Andrew Peller Limited

Third-quarter sales were up 3.3% year over year. Gross margin was $45.5 million, or 41.8% of revenue, versus 40.2% a year ago. EBITDA increased 6% to $19.7 million from $18.5 million, while year-to-date EBITDA reached $57.1 million, up close to 16%. Selling and admin expenses were $25.8 million, up 8% year over year. Net debt was roughly $164 million at quarter end, down from $182 million at fiscal year-end, and debt-to-EBITDA was about 2.3x. Year-to-date revenue was consistent with prior year, and excluding the one-time LCBO strike impact in Q2 fiscal 2025, revenue growth was between 1.5% and 2%. Management did not give formal full-year numeric guidance, but said Q3 and year-to-date results put the company on track for a strong fiscal 2026 and ongoing growth in fiscal 2027. They also said margins are expected to increase into fiscal 2027, though at a slower rate, and that Q4 outlook supports year-to-date margin trends.

Paul Dubkowski described the quarter as strong and said revenue, margins and EBITDA are at or near all-time highs. He emphasized execution across channels and regions, especially Western Canada and Ontario, along with strategic growth in sparkling and better-for-you products. He framed LayLow’s launch, a Peller Estates refresh, and continued innovation as central to the company’s long-term growth strategy, while also pointing to healthy cash flow, reduced leverage and optionality for M&A or asset sales.

Renee Cauchi focused on the financial drivers behind the quarter: 3.3% sales growth, gross margin of 41.8%, EBITDA of $19.7 million, and year-to-date EBITDA of $57.1 million. She attributed margin expansion to the cost savings program, lower input costs for glass bottles and inbound freight, and the Ontario Grape Support Program, which was absent in the comparable prior-year periods. She also noted S&A of $25.8 million, a 26% decline in Q3 interest expense, net debt of about $164 million, and inventory of $156 million, which was down from $170 million at fiscal 2025 year-end due to disciplined inventory management.

Analysts asked how much of the revenue growth came from new products and market share gains; management said it was a mix of core portfolio performance, innovation, and stronger execution across liquor board, grocery, big box, estates and Wine Club. On margin sustainability, management said the bulk of the $25 million cost improvement plan has already been delivered, but additional initiatives remain and margins should keep improving into fiscal 2027, albeit more slowly. Questions on USMCA risk prompted management to say the business has limited U.S. exposure and can pivot sourcing more into Canada, while M&A and asset sales were described as active strategic priorities with no near-term timing disclosed. They also said Better-for-You category growth is about 60% year over year and LayLow is rolling out across Canada over coming months.