Lassonde Industries : Consolidated financial statement – Q3

Interim Report

Lassonde Industries Inc.

Third Quarter

Ended September 28, 2024

Lassonde Industries Inc.

Table of Contents

Interim Condensed Consolidated Statements of Income	3
Interim Condensed Consolidated Statements of Comprehensive Income	4
Interim Condensed Consolidated Statements of Financial Position	5
Interim Condensed Consolidated Statements of Shareholders' Equity	6
Interim Condensed Consolidated Statements of Cash Flows	7
Notes to the Interim Condensed Consolidated Financial Statements	8

2

Lassonde Industries Inc.

Interim Condensed Consolidated Statements of Income

(in thousands of Canadian dollars unless otherwise indicated) (unaudited)

		Third quarters ended	Nine months ended
	Note	Sept. 28, 2024	Sept. 30, 2023	Sept. 28, 2024	Sept. 30, 2023
		$	$		$	$
Sales		668,267	583,428	1,862,778	1,710,174
Cost of sales		488,437	437,168	1,357,634	1,274,972
Gross profit		179,830	146,260		505,144	435,202
Selling and administrative expenses		132,666	110,522	373,369	331,872
Operating profit		47,164	35,738		131,775	103,330
Share in the profit or (loss) of an associate		-	(507)	-	(1,638)
Financial expenses	5	7,098	4,164	15,587	12,944
Other (gains) losses	6	(84)	(2,217)	(2,104)	(4,074)
Profit before income taxes		40,150	33,284		118,292	92,822
Income tax expense	7	11,082	8,963	32,734	25,111
Profit		29,068	24,321		85,558	67,711
Attributable to:		29,652			87,013
Corporation's shareholders		24,311	66,510
Non-controlling interests		(584)	10	(1,455)	1,201
		29,068	24,321		85,558	67,711
Basic and diluted earnings per share (in $)	4.35	3.56	12.75	9.75
Weighted average number of shares
outstanding (in thousands)		6,822	6,822	6,822	6,822

3

Lassonde Industries Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

(in thousands of Canadian dollars) (unaudited)

	Third quarters ended	Nine months ended
Sept. 28, 2024	Sept. 30, 2023	Sept. 28, 2024	Sept. 30, 2023
	$	$		$	$
Profit	29,068	24,321	85,558	67,711
Other comprehensive income
Items that will be reclassified subsequently to profit or loss:
Net change in the cash flow hedge of financial assets
and liabilities
Gains (losses) on financial instruments designated	(152)			567
as hedges	416	1,043
Reclassification of (gains) losses on financial	(133)	(208)	(547)	(1,041)
instruments designated as hedges
Income tax expense	73	(55)	(5)	-
	(212)	153	15	2
Exchange difference on translating foreign operations	(11,265)	12,720	9,747	(1,128)
	(11,477)	12,873	9,762	(1,126)
Items that will not be reclassified subsequently to profit or loss:
Net change in the cash flow hedge of non-financial assets
Gains (losses) on financial instruments designated	2,299			19,241
as hedges	6,888	4,033
Income tax expense	(595)	(1,778)	(5,030)	(1,022)
	1,704	5,110	14,211	3,011
Benefit cost of the defined benefit plans
Remeasurements of the net defined benefit	758			(3,349)
asset or liability	(714)	(1,536)
Income tax expense	(202)	191	894	410
	556	(523)	(2,455)	(1,126)
	2,260	4,587	11,756	1,885
Total other comprehensive income (loss)	(9,217)	17,460	21,518	759
Comprehensive income	19,851	41,781	107,076	68,470
Attributable to:	21,492			107,065
Corporation's shareholders	40,352	67,187
Non-controlling interests	(1,641)	1,429	11	1,283
	19,851	41,781	107,076	68,470

4

Lassonde Industries Inc.

Interim Condensed Consolidated Statements of Financial Position

(in thousands of Canadian dollars) (unaudited)

		As at	As at
	Note	Sept. 28, 2024	Dec. 31, 2023
		$	$
Assets
Current		9,165
Cash and cash equivalents		19,842
Accounts receivable	9	231,387	188,321
Income tax recoverable		5,484	4,206
Inventories		414,202	386,619
Derivative instruments		3,480	173
Other current assets		27,206	37,479
		690,924	636,640
Derivative instruments		-	74
Property, plant and equipment		588,275	500,821
Intangible assets		317,726	184,560
Net defined benefit asset		18,356	21,957
Deferred tax assets		2,031	-
Other non-current assets		872	757
Goodwill		477,120	320,895
		2,095,304	1,665,704
Liabilities
Current		3,089
Bank overdraft		4,030
Accounts payable and accrued liabilities	10	349,986	330,412
Income tax payable		13,167	7,066
Derivative instruments		2,540	6,425
Other current liabilities		13,507	5,716
Current portion of long-term debt		25,564	18,525
		407,853	372,174
Derivative instruments		45	-
Long-term debt		439,618	191,995
Long-term incentive plan liabilities		9,961	5,323
Pension plan liabilities		1,134	830
Deferred tax liabilities		108,803	99,480
Other non-current liabilities		38,542	-
		1,005,956	669,802
Shareholders' equity		1,001,392
Equity attributable to the Corporation's shareholders		922,570
Non-controlling interests		87,956	73,332
		1,089,348	995,902
		2,095,304	1,665,704
Approved by the Board of Directors
	Pierre-Paul Lassonde	Chantal Bélanger
	Director	Director

5

Lassonde Industries Inc.

Interim Condensed Consolidated Statements of Shareholders' Equity

(in thousands of Canadian dollars) (unaudited)

	Equity attributable to the Corporation's shareholders
			Accumulated		Non-	Total
		Contributed	other	Retained	controlling	shareholders'
	Share capital	surplus	reserves i )	earnings	interests	equity
	$	$	$	$	$	$
Balance as at December 31, 2023	46,660	1,360	73,777	800,773	73,332	995,902
Profit	-	-	-	87,013	(1,455)	85,558
Other comprehensive income (loss)	-	-	22,507	(2,455)	1,466	21,518
Transfer to non-financial assets ii)	-	-	(8,120)	-	(268)	(8,388)
Dividends	-	-	-	(20,465)	-	(20,465)
Investment from non-controlling	-	-	-	-	15,223	15,223
interests
Adjustment to non-controlling	-	-	-	342	(342)	-
interests
Balance as at September 28, 2024	46,660	1,360	88,164	865,208	87,956	1,089,348
Balance as at December 31, 2022	46,660	1,360	94,102	735,044	60,401	937,567
Profit	-	-	-	66,510	1,201	67,711
Other comprehensive income (loss)	-	-	1,803	(1,126)	82	759
Transfer to non-financial assets ii)	-	-	(4,086)	-	(78)	(4,164)
Dividends	-	-	-	(11,592)	-	(11,592)
Balance as at September 30, 2023	46,660	1,360	91,819	788,836	61,606	990,281

1. Includes the hedging reserve and the foreign currency translation reserve.
2. Transfer of cash flow hedge (gains) losses to non-financial assets.

Additional information about shareholders' equity is presented in Note 12.

6

Lassonde Industries Inc.

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars) (unaudited)

		Nine months ended
	Note	Sept. 28, 2024	Sept. 30, 2023
		$	$
Operating activities		85,558
Profit		67,711
Adjustments:		32,734
Income tax expense	7	25,111
Net interest expense	5	14,909	12,335
Depreciation of property, plant and equipment and amortization of intangible assets		52,810	46,134
(Gains) losses on capital assets		137	432
Change in the fair value of financial instruments		(1,089)	(1,827)
Cost of the long-term incentive plan, net of payments		2,790	3,190
Cost of pension plans recognized in profit or loss, net of contributions		556	(85)
Share in the (profit) or loss of an associate		-	1,638
Unrealized foreign exchange (gains) losses		1,131	(485)
Other		78	49
		189,614	154,203
Change in non-cash operating working capital items	13	(695)	11,982
Net income tax paid		(22,671)	(6,510)
Net interest paid		(13,569)	(12,256)
Settlement of derivative instruments		5,482	(324)
		158,161	147,095
Financing activities		259,594	(43,760)
Change in revolving operating credit, net of transaction costs
Repayment of long-term debt		(11,376)	(6,395)
Dividends paid on Class A shares		(9,207)	(5,213)
Dividends paid on Class B shares		(11,258)	(6,379)
Investment from non-controlling interests		15,223	-
		242,976	(61,747)
Investing activities		(324,555)
Consideration paid on a business combination, net of acquired cash on hand		-
Net acquisition of property, plant and equipment		(77,295)	(56,111)
Acquisition of intangible assets		(8,344)	(7,094)
Acquisition of other non-current assets		(434)	-
		(410,628)	(63,205)
Change in cash and cash equivalents		(9,491)	22,143
Cash and cash equivalents at beginning		15,812	(1,710)
Effect of exchange rate changes on cash and cash equivalents		(245)	(272)
Cash and cash equivalents at end		6,076	20,161

Additional cash flow information is presented in Note 13.

7

Lassonde Industries Inc.

Notes to the Interim Condensed Consolidated Financial Statements

Table of Contents

Note 1.	Description of the Corporation	9
Note 2.	Statement of Compliance	9
Note 3.	Adoption of IFRS Standards	9
Note 4.	Business Combination	10
Note 5.	Financial Expenses	13
Note 6.	Other (Gains) Losses	13
Note 7.	Income Tax Expense	13
Note 8.	Financial Instruments	14
Note 9.	Accounts Receivable	15
Note 10.	Accounts Payable and Accrued Liabilities	16
Note 11.	Long-Term Debt	16
Note 12.	Shareholders' Equity	16
Note 13.	Additional Cash Flow Information	17
Note 14.	Additional Lease Information	18
Note 15.	Contingencies	18
Note 16.	Segment Information	19
Note 17.	Future Accounting Changes	20

8

Lassonde Industries Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(tabular amounts are in thousands of Canadian dollars unless otherwise indicated) (unaudited)

Note 1. Description of the Corporation

Lassonde Industries Inc. is incorporated under the Canada Business Corporations Act. Its Class A subordinate voting shares are listed on the Toronto Stock Exchange under the ticker symbol LAS.A. The head office is located at 755 Principale Street in Rougemont, Québec, Canada.

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

The Corporation's national brands are sold in various packages under several proprietary trademarks as well as under trademarks for which the Corporation is a licensed user. The Corporation also manufactures private label products for the vast majority of major retailers and wholesalers in North America.

Note 2. Statement of Compliance

The Corporation's interim condensed consolidated financial statements have been prepared in compliance with IAS 34 Interim Financial Reporting and using the same accounting policies as those described in the Corporation's annual consolidated financial statements for the year ended December 31, 2023. The Corporation's annual consolidated financial statements for the year ended December 31, 2023 were prepared in compliance with International Financial Reporting Standards ("IFRS").

These interim condensed consolidated financial statements do not include all of the information required under IFRS for complete financial statements, and they should therefore be read in conjunction with the Corporation's annual consolidated financial statements for the year ended December 31, 2023. The Corporation's interim condensed consolidated financial statements and annual consolidated financial statements are available on the SEDAR+ website at www.sedarplus.ca and on the Corporation's website at www.lassonde.com.

The Board of Directors approved these interim condensed consolidated financial statements on November 7, 2024.

Note 3. Adoption of IFRS Standards

3.1 IAS 1 Presentation of Financial Statements

On January 1, 2024, the Corporation adopted the amended version of IAS 1 Presentation of Financial Statements, which establishes a more general liability classification approach based on an analysis of existing contracts at the reporting date and clarifies the classification of borrowings and other financial liabilities that have covenants with which an entity must comply.

The adoption of the amended version of this standard had no impact on the Corporation's consolidated financial statements.

3.2 Supplier finance arrangements

On January 1, 2024, the Corporation adopted the amended versions of IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, which add disclosure requirements and clarify existing disclosure requirements requiring qualitative and quantitative information to be provided on supplier finance arrangements.

The adoption of the amended version of these standards had no impact on the Corporation's consolidated financial statements.

9

Lassonde Industries Inc.

Notes to the Interim Condensed Consolidated Financial Statements

(tabular amounts are in thousands of Canadian dollars unless otherwise indicated) (unaudited)

Note 4. Business Combination

4.1 Summer Garden

4.1.1 Description of the business combination

On August 8, 2024, a 90%-owned U.S. subsidiary of the Corporation completed the acquisition of The Zidian Group, which operates Summer Garden Food Manufacturing and certain of its affiliates (collectively, "Summer Garden"), after a final acquisition agreement was signed on June 20, 2024.

Located in Boardman, Ohio, Summer Garden develops, manufactures and markets a wide range of premium sauces and condiments, including tomato and cream-based pasta sauces, BBQ sauces, dipping sauces and dressings.

Through this business combination, the Corporation is increasing its presence in the specialty food segment in the United States, is expanding its product offering, including national brand products, and is strengthening its presence in the North American market.

4.1.2 Initial recognition of the business combination

The fair value of the consideration transferred and the net identifiable assets acquired is preliminary and is subject to change until recognition of the business combination and of the working capital adjustments have been finalized.

	Preliminary
	$
Consideration transferred	325,933
Consideration paid in cash
Contingent considerations payable	45,282
	371,215
Identifiable assets acquired	1,378
Cash and cash equivalents
Accounts receivable	14,214
Inventories	32,647
Other current assets	1,141
Property, plant and equipment i )	40,158
Intangible assets	145,401
	234,939
Liabilities assumed	11,299
Accounts payable and accrued liabilities
Other current liabilities	115
Long-term debt i)	5,006
	16,420
Net identifiable assets acquired	218,519
Goodwill	152,696

1. Includes right-of-use assets and lease liabilities totalling $5,006,000.

10