Saputo (TSE:SAP) executives highlighted stronger profitability, margin expansion, and robust cash generation in the company’s third-quarter fiscal 2026 earnings call, pointing to benefits from multi-year capital investments, disciplined cost control, and sustained volume growth across all operating sectors.
Quarterly financial performance
Chief Financial Officer Maxime Therrien said the third quarter reflected “strong commercial execution, disciplined cost management, and meaningful operational efficiencies across our network.” Saputo reported revenue of CAD 4.9 billion, down 2% versus last year, which management attributed largely to lower U.S. commodity markets.
Cash generation remained a focal point. Saputo delivered CAD 401 million of net cash from operations in the quarter, supported by improved EBITDA and “working capital discipline” amid shifting market prices and inflation. Year-to-date net cash from operations reached CAD 1.1 billion, which the company said was significantly higher than last year.
Balance sheet leverage also improved. Saputo’s net debt-to-adjusted EBITDA ratio decreased to 1.76x, which management noted was below its long-term target range. Through the first nine months of the year, Saputo returned CAD 646 million to shareholders through dividends and repurchases of 12.6 million shares under its normal course issuer bid.
Sector results: Canada, U.S., International, and Europe
In Canada, Therrien said the business posted solid momentum, with revenue up 4% year-over-year and year-to-date revenue growth of 5%. Adjusted EBITDA increased 8% to CAD 189 million, driven by higher volume, favorable mix, and efficiency gains from automation and production investments. Chief Executive Officer Carl Colizza added that Canada delivered a second consecutive quarter of record profitability and cited continued gains in value-added offerings and high-protein innovations, including the Armstrong protein line and new Dairyland and Neilson protein beverages.
In the U.S., revenue was $2.1 billion, down 7% from last year, which management attributed mainly to lower butter and cheese block prices. Still, Saputo reported improved underlying demand and higher sales volume across retail, food service, and value-added ingredients. Adjusted EBITDA increased 16% to CAD 185 million, aided by volume growth, favorable mix, and operational improvements. Management also cited headwinds from negative inventory realization in cheese and higher labor costs, as well as increased advertising and promotion spending, partially offset by SG&A optimization.
For the international sector, revenue was CAD 994 million, down 3%, while adjusted EBITDA jumped 61% to CAD 82 million. Management attributed the EBITDA improvement to higher volumes, mix optimization, and a “much more favorable relationship between international prices and milk costs.” Saputo said improved milk availability in Argentina supported higher sales volume. In Australia, lower export volume was partially offset by stronger domestic sales, consistent with the company’s stated mix optimization approach.
In Europe, revenue increased 8% to CAD 336 million, driven by higher sales volume and increased advertising and promotion behind branded cheese, though softer retail volume in non-cheese categories partially offset those gains. Adjusted EBITDA rose 16% to CAD 36 million, and margin improved to 11%. Management said results benefited from input-cost dynamics, higher volumes, and efficiencies tied to consolidating cheese packing operations in Nuneaton and ongoing progress in ingredients strategy.
Operational execution and investment priorities
Colizza emphasized that multi-year capital investments are translating into a “more efficient and reliable network,” supporting service levels and flexibility. In response to analyst questions about a “more resilient operating model,” he cited facility rationalization, commissioning of new equipment, improved workforce stability, and stronger first-pass quality—all of which he said support industry-leading fill rates and customer credibility.
In the U.S., management highlighted two major Wisconsin-related developments. Colizza said the permanent closure of the Green Bay facility and transfer of production to Franklin is complete, and that increased scale and streamlined processes helped Franklin increase output by roughly 30%. He also discussed an approximately $180 million investment at the Ripon, Wisconsin facility to upgrade whey protein systems and add a new lactose dryer, which he said is increasing WPC-80 output by roughly 35% while improving quality.
Colizza and Therrien said Saputo will continue to invest to support organic growth, particularly where customers and consumers are signaling demand—especially high-protein products and value-added dairy ingredients. Colizza said the company would consider additional capital investments and that M&A is “on the table” as a way to reach markets more quickly, with a significant focus on North America given Saputo’s familiarity with the market and the competitiveness of the U.S. milk cost base.
Market conditions: milk supply, commodity volatility, and protein demand
Management described a global environment of higher milk supply, with Colizza noting that feed conditions and farm resilience have contributed to rising production and stronger milk components. He said current milk supply growth has outpaced demand growth in some categories “for now,” creating pressure that contributes to volatility—particularly in the U.S.—which he expects to persist through the remainder of the fiscal year and into next year.
At the same time, leadership repeatedly pointed to global demand trends supporting dairy consumption, especially around protein. Colizza said interest in high-protein, nutrient-dense foods is not limited to North America, citing demand signals across regions including Southeast Asia, China, Europe, and Oceania. He also referenced recently released U.S. Dietary Guidelines for Americans as “constructive” for dairy, while noting that momentum in high-protein dairy products was already present and that he could not directly link demand increases to the guidelines.
On U.S. profitability longer term, Colizza reiterated the company’s objective for the U.S. platform to reach “high single digits” and target “double-digit EBITDA margin,” adding that the company expects further benefits from the removal of duplicate costs and warehousing consolidation efficiencies.
Capital spending outlook and upcoming reporting date
Responding to a question on capital spending, Therrien said fiscal 2026 should be viewed as a “low point” for CapEx, and that fiscal 2027 capital investment is expected to be north of CAD 400 million, reflecting inflation, digital investment, and other projects referenced by management.
Saputo said it expects to release its fourth-quarter and full-year fiscal 2026 results on June 4, 2026.
About Saputo (TSE:SAP)
Saputo is a global dairy processor domiciled in Canada (28% of fiscal 2022 sales) with operations in the United States (43%), the U.K. (6%), and other international markets (23%). It sells cheese, cream, fluid milk, and other dairy products. In the retail segment (50% of revenue), its mix of brands include Saputo, Armstrong, Cheer, Cathedral City, and Frylight. Saputo also competes in food service (30% of revenue) and industrials (20% of revenue), which houses its ingredients business.
