Andrew Peller Limited

Third-quarter sales increased 3.3% year over year. Gross margin was $45.5 million, or 41.8% of revenue, versus 40.2% last year; year-to-date margin improved to 43.3% from 40.4%. EBITDA rose 6% to $19.7 million from $18.5 million, and year-to-date EBITDA grew close to 16% to $57.1 million. Selling and admin expenses were $25.8 million, up 8%, and Q3 interest expense decreased 26% versus the prior year. Net debt was roughly $164 million at quarter end, down from $182 million at fiscal year-end, with debt-to-EBITDA about 2.3x. Inventory was $156 million, down from $170 million at fiscal 2025 year-end. Management said the quarter and year-to-date results put the company on track for a strong fiscal 2026 and ongoing growth in fiscal 2027, and they expect margins to keep rising in fiscal 2027, though at a slower pace as most of the $25 million cost improvement plan has already been realized.

Paul Dubkowski said Q3 reflected strong execution across the business, with growth in core portfolio sales and innovation-led products, plus continued strength in estates, Wine Club, and evolving Ontario channels. He framed LayLow, sparkling, and better-for-you offerings as strategic growth areas and said the company is moving into fiscal 2027 with confidence and momentum. His tone was upbeat and forward-looking, including openness to innovation, strategic investment, acquisition, and asset monetization.

Renee Cauchi focused on the hard numbers: revenue up 3.3% in Q3, gross margin at $45.5 million and 41.8% of revenue, EBITDA at $19.7 million, and SG&A at $25.8 million. She said margin improvement came from the cost savings program, lower glass bottle and inbound freight costs, and the Ontario Grape Support Program, and noted Q3 interest expense fell 26% as debt declined. Cash discipline was visible in inventory at $156 million versus $170 million at fiscal 2025 year-end, net debt of about $164 million, and leverage of roughly 2.3x.

Analysts asked how much of the revenue growth came from new products versus share gains; management said it was a mix of core portfolio performance, innovation, and strong execution across East and West channels. On margin sustainability, management said margins are already above 41% in the quarter and trending above 43% year to date, with further increases expected in fiscal 2027 but at a slower pace because most of the $25 million cost program is done. They also addressed USMCA risk, saying exposure is limited because the company does not sell much into the U.S. or internationally and can shift sourcing more into Canada, and they confirmed M&A and asset sales remain active strategic priorities without giving timelines.