Vishal.

Okay. Of the divestitures planned that greater than $1 billion, do you anticipate a large portion of that more to come in 2026, or How should we think about it over the years to come?

Again, we need to be careful, Vishal, because we didn't use the words dispositions or sales. We used the word monetizations, right?

We expect to complete the process, as I mentioned earlier, over the next couple of years. Not sure as to timing, but we are in a lot of robust discussions with regards to taking on partners in some of our platforms.

Okay. George, off the top you suggested that you are seeing, and I think you pointed more so to Canada, some trading-down behavior on behalf of consumers within your segments.

Are you noticing in the markets when you're looking for acquisitions, softer valuations for potential files and/or of some of the monetizations that you're looking at some hesitation on behalf of those partners or those potential buyers for those assets?

Again, Vishal, we want to be careful with regards to trade down. Trade down by channel, right?

We're seeing trade down by channel. Or

customer.

Right? By customer and channel, right?

Not trade down, generally people don't change their eating choices in a recession, right? They just buy elsewhere where they can get it cheaper, right?

That's what we see. It's really important to convey that and for you guys to understand that, right?

We're seeing some changes in terms of where the consumer shops. They're still buying the same items they were buying before.

Vishal, our margins in those different channels are very similar. We're relatively agnostic on where we sell that product.

With regards to the M&A environment, I would say that there's a lot of assets for sale. Some of them are owned by PE, some of them are being sold by large CPG as they try to sharpen their portfolios.

There's a lot of assets for sale. We're looking at 2 or 3 opportunities every week.

I would say that leads to a general softening of valuations. Not much, but some softening.

There's a lot of assets for sale.

Okay. With respect to your monetization indications, are you seeing a similar softening on your side or not really?

What we've said before, Vishal, is that as you saw with the sale of Shaw Bakers, right, we're comfortable with our balance sheet. We don't feel the need to discount anything to sell it, right?

Our assets are in good shape, they're doing well, they're growing, they're leading the industry in many areas, including innovation and growth. Again, we expect to be able to get fair prices for them, right?

We're not going to discount them to move them, right? That is not going to happen.

Got it. Okay.

Lastly, the nudging up of 2027 expectations, is that on the basis of the expectation of more acquisitions to come or is that just on an organic basis of the business currently today?

When we last talked about 2027, we talked about meeting or exceeding our targets. Before Stampede, to hit our at least our sales target, not necessarily EBITDA target, hit our sales target, we needed to complete an acquisition.

With Stampede now completed, from here to the end of '27, we'll hit our targets just organically. We don't need to complete any more acquisitions.

That's really the key message we were trying to say.

Oh hey, good afternoon. Can you, Will, can you just characterize the organic volume growth in Q2?

Should we expect a similar level? I know you gave the back half of the year color, but on Q2 itself, should we expect a similar level to Q1 given what you're seeing?

Hey, Michael. Q2 is

like Q1 is generally a slower quarter for seasonal purposes and it's just tougher to grow in for that same purpose. We do expect to see some pick up in Q2.

It will be a bit stronger, but it's not going to be as strong as we originally expected because of the LTO issue that we've been talking about, but it will be stronger than Q1.

Okay. Then just carrying that over to margins, we should expect that margins in Specialty follow a similar cadence to how we model the organic volume growth through the year?

Correct. Absolutely.

Now that most of our pricing is where it needs to be, like I say, a little bit more work to do in Q2, but most of it's where it needs to be, assuming there's no crazy inflation in Q2, but beef we do expect to be inflation, but mildly. Under those assumptions, then the biggest driver is going to be contribution margin growth, i.e., sales growth.

We've talked about it, our contribution margins in the Specialty Foods group are anywhere from a low on some of our co-pack business of 20% up to as high as 40% in certain categories. That is the big driver that expansion in our margin.

Okay. Then just coming back to some of the items discussed in the release itself, in terms of the asset sales or the partnerships, and the M&A, and then the leverage targets themselves, how do we think about all of these items in conjunction with one another?

Because you're talking about hitting leverage of 3 times by mid-2027, but at the same time you're referencing the M&A environment and the asset monetization process. I'm just trying to think for myself how this all comes together.

No, fair question, Michael. Let's be clear.

We expect to hit our 3-to-1 or better total debt-to-EBITDA ratio target by early to mid-2027, and the only asset dispositions built into that is the sale leaseback I talked about earlier. Outside of that, it's only through growing our free cash flow and paying down our debt and growing our EBITDA, which favorably hits the ratio, obviously.

There's no business dispositions built into that target. Anything we do on that side will only accelerate it, how quickly we achieve it.

Okay. Is that a firm target to hit before you look at M&A, or an M&A opportunity could come in before that?

No, no, we'll we'll continue to manage M&A as we've been doing for the last year, year and a half, and that is any transaction we do will be structured that it it either doesn't hinder or it helps us achieve that target. We've been doing our transactions with some contingent consideration, maybe issuing some shares to the ownership group, and and using other mechanisms to make sure that any acquisitions we do do not put us behind schedule in achieving that target.

Okay. Thank you.

Okay. Thanks, Michael.

Good morning, George and Will. Good quarter.

Hey, Derek.

Hey, Derek. Thanks.

Good. I just want to follow up on your last comment.

I do think it's the first time, though, that you have given a timeline on getting below that 3 times leverage. I was just curious on how much visibility you have on that timeline.

Again, I think us giving it, we've had that objective for a while now, but we wanted to see a few of these pieces fall in place like the recovery for the beef inflation, just the cadence of the growth in our various initiatives, US initiatives in particularly, the stability of the Canadian market. We have more confidence now, and that's why we've started communicating it as a specific target.

That's fair. Maybe just to follow up on George's working capital question way back.

The $96 million increase in inventories due to Stampede, do you expect that to start reversing in Q2?

I want to be clear on that 96 just in case somebody starts crunching the math. It's $56 million in actual inventory increases, and then the balance is prepaid inventory for international shipments.

It's all inventory, but it's not necessarily in an inventory bucket. Just to make sure anyone sort of checking all the details, they're trying to figure it out, the net impact is the $96 million.

In terms of how that unwinds, yeah, it should start unwinding in Q2 and Q3, accelerating. Q4 then, by that point I would expect they're through most of it, and they're actually starting to buy to support the sales programs at that part.

The strategy is always the beef market peaks in Q2, Q3, the summer months, grilling, all that stuff. If you look at any charts of the key beef cuts they use, you'll see that sort of goes up, and it has a traditional seasonal cycle of increasing in Q2, Q3, and then coming off in Q4.

That is what the buying is meant to do. Q2, Q3 is when it'll all be used up, or most of it used up.

That's helpful. Just one last one for me.

Again, strong I think considering that you're lapping a tough comp or a promo comp last year in the US, the 10% organic volume growth, just do you have a sense of what it would have been excluding that promo?

I do. I think it turns out our Custom Culinary Solutions growth would have been pretty close to 6% versus a 1% contraction, and then overall I think that put us at about 12% for the entire US initiative group.

Again, this is really important to understand when you're looking at this metric is you have to look at it on a year-over-year basis, not a quarter-over-quarter basis, just because of the seasonality of the business. On a quarter-over-quarter business, you're looking at 9.7% last year, 9.9% this year including the impact of that customer initiative, and then, normalizing for that, you're probably at that 12% to 13%.

Showing good momentum year-over-year in that growth rate.

Yeah. That's what I was getting at.

Thanks, Will.

Thanks, Derek.

Hello again. Are you able to give us some color on Stampede's EBITDA margin in Q1 just to get a feel for how quickly their margins are normalizing higher, and kind of allow us to feel at the Specialty Food margin with and without that mix impact?

I assume they're taking price to offset beef inflation like you are, but any color appreciated.

They're around the 9%, a little over 9%, Kyle. They are below the average, and we knew that, right?

That was one of the reasons why our 10% EBITDA target is a little bit behind schedule. It's just the mix with Stampede coming into that mix.

Around 9%, a little over 9%.

Got it. Okay.

Thank you. That's it.

Thanks, Kyle.

Hey, good morning, guys. Good morning.

Good morning.

Just to start off, I know last quarter you acknowledged that beef pricing was set a bit below the absolute peak. I guess heading into the grilling season, could you just give us a sense of how much of that buffer remains in your current pricing versus your beef input costs?

It should be the seasonality is built into the pricing structures, right? We don't look as that seasonality is inflationary.

It's really the year-over-year comparison on a quarterly year-over-year basis that's the important number. We do expect that to continue to be inflationary.

Our expectation is mild inflation, but we'll see with all the chaos in the world. Who knows what's going to happen.

It's not one commodity, right? It's many commodities.

Again, you have the processing cuts and the retail cuts, of course, and then you've got domestic and international and there's different pricing, right, for different commodities. A lot of the press that you see is based on domestic pricing, which is very different than imports.

Got it. Appreciate the color there.

Then it would just be great to get an update on Stampede and the cross-selling opportunities there and the extent to which we might see any of that kind of flow through later this year or into next year. Listen,

we couldn't be happier with Stampede. It's a great business, great management team.

We've had a number of conferences to introduce the Stampede management team to the Premium Brands ecosystem. We had a leadership conference, we had a procurement conference, we're having an operations conference in about 10 days' time.

There is been all kinds of conversations around introducing them to our product lines and vice versa, and they've introduced our companies to some of their customers and again, vice versa. Lots of positive movement there over the last 3 months, and, again, we're very pleased with how things are going.

Obviously, they're focused on managing their business overall, but we couldn't be more excited about Stampede and having the management team join Premium Brands.

Great. Then just last for me, in your slide deck, the acquisition pipeline appears to still be relatively thin versus last year.

With your ongoing focus on deleveraging, could you just share your latest thoughts on M&A in this macro environment, and maybe taking that a step further, if you are still active, should we expect any near-term acquisitions to maybe be smaller tuck-ins rather than, let's say, another Stampede-sized transaction?

We will always do tuck-ins and smaller acquisitions. We try to support our different platforms with their different initiatives in terms of access to capacity or a product line that they want to sell or they want to get into and those type of things.

We will always be in discussions with regards to the smaller type of acquisitions. As Will said, we're going to be disciplined.

To the extent that we do any, they will not stretch the balance sheet in any way or weaken the balance sheet in any way. We will do lots of those, and we have a lot of those in the pipeline.

Again, we're in a lot of discussions. With regards to anything larger, a lot of stars need to line up for us to do a larger acquisition.

Are we in discussions with regards to larger acquisitions? Of course we are.

We're always in those type of discussions. Again, we don't see anything imminent, but as I said earlier, a lot of stars need to line up for us to do that.

Okay. Thanks very much.

Thank you.

Thanks, Ron.

Thank you, Joanna. I just want to say that we have never been more excited about our future, and we look forward to reporting to you on our progress in the quarters to come.

As I keep mentioning in my CEO letters, my CEO letter for this year should be coming out in the next couple of weeks, and in my prepared remarks, the food industry is at an inflection point, and consumers are moving away from ultra-processed foods to foods that contribute to their well-being. Over the past couple of years, we completely transformed our business model, adding substantial capacity to our plant network in the US, as you know.

Although we have grown a lot in this market over the past 5 years, we still believe that our business there is still at its early innings, and we have incredible growth runways ahead of us. Thank you for attending today.

Back to you, Joanna.