Premium Brands Holdings Corporation ($PBH)

Good morning. Ladies and gentlemen, welcome to the Premium Brand Holdings Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] And also note that this call is being recorded on Thursday, March 19, 2026. Our speakers today are George Paleologou, CEO and President of Premium Brands; and Will Kalutycz, CFO of Premium Brands. At this time, I would like to turn the call over to George. Please go ahead.

Thank you, Sylvie. Good morning, and welcome, everyone, to our 2025 Fourth Quarter and Year-end 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. Back to you, Sylvie.

[Operator Instructions] First, we will hear from Martin Landry at Stifel.

I would like to start with your revenue guidance for '26. You're calling for revenues of $9.4 billion at the midpoint. It represents a revenue growth of around 26% year-over-year. So I was wondering if you can talk about what type of cadence do you expect on a quarter basis? Is this going to be -- is this revenue growth going to be evenly distributed? Or is it going to be a little bit more front-end loaded?

Yes. It will be -- again, a lot of our growth is ramping up. So you'll have a sort of a ramp-up across the year, Martin, and then within that, there's obviously the seasonality, Q1 being the softest quarter of the year and Q4 being the next office and then 2 and 3 sort of being our strong seasonally strong quarters.

Okay. Just to be clear, Will, does that mean that the revenue growth is going to be more -- is going to be higher in Q2 and Q3 when we look at this on a year-over-year basis.

In dollar terms, absolutely.

Okay. Okay. And then what does the EBITDA cadence looks like/Again, when we look at your EBITDA dollars growing on a year-over-year basis, when do you expect the biggest growth? Is this going to be back loaded given the commodity cost pressure you've had in H2 of '25.

Yes. We're -- like on a product basis, by Q2, we're expecting -- and we're talking mainly 2 groups, our protein group and our lobster group. So I'll separate those and talk about them separately. On the protein group, by the end of Q1, we expect their margins on a per product basis to be back to normal levels. Our final price increases will have impacted by the end of the quarter. So that noise is kind of not going into Q2. So on the specialty food side then, the rest of the margin expansion is primarily driven by volume growth, which will be the major driver. In terms of the lobster group, 2025 was an incredibly tough year in that segment with the main fishery. So it's really going to be a factor of how the fishery goes. We're a little more optimistic. Q1 will still be tough because we're carrying through the issues of 2025, but we'll be through all of our high-cost inventory by that point. And so again, on the Premium Food Distribution group side or in the Lobster Group, in particular, you should start seeing normalization margins. And so their margins getting back to more normal levels in Q2 and then being steady for the rest of the year.

And what he meant, Martin, is Q1 will be tough for the lobster group, not Premium Brands.

Premium rest food distributions.

With this part of it, yes.

Yes. Okay. So in terms of EBITDA cadence, a little of a slower start that ramping up starting Q2.

Exactly.

Because of seasonality, mainly Martin, right? Because [indiscernible] seasonality and the beef costs are going to be -- and the lobster cost.

[indiscernible] which you've explained.

Yes.

Next question will be from Derek Lessard at TD Cowen.

Congrats on the quarter given the volatility that's going on out there. George, I just want to hit on your comments from the call this morning. You talked about a shift or a consumer shift to buying lower cost -- some of the lower-cost products. Could you maybe talk about that shift and how that impacted you? And what product categories were you referring to specifically?

Derek, what specifically are you referring to in my prepared remarks. I was I think that the point there is that there is definitely a shift away from purchasing ultra processed foods. I think you're seeing it in all the stats that's coming out. Again, the new U.S. food guide, obviously, a narrative from there talks a lot about it. In the U.S., it's quite significant because a lot of the school lunch programs the food programs for the military and the SNAP program as well is changing. A lot of ultra processed foods do not qualify under those programs. So again, there is definitely a shift towards more wholesome foods with more natural ingredients, definitely a shift towards protein particularly clean protein, which is where we play. And we're seeing that with all the requests we're getting from different customers to provide them with innovation sessions around our products, right, which is what is driving our growth.

Yes. Sorry, sorry, George. Maybe I wasn't clear. I think I was talking -- I'm talking more about the challenging consumer backdrop and if there's been any trade down?

Again, Derek, as we've said before, from our perspective, over the past year or so, we have seen changes in the channels that the consumers are shopping for their food, right? For example, there's been some transition from mainstream retail to club, for example. Again, you're seeing it in some of the reported numbers from some of the publicly traded companies in the space. We're not seeing a lot of changes in regards to the way the consumer eats. The trends that we've been investing in -- again, what I mentioned earlier in terms of eating cleaner food, less ultra processed foods. So those are continuing. I was just at a conference in Washington, D.C., which showed all the statistics from '25. And all of the trends, 9 out of 10 leading growth categories in all of retail are protein and meat related, 9 out of the 10 right? So basically, the trends that we've been talking about are continuing.

And Derek, I would add, it's interesting because where we're seeing the most in our business and that comment is on the food service side of things, we are seeing a much more price-sensitive consumer. Our food service customers are looking for solutions, price-based solutions and that's historically what we have seen in economically challenged times. And then correspondingly, we generally see some pickup or benefit on the retail side as people eat out less. The interesting part and what's driving all our growth, all our capital investment has been around the U.S. And at this point, it's primarily a retail strategy. So we're not exposed to that food service sensitivity in the U.S.

Okay. It's top for maybe products like at the [indiscernible] stores, right, the [indiscernible] priced?

Yes, yes. Although our biggest exposure there is jerky. And you're not seeing that category too well as we called out in our MD&A. And I guess -- and where we are exposed in the foodservice side on the sandwich business and QSR, again, that unique part of the channel seems to be pretty economically solid and sort of that small luxury concept, and it tends to do fairly well or find through these more economic times. And that's what we're seeing play out today.

Okay. And then maybe one final one for me before I requeue. Good progress on the free cash flow. It feels like it all back still a little bit by the working capital. It looks like as you build up your as you build up your programs mostly on inventory. Can we be expecting a release of that cash in the coming quarters and when?

Yes. It's the first quarter in a long time. I can say I'm I'm a little bit happy at the progress we made on inventory because when you dig into it, we build about $70 million of inventory for 3 key protein programs. Our [indiscernible] program, our sticks program and our Kebab program. And it was purposely built to support us through the busy summer seasons. We're building inventory going into those seasons because we can't meet demand with our production capacity if we don't build in the offseason. And so it's a big -- it's a very positive story, the inventory build. You strip that $70 million out, our days purchase in inventory is about 57. And that's starting to get pretty good. A return probably targeting closer to 55, but we're getting very close to targets. So in answer to your question, yes, we should see that free cash flow starting in Q2 as we start to liquidate that inventory.

Next question will be from Michael Glen of Raymond James.

Maybe just to start, Will, can you just give some -- you made the comment on the earlier question regarding the beef price inflation, but are you comfortable like I'm just trying to assess if you look at the USDA data recently, it looks like beef has been moving higher. Like what level of beef price have you embedded into the guidance? And are you comfortable with that level? We're just trying to get an idea of all of that.

Yes. So yes, we definitely expect beef to be inflationary this year. That demand continues to be very strong win corresponding to George's earlier comments on consumer trends. and at the same time, supply continues to be very tight in North America. So we are expecting it to be inflationary, that is built into our guidance. But the issue in the back half of last year and what shocked us so much was what happened with the tariff situation in the U.S. with Brazil. that really created a tremendous amount of volatility that wasn't factored into. Taking out those types of black swan events, we feel very comfortable with the pricing strategies we put in place at this point for 2026.

Okay. And in the third quarter, you provided a figure with specialty gross margin, excluding the higher beef price. Do you have a similar figure for Q4?

Well, it's interesting because that figure, what we did in that figure is we looked at our selling price increases in our protein group of businesses, and we compared that to the increase in beef prices. And we took that nominal difference and that's what we used in the MD&A. What that does not reflect is the fact that that's just a cost recovery. You're still not recovering your margins. And so in Q4, we actually made great progress on our pricing. So when you do that math, it's actually slightly positive. It's about $2 million positive, i.e., our selling price increases, net of commodity and wage inflation was a positive $2 million. But the issue now is our percentage margins still haven't come back because the price increases weren't fully implemented. So it becomes a little more difficult to come up with that number when you're now going from just a cost recovery basis to what the margin should be. So that's why we didn't disclose it this quarter.

And then just on the Shaw divestment, does Shaw get netted out of the reported results at the time of sale, so in 60 days? Or does it get netted out as a discontinued op from the beginning of the year?

Yes. We'll probably -- because it's not material, we're going to argue it's not a discontinued ops. So it will just be netted out from the day we sold and there seems to be a little bit of confusion around the Shaw transaction. So yes, we've excluded Shaw for the 3 quarters of the year. That's about $170 million in sales that we've pulled out of the guidance, if you want to compare it sort of pre Shaw to post Shaw transaction. And on the EBITDA side, for '26, we're budgeting before restructuring costs, about $21 million, most of that being in the last 3 quarters, about $20 million of it being in the last 3 quarters. So we pulled out that $20 million from our guidance. So if you want to normalize the guidance for the Shaw numbers, it's $170 million in sales and about $20 million in EBITDA.

And all the numbers that Will has mentioned, Michael, are in Canadian dollars. There seems to be some confusion in terms of what's U.S. or Canadian in some of the commentary I saw all the numbers you mentioned are in Canadian dollars.

Next question will be from Chris Li at Desjardins.

Sorry, my [indiscernible] might have been a big source of the confusion, I apologize for that. Well, maybe 1 -- I start with the question on the Stampede acquisition. When the deal was first announced, I think you provided some EBITDA guidance for 2026 of around USD 90 million. Just wanted to check in to see if that's still a reasonable outlook. I just asked in the context of your earlier comments around the foodservice channel being a bit more sensitive. I think Stampede is a bit more leverage to foodservice. I know there's some unique advantages, obviously, to that business that may make it more resilient. So I just want to check in to just see the outlook for Stampede is still valid.

Yes. So the actual number -- total number, Stampede was $90 million, and then we had $8 million of synergies built into that number. So a total contribution of $98 million. And we still feel very good about that. The food service exposure, you're absolutely right that, that is a different characteristic of Stampede. That was one of the reasons that attracted to us because it further diversified our cash flows. But it's very interesting because whereas they are seeing. Their customers are seeing some softness in their sales, which is no surprise. But what has been happening is their customers have been coming them to more product solutions, more LTO-type transactions, which they do incredibly well on in terms of their ability to meet what the customer is trying to do. And so yes, that -- if you just looked at 1 SKU within the Stampede business, you might see some softness but they're more than making it up in these other opportunities around LTOs and new product development.

Yes. The other comment I have, Chris, is that they're not just food service. They do a lot of business with club and retail. This is the part of the business, the business that's growing and will continue to grow in the future. And again, based on some of the macro trends that I talked about earlier.

Okay. That's very helpful. And my second question is just again on your revenue outlook. If I look at your Specialty Foods, excluding Stampede, just last year, [indiscernible] organic volume growth rate of almost 10%. When you think about your outlook for this year, are you expecting the [indiscernible] to be similar, like almost 9% to 10%? Or do you expect it to accelerate given you have on the immune program still coming through the year?

For the year, Chris, our organic volume growth rate in the Specialty Foods, I believe, is about little over 8.5% for the year. And it had accelerated through the year. So by the end of the year, we're around the 10%, I believe, for Q4. For 2026, we're expecting an annual rate closer to the Q4 rate. So going from 8.5% to about 10% for the year.

Next question will be from Luke Hannan at Canaccord Genuity.

I appreciate the added disclosure when it comes to ROIC in the MD&A as well. I just wanted to follow up on -- it's mentioned in there, the ramp-up costs that were associated with Shaw. But overall, do you expect that divestiture to be dilutive at all to ROIC in the near term, just given the contribution of margins in bakery and how much higher [indiscernible] development.

Well, it's interesting, Luke. If you separate out show from -- we look at the ROIC on the different groups within the platform, the Specialty Foods platform. So for our bakery platform, you look at ROIC on that business, and it was about 7% this year. But if you strip Shaw out, it's actually 17.5%. Our artisans brand business, which they built -- they were the first plant built in our most recent CapEx cycle. They finish their plant in 2022. And that plant is now coming to close to capacity or at capacity. And so they're hitting out of the part of ROIC. Shaw is still in the early days of the ramp-up, last start-up costs, a lot of things to work out in the new San Leandro plant. So their ROIC has been suffering because of that.

Okay. Got it. And then just for my follow-up here on the thought behind the keeping that minority stake. I mean it would seem like the intention would probably be at some point in time down the road for you guys to divest that as well? Is that...

No, no, let's be clear, that's a great question, Luke. We only own 74% of Shaw. Our partner down in San Francisco owns the other 26%. So we will have fully exited our investment in Sharwood's transaction. So that USD 114 million in proceeds we received. That's for 74% of the business. So you need to divide that by 74% to get sort of a full value of the business concept.

Sure. And then so following on that logic, then so a rough math, I'd say you guys got about 10x for that stake?

Yes. Yes, if you take the $21 million in projected EBITDA for 2026, convert that to U.S. dollars, that's about USD 15 million in EBITDA. You take out -- there's still going to be some ongoing restructuring costs with the business. Yes, we're a little over 10x the multiple.

Not only that, Luke. But again, as you know, we're not a financial investor here. We're a strategic investor. And we found an excellent buyer for the business. And again, there's tangibles and intangibles to this type of transaction. And we're going to work together with the buyer for for me to benefit in the future. So we will be partners with them in the future in our core business.

Next question will be from Ty Collin at CIBC.

For my first one, I'm just wondering if you could provide a little more color around the gross margin decline in the quarter. I know you guys called out a few factors in the MD&A, but I just want to understand what the biggest drivers were there since it sounds like commodity headwinds were actually quite a bit lower sequentially. And just how we should think about that into 2026.

Now Ty, are you looking at consolidated or in the individual segments?

I was referring to consolidated, but yes.

Okay. Yes, yes, because if you're looking at a consolidated basis, the biggest single factor was in our lobster group. Going back to my earlier comment of taking selling prices, less commodity impacts and looking at what that number is, the fourth quarter, you take our selling price increases on our lobster products and take the commodity cost impact, commodity cost inflation on the lobster procurement, that's about -- that was about a $6.5 million hit in the quarter. That was the single largest impact on our gross margins. And then if you look at the Specialty Foods Group, it was my comment earlier. Our protein margins, protein group's margins are still below where they should be. because we're still in the process of realizing on our beef price increases. So that was a contributing factor. But the single biggest one was the lobster issue.

Okay. So it's still more of a -- within specialty because it's still more of a commodity issue rather than plant start-up or any other sort of...

Sorry, sir, that's a great point. Yes, we had about $10 million of incremental overhead costs associated with our Tennessee facility, our various protein lines that have come on and with one other new plant that came on that -- I'm not recalling right now. So yes, you're absolutely right. but partially offsetting that was we had incredibly strong organic volume growth in the quarter, right? Our U.S. growth initiatives hit 18% organic volume growth. So that's helping to cover some of that plant overhead.

Okay. Got it. And then just for my follow-up on the M&A pipeline. So I mean, just based on the debt you put out this quarter, it looks like that's emptied out pretty significantly compared to what it was in Q3. Is that because you're seeing fewer quality opportunities out there? Or does that reflect more of a deliberate decision to kind of take a breath and focus on some other priorities in the near term?

Yes. We are in a number of discussions, Ty, with some excellent companies. I think we're cautious. Obviously, there is a war going on, and we have some concerns around the impact of high gas prices and consumers and those type of things. But certainly, we're very busy. We're always in discussions with companies that we think will complement our our portfolio of food companies. And with regards to that schedule in the deck, we're always very careful because we're a big player now. And a lot of times when we disclose discussions as advanced people speculate us to do. what companies they are. So we're trying to be a little more cautious. But again, we're obviously very acquisitive, and we still -- we're still looking at a number of wonderful opportunities.

Next question will be from Nevin Yochem at BMO Capital Markets.

You've got [indiscernible] on for Steve today. Just a couple of questions from our team. I guess the first is, are you able to provide an update on the major meat stick launch you guys had ramping up how did that progress? Are you fully ramped up now? And then if you're able to discuss initial margins relative to your expectations?

Yes. So in terms of the launch, it's gone extremely well. It's exceeded expectations, our expectations and our customer expectations. So very successful. It's using up a lot of capacity, which is which is a good problem to have, I guess, because we're unable to, in some cases, launch other programs that are in the pipeline. I won't comment about margins because we don't like to do that in terms of specific margins, about specific SKUs for competitive reasons. But again, yes, I think everybody is extremely pleased with the launch.

Yes. And the only thing I'd add, Nevin, is it is a cost-plus structure. So we are on that basis achieving our margins, obviously, because it's cost plus that we expected. The challenge in the quarter with the program though, it's such a big program, and it's impacting several different plants, including our new [indiscernible] expansion. So you probably noticed in the deck, it was by far a significant impact on the restructuring costs in the quarter. So that was one of the challenges of the program because we made it very clear. Every product that went into a store had to be 100% the best in quality. And so that resulted as we're ramping up the program and working through equipment issues and so it resulted in a lot of waste, taking such a strict adherence to our quality standards. The good news is we are now through that. So you're going to see that cost, that restructuring cost for that program drop off dramatically in Q1.

Great. That's good to hear. And a follow-up just on the investment income. It looks like you benefited from a onetime $5 million valuation gain in Q4. Excluding this, it looks like investment income has been consistently in the $15 million to $16 million range per quarter. Is that a fair run rate going into '26?

Yes. Yes, absolutely. And you're absolutely right. That was sort of again that we're not expecting that on a regular basis by any means. And that $15 million or so is a good run rate.

Next question will be from John Zamparo at Scotiabank.

I'd like to get a sense of what level of pricing you've taken on beef products that we'll start to notice in Q1. Without sharing the numbers, I wonder, does it reflect the peak inflation that we saw in the middle of last year or the lower level of year-over-year inflation we saw in Q4. Just wondering what the baseline is that you've based your pricing off?

Yes. It's not the peak, John. We all knew that -- sorry, we didn't know the peak was the peak, but there was a lot of hesitation to price off the peak because it was just so high, and we weren't sure could be sustainable. And in fact, it wasn't. So we priced off below it for most of our business. Now some of our businesses did price off that. They priced -- and they set prices in that chaos. But the reality is our customers now see what's happened, and we'll probably, to the extent that the pricing was so high, give some of that back. But overall, we're priced at a nice point between sort of where we are today in that peak, leaving us some flexibility for, like I say, the expected cost inflation we see for 2026 in the beef category.

The interesting thing, John, as I said earlier, is that despite high beef prices, and these are historically high beef prices particularly with certain cuts. Demand for beef not dollar-wise, but volume-wise, is still going way up. right? This is something that we haven't seen before. Normally, the price of values up substantially the impact the demand for vacant, those type of things. But even if beef prices are historically high, demand in terms of volume continues to increase.

Okay. And then thinking about inflation more holistically, the last time we saw a spike in oil at the start of the Ukraine war, beef costs surged shortly afterwards, I think inflation on some other commodities for PVH increased as well. I'm mindful of the comment in the press release of [indiscernible] beef inflation so far. But what's your expectation on commodity inflation for this year? And what are the implications to BBH if we do see a prolonged period of higher natural gas costs leading to higher fertilizer costs leading to higher feed costs?

Yes. Well, it's an interesting question, John, because the supply/demand dynamics that drive the cost of the raw materials we buy. They're indirectly but not directly impacted by the freight. That more impacts the packers and the farmers' margins, so we're far enough down the channel that it takes a long time until you see any of that kind of impact us. First, what has to happen is there's going to be a cutback in production cut back in process. So our expectations, at least for the near to midterm is other supply/demand and supply/demand dynamics are going to be more important than fuel at this point. Generally, where we see most of the cost and fuel is at least in the short to midterm is more in freight. Freight, if you go back to 2022, '23, we were talking a lot about freight costs as part of the inflation equation that hasn't been a story for the last couple of years. So that's where we do see sort of the more short-term impacts. And it's just not as material to overall margins.

The other thing, John, and you're making a little bit of a circular argument there because ultimately, the best thing about high prices is high prices, right? So there's a point where demand for beef will come down. It hasn't happened yet. But ultimately, if prices for beef continue to go up, there will be a point where demand will go down, and that will bring prices down. right? That's what I kind of wanted to explain earlier, right? The other part is that demand remains high, but beef comes from either domestic sources or from imports, right? And imports tend to be cheaper and the U.S. now has opened up to more imports, right? So the more supply that should keep prices lower rather than higher. So there's a number of dynamics there that will impact price.

Okay. And if I could squeeze one more in. I know you just sold 1 business, but I wonder if we can get an update on your plans to divest of other noncore assets. This is something that's been discussed in the past. But I don't know if there is anything you can say, but is there anything you can share about those plans or expected time line for completion?

Yes. We have a number of -- we're in a number of discussions, John, with regards to exiting investments and businesses that we deem non-core, we expect to close some in some more transactions in '26. We don't know exactly when, but we're definitely in a number of advanced discussions in that regard.

Next question will be from Vishal Shreedhar at National Bank.

Related to the specialty foods and the organic volume growth that we quoted, my assumption based on discussions through the year was the anticipated acceleration through the year, culminating in Q4 is a new stick program launch, but we saw the growth kind of sequentially slow, albeit, still strong. And within the process in particular, I was hoping if you could comment on that or if there was something that happened probably through the quarter that may changes trajectory?

No. If you look year-over-year for quarters, sequentially, it did get stronger every quarter, the organic volume growth rate for the group. On a quarter-over-quarter basis, the only thing without drilling into a little bit more would be seasonality, Vishal, be the only kind of factor maybe to consider.

Yes. The other factor, we shall see absolute timing of launches, right? These are big, big launches. And the timing makes a difference in terms of what we move forward.

I see. Okay. So regarding from Q3 to Q4, the seasonality would have been the impact that we should consider in terms of the change in trajectory?

Yes, Yes. It's really the acceleration is sort of on a year-over-year quarter comparison.

Right. But Q3 would not attack the large new [indiscernible] launch, it started in Q4 partly through, is that correct?

Yes. correct.

Yes, correct, Vishal. It was delayed to the fourth quarter. And it was partway through the fourth quarter that it launched. It wasn't the full quarter.

And was launched in Canada in Q1. So it did not launch in Canada until Q1 '26.

Okay. And with respect to, Will, the comments that you provided earlier on in this call and you said you anticipate an acceleration of trends through the year recognizing seasonality in Q2 and Q3, is the suggestion then that we should anticipate Q1 organic volume growth to slow before we constitute through Q1, Q2 and Q3. Q1 slow sequentially, albeit store growth.

Yes. Again, on a year-over-year basis, Vishal, it will accelerate on a quarter-over-quarter basis, I'd have to go back. I'm not sure what the answer to that would be. I would suspect so because they're both seasonally slow quarters. And like I said, the -- 1 of the biggest drivers of our growth has been the stick launch and that was partway through Q4. So we'll get a full quarter in Q1.

Right. Okay. And you commented on the restructuring costs, the $25 million. And how should we think about the restructuring costs we're building through the year and they are larger than they usually happen with PVH and those are adjusted out, I understand. But in 2026, how should we think about the restructuring costs are going to be incurred. Do you have a sense in your plan?

Yes. Yes. Q4 came in higher than our original plan. We had 2 major issues that caused the variance. So we've got a slide in the deck that outlines sort of the individual initiatives. Just the labor transition issues at our Shaw facilities in San Francisco, the degree of challenges around that wasn't anticipated. So that was about a $5.7 million variance in the quarter. As you know, Shaw bakers has been sold. So we're not going to see -- we'll see some in Q1, but we won't see any more after that. And then the other one was the product launch, the stick product launch, which again, to keep our product quality standards at the level we wanted resulted in a tremendous amount of waste. That waste was higher than expected. So those 2 issues are essentially gone now. So those are the big variances, the big numbers in the quarter. We are expecting for 2026 a much lower number. You got a little bit of carryover on the sticks. The Tennessee project is now complete. Our pillars project is making some good progress now. So we expect that's the only one to go to in Q2 and then after that, it's sort of some miscellaneous projects. So it will certainly be a much, much lower number in '26 than it was in '25.

Next question will be from Chris Li at Desjardins.

Maybe just a question on leverage. I think pro forma Stampede, your leverage is around 3.9x, and you're still targeting that to get to the low 3s, I think, by end of this year, early 2027. Can you just walk us through kind of what are the key drivers that will get you there? And how much visibility do you have to achieve that target?

Yes. So yes, in terms of getting to our targeted total debt to EBITDA ratio of 3 or that are absolutely still targeting end of '26, early '27. That has not changed. Again, the key drivers are, first off, leveraging the capacity we've invested in. So growth in our EBITDA. That's going to be the biggest single driver. There will be some debt paydown because you're going to see a nice improvement or a significant improvement in our free cash flow. The saw transaction takes our turns down about 0.2 to 0.3 turns. So that's an immediate benefit when we close that transaction. Those are probably the big immediate factors driving it.

And some of the other noncore...

It does happen. That's -- if there's another transaction that would only accelerate it. But just based on our modeling and our assumptions and status quo, with the transactions that have happened so far, that's the plan, Chris.

Okay. Yes, that was my other question was is predicated on more divestiture, but it doesn't sound like...

No, absolutely not. That would only accelerate it.

Okay. And then George, thanks for the update on sort of your thoughts around non-core assets. That was helpful. I know another group of businesses that you look at as you kind of call it, strategic assets. Any sort of update on that in terms of monetizing some of those assets this year?

Again, Chris, I would say that, as you could see, we are growing substantially in the U.S. We still think that we're in the early innings in the U.S. where in some areas now, we've added a lot of capacity, and we are looking for more capacity or examples in sticks as we speak. And so we're always trying to sharpen our focus. We like the opportunities we see in certain parts of the business. And we're looking at our overall business a little differently. But I can't say more than that. Again, really excited by some of the growth opportunities we're seeing organically and by acquisition in the U.S. market.

Okay. So I was not clear. I was thinking more just in terms of you guys maybe partnering up with someone. Is it like a supply chain partner where you can allow you to take some of the [indiscernible] out of your -- some of your assets?

As I said earlier, Chris, that is part of what we view as some monetization of potentially non-core assets, right? So that's one of the ways that we're looking at to basically take some capital from a part of the business where maybe the returns are not as high as the potential returns we could make by employing it in the U.S. in our core businesses there, right? That's part of that process. And as I said earlier, we're in a lot of those type of discussions. I don't know at this point in timing, but certainly, there's a lot on the go in that regard. There's a lot of very good companies that are interested in partnering with us in some of our segments.

Okay. And then my last question, just going back to your comment about the free cash flow improving. Can you just remind us or share with us what is your CapEx projection for this year? And also maybe from a working capital perspective, I know last year, there was a usage of about $300 million. What is your expectation for 2026?

So on the CapEx, we really talk about 3 buckets. One is our maintenance CapEx, which we're projecting $70 million to $75 million for the year. The second is our approved major CapEx projects, and we've got a slide that outlines those in the presentation. there's about $67 million left to spend on those projects over the next 3 quarters, Q1 through 3, up '26. And then we have smaller CapEx projects. And generally, we spend about $70 million plus on those projects is our expectations going forward with Stampede joining the group. So as of today, that's what's committed to or that's the plan. But I mentioned earlier, our sandwich group is running into capacity issues. So we may look at other projects in the future. But at this point, that's all that's in the pipeline. In terms of working capital, like I say, we've made good progress on our core inventories. The issue at the end of the year was the buildup for -- to support our growth. So going forward, really, the driver is just going to be our growth and buying opportunities there'll be volatility around that. So I can't give you a number around on net working capital. I'll -- other than to say it will increase with the growth of our business.

[Operator Instructions] Next we will hear from Ryland Conrad at RBC Capital Markets.

Just on the revenue guidance for 2026, could you impact your assumptions there for growth in Canada?

We don't give specific guidance on Canada, Ryland. But in general terms, it's not a big piece of our expectations for the year. At best, it's probably 2% to 3% volume growth would be our general expectation on the specialty foods side, a little bit higher on the premium food distribution group, which is primarily on the distribution side of Canadian business. But again, the excitement in our business, the big growth driver of our volume growth is going to be or is our U.S. initiatives. And it will be interesting to see 2026 because 2025, it was our protein sandwich of bakery groups. We've got a lot of exciting stuff happening in our culinary group right now. We built a new facility in Maine. We've made some investments here on the West Coast in our culinary capacity. And it's an exciting category with a lot of opportunities, and we expect them actually to be a nice driver of growth, start registering on our organic growth in 2026. But again, all of that centered around the U.S. and the investments we're making in the U.S.

Great. And then just on the truck sales within Specialty Foods, could you just remind us when that headwind began to emerge in 2025? And how have sales or the year-over-year kind of sales decline trended sequentially? Like are you seeing incremental pressure there? Or is it generally stable?

It kind of -- it's a little volatile. It seems to go up and down a bit. It was a tougher quarter this in Q4 because for the last number of quarters, you've been seeing contraction in our jerky sales, and that reflects what's happening in the market. It's a very high-cost product that has historically targeted at a young male consumer and so a much more price-sensitive consumer in the C-store channel. And correspondingly, you've seen that whole category come under pressure given the high beef prices. So the other factor though that accelerated or made it a bit bigger in Q4 versus where it had been trending is we also have some very successful Turkey tender programs, so like a Turkey jerky almost. And Turkey prices have just gotten so incredibly high that there -- we've started exiting categories because the price point has just gotten too high. So it was a little higher this quarter because of that. But outside of that, if you look at the category in general, that's kind of where our jerky sales have been trending as well.

Again, if you go back a few years when we partnered with Oberto. Oberto was a jerky company effectively a national jerky company with very little business in sticks. At the time, we said that the opportunity for Oberto and for us is to leverage the Oberto's platform to grow the premium sticks today, effectively, it's a much larger company, but it's predominantly one of the leading state companies in the U.S. today. As Will said, we just haven't been focusing on jerky, jerky's a legacy type of item. But really, the big focus in terms of marketing promotions, capacity expansions has all been in sticks, we were right. The Stig industry has particularly the premium stick industry has exploded in the U.S.

Okay. I appreciate that color. And then just last for me. modeling question on corporate costs. I guess is it safe to assume this kind of $30 million annual run rate is good going forward. I know it's consistently been in -- it's kind of $8 million to $10 million range through the first 3 quarters and then drops quite a bit in Q4. So just how should we be thinking about that?

Yes. So the big -- the volatile factor there is discretionary employee discretionary costs, so bonuses. And clearly, with the challenges in the protein group, and the ban the Shaw Bakery Group and the Lobster Group, discretionary compensation was down significantly. So that's one of the factors you see driving the decrease in the corporate costs and SG&A in general. So you kind of have to normalize that for that. And so going forward '26, assuming we hit our numbers as we expect, you should expect a higher corporate cost because of higher discretionary compensation.

Next question will be from Derek Lessard at TD Cowen.

And by the way, I did see $20-plus U.S. turkey prices at Logan Airport. I got that point.

No surprise there, Derek.

Yes. I just -- Will, I just want to clarify the sales guidance, the [ 9.25 to 9.55 ]. To be clear, if it was included in the Shaw Bakery, it would -- those numbers would have been $170 million higher?

Yes, $170 million to $180 million to reflect sort of the range concept Canadian.

Okay. And the same thing on the EBITDA, correct?

Correct.

At this time, we have no other questions registered. I would like to turn the call back over to George Paleologou.

Yes, I'd like to thank everyone for attending today. Thank you very much.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.