TENAZ ENERGY CORP. ANNOUNCES Q2 2025 RESULTS
The unaudited interim condensed consolidated financial statements and related management's discussion and analysis ("MD&A") are available on SEDAR+ at www.sedarplus.ca and on Tenaz's website at www.tenazenergy.com. Select financial and operating information for the three and six months ended June 30, 2025 appear below and should be read in conjunction with the related financial statements and MD&A.
HIGHLIGHTS
Corporate Update
On May 1, 2025, we closed the acquisition of NAM Offshore B.V. ('NOBV'). The former NOBV staff is now with Tenaz Energy Netherlands B.V. ("TEN"). We believe that the experience and capability of our new team, combined with a deep portfolio of investment projects and underutilized infrastructure, sets Tenaz up for long-term success in the Netherlands.
Second Quarter Operating and Financial Results
Production volumes averaged 7,998 boe/d(1) in Q2 2025, up 176% from Q1 2025, reflecting two months of production from TEN. Results from TEN have been in line with our expectations, with current quarter production affected by planned annual turnarounds. Production from our non-operated pre-TEN assets was also affected, as expected, by Q2 turnarounds. Canadian production increased due to drilling earlier in the year.
Funds flow from operations(2) ("FFO") for the second quarter was $17.2 million ($0.61/share(3)) as compared to $1.0 million ($0.03/share) in Q1 2025. This increase was driven by two months of contribution from TEN, which contributed approximately $23.5 million to FFO, partially offset by $6.8 million of residual transaction costs associated with transition activities for the TEN acquisition.
Net income for Q2 2025 was $188.6 million ($6.73/share), as compared to $1.3 million ($0.05/share) in Q2 2024. The increase in net income was the result of the recognition of a $192.2 million gain on acquisition.
Tenaz ended Q2 2025 with a net debt position of $100.2 million. This balance largely pertains to the contingent earn-out consideration, of which $53.7 million has been recorded as a current liability and $35.6 million has been recorded as a long-term liability. These amounts represent Tenaz's current estimate of the payments due in Q1 2026 (for the 2025 portion of the earn-out) and for later periods, respectively. This estimate and the amount ultimately paid may change over time due to changes in commodity prices, activity levels, production and cost results, among other factors.
During 2025, up to June 30th, we have deployed $3.1 million for our Normal Course Issuer Bid ("NCIB") program, repurchasing and retiring 0.21 million shares at an average price of $14.83/share. In February 2025, we renewed our NCIB and obtained approval to purchase up to 2.5 million additional shares. Since the beginning of the NCIB program in Q3 2022, we have retired 2.3 million common shares (8.0% of basic common shares) at an average cost of $3.90/share.
FINANCIAL AND OPERATIONAL SUMMARYThree months ended
Six months ended
Jun 30
Mar 31
Jun 30
Jun 30
Jun 30($000 CAD, except per share and per boe amounts)
2025
2025
2024
2025
2024FINANCIAL
Petroleum and natural gas sales
60,108
17,692
14,007
77,800
31,893Cash flow (used in) from operating activities
49,837
(3,811
)(11,920
)46,026
(5,702
)
Funds flow from operations(2)
17,214
953
5,822
18,167
12,865Per share - basic(2)
0.61
0.03
0.22
0.65
0.48Per share - diluted(2)
0.53
0.03
0.19
0.56
0.43Net income (loss)
188,610
(5,308
)1,335
183,302
778Per share - basic
6.73
(0.19
)0.05
6.59
0.03Per share - diluted
5.77
(0.19
)0.04
5.60
0.03Capital expenditures(2)
10,834
9,320
2,501
20,154
6,317Net debt(2)
(100,248
)(497
)44,343
(100,248
)44,343Common shares outstanding (000)
End of period - basic
28,391
27,550
27,345
28,391
27,345Weighted average for the period - basic
28,017
27,595
26,734
27,806
26,756Weighted average for the period - diluted
32,669
32,715
29,992
32,711
29,733
OPERATING
Average daily production
Heavy crude oil (bbls/d)
1,244
951
911
1,098
1,030Natural gas liquids (bbls/d)
103
71
71
87
71Natural gas (Mcf/d)
39,909
11,225
9,206
25,646
9,605Total (boe/d)(1)
7,998
2,893
2,517
5,460
2,702
Netbacks ($/boe)
Petroleum and natural gas sales
82.58
67.95
61.17
78.72
64.86Royalties
(2.33
)(5.38
)(6.18
)(3.13
)(5.99
)
Transportation expenses
(2.56
)(3.09
)(3.40
)(2.70
)(3.18
)
Operating expenses
(32.56
)(28.45
)(36.47
)(31.48
)(30.90
)
Midstream income(2)
2.00
5.30
6.12
2.87
5.14Operating netback(2)
47.13
36.33
21.24
44.28
29.93
BENCHMARK COMMODITY PRICES
WTI crude oil (US$/bbl)(4)
63.71
71.42
80.55
67.55
78.76WCS ($/bbl)
73.93
84.43
91.52
79.15
84.66AECO ($/Mcf)(5)
1.69
2.13
1.18
1.91
1.84TTF ($/Mcf)(6)
16.27
20.65
13.70
18.44
12.76(1) The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. Refer to "Barrels of Oil Equivalent" included in the "Advisories" section of this press release.(2) This is a non-GAAP and other financial measure. Refer to "Non-GAAP and Other Financial Measures" in the section "Advisories".(3) Per share metrics calculated using the weighted average common shares for the applicable period.(4) WTI represents posting price of West Texas Intermediate ("WTI") crude oil.(5) AECO is the natural gas price index for Alberta.(6) TTF is the price for natural gas in the Netherlands.
PRESIDENT'S MESSAGE
Q2 2025 marks our first reporting period since closing the acquisition of NAM Offshore B.V. ("NOBV", now Tenaz Energy Netherlands or "TEN"). In this report, we have included two months of TEN operations and present our preliminary estimates of fair value of the acquired assets and liabilities.
We are encouraged by the commitment of the Netherlands to secure gas supply through responsible offshore development. Tenaz is grateful for support from other industry participants in this effort, including from Energie Beheer Nederland ("EBN"), which acts as a joint venture partner on behalf of the Dutch state. Our Tenaz strategy is well timed to advance Europe's objective to increase gas production, and we are fortunate to have an asset base that has the potential to contribute meaningfully.
Operations
During the quarter, we successfully completed a 21-day major turnaround at the Den Helder Gas Terminal on both the HiCal and LoCal gas plants. Approximately 65% of our production flows through the HiCal and LoCal plants. The NOGAT gas plant, also operated by Tenaz, continued to operate throughout the turnaround. This onshore downtime coincided with turnaround activity at the K14 offshore hub, which is our largest processing and compression platform complex. All facilities are now fully operational. As Tenaz's first major operating activity in the Netherlands, we are proud to announce that our team executed this complex set of turnarounds safely and within our forecasted timelines. Because the acquisition closed partway through the quarter, only two months of TEN production was counted toward our results, resulting in an addition of approximately 5,000 boe/d (99% gas) for Q2 2025, as we previously expected.
Our primary objective now is to mobilize the necessary services to convert our compelling opportunity set into executed projects. Our 2025 capital plan includes a barge campaign for workovers, well optimizations, and infrastructure life extension and maintenance activities. Our technical staff is focused on identifying the most effective options to rejuvenate the existing well stock which has had limited investment activity for a number of years. We also intend to initiate a new well drilling program and are in the process of contracting a jack-up rig. We continue to use an already-contracted "walk-to-work" vessel to access offshore platforms that are not continuously manned for other maintenance activities.
Early planned activities include re-wheeling a compressor to reduce suction pressure to improve production and add reserves by reducing abandonment pressure in certain gas fields. As we look to Q4 2025, we aim to have completed tender and permitting processes for the barge and jack-up to enable workover and drilling activity on multiple locations. Preparation for these campaigns requires meeting the Dutch North Sea's comprehensive permitting and procurement timelines, which include partner and regulator approvals, acquisition of long-lead items, and post-drill tie-in planning. We aim to have all permits in place to ensure uninterrupted activity once the well work and drilling campaigns begin.
Across the rest of our producing portfolio, production was also as expected. Our pre-existing non-operated assets in the Netherlands experienced typical seasonal planned downtime, with 18 days of maintenance at hubs connected to the NGT pipeline system in April and May. Production from our pre-NOBV Netherlands assets was 775 boe/d (99% gas) in Q2 2025, down 20% from Q1 2025 because of the maintenance downtime, and down 2% from Q2 2024 due to natural decline.
Canadian production was up 19% from Q1 2025 and 32% from Q2 2024, with little capital activity during the quarter. The three gross (2.4 net) wells drilled in Q1 2025 continue to have strong production performance with a current aggregate rate of approximately 1,000 boe/d gross (870 boe/d net at a 63% oil weighting). We plan to optimize production from the new wells with additional compression in Q3 2025. We have deep project inventory in multiple formations in our Canadian asset base and have begun to plan for our 2026 drilling program.
Commodity Environment
During Q2 2025, TTF gas prices averaged €35.37/MWh ($16.27/Mcf), which was €3.60/MWh higher than in Q2 2024. Pricing strength came from low end-of-season EU gas storage levels and a greater emphasis on LNG imports to offset reduced Russian pipeline gas supplies. This increased reliance on LNG resulted in EU imports of US LNG nearly doubling in Q2 2025 versus the prior year, with overall LNG imports reaching a record high. Absent this supply, European storage replenishment for the coming winter would have been severely challenged, highlighting not only the sustained reliance on spot LNG but also the region's displayed ability to absorb incremental imports.
Looking forward, the EU's shift away from Russian natural gas supply appears on track to be permanent, and replacing lost supply could rest heavily on US LNG export growth. An EU proposal to phase out Russian gas and oil imports by the end of 2027 is moving towards the final stages of approval, with some lawmakers pushing for an earlier timeline, perhaps as soon as the end of 2026. The outcome of this legally-binding ban would see a further reduction of Russian pipeline exports to the EU of approximately 1.5 Bcf/d, and a loss of approximately 2 Bcf/d in LNG imports. A loss of 3.5 Bcf/d in supply would need to be replaced by a combination of domestic production growth, other pipeline imports, and higher LNG imports in particular. US LNG growth is well-timed to fill an EU supply shortfall, with increased LNG trade included in energy import targets attached to current tariff negotiations. To put the loss of Russian gas supply in context of EU LNG imports, replacing 3.5 Bcf/d of lost supply would increase imports from other countries by approximately 50% above the past twelve-month average. To put 3.5 Bcf/d in context of the US LNG market, it is more than twice as high as volumes from the US EIA's LNG liquefaction projects under construction list for 2026 of 1.6 Bcf/d.
At present, the TTF marker price stands at approximately €32.40/MWh ($15.21/Mcf), with the price for the remainder of 2025 at €33.94/MWh ($15.95/Mcf). We have hedged approximately 50% of our 2025 Netherlands gas production at an average price of €35.45/MWh ($16.65/Mcf).
WCS differentials to WTI averaged approximately US$10/bbl during Q2 2025, a narrower level than typically realized historically. Differential strength was supported by excess downstream pipeline capacity, low WCSB storage levels and healthy demand from US and Asian refiners. We have hedged 21% of our exposure to WTI prices for the second half of 2025, using a collar with a floor price of US$60/bbl and ceiling of US$75/bbl (as compared to a forward market price of approximately US$63.75/bbl), but remained unhedged for WCS differential exposure.
AECO gas prices averaged $1.69/MMBtu in Q2 2025, with the low price reflecting a combination of high production, limited egress capacity and high AECO gas storage levels. We have hedged 18% of our AECO exposure for the second half of 2025 (hedge price of $2.56/MMBtu as compared to a forward market price of $1.96/MMBtu).
Corporate Update
Our balance sheet now reflects our post-NOBV company structure. As of Q2 2025, we have included the contingent earn-out obligation in our net debt measure. This obligation consists of payments to the seller based on free cash flow for the 2025-2027 period. Including our working capital, senior unsecured notes and the earn-out, we ended the quarter with a net debt position of approximately $100 million. Specifically, regarding the earn-out, $53.7 million has been recorded as a current liability and $35.6 million has been recorded as a long-term liability. These amounts represent Tenaz's current estimate of the payments due in Q1 2026 (for the 2025 portion of the earn-out) and for later periods, respectively. This estimate and the amount ultimately paid may change over time due to changes in commodity prices, activity levels, production and cost results, among other factors.
Net income for the year-to-date period was approximately $190 million, primarily due to a significant gain recorded on the NOBV acquisition. The gain on acquisition arose because the fair value of acquired property, plant and equipment, exploration and evaluation assets, net of asset retirement obligations, exceeded the total consideration paid. The gain on acquisition was partially offset by transaction costs incurred in connection with the transition activities leading up to the May 1, 2025 completion date.
We are pleased to announce the appointment of Mirzeta Delkic to the position of Vice President of Human Resources and Sustainability. Ms. Delkic joined Tenaz in 2023 as Director of Human Resources. Prior to Tenaz, she held management roles in human resources and corporate governance at Vermilion Energy and Viterra. Ms. Delkic has a Bachelor of Arts degree in Law and Society with a minor in Political Science and an MBA (finance specialization) from the University of Calgary.
We are often asked when our next acquisition will be announced and what types of assets we are targeting. While we do not comment on specific opportunities, we continue to see strong potential to expand our asset portfolio. International deal processes involve complex negotiations, evolving seller expectations, and shifts in commodity pricing, so each transaction can take a long time to consummate. Our geographic focus remains the same, primarily Europe but also Latin America, with optionality in MENA and Canada. We are open to either natural gas or oil assets, driven by the expected returns in a given project. If expected risk-adjusted returns were equal, we would probably prefer an international gas project over an oil project, based on our macro view of the two commodities.
We remain aligned throughout our organization to the creation of shareholder value. Our NCIB program continues to return capital to shareholders, and we are committed to disciplined execution of it in 2025 and beyond. We would like to extend our gratitude to our shareholders for their continued confidence in Tenaz. Shareholder trust is instrumental as we navigate key operational milestones, strengthen our corporate systems and organization, and seek to deliver our strategic objectives. We are honoured that year-to-date total shareholder return ("TSR") from Tenaz shares is 32%, and that TSR since the recapitalization in 2021 is 946%.
/s/ Anthony Marino
President and Chief Executive Officer August 6, 2025
About Tenaz Energy Corp.
Tenaz is an energy company focused on the acquisition and sustainable development of international oil and gas assets. Tenaz is the second largest operator of natural gas assets in the Dutch sector of the North Sea and develops crude oil and natural gas at Leduc-Woodbend in Alberta. Additional information regarding Tenaz is available on SEDAR+ and at www.tenazenergy.com. Tenaz's Common Shares are listed for trading on the Toronto Stock Exchange under the symbol "TNZ".
ADVISORIES
Non‐GAAP and Other Financial Measures
This press release contains the terms funds flow from operations and capital expenditures which are considered "non-GAAP financial measures" and operating netback which is considered a "non-GAAP financial ratio". These terms do not have a standardized meaning prescribed by GAAP. In addition, this press release contains the term adjusted working capital (net debt), which is considered a "capital management measure". Accordingly, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP and these measures should not be considered to be more meaningful than GAAP measures in evaluating the Company's performance.
Funds flow from operations ("FFO")
Tenaz considers funds flow from operations to be a key measure of performance as it demonstrates the Company's ability to generate the necessary funds for sustaining capital, future growth through capital investment, and settling liabilities. Funds flow from operations is calculated as cash flow from operating activities plus income from associate and before changes in non-cash operating working capital and decommissioning liabilities settled. Funds flow from operations is not intended to represent cash flows from operating activities. A summary of the reconciliation of cash flow from operating activities to funds flow from operations, is set forth below:
($000)
Q2 2025
Q1 2025
Q2 2024
YTD 2025
YTD 2024Cash flow from (used in) operating activities
49,837
(3,811)
(11,920)
46,026
(5,702)Change in non-cash operating working capital
(34,623
)2,895
14,896
(31,728
)11,996Decommissioning liabilities settled
613
585
1,445
1,198
4,042Midstream income
1,454
1,381
1,401
2,835
2,529Amortization of deferred financing costs
(67
)(97
)-
(164
)-Funds flow from operations
17,214
953
5,822
18,167
12,865
(1) FFO per share (basic) is calculated as FFO divided by the weighted average common shares outstanding. Diluted FFO per share adjusts for the impact of potentially dilutive securities using the treasury stock method. For the periods presented, FFO per share was as follows: Q2 2025: $0.61 basic, $0.53 diluted; Q1 2025: $0.03 basic, $0.03 diluted; Q2 2024: $0.22 basic, $0.19 diluted; YTD 2025: $0.65 basic, $0.56 diluted; YTD 2024: $0.48 basic, $0.43 diluted.
Capital Expenditures
Tenaz considers capital expenditures to be a useful measure of the Company's investment in its existing asset base calculated as the sum of exploration and evaluation asset expenditures and property, plant and equipment expenditures from the consolidated statements of cash flows that is most directly comparable to cash flows used in investing activities. The reconciliation to primary financial statement measures is set forth below:
($000)
Q2 2025
Q1 2025
Q2 2024
YTD 2025
YTD 2024Exploration and evaluation
198
311
467
509
985Property, plant and equipment
10,636
9,009
2,034
19,645
5,332Capital expenditures
10,834
9,320
2,501
20,154
6,317
Free Cash Flow ("FCF")
Tenaz considers free cash flow to be a key measure of performance as it demonstrates the Company's excess funds generated after capital expenditures for potential shareholder returns, acquisitions, or growth in available liquidity. FCF is a non-GAAP financial measure and is comprised of funds flow from operations less capital expenditures. A summary of the reconciliation of the measure, is set forth below:
($000)
Q2 2025
Q1 2025
Q2 2024
YTD 2025
YTD 2024Funds flow from operations
17,214
953
5,822
18,167
12,865Less: Capital expenditures
(10,834
)(9,320
)(2,501
)(20,154
)(6,317
)
Free cash flow
6,380
(8,367
)3,321
(1,987
)6,548
Midstream Income
Tenaz considers midstream income an integral part of determining operating netbacks. Operating netbacks assists management and investors with evaluating operating performance. Tenaz's midstream income consists of the income from its associate, Noordtgastransport B.V. and excludes the amortization of fair value increment of NGT that is included in the equity investment on the balance sheet. Under IFRS Accounting Standards, investments in associates are accounted for using the equity method of accounting. Income from associate is Tenaz's share of the investee's net income and comprehensive income.
($000)
Q2 2025
Q1 2025
Q2 2024
YTD 2025
YTD 2024Income from associate
1,214
1,144
1,160
2,358
2,048Plus: Amortization of fair value increment of NGT
240
237
241
477
481Midstream income
1,454
1,381
1,401
2,835
2,529
Net debt
Management views net debt as a key industry benchmark and measure to assess the Company's financial position and liquidity. Net debt is calculated as current assets less current liabilities and long term debt, excluding the fair value of derivative instruments. If positive, the amount is referred to as adjusted working capital. Tenaz's net debt as at June 30, 2025 and December 31, 2024 is summarized below:June 30
December 31($000)
2025
2024Current assets
335,024
188,537Current liabilities
(261,087
)(40,304
)
Net current assets
73,937
148,233Fair value of net derivative instruments
(132
)(5
)
Long-term debt
(138,439
)(138,275
)
Contingent consideration, non-current portion
(35,614
)-Net debt
(100,248
)9,953
Operating Netback
Tenaz calculates operating netback on a dollar or per boe basis, as petroleum and natural gas sales less royalties, operating costs and transportation costs, plus midstream income. Operating netback is a key industry benchmark and a measure of performance for Tenaz that provides investors with information that is commonly used by other crude oil and natural gas producers. The measurement on a per boe basis assists management and investors with evaluating operating performance on a comparable basis.
Per Share Ratios
FFO per share (basic) is calculated as FFO divided by the weighted average common shares outstanding. Diluted FFO per share adjusts for the impact of potentially dilutive securities using the treasury stock method.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 Mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Forward‐looking Information
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "budget", "forecast", "guidance", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "potential", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to our beliefs about liquidity; Europe's objective to increase gas production and our potential to contribute meaningfully; Tenaz's opportunity set, project inventory and capital plans; activities and budget for 2025, and our anticipated operational and financial performance; the estimated contingent earn-out consideration; expected well performance; potential and planned workover and drilling opportunities; the anticipated timing of the tender and permitting processes for the barge and jack-up drilling rig; our production and capital guidance including forecast average production volumes and capital expenditures for 2025; the ability to grow our assets domestically and internationally; and the Company's strategy including our potential to expand our asset portfolio, our geographic focus and preferred projects.
The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Tenaz including, without limitation: the continued performance of Tenaz's oil and gas properties in a manner consistent with its past experiences; that Tenaz will continue to conduct its operations in a manner consistent with past operations; expectations regarding future development; the general continuance of current industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty, tariff and regulatory regimes; expectations regarding future acquisition opportunities; the continued availability of oilfield services; and the continued availability of adequate debt and equity financing and cash flow from operations to fund its planned expenditures.
Tenaz believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable, but no assurance can be given that these factors, expectations, and assumptions will prove to be correct.
The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of Tenaz's products; unanticipated operating results or production declines; changes in tax or environmental laws, tariffs, royalty rates or other regulatory matters; changes in development plans of Tenaz or by third party operators of Tenaz's properties; increased debt levels or debt service requirements; inaccurate estimation of Tenaz's oil and gas reserve volumes or resources; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; a failure to obtain necessary approvals as proposed or at all and certain other risks detailed from time to time in Tenaz's public documents.
The forward-looking information and statements contained in this press release speak only as of the date of this press release, and Tenaz does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
For further information, contact:
Tenaz Energy Corp. investors@tenazenergy.com
Anthony MarinoPresident and Chief Executive Officer Direct: 587 330 1983
Bradley BennettChief Financial Officer Direct: 587 330 1714
/NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW/
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/261482
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And in the US, President Donald Trump's quest to add supply in an effort to bring down the price of oil has unsettled local producers. The Dallas Fed's latest quarterly energy survey, published on July 2, shows negative sentiment among oil companies toward the Trump administration's policy on the fossil fuel. One respondent in the anonymized study said the administration's implied price target of $50 a barrel is simply unsustainable for the industry. Another spoke of the 'chaos' caused by current US trade policies, adding the volatility will drive companies to 'lay down rigs.' Meanwhile, the outlook for solar and wind stocks is starting to improve. The analysis of Hazeltree's data shows that the average share of funds that were net short stocks in the Invesco Solar ETF dropped to 3% in June. That's the lowest percentage since April 2021, when green equities were trading near record highs. The number of funds net long stocks in the First Trust Global Wind Energy ETF reached a 30-month high in February this year. Those positions fell back in June, but net longs still dominated shorts overall. Other hedge fund managers said AI has the potential to trigger a generational swell in energy demand that is likely to give new support to renewables. 'The market is telling you that AI is the biggest thing we've seen in our entire careers,' said Karim Moussalem, chief investment officer of equities at London-based Selwood Asset Management LLP, which manages about $1.6 billion. To meet energy demand from AI, renewables will need to play a big part, not least 'because they're the fastest to market,' he said. Renewables are likely to meet more than half of the required additional generation capacity by 2035, BloombergNEF said in a report last month. In China, green stocks are now enjoying a rebound after its solar industry started addressing overcapacity concerns. After losing about half its value between the end of 2021 and 2023, the Solactive Select China Green Energy Index — which includes solar giant Longi Green Energy Technology Co. — has advanced around 19% from an April low. In the US, Trump administration attacks on green energy — including a rollback of Biden-era subsidies — have already contributed to over $22 billion of clean energy projects being canceled or delayed since January, according to an analysis from the E2 advocacy group. Yet, for a number of fund managers, the decision to slash green subsidies helps end some of the policy uncertainty that had prevented investors from moving into wind and solar. 'At least now we know what the rules are going to be and so people can go back to evaluating these as businesses,' Mares said. The final version of Trump's $3.4 trillion budget bill — dubbed the One Big Beautiful Bill — was actually more favorable toward some corners of the renewables market than Tall Trees Capital's Audet expected. Utility-scale solar, for example, has emerged as a relative winner, she said. For green investors, it's been 'less bad than expected,' said Nishant Gupta, founder and chief investment officer of Kanou Capital LLP, an energy transition-focused hedge fund. 'There's been more protection around US domestic production than expected.' And this year's tariff wars have coincided with a broad rebound in green stocks. Since Trump first unveiled his proposed tariffs on April 2 — dubbed Liberation Day by the White House — the main S&P index tracking clean energy stocks has added about 18%. Over the same period, the main S&P index for oil companies is down around 4%. Much of the clean-energy rebound has been driven by solar. The Invesco Solar ETF, a widely tracked exchange-traded fund packed with solar stocks, is up more than 18% since April 2. More hedge funds continue to be short stocks in the Kraneshares Electric Vehicles and Future Mobility Index ETF than long — a constant since 2021 as China has steadily displaced Western manufacturers. But the share of net shorts dropped to 2.87% in June, which is the second-lowest level in almost half a decade. At the same time, there's an expectation among fund managers that the continued rise in sales of EVs globally will reduce the need for petroleum. That matches BloombergNEF estimates, which anticipate a 25% annual increase in EV sales this year. BNEF also expects that about 40% of vehicles on the road could be electric by 2040, displacing 19 million barrels of oil a day by that year. The strategy shift among funds reflects the fact that economic growth without low-carbon energy is now inconceivable, according to Trium's Mares. 'If we are going to continue to grow both in developed and emerging economies, we're going to need a lot of energy,' he said. 'A big chunk of the marginal growth in energy over the last 10 years has come from renewables and it's hard to see why that isn't going to continue.' MethodologyBloomberg Green analyzed anonymized weekly data that around 700 hedge fund managers disclosed to Hazeltree, from January 2021 through 27 June 2025. The hedge funds in the Hazeltree database vary in terms of assets under management, and the analysis is not weighted by hedge fund assets or size of position held. Collectively, AUM for the hedge funds analyzed is around $700 billion. Total assets under management in the hedge fund industry were around $4.7 trillion at the end of the second quarter 2025, according to Hedge Fund Research. Bloomberg also interviewed hedge fund managers on their oil and energy transition bets and on trends from the data analysis. Hedge funds mostly provided their data to Hazeltree via prime brokers. There is a possibility that some positions may not be disclosed. These will not be included in Hazeltree's data or in the Bloomberg analysis. Hazeltree's data reports percentages of the hedge funds that held net long positions and net short positions for a specific stock. Bloomberg's analysis categorized roughly 230 stocks based on key ETFs or indices for a sector, and further calculated a sector-wide monthly average. In some cases, the same company could be included in different sectors. Four stocks didn't appear in the Hazeltree data provided to Bloomberg. ETFs and indices used in the analysis are S&P Global Oil Index, Invesco Solar ETF, First Trust Global Wind Energy ETF and KraneShares Electric Vehicles & Future Mobility Index ETF. --With assistance from Sheryl Tian Tong Lee, Will Mathis and Simon Casey. The Pizza Oven Startup With a Plan to Own Every Piece of the Pie Digital Nomads Are Transforming Medellín's Housing The Game Starts at 8. The Robbery Starts at 8:01 Russia's Secret War and the Plot to Kill a German CEO It's Only a Matter of Time Until Americans Pay for Trump's Tariffs ©2025 Bloomberg L.P.
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Saputo Reports Financial Results for the First Quarter of Fiscal 2026 Ended June 30, 2025
MONTRÉAL, Aug. 07, 2025 (GLOBE NEWSWIRE) -- Saputo Inc. (TSX: SAP) (we, Saputo or the Company) reported today its financial results for the first quarter of fiscal 2026, which ended on June 30, 2025. All amounts in this news release are in millions of Canadian dollars (CDN), except per share amounts, unless otherwise indicated, and are presented according to International Financial Reporting Standards (IFRS). 'We're pleased to begin fiscal 2026 with solid momentum. Our first quarter performance reflected the strength of our global operations and the effectiveness of our strategy,' said Carl Colizza, President and CEO. 'Our strong results were driven by our Canada Sector exceeding expectations on the back of strong commercial execution, improved overall performance in our USA Sector despite commodity headwinds, and solid year-over-year gains across our International and Europe Sectors. Our disciplined execution, operational efficiencies, and capital deployment efforts are driving both earnings growth and returns. With robust operating cash flow and a strong balance sheet, we remain confident in our ability to invest for scalable growth, return capital to shareholders, and create long-term value.' (unaudited) For the three-month periodsended June 30 2025 2024 Revenues 4,631 4,606 Adjusted EBITDA1 426 383 Adjusted EBITDA margin1 8.3 % Net earnings 165 142 Earnings per share (EPS) Basic and Diluted 0.40 0.33 Adjusted net earnings1 184 167 Adjusted EPS1 Basic and Diluted 0.44 0.39 Net Cash from Operating Activities 317 191 Capital Expenditures 65 98 We delivered a record first quarter adjusted EBITDA1 performance, supported by strong results across all our Sectors. We realized the benefits of strong execution related to operational improvements, commercial initiatives, and our continued efforts toward our sustained cost optimization measures. Revenues of $4.631 billion, up $25 million or 0.5%, driven by higher selling prices in both domestic and international cheese and dairy ingredient markets, while US dairy commodity market pricing3 was lower. Sales volumes were higher, on a relative basis, given the impact of the divestitures in our Dairy Division (Australia). Adjusted EBITDA1 of $426 million, up $43 million or 11.2%, with a margin1 of 9.2%, up from 8.3%. Operational improvements, primarily driven by ongoing efficiency initiatives stemming from our recent capital investments, disciplined execution on customer fulfillment, and proactive cost management, supported margin enhancement; In our domestic markets, higher selling prices implemented across key product categories to mitigate inflationary pressures preserved margin performance; In our export markets, the favourable relation between the international cheese and dairy ingredient market prices and the cost of milk as raw material had a positive impact on our results; Sales volumes and favourable product mix were significant drivers; Unfavourable US dairy commodity market conditions3 compared to the same quarter last fiscal year; and Lower selling, general, and administrative costs. Net earnings totalled $165 million or $0.40 per share (basic and diluted), up $23 million or $0.07 per share, respectively. The increase in net earnings was mainly due to higher adjusted EBITDA1 and a gain on hyperinflation (Argentina net monetary position)3 as compared to a loss for the same quarter last fiscal year, partially offset by higher financial charges, restructuring costs, and depreciation and amortization. The increase in EPS also reflects common shares purchased under our normal course issuer bid (NCIB). Adjusted net earnings1 totalled $184 million or $0.44 per share1 (basic and diluted), up $17 million or $0.05 per share, respectively. The increase in adjusted EPS1 is mainly due to higher net earnings and reflects common shares purchased under our NCIB. Net cash from operating activities totalled $317 million, up $126 million or 66%. The increase is mainly due to higher adjusted EBITDA1 and lower working capital usage. The Company returned capital to shareholders through the purchase of approximately 4.7 million common shares for a total purchase price of $123 million and the payment of dividends totalling $79 million. Capital expenditures totalled $65 million and the balance of operating cash was directed primarily toward the reduction of net Board of Directors reviewed the dividend policy and increased the quarterly dividend from $0.19 per share to $0.20 per share, representing a 5.3% increase. The quarterly dividend will be payable on September 12, 2025, to shareholders of record on September 2, 2025. On June 1, 2025, the new milk pricing formula approved for all federal milk marketing orders in which we operate in the US became effective. The new milk pricing formula did not materially impact results in the first quarter. In June 2025, we announced our environmental objectives through to 2030, including our science-based targets, which have been validated by the Science-Based Targets initiative (SBTi). On August 7, 2025, we published our Climate Roadmap, which provides additional details on our action plan to achieve our science-based targets, and is available in the 'Our Promise' section of the Company's website at 1 This is a total of segments measure, a non-GAAP financial measure, or a non-GAAP ratio. See the 'Non-GAAP Measures' section of this news release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the primary financial statements, as applicable. 2 Refer to the ''Glossary'' section of the Management's Discussion and Analysis. 3 Refer to the section "Discussion of factors impacting the Company's operations and results" of the Management's Discussion and Analysis. Additional Information For more information, reference is made to the condensed interim consolidated financial statements, the notes thereto and to the Management's Discussion and Analysis for the first quarter of fiscal 2026. These documents can be obtained on SEDAR+ under the Company's profile at and in the 'Investors' section of the Company's website, at Webcast and Conference Call A webcast and conference call will be held on Friday, August 8, 2025, at 8:30 a.m. (Eastern Time). The webcast will begin with a short presentation followed by a question and answer period. The speakers will be Carl Colizza, President and CEO, and Maxime Therrien, CFO and Secretary. To participate: Webcast: A live webcast of the event can be accessed using this slides will be included in the webcast and can also be accessed in the 'Investors' section of Saputo's website ( under 'Calendar of Events'. Conference line: 1-888-596-4144; Conference ID: 8145823Please dial-in five minutes prior to the start time. Replay of the conference call and webcast presentationFor those unable to join, the webcast presentation will be archived on Saputo's website ( in the 'Investors' section, under 'Calendar of Events'. About Saputo Saputo, one of the top ten dairy processors in the world, produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products, and dairy ingredients. Saputo is a leading cheese manufacturer and fluid milk and cream processor in Canada, a leading dairy processor in Australia and the top dairy processor in Argentina. In the USA, Saputo ranks among the top three cheese producers and is one of the top producers of extended shelf-life and cultured dairy products. In the United Kingdom, Saputo is the leading manufacturer of branded cheese and dairy spreads. In addition to its dairy portfolio, Saputo produces, markets, and distributes a range of dairy alternative products. Saputo products are sold in several countries under market-leading brands, as well as private label brands. Saputo Inc. is a publicly traded company and its shares are listed on the Toronto Stock Exchange under the symbol 'SAP'. Follow Saputo's activities at or via Facebook, Instagram, and LinkedIn. Investor InquiriesNicholas EstrelaSenior Director, Investor Relations1-514-328-3117 Media Inquiries1-514-328-3141 / 1-866-648-5902media@ CAUTION REGARDING FORWARD-LOOKING STATEMENTS This news release contains statements which are forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to our objectives, outlook, business projects, strategies, beliefs, expectations, targets, commitments, goals, ambitions and strategic plans including our ability to achieve these targets, commitments, goals, ambitions and strategic plans, and statements other than historical facts. The words 'may', 'could', 'should', 'will', 'would', 'believe', 'plan', 'expect', 'intend', 'anticipate', 'estimate', 'foresee', 'objective', 'continue', 'propose', 'aim', 'commit', 'assume', 'forecast', 'predict', 'seek', 'project', 'potential', 'goal', 'target', or 'pledge', or the negative of these terms or variations of them, the use of conditional or future tense or words and expressions of similar nature, are intended to identify forward-looking statements. All statements other than statements of historical fact included in this news release may constitute forward-looking statements within the meaning of applicable securities laws. By their nature, forward-looking statements are subject to inherent risks and uncertainties. Actual results could significantly differ from those stated, implied, or projected in such forward-looking statements. As a result, we cannot guarantee that any forward-looking statements will materialize, and we warn readers that these forward-looking statements are not statements of historical fact or guarantees of future performance in any way. Assumptions, expectations, and estimates made in the preparation of forward-looking statements and risks and uncertainties that could cause actual results to significantly differ from current expectations are discussed in our materials filed with the Canadian securities regulatory authorities from time to time, including the 'Risks and Uncertainties' section of the Management's Discussion and Analysis dated June 5, 2025, available on SEDAR+ under the Company's profile at Such risks and uncertainties include the following: product liability; the availability and price variations of milk and other dairy ingredients, our ability to transfer input costs increases, if any, to our customers in competitive market conditions; supply chain strain and supplier concentration; the price fluctuation of dairy products in the countries in which we operate, as well as in international markets; continuing economic and geopolitical uncertainties; changes in international trade agreements and policies, including those that may result from tariffs, quotas, trade barriers and other similar restrictions; actual or perceived changes in the condition of the economy or economic slowdowns or recessions; changes in consumer trends; our ability to identify, attract, and retain qualified individuals; the increased competitive environment in our industry; consolidation of clientele; cyber threats and other information technology-related risks relating to business disruptions, confidentiality, data integrity business and email compromise-related fraud; changes to or removal of tariff protection on dairy; unanticipated business disruption; changes in environmental laws and regulations; the potential effects of climate change; increased focus on environmental sustainability matters; public health threats; the failure to execute our growth strategy as expected or to adequately integrate acquired businesses in a timely and efficient manner; the failure to complete capital expenditures as planned; changes in interest rates and access to capital and credit markets. There may be other risks and uncertainties that we are not aware of at present, or that we consider to be insignificant, that could still have a harmful impact on our business, financial state, liquidity, results, or reputation. Forward-looking statements are based on Management's current estimates, expectations and assumptions regarding, among other things; the projected revenues and expenses; the economic, industry, competitive, and regulatory environments in which we operate or which could affect our activities; international trade policies; our ability to identify, attract, and retain qualified and diverse individuals; our ability to attract and retain customers and consumers; the results of our sustainability efforts; the effectiveness of our environmental and sustainability initiatives; our operating costs; the pricing of our finished products on the various markets in which we carry on business; the successful execution of our growth strategy; our ability to deploy capital expenditure projects as planned; reliance on third parties; our ability to gain efficiencies and cost optimization from strategic initiatives; our ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; our ability to leverage our brand value; our ability to drive revenue growth in our key product categories or platforms or add products that are in faster-growing and more profitable categories; the market supply and demand levels for our products; our warehousing, logistics, and transportation costs; our effective income tax rate; the exchange rate of the Canadian dollar to the currencies of cheese and dairy ingredients. Our financial performance goals and ambitions are set using assumptions regarding, among others: the absence of significant deterioration in macroeconomic conditions; tariffs, quotas, trade barriers and other similar restrictions; our ability to mitigate inflationary cost pressure; ingredient markets, commodity prices, foreign exchange; labour market conditions; the impact of price elasticity; our ability to increase the production capacity and productivity in our facilities; the efficiency of our network and cost optimization initiatives, and the demand growth for our products. Our ability to achieve our environmental targets, pledges, commitments, and goals (together, our 'environmental targets') is further subject to, among others: the development, effectiveness and costs of solutions to reduce emissions in dairy production systems; the ability of the Company and our industry to develop sustainable incentive models to reduce emissions; the availability of and our ability to access and implement the technology necessary to achieve our environmental targets at reasonable and sustainable costs; the development and performance of technology, innovation and the future use and deployment of technology and associated expected future results; the accessibility at sustainable costs of carbon and renewable energy instruments for which a market is still developing and which are subject to risk of invalidation or reversal; environmental regulation, and our ability to leverage our supplier relationships and our sustainability advocacy efforts. Management believes that these estimates, expectations, and assumptions are reasonable as of the date hereof, and are inherently subject to significant business, economic, competitive, and other uncertainties and contingencies regarding future events, and are accordingly subject to changes after such date. Forward-looking statements are intended to provide shareholders with information regarding Saputo, including our assessment of future financial plans, and may not be appropriate for other purposes. Undue importance should not be placed on forward-looking statements, and the information contained in such forward-looking statements should not be relied upon as of any other date. Unless otherwise indicated by Saputo, forward-looking statements in this news release describe our estimates, expectations, and assumptions as of the date hereof, and, accordingly, are subject to change after that date. Except as required under applicable securities legislation, Saputo does not undertake to update or revise forward-looking statements, whether written or verbal, that may be made from time to time by itself or on our behalf, whether as a result of new information, future events, or otherwise. All forward-looking statements contained herein are expressly qualified by this cautionary statement. SECTOR OPERATING REVIEW CANADA SECTOR (in millions of CDN dollars) For the three-month periods ended June 30 2025 2024 Revenues 1,321 1,253 Adjusted EBITDA 170 153 Adjusted EBITDA margin 12.2 % Depreciation and amortization 29 29 Revenues Revenues for the first quarter of fiscal 2026 totalled $1.321 billion, up $68 million or 5.4%, as compared to $1.253 billion for the same quarter last fiscal year. Revenues increased due to higher sales volumes in all our market segments: retail, foodservice, and industrial. The increase was mainly driven by our milk, cheese, and dairy foods categories. We also benefited from favourable product mix due to growth in value-added milk, cultured products, and specialty cheese, which had a positive impact on revenues. In our everyday cheese category, Armstrong became the national category leader, reflecting strong brand momentum and effective commercial execution. Revenues also increased due to higher selling prices implemented to mitigate inflationary pressures and the higher cost of milk as raw material. Adjusted EBITDA Adjusted EBITDA for the first quarter of fiscal 2026 totalled $170 million, up $17 million or 11.1%, as compared to $153 million for the same quarter last fiscal year. Adjusted EBITDA margin was 12.9%, up from 12.2%. Commercial initiatives driving higher sales volumes, favourable product mix, and higher pricing, as described above, positively impacted results. Selling, general, and administrative cost efficiencies contributed to the adjusted EBITDA increase, primarily due to cost optimization measures. Other elements Depreciation and amortization for the first quarter of fiscal 2026 totalled $29 million, flat, as compared to the same quarter last fiscal year. USA SECTOR (in millions of CDN dollars) For the three-month periods ended June 30 2025 2024 Revenues 2,128 2,085 Adjusted EBITDA 171 162 Adjusted EBITDA margin 7.8 % Depreciation and amortization 67 63 Revenues Revenues for the first quarter of fiscal 2026 totalled $2.128 billion, up $43 million or 2.1%, as compared to $2.085 billion for the same quarter last fiscal year. Revenues increased due to higher sales volumes in both our retail and foodservice market segments. We benefited from favourable product mix, driven by increased sales volumes of dairy foods and value-added categories. Volume growth was supported by stronger demand from several of our largest customers, reflecting the strength of our commercial relationships, the continued relevance of our offering, and our ability to serve their evolving needs. Revenues were negatively impacted by lower US dairy commodity market pricing3, primarily driven by the lower average butter market price2 and partially offset by the fluctuation of the average block market price2. However, higher selling prices implemented to mitigate inflationary pressures contributed positively to revenues. The conversion of the US dollar to the Canadian dollar had a favourable impact. Adjusted EBITDA Adjusted EBITDA for the first quarter of fiscal 2026 totalled $171 million, up $9 million or 5.6%, as compared to $162 million for the same quarter last fiscal year. Adjusted EBITDA margin was 8.0%, up from 7.8%. The increase in adjusted EBITDA reflects operational improvements, primarily driven by ongoing efficiency initiatives stemming from our recent capital investments. These initiatives contributed to a reduction in duplicate operating costs. In addition, disciplined execution on customer fulfillment and proactive cost management, reflecting our commitment to operational excellence, supported margin enhancement. Higher sales volumes and favourable product mix, driven by our commercial initiatives, positively impacted results. Selling, general, and administrative cost efficiencies contributed to the adjusted EBITDA increase, primarily due to cost optimization measures. Compared to the same quarter last fiscal year, US dairy commodity market conditions3 were unfavourable. This was due to more stable US dairy commodity market prices3 this fiscal year in comparison to the favourable fluctuations of those market prices last fiscal year. The new milk pricing formula, effective for one month of the quarter, did not materially impact results. The conversion of the US dollar versus the Canadian dollar had a favourable impact. Other elements Depreciation and amortization for the first quarter of fiscal 2026 totalled $67 million, up $4 million, as compared to $63 million for the same quarter last fiscal year. This increase was mainly attributable to the net effect of the commissioning and decommissioning of assets in connection with our strategic capital projects. INTERNATIONAL AND EUROPE SECTORS (in millions of CDN dollars) For the three-month periods ended June 30 2025 2024 Revenues International Sector 865 1,004 Revenues Europe Sector 317 264 Revenues International Sector and Europe Sector1 1,182 1,268 Adjusted EBITDA International Sector 55 45 Adjusted EBITDA margin International Sector 4.5 % Adjusted EBITDA Europe Sector 30 23 Adjusted EBITDA margin Europe Sector 8.7 % Adjusted EBITDA International Sector and Europe Sector1 85 68 Adjusted EBITDA margin International Sector and Europe Sector1 5.4 % Depreciation and amortization International Sector 30 29 Depreciation and amortization Europe Sector 27 27 Depreciation and amortization International Sector and Europe Sector1 57 56 1 This is a total of segments measure, a non-GAAP financial measure, or a non-GAAP ratio. See the 'Non-GAAP Measures' section below of this news release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the primary financial statements, as applicable. INTERNATIONAL SECTOR Revenues Revenues for the first quarter of fiscal 2026 totalled $865 million, down $139 million or 13.8%, as compared to $1.004 billion for the same quarter last fiscal year. Our sales volumes were lower compared to the same quarter last fiscal year, in both our domestic and export markets. The decrease in domestic sales volumes is mainly due to the divestitures of our two fresh milk plants and the King Island Dairy business in our Dairy Division (Australia). Our export sales volumes decreased in line with our strategy to reposition sales volumes toward our domestic markets. Higher international cheese and dairy ingredient market prices for our products in our export markets had a favourable impact. The non-cash negative impact due to the application of hyperinflation accounting2,3 to the revenues of the Dairy Division (Argentina) was unfavorable by $17 million as compared to the same quarter last fiscal year. The conversion of Australian dollars to Canadian dollars had an unfavourable impact. Adjusted EBITDA Adjusted EBITDA for the first quarter of fiscal 2026 totalled $55 million, up $10 million or 22.2%, as compared to $45 million for the same quarter last fiscal year. Adjusted EBITDA margin was 6.4%, up from 4.5%. The favourable relation between the international cheese and dairy ingredient market prices and the cost of milk as raw material had a positive impact on our results. In Australia, we benefited from lower milk costs. In Argentina, milk costs were higher, however results reflected a more favourable alignment between inflation and the devaluation of the Argentine peso. Reduced milk availability in Australia, due mostly to ongoing drought conditions in key milk-producing regions, negatively impacted efficiencies and the absorption of fixed costs. This impact was mitigated by our product mix optimization strategy. The non-cash negative impact due to the application of hyperinflation accounting2,3 to the results of the Dairy Division (Argentina) was unfavorable by $5 million as compared to the same quarter last fiscal year. Other elements Depreciation and amortization for the first quarter of fiscal 2026 totalled $30 million, up $1 million, as compared to $29 million for the comparative quarter last fiscal year. Gain on hyperinflation (Argentina net monetary position)3 for the first quarter of fiscal 2026 totalled $1 million ($10 million loss in the first quarter of fiscal 2025). EUROPE SECTOR Revenues Revenues for the first quarter of fiscal 2026 totalled $317 million, up $53 million or 20.1%, as compared to $264 million for the same quarter last fiscal year. Revenues increased due to higher selling prices implemented to mitigate inflationary pressures and the higher cost of milk and other input costs. Revenues also increased due to higher sales volumes. Bulk cheese sales volumes increased, as a result of higher milk intake, at higher selling prices. Dairy ingredients sales volumes also increased at higher selling prices. These increases were partially offset by lower retail market segment sales volumes in non-cheese categories. The conversion of the British pound sterling to the Canadian dollar had a favourable impact. Adjusted EBITDA Adjusted EBITDA for the first quarter of fiscal 2026 totalled $30 million, up $7 million or 30.4%, as compared to $23 million for the same quarter last fiscal year. Adjusted EBITDA margin was 9.5%, up from 8.7%. The improved performance was mainly driven by the more favourable relation between selling prices and input costs, which supported overall margin recovery, partially offsetting the impact of an unfavourable product mix. The conversion of the British pound sterling to the Canadian dollar had a favourable impact. Other elements Depreciation and amortization for the first quarter of fiscal 2026 totalled $27 million, flat, as compared to the same quarter last fiscal year. Restructuring costs for the first quarter of fiscal 2026 totalled $6 million and comprised severance costs in connection to our previously announced decision to stop manufacturing certain functional dairy ingredient products by mid-fiscal 2026 as well as in relation to the optimization of selling, general, and administrative costs. There were no restructuring costs during the first quarter of fiscal 2025. 2 Refer to the ''Glossary'' section of the Management's Discussion and Analysis. 3 Refer to the section "Discussion of factors impacting the Company's operations and results" of the Management's Discussion and Analysis. FY26 OUTLOOK We remain confident in the long-term outlook for the business and its ability to navigate current macroeconomic challenges. The direct impact of trade-related tariffs on our business is expected to be limited and manageable at this time. However, we anticipate that the evolving global trade landscape and consumer sentiment may impact consumer spending patterns in the short term. We expect organic sales growth, notably in our USA Sector, with a more balanced contribution of volumes and price, supported by growth in key retail categories, expansion with major food distributors, the phased ramp-up of our Franklin, Wisconsin, facility, higher brand support, and innovation. We expect further contribution from optimization and capacity expansion initiatives, notably in our USA Sector, which is expected to drive operating margin expansion. The previously announced closure of the Green Bay, Wisconsin, facility is expected to occur by the end of the third quarter. We expect US dairy markets to be driven by milk supply and dairy demand, with continued volatility in the short to medium term. On June 1, 2025, the new milk pricing formula approved for all federal milk marketing orders in which we operate in the US became effective. This change is expected to positively impact our USA Sector results. We anticipate continued strong performance in the Canada Sector, supported by ongoing operational efficiencies, favourable volume and mix trends, targeted commercial initiatives, and disciplined cost reduction efforts. The International Sector is expected to benefit from product mix optimization and cost reductions in Australia, despite higher milk costs driven by competitive market dynamics, while Argentina is expected to see increased milk availability, lower milk costs, a stronger export business, and a more stable relationship between currency and inflation. The Europe Sector is expected to see an improved performance supported by margin recovery initiatives, including disciplined pricing and volume acceleration, the maturation of previously launched initiatives, and continued focus on cost efficiency. We expect to benefit from the recent improvements in global dairy ingredient market prices, including firmer pricing across key commodity categories in the first half of the fiscal year. We anticipate our selling, general, and administrative expenses to be impacted by higher labour costs, including wage increases, and higher planned advertising and promotional spending. We expect to partially mitigate these higher costs through the ongoing optimization of our selling, general, and administrative costs and structural simplifications. We will continue to focus on improving our working capital and generating strong cash flow from operations. We expect capital expenditures totalling approximately $360 million in fiscal 2026. We expect to continue repurchasing shares under our NCIB program given the strength of our balance sheet and our expected strong cash flow from operations. NON-GAAP MEASURES We report our financial results in accordance with GAAP and generally assess our financial performance using financial measures that are prepared using GAAP. However, this news release also refers to certain non-GAAP and other financial measures which do not have a standardized meaning under GAAP, and are described in this section. We use non-GAAP measures and ratios to provide investors with supplemental metrics to assess and measure our operating performance and financial position from one period to the next. We believe that those measures are important supplemental metrics because they eliminate items that are less indicative of our core business performance and could potentially distort the analysis of trends in our operating performance and financial position. We also use non-GAAP measures to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets and forecasts, and to determine components of management compensation. We believe these non-GAAP measures, in addition to the financial measures prepared in accordance with GAAP, enable investors to evaluate the Company's operating results, underlying performance, and future prospects in a manner similar to management. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution of GAAP results. These non-GAAP measures have no standardized meaning under GAAP and are unlikely to be comparable to similar measures presented by other issuers. Our method of calculating these measures may differ from the methods used by others, and, accordingly, our definition of these non-GAAP financial measures may not be comparable to similar measures presented by other issuers. In addition, non-GAAP financial measures should not be viewed as a substitute for the related financial information prepared in accordance with GAAP. This section provides a description of the components of each non-GAAP measure used in this news release and the classification thereof. NON-GAAP FINANCIAL MEASURES AND RATIOS A non-GAAP financial measure is a financial measure that depicts the Company's financial performance, financial position, or cash flow and either excludes an amount that is included in or includes an amount that is excluded from the composition of the most directly comparable financial measures disclosed in the Company's financial statements. A non-GAAP ratio is a financial measure disclosed in the form of a ratio, fraction, percentage, or similar representation and that has a non-GAAP financial measure as one or more of its components. Below are descriptions of the non-GAAP financial measures and ratios that we use as well as reconciliations to the most comparable GAAP financial measures, as applicable. Adjusted net earnings Adjusted net earnings is defined as net earnings before the following items (when they occur): restructuring costs, amortization of intangible assets related to business acquisitions, (gain) on disposal of assets, goodwill and intangible assets impairment charge, and loss (gain) on hyperinflation (Argentina net monetary position), net of applicable income taxes. We believe that adjusted net earnings provides useful information to investors because this financial measure provides precision with regards to our ongoing operations by eliminating the impact of non-operational or non-cash items. We believe that in the context of our history of business acquisitions, adjusted net earnings provides a more effective measure to assess performance against the Company's peer group, including due to the application of various accounting policies in relation to the amortization of acquired intangible assets. We also believe adjusted net earnings is useful to investors because it helps identify underlying trends in our business that could otherwise be masked by certain write-offs, charges, income, or recoveries that can vary from period to period. We believe that securities analysts, investors, and other interested parties also use adjusted net earnings to evaluate the performance of issuers. Excluding these items does not imply they are non-recurring. This measure does not have any standardized meanings under GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. The following table provides a reconciliation, net of applicable income taxes, of net earnings to adjusted net earnings: For the three-month periodsended June 30 2025 2024 Net earnings 165 142 Amortization of intangible assets related to business acquisitions1 15 15 Restructuring costs2 5 — Loss (gain) on hyperinflation (Argentina net monetary position)2 (1 ) 10 Adjusted net earnings 184 167 Revenues 4,631 4,606 1Amortization of intangible assets related to business acquisitions is included in Depreciation and amortization, as presented on the condensed interim consolidated income statements. 2 Items presented on the condensed interim consolidated income statements. Adjusted EPS basic and adjusted EPS diluted Adjusted EPS basic (adjusted net earnings per basic common share) and adjusted EPS diluted (adjusted net earnings per diluted common share) are non-GAAP ratios and do not have any standardized meaning under GAAP. Therefore, these measures are unlikely to be comparable to similar measures presented by other issuers. We define adjusted EPS basic and adjusted EPS diluted as adjusted net earnings divided by the basic and diluted weighted average number of common shares outstanding for the period. Adjusted net earnings is a non-GAAP financial measure. For more details on adjusted net earnings, refer to the discussion above in the adjusted net earnings section. We use adjusted EPS basic and adjusted EPS diluted, and we believe that certain securities analysts, investors, and other interested parties use these measures, among other ones, to assess the performance of our business without the effect of restructuring costs, amortization of intangible assets related to business acquisitions, (gain) on disposal of assets, goodwill and intangible assets impairment charge, and loss (gain) on hyperinflation (Argentina net monetary position). We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Adjusted EPS is also a component in the determination of long-term incentive compensation for management. TOTAL OF SEGMENTS MEASURES A total of segments measure is a financial measure that is a subtotal or total of two or more reportable segments and is disclosed within the notes to Saputo's condensed interim consolidated financial statements, but not in its primary financial statements. Consolidated adjusted EBITDA is a total of segments measure. Consolidated adjusted EBITDA is the total of the adjusted EBITDA of our four geographic sectors. We report our business under four sectors: Canada, USA, International, and Europe. The Canada Sector consists of the Dairy Division (Canada), the USA Sector consists of the Dairy Division (USA), the International Sector consists of the Dairy Division (Australia) and the Dairy Division (Argentina), and the Europe Sector consists of the Dairy Division (UK). We sell our products in three different market segments: retail, foodservice, and industrial. Adjusted EBITDA and adjusted EBITDA margin Adjusted EBITDA is defined as net earnings (loss) before the following items (when they occur): income taxes, financial charges, loss (gain) on hyperinflation (Argentina net monetary position), restructuring costs, (gain) on disposal of assets, goodwill and intangible assets impairment charge, and depreciation and amortization. Net earnings (loss) before income taxes, financial charges, loss (gain) on hyperinflation, restructuring costs, (gain) on disposal of assets, goodwill and intangible assets impairment charge, and depreciation and amortization is a measure which is presented on the consolidated income statements. Adjusted EBITDA margin consists of adjusted EBITDA expressed as a percentage of revenues. We believe that adjusted EBITDA and adjusted EBITDA margin provide investors with useful information because they are common industry measures. These measures are also key metrics of the Company's operational and financial performance without the variation caused by the impacts of the elements itemized below and provide an indication of the Company's ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations, and service its long-term debt. Adjusted EBITDA is the key measure of profit used by management for the purpose of assessing the performance of each sector and of the Company as a whole, and to make decisions about the allocation of resources. We believe that securities analysts, investors, and other interested parties also use adjusted EBITDA to evaluate the performance of issuers. Adjusted EBITDA is also a component in the determination of short-term incentive compensation for management. The following table provides a reconciliation of net earnings to adjusted EBITDA on a consolidated basis. For the three-month periodsended June 30 2025 2024 Net earnings 165 142 Income taxes1 57 45 Financial charges1 46 38 Loss (gain) on hyperinflation (Argentina net monetary position)1 (1 ) 10 Restructuring costs1 6 — Depreciation and amortization1 153 148 Adjusted EBITDA 426 383 Revenues 4,631 4,606 Adjusted EBITDA margin 8.3 % 1 Items presented on the consolidated income statements. Revenues, adjusted EBITDA, and depreciation and amortization of International Sector and Europe Sector Total are total of segments measures, as reconciled to total consolidated measures in the below tables. For the three-month periods ended June 30, 2025 Canada USA International and Europe Total Total Consolidated Revenues $ 1,321 $ 2,128 $ 1,182 $ 4,631 Adjusted EBITDA $ 170 $ 171 $ 85 $ 426 Depreciation and amortization $ 29 $ 67 $ 57 $ 153 For the three-month periods ended June 30, 2024 Canada USA International Europe International and Europe Total Total Consolidated Revenues $ 1,253 $ 2,085 $ 1,004 $ 264 $ 1,268 $ 4,606 Adjusted EBITDA $ 153 $ 162 $ 45 $ 23 $ 68 $ 383 Depreciation and amortization $ 29 $ 63 $ 29 $ 27 $ 56 $ 148Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Saputo Inc (SAPIF) Q1 2026 Earnings Call Highlights: Record EBITDA and Strategic Growth Amidst ...
Consolidated Revenue: $4.6 billion, a 1% increase year-over-year. Adjusted EBITDA: $426 million, up 11% from the previous year. Net Earnings: $165 million; adjusted net earnings were $184 million, a 10% increase year-over-year. Adjusted EPS: $0.44 per share, up from $0.39 last year, a 13% increase. Operating Cash Flow: $317 million, a 66% increase year-over-year. Capital Expenditures: $65 million, aligned with strategic plans. Net Debt to Adjusted EBITDA Ratio: Improved to 2.03. Canada Revenue: $1.3 billion, a 5% increase year-over-year. Canada Adjusted EBITDA: $170 million, up 11% with a margin of 12.9%. U.S. Revenue: $2.1 billion, a 2% increase year-over-year. U.S. Adjusted EBITDA: $171 million, a 6% increase year-over-year. International Revenue: $865 million, down 14% year-over-year. International Adjusted EBITDA: $55 million, up 22% year-over-year. Europe Revenue: $317 million. Europe Adjusted EBITDA: $30 million, a 30% increase year-over-year. Shareholder Returns: $202 million returned through dividends and share repurchases. Quarterly Dividend Increase: From $0.19 to $0.20 per share, a 5.3% increase. Warning! GuruFocus has detected 7 Warning Signs with SAPIF. Release Date: August 08, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Saputo Inc (SAPIF) reported a record first quarter adjusted EBITDA, reflecting strong business execution across global operations. The company saw meaningful improvements in its largest operating sectors, Canada and the U.S., driven by strong commercial initiatives and operational efficiencies. International and Europe sectors delivered year-over-year improvements, supported by robust volumes and improving market fundamentals. Strong operating cash flow allowed Saputo Inc (SAPIF) to return a majority of cash to shareholders through share repurchases and dividends. The company is investing in key capabilities such as innovation and data-driven decision-making to support scalable growth and maximize shareholder value. Negative Points The macroeconomic environment remains complex, posing challenges to Saputo Inc (SAPIF)'s operations. U.S. dairy commodity market conditions were unfavorable, impacting revenue despite operational improvements. Reduced milk availability in Australia due to drought conditions negatively impacted efficiency and fixed cost absorption. Higher milk costs in Argentina affected results, although macroeconomic factors provided some relief. The international sector saw a 14% revenue decline due to lower sales volumes and the divestiture in the Dairy Division Australia. Q & A Highlights Q: Congratulations on a great quarter. Can you walk us through the volume growth across channels and geographies and how it will contribute to Saputo going forward? A: Thank you, Irene. We have improved our fill rates and strengthened customer relationships, which has allowed us to fuel their growth. Our commercial teams ensure that our product mix is relevant to the consumer base, tailored by region and business partners. We are also unlocking incremental A&P investments on key focus brands to optimize our portfolio and maximize returns. Q: How should we think about the evolution of EBITDA delivery in the U.S. over the next fiscal years? A: The U.S. team has been improving consistently, with fill rates at record levels. We are on track with our capital initiatives, such as the Franklin facility, which will enhance efficiency and reduce costs. We are confident in the trajectory of the U.S. business, expecting continued improvements in operational efficiency and market demand. Q: What would it take to get margins back to 10% plus in the U.S., and is that still a possibility? A: Yes, it is possible. The U.S. team is focused on core categories with solid demand and balance between supply and demand. The remaining returns from our capital investment program will primarily come from the U.S., which will improve margin structure. We expect the U.S. to position itself between the margins of Canada and the international sector. Q: Can you provide more color on the better mix in the U.S. and how it impacts margins? A: The favorable product mix includes products with better margins and those we excel at manufacturing. In Q1, there was strong demand for mozzarella and higher-margin Dairy Foods products. Our ability to fill demand has been a significant factor in improving margins. Q: How are you managing pricing increases across geographies, particularly in the U.K.? A: Pricing increases are a last resort after exploring other cost mitigation options. In the U.K., we've managed to pass on some costs due to inflationary pressures. However, the strength of our U.K. operations is not solely reliant on price increases; we are also focused on efficiency and cost optimization initiatives. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
