Lassonde Industries Q3 2026 Earnings Call Transcript
Lassonde Industries (TSX:LAS) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Lassonde Industries reported a slight decrease in Q3 sales to $713 million from $724 million last year, with a 2.3% decrease excluding favorable foreign exchange effects, mainly due to production disruptions and changes in promotional strategies.
Gross profit increased to $206 million from $198 million, attributed to lower commodity costs and favorable sales mix, despite higher conversion costs and transportation expenses.
Strategic initiatives include the gradual transfer of production to a new New Jersey facility and resolving equipment challenges in North Carolina. These initiatives are impacting short-term growth opportunities but are aimed at strengthening future operations.
The company maintained market leadership in the Canadian beverage sector and gained share in the U.S. with the Apple & Eve brand, despite overall volume pressures from macroeconomic conditions.
Management anticipates continued pressure on demand and volumes, with 2026 sales expected to be slightly below last year. The company plans to focus on innovation and cost management to navigate ongoing challenges.
Full Transcript
OPERATOR
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Lassonde Industries’ 2026 third quarter earnings conference call. The corporation’s press release reporting its financial results was published yesterday after market close. It can be found on its website at lassonde.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. If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time. Before turning to management’s prerecorded remarks, please be advised that this conference call will contain statements that are forward-looking within the meaning of Canadian securities laws. Forward-looking information is based on management’s current expectations and assumptions and is subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. For a discussion of key assumptions and risk factors, please refer to the Forward-Looking Statements section of the MD&A. Also note that all figures expressed on today’s call are in Canadian dollars unless otherwise stated, and that most amounts have been rounded to ease the presentation. This call will also include certain non-IFRS financial measures and ratios that are not standardized under IFRS and may not be comparable to similar measures used by other issuers. Reconciliations to the most directly comparable IFRS measures and related definitions are provided in the appendix to the presentation and in the corporation’s MD&A. This conference call is being recorded on Friday, November 6, 2026. I will now turn the call over to Vince Tempano, Chief Executive Officer.
Vince Tempano (Chief Executive Officer)
Good morning, ladies and gentlemen. I am here with Frances Trudeau, our Chief Financial Officer. We appreciate your time today as we review our results for the third quarter ended September 26, 2026. Please turn to Slide 4. Lassonde delivered another quarter of gross profit and EPS growth despite a challenging operating environment. Externally, macroeconomic uncertainty continues to weigh on consumer sentiment, placing pressure on volumes across several segments of the agri-food sector, while inflationary pressures also impacted freight costs.
Internally, temporary production issues in our U.S. beverage network constrained our ability to meet certain growth opportunities and, to a lesser extent, increased conversion cost. Despite these headwinds, the strength of our brands, continued disciplined revenue management, and the agility of our network enabled us to consolidate our position in key categories. Now let’s turn to Slide 5 for a closer look at our operations, beginning with beverage activities in our U.S. beverage business. Commercial gains offset category softness, but supply constraints driven by internal operational issues led to a volume decline. Disciplined pricing and promotions enabled us to remain competitive while delivering value amid evolving consumer purchasing behaviors. In private label, our performance was in line with the category, while brands outperformed, driven by distribution gains for Apple & Eve as it continued expanding with national retailers in the U.S. Midwest.
The brand also gained incremental distribution in certain channels driven by innovation in reduced-sugar juice box formats. Regarding the production issues noted earlier, certain mechanical problems on a North Carolina single-serve line resulted in a production shutdown of approximately 20 days, while managing end-of-life assets at our existing New Jersey facility caused temporary disruptions and suboptimal production levels. We quickly mitigated these disruptions by shifting production to other facilities, including to Canada.
While these measures increased conversion and transportation costs, they also limited our ability to pursue certain growth opportunities, particularly in single-serve formats that continue to outperform the category. As for our new facility in New Jersey, we remain on track to begin the gradual transfer of production activities and the initial test runs near the end of the fourth quarter, with the transition continuing through most of 2027. Turning to Slide 6 for our Canadian beverage activities, this quarter we sustained our market leadership despite category volume declines, underscoring the strength of our Canadian beverage portfolio. We also maintained disciplined pricing and promotional practices that preserved our competitiveness while adapting to shifts in consumer behavior. Our national brands were up against a strong prior year comparison, but Oasis delivered further volume and market share gains in the chilled category, while shelf-stable volumes were affected by changes in retailers’ promotional strategies.
Meanwhile, private label volumes remained soft, primarily reflecting changes in a major customer’s go-to-market strategy as well as our planned portfolio optimization actions, including the discontinuation of selected product lines. Moving on to foodservice on Slide 7, North America volume growth remained constrained as macroeconomic pressures continue to weigh on away-from-home dining. Nevertheless, our overall volumes remained relatively steady, with new concentrate business from national accounts offsetting broader market softness. As for bag-in-box, we continued ramping up volumes with a prominent Canadian-based QSR chain, meeting or exceeding expectations, and we are now introducing innovations to support seasonal menu items.
We also launched a new offering with a U.S. provider of automated beverage dispensing solutions using our aseptic packaging platform, reflecting our growth presence in foodservice. I’m proud to share that we received two important industry honors. First, we were named one of Sysco Canada’s top 10 suppliers out of more than 1,500, and we were the only beverage supplier recognized. Second, Gordon Foodservice recognized us through its 2026 VIP awards, which honor key partners across North America.
These awards reflect our ability to meet the high standards of an industry where consistency, dependable service, and responsiveness to customer needs are essential. Now let’s turn to specialty food on Slide 8. North American industry volumes remain soft across most of our product categories. At the same time, consumer demand became increasingly polarized, with some consumers trading up as an alternative to dining out and others prioritizing more affordable, value-oriented options. That said, our core premium and super-premium pasta sauce subcategories continue to outperform the market, with third-party brands delivering volume growth in both the U.S. and Canada, supported by earlier distribution gains.
As for our brands, G. Hughes non-BBQ better-for-you specialty sauces have performed very well, delivering double-digit sales growth driven by a new brand campaign and innovation in Asian-inspired sauces, while facing greater competitive pressure in the U.S. barbecue sauce category. In Canada, G. Hughes delivered strong performance as we continue to expand the brand’s reach. It is now available at 10 of Canada’s leading food retailers, and building G. Hughes into a leading North America better-for-you brand remains a priority.
I now turn the call over to Francis for a review of quarter three results. Francis.
Francis (Chief Financial Officer)
Thank you, Vince. Good morning, everyone. Let’s turn to Slide 9. Third quarter sales totaled $713 million versus $724 million last year. Excluding a favorable foreign exchange effect, sales decreased by 2.3%. The reduction reflects the impact of the change in promotional strategies of certain retailers, the discontinuation of low margin or non-strategic product lines at our Canadian beverage business, suboptimal production levels at our New Jersey and North Carolina plants, and general category trends.
On the other hand, we benefited from a more favorable sales mix. Please move to Slide 10. Gross profit amounted to $206 million, up from $198 million a year ago. Excluding a favorable foreign exchange impact, it rose $5.4 million, or 3%, reflecting a decrease in orange and apple commodity costs and a positive shift in the sales mix. These factors were partly offset by higher conversion costs, mainly due to the temporary equipment issues mentioned earlier, higher PET resin costs, and lower sales volumes. SG&A expenses were $149 million, up $9 million versus last year, mainly due to higher transportation costs to deliver products to clients and an increase in selling, marketing, and certain administrative expenses.
Excluding items impacting comparability, adjusted EBITDA was $84 million, or 11.7% of sales, versus $86 million, or 11.9% of sales, last year. Turning to Slide 11 for profit excluding items impacting comparability. Adjusted profit attributable to the corporation’s shareholders totaled $41 million, or $5.94 per share, up 2% from $40 million, or $5.84, last year. Let’s turn to working capital on Slide 12. At the end of Q3, the days of operating working capital ratio stood at 50 days versus 46 days three months earlier. While the ratio remained within our normal seasonal range, the sequential variation reflects lower days of payables outstanding. Please note that we also expect year-end working capital to remain within historical range.
Now on to Slide 13 for cash flows. Operating activities generated $63 million in Q3 2026 compared to $118 million last year. The variation comes from working capital requirements of $1.4 million this year as opposed to $51 million released last year. Capex totaled $55 million in the quarter, and they are still projected to reach up 7% of sales in 2026, including approximately US$87 million for the New Jersey project. Looking ahead to 2027, residual investment to complete the New Jersey facility should result in Capex being above historical range but below 2026 as a percentage of sales.
Turning to our financial position on Slide 14, Lassonde’s net debt was $456 million at the end of the third quarter, relatively stable from $451 million three months earlier, as operating cash flow generation was offset by Capex and dividends. As a result, the net debt to adjusted EBITDA ratio was 1.25:1 at the end of the quarter compared to 1.22:1 three months earlier. All things being equal, we expect the leverage ratio to remain well below our internal maximum threshold of 3.25:1.
As for our share repurchase program, since reinstating our normal course issuer bid in August, we have repurchased more than 68,000 shares to date for total consideration of $15.8 million. As a reminder, the program allows us to repurchase up to 200,000 shares over a 12-month period. Before turning the call back to Vince, with less than 2 months remaining in fiscal 2026, we will provide an outlook extending into early 2027. Please turn to Slide 15. In the coming months, we expect consumer demand and volumes to remain under pressure as affordability concerns continue to influence purchasing behaviors. As a result, we reiterate our view that fiscal 2026 sales will be slightly below last year’s level, excluding the impact of foreign exchange.
In addition, in relation with the asset impairment announced in the previous quarter, 2027 sales will reflect contractual changes with one important specialty food customer. We’ve already secured approximately 70% replacement volume for 2027 and remain in active discussion for the balance. However, uncertainty remains about our ability to replace that volume at historical business terms. On the cost side, higher crude oil prices are expected to continue putting pressure on transportation and PET resin costs.
Partially offsetting these pressures, we continue to expect the benefit from favorable commodity costs. Moving to Slide 16, conversion costs in our U.S. beverage network may also remain higher for the balance of 2026 and early 2027 for two main reasons. First, managing end-of-life production assets at our existing facility in New Jersey may result in suboptimal production levels. Temporary disruptions similar to those experienced in Q3 may occur until the transfer to the new facility is complete. Please note that as we begin transferring production later in the fourth quarter, we expect to incur usual startup costs.
We intend to classify these as items impacting comparability between periods and exclude them from adjusted EBITDA and adjusted EPS. Second, although the situation in North Carolina is improving, we continue to prudently operate a single-serve line at a reduced run rate. We have temporarily shifted some production to other facilities until we reach a normal cadence, but these mitigation measures are also resulting in higher freight costs. That concludes my section.
I turn the call back to Vince for the conclusion.
Vince Tempano (Chief Executive Officer)
Thank you, Francis. Please turn to Slide 17. Our performance to date in 2026 demonstrates the resilience of our business and the effectiveness of the actions we have taken to deliver sustainable profitability. While external pressures from a challenging macroeconomic and geopolitical environment may affect consumer spending, input costs, and supply dynamics, our focus remains clear: leverage the strength, depth, and breadth of our portfolio and execute on the levers within our control, including optimizing our commodity exposure through product innovation, maintaining price discipline, and implementing targeted cost initiatives to protect margins.
Turning to Slide 18 for our priorities. Our immediate focus is on executing a successful production transfer in New Jersey. We are very excited with the upcoming start of this facility that represents an important milestone in strengthening our manufacturing footprint and enhancing our competitive position in the U.S. market. The other priority for our U.S. Beverage business is to restore normal operations in North Carolina to capture growth opportunities in single-serve formats.
As for our Canadian beverage business, our priority remains fortifying our leadership by stepping up our innovation agenda to stimulate growth in emerging beverage segments and strengthening execution across our core channels. Through disciplined revenue management and sustained investments in our brands in foodservice, we will build on our recent gains to drive further volume growth with broadline distributors and national accounts. Finally, in specialty food, we are focused on refining the positioning of our branded products and strengthening our position by further diversifying our customer base and product portfolio by backfilling available capacity following changes with one important customer. Notably, the majority of the replacement volume secured to date comes from new third-party relationships.
In closing on Slide 19, while we continue to navigate near-term challenges, Lassonde remains a strong organization built around passionate and innovative people. Supported by ongoing investments in our network, a diversified portfolio of leading brands, deep customer relationships, and disciplined execution, we are well positioned to capture medium and long-term opportunities to drive sustainable growth in the North American food and beverage market.
This concludes our prepared remarks. We are now pleased to answer your questions.
OPERATOR
Thank you. We will now begin the question and answer session. To join the question queue, you may press star then the number one on your telephone keypad. You will hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, press star then two. We will pause for a moment as callers join the queue. The first question comes from Ahmed Abdullah with National Bank of Canada. Please go ahead.
Ahmed Abdullah (Analyst at National Bank of Canada)
Yes, good morning and thanks for taking my question. Just touching on the plant disruption costs, is it possible to quantify the 3Q EBITDA impact from the North Carolina and New Jersey disruptions there, and how much of that should kind of linger into the fourth quarter?
Francis (Chief Financial Officer)
So we don’t disclose that. However, I would lead you to our comments on what happened in the quarter. Conversion costs and freight have been the two main components, and look at our margin impact there, and you could assume that that had a significant impact in the quarter.
Ahmed Abdullah (Analyst at National Bank of Canada)
Okay, that’s fair. And expect that to kind of— Is that going to continue in Q4?
Francis (Chief Financial Officer)
As we alluded in our section, there’s a risk there, and that’s why we’ve put it there specifically. As we’re working on solving the issue, we’re still at suboptimal productions right now.
Ahmed Abdullah (Analyst at National Bank of Canada)
Okay, that’s fair. Thanks for the color. So on the specialty food replacement economics that you touched on—so with approximately 70% of the volume secured, how much of the associated earnings contributions have you replaced? And can you kind of give us a bit more color on the remaining risk that spills into the 2027 profitability?
Francis (Chief Financial Officer)
Yeah. So on that front, in the last quarter we said it was going to start having impact Q3, Q4 this year, which we started to see. So that’s number one. We’re doing a good job on the top line side, as in the last few months replacing 70, as you said. The thing that we’ve put in our comments there: there’s a risk in terms of replacing at similar business terms the volume. So that’s something right now that we see having an impact in Q4 and early 2027, as we said in our Outlook section.
Ahmed Abdullah (Analyst at National Bank of Canada)
Okay. And just finally, just touching on private label demand, the weakness that we saw. Can you perhaps give us a bit more color between, you know, what drove that? Is it the deliberate portfolio exits, customer changes, or the demand, and which components do you expect to kind of improve as the operations normalize?
Vince Tempano (Chief Executive Officer)
Yes. So Matt, it’s Vince. The situation on private label is fairly similar whether you look at Canada or the United States. The first thing is clearly it’s being impacted by the same category headwinds that the total category is experiencing. You know, when you look at the Canadian business, volumes are down about negative 5 on a total basis; in the U.S., about negative 3. So category volume performance remains stubborn, you know, in this inflationary environment.
The other thing that’s happening, though, is shifts in retailer strategies. And I’ll give you two perspectives on this. More broadly speaking, what you’re seeing in particular in Canada is a shift from promo high-low to EDLP, and so that’s having some impact on performance, in particular when you face that off against brands looking at promotions as a means to deal with the issue of affordability. So those are the things that I would say in Canada.
From a U.S. perspective, the additional thing that I would add to it is you’re seeing consumers be much more selective in channels in which they participate. And when you take a look at the makeup of the business and the importance of grocery, you are starting to see shifts away from the grocery channel into discount for sure. But in the U.S. you’re looking at mass and club, which are more on the winning side as part of this. I would say that’s how I would describe it in terms of what you’re seeing, the persistence to which that’s going to continue.
You know, there’s a question on just how persistent the category declines are going to be. But what I would assume is that some of the issues that we’re seeing this year from a volume perspective, tied to these retailer strategies, we should be able to cycle those when you come into 2027 looking over 2026.
Francis (Chief Financial Officer)
And if I may add, in terms of your second question, in terms of what we’re planning to improve, I think you saw in the quarter the sales mix having a positive impact. And we’ve started in the last few months and last few years to work on our portfolio and innovation to be allowed to better meet customer demand and the change in customer habits. So that’s something we are doing, and that shows positive results. And as we said in our results in this quarter, that had a significant impact.
On top of that, I would say in terms of distribution, our away-from-home segment is something that we’re working on. And positioning ourselves also outside traditional retailers is also something we’re working on to offset this trend in the market right now.
Matt
Thanks for the color. I’ll keep back up.
OPERATOR
Your next question comes from Martin Landry with Stifel. Please go ahead.
Martin Landry (Analyst at Stifel)
Hi, good morning, guys. I was wondering if you could expand a little bit as to what has happened in North Carolina. I think you said that like a 20-day downtime, which is pretty important. Is that the new line that was just established last year?
Vince Tempano (Chief Executive Officer)
Martin? It’s Vince. Yes, it is. And so it was down for about 20 days. What I can say to you, though, is that it’s an equipment challenge that we’ve been dealing with. We see it as temporary. We’re seeing improvements, but we’re trying to be very prudent in the planning. We’ve got redundancy in our network that we’re continuing to leverage to make sure that we can still satisfy demand of our existing customer base. The real challenge for us is to what extent does it sort of dampen our ability to pursue growth?
But I think what’s important here is we see it as temporary. We’re seeing improvements in that at this stage. As Francis said, the challenge as well for us is this notion of it comes at a cost, you know, whether you’re dealing with freight from other markets into the U.S. marketplace when it’s coming out of Canada, and overhead absorption challenges in North Carolina at the same time. But it’s an equipment challenge.
Francis (Chief Financial Officer)
And I would add also, Vince, it comes at a cost of not being able to capture some growth opportunities. So while we are very resilient and able to offload to other plants, it affects our ability to plan in advance. So that’s also affected the results of the quarter.
Martin Landry (Analyst at Stifel)
Yeah, okay. It would have been great to have a little bit of an idea of the magnitude of all this on revenues and earnings, but if it’s something you don’t want to share, that’s fine. And so just to be clear, I understand that the New Jersey facility will be suboptimal heading into ’27. Is the North Carolina situation be resolved by year-end? Okay. Okay. Vince, you gave some interesting numbers, you know, industry volumes down five in Canada, down three in U.S. Can you contrast that with your volumes, just to understand if—I mean, it sounds like you have been gaining shares. I’d just like to have a little bit more color on that.
Vince Tempano (Chief Executive Officer)
So if you take a look at the U.S. market, I’ll start there. We are gaining share on a branded side. We’ve had real success with the Apple & Eve brand, in particular with the reduced sugar format, and so really pleased with what we’re seeing on that front. I already shared with you sort of perspectives from a private label view. When you take a look at Canada volumes, it’s the same message that I delivered prior, which is category headwinds. There is an impact that I noted in my script in terms of a retailer strategy that is having an impact on performance—a real shift away from frequency of promotion as well as depth of promotion that we would have benefited from. And that’s one of the things that the Canadian business is dealing with and, as I mentioned earlier, call it a reset.
That reset is nearly complete. We’ll be able to cycle that when we look into 2027. We are pleased with some of the performance that we are seeing in Canada, though, as well. When you take a look at our share performance, solid performance in Chilled in particular over the last four weeks—really solid improvements that we’re seeing in there. And obviously the team has been very, very focused on leveraging mix because of a really diversified portfolio to try to address some of these category headwinds. But primarily speaking, I would draw it back to some of the things that we’re seeing on the promotional front.
Martin Landry (Analyst at Stifel)
Okay. So just to summarize—there’s a lot in there—just to summarize, are you gaining share in Canada? Because you do say that you’re getting share for Oasis in the Chilled category, but are you getting share for Oasis overall or are you losing?
Vince Tempano (Chief Executive Officer)
What I would say to you when you take a look at the total business, I would say first of all, over the past short while, you would have seen a decline in share. But when you take a look at our share performance relative to 2024, it’s above 2024 levels. And so you’re clearly seeing some adjustments from that 2024 period, because we had some one-time benefits in 2025. So overall, I’m pleased with the performance of the business. And again, when I talk at the last four weeks, we’re also seeing some improvements in our share position.
Martin Landry (Analyst at Stifel)
Okay. And then in the U.S. you did say that you’re seeing customers shifting away from traditional grocers and moving into mass and club. What is your exposure to mass and club in the U.S.? Are you under-exposed, over-exposed? Can you benefit from that trend of customers shifting?
Vince Tempano (Chief Executive Officer)
I would say we’re fairly evenly exposed. I mean, but clearly what we’re going to be doing is taking a look at what we do to maximize some of the shifts that are taking place in that market. I mean, that’s what we continue to do. We’ve got a diverse portfolio. We’re fairly well represented across all the channels. But if the consumers start to shift, we need to make sure that we’re doing what we must be doing to participate in that shift, of which that’s really where the focus is.
But I would say evenly exposed.
Martin Landry (Analyst at Stifel)
Okay. Okay, perfect. Thank you and best of luck.
Vince Tempano (Chief Executive Officer)
Thank you.
Francis (Chief Financial Officer)
Thank you.
OPERATOR
Once again, if you have a question, please press star then 1. Your next question comes from Eric Zhu, Canaccord Genuity. Please go ahead.
Eric Ong (Analyst at Canaccord Genuity)
Thank you very much and good morning. This is Eric Ong for Buchanan. Most of my questions have already been asked, but I wanted to maybe dig into the numbers. So in your sales breakdown on slide 9, you said private label was down 21 million volumes. And considering you previously said that your SKU cut in private label was roughly 7 to 8 million impact per quarter, so is the 13 million balance mostly kind of due to the change in that one Canadian customer’s go-to-market strategy?
And also wanting to ask about what’s going to drop down.
Francis (Chief Financial Officer)
Yeah, you get it, Eric. So that’s the main reason for it, I would say. On top of that, the discontinuation of selected product lines that we announced in previous quarters also fits in that category of private label. So those are the two main elements that should be considered there.
Eric Ong (Analyst at Canaccord Genuity)
Got it. Thank you very much. And also I wanted to just get your color on the spread between private label and branded. Has that changed over the past few quarters from the last time that you looked at it?
Francis (Chief Financial Officer)
Can you repeat the question?
Eric Ong (Analyst at Canaccord Genuity)
Oh, yeah, sorry. I wanted to ask about the spread, the value spread, between private label and branded, considering the current consumer environment is, you know, very, very value-seeking, and wanting to get your color on that.
Vince Tempano (Chief Executive Officer)
The spread primarily has not changed materially.
Eric Ong (Analyst at Canaccord Genuity)
Okay. And finally, in your MD&A you note that pasta sauce has been very good in Canada. It’s grown with single digit versus industry which has been declining. Is there anything that you want to highlight about that? Why are you growing pasta sauce shares in Canada?
Vince Tempano (Chief Executive Officer)
So one of the things that you’re seeing is there’s growth in, call it, the premium to super premium segment. And our participation in that, with the brands that we pack for, are performing exceptionally well. We’ve got strong brands that we pack for and, like I said, are participating in a segment within the category that is outpacing the category average. And that’s really why we’re seeing the growth that we’re seeing there.
Eric Ong (Analyst at Canaccord Genuity)
Got it. Thank you very much. And finally I wanted to ask about, given the lags where you experience tailwinds and headwinds in raw material prices due to your hedging strategy, will you or could you quantify kind of like the benefit that you will be seeing due to lower orange and apple concentrates maybe in Q4 or 2027?
Francis (Chief Financial Officer)
Yeah, it’s tough to quantify that because it’s been in the market for already a while and, you know, these things—there’s always a lag in the market when low commodities get in. Like there’s purchase price adjustment mechanisms that are in place right now today. What we’re saying is difficult to predict because you cannot just look at, in isolation, orange and apple concentrate. You need to look at it versus other elements like freight and PET resin costs, which have suffered massive inflation since June last year.
So the benefit on one side of commodity has been offset significantly by other elements. So to quantify only one side is difficult. So that’s the main element right now. But you’re right that we’ve been on the right side in terms of commodity costs for the last few months. And that’s why we put that elasticity, and the commodity management is going to be important for us in terms of the outlook period that we announced.
Eric Ong (Analyst at Canaccord Genuity)
That’s great. Thank you very much for all of the color, best of luck.
Francis (Chief Financial Officer)
Thanks a lot.
OPERATOR
Your next question comes from Frederic Tremblay with Desjardins Securities. Please go ahead.
Frederic Tremblay (Analyst)
Thanks. Good morning. Just given the disruptions at the existing New Jersey facility that you saw recently, do you think it would be worth considering an acceleration of the transfer to the new facility? Is your current timeline of the transition happening through most of 2020 does seem to present some risk of further disruptions over the next 12 months. Perhaps operationally it’s not feasible to accelerate that, but just wanted to see how you think about mitigating risk associated with the legacy facility there.
Francis (Chief Financial Officer)
Yeah, Frederic, we would love to do it and we’re looking forward to transfer into our new facility. We’re managing end-of-life equipment. Unfortunately it’s not feasible as the plant is being built as we speak, as we said in previous quarter, and we’re still on time, on budget. We are going through test runs right now and, you know, end of fiscal 2026 is going to be the period where we’re going to start launching the new plant. So that’s something that’s happening.
So this transition is going to happen, as we said, towards most of 2027, as the multiple lines that are going to be transferred are going to be sequential from one plant to the other, and in some period of time both plants will run in parallel. So unfortunately we cannot accelerate it. But right now we’re on plan and everything is working well. We’d love to; the teams are looking forward to just move away from that. But it’s not something we could do, and we’re November 6th today, so we’re coming at that point of time where we’re going to start transitioning.
Vince Tempano (Chief Executive Officer)
Hey Frederic, it’s Vince and I’m just going to build on something Francis said, and I know it doesn’t really get to your question, which is can you accelerate? You know, the answer is no, even as much as we would like to do that. Having said that, I want to remind that this is a major investment, a $200 million US investment, and the project remains on track and on budget. Lines are there. The team is getting ready to do first runs at the end of December, early January, and so we’re quite pleased with the progress that this major project has taken.
In the meantime, we’re going to continue to manage as effectively as we can some of this end-of-life equipment challenge that we’ve dealt with in New Jersey and continue to manage and leverage the existing network where we believe there’s some redundancy to ensure that we can satisfy existing customer demand.
Frederic Tremblay (Analyst)
That’s helpful, thanks for that color. Last question for me would be just given the, you know, the demand environment that we’re seeing now that remains under pressure. Curious to see, Vince, if from your experience, like from an industry perspective, would you expect behaviors to be promotional over a prolonged period of time or does margin discipline, you know, big priority, generally? Just wanted to get your views on how you would expect the industry to react over the next few quarters.
Vince Tempano (Chief Executive Officer)
It’s a fair question, Frederick. I would say right now this is a very uncertain environment that we’re still participating in. You’ve got commodity gains that are offset by other fuel and freight, freight cost as a result of the Middle East crisis. You have the uncertainty on tariffs. So, you know, the view is that until we feel more certain about the future, you would anticipate that what we’re seeing is what we’re going to continue to see, at least for the foreseeable future.
What does that mean? It does mean we’ve got to maintain pricing discipline. It’s really important. But recognizing, you know, the category declines, being really smart about how it is that we appeal to these shifts in consumer behaviors. You know, I’ve always said that one of the real powers of Lassonde is the diversity of the portfolio and being able to leverage that portfolio, whether it’s from a product, pack, or channel perspective, to be able to shift and participate, as I said in my prior answer, where the consumer is going.
But your question on promotions, my view is that there’s going to continue to be focus on smart promotions to be able to appeal to that value-seeking consumer. So more in discount, more in mass, more in club, obviously doing the things that we need to do from a promotional perspective in grocery. But that’s where I think the focus is going to be. The additional thing as well is ensuring that not only we’re managing that from a mix perspective, that we continue to introduce innovative products that add unique value that consumers are seeking out and are willing to pay for.
And that is a real focus for us. So as we move into 2027, you’re going to hear us talk more about that as a means to stimulate category performance further.
Frederic Tremblay (Analyst)
Very helpful. Thank you.
OPERATOR
This concludes the question and answer session. I would like to turn the conference back over to Vince Tempano for any closing remarks.
Vince Tempano (Chief Executive Officer)
Thank you, operator, and thank you for joining us this morning. We look forward to speaking with you again at our next quarterly call. Have a great day and have a great weekend, everybody.
OPERATOR
This concludes today’s conference call. You may now disconnect your lines. Thank you and have a nice day.
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