SAP SE — Call Transcript 2026

Thank you for standing by. My name is John Louis and I will be your conference operator today. At this time, I would like to welcome everyone to the Saputo fourth quarter 2026 financial results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Nicholas Estrela, Head of Investor Relations. You may begin. Thank you. Good morning and welcome to our fourth quarter and full year fiscal 2026 earnings call. Our speakers today will be Carl Colizza, President and Chief Executive Officer, and Maxime Therrien, Chief Financial Officer and Secretary. Before we begin, I'd like to remind you that this webcast and conference call are being recorded and the webcast will be posted on our website along with the fourth quarter investor presentation. Please also note that some of the statements provided during this call are forward-looking. Such statements are based on assumptions that are subject to risks and uncertainties. We refer to our cautionary statements regarding forward-looking information in our annual report, press releases, and filings. Please treat any forward-looking information with caution as our actual results could differ materially. We do not accept any obligation to update this information, except as required under securities legislation. I'll now hand it over to Carl. Thank you, Nick. Good morning, everyone, and thank you for joining us. We delivered a strong close to the year, reflecting continued progress in how we are shaping the business commercially, operationally, and strategically. While the environment remains dynamic, we see clear structural demand momentum across the dairy category, driven by a growing consumer focus on protein and a renewed trust in dairy, which is supporting innovation and reinforcing demand for higher value offerings. Our top line reflects the momentum. Growth is increasingly coming from higher quality sources, better mix, stronger channel positioning, and a more deliberate alignment between pricing and value delivered. This reflects a more disciplined and targeted approach to how we are driving the business. On margins, we are making clear progress. Operational improvements and warehouse optimization, supported by cost management, are driving structurally better profitability, even as we navigate ongoing cost pressure. While the quarter includes some non-operational costs that impacted reported performance, the underlying trajectory of the business is firmly improving. Over the past several years, we have strengthened our network, improved our cost structure, and repositioned the business to operate effectively. Today, those investments are embedded in our results, driving better margins, stronger execution, and a greater consistency across the organization. This is translating into a more consistent performance across our key markets and improving profitability in the U.S., normalization in Europe, and efficiencies flowing through our broader cost structure. This progress reflects where we are in our journey, moving beyond the core investment phase and into a stage of growth and capital redeployment. From a strategic standpoint, our direction is clear. We are simplifying the portfolio and reallocating capital toward the categories and markets where we see the strongest returns, while building a more resilient and competitive business. This is also reflected in our cash generation. Strong cash flow is the result of solid execution and a more efficient operating model, and it provides us with the flexibility to reinvest in the business, pursue targeted growth, and return capital to shareholders. I will now turn the call over to Maxime for the financial review before coming back with some concluding remarks. Thank you, Carl, and good morning, everyone. Before turning to the results, a brief portfolio update. In February, we signed an agreement to sell an 80% stake in our Dairy Division Argentina. The transaction is expected to close the first half of fiscal 2027, subject to customary conditions and regulatory approvals. The Dairy Division Argentina results are now presented as discontinued operation, and prior periods have been restated accordingly. All figures I will discuss today reflects continuing operation, which excludes the Dairy Division Argentina results. After the disposal, we will account for its remaining 20% interest as an investment using the equity method. Fourth quarter results underscore the sustained execution momentum we delivered throughout the year across both commercial initiatives and operational delivery. Sales volume increased, supported by targeted commercial initiatives and consistent high-quality service level that supported customer demand. This was complemented by a favorable product mix with growth in value-added and dairy food categories, as well as core branded products. Margin performance improved, underpinned by ongoing operational enhancement and efficiency gains, including tangible progress in warehousing optimization and ongoing cost control initiatives. In domestic markets, our pricing action remained effective in offsetting inflationary pressures across key categories, preserving margin integrity. At the same time, the quarter reflects higher operating costs, including increases in wages and compensation. Driven in part by a CAD 33 million increase in stock-based compensation related to share price appreciation. The quarter also reflects a continued and targeted investment in advertising and promotional activities to support volume momentum. Adjusted EBITDA increased 5% to CAD 19 million-CAD 386 million. Margin expanded to 9.2%, up from 8.3% last year, reflecting solid operational performance. Revenues came in at CAD 4.2 billion, down 6% from last year, largely due to the effect of lower U.S. dairy commodity market pricing. Net earnings from continuing operation were CAD 157 million. On an adjusted basis, net earnings were up 17% at CAD 169 million and adjusted EPS increased 21% to CAD 0.41, benefiting from stronger earnings and the impact of our share repurchase program. In Q4, we generated over CAD 500 million of operating cash from continuing operation, up CAD 170 million year-over-year. The improvement was driven primarily by CAD 147 working capital tailwind alongside higher EBITDA generation. This reflects our underlying strong cash conversion and disciplined balance sheet management. Full-year net cash flow from operation was CAD 1.5 billion, CAD 314 higher when compared to last year. Full-year CapEx totaled CAD 339 million. We expect capital expenditure to step up in fiscal 2027 to approximately CAD 550 million as we lean into disciplined high-return investments. These will be focused on fastest-growing dairy segments, improving capacity and driving efficiency across the network. Importantly, spend will remain tightly managed with phasing and returns linked to execution. From a leverage perspective, our net debt to adjusted EBITDA ratio improved to 1.7 times. Including estimated net proceed from the sale of 80% of the Dairy Division (Argentina), our leverage ratio on a pro forma basis reached 1.37 times, underscoring the strength and the flexibility of our balance sheet. In fiscal 2026, we returned approximately CAD 1 billion to shareholders via dividend and share repurchases, including the repurchase of 19.2 million shares under our NCIB. The Canada sector delivered solid results, with revenue up 4% and full-year growth of 5%. Revenue increase driven by solid volume growth across retail, food service, and industrial segment, supported by a favorable mix shift towards butter, value-added category, particularly high-protein beverages and cultured products. Targeted pricing action to offset inflationary pressures and higher milk input costs further supported top-line growth. On profitability, adjusted EBITDA was up 1%, reaching CAD 159 million. Adjusted EBITDA increased, driven by volume growth and a favorable mix, with additional upside from manufacturing efficiencies, but partially offset by higher wages-related costs, including higher stock-based compensation and brand support initiatives. For the U.S. sector, revenue came in at CAD 1.9 billion, down 13% from last year, reflecting lower U.S. dairy commodity prices, particularly butter and cheese. Underlying top-line performance remains solid with continued volume growth and favorable mix across the portfolio. Growth was led by strength across cheese, dairy foods, and value-added dairy ingredient, including mozzarella, as well as contribution from string cheese, export cheese, and cream cheese categories. We also continue to outperform the market, with cheese volume growing ahead of industry benchmarks, reflecting ongoing share gains across the category. Adjusted EBITDA in the U.S. was broadly in line with last year while underlying business performance continued to improve. Our performance remained solid, supported by higher volume and a favorable product mix alongside continued execution of our commercial initiatives. We also realized benefit from ongoing operational improvement, including efficiencies from our Midwest consolidated warehouse facility. These factors were offset by higher logistics expenses driven by elevated transportation and fuel costs, as well as ongoing increases in wages and also higher stock-based compensation. We also continue to invest in targeted advertising and promotional activity to support our brand. Overall results reflect a balanced profile of operational progress and disciplined investment, supporting stable earnings in a dynamic cost environment.Turning to our international sector, which consists mainly of the Dairy Division Australia, revenue were supported by stronger export pricing with higher international cheese and dairy ingredient markets, and also supported by growth in value-added ingredient. Domestic demand remained solid, reinforcing our strategic focus on domestic market opportunities with higher domestic volumes, more than offsetting our export volume reduction. International EBITDA was stable year-over-year. Higher dairy ingredient and cheese prices were largely offset by elevated milk input costs. Operationally, tighter milk availability created some pressure on efficiencies and fixed cost absorption, though this was partially mitigated by disciplined product mix optimization. We also absorbed higher labor and strategic A&P investment in the quarter, alongside increased stock-based compensation. Despite input cost inflation and operational constraint, the business demonstrated solid margin discipline and cost control. For the Europe sector, revenue was over CAD 290 million, down 13% from last year. This primarily reflecting reduced volume in bulk cheese due to lower milk intake and lower dairy ingredient volume following the continued execution of our ingredient strategy. Retail remained more resilient, with strength in branded cheese partially offsetting softer non-cheese categories. Pricing action helped mitigated inflationary pressure. Adjusted EBITDA came in at CAD 37 million, up 54%, with margin improving to 13%. The lift was primarily driven by a more favorable product mix and the consolidation of our cheese packing operation and continued progress on our ingredient strategy, both of which delivered meaningful operational efficiencies and cost-saving. In closing, we delivered a record year in Canada and we're capturing the benefit of our investment in the U.S. We also made a significant portfolio decision with the divestiture of Argentina, reinforcing our focus on value creation. Throughout the year, we remained disciplined, advancing our commercial initiatives while maintaining strong financial position. This supports a consistent approach to capital allocation, enabling us to invest for growth while continuing to return capital to shareholder. On that note, I'll turn the call back to Carl. Thank you, Max. In Canada, our performance this quarter continues to reflect the underlying strength and resiliency of our domestic platform. We delivered broad-based volume growth across retail, food service, and industrial market segments, supported by sustained demand in dairy foods, particularly in value-added and higher protein offerings. This is an area where consumer trends are aligned with our portfolio and where we see runway for value creation. As an example, Armstrong continues to perform as a leading brand within the everyday cheese category, reinforcing our position in core household staples. Our approach in Canada remains deliberate. We are investing behind our portfolio, strengthening in-store execution, and refreshing our offering to stay relevant. This includes a 360-degree media campaign in Quebec and targeted packaging upgrades across Saputo shredded cheese and Neilson value-added beverages to enhance shelf presence and drive conversion. These actions are not one-off. They are part of a scaled, repeatable commercial model that is driving consistent engagement and supporting growth across key categories. At the same time, we are building out our higher protein platform, which represents a clear opportunity to extend our relevance in evolving consumption occasions and capture incremental volume within the category. From a profitability standpoint, we benefited from operating leverage on higher volumes, improved mix, and the ongoing contribution from prior capital investments. Pricing actions have been disciplined and aligned with the input cost realities, ensuring we protect margins while maintaining competitiveness. Overall, Canada reflects what we are focused on delivering across the organization: a stable, demand-driven earnings base supported by strong brands and a portfolio evolution. In the U.S., our performance this quarter continues to demonstrate the strength of a scaled, commercially driven platform with momentum building. We are outpacing the market and gaining market share across our key categories, reflecting strong execution in both cheese and dairy foods, as well as the advantage of operating across multiple channels and end markets. What differentiates this business is not just volume growth, but our ability to translate that growth into higher quality earnings through mix and portfolio management. We continue to see strong traction in structural growth areas, particularly in high-protein snacking and value-added ingredients, supported in part by the ramp-up of our Waupun facility. Additional capacity is driving incremental volumes in whey and high-value dairy ingredients and improving utilization as sustained demand in these categories continues to support scale. At the same time, we are extending that scale into under-penetrated channels while unlocking white space opportunities. Frigo Cheese Heads is expanding beyond lunchbox into adult and on-the-go snacking. We are also increasing our presence in convenience and food away from home channels where distribution remains under-penetrated, providing further growth opportunities. These efforts are supported by targeted investments in commercial capabilities, providing us with the tools and customer activation programs required to scale these emerging platforms sustainably. In parallel, our brand investments are beginning to compound. Increased marketing and promotional activity, including the extension of our Cheese Heads media campaign to reach new snacking audiences beyond its traditional base, is driving new consumer acquisition, strengthening engagement, and enhancing our digital and e-commerce presence as key enablers of long-term growth. At the same time, we are extending the Saputo brand, building on its strength as a well-established Canadian brand across the U.S. as a solutions-oriented food service platform, deepening customer relationships and expanding our relevance across a broader set of dairy applications. From an operational standpoint, the most recent phase of network optimization and transformation is largely behind us, allowing us to pivot toward the next set of initiatives to further enhance the network. We are now operating from a more efficient footprint with benefits from our consolidated Midwest warehousing facility in Caledonia, together with ongoing third-party logistics consolidation. These initiatives are improving fill rates, enhancing efficiency, and strengthening execution consistency, supporting continued margin expansion. As a result, the U.S. business is entering the next phase from a position of strength. With scale, category exposure aligned to consumer trends, and a more efficient operating model, we see a clear path to sustained, high-quality growth and further margin progression over time. In our International Sector, Australia's performance this quarter reflects both improving market conditions and the strategic value of our footprint. As pricing strengthened across global dairy markets, we were positioned to capture the upside selectively, directing volumes to the markets and channels offering the best returns. This is a key advantage of our model. We are not constrained to a single market dynamic. Demand patterns remained uneven, and we were intentional in how we responded. Rather than pursuing volume for its own sake, we prioritize value creation, optimizing mix, aligning pricing, and actively managing where and how we deploy our production capacity. On profitability, improving market conditions provided a tailwind, but what is more important is how we executed within that environment. Despite constraints on milk availability in certain regions, we continue to optimize our portfolio in real time, ensuring we are consistently allocating milk to higher-value opportunities. This reflects a shift to a more flexible, broader platform. It gives us the ability to manage volatility, act on opportunities, and create value over time. In our Europe sector, the quarter underscores the strength of our strategy and our ability to drive structural margin improvement. We are seeing a clear and deliberate shift in the portfolio from commodity exposure toward branded, higher-value products. This is not just mix improvement. It reflects how we are repositioning the business to capture more value across the category. Our Cathedral City branded business remains central to that strategy. It continues to outperform its category and gain share, supported by a fully integrated marketing approach that is reinforcing both household penetration and consumer relevance. What is increasingly important is the breadth of that platform. Cathedral City is no longer limited to core cheese. It is extending into adjacent categories through licensing, where we are seeing strong momentum and incremental growth opportunities beyond the traditional shelf. Operationally, the work we have executed over the past year is translating into tangible structural benefits. Network optimization and strategic shifts in our ingredients approach are simplifying the business, improving efficiency, and supporting margin expansion. Stepping back, Europe is evolving into a more focused platform with stronger earnings quality. As we look ahead, we remain committed to operating as a low-cost manufacturer of high-quality dairy solutions by driving efficiency, strengthening commercial execution, and capturing the long-term opportunity in dairy. In a dynamic and at times unpredictable environment, we continue to concentrate on what is within our control, positioning the business to create value across market cycles, not just through them. Our approach is grounded in a disciplined, category-led strategy, being selective in where we participate, prioritizing returns over volume, and investing behind the customers, products, and brands that strengthen our long-term position. Structural demand drivers, particularly growing consumer interest in protein-rich and value-added dairy, continue to reinforce the attractiveness of the category across products, channels, and geographies. Operationally, we are entering the next phase of our transformation. As recent investments scale, we expect to unlock further efficiencies, improve absorption, and reinforce our cost position. Capital deployment remains disciplined and unchanged. We will invest where we see attractive returns through organic initiatives and strategic investments, including M&A, focused on value creation and the right opportunities, not the fastest ones. All of this is supported by continued cash generation and a balance sheet strength, ensuring we act decisively where we see value. Taken together, Saputo is today a more focused and agile business, supported by a stronger operating foundation and a clearer path to consistent, high-quality value creation over time. This concludes our formal remarks. I will now turn the call over for questions. Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Irene Nattel of RBC Capital Markets. Your line is open. Thanks, and good morning, everyone, and congratulations on a great year in FY 2026. I want to focus for a second on some shift in tone in this release and in this call, really around capital allocation and targeted investments. Can you give us an idea of where the incremental CapEx is going to go? When you talk about targeted strategic M&A, can you give us an idea of order of magnitude and what types of geographies and product categories that might be? Thank you, Irene, for the question. What I would say to start is that we continue to be focused on growth and, of course, growing where consumers are pulling demand from in our dairy category. Hence, we are looking at ensuring that we invest for organic growth, and we have some very interesting opportunities that we're unlocking right now, in fact, in most of our geographies. They're all really centered around products, and I'm going to give you sort of a general perspective. Those would be cultured in nature or the likes of cottage cheese or value-added beverages, as well as continuing on our investment journey in our ingredients sectors. These are very exciting categories for us, and we are pleased and excited to be able to invest behind these to keep growing our relevance with consumers. As we've said in the recent past, we'll continue to look at what is the best route to market to making that happen, whether that's an investment in ourselves organically or whether that is through looking at an acquisition of sorts to either bring on a brand, a capability, and possibly even a route to market. These are always put into sort of the balance, but considering where our balance sheet is at today and the strength of it, we feel quite confident that a mix of those two is in our horizon, and we will be able to remain that dairy solutions provider for our customers and continue to be relevant with our consumers with a disciplined investment in both segments. That's great. Thank you. Really appreciate it. You did mention the balance sheet, and clearly on a pro forma basis at just around 1.3, 1.4x, you have ample capacity. How should we be thinking about potential magnitude of M&A? You've done all ranges historically, so what should we kind of be expecting here, and is anything imminent? We're very focused in what it is we want to acquire, and we're not looking for a new milk shed. We've also shared that in the recent past. We're very comfortable with where it is we are manufacturing in today and the opportunities that some of those platforms present for us to continue to service our international markets and to capture either emerging markets. I'll say that those two platforms in particular are certainly the U.S. and Australia, which is the engine behind our international supply. Closing that part up, we're not looking for new milk sheds, but what we are looking for is a real fit. We're looking for things that will allow us to keep growing in the protein sector, better-for-you offerings, tailored nutrition. quite frankly, the criteria must meet things like adding capabilities, strengthening our route to markets, and it's not about the size, because there are a number of things that we require that either could be a sort of a tuck-in size in nature or something that's more substantial. again, we continue to review things that are adjacencies, that are core to our strategy, and not just what's available in the marketplace. That's really helpful. Thank you. Your next question comes from the line of Michael Van Aelst of TD Cowen. Your line is open. Hi, good morning. Looking at the EBITDA, and if I back out that incremental stock-based comp, it was up 14%, which is pretty impressive. I was hoping that you could unpack the three or four largest drivers of this growth in the quarter, which do you still see having the most juice and boosting profits further in fiscal 2027? Thank you, Mike, and I would say that volume will be number one on our list. We continue to fire on all cylinders in all our geographies, and volume is certainly continuing to drive absorption costs, returns, all of the above. I would also say that Q4 is a quarter where we've been able to capture the real full extent, almost the full extent of all of the prior capital investments that we've made in ourselves over the last couple of years. We've also made some significant inroads with regards to our ingredients business and being able to unlock the value that comes with the demand in that market space today. All of this is supported by second-to-none service levels. Our business, in addition to growing with the demand in the marketplace, we've also been able to have excellent service levels and fill rates to make that happen. I would say that, in a nutshell, volume, execution excellence, is driving that momentum, supported by some historical investments that we've made, including the investments we made in A&P. We began that journey earlier in the year, and we're beginning to see the benefits of that flow through. That's especially true with maybe two specific brands, being Cathedral City and Frigo Cheese Heads in the U.S. Okay, thanks. That's helpful. When you look at these, I understand that most of them seem to be going on all cylinders in Q4, but how much of that ramped up during the year and therefore has room to continue to drive growth as you cycle through those improvements in fiscal 2027? We feel good about the momentum and the ongoing performance. Without taking anything for granted, we're feeling really good about the business continuing to optimize and through our continuous improvement programs. I do believe that we are going to continue to see improvements in our overall operating costs. We're very disciplined with regards to our inventory management and our overall supply and demand planning process, keeping our working capital as low as possible, yet not sacrificing our service levels. The A&P investments that we made in fiscal 2026, of course, that momentum will carry through. As we mentioned, we will also be stepping up A&P investments in this fiscal year to support a very targeted sector of growing demand from the consumer space and a handful of our brands. We have continued CapEx programs that are driving incremental efficiencies, and we see that as an ongoing engine for our growth. We're certainly mindful of inflation. Everyone is subject to some of the geopolitical turmoil that we have today. We're going to continue to do what we need to do to protect margins, but at the same time, we want to make sure that we remain competitive, and accordingly, we continue to be focused on growth. Great. That's helpful. Thank you. Your next question comes from the line of Scott Marks of Jefferies. Your line is open. Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask about, just following up on some of the last comments you made there about inflation. I think you noted that in the quarter you had some headwinds from fuel and transportation costs. As we look ahead to fiscal 2027, could you help us frame how you're thinking about magnitude of impact from those and if we walk around the world, how we should be thinking about impacts? Thank you for the question. I would say that the impact of the inflationary pressures specifically associated to either energy or fuel is quite even across the globe. There isn't one sector that we feel is necessarily more exposed than another. They've been, I'll use the word, manageable to date. We are certainly looking to mitigate as many as we can through either operational changes, internal logistics, speaking with customers, of course, on any preferences or changes that they would like to see and how it is we service them in order to keep their own pricing intact. We certainly look to pricing action as one of our last resorts. At this stage, we feel that the influence of incremental cost in energy and fuel is one where we'll be able to navigate through. We will remain competitive, but we'll also look to pricing should things continue to persist throughout the year. There isn't one region in particular that is necessarily more exposed than another, nor is our operating platform more exposed. Understood. Appreciate the context there. Second question from me, you've spoken a lot about the shift toward branded, toward value-added products, value-added ingredients. Wondering if you could just kind of help us frame bigger picture? As you look at your businesses across the globe, where do you think you are in that journey from shifting from more commoditized products to more of these value-added products? How should we be thinking about the runway ahead? Maybe one way to help describe opportunities and where we are on our journey. The ingredients business is not new to Saputo. We've been in this business for decades, but certainly it's evolving at a more rapid pace and demand is certainly ramping up very quickly. We had some foresight a couple of years ago when we decided to invest heavily into our Waupun facility, which added capacity as well as capabilities into higher fractions of whey protein concentrates, as well as moving into edible and dry blend lactose. We have capabilities not only in the U.S., we have capabilities in Australia. What I also want to provide by way of example, a choice we made in the U.K. In the U.K., we walked away from a business that we were involved in when it comes to the whey solids, and that was our demineralized and GOS operations, because of the demand turndown in those categories. Instead, we decided to move over into some basic whey products, which has improved our margin structure, as you can see from the results. It's also an area which is also underdeveloped for us, and we are actively looking at how to bring those solids to life and to value through further refinement. There are active projects in this space at this moment. You can see that we have a combination of a mature business in some areas, as well as an opportunity to continue to add value to whey solids that we already generate. If I look further out, in order to continue to support our ingredients business, specifically on the whey-based side, our current position and growth in the cheese sector will allow us to fuel that whey business as well, that ingredients business, which is whey-based, that is dependent on cheese make as well. We feel really good about the combination and the vertical integration that we have with these two sectors, allowing us to continue to capture that demand. In addition to that, I would say that we're going to continue to look at moving to a greater share beyond that of being a provider of those ingredients to those who have the last mile and branded offerings, and continuing to look at how we can incorporate our ingredients as a raw material into finished goods that we can bring to market as well. Appreciate the color. I'll pass it on. Your next question comes from the line of Marc Dumais of Ventum Financial. Your line is open. Hi, good morning, guys. Carl, earlier you mentioned a step up in A&P spending this year. Maybe for Max, order of magnitude there. Carl, can you maybe talk a little bit about where you're going to see those spend specifically go to? Hi, Marc. Welcome back. Relative to A&P investment for us, we see it as a journey. We did have an incremental spend in fiscal 2026, and we do expect incremental spend as well to further support our brand. The focus that the organization is putting around brand awareness and commercial initiative is having great momentum. We intend to pursue it over the next couple of fiscal. I will not be providing any specific number just for market sensitivity perspective. I can give you a flavor from a percentage perspective, likely around 20% of what we've achieved this fiscal will be an incremental next year. Maybe I can just add one thing on that, Marc, is we continue to be focused on supporting those key brands. We've underscored what those are. They do span all of our geographies. They're the likes of the Cathedral City of the world, Devondale, Frigo Cheese Heads, Saputo, and of course, Armstrong. As we do this, we also continuously evaluate the returns from our investments, the overall performance of the brands through a variety of metrics, and ensures that our A&P spend fundamentally. It remains an important part of our growth algorithm on an ongoing basis. Thanks for that. One more if I may, Carl? Can you give us your vision on the ingredients platform? Where are the margins today? How do you see that evolving over the next three to four years, and what areas can we grow organically there, and what areas do you feel like we need M&A? The ingredients portfolio is very broad, and although the craze and the demand is squarely focused on protein also comes from two different segments, if you want, in our dairy category, one being whey-based and the other one being milk-based. We play in both, of course. We do feel that there's an opportunity in both sectors to continue to enhance, not only our offering, but also our volume. To get to the whey-based proteins, I want to re-emphasize that it passes through augmented cheese make and cheese sales, and we're very well-positioned with the portfolio that we have, both branded, both private label offerings, and all the channels we play in to continue to grow our cheese business to be able to fuel that piece. The remainder of the ingredients portfolio also includes milk-based proteins, and this is an area where it's a smaller share of our portfolio, but we continue to see it as being complementary and part of our growth engine as well, as that business also comes with the opportunity to grow our cream offerings and our cream platform, which is key to our dairy foods offerings. It is very strategic for us, very much intertwined with our core offerings in dairy foods and cheese, and we will continue to invest both in capital, and we will continue to look for the appropriate fit in elements that might enhance our route to market and/or enhance our last mile, and that'd be more the B2C space. We feel very good about where protein sits and where dairy sits with consumers, and ingredients will play an important part of our growth profile over the next couple of years. Great. Carl, can you comment at all about the margin of what you referred to? Yeah. How vast that sector is, there's varying degrees. Overall, the ingredient sector margin is one that is quite strong and on the upper end of our overall average, if not exceeding our average of reported margins. Thank you. Your next question comes from the line of Vishal Shreedhar of National Bank. Your line is open. Hi. Thanks for taking my questions. I was interested to hear about the momentum that you're seeing in your business and wanted to get your perspective on consumer malaise and how that plays into your portfolio looking at the past. Just if you anticipate through the year any shift towards private label away from brand or shift towards retail away from food service, and if so, how that might impact the business. Thank you, Vishal, for the question. Certainly over the last three to five years, we've learned a lot about the need to be agile. We built the platform accordingly, and we do feel very confident about our ability to navigate the channels that will certainly win in various cycles, economic cycles that we have, whether that be the away from home or whether that be retail or food service. We feel quite confident that we're agile enough today, much better positioned than we were a couple of years ago to be able to move to and from. I won't speculate on which ones will be winners, as it is cyclical in nature, but we'll be able to go through that nonetheless with growth. When it comes to the aspects of branded versus private label or even toll manufacturing and industrial supply, it's always been core to our business model to play in all sectors. Yes, we certainly see a shift in or a growth in private label brands across many geographies, but that does not put us in a position where we feel that our brands are in danger or our growth profile associated to them are going to be jeopardized. In fact, what it's doing is ensuring that we put the focus and the resources behind the right brands and making sure that those brands continue to resonate. We continue to innovate behind the appropriate brands and not sprinkle it across our entire network. We welcome, if you want, the dynamics that are out there today, because quite frankly, I do believe that we're, if not one of, if not the best positioned to be able to capture the rise and the wins and the real opportunities that are going to present themselves with consumer shifts and customer channel shifts. Okay. Thank you. With respect to GLP-1s and the impact to your business and the categories that you're in. I've noticed that some of the North American pizza players are reporting tepid performance, but I think you commented that your mozzarella trends are growing. I was wondering what your perspective is on these GLP-1s and how it impacts your business and if there's any shifts you need to make. GLP-1 dynamics is one that continues to evolve rather rapidly, whether that is in the number of users or which parts of the world that we play in are emerging as a growing set of consumers who are participating in that diet or that usage. Our portfolio, first of all, the dairy category is well-positioned in order to play a role for those who choose GLP-1 drugs. That is because of the protein requirements. I think we're all becoming familiar now with the fact that protein is an important part of that journey. That GLP-1 journey also has a variety of caloric requirements along the way. People will cycle, if you want, in and out of various dairy products and offerings in that journey. Some will be very protein-focused, low calorie, and then at another point in that journey, they become in need of a more complete nutrition. That means that dairy, whether it's the high protein products or products like cheese, which are balanced in complete nutrition and protein, will continue to play an important role. I do feel quite comfortable that the ongoing demand and trust in dairy is in fact in part supported by the GLP-1 trends. Thank you. Your next question comes from the line of John Zamparo of Scotiabank. Your line is open. Thank you. Good morning. I wanted to follow up on the CapEx guidance. In particular, when do you anticipate the revenue benefits to hit? Is that most likely to be felt fully in F28, or could some of that slip into F29 or could some fall into F27? Just wondering if you'd add some color on the timelines of any key contributors or key projects. I would say that from the fresh capital that we've unlocked, the majority of that, the more meaningful portions will hit more in 2028, 2029 than it is in 2027. Again, we're looking at investing in categories that we know will have continued long-term growth and support. The CapEx in itself, or the timing of delivering the incremental capacity in these categories does not necessarily limit our growth. We're being a lot more intentional and proactive with our investments. Despite the capital taking the timelines that it has and then the lead time it has, we feel that we'll nonetheless be able to grow our business in most of our categories over that timeframe. Got it. Okay. I wanted to ask about the margins in Europe. I think you had talked about low to mid-teens as the eventual target in that sector. You made a pretty sizable step up this quarter. I wonder, does that shift how you're thinking about the long-term ceiling of margins in that region? What are going to be the key drivers? Is it more mix or is it efficiency or some other driver that's going to move margins further? In Europe, we're very pleased with the performance of our European team and business. I would say that although there's some seasonality involved in what you see with regards to the margin, it is an absolute structural improvement that the business has had through the consolidation efforts, the optimization efforts, management of working capital, ensuring that the cheese that we actually manufacture is cheese that is needed in the marketplace. That underlying strength will continue in quarters and years to come. Where I see the ability to continue to keep moving the margin forward beyond the 13-ish, where we're sitting at today, I believe is strongly related to the continued growth of the Cathedral City brand, as well as our focus on adding incremental value to a pool of whey solids in that platform that, in comparison to the rest of our whey solids usage globally at Saputo, is undervalued right now. It's a great opportunity for that platform. Appreciate the color. Thank you very much. Your next question comes from the line of Chris Li of Desjardins. Your line is open. Good morning, everyone. Thanks for squeezing me in. Carl, in your outlook, you mentioned that you expect U.S. dairy volatility to persist. Just directionally speaking, do you expect the level of volatility this year to be similar, higher, or lower than last year? I would say that maybe if I look back, Chris, to the prior years, the volatility is dampening a little bit versus the, call it 2020 to 2024, 2025 era. It does sit, many of the market indices are sitting at lower levels. All of this to say that part of the reason is fundamentally that we've had a healthy milk season, not only in the U.S., but also globally. That's an environment where the dairy farming communities, I'll say, have been fortunate to have a climate that has cooperated with its needs. The overall cost of feed for most of fiscal 2025 was in a favorable position to prior years, so it supported their ongoing growth. Where we see calendar 2026 and beyond, there'll be inflationary pressures in that community as well, and that we don't see milk growing at the same pace and click as it did in 2025, which, depending on the regions, was between 2% and 4%. We see something more subdued, more aligned with the demand of overall dairy products. That in itself will likely help the current market conditions in the U.S. move from its lower base to something higher than what we're seeing today. I expect that the volatility will be there nonetheless, but because of not only the milk dynamics, but certainly aspects of geopolitics. All that said, we stay focused on the things that are in our control and we'll continue to grow our business in the key categories. The market dynamics will be what they are, but I feel good about, I'll say, the narrowing between milk supply and the overall demand in the dairy category being better aligned in not only calendar 2026, but also at least in the first half of 2027. Great. That's very helpful. Thank you for that. Another question I have just on M&A. Is it fair to say that if you do acquire something that we should think about it in terms of synergies? Should it be more skewed towards revenue, or should there be also some cost synergies from leveraging the manufacturing capabilities or increasing capital utilization? Just yeah, one thing about if we do think about M&A, what type of synergies should we be thinking about? It's both, depending on the categories that we would be exploring. As we indicated before, we're highly focused on ensuring that we invest in strengthening our growth profile, and accelerating our priorities. Keep in mind, I think we've said this before, we are very focused on remaining a low-cost manufacturer of high-quality dairy solutions. Choices that we will make, both in CapEx and in M&A spaces, are intended to lower our overall operating costs, as well as ensuring that we can continue to be that one-stop shop for our customers who are looking for dairy solutions, both innovation, a route to market to assist in their growth, as well as ensuring that the portfolio meets what consumers are demanding. It'll be a combination of both. Some may be skewing to synergies, others skewing to innovations, brand, and/or route to markets. Got it. Okay. Thanks very much, and all the best. With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Nick Estrela for closing remarks. Thank you, JL. Please note that we will release our first quarter fiscal 2027 results on August 6th, 2026. We thank you for taking part in the call and webcast. Have a great day. This concludes today's conference call. You may now disconnect.

Speaker 9: Thank you for standing by. My name is John Louis and I will be your conference operator today. At this time, I would like to welcome everyone to the Saputo fourth quarter 2026 financial results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Nicholas Estrela, Head of Investor Relations. You may begin. Thank you for standing by. thank you for standing by My name is John Louis and I will be your conference operator today. my name is john louis and i will be your conference operator today At this time, I would like to welcome everyone to the Saputo fourth quarter 2026 financial results call. at this time i would like to welcome everyone to the saputo fourth quarter 2026 financial results call All lines have been placed on mute to prevent any background noise. all lines have been placed on mute to prevent any background noise After the speaker's remarks, there will be a question and answer session. after the speaker's remarks there will be a question and answer session If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad If you would like to withdraw your question, simply press star one again. if you would like to withdraw your question simply press star one again I would now like to turn the conference over to Nicholas Estrela, Head of Investor Relations. i would now like to turn the conference over to nicholas estrela head of investor relations You may begin. you may begin

Speaker 8: Thank you. Good morning and welcome to our fourth quarter and full year fiscal 2026 earnings call. Our speakers today will be Carl Colizza, President and Chief Executive Officer, and Maxime Therrien, Chief Financial Officer and Secretary. Before we begin, I'd like to remind you that this webcast and conference call are being recorded and the webcast will be posted on our website along with the fourth quarter investor presentation. Please also note that some of the statements provided during this call are forward-looking. Such statements are based on assumptions that are subject to risks and uncertainties. We refer to our cautionary statements regarding forward-looking information in our annual report, press releases, and filings. Please treat any forward-looking information with caution as our actual results could differ materially. We do not accept any obligation to update this information, except as required under securities legislation. Thank you. thank you Good morning and welcome to our fourth quarter and full year fiscal 2026 earnings call. good morning and welcome to our fourth quarter and full year fiscal 2026 earnings call Our speakers today will be Carl Colizza, President and Chief Executive Officer, and Maxime Therrien, Chief Financial Officer and Secretary. our speakers today will be carl colizza president and chief executive officer and maxime therrien chief financial officer and secretary Before we begin, I'd like to remind you that this webcast and conference call are being recorded and the webcast will be posted on our website along with the fourth quarter investor presentation. before we begin i'd like to remind you that this webcast and conference call are being recorded and the webcast will be posted on our website along with the fourth quarter investor presentation Please also note that some of the statements provided during this call are forward-looking. please also note that some of the statements provided during this call are forward-looking Such statements are based on assumptions that are subject to risks and uncertainties. such statements are based on assumptions that are subject to risks and uncertainties We refer to our cautionary statements regarding forward-looking information in our annual report, press releases, and filings. we refer to our cautionary statements regarding forward-looking information in our annual report press releases and filings Please treat any forward-looking information with caution as our actual results could differ materially. please treat any forward-looking information with caution as our actual results could differ materially We do not accept any obligation to update this information, except as required under securities legislation. we do not accept any obligation to update this information except as required under securities legislation I'll now hand it over to Carl. I'll now hand it over to Carl. i'll now hand it over to carl

Speaker 1: Thank you, Nick. Good morning, everyone, and thank you for joining us. We delivered a strong close to the year, reflecting continued progress in how we are shaping the business commercially, operationally, and strategically. While the environment remains dynamic, we see clear structural demand momentum across the dairy category, driven by a growing consumer focus on protein and a renewed trust in dairy, which is supporting innovation and reinforcing demand for higher value offerings. Our top line reflects the momentum. Growth is increasingly coming from higher quality sources, better mix, stronger channel positioning, and a more deliberate alignment between pricing and value delivered. This reflects a more disciplined and targeted approach to how we are driving the business. On margins, we are making clear progress. Operational improvements and warehouse optimization, supported by cost management, are driving structurally better profitability, even as we navigate ongoing cost pressure. Thank you, Nick. thank you nick Good morning, everyone, and thank you for joining us. good morning everyone and thank you for joining us We delivered a strong close to the year, reflecting continued progress in how we are shaping the business commercially, operationally, and strategically. we delivered a strong close to the year reflecting continued progress in how we are shaping the business commercially operationally and strategically While the environment remains dynamic, we see clear structural demand momentum across the dairy category, driven by a growing consumer focus on protein and a renewed trust in dairy, which is supporting innovation and reinforcing demand for higher value offerings. while the environment remains dynamic we see clear structural demand momentum across the dairy category driven by a growing consumer focus on protein and a renewed trust in dairy which is supporting innovation and reinforcing demand for higher value offerings Our top line reflects the momentum. our top line reflects the momentum Growth is increasingly coming from higher quality sources, better mix, stronger channel positioning, and a more deliberate alignment between pricing and value delivered. growth is increasingly coming from higher quality sources better mix stronger channel positioning and a more deliberate alignment between pricing and value delivered This reflects a more disciplined and targeted approach to how we are driving the business. this reflects a more disciplined and targeted approach to how we are driving the business On margins, we are making clear progress. on margins we are making clear progress Operational improvements and warehouse optimization, supported by cost management, are driving structurally better profitability, even as we navigate ongoing cost pressure. operational improvements and warehouse optimization supported by cost management are driving structurally better profitability even as we navigate ongoing cost pressure While the quarter includes some non-operational costs that impacted reported performance, the underlying trajectory of the business is firmly improving. Over the past several years, we have strengthened our network, improved our cost structure, and repositioned the business to operate effectively. Today, those investments are embedded in our results, driving better margins, stronger execution, and a greater consistency across the organization. This is translating into a more consistent performance across our key markets and improving profitability in the U.S., normalization in Europe, and efficiencies flowing through our broader cost structure. This progress reflects where we are in our journey, moving beyond the core investment phase and into a stage of growth and capital redeployment. From a strategic standpoint, our direction is clear. We are simplifying the portfolio and reallocating capital toward the categories and markets where we see the strongest returns, while building a more resilient and competitive business. While the quarter includes some non-operational costs that impacted reported performance, the underlying trajectory of the business is firmly improving. while the quarter includes some non-operational costs that impacted reported performance the underlying trajectory of the business is firmly improving Over the past several years, we have strengthened our network, improved our cost structure, and repositioned the business to operate effectively. over the past several years we have strengthened our network improved our cost structure and repositioned the business to operate effectively Today, those investments are embedded in our results, driving better margins, stronger execution, and a greater consistency across the organization. today those investments are embedded in our results driving better margins stronger execution and a greater consistency across the organization This is translating into a more consistent performance across our key markets and improving profitability in the U.S., normalization in Europe, and efficiencies flowing through our broader cost structure. this is translating into a more consistent performance across our key markets and improving profitability in the u.s normalization in europe and efficiencies flowing through our broader cost structure This progress reflects where we are in our journey, moving beyond the core investment phase and into a stage of growth and capital redeployment. this progress reflects where we are in our journey moving beyond the core investment phase and into a stage of growth and capital redeployment From a strategic standpoint, our direction is clear. from a strategic standpoint our direction is clear We are simplifying the portfolio and reallocating capital toward the categories and markets where we see the strongest returns, while building a more resilient and competitive business. we are simplifying the portfolio and reallocating capital toward the categories and markets where we see the strongest returns while building a more resilient and competitive business This is also reflected in our cash generation. Strong cash flow is the result of solid execution and a more efficient operating model, and it provides us with the flexibility to reinvest in the business, pursue targeted growth, and return capital to shareholders. I will now turn the call over to Maxime for the financial review before coming back with some concluding remarks. This is also reflected in our cash generation. this is also reflected in our cash generation Strong cash flow is the result of solid execution and a more efficient operating model, and it provides us with the flexibility to reinvest in the business, pursue targeted growth, and return capital to shareholders. strong cash flow is the result of solid execution and a more efficient operating model and it provides us with the flexibility to reinvest in the business pursue targeted growth and return capital to shareholders I will now turn the call over to Maxime for the financial review before coming back with some concluding remarks. i will now turn the call over to maxime for the financial review before coming back with some concluding remarks

Speaker 6: Thank you, Carl, and good morning, everyone. Before turning to the results, a brief portfolio update. In February, we signed an agreement to sell an 80% stake in our Dairy Division Argentina. The transaction is expected to close the first half of fiscal 2027, subject to customary conditions and regulatory approvals. The Dairy Division Argentina results are now presented as discontinued operation, and prior periods have been restated accordingly. All figures I will discuss today reflects continuing operation, which excludes the Dairy Division Argentina results. After the disposal, we will account for its remaining 20% interest as an investment using the equity method. Fourth quarter results underscore the sustained execution momentum we delivered throughout the year across both commercial initiatives and operational delivery. Sales volume increased, supported by targeted commercial initiatives and consistent high-quality service level that supported customer demand. Thank you, Carl, and good morning, everyone. thank you carl and good morning everyone Before turning to the results, a brief portfolio update. before turning to the results a brief portfolio update In February, we signed an agreement to sell an 80% stake in our Dairy Division Argentina. in february we signed an agreement to sell an 80% stake in our dairy division argentina The transaction is expected to close the first half of fiscal 2027, subject to customary conditions and regulatory approvals. the transaction is expected to close the first half of fiscal 2027 subject to customary conditions and regulatory approvals The Dairy Division Argentina results are now presented as discontinued operation, and prior periods have been restated accordingly. the dairy division argentina results are now presented as discontinued operation and prior periods have been restated accordingly All figures I will discuss today reflects continuing operation, which excludes the Dairy Division Argentina results. all figures i will discuss today reflects continuing operation which excludes the dairy division argentina results After the disposal, we will account for its remaining 20% interest as an investment using the equity method. after the disposal we will account for its remaining 20% interest as an investment using the equity method Fourth quarter results underscore the sustained execution momentum we delivered throughout the year across both commercial initiatives and operational delivery. fourth quarter results underscore the sustained execution momentum we delivered throughout the year across both commercial initiatives and operational delivery Sales volume increased, supported by targeted commercial initiatives and consistent high-quality service level that supported customer demand. sales volume increased supported by targeted commercial initiatives and consistent high-quality service level that supported customer demand This was complemented by a favorable product mix with growth in value-added and dairy food categories, as well as core branded products. Margin performance improved, underpinned by ongoing operational enhancement and efficiency gains, including tangible progress in warehousing optimization and ongoing cost control initiatives. In domestic markets, our pricing action remained effective in offsetting inflationary pressures across key categories, preserving margin integrity. At the same time, the quarter reflects higher operating costs, including increases in wages and compensation. Driven in part by a CAD 33 million increase in stock-based compensation related to share price appreciation. The quarter also reflects a continued and targeted investment in advertising and promotional activities to support volume momentum. Adjusted EBITDA increased 5% to CAD 19 million-CAD 386 million. Margin expanded to 9.2%, up from 8.3% last year, reflecting solid operational performance. This was complemented by a favorable product mix with growth in value-added and dairy food categories, as well as core branded products. this was complemented by a favorable product mix with growth in value-added and dairy food categories as well as core branded products Margin performance improved, underpinned by ongoing operational enhancement and efficiency gains, including tangible progress in warehousing optimization and ongoing cost control initiatives. margin performance improved underpinned by ongoing operational enhancement and efficiency gains including tangible progress in warehousing optimization and ongoing cost control initiatives In domestic markets, our pricing action remained effective in offsetting inflationary pressures across key categories, preserving margin integrity. in domestic markets our pricing action remained effective in offsetting inflationary pressures across key categories preserving margin integrity At the same time, the quarter reflects higher operating costs, including increases in wages and compensation. Driven in part by a CAD 33 million increase in stock-based compensation related to share price appreciation. at the same time the quarter reflects higher operating costs including increases in wages and compensation. driven in part by a cad 33 million increase in stock-based compensation related to share price appreciation The quarter also reflects a continued and targeted investment in advertising and promotional activities to support volume momentum. the quarter also reflects a continued and targeted investment in advertising and promotional activities to support volume momentum Adjusted EBITDA increased 5% to CAD 19 million-C AD 386 million. adjusted ebitda increased 5% to cad 19 million-c ad 386 million Margin expanded to 9.2%, up from 8.3% last year, reflecting solid operational performance. margin expanded to 9.2% up from 8.3% last year reflecting solid operational performance Revenues came in at CAD 4.2 billion, down 6% from last year, largely due to the effect of lower U.S. dairy commodity market pricing. Net earnings from continuing operation were CAD 157 million. On an adjusted basis, net earnings were up 17% at CAD 169 million and adjusted EPS increased 21% to CAD 0.41, benefiting from stronger earnings and the impact of our share repurchase program. In Q4, we generated over CAD 500 million of operating cash from continuing operation, up CAD 170 million year-over-year. The improvement was driven primarily by CAD 147 working capital tailwind alongside higher EBITDA generation. This reflects our underlying strong cash conversion and disciplined balance sheet management. Full-year net cash flow from operation was CAD 1.5 billion, CAD 314 higher when compared to last year. Revenues came in at CAD 4.2 billion, down 6% from last year, largely due to the effect of lower U.S. dairy commodity market pricing. revenues came in at cad 4.2 billion down 6% from last year largely due to the effect of lower u.s dairy commodity market pricing Net earnings from continuing operation were CAD 157 million. net earnings from continuing operation were cad 157 million On an adjusted basis, net earnings were up 17% at CAD 169 million and adjusted EPS increased 21% to CAD 0.41, benefiting from stronger earnings and the impact of our share repurchase program. on an adjusted basis net earnings were up 17% at cad 169 million and adjusted eps increased 21% to cad 0.41 benefiting from stronger earnings and the impact of our share repurchase program In Q4, we generated over CAD 500 million of operating cash from continuing operation, up CAD 170 million year-over-year. in q4 we generated over cad 500 million of operating cash from continuing operation up cad 170 million year-over-year The improvement was driven primarily by CAD 147 working capital tailwind alongside higher EBITDA generation. the improvement was driven primarily by cad 147 working capital tailwind alongside higher ebitda generation This reflects our underlying strong cash conversion and disciplined balance sheet management. this reflects our underlying strong cash conversion and disciplined balance sheet management Full-year net cash flow from operation was CAD 1.5 billion, CAD 314 higher when compared to last year. full-year net cash flow from operation was cad 1.5 billion cad 314 higher when compared to last year Full-year CapEx totaled CAD 339 million. We expect capital expenditure to step up in fiscal 2027 to approximately CAD 550 million as we lean into disciplined high-return investments. Full-year CapEx totaled CAD 339 million. full-year capex totaled cad 339 million We expect capital expenditure to step up in fiscal 2027 to approximately CAD 550 million as we lean into disciplined high-return investments. we expect capital expenditure to step up in fiscal 2027 to approximately cad 550 million as we lean into disciplined high-return investments These will be focused on fastest-growing dairy segments, improving capacity and driving efficiency across the network. Importantly, spend will remain tightly managed with phasing and returns linked to execution. From a leverage perspective, our net debt to adjusted EBITDA ratio improved to 1.7 times. Including estimated net proceed from the sale of 80% of the Dairy Division (Argentina), our leverage ratio on a pro forma basis reached 1.37 times, underscoring the strength and the flexibility of our balance sheet. In fiscal 2026, we returned approximately CAD 1 billion to shareholders via dividend and share repurchases, including the repurchase of 19.2 million shares under our NCIB. The Canada sector delivered solid results, with revenue up 4% and full-year growth of 5%. Revenue increase driven by solid volume growth across retail, food service, and industrial segment, supported by a favorable mix shift towards butter, value-added category, particularly high-protein beverages and cultured products. These will be focused on fastest-growing dairy segments, improving capacity and driving efficiency across the network. these will be focused on fastest-growing dairy segments improving capacity and driving efficiency across the network Importantly, spend will remain tightly managed with phasing and returns linked to execution. importantly spend will remain tightly managed with phasing and returns linked to execution From a leverage perspective, our net debt to adjusted EBITDA ratio improved to 1.7 times. from a leverage perspective our net debt to adjusted ebitda ratio improved to 1.7 times Including estimated net proceed from the sale of 80% of the Dairy Division (Argentina), our leverage ratio on a pro forma basis reached 1.37 times, underscoring the strength and the flexibility of our balance sheet. including estimated net proceed from the sale of 80% of the dairy division (argentina) our leverage ratio on a pro forma basis reached 1.37 times underscoring the strength and the flexibility of our balance sheet In fiscal 2026, we returned approximately CAD 1 billion to shareholders via dividend and share repurchases, including the repurchase of 19.2 million shares under our NCIB. in fiscal 2026 we returned approximately cad 1 billion to shareholders via dividend and share repurchases including the repurchase of 19.2 million shares under our ncib The Canada sector delivered solid results, with revenue up 4% and full-year growth of 5%. the canada sector delivered solid results with revenue up 4% and full-year growth of 5% Revenue increase driven by solid volume growth across retail, food service, and industrial segment, supported by a favorable mix shift towards butter, value-added category, particularly high-protein beverages and cultured products. revenue increase driven by solid volume growth across retail food service and industrial segment supported by a favorable mix shift towards butter value-added category particularly high-protein beverages and cultured products Targeted pricing action to offset inflationary pressures and higher milk input costs further supported top-line growth. On profitability, adjusted EBITDA was up 1%, reaching CAD 159 million. Adjusted EBITDA increased, driven by volume growth and a favorable mix, with additional upside from manufacturing efficiencies, but partially offset by higher wages-related costs, including higher stock-based compensation and brand support initiatives. For the U.S. sector, revenue came in at CAD 1.9 billion, down 13% from last year, reflecting lower U.S. dairy commodity prices, particularly butter and cheese. Underlying top-line performance remains solid with continued volume growth and favorable mix across the portfolio. Growth was led by strength across cheese, dairy foods, and value-added dairy ingredient, including mozzarella, as well as contribution from string cheese, export cheese, and cream cheese categories. We also continue to outperform the market, with cheese volume growing ahead of industry benchmarks, reflecting ongoing share gains across the category. Targeted pricing action to offset inflationary pressures and higher milk input costs further supported top-line growth. targeted pricing action to offset inflationary pressures and higher milk input costs further supported top-line growth On profitability, adjusted EBITDA was up 1%, reaching CAD 159 million. on profitability adjusted ebitda was up 1% reaching cad 159 million Adjusted EBITDA increased, driven by volume growth and a favorable mix, with additional upside from manufacturing efficiencies, but partially offset by higher wages-related costs, including higher stock-based compensation and brand support initiatives. adjusted ebitda increased driven by volume growth and a favorable mix with additional upside from manufacturing efficiencies but partially offset by higher wages-related costs including higher stock-based compensation and brand support initiatives For the U.S. sector, revenue came in at CAD 1.9 billion, down 13% from last year, reflecting lower U.S. dairy commodity prices, particularly butter and cheese. for the u.s sector revenue came in at cad 1.9 billion down 13% from last year reflecting lower u.s dairy commodity prices particularly butter and cheese Underlying top-line performance remains solid with continued volume growth and favorable mix across the portfolio. underlying top-line performance remains solid with continued volume growth and favorable mix across the portfolio Growth was led by strength across cheese, dairy foods, and value-added dairy ingredient, including mozzarella, as well as contribution from string cheese, export cheese, and cream cheese categories. growth was led by strength across cheese dairy foods and value-added dairy ingredient including mozzarella as well as contribution from string cheese export cheese and cream cheese categories We also continue to outperform the market, with cheese volume growing ahead of industry benchmarks, reflecting ongoing share gains across the category. we also continue to outperform the market with cheese volume growing ahead of industry benchmarks reflecting ongoing share gains across the category Adjusted EBITDA in the U.S. was broadly in line with last year while underlying business performance continued to improve. Our performance remained solid, supported by higher volume and a favorable product mix alongside continued execution of our commercial initiatives. We also realized benefit from ongoing operational improvement, including efficiencies from our Midwest consolidated warehouse facility. These factors were offset by higher logistics expenses driven by elevated transportation and fuel costs, as well as ongoing increases in wages and also higher stock-based compensation. We also continue to invest in targeted advertising and promotional activity to support our brand. Adjusted EBITDA in the U.S. was broadly in line with last year while underlying business performance continued to improve. adjusted ebitda in the u.s was broadly in line with last year while underlying business performance continued to improve Our performance remained solid, supported by higher volume and a favorable product mix alongside continued execution of our commercial initiatives. our performance remained solid supported by higher volume and a favorable product mix alongside continued execution of our commercial initiatives We also realized benefit from ongoing operational improvement, including efficiencies from our Midwest consolidated warehouse facility. we also realized benefit from ongoing operational improvement including efficiencies from our midwest consolidated warehouse facility These factors were offset by higher logistics expenses driven by elevated transportation and fuel costs, as well as ongoing increases in wages and also higher stock-based compensation. these factors were offset by higher logistics expenses driven by elevated transportation and fuel costs as well as ongoing increases in wages and also higher stock-based compensation We also continue to invest in targeted advertising and promotional activity to support our brand. we also continue to invest in targeted advertising and promotional activity to support our brand Overall results reflect a balanced profile of operational progress and disciplined investment, supporting stable earnings in a dynamic cost environment.Turning to our international sector, which consists mainly of the Dairy Division Australia, revenue were supported by stronger export pricing with higher international cheese and dairy ingredient markets, and also supported by growth in value-added ingredient. Domestic demand remained solid, reinforcing our strategic focus on domestic market opportunities with higher domestic volumes, more than offsetting our export volume reduction. International EBITDA was stable year-over-year. Higher dairy ingredient and cheese prices were largely offset by elevated milk input costs. Operationally, tighter milk availability created some pressure on efficiencies and fixed cost absorption, though this was partially mitigated by disciplined product mix optimization. We also absorbed higher labor and strategic A&P investment in the quarter, alongside increased stock-based compensation. Overall results reflect a balanced profile of operational progress and disciplined investment, supporting stable earnings in a dynamic cost environment.Turning to our international sector, which consists mainly of the Dairy Division Australia, revenue were supported by stronger export pricing with higher international cheese and dairy ingredient markets, and also supported by growth in value-added ingredient. overall results reflect a balanced profile of operational progress and disciplined investment supporting stable earnings in a dynamic cost environment.turning to our international sector which consists mainly of the dairy division australia revenue were supported by stronger export pricing with higher international cheese and dairy ingredient markets and also supported by growth in value-added ingredient Domestic demand remained solid, reinforcing our strategic focus on domestic market opportunities with higher domestic volumes, more than offsetting our export volume reduction. domestic demand remained solid reinforcing our strategic focus on domestic market opportunities with higher domestic volumes more than offsetting our export volume reduction International EBITDA was stable year-over-year. international ebitda was stable year-over-year Higher dairy ingredient and cheese prices were largely offset by elevated milk input costs. higher dairy ingredient and cheese prices were largely offset by elevated milk input costs Operationally, tighter milk availability created some pressure on efficiencies and fixed cost absorption, though this was partially mitigated by disciplined product mix optimization. operationally tighter milk availability created some pressure on efficiencies and fixed cost absorption though this was partially mitigated by disciplined product mix optimization We also absorbed higher labor and strategic A&P investment in the quarter, alongside increased stock-based compensation. we also absorbed higher labor and strategic a&p investment in the quarter alongside increased stock-based compensation Despite input cost inflation and operational constraint, the business demonstrated solid margin discipline and cost control. For the Europe sector, revenue was over CAD 290 million, down 13% from last year. This primarily reflecting reduced volume in bulk cheese due to lower milk intake and lower dairy ingredient volume following the continued execution of our ingredient strategy. Retail remained more resilient, with strength in branded cheese partially offsetting softer non-cheese categories. Pricing action helped mitigated inflationary pressure. Adjusted EBITDA came in at CAD 37 million, up 54%, with margin improving to 13%. The lift was primarily driven by a more favorable product mix and the consolidation of our cheese packing operation and continued progress on our ingredient strategy, both of which delivered meaningful operational efficiencies and cost-saving. In closing, we delivered a record year in Canada and we're capturing the benefit of our investment in the U.S. Despite input cost inflation and operational constraint, the business demonstrated solid margin discipline and cost control. despite input cost inflation and operational constraint the business demonstrated solid margin discipline and cost control For the Europe sector, revenue was over CAD 290 million, down 13% from last year. for the europe sector revenue was over cad 290 million down 13% from last year This primarily reflecting reduced volume in bulk cheese due to lower milk intake and lower dairy ingredient volume following the continued execution of our ingredient strategy. this primarily reflecting reduced volume in bulk cheese due to lower milk intake and lower dairy ingredient volume following the continued execution of our ingredient strategy Retail remained more resilient, with strength in branded cheese partially offsetting softer non-cheese categories. retail remained more resilient with strength in branded cheese partially offsetting softer non-cheese categories Pricing action helped mitigated inflationary pressure. pricing action helped mitigated inflationary pressure Adjusted EBITDA came in at CAD 37 million, up 54%, with margin improving to 13%. adjusted ebitda came in at cad 37 million up 54% with margin improving to 13% The lift was primarily driven by a more favorable product mix and the consolidation of our cheese packing operation and continued progress on our ingredient strategy, both of which delivered meaningful operational efficiencies and cost-saving. the lift was primarily driven by a more favorable product mix and the consolidation of our cheese packing operation and continued progress on our ingredient strategy both of which delivered meaningful operational efficiencies and cost-saving In closing, we delivered a record year in Canada and we're capturing the benefit of our investment in the U.S. in closing we delivered a record year in canada and we're capturing the benefit of our investment in the u.s We also made a significant portfolio decision with the divestiture of Argentina, reinforcing our focus on value creation. Throughout the year, we remained disciplined, advancing our commercial initiatives while maintaining strong financial position. This supports a consistent approach to capital allocation, enabling us to invest for growth while continuing to return capital to shareholder. On that note, I'll turn the call back to Carl. We also made a significant portfolio decision with the divestiture of Argentina, reinforcing our focus on value creation. we also made a significant portfolio decision with the divestiture of argentina reinforcing our focus on value creation Throughout the year, we remained disciplined, advancing our commercial initiatives while maintaining strong financial position. throughout the year we remained disciplined advancing our commercial initiatives while maintaining strong financial position This supports a consistent approach to capital allocation, enabling us to invest for growth while continuing to return capital to shareholder. this supports a consistent approach to capital allocation enabling us to invest for growth while continuing to return capital to shareholder On that note, I'll turn the call back to Carl. on that note i'll turn the call back to carl

Speaker 1: Thank you, Max. In Canada, our performance this quarter continues to reflect the underlying strength and resiliency of our domestic platform. We delivered broad-based volume growth across retail, food service, and industrial market segments, supported by sustained demand in dairy foods, particularly in value-added and higher protein offerings. This is an area where consumer trends are aligned with our portfolio and where we see runway for value creation. As an example, Armstrong continues to perform as a leading brand within the everyday cheese category, reinforcing our position in core household staples. Our approach in Canada remains deliberate. We are investing behind our portfolio, strengthening in-store execution, and refreshing our offering to stay relevant. This includes a 360-degree media campaign in Quebec and targeted packaging upgrades across Saputo shredded cheese and Neilson value-added beverages to enhance shelf presence and drive conversion. These actions are not one-off. Thank you, Max. thank you max In Canada, our performance this quarter continues to reflect the underlying strength and resiliency of our domestic platform. in canada our performance this quarter continues to reflect the underlying strength and resiliency of our domestic platform We delivered broad-based volume growth across retail, food service, and industrial market segments, supported by sustained demand in dairy foods, particularly in value-added and higher protein offerings. we delivered broad-based volume growth across retail food service and industrial market segments supported by sustained demand in dairy foods particularly in value-added and higher protein offerings This is an area where consumer trends are aligned with our portfolio and where we see runway for value creation. this is an area where consumer trends are aligned with our portfolio and where we see runway for value creation As an example, Armstrong continues to perform as a leading brand within the everyday cheese category, reinforcing our position in core household staples. as an example armstrong continues to perform as a leading brand within the everyday cheese category reinforcing our position in core household staples Our approach in Canada remains deliberate. our approach in canada remains deliberate We are investing behind our portfolio, strengthening in-store execution, and refreshing our offering to stay relevant. we are investing behind our portfolio strengthening in-store execution and refreshing our offering to stay relevant This includes a 360-degree media campaign in Quebec and targeted packaging upgrades across Saputo shredded cheese and Neilson value-added beverages to enhance shelf presence and drive conversion. this includes a 360-degree media campaign in quebec and targeted packaging upgrades across saputo shredded cheese and neilson value-added beverages to enhance shelf presence and drive conversion These actions are not one-off. these actions are not one-off They are part of a scaled, repeatable commercial model that is driving consistent engagement and supporting growth across key categories. At the same time, we are building out our higher protein platform, which represents a clear opportunity to extend our relevance in evolving consumption occasions and capture incremental volume within the category. From a profitability standpoint, we benefited from operating leverage on higher volumes, improved mix, and the ongoing contribution from prior capital investments. Pricing actions have been disciplined and aligned with the input cost realities, ensuring we protect margins while maintaining competitiveness. Overall, Canada reflects what we are focused on delivering across the organization: a stable, demand-driven earnings base supported by strong brands and a portfolio evolution. In the U.S., our performance this quarter continues to demonstrate the strength of a scaled, commercially driven platform with momentum building. They are part of a scaled, repeatable commercial model that is driving consistent engagement and supporting growth across key categories. they are part of a scaled repeatable commercial model that is driving consistent engagement and supporting growth across key categories At the same time, we are building out our higher protein platform, which represents a clear opportunity to extend our relevance in evolving consumption occasions and capture incremental volume within the category. at the same time we are building out our higher protein platform which represents a clear opportunity to extend our relevance in evolving consumption occasions and capture incremental volume within the category From a profitability standpoint, we benefited from operating leverage on higher volumes, improved mix, and the ongoing contribution from prior capital investments. from a profitability standpoint we benefited from operating leverage on higher volumes improved mix and the ongoing contribution from prior capital investments Pricing actions have been disciplined and aligned with the input cost realities, ensuring we protect margins while maintaining competitiveness. pricing actions have been disciplined and aligned with the input cost realities ensuring we protect margins while maintaining competitiveness Overall, Canada reflects what we are focused on delivering across the organization: a stable, demand-driven earnings base supported by strong brands and a portfolio evolution. overall canada reflects what we are focused on delivering across the organization a stable demand-driven earnings base supported by strong brands and a portfolio evolution In the U.S., our performance this quarter continues to demonstrate the strength of a scaled, commercially driven platform with momentum building. in the u.s our performance this quarter continues to demonstrate the strength of a scaled commercially driven platform with momentum building We are outpacing the market and gaining market share across our key categories, reflecting strong execution in both cheese and dairy foods, as well as the advantage of operating across multiple channels and end markets. What differentiates this business is not just volume growth, but our ability to translate that growth into higher quality earnings through mix and portfolio management. We continue to see strong traction in structural growth areas, particularly in high-protein snacking and value-added ingredients, supported in part by the ramp-up of our Waupun facility. Additional capacity is driving incremental volumes in whey and high-value dairy ingredients and improving utilization as sustained demand in these categories continues to support scale. At the same time, we are extending that scale into under-penetrated channels while unlocking white space opportunities. Frigo Cheese Heads is expanding beyond lunchbox into adult and on-the-go snacking. We are outpacing the market and gaining market share across our key categories, reflecting strong execution in both cheese and dairy foods, as well as the advantage of operating across multiple channels and end markets. we are outpacing the market and gaining market share across our key categories reflecting strong execution in both cheese and dairy foods as well as the advantage of operating across multiple channels and end markets What differentiates this business is not just volume growth, but our ability to translate that growth into higher quality earnings through mix and portfolio management. what differentiates this business is not just volume growth but our ability to translate that growth into higher quality earnings through mix and portfolio management We continue to see strong traction in structural growth areas, particularly in high-protein snacking and value-added ingredients, supported in part by the ramp-up of our Waupun facility. Additional capacity is driving incremental volumes in whey and high-value dairy ingredients and improving utilization as sustained demand in these categories continues to support scale. we continue to see strong traction in structural growth areas particularly in high-protein snacking and value-added ingredients supported in part by the ramp-up of our waupun facility. additional capacity is driving incremental volumes in whey and high-value dairy ingredients and improving utilization as sustained demand in these categories continues to support scale At the same time, we are extending that scale into under-penetrated channels while unlocking white space opportunities. at the same time we are extending that scale into under-penetrated channels while unlocking white space opportunities Frigo Cheese Heads is expanding beyond lunchbox into adult and on-the-go snacking. frigo cheese heads is expanding beyond lunchbox into adult and on-the-go snacking We are also increasing our presence in convenience and food away from home channels where distribution remains under-penetrated, providing further growth opportunities. These efforts are supported by targeted investments in commercial capabilities, providing us with the tools and customer activation programs required to scale these emerging platforms sustainably. In parallel, our brand investments are beginning to compound. Increased marketing and promotional activity, including the extension of our Cheese Heads media campaign to reach new snacking audiences beyond its traditional base, is driving new consumer acquisition, strengthening engagement, and enhancing our digital and e-commerce presence as key enablers of long-term growth. At the same time, we are extending the Saputo brand, building on its strength as a well-established Canadian brand across the U.S. as a solutions-oriented food service platform, deepening customer relationships and expanding our relevance across a broader set of dairy applications. We are also increasing our presence in convenience and food away from home channels where distribution remains under-penetrated, providing further growth opportunities. we are also increasing our presence in convenience and food away from home channels where distribution remains under-penetrated providing further growth opportunities These efforts are supported by targeted investments in commercial capabilities, providing us with the tools and customer activation programs required to scale these emerging platforms sustainably. these efforts are supported by targeted investments in commercial capabilities providing us with the tools and customer activation programs required to scale these emerging platforms sustainably In parallel, our brand investments are beginning to compound. in parallel our brand investments are beginning to compound Increased marketing and promotional activity, including the extension of our Cheese Heads media campaign to reach new snacking audiences beyond its traditional base, is driving new consumer acquisition, strengthening engagement, and enhancing our digital and e-commerce presence as key enablers of long-term growth. increased marketing and promotional activity including the extension of our cheese heads media campaign to reach new snacking audiences beyond its traditional base is driving new consumer acquisition strengthening engagement and enhancing our digital and e-commerce presence as key enablers of long-term growth At the same time, we are extending the Saputo brand, building on its strength as a well-established Canadian brand across the U.S. as a solutions-oriented food service platform, deepening customer relationships and expanding our relevance across a broader set of dairy applications. at the same time we are extending the saputo brand building on its strength as a well-established canadian brand across the u.s as a solutions-oriented food service platform deepening customer relationships and expanding our relevance across a broader set of dairy applications From an operational standpoint, the most recent phase of network optimization and transformation is largely behind us, allowing us to pivot toward the next set of initiatives to further enhance the network. We are now operating from a more efficient footprint with benefits from our consolidated Midwest warehousing facility in Caledonia, together with ongoing third-party logistics consolidation. These initiatives are improving fill rates, enhancing efficiency, and strengthening execution consistency, supporting continued margin expansion. As a result, the U.S. business is entering the next phase from a position of strength. With scale, category exposure aligned to consumer trends, and a more efficient operating model, we see a clear path to sustained, high-quality growth and further margin progression over time. In our International Sector, Australia's performance this quarter reflects both improving market conditions and the strategic value of our footprint. From an operational standpoint, the most recent phase of network optimization and transformation is largely behind us, allowing us to pivot toward the next set of initiatives to further enhance the network. from an operational standpoint the most recent phase of network optimization and transformation is largely behind us allowing us to pivot toward the next set of initiatives to further enhance the network We are now operating from a more efficient footprint with benefits from our consolidated Midwest warehousing facility in Caledonia, together with ongoing third-party logistics consolidation. we are now operating from a more efficient footprint with benefits from our consolidated midwest warehousing facility in caledonia together with ongoing third-party logistics consolidation These initiatives are improving fill rates, enhancing efficiency, and strengthening execution consistency, supporting continued margin expansion. these initiatives are improving fill rates enhancing efficiency and strengthening execution consistency supporting continued margin expansion As a result, the U.S. business is entering the next phase from a position of strength. as a result the u.s business is entering the next phase from a position of strength With scale, category exposure aligned to consumer trends, and a more efficient operating model, we see a clear path to sustained, high-quality growth and further margin progression over time. with scale category exposure aligned to consumer trends and a more efficient operating model we see a clear path to sustained high-quality growth and further margin progression over time In our International Sector, Australia's performance this quarter reflects both improving market conditions and the strategic value of our footprint. in our international sector australia's performance this quarter reflects both improving market conditions and the strategic value of our footprint As pricing strengthened across global dairy markets, we were positioned to capture the upside selectively, directing volumes to the markets and channels offering the best returns. This is a key advantage of our model. We are not constrained to a single market dynamic. Demand patterns remained uneven, and we were intentional in how we responded. Rather than pursuing volume for its own sake, we prioritize value creation, optimizing mix, aligning pricing, and actively managing where and how we deploy our production capacity. On profitability, improving market conditions provided a tailwind, but what is more important is how we executed within that environment. Despite constraints on milk availability in certain regions, we continue to optimize our portfolio in real time, ensuring we are consistently allocating milk to higher-value opportunities. This reflects a shift to a more flexible, broader platform. As pricing strengthened across global dairy markets, we were positioned to capture the upside selectively, directing volumes to the markets and channels offering the best returns. as pricing strengthened across global dairy markets we were positioned to capture the upside selectively directing volumes to the markets and channels offering the best returns This is a key advantage of our model. this is a key advantage of our model We are not constrained to a single market dynamic. we are not constrained to a single market dynamic Demand patterns remained uneven, and we were intentional in how we responded. demand patterns remained uneven and we were intentional in how we responded Rather than pursuing volume for its own sake, we prioritize value creation, optimizing mix, aligning pricing, and actively managing where and how we deploy our production capacity. rather than pursuing volume for its own sake we prioritize value creation optimizing mix aligning pricing and actively managing where and how we deploy our production capacity On profitability, improving market conditions provided a tailwind, but what is more important is how we executed within that environment. on profitability improving market conditions provided a tailwind but what is more important is how we executed within that environment Despite constraints on milk availability in certain regions, we continue to optimize our portfolio in real time, ensuring we are consistently allocating milk to higher-value opportunities. despite constraints on milk availability in certain regions we continue to optimize our portfolio in real time ensuring we are consistently allocating milk to higher-value opportunities This reflects a shift to a more flexible, broader platform. this reflects a shift to a more flexible broader platform It gives us the ability to manage volatility, act on opportunities, and create value over time. In our Europe sector, the quarter underscores the strength of our strategy and our ability to drive structural margin improvement. We are seeing a clear and deliberate shift in the portfolio from commodity exposure toward branded, higher-value products. This is not just mix improvement. It reflects how we are repositioning the business to capture more value across the category. Our Cathedral City branded business remains central to that strategy. It continues to outperform its category and gain share, supported by a fully integrated marketing approach that is reinforcing both household penetration and consumer relevance. What is increasingly important is the breadth of that platform. Cathedral City is no longer limited to core cheese. It gives us the ability to manage volatility, act on opportunities, and create value over time. it gives us the ability to manage volatility act on opportunities and create value over time In our Europe sector, the quarter underscores the strength of our strategy and our ability to drive structural margin improvement. in our europe sector the quarter underscores the strength of our strategy and our ability to drive structural margin improvement We are seeing a clear and deliberate shift in the portfolio from commodity exposure toward branded, higher-value products. we are seeing a clear and deliberate shift in the portfolio from commodity exposure toward branded higher-value products This is not just mix improvement. this is not just mix improvement It reflects how we are repositioning the business to capture more value across the category. it reflects how we are repositioning the business to capture more value across the category Our Cathedral City branded business remains central to that strategy. our cathedral city branded business remains central to that strategy It continues to outperform its category and gain share, supported by a fully integrated marketing approach that is reinforcing both household penetration and consumer relevance. it continues to outperform its category and gain share supported by a fully integrated marketing approach that is reinforcing both household penetration and consumer relevance What is increasingly important is the breadth of that platform. what is increasingly important is the breadth of that platform Cathedral City is no longer limited to core cheese. cathedral city is no longer limited to core cheese It is extending into adjacent categories through licensing, where we are seeing strong momentum and incremental growth opportunities beyond the traditional shelf. Operationally, the work we have executed over the past year is translating into tangible structural benefits. Network optimization and strategic shifts in our ingredients approach are simplifying the business, improving efficiency, and supporting margin expansion. Stepping back, Europe is evolving into a more focused platform with stronger earnings quality. As we look ahead, we remain committed to operating as a low-cost manufacturer of high-quality dairy solutions by driving efficiency, strengthening commercial execution, and capturing the long-term opportunity in dairy. In a dynamic and at times unpredictable environment, we continue to concentrate on what is within our control, positioning the business to create value across market cycles, not just through them. It is extending into adjacent categories through licensing, where we are seeing strong momentum and incremental growth opportunities beyond the traditional shelf. it is extending into adjacent categories through licensing where we are seeing strong momentum and incremental growth opportunities beyond the traditional shelf Operationally, the work we have executed over the past year is translating into tangible structural benefits. operationally the work we have executed over the past year is translating into tangible structural benefits Network optimization and strategic shifts in our ingredients approach are simplifying the business, improving efficiency, and supporting margin expansion. network optimization and strategic shifts in our ingredients approach are simplifying the business improving efficiency and supporting margin expansion Stepping back, Europe is evolving into a more focused platform with stronger earnings quality. stepping back europe is evolving into a more focused platform with stronger earnings quality As we look ahead, we remain committed to operating as a low-cost manufacturer of high-quality dairy solutions by driving efficiency, strengthening commercial execution, and capturing the long-term opportunity in dairy. as we look ahead we remain committed to operating as a low-cost manufacturer of high-quality dairy solutions by driving efficiency strengthening commercial execution and capturing the long-term opportunity in dairy In a dynamic and at times unpredictable environment, we continue to concentrate on what is within our control, positioning the business to create value across market cycles, not just through them. in a dynamic and at times unpredictable environment we continue to concentrate on what is within our control positioning the business to create value across market cycles not just through them Our approach is grounded in a disciplined, category-led strategy, being selective in where we participate, prioritizing returns over volume, and investing behind the customers, products, and brands that strengthen our long-term position. Structural demand drivers, particularly growing consumer interest in protein-rich and value-added dairy, continue to reinforce the attractiveness of the category across products, channels, and geographies. Operationally, we are entering the next phase of our transformation. As recent investments scale, we expect to unlock further efficiencies, improve absorption, and reinforce our cost position. Capital deployment remains disciplined and unchanged. We will invest where we see attractive returns through organic initiatives and strategic investments, including M&A, focused on value creation and the right opportunities, not the fastest ones. All of this is supported by continued cash generation and a balance sheet strength, ensuring we act decisively where we see value. Our approach is grounded in a disciplined, category-led strategy, being selective in where we participate, prioritizing returns over volume, and investing behind the customers, products, and brands that strengthen our long-term position. Structural demand drivers, particularly growing consumer interest in protein-rich and value-added dairy, continue to reinforce the attractiveness of the category across products, channels, and geographies. our approach is grounded in a disciplined category-led strategy being selective in where we participate prioritizing returns over volume and investing behind the customers products and brands that strengthen our long-term position. structural demand drivers particularly growing consumer interest in protein-rich and value-added dairy continue to reinforce the attractiveness of the category across products channels and geographies Operationally, we are entering the next phase of our transformation. operationally we are entering the next phase of our transformation As recent investments scale, we expect to unlock further efficiencies, improve absorption, and reinforce our cost position. as recent investments scale we expect to unlock further efficiencies improve absorption and reinforce our cost position Capital deployment remains disciplined and unchanged. capital deployment remains disciplined and unchanged We will invest where we see attractive returns through organic initiatives and strategic investments, including M&A, focused on value creation and the right opportunities, not the fastest ones. we will invest where we see attractive returns through organic initiatives and strategic investments including m&a focused on value creation and the right opportunities not the fastest ones All of this is supported by continued cash generation and a balance sheet strength, ensuring we act decisively where we see value. all of this is supported by continued cash generation and a balance sheet strength ensuring we act decisively where we see value Taken together, Saputo is today a more focused and agile business, supported by a stronger operating foundation and a clearer path to consistent, high-quality value creation over time. This concludes our formal remarks. I will now turn the call over for questions. Taken together, Saputo is today a more focused and agile business, supported by a stronger operating foundation and a clearer path to consistent, high-quality value creation over time. taken together saputo is today a more focused and agile business supported by a stronger operating foundation and a clearer path to consistent high-quality value creation over time This concludes our formal remarks. this concludes our formal remarks I will now turn the call over for questions. i will now turn the call over for questions

Speaker 9: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Irene Nattel of RBC Capital Markets. Your line is open. Thank you. thank you The floor is now open for questions. the floor is now open for questions If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. if you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue If you would like to withdraw your question, simply press star one again. if you would like to withdraw your question simply press star one again If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. if you are called upon to ask a question and are listening via loudspeaker on your device please pick up your handset and ensure that your phone is not on mute when asking your question Your first question comes from the line of Irene Nattel of RBC Capital Markets. your first question comes from the line of irene nattel of rbc capital markets Your line is open. your line is open

Speaker 3: Thanks, and good morning, everyone, and congratulations on a great year in FY 2026. I want to focus for a second on some shift in tone in this release and in this call, really around capital allocation and targeted investments. Can you give us an idea of where the incremental CapEx is going to go? When you talk about targeted strategic M&A, can you give us an idea of order of magnitude and what types of geographies and product categories that might be? Thanks, and good morning, everyone, and congratulations on a great year in FY 2026. thanks and good morning everyone and congratulations on a great year in fy 2026 I want to focus for a second on some shift in tone in this release and in this call, really around capital allocation and targeted investments. i want to focus for a second on some shift in tone in this release and in this call really around capital allocation and targeted investments Can you give us an idea of where the incremental CapEx is going to go? can you give us an idea of where the incremental capex is going to go When you talk about targeted strategic M&A, can you give us an idea of order of magnitude and what types of geographies and product categories that might be? when you talk about targeted strategic m&a can you give us an idea of order of magnitude and what types of geographies and product categories that might be

Speaker 1: Thank you, Irene, for the question. What I would say to start is that we continue to be focused on growth and, of course, growing where consumers are pulling demand from in our dairy category. Hence, we are looking at ensuring that we invest for organic growth, and we have some very interesting opportunities that we're unlocking right now, in fact, in most of our geographies. They're all really centered around products, and I'm going to give you sort of a general perspective. Those would be cultured in nature or the likes of cottage cheese or value-added beverages, as well as continuing on our investment journey in our ingredients sectors. These are very exciting categories for us, and we are pleased and excited to be able to invest behind these to keep growing our relevance with consumers. Thank you, Irene, for the question. thank you irene for the question What I would say to start is that we continue to be focused on growth and, of course, growing where consumers are pulling demand from in our dairy category. what i would say to start is that we continue to be focused on growth and of course growing where consumers are pulling demand from in our dairy category Hence, we are looking at ensuring that we invest for organic growth, and we have some very interesting opportunities that we're unlocking right now, in fact, in most of our geographies. hence we are looking at ensuring that we invest for organic growth and we have some very interesting opportunities that we're unlocking right now in fact in most of our geographies They're all really centered around products, and I'm going to give you sort of a general perspective. they're all really centered around products and i'm going to give you sort of a general perspective Those would be cultured in nature or the likes of cottage cheese or value-added beverages, as well as continuing on our investment journey in our ingredients sectors. those would be cultured in nature or the likes of cottage cheese or value-added beverages as well as continuing on our investment journey in our ingredients sectors These are very exciting categories for us, and we are pleased and excited to be able to invest behind these to keep growing our relevance with consumers. these are very exciting categories for us and we are pleased and excited to be able to invest behind these to keep growing our relevance with consumers As we've said in the recent past, we'll continue to look at what is the best route to market to making that happen, whether that's an investment in ourselves organically or whether that is through looking at an acquisition of sorts to either bring on a brand, a capability, and possibly even a route to market. These are always put into sort of the balance, but considering where our balance sheet is at today and the strength of it, we feel quite confident that a mix of those two is in our horizon, and we will be able to remain that dairy solutions provider for our customers and continue to be relevant with our consumers with a disciplined investment in both segments. As we've said in the recent past, we'll continue to look at what is the best route to market to making that happen, whether that's an investment in ourselves organically or whether that is through looking at an acquisition of sorts to either bring on a brand, a capability, and possibly even a route to market. as we've said in the recent past we'll continue to look at what is the best route to market to making that happen whether that's an investment in ourselves organically or whether that is through looking at an acquisition of sorts to either bring on a brand a capability and possibly even a route to market These are always put into sort of the balance, but considering where our balance sheet is at today and the strength of it, we feel quite confident that a mix of those two is in our horizon, and we will be able to remain that dairy solutions provider for our customers and continue to be relevant with our consumers with a disciplined investment in both segments. these are always put into sort of the balance but considering where our balance sheet is at today and the strength of it we feel quite confident that a mix of those two is in our horizon and we will be able to remain that dairy solutions provider for our customers and continue to be relevant with our consumers with a disciplined investment in both segments

Speaker 3: That's great. Thank you. Really appreciate it. You did mention the balance sheet, and clearly on a pro forma basis at just around 1.3, 1.4x, you have ample capacity. How should we be thinking about potential magnitude of M&A? You've done all ranges historically, so what should we kind of be expecting here, and is anything imminent? That's great. that's great Thank you. thank you Really appreciate it. really appreciate it You did mention the balance sheet, and clearly on a pro forma basis at just around 1.3, 1.4x , you have ample capacity. you did mention the balance sheet and clearly on a pro forma basis at just around 1.3 1.4x you have ample capacity How should we be thinking about potential magnitude of M&A? how should we be thinking about potential magnitude of m&a You've done all ranges historically, so what should we kind of be expecting here, and is anything imminent? you've done all ranges historically so what should we kind of be expecting here and is anything imminent

Speaker 1: We're very focused in what it is we want to acquire, and we're not looking for a new milk shed. We've also shared that in the recent past. We're very comfortable with where it is we are manufacturing in today and the opportunities that some of those platforms present for us to continue to service our international markets and to capture either emerging markets. I'll say that those two platforms in particular are certainly the U.S. and Australia, which is the engine behind our international supply. Closing that part up, we're not looking for new milk sheds, but what we are looking for is a real fit. We're looking for things that will allow us to keep growing in the protein sector, better-for-you offerings, tailored nutrition. We're very focused in what it is we want to acquire, and we're not looking for a new milk shed. we're very focused in what it is we want to acquire and we're not looking for a new milk shed We've also shared that in the recent past. we've also shared that in the recent past We're very comfortable with where it is we are manufacturing in today and the opportunities that some of those platforms present for us to continue to service our international markets and to capture either emerging markets. we're very comfortable with where it is we are manufacturing in today and the opportunities that some of those platforms present for us to continue to service our international markets and to capture either emerging markets I'll say that those two platforms in particular are certainly the U.S. and Australia, which is the engine behind our international supply. i'll say that those two platforms in particular are certainly the u.s and australia which is the engine behind our international supply Closing that part up, we're not looking for new milk sheds, but what we are looking for is a real fit. closing that part up we're not looking for new milk sheds but what we are looking for is a real fit We're looking for things that will allow us to keep growing in the protein sector, better-for-you offerings, tailored nutrition. we're looking for things that will allow us to keep growing in the protein sector better-for-you offerings tailored nutrition quite frankly, the criteria must meet things like adding capabilities, strengthening our route to markets, and it's not about the size, because there are a number of things that we require that either could be a sort of a tuck-in size in nature or something that's more substantial. again, we continue to review things that are adjacencies, that are core to our strategy, and not just what's available in the marketplace. quite frankly, the criteria must meet things like adding capabilities, strengthening our route to markets, and it's not about the size, because there are a number of things that we require that either could be a sort of a tuck-in size in nature or something that's more substantial. again, we continue to review things that are adjacencies, that are core to our strategy, and not just what's available in the marketplace. quite frankly the criteria must meet things like adding capabilities strengthening our route to markets and it's not about the size because there are a number of things that we require that either could be a sort of a tuck-in size in nature or something that's more substantial again we continue to review things that are adjacencies that are core to our strategy and not just what's available in the marketplace

Speaker 3: That's really helpful. Thank you. That's really helpful. that's really helpful Thank you. thank you

Speaker 9: Your next question comes from the line of Michael Van Aelst of TD Cowen. Your line is open. Your next question comes from the line of Michael Van Aelst of TD Cowen. your next question comes from the line of michael van aelst of td cowen Your line is open. your line is open

Speaker 7: Hi, good morning. Looking at the EBITDA, and if I back out that incremental stock-based comp, it was up 14%, which is pretty impressive. I was hoping that you could unpack the three or four largest drivers of this growth in the quarter, which do you still see having the most juice and boosting profits further in fiscal 2027? Hi, good morning. hi good morning Looking at the EBITDA, and if I back out that incremental stock-based comp, it was up 14%, which is pretty impressive. looking at the ebitda and if i back out that incremental stock-based comp it was up 14% which is pretty impressive I was hoping that you could unpack the three or four largest drivers of this growth in the quarter, which do you still see having the most juice and boosting profits further in fiscal 2027? i was hoping that you could unpack the three or four largest drivers of this growth in the quarter which do you still see having the most juice and boosting profits further in fiscal 2027

Speaker 1: Thank you, Mike, and I would say that volume will be number one on our list. We continue to fire on all cylinders in all our geographies, and volume is certainly continuing to drive absorption costs, returns, all of the above. I would also say that Q4 is a quarter where we've been able to capture the real full extent, almost the full extent of all of the prior capital investments that we've made in ourselves over the last couple of years. We've also made some significant inroads with regards to our ingredients business and being able to unlock the value that comes with the demand in that market space today. All of this is supported by second-to-none service levels. Thank you, Mike, and I would say that volume will be number one on our list. thank you mike and i would say that volume will be number one on our list We continue to fire on all cylinders in all our geographies, and volume is certainly continuing to drive absorption costs, returns, all of the above. we continue to fire on all cylinders in all our geographies and volume is certainly continuing to drive absorption costs returns all of the above I would also say that Q4 is a quarter where we've been able to capture the real full extent, almost the full extent of all of the prior capital investments that we've made in ourselves over the last couple of years. i would also say that q4 is a quarter where we've been able to capture the real full extent almost the full extent of all of the prior capital investments that we've made in ourselves over the last couple of years We've also made some significant inroads with regards to our ingredients business and being able to unlock the value that comes with the demand in that market space today. we've also made some significant inroads with regards to our ingredients business and being able to unlock the value that comes with the demand in that market space today All of this is supported by second-to-none service levels. all of this is supported by second-to-none service levels Our business, in addition to growing with the demand in the marketplace, we've also been able to have excellent service levels and fill rates to make that happen. I would say that, in a nutshell, volume, execution excellence, is driving that momentum, supported by some historical investments that we've made, including the investments we made in A&P. We began that journey earlier in the year, and we're beginning to see the benefits of that flow through. That's especially true with maybe two specific brands, being Cathedral City and Frigo Cheese Heads in the U.S. Our business, in addition to growing with the demand in the marketplace, we've also been able to have excellent service levels and fill rates to make that happen. our business in addition to growing with the demand in the marketplace we've also been able to have excellent service levels and fill rates to make that happen I would say that, in a nutshell, volume, execution excellence, is driving that momentum, supported by some historical investments that we've made, including the investments we made in A&P. i would say that in a nutshell volume execution excellence is driving that momentum supported by some historical investments that we've made including the investments we made in a&p We began that journey earlier in the year, and we're beginning to see the benefits of that flow through. we began that journey earlier in the year and we're beginning to see the benefits of that flow through That's especially true with maybe two specific brands, being Cathedral City and Frigo Cheese Heads in the U.S. that's especially true with maybe two specific brands being cathedral city and frigo cheese heads in the u.s

Speaker 7: Okay, thanks. That's helpful. When you look at these, I understand that most of them seem to be going on all cylinders in Q4, but how much of that ramped up during the year and therefore has room to continue to drive growth as you cycle through those improvements in fiscal 2027? Okay, thanks. okay thanks That's helpful. that's helpful When you look at these, I understand that most of them seem to be going on all cylinders in Q4, but how much of that ramped up during the year and therefore has room to continue to drive growth as you cycle through those improvements in fiscal 2027? when you look at these i understand that most of them seem to be going on all cylinders in q4 but how much of that ramped up during the year and therefore has room to continue to drive growth as you cycle through those improvements in fiscal 2027

Speaker 1: We feel good about the momentum and the ongoing performance. Without taking anything for granted, we're feeling really good about the business continuing to optimize and through our continuous improvement programs. I do believe that we are going to continue to see improvements in our overall operating costs. We're very disciplined with regards to our inventory management and our overall supply and demand planning process, keeping our working capital as low as possible, yet not sacrificing our service levels. The A&P investments that we made in fiscal 2026, of course, that momentum will carry through. As we mentioned, we will also be stepping up A&P investments in this fiscal year to support a very targeted sector of growing demand from the consumer space and a handful of our brands. We feel good about the momentum and the ongoing performance. we feel good about the momentum and the ongoing performance Without taking anything for granted, we're feeling really good about the business continuing to optimize and through our continuous improvement programs. without taking anything for granted we're feeling really good about the business continuing to optimize and through our continuous improvement programs I do believe that we are going to continue to see improvements in our overall operating costs. i do believe that we are going to continue to see improvements in our overall operating costs We're very disciplined with regards to our inventory management and our overall supply and demand planning process, keeping our working capital as low as possible, yet not sacrificing our service levels. we're very disciplined with regards to our inventory management and our overall supply and demand planning process keeping our working capital as low as possible yet not sacrificing our service levels The A&P investments that we made in fiscal 2026, of course, that momentum will carry through. the a&p investments that we made in fiscal 2026 of course that momentum will carry through As we mentioned, we will also be stepping up A&P investments in this fiscal year to support a very targeted sector of growing demand from the consumer space and a handful of our brands. as we mentioned we will also be stepping up a&p investments in this fiscal year to support a very targeted sector of growing demand from the consumer space and a handful of our brands We have continued CapEx programs that are driving incremental efficiencies, and we see that as an ongoing engine for our growth. We're certainly mindful of inflation. Everyone is subject to some of the geopolitical turmoil that we have today. We're going to continue to do what we need to do to protect margins, but at the same time, we want to make sure that we remain competitive, and accordingly, we continue to be focused on growth. We have continued CapEx programs that are driving incremental efficiencies, and we see that as an ongoing engine for our growth. we have continued capex programs that are driving incremental efficiencies and we see that as an ongoing engine for our growth We're certainly mindful of inflation. we're certainly mindful of inflation Everyone is subject to some of the geopolitical turmoil that we have today. everyone is subject to some of the geopolitical turmoil that we have today We're going to continue to do what we need to do to protect margins, but at the same time, we want to make sure that we remain competitive, and accordingly, we continue to be focused on growth. we're going to continue to do what we need to do to protect margins but at the same time we want to make sure that we remain competitive and accordingly we continue to be focused on growth

Speaker 7: Great. That's helpful. Thank you. Great. great That's helpful. that's helpful Thank you. thank you

Speaker 9: Your next question comes from the line of Scott Marks of Jefferies. Your line is open. Your next question comes from the line of Scott Marks of Jefferies. your next question comes from the line of scott marks of jefferies Your line is open. your line is open

Speaker 10: Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask about, just following up on some of the last comments you made there about inflation. I think you noted that in the quarter you had some headwinds from fuel and transportation costs. As we look ahead to fiscal 2027, could you help us frame how you're thinking about magnitude of impact from those and if we walk around the world, how we should be thinking about impacts? Hey, good morning. hey good morning Thanks so much for taking our questions. thanks so much for taking our questions First thing I wanted to ask about, just following up on some of the last comments you made there about inflation. first thing i wanted to ask about just following up on some of the last comments you made there about inflation I think you noted that in the quarter you had some headwinds from fuel and transportation costs. i think you noted that in the quarter you had some headwinds from fuel and transportation costs As we look ahead to fiscal 2027, could you help us frame how you're thinking about magnitude of impact from those and if we walk around the world, how we should be thinking about impacts? as we look ahead to fiscal 2027 could you help us frame how you're thinking about magnitude of impact from those and if we walk around the world how we should be thinking about impacts

Speaker 1: Thank you for the question. I would say that the impact of the inflationary pressures specifically associated to either energy or fuel is quite even across the globe. There isn't one sector that we feel is necessarily more exposed than another. They've been, I'll use the word, manageable to date. We are certainly looking to mitigate as many as we can through either operational changes, internal logistics, speaking with customers, of course, on any preferences or changes that they would like to see and how it is we service them in order to keep their own pricing intact. We certainly look to pricing action as one of our last resorts. At this stage, we feel that the influence of incremental cost in energy and fuel is one where we'll be able to navigate through. Thank you for the question. thank you for the question I would say that the impact of the inflationary pressures specifically associated to either energy or fuel is quite even across the globe. i would say that the impact of the inflationary pressures specifically associated to either energy or fuel is quite even across the globe There isn't one sector that we feel is necessarily more exposed than another. there isn't one sector that we feel is necessarily more exposed than another They've been, I'll use the word, manageable to date. they've been i'll use the word manageable to date We are certainly looking to mitigate as many as we can through either operational changes, internal logistics, speaking with customers, of course, on any preferences or changes that they would like to see and how it is we service them in order to keep their own pricing intact. We certainly look to pricing action as one of our last resorts. we are certainly looking to mitigate as many as we can through either operational changes internal logistics speaking with customers of course on any preferences or changes that they would like to see and how it is we service them in order to keep their own pricing intact. we certainly look to pricing action as one of our last resorts At this stage, we feel that the influence of incremental cost in energy and fuel is one where we'll be able to navigate through. at this stage we feel that the influence of incremental cost in energy and fuel is one where we'll be able to navigate through We will remain competitive, but we'll also look to pricing should things continue to persist throughout the year. There isn't one region in particular that is necessarily more exposed than another, nor is our operating platform more exposed. We will remain competitive, but we'll also look to pricing should things continue to persist throughout the year. we will remain competitive but we'll also look to pricing should things continue to persist throughout the year There isn't one region in particular that is necessarily more exposed than another, nor is our operating platform more exposed. there isn't one region in particular that is necessarily more exposed than another nor is our operating platform more exposed

Speaker 10: Understood. Appreciate the context there. Second question from me, you've spoken a lot about the shift toward branded, toward value-added products, value-added ingredients. Wondering if you could just kind of help us frame bigger picture? As you look at your businesses across the globe, where do you think you are in that journey from shifting from more commoditized products to more of these value-added products? How should we be thinking about the runway ahead? Understood. understood Appreciate the context there. appreciate the context there Second question from me, you've spoken a lot about the shift toward branded, toward value-added products, value-added ingredients. second question from me you've spoken a lot about the shift toward branded toward value-added products value-added ingredients Wondering if you could just kind of help us frame bigger picture? wondering if you could just kind of help us frame bigger picture As you look at your businesses across the globe, where do you think you are in that journey from shifting from more commoditized products to more of these value-added products? as you look at your businesses across the globe where do you think you are in that journey from shifting from more commoditized products to more of these value-added products How should we be thinking about the runway ahead? how should we be thinking about the runway ahead

Speaker 1: Maybe one way to help describe opportunities and where we are on our journey. The ingredients business is not new to Saputo. We've been in this business for decades, but certainly it's evolving at a more rapid pace and demand is certainly ramping up very quickly. We had some foresight a couple of years ago when we decided to invest heavily into our Waupun facility, which added capacity as well as capabilities into higher fractions of whey protein concentrates, as well as moving into edible and dry blend lactose. We have capabilities not only in the U.S., we have capabilities in Australia. What I also want to provide by way of example, a choice we made in the U.K. Maybe one way to help describe opportunities and where we are on our journey. maybe one way to help describe opportunities and where we are on our journey The ingredients business is not new to Saputo. the ingredients business is not new to saputo We've been in this business for decades, but certainly it's evolving at a more rapid pace and demand is certainly ramping up very quickly. we've been in this business for decades but certainly it's evolving at a more rapid pace and demand is certainly ramping up very quickly We had some foresight a couple of years ago when we decided to invest heavily into our Waupun facility, which added capacity as well as capabilities into higher fractions of whey protein concentrates, as well as moving into edible and dry blend lactose. we had some foresight a couple of years ago when we decided to invest heavily into our waupun facility which added capacity as well as capabilities into higher fractions of whey protein concentrates as well as moving into edible and dry blend lactose We have capabilities not only in the U.S., we have capabilities in Australia. we have capabilities not only in the u.s we have capabilities in australia What I also want to provide by way of example, a choice we made in the U.K. what i also want to provide by way of example a choice we made in the u.k In the U.K., we walked away from a business that we were involved in when it comes to the whey solids, and that was our demineralized and GOS operations, because of the demand turndown in those categories. Instead, we decided to move over into some basic whey products, which has improved our margin structure, as you can see from the results. It's also an area which is also underdeveloped for us, and we are actively looking at how to bring those solids to life and to value through further refinement. There are active projects in this space at this moment. You can see that we have a combination of a mature business in some areas, as well as an opportunity to continue to add value to whey solids that we already generate. In the U.K., we walked away from a business that we were involved in when it comes to the whey solids, and that was our demineralized and GOS operations, because of the demand turndown in those categories. in the u.k we walked away from a business that we were involved in when it comes to the whey solids and that was our demineralized and gos operations because of the demand turndown in those categories Instead, we decided to move over into some basic whey products, which has improved our margin structure, as you can see from the results. instead we decided to move over into some basic whey products which has improved our margin structure as you can see from the results It's also an area which is also underdeveloped for us, and we are actively looking at how to bring those solids to life and to value through further refinement. it's also an area which is also underdeveloped for us and we are actively looking at how to bring those solids to life and to value through further refinement There are active projects in this space at this moment. there are active projects in this space at this moment You can see that we have a combination of a mature business in some areas, as well as an opportunity to continue to add value to whey solids that we already generate. you can see that we have a combination of a mature business in some areas as well as an opportunity to continue to add value to whey solids that we already generate If I look further out, in order to continue to support our ingredients business, specifically on the whey-based side, our current position and growth in the cheese sector will allow us to fuel that whey business as well, that ingredients business, which is whey-based, that is dependent on cheese make as well. We feel really good about the combination and the vertical integration that we have with these two sectors, allowing us to continue to capture that demand. In addition to that, I would say that we're going to continue to look at moving to a greater share beyond that of being a provider of those ingredients to those who have the last mile and branded offerings, and continuing to look at how we can incorporate our ingredients as a raw material into finished goods that we can bring to market as well. If I look further out, in order to continue to support our ingredients business, specifically on the whey-based side, our current position and growth in the cheese sector will allow us to fuel that whey business as well, that ingredients business, which is whey-based, that is dependent on cheese make as well. if i look further out in order to continue to support our ingredients business specifically on the whey-based side our current position and growth in the cheese sector will allow us to fuel that whey business as well that ingredients business which is whey-based that is dependent on cheese make as well We feel really good about the combination and the vertical integration that we have with these two sectors, allowing us to continue to capture that demand. we feel really good about the combination and the vertical integration that we have with these two sectors allowing us to continue to capture that demand In addition to that, I would say that we're going to continue to look at moving to a greater share beyond that of being a provider of those ingredients to those who have the last mile and branded offerings, and continuing to look at how we can incorporate our ingredients as a raw material into finished goods that we can bring to market as well. in addition to that i would say that we're going to continue to look at moving to a greater share beyond that of being a provider of those ingredients to those who have the last mile and branded offerings and continuing to look at how we can incorporate our ingredients as a raw material into finished goods that we can bring to market as well

Speaker 10: Appreciate the color. I'll pass it on. Appreciate the color. appreciate the color I'll pass it on. i'll pass it on

Speaker 9: Your next question comes from the line of Marc Dumais of Ventum Financial. Your line is open. Your next question comes from the line of Marc Dumais of Ventum Financial. your next question comes from the line of marc dumais of ventum financial Your line is open. your line is open

Speaker 5: Hi, good morning, guys. Carl, earlier you mentioned a step up in A&P spending this year. Maybe for Max, order of magnitude there. Carl, can you maybe talk a little bit about where you're going to see those spend specifically go to? Hi, good morning, guys. hi good morning guys Carl, earlier you mentioned a step up in A&P spending this year. carl earlier you mentioned a step up in a&p spending this year Maybe for Max, order of magnitude there. maybe for max order of magnitude there Carl, can you maybe talk a little bit about where you're going to see those spend specifically go to? carl can you maybe talk a little bit about where you're going to see those spend specifically go to

Speaker 6: Hi, Marc. Welcome back. Relative to A&P investment for us, we see it as a journey. We did have an incremental spend in fiscal 2026, and we do expect incremental spend as well to further support our brand. The focus that the organization is putting around brand awareness and commercial initiative is having great momentum. We intend to pursue it over the next couple of fiscal. I will not be providing any specific number just for market sensitivity perspective. I can give you a flavor from a percentage perspective, likely around 20% of what we've achieved this fiscal will be an incremental next year. Hi, Marc. hi marc Welcome back. welcome back Relative to A&P investment for us, we see it as a journey. relative to a&p investment for us we see it as a journey We did have an incremental spend in fiscal 2026, and we do expect incremental spend as well to further support our brand. we did have an incremental spend in fiscal 2026 and we do expect incremental spend as well to further support our brand The focus that the organization is putting around brand awareness and commercial initiative is having great momentum. the focus that the organization is putting around brand awareness and commercial initiative is having great momentum We intend to pursue it over the next couple of fiscal. we intend to pursue it over the next couple of fiscal I will not be providing any specific number just for market sensitivity perspective. i will not be providing any specific number just for market sensitivity perspective I can give you a flavor from a percentage perspective, likely around 20% of what we've achieved this fiscal will be an incremental next year. i can give you a flavor from a percentage perspective likely around 20% of what we've achieved this fiscal will be an incremental next year

Speaker 1: Maybe I can just add one thing on that, Marc, is we continue to be focused on supporting those key brands. We've underscored what those are. They do span all of our geographies. They're the likes of the Cathedral City of the world, Devondale, Frigo Cheese Heads, Saputo, and of course, Armstrong. As we do this, we also continuously evaluate the returns from our investments, the overall performance of the brands through a variety of metrics, and ensures that our A&P spend fundamentally. It remains an important part of our growth algorithm on an ongoing basis. Maybe I can just add one thing on that, Marc, is we continue to be focused on supporting those key brands. maybe i can just add one thing on that marc is we continue to be focused on supporting those key brands We've underscored what those are. we've underscored what those are They do span all of our geographies. they do span all of our geographies They're the likes of the Cathedral City of the world, Devondale, Frigo Cheese Heads, Saputo, and of course, Armstrong. they're the likes of the cathedral city of the world devondale, frigo cheese heads saputo and of course armstrong As we do this, we also continuously evaluate the returns from our investments, the overall performance of the brands through a variety of metrics, and ensures that our A&P spend fundamentally. It remains an important part of our growth algorithm on an ongoing basis. as we do this we also continuously evaluate the returns from our investments the overall performance of the brands through a variety of metrics and ensures that our a&p spend fundamentally. it remains an important part of our growth algorithm on an ongoing basis

Speaker 5: Thanks for that. One more if I may, Carl? Can you give us your vision on the ingredients platform? Where are the margins today? How do you see that evolving over the next three to four years, and what areas can we grow organically there, and what areas do you feel like we need M&A? Thanks for that. thanks for that One more if I may, Carl? one more if i may carl Can you give us your vision on the ingredients platform? can you give us your vision on the ingredients platform Where are the margins today? where are the margins today How do you see that evolving over the next three to four years, and what areas can we grow organically there, and what areas do you feel like we need M&A? how do you see that evolving over the next three to four years and what areas can we grow organically there and what areas do you feel like we need m&a

Speaker 1: The ingredients portfolio is very broad, and although the craze and the demand is squarely focused on protein also comes from two different segments, if you want, in our dairy category, one being whey-based and the other one being milk-based. We play in both, of course. We do feel that there's an opportunity in both sectors to continue to enhance, not only our offering, but also our volume. To get to the whey-based proteins, I want to re-emphasize that it passes through augmented cheese make and cheese sales, and we're very well-positioned with the portfolio that we have, both branded, both private label offerings, and all the channels we play in to continue to grow our cheese business to be able to fuel that piece. The ingredients portfolio is very broad, and although the craze and the demand is squarely focused on protein also comes from two different segments, if you want, in our dairy category, one being whey-based and the other one being milk-based. the ingredients portfolio is very broad and although the craze and the demand is squarely focused on protein also comes from two different segments if you want in our dairy category one being whey-based and the other one being milk-based We play in both, of course. we play in both of course We do feel that there's an opportunity in both sectors to continue to enhance, not only our offering, but also our volume. we do feel that there's an opportunity in both sectors to continue to enhance not only our offering but also our volume To get to the whey-based proteins, I want to re-emphasize that it passes through augmented cheese make and cheese sales, and we're very well-positioned with the portfolio that we have, both branded, both private label offerings, and all the channels we play in to continue to grow our cheese business to be able to fuel that piece. to get to the whey-based proteins i want to re-emphasize that it passes through augmented cheese make and cheese sales and we're very well-positioned with the portfolio that we have both branded both private label offerings and all the channels we play in to continue to grow our cheese business to be able to fuel that piece The remainder of the ingredients portfolio also includes milk-based proteins, and this is an area where it's a smaller share of our portfolio, but we continue to see it as being complementary and part of our growth engine as well, as that business also comes with the opportunity to grow our cream offerings and our cream platform, which is key to our dairy foods offerings. It is very strategic for us, very much intertwined with our core offerings in dairy foods and cheese, and we will continue to invest both in capital, and we will continue to look for the appropriate fit in elements that might enhance our route to market and/or enhance our last mile, and that'd be more the B2C space. The remainder of the ingredients portfolio also includes milk-based proteins, and this is an area where it's a smaller share of our portfolio, but we continue to see it as being complementary and part of our growth engine as well, as that business also comes with the opportunity to grow our cream offerings and our cream platform, which is key to our dairy foods offerings. the remainder of the ingredients portfolio also includes milk-based proteins and this is an area where it's a smaller share of our portfolio but we continue to see it as being complementary and part of our growth engine as well as that business also comes with the opportunity to grow our cream offerings and our cream platform which is key to our dairy foods offerings It is very strategic for us, very much intertwined with our core offerings in dairy foods and cheese, and we will continue to invest both in capital, and we will continue to look for the appropriate fit in elements that might enhance our route to market and/or enhance our last mile, and that'd be more the B2C space. it is very strategic for us very much intertwined with our core offerings in dairy foods and cheese and we will continue to invest both in capital and we will continue to look for the appropriate fit in elements that might enhance our route to market and/or enhance our last mile and that'd be more the b2c space We feel very good about where protein sits and where dairy sits with consumers, and ingredients will play an important part of our growth profile over the next couple of years. We feel very good about where protein sits and where dairy sits with consumers, and ingredients will play an important part of our growth profile over the next couple of years. we feel very good about where protein sits and where dairy sits with consumers and ingredients will play an important part of our growth profile over the next couple of years

Speaker 5: Great. Carl, can you comment at all about the margin of what you referred to? Great. great Carl, can you comment at all about the margin of what you referred to? carl can you comment at all about the margin of what you referred to

Speaker 1: Yeah. How vast that sector is, there's varying degrees. Overall, the ingredient sector margin is one that is quite strong and on the upper end of our overall average, if not exceeding our average of reported margins. Yeah. yeah How vast that sector is, there's varying degrees. how vast that sector is there's varying degrees Overall, the ingredient sector margin is one that is quite strong and on the upper end of our overall average, if not exceeding our average of reported margins. overall the ingredient sector margin is one that is quite strong and on the upper end of our overall average if not exceeding our average of reported margins

Speaker 5: Thank you. Thank you. thank you

Speaker 9: Your next question comes from the line of Vishal Shreedhar of National Bank. Your line is open. Your next question comes from the line of Vishal Shreedhar of National Bank. your next question comes from the line of vishal shreedhar of national bank Your line is open. your line is open

Speaker 11: Hi. Thanks for taking my questions. I was interested to hear about the momentum that you're seeing in your business and wanted to get your perspective on consumer malaise and how that plays into your portfolio looking at the past. Just if you anticipate through the year any shift towards private label away from brand or shift towards retail away from food service, and if so, how that might impact the business. Hi. hi Thanks for taking my questions. thanks for taking my questions I was interested to hear about the momentum that you're seeing in your business and wanted to get your perspective on consumer malaise and how that plays into your portfolio looking at the past. i was interested to hear about the momentum that you're seeing in your business and wanted to get your perspective on consumer malaise and how that plays into your portfolio looking at the past Just if you anticipate through the year any shift towards private label away from brand or shift towards retail away from food service, and if so, how that might impact the business. just if you anticipate through the year any shift towards private label away from brand or shift towards retail away from food service and if so how that might impact the business

Speaker 1: Thank you, Vishal, for the question. Certainly over the last three to five years, we've learned a lot about the need to be agile. We built the platform accordingly, and we do feel very confident about our ability to navigate the channels that will certainly win in various cycles, economic cycles that we have, whether that be the away from home or whether that be retail or food service. We feel quite confident that we're agile enough today, much better positioned than we were a couple of years ago to be able to move to and from. I won't speculate on which ones will be winners, as it is cyclical in nature, but we'll be able to go through that nonetheless with growth. Thank you, Vishal, for the question. thank you vishal for the question Certainly over the last three to five years, we've learned a lot about the need to be agile. certainly over the last three to five years we've learned a lot about the need to be agile We built the platform accordingly, and we do feel very confident about our ability to navigate the channels that will certainly win in various cycles, economic cycles that we have, whether that be the away from home or whether that be retail or food service. we built the platform accordingly and we do feel very confident about our ability to navigate the channels that will certainly win in various cycles economic cycles that we have whether that be the away from home or whether that be retail or food service We feel quite confident that we're agile enough today, much better positioned than we were a couple of years ago to be able to move to and from. we feel quite confident that we're agile enough today much better positioned than we were a couple of years ago to be able to move to and from I won't speculate on which ones will be winners, as it is cyclical in nature, but we'll be able to go through that nonetheless with growth. i won't speculate on which ones will be winners as it is cyclical in nature but we'll be able to go through that nonetheless with growth When it comes to the aspects of branded versus private label or even toll manufacturing and industrial supply, it's always been core to our business model to play in all sectors. Yes, we certainly see a shift in or a growth in private label brands across many geographies, but that does not put us in a position where we feel that our brands are in danger or our growth profile associated to them are going to be jeopardized. In fact, what it's doing is ensuring that we put the focus and the resources behind the right brands and making sure that those brands continue to resonate. We continue to innovate behind the appropriate brands and not sprinkle it across our entire network. When it comes to the aspects of branded versus private label or even toll manufacturing and industrial supply, it's always been core to our business model to play in all sectors. when it comes to the aspects of branded versus private label or even toll manufacturing and industrial supply it's always been core to our business model to play in all sectors Yes, we certainly see a shift in or a growth in private label brands across many geographies, but that does not put us in a position where we feel that our brands are in danger or our growth profile associated to them are going to be jeopardized. yes we certainly see a shift in or a growth in private label brands across many geographies but that does not put us in a position where we feel that our brands are in danger or our growth profile associated to them are going to be jeopardized In fact, what it's doing is ensuring that we put the focus and the resources behind the right brands and making sure that those brands continue to resonate. in fact what it's doing is ensuring that we put the focus and the resources behind the right brands and making sure that those brands continue to resonate We continue to innovate behind the appropriate brands and not sprinkle it across our entire network. we continue to innovate behind the appropriate brands and not sprinkle it across our entire network We welcome, if you want, the dynamics that are out there today, because quite frankly, I do believe that we're, if not one of, if not the best positioned to be able to capture the rise and the wins and the real opportunities that are going to present themselves with consumer shifts and customer channel shifts. We welcome, if you want, the dynamics that are out there today, because quite frankly, I do believe that we're, if not one of, if not the best positioned to be able to capture the rise and the wins and the real opportunities that are going to present themselves with consumer shifts and customer channel shifts. we welcome if you want the dynamics that are out there today because quite frankly i do believe that we're if not one of if not the best positioned to be able to capture the rise and the wins and the real opportunities that are going to present themselves with consumer shifts and customer channel shifts

Speaker 11: Okay. Thank you. With respect to GLP-1s and the impact to your business and the categories that you're in. I've noticed that some of the North American pizza players are reporting tepid performance, but I think you commented that your mozzarella trends are growing. I was wondering what your perspective is on these GLP-1s and how it impacts your business and if there's any shifts you need to make. Okay. okay Thank you. thank you With respect to GLP-1s and the impact to your business and the categories that you're in. with respect to glp-1s and the impact to your business and the categories that you're in I've noticed that some of the North American pizza players are reporting tepid performance, but I think you commented that your mozzarella trends are growing. i've noticed that some of the north american pizza players are reporting tepid performance but i think you commented that your mozzarella trends are growing I was wondering what your perspective is on these GLP-1s and how it impacts your business and if there's any shifts you need to make. i was wondering what your perspective is on these glp-1s and how it impacts your business and if there's any shifts you need to make

Speaker 1: GLP-1 dynamics is one that continues to evolve rather rapidly, whether that is in the number of users or which parts of the world that we play in are emerging as a growing set of consumers who are participating in that diet or that usage. Our portfolio, first of all, the dairy category is well-positioned in order to play a role for those who choose GLP-1 drugs. That is because of the protein requirements. I think we're all becoming familiar now with the fact that protein is an important part of that journey. That GLP-1 journey also has a variety of caloric requirements along the way. People will cycle, if you want, in and out of various dairy products and offerings in that journey. GLP-1 dynamics is one that continues to evolve rather rapidly, whether that is in the number of users or which parts of the world that we play in are emerging as a growing set of consumers who are participating in that diet or that usage. glp-1 dynamics is one that continues to evolve rather rapidly whether that is in the number of users or which parts of the world that we play in are emerging as a growing set of consumers who are participating in that diet or that usage Our portfolio, first of all, the dairy category is well-positioned in order to play a role for those who choose GLP-1 drugs. our portfolio first of all the dairy category is well-positioned in order to play a role for those who choose glp-1 drugs That is because of the protein requirements. that is because of the protein requirements I think we're all becoming familiar now with the fact that protein is an important part of that journey. i think we're all becoming familiar now with the fact that protein is an important part of that journey That GLP-1 journey also has a variety of caloric requirements along the way. that glp-1 journey also has a variety of caloric requirements along the way People will cycle, if you want, in and out of various dairy products and offerings in that journey. people will cycle if you want in and out of various dairy products and offerings in that journey Some will be very protein-focused, low calorie, and then at another point in that journey, they become in need of a more complete nutrition. That means that dairy, whether it's the high protein products or products like cheese, which are balanced in complete nutrition and protein, will continue to play an important role. I do feel quite comfortable that the ongoing demand and trust in dairy is in fact in part supported by the GLP-1 trends. Some will be very protein-focused, low calorie, and then at another point in that journey, they become in need of a more complete nutrition. some will be very protein-focused low calorie and then at another point in that journey they become in need of a more complete nutrition That means that dairy, whether it's the high protein products or products like cheese, which are balanced in complete nutrition and protein, will continue to play an important role. that means that dairy whether it's the high protein products or products like cheese which are balanced in complete nutrition and protein will continue to play an important role I do feel quite comfortable that the ongoing demand and trust in dairy is in fact in part supported by the GLP-1 trends. i do feel quite comfortable that the ongoing demand and trust in dairy is in fact in part supported by the glp-1 trends

Speaker 11: Thank you. Thank you. thank you

Speaker 9: Your next question comes from the line of John Zamparo of Scotiabank. Your line is open. Your next question comes from the line of John Zamparo of Scotiabank. your next question comes from the line of john zamparo of scotiabank Your line is open. your line is open

Speaker 4: Thank you. Good morning. I wanted to follow up on the CapEx guidance. In particular, when do you anticipate the revenue benefits to hit? Is that most likely to be felt fully in F28, or could some of that slip into F29 or could some fall into F27? Just wondering if you'd add some color on the timelines of any key contributors or key projects. Thank you. thank you Good morning. good morning I wanted to follow up on the CapEx guidance. i wanted to follow up on the capex guidance In particular, when do you anticipate the revenue benefits to hit? in particular when do you anticipate the revenue benefits to hit Is that most likely to be felt fully in F28, or could some of that slip into F29 or could some fall into F27? is that most likely to be felt fully in f28 or could some of that slip into f29 or could some fall into f27 Just wondering if you'd add some color on the timelines of any key contributors or key projects. just wondering if you'd add some color on the timelines of any key contributors or key projects

Speaker 1: I would say that from the fresh capital that we've unlocked, the majority of that, the more meaningful portions will hit more in 2028, 2029 than it is in 2027. Again, we're looking at investing in categories that we know will have continued long-term growth and support. The CapEx in itself, or the timing of delivering the incremental capacity in these categories does not necessarily limit our growth. We're being a lot more intentional and proactive with our investments. Despite the capital taking the timelines that it has and then the lead time it has, we feel that we'll nonetheless be able to grow our business in most of our categories over that timeframe. I would say that from the fresh capital that we've unlocked, the majority of that, the more meaningful portions will hit more in 2028, 2029 than it is in 2027. i would say that from the fresh capital that we've unlocked the majority of that the more meaningful portions will hit more in 2028 2029 than it is in 2027 Again, we're looking at investing in categories that we know will have continued long-term growth and support. again we're looking at investing in categories that we know will have continued long-term growth and support The CapEx in itself, or the timing of delivering the incremental capacity in these categories does not necessarily limit our growth. the capex in itself or the timing of delivering the incremental capacity in these categories does not necessarily limit our growth We're being a lot more intentional and proactive with our investments. we're being a lot more intentional and proactive with our investments Despite the capital taking the timelines that it has and then the lead time it has, we feel that we'll nonetheless be able to grow our business in most of our categories over that timeframe. despite the capital taking the timelines that it has and then the lead time it has we feel that we'll nonetheless be able to grow our business in most of our categories over that timeframe

Speaker 4: Got it. Okay. I wanted to ask about the margins in Europe. I think you had talked about low to mid-teens as the eventual target in that sector. You made a pretty sizable step up this quarter. I wonder, does that shift how you're thinking about the long-term ceiling of margins in that region? What are going to be the key drivers? Is it more mix or is it efficiency or some other driver that's going to move margins further? Got it. got it Okay. okay I wanted to ask about the margins in Europe. i wanted to ask about the margins in europe I think you had talked about low to mid-teens as the eventual target in that sector. i think you had talked about low to mid-teens as the eventual target in that sector You made a pretty sizable step up this quarter. you made a pretty sizable step up this quarter I wonder, does that shift how you're thinking about the long-term ceiling of margins in that region? i wonder does that shift how you're thinking about the long-term ceiling of margins in that region What are going to be the key drivers? what are going to be the key drivers Is it more mix or is it efficiency or some other driver that's going to move margins further? is it more mix or is it efficiency or some other driver that's going to move margins further

Speaker 1: In Europe, we're very pleased with the performance of our European team and business. I would say that although there's some seasonality involved in what you see with regards to the margin, it is an absolute structural improvement that the business has had through the consolidation efforts, the optimization efforts, management of working capital, ensuring that the cheese that we actually manufacture is cheese that is needed in the marketplace. That underlying strength will continue in quarters and years to come. In Europe, we're very pleased with the performance of our European team and business. in europe we're very pleased with the performance of our european team and business I would say that although there's some seasonality involved in what you see with regards to the margin, it is an absolute structural improvement that the business has had through the consolidation efforts, the optimization efforts, management of working capital, ensuring that the cheese that we actually manufacture is cheese that is needed in the marketplace. i would say that although there's some seasonality involved in what you see with regards to the margin it is an absolute structural improvement that the business has had through the consolidation efforts the optimization efforts management of working capital ensuring that the cheese that we actually manufacture is cheese that is needed in the marketplace That underlying strength will continue in quarters and years to come. that underlying strength will continue in quarters and years to come Where I see the ability to continue to keep moving the margin forward beyond the 13-ish, where we're sitting at today, I believe is strongly related to the continued growth of the Cathedral City brand, as well as our focus on adding incremental value to a pool of whey solids in that platform that, in comparison to the rest of our whey solids usage globally at Saputo, is undervalued right now. It's a great opportunity for that platform. Where I see the ability to continue to keep moving the margin forward beyond the 13-ish, where we're sitting at today, I believe is strongly related to the continued growth of the Cathedral City brand, as well as our focus on adding incremental value to a pool of whey solids in that platform that, in comparison to the rest of our whey solids usage globally at Saputo, is undervalued right now. where i see the ability to continue to keep moving the margin forward beyond the 13-ish where we're sitting at today i believe is strongly related to the continued growth of the cathedral city brand as well as our focus on adding incremental value to a pool of whey solids in that platform that in comparison to the rest of our whey solids usage globally at saputo is undervalued right now It's a great opportunity for that platform. it's a great opportunity for that platform

Speaker 4: Appreciate the color. Thank you very much. Appreciate the color. appreciate the color Thank you very much. thank you very much

Speaker 9: Your next question comes from the line of Chris Li of Desjardins. Your line is open. Your next question comes from the line of Chris Li of Desjardins. your next question comes from the line of chris li of desjardins Your line is open. your line is open

Speaker 2: Good morning, everyone. Thanks for squeezing me in. Carl, in your outlook, you mentioned that you expect U.S. dairy volatility to persist. Just directionally speaking, do you expect the level of volatility this year to be similar, higher, or lower than last year? Good morning, everyone. good morning everyone Thanks for squeezing me in. thanks for squeezing me in Carl, in your outlook, you mentioned that you expect U.S. dairy volatility to persist. carl in your outlook you mentioned that you expect u.s dairy volatility to persist Just directionally speaking, do you expect the level of volatility this year to be similar, higher, or lower than last year? just directionally speaking do you expect the level of volatility this year to be similar higher or lower than last year

Speaker 1: I would say that maybe if I look back, Chris, to the prior years, the volatility is dampening a little bit versus the, call it 2020 to 2024, 2025 era. It does sit, many of the market indices are sitting at lower levels. All of this to say that part of the reason is fundamentally that we've had a healthy milk season, not only in the U.S., but also globally. That's an environment where the dairy farming communities, I'll say, have been fortunate to have a climate that has cooperated with its needs. The overall cost of feed for most of fiscal 2025 was in a favorable position to prior years, so it supported their ongoing growth. I would say that maybe if I look back, Chris, to the prior years, the volatility is dampening a little bit versus the, call it 2020 to 2024, 2025 era. i would say that maybe if i look back chris to the prior years the volatility is dampening a little bit versus the call it 2020 to 2024 2025 era It does sit, many of the market indices are sitting at lower levels. it does sit many of the market indices are sitting at lower levels All of this to say that part of the reason is fundamentally that we've had a healthy milk season, not only in the U.S., but also globally. all of this to say that part of the reason is fundamentally that we've had a healthy milk season not only in the u.s but also globally That's an environment where the dairy farming communities, I'll say, have been fortunate to have a climate that has cooperated with its needs. that's an environment where the dairy farming communities i'll say have been fortunate to have a climate that has cooperated with its needs The overall cost of feed for most of fiscal 2025 was in a favorable position to prior years, so it supported their ongoing growth. the overall cost of feed for most of fiscal 2025 was in a favorable position to prior years so it supported their ongoing growth Where we see calendar 2026 and beyond, there'll be inflationary pressures in that community as well, and that we don't see milk growing at the same pace and click as it did in 2025, which, depending on the regions, was between 2% and 4%. We see something more subdued, more aligned with the demand of overall dairy products. That in itself will likely help the current market conditions in the U.S. move from its lower base to something higher than what we're seeing today. I expect that the volatility will be there nonetheless, but because of not only the milk dynamics, but certainly aspects of geopolitics. All that said, we stay focused on the things that are in our control and we'll continue to grow our business in the key categories. Where we see calendar 2026 and beyond, there'll be inflationary pressures in that community as well, and that we don't see milk growing at the same pace and click as it did in 2025, which, depending on the regions, was between 2% and 4%. where we see calendar 2026 and beyond there'll be inflationary pressures in that community as well and that we don't see milk growing at the same pace and click as it did in 2025 which depending on the regions was between 2% and 4% We see something more subdued, more aligned with the demand of overall dairy products. we see something more subdued more aligned with the demand of overall dairy products That in itself will likely help the current market conditions in the U.S. move from its lower base to something higher than what we're seeing today. that in itself will likely help the current market conditions in the u.s move from its lower base to something higher than what we're seeing today I expect that the volatility will be there nonetheless, but because of not only the milk dynamics, but certainly aspects of geopolitics. i expect that the volatility will be there nonetheless but because of not only the milk dynamics but certainly aspects of geopolitics All that said, we stay focused on the things that are in our control and we'll continue to grow our business in the key categories. all that said we stay focused on the things that are in our control and we'll continue to grow our business in the key categories The market dynamics will be what they are, but I feel good about, I'll say, the narrowing between milk supply and the overall demand in the dairy category being better aligned in not only calendar 2026, but also at least in the first half of 2027. The market dynamics will be what they are, but I feel good about, I'll say, the narrowing between milk supply and the overall demand in the dairy category being better aligned in not only calendar 2026, but also at least in the first half of 2027. the market dynamics will be what they are but i feel good about i'll say the narrowing between milk supply and the overall demand in the dairy category being better aligned in not only calendar 2026 but also at least in the first half of 2027

Speaker 2: Great. That's very helpful. Thank you for that. Another question I have just on M&A. Is it fair to say that if you do acquire something that we should think about it in terms of synergies? Should it be more skewed towards revenue, or should there be also some cost synergies from leveraging the manufacturing capabilities or increasing capital utilization? Just yeah, one thing about if we do think about M&A, what type of synergies should we be thinking about? Great. great That's very helpful. that's very helpful Thank you for that. thank you for that Another question I have just on M&A. another question i have just on m&a Is it fair to say that if you do acquire something that we should think about it in terms of synergies? is it fair to say that if you do acquire something that we should think about it in terms of synergies Should it be more skewed towards revenue, or should there be also some cost synergies from leveraging the manufacturing capabilities or increasing capital utilization? should it be more skewed towards revenue or should there be also some cost synergies from leveraging the manufacturing capabilities or increasing capital utilization Just yeah, one thing about if we do think about M&A, what type of synergies should we be thinking about? just yeah one thing about if we do think about m&a what type of synergies should we be thinking about

Speaker 1: It's both, depending on the categories that we would be exploring. As we indicated before, we're highly focused on ensuring that we invest in strengthening our growth profile, and accelerating our priorities. Keep in mind, I think we've said this before, we are very focused on remaining a low-cost manufacturer of high-quality dairy solutions. Choices that we will make, both in CapEx and in M&A spaces, are intended to lower our overall operating costs, as well as ensuring that we can continue to be that one-stop shop for our customers who are looking for dairy solutions, both innovation, a route to market to assist in their growth, as well as ensuring that the portfolio meets what consumers are demanding. It'll be a combination of both. Some may be skewing to synergies, others skewing to innovations, brand, and/or route to markets. It's both, depending on the categories that we would be exploring. it's both depending on the categories that we would be exploring As we indicated before, we're highly focused on ensuring that we invest in strengthening our growth profile, and accelerating our priorities. as we indicated before we're highly focused on ensuring that we invest in strengthening our growth profile and accelerating our priorities Keep in mind, I think we've said this before, we are very focused on remaining a low-cost manufacturer of high-quality dairy solutions. keep in mind i think we've said this before we are very focused on remaining a low-cost manufacturer of high-quality dairy solutions Choices that we will make, both in CapEx and in M&A spaces, are intended to lower our overall operating costs, as well as ensuring that we can continue to be that one-stop shop for our customers who are looking for dairy solutions, both innovation, a route to market to assist in their growth, as well as ensuring that the portfolio meets what consumers are demanding. choices that we will make both in capex and in m&a spaces are intended to lower our overall operating costs as well as ensuring that we can continue to be that one-stop shop for our customers who are looking for dairy solutions both innovation a route to market to assist in their growth as well as ensuring that the portfolio meets what consumers are demanding It'll be a combination of both. it'll be a combination of both Some may be skewing to synergies, others skewing to innovations, brand, and/or route to markets. some may be skewing to synergies others skewing to innovations brand and/or route to markets

Speaker 2: Got it. Okay. Thanks very much, and all the best. Got it. got it Okay. okay Thanks very much, and all the best. thanks very much and all the best

Speaker 9: With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Nick Estrela for closing remarks. With no further questions, that concludes our Q&A session. with no further questions that concludes our q&a session I'll now turn the conference back over to Nick Estrela for closing remarks. i'll now turn the conference back over to nick estrela for closing remarks

Speaker 8: Thank you, JL. Please note that we will release our first quarter fiscal 2027 results on August 6th, 2026. We thank you for taking part in the call and webcast. Have a great day. Thank you, JL. thank you jl Please note that we will release our first quarter fiscal 2027 results on August 6th, 2026. please note that we will release our first quarter fiscal 2027 results on august 6th 2026 We thank you for taking part in the call and webcast. we thank you for taking part in the call and webcast Have a great day. have a great day

Speaker 9: This concludes today's conference call. You may now disconnect. This concludes today's conference call. this concludes today's conference call You may now disconnect. you may now disconnect