Saputo Reports Financial Results for the Fourth Quarter and Fiscal 2026

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The conversion of Australian dollars to Canadian dollars had a favourable impact.

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Adjusted EBITDA

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Adjusted EBITDA for the fourth quarter of fiscal 2026 totalled $41 million, up $3 million or 7.9%, as compared to $38 million for the same quarter last fiscal year. Adjusted EBITDA margin was 5.8%, up from 5.6%.

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The favourable impact of higher international cheese and dairy ingredient market prices was partially offset by higher milk costs.

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Reduced milk availability impacted efficiencies and the absorption of fixed costs. This impact was mitigated by our product mix optimization strategy.

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Ongoing increases in wages and compensation, including higher stock-based compensation, as well as planned strategic investments in advertising and promotional activities, were incurred in the quarter. Those cost increases were mitigated to some extent by the benefits from our ongoing cost optimization measures on selling, general, and administrative costs.

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In fiscal 2026, adjusted EBITDA totalled $162 million, up $27 million or 20.0%, as compared to $135 million last fiscal year. Adjusted EBITDA margin was 6.3%, up from 5.0%.

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The favourable impact of higher international cheese and dairy ingredient market prices was partially offset by higher milk costs as of July 1, 2025.

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Reduced milk availability, due mostly to ongoing drought conditions in key milk-producing regions, negatively impacted efficiencies and the absorption of fixed costs. This impact was mitigated by our product mix optimization strategy.

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Ongoing increases in wages and compensation, including higher stock-based compensation, as well as planned strategic investments in advertising and promotional activities, were incurred in the fiscal year. Those cost increases were mitigated to some extent by the benefits from our ongoing cost optimization measures on selling, general, and administrative costs.

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Other elements

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Depreciation and amortization for the fourth quarter of fiscal 2026 totalled $27 million, up $2 million, as compared to $25 million for the same quarter last fiscal year. In fiscal 2026, depreciation and amortization totalled $104 million, up $5 million, as compared to $99 million last fiscal year.

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There were no restructuring costs in fiscal 2026. In the fourth quarter of fiscal 2025, restructuring costs totalled $2 million and were comprised of severance costs relative to the optimization of selling, general, and administrative costs. In fiscal 2025, restructuring costs totalled $6 million, which related to severance and site closure costs incurred mainly in connection with the sale of the King Island Dairy facility and the optimization of selling, general, and administrative costs.

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In the fourth quarter of fiscal 2025, we recorded a gain on disposal of assets of $24 million from the sale of land owned by the Dairy Division (Australia). There were no disposal of assets in fiscal 2026.

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EUROPE SECTOR

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Revenues

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Revenues for the fourth quarter of fiscal 2026 totalled $290 million, down $45 million or 13.4%, as compared to $335 million for the same quarter last fiscal year.

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Revenues decreased due to lower sales volumes of bulk cheese, as a result of lower milk intake, as well as lower dairy ingredients sales volumes, reflecting the change to our ingredient strategy. Retail market segment sales volumes in non-cheese categories were partially offset by higher branded cheese sales volumes.

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Higher selling prices, implemented to mitigate inflationary pressures, partially offset the decline in revenues. The conversion of the British pound sterling to the Canadian dollar had a favourable impact.

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In fiscal 2026, revenues totalled $1.267 billion, up $80 million or 6.7%, as compared to $1.187 billion last fiscal year.

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Revenues increased due to higher selling prices implemented to mitigate inflationary pressures and the higher cost of milk and other input costs. Retail market segment sales volumes in non-cheese categories decreased. Bulk cheese sales volumes increased, as a result of higher milk intake. Dairy ingredients sales volumes also increased at higher selling prices. Incremental advertising and promotional activity supported growth in branded cheese sales volumes. These variations in sales volumes across product categories and market segments had a limited overall impact on revenues.

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The conversion of the British pound sterling to the Canadian dollar had a favourable impact.

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Adjusted EBITDA

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Adjusted EBITDA for the fourth quarter of fiscal 2026 totalled $37 million, up $13 million or 54.2%, as compared to $24 million for the same quarter last fiscal year. Adjusted EBITDA margin was 12.8%, up from 7.2%.

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The improved performance was mainly driven by favourable product mix, which resulted from lower bulk cheese and higher branded cheese sales volumes. The consolidation of cheese packing operations at Nuneaton and the transition of our ingredients strategy, which occurred in the second quarter of the fiscal year, delivered operational efficiencies and cost savings.

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We incurred ongoing increases in wages and compensation, including higher stock-based compensation, as well as planned strategic investments in advertising and promotional activities to support our commercial initiatives. Those cost increases were mitigated to some extent by the benefits from our ongoing cost optimization measures on selling, general, and administrative costs.

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The conversion of the British pound sterling to the Canadian dollar had a favourable impact.

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In fiscal 2026, adjusted EBITDA totalled $128 million, up $22 million or 20.8%, as compared to $106 million last fiscal year. Adjusted EBITDA margin was 10.1%, up from 8.9%.

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The improved performance was mainly driven by the more favourable relation between selling prices and input costs, which supported overall margin recovery, partially offset by the negative impacts of elevated operating expenses and unfavourable product mix.

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The Sector’s results were impacted by a planned maintenance shutdown in the second quarter, which temporarily constrained production, as well as costs associated with the commissioning and decommissioning of assets relative to the transition of its ingredients strategy and the relocation of cheese packing operations to Nuneaton. Those initiatives began delivering operational efficiencies and cost savings in the second half of the fiscal year.

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We incurred ongoing increases in wages and compensation, including higher stock-based compensation, as well as planned strategic investments in advertising and promotional activities to support our commercial initiatives. Those cost increases were mitigated to some extent by the benefits from our ongoing cost optimization measures on selling, general, and administrative costs.

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The conversion of the British pound sterling to the Canadian dollar had a favourable impact.

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Other elements

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Depreciation and amortization for the fourth quarter of fiscal 2026 totalled $27 million, down $3 million, as compared to $30 million for the same quarter last fiscal year. In fiscal 2026, depreciation and amortization totalled $107 million, down $6 million, as compared to $113 million last fiscal year. The decreases in depreciation are attributed to the decommissioning of assets in connection with our strategic capital projects.

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There were no restructuring costs in the fourth quarter of fiscal 2026. In the fourth quarter of fiscal 2025 restructuring costs totalled $68 million, and comprised a non-cash assets write-down of $63 million mainly relating to fixed assets in connection with the our decision to stop manufacturing certain functional dairy ingredient products in our Dairy Division (UK) by mid-fiscal 2026. Restructuring costs for the fourth quarter of fiscal 2025 and in fiscal 2025 also included severance and site closure costs totalling $5 million and $7 million, respectively, incurred relative to the optimization of selling, general, and administrative costs, and the relocation of cheese packing operations from one site to another in our Dairy Division (UK). In fiscal 2026, restructuring costs totalled $6 million, and comprised severance costs, as well as the optimization of selling, general, and administrative costs. In fiscal 2025, restructuring costs totalled $70 million.

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In fiscal 2025, a non-cash goodwill and intangible assets impairment charge of $684 million ($674 million after tax) was recorded for our Europe Sector’s Dairy Division (UK).

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In performing our annual goodwill impairment testing as at December 31, 2024, for our Dairy Division (UK) cash generating unit (the UK CGU), estimates of future discounted cash flows were reduced primarily due to challenging market conditions in the United Kingdom, including inflation and elevated interest rates. See Note 9 to the consolidated financial statements for additional information.

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FY27 OUTLOOK

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^{See Caution Regarding Forward-Looking Statements.}

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SELECTED QUARTERLY FINANCIAL INFORMATION

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The results of the Dairy Division (Argentina) have been classified as discontinued operations and are therefore excluded from continuing operations and from the International Sector results. Comparative figures have been re-presented to reflect this classification. Refer to Note 6 to the Company’s consolidated financial statements for further information.

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(in millions of CDN dollars, except per share amounts and ratios)

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Quarterly financial information by sector

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NON-GAAP MEASURES

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We report our financial results in accordance with GAAP and generally assess our financial performance using financial measures that are prepared using GAAP. However, this news release also refers to certain non-GAAP and other financial measures which do not have a standardized meaning under GAAP, and are described in this section.

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We use non-GAAP measures and ratios to provide investors with supplemental metrics to assess and measure our operating performance and financial position from one period to the next. We believe that those measures are important supplemental metrics because they eliminate items that are less indicative of our core business performance and could potentially distort the analysis of trends in our operating performance and financial position. We also use non-GAAP measures to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets and forecasts, and to determine components of management compensation. We believe these non-GAAP measures, in addition to the financial measures prepared in accordance with GAAP, enable investors to evaluate the Company’s operating results, underlying performance, and future prospects in a manner similar to management. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution of GAAP results.

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These non-GAAP measures have no standardized meaning under GAAP and are unlikely to be comparable to similar measures presented by other issuers. Our method of calculating these measures may differ from the methods used by others, and, accordingly, our definition of these non-GAAP financial measures may not be comparable to similar measures presented by other issuers. In addition, non-GAAP financial measures should not be viewed as a substitute for the related financial information prepared in accordance with GAAP. This section provides a description of the components of each non-GAAP measure used in this news release and the classification thereof.

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NON-GAAP FINANCIAL MEASURES AND RATIOS

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A non-GAAP financial measure is a financial measure that depicts the Company’s financial performance, financial position, or cash flow and either excludes an amount that is included in or includes an amount that is excluded from the composition of the most directly comparable financial measures disclosed in the Company’s financial statements. A non-GAAP ratio is a financial measure disclosed in the form of a ratio, fraction, percentage, or similar representation and that has a non-GAAP financial measure as one or more of its components.

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Below are descriptions of the non-GAAP financial measures and ratios that we use as well as reconciliations to the most comparable GAAP financial measures, as applicable.

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Adjusted net earnings from continuing operations

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Adjusted net earnings from continuing operations is defined as net earnings (loss) from continuing operations before the following items (when they occur): restructuring costs, amortization of intangible assets related to business acquisitions, (gain) loss on disposal of assets, and goodwill and intangible assets impairment charge, net of applicable income taxes. We believe that adjusted net earnings from continuing operations provides useful information to investors because this financial measure provides precision with regards to our ongoing operations by eliminating the impact of non-operational or non-cash items. We believe that in the context of our history of business acquisitions, adjusted net earnings from continuing operations provides a more effective measure to assess performance against the Company’s peer group, including due to the application of various accounting policies in relation to the amortization of acquired intangible assets.

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We also believe adjusted net earnings from continuing operations is useful to investors because it helps identify underlying trends in our business that could otherwise be masked by certain write-offs, charges, income, or recoveries that can vary from period to period. We believe that securities analysts, investors, and other interested parties also use adjusted net earnings to evaluate the performance of issuers. Excluding these items does not imply they are non-recurring. This measure does not have any standardized meanings under GAAP and is therefore unlikely to be comparable to similar measures presented by other companies.

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The following table provides a reconciliation, net of applicable income taxes, of net earnings to adjusted net earnings:

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Adjusted EPS basic and adjusted EPS diluted from continuing operations

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Adjusted EPS basic from continuing operations (adjusted net earnings from continuing operations per basic common share) and adjusted EPS diluted from continuing operations (adjusted net earnings from continuing operations per diluted common share) are non-GAAP ratios and do not have any standardized meaning under GAAP. Therefore, these measures are unlikely to be comparable to similar measures presented by other issuers. We define adjusted EPS basic from continuing operations and adjusted EPS diluted from continuing operations as adjusted net earnings from continuing operations divided by the basic and diluted weighted average number of common shares outstanding for the period. Adjusted net earnings from continuing operations is a non-GAAP financial measure. For more details on adjusted net earnings, refer to the discussion above in the adjusted net earnings section.

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We use adjusted EPS basic from continuing operations and adjusted EPS diluted from continuing operations, and we believe that certain securities analysts, investors, and other interested parties use these measures, among other ones, to assess the performance of our business without the effect of restructuring costs, amortization of intangible assets related to business acquisitions, (gain) loss on disposal of assets, and goodwill and intangible assets impairment charge. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Adjusted EPS is also a component in the determination of long-term incentive compensation for management.

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Adjusted EBITDA from continuing and discontinued operations

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Adjusted EBITDA from continuing and discontinued operations is defined as consolidated adjusted EBITDA, as described below, plus the adjusted EBITDA from discontinued operations, which includes the Dairy Division (Argentina) as presented in Note 6 to the consolidated financial statements. A reconciliation of adjusted EBITDA from continuing and discontinued operations to the most directly comparable financial measure used by the Company, namely net earnings (loss), is provided under adjusted EBITDA and adjusted EBITDA margin below.

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We believe that adjusted EBITDA from continuing and discontinued operations provides investors with useful information regarding the Company’s operational and financial performance before the decision to discontinue the Dairy Division (Argentina). Including discontinued operations in adjusted EBITDA is useful for comparative purposes, as it enables investors to evaluate trends in operational performance without the variation that might result from excluding the Dairy Division (Argentina) that was part of the company’s operations for the fiscal year. This transparency is important because it helps users of the financial statements see the impact of all business activities, including those that are no longer part of the ongoing operations, to evaluate the historical performance of the Company. Adjusted EBITDA from continuing operations and discontinued operations is also a component in the determination of short-term incentive compensation for management.

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TOTAL OF SEGMENTS MEASURES

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A total of segments measure is a financial measure that is a subtotal or total of two or more reportable segments and is disclosed within the notes to Saputo’s consolidated financial statements, but not in its primary financial statements. Consolidated adjusted EBITDA and consolidated adjusted EBITDA from continuing and discontinued operations are total of segments measures.

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Consolidated adjusted EBITDA is the total of the adjusted EBITDA of our four geographic sectors. We report our business under four sectors: Canada, USA, International, and Europe. The Canada Sector consists of the Dairy Division (Canada), the USA Sector consists of the Dairy Division (USA), the International Sector consists of the Dairy Division (Australia), and the Europe Sector consists of the Dairy Division (UK). Consolidated adjusted EBITDA from continuing and discontinued operations includes consolidated adjusted EBITDA and the adjusted EBITDA from discontinued operations, which includes the Dairy Division (Argentina). We sell our products in three different market segments: retail, foodservice, and industrial.

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Adjusted EBITDA and adjusted EBITDA margin

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Adjusted EBITDA is defined as net earnings (loss) from continuing operations before the following items (when they occur): income taxes, financial charges, restructuring costs, (gain) loss on disposal of assets, goodwill and intangible assets impairment charge, and depreciation and amortization. Net earnings (loss) from continuing operations before income taxes, financial charges, restructuring costs, (gain) loss on disposal of assets, goodwill and intangible assets impairment charge, and depreciation and amortization is a measure which is presented on the consolidated income statements. Adjusted EBITDA margin consists of adjusted EBITDA expressed as a percentage of revenues.

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We believe that adjusted EBITDA and adjusted EBITDA margin provide investors with useful information because they are common industry measures. These measures are also key metrics of the Company’s operational and financial performance without the variation caused by the impacts of the elements itemized below and provide an indication of the Company’s ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations, and service its long-term debt. Adjusted EBITDA is the key measure of profit used by management for the purpose of assessing the performance of each sector and of the Company as a whole, and to make decisions about the allocation of resources. We believe that securities analysts, investors, and other interested parties also use adjusted EBITDA to evaluate the performance of issuers. Adjusted EBITDA is also a component in the determination of short-term incentive compensation for management.

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The following tables provide a reconciliation of net earnings to adjusted EBITDA and adjusted EBITDA from continuing and discontinued operations on a consolidated basis.

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Revenues, adjusted EBITDA, and depreciation and amortization of International Sector and Europe Sector Subtotals are total of segments measures, as reconciled to total consolidated measures in the below tables.

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