Mr. Eric Gemme reports

LASSONDE INDUSTRIES INC. ANNOUNCES ITS Q4 AND FISCAL 2023 RESULTS

Lassonde Industries Inc. has released its financial results for its fourth quarter and year ended Dec. 31, 2023.

"Lassonde Industries achieved solid performance in 2023, concluding the year with record sales of $2.3 billion and strong year-over-year profit improvement," said Nathalie Lassonde, Chief Executive Officer and Vice-Chair of the Board of Directors of Lassonde Industries Inc. "The progress shown over the past year reflects the continued execution of our strategic plan. It represents another important step towards achieving our long-term growth ambitions and creating lasting value for our shareholders."

"Reflecting solid momentum throughout the organization, all divisions delivered profit growth in the fourth quarter and for 2023. Simultaneously, we continued to progress on all pillars of our multi-year strategy, which includes fortifying the foundation of our U.S. business," said Vince Timpano, President and COO, Lassonde Industries Inc. "In 2024, in addition to building back our U.S. sales volume, we will commission our new single-serve line in North Carolina in the second half of the year. In Canada, our team is focused on addressing price inflation on orange juice and bringing to market multiple product innovations. We also continue to focus on growing our specialty food products portfolio. Given our attention and market dynamics, we anticipate sales growth in the mid-single-digit range for 2024 excluding foreign exchange impacts."

Fourth Quarter Highlights:

• Sales of $604.8 million. Excluding a $1.1 million favourable foreign exchange impact, sales were up $47.7 million (8.6%) from the same quarter last year, mainly due to selling price adjustments and to an increase in U.S. sales volume, partly offset by a decrease in the Canadian sales volume of national brand products.
• Gross profit of $152.5 million (25.2% of sales). Excluding a $3.7 million unfavourable foreign exchange impact, gross profit was up $32.6 million from the same quarter last year. This net increase, coming from all of the Corporation's divisions, results mainly from the following items:
  • Favourable impact of selling price adjustments to offset cost increases, including the higher cost for certain inputs, especially apple and orange concentrates;
  • Gross profit loss of $3.7 million in 2022 following a production interruption of the cranberry sauce line at the Corporation's New Jersey plant; and
  • $2.0 million in expenses related to business optimization.
• Operating profit of $32.1 million, up $15.4 million from the same quarter last year. This net increase results mainly from the following items:
  • Higher gross profit;
  • $6.0 million increase in selling and marketing expenses, essentially in Canada;
  • $6.0 million increase in performance-related compensation expenses;
  • $4.2 million decrease in transportation costs incurred to deliver products to customers, resulting (i) from decreases in fuel surcharges and in base transportation rates, and (ii) from savings related to the use of new processes and the transportation management system ("TMS") in the U.S.;
  • $1.9 million increase in certain administrative expenses; and
  • $1.5 million in expenses related to business optimization.
• Excluding items impacting comparability, adjusted EBITDA1 was $52.6 million (8.7% of sales), up $14.3 million from the same quarter last year.
• Profit attributable to the Corporation's shareholders of $21.0 million, resulting in basic and diluted earnings per share ("EPS") of $3.08, up $10.6 million and $1.55, respectively, from the same quarter in 2022. Excluding items impacting comparability, adjusted EPS1 was $3.14 compared to $2.09 in the same quarter last year.
• Dividend of $0.50 per share, paid on December 15, 2023.

Fiscal 2023 Highlights:

• Sales of $2,314.9 million. Excluding a $43.8 million favourable foreign exchange impact, sales were up $120.1 million (5.6%) from last year, mainly due to the favourable impact of selling price adjustments and to a favourable change in the sales mix of private label products, partly offset by a decrease in sales volume, essentially in the U.S.
• Gross profit of $587.7 million (25.4% of sales). Excluding a $5.1 million unfavourable foreign exchange impact, gross profit was up $69.4 million from last year. This net increase, coming from all of the Corporation's divisions, results mainly from the following items:
  • Favourable impact of selling price adjustments to offset cost increases, including the higher cost for all inputs, especially apple and orange concentrates and the increase in the Corporation's conversion costs; Gross profit loss of $5.2 million in 2022 following a production interruption on the cranberry sauce line at the Corporation's New Jersey plant; and
  • $2.0 million in expenses related to business optimization.
• Operating profit of $135.4 million, up $54.1 million from last year. This net increase results mainly from the following items:
  • Higher gross profit;
  • $38.9 million decrease in transportation costs incurred to deliver products to customers, resulting (i) from decreases in fuel surcharges and in base transportation rates, (ii) from savings related to the use of new processes and the TMS in the U.S. and (iii) from a decrease in sales volume;
  • $28.9 million increase in performance-related compensation expenses;
  • $8.1 million increase in certain administrative expenses;
  • $6.5 million unfavourable foreign exchange impact that affected the conversion of the selling and administrative expenses of the U.S. entities into Canadian dollars;
  • $6.4 million increase in selling and marketing expenses, essentially in Canada;
  • $5.7 million decrease in expenses related to the multi-year strategy and its deployment; and
  • $1.9 million in expenses related to business optimization.
• Excluding items impacting comparability, adjusted EBITDAi was $207.1 million (8.9% of sales), up $50.0 million from last year.
• Profit attributable to the Corporation's shareholders of $87.5 million, resulting in EPS of $12.83, up $33.6 million and $4.99, respectively, from 2022. Excluding items impacting comparability, adjusted EPS1 was $13.18 compared to $9.37 last year.
• As at December 31, 2023, long-term debt, including the current portion, stood at $210.5 million, representing a net debt to adjusted EBITDAi ratio of 0.92:1. This is down $38.9 million from December 31, 2022.
• Dividends totalling $2.20 per share, for a total amount of $15.0 million paid in 2023.

Outlook

Lassonde continues to expect the largest factors impacting its performance in fiscal 2024 will be the financial health of consumers and the inflationary environment. As a result, the Corporation is currently retaining the following assumptions for its fiscal year 2024:

Sales growth rate

For 2024, barring any significant external shocks and excluding foreign exchange impacts, Lassonde expects:

• a sales growth rate in the mid-single-digit range, mainly driven by the run rate effect of its selling price adjustments together with the volume growth expected in the second half of the year; and
• a slight decrease in sales volume in the first half of the year with sequential improvement in the second half resulting from the combined impact of the following items: (i) the pace of the U.S. demand build back strategy for the Corporation's products; ii) additional volumes available following the deployment of its single serve line in North Carolina; and (iii) the overall stabilization of demand.

Lassonde will also consider further pricing action to be implemented over the course of 2024 if inflation persists. However, the Corporation is closely monitoring the evolution of consumer food habits and demand elasticity in a context of price increases.

Key commodity and input costs

Lassonde's input costs have increased significantly since 2021. More recently, the prices for orange juice and orange concentrates remain an area of focus.

Given that a large portion of the raw material purchases made by Lassonde's Canadian operations are in U.S. dollars, a strengthening of this currency against the Canadian dollar results in a higher cost for products sold in the Canadian market. Furthermore, the Corporation is expecting an unfavourable foreign exchange impact for 2024 when considering its hedged positions.

Expenses, including items impacting the comparability between the periods

The Corporation's performance-related compensation expenses are expected to return in 2024 to levels below those observed in 2023.

During 2024, Lassonde plans to continue deploying its multi-year strategy, optimizing its business and upgrading its key systems and technology infrastructures to improve its efficiency. Planned spending in support of these elements is expected to reach up to $5.0 million in 2024.

Effective tax rate

Effective tax rate should be about 26.5% for fiscal 2024.

Working capital

The Corporation's Days Operating Working Capital1 is now closer to its historical levels and only incremental improvements are expected for this ratio over the course of 2024. However, this outlook might be impacted by (i) opportunistic decisions to secure inventory cost ahead of potential additional price increases from suppliers, (ii) the objective of ensuring an adequate service level, or (iii) the decisions to counter new potential supply chain disruptions.

Capital expenditures

The Corporation's overall capital expenditures program for 2024 is estimated to reach up to 5.0% of its sales as it continues to deploy capital in support of its multi-year strategy. This estimate depends on the rate of progress of certain large capital projects and on the evolution of the macroeconomic environment.

Conference Call to Discuss Fourth Quarter 2023 Financial Results

• Open to: Investors, analysts, and all interested parties
• DATE: Friday, March 22, 2024
• TIME: 8:30 AM ET
• CALL: 604-638-5340 (for international participants)
• 1-800-319-4610 (for North American participants)

A live audio broadcast of the conference call will be available on the Corporation's website, on the Investors page. A replay of the webcast will remain available at the same link until midnight, March 29, 2024.

About Lassonde

Lassonde Industries Inc. is a leader in the food and beverage industry in North America. The Corporation develops, manufactures, and markets a wide range of private label and national brand products, including ready-to-drink beverages, fruit-based snacks as well as frozen juice concentrates. It is also a leading producer of cranberry sauces and specialty food products such as pasta sauces, soups and fondue broths and sauces. The Corporation also produces, imports and markets selected wines from several countries of origin and produces and markets apple cider and cider-based drinks.

The Corporation operates 16 plants located in Canada and the United States and produces its superior quality products through the expertise of over 2,700 full-time equivalent employees.

The Corporation is active in two market segments:

• Retail sales consist of sales to food retailers and wholesalers such as supermarket chains, independent grocers, superstores, warehouse clubs, major pharmacy chains; and
• Food service sales consist of sales to restaurants, hotels, hospitals, schools, and wholesalers serving these institutions.

1 This measure does not constitute a standardized financial measure in accordance with the financial reporting framework used to prepare the Corporation's financial statements. Comparing it to a similar financial measure presented by other issuers may not be possible. Refer to Section "Financial Measures Not in Accordance with IFRS" of this press release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the financial statements, as applicable.

We seek Safe Harbor.