Andrew Peller (TSE:ADW.A) reported what management called another strong quarter in its third quarter fiscal 2026 earnings call, citing higher sales, expanding margins, and improved earnings supported by performance across multiple channels and regions. Chief Executive Officer Paul Dubkowski was joined by Chief Financial Officer Renee Cauchi and President and Chief Commercial Officer Patrick O’Brien.
Sales growth led by Western Canada and evolving Ontario channels
Dubkowski said third-quarter results were highlighted by top-line growth of 3.3% alongside margin and earnings expansion that management described as at or near all-time highs for the company. He pointed to positive trends across multiple trade channels and regions, including a “strong quarter in Western Canada” and “sustained momentum in Ontario” as retail modernization continues.
In Ontario, management said the business continued to perform well overall as the market evolves. Dubkowski said strong performance in big box, grocery, and the liquor board channel was supported by the company’s portfolio breadth. He noted, however, that these gains were “partially offset” by expected softness in the company’s owned retail stores and wine kit business as consumers adjust to the changing distribution landscape.
Estate traffic and wine club performance support results
While noting the third quarter is not the company’s busiest seasonal period, Dubkowski said estate properties in Ontario and British Columbia posted increased traffic, conversion, and overall performance, reflecting ongoing consumer interest in local destinations and the experiences offered at the estates.
He also highlighted “strong results” in the wine club business, citing the ability to attract new members, improve retention, and increase average spend. Dubkowski attributed that performance to new club offers and the benefit of higher estate traffic.
Innovation focus: sparkling and “better-for-you” products
Management emphasized continued focus on sparkling and “better-for-you” products as key growth segments within wine. Dubkowski said the company continues investing in operational and brand marketing capabilities in sparkling, aiming to be a market leader across the consumer sparkling landscape. He referenced current offerings including Trius Traditional Method, Trius Cuvée Close, Peller Secco, and Peller Radiance 9%, and said the company was “excited” about additional products and innovation in the year ahead.
In the better-for-you segment, Dubkowski said Honest Lot remains one of the company’s fastest-growing brands and continues to resonate with consumers seeking zero-sugar options. He called the quarter’s “most exciting” innovation milestone the national launch of Laylow, introduced initially in Pinot Grigio and rosé, with additional varietals and formats planned. Dubkowski said Laylow is intended to offer “full flavor with fewer calories, less alcohol, and less sugar,” and positioned the brand for consumers seeking balance “without compromise.”
On the call, O’Brien provided category and rollout commentary, saying the better-for-you wine segment is growing “at about 60% versus last year” across English Canada and has “doubled in size since 2024.” He said Laylow was rolling out in Ontario through the company’s retail stores and the LCBO, with grocery partners to follow “next month,” expansion across British Columbia and Alberta “in the coming months,” and the Atlantic region “to follow in quarter one.”
Looking ahead, Dubkowski said additional innovation is planned, including a brand refresh for Peller Estates.
Margins, EBITDA growth, and leverage reduction
Cauchi reported gross margin of CAD 45.5 million in the third quarter, or 41.8% of revenue, up from 40.2% in the same period last year. On a year-to-date basis, the gross margin percentage improved to 43.3% from 40.4%.
She attributed margin improvement to the company’s cost savings program, which lowered input costs for glass bottles and inbound freight, and to the Ontario Grape Support Program, which was not in effect during comparable fiscal 2025 periods.
Selling and administrative expenses were CAD 25.8 million, up 8% year-over-year, reflecting increased advertising and promotional investments tied to innovation and expanded distribution in Ontario.
EBITDA increased 6% year-over-year to CAD 19.7 million from CAD 18.5 million. For the year-to-date period, Cauchi said EBITDA totaled CAD 57.1 million, up close to 16%.
She also highlighted a reduction in debt levels and interest expense. Third-quarter interest expense decreased 26% from the prior year, and net debt was roughly CAD 164 million at quarter-end, down from CAD 182 million at fiscal year-end. The company’s debt-to-EBITDA ratio was about 2.3 times on a rolling twelve-month basis. Inventory was CAD 156 million at quarter-end, down from CAD 170 million at fiscal 2025 year-end, reflecting what Cauchi described as disciplined inventory management, while also rising from second-quarter levels in line with typical post-harvest seasonal patterns.
Outlook, external risks, and strategic options
In the Q&A session, Dubkowski said sales growth reflected a combination of core portfolio performance and innovation, supported by strength across liquor board, grocery, big box, and estate and wine club momentum.
On margin sustainability, Dubkowski said the company expects margins to continue increasing into fiscal 2027, though “at a slower rate” because the company has “largely delivered” on its CAD 25 million cost improvement plan. He added that additional initiatives are planned moving forward.
Asked about potential USMCA-related risk, Dubkowski said the company has been “forward-thinking,” noting it sources products and components globally and has the ability to pivot, including bringing more sourcing into Canada. He added the company does not sell a substantial amount into the U.S. or internationally and said management was not concerned at this time, while continuing to monitor developments.
Dubkowski reiterated that acquisitions remain part of the company’s strategy and said there is an active process underway, though he did not provide a timeline. He also said the company has been evaluating ways to unlock value from its asset base, referencing prior discussion of Port Moody and its vineyard assets, but said there was “nothing to report at this time.”
Management said the company’s fiscal 2026 results to date position it for a strong year and “ongoing growth” in fiscal 2027. Dubkowski said the company is ready to pursue opportunities “whether through innovation, strategic investment, or acquisition,” while aiming to become “the fastest growing wine company in English Canada.”
About Andrew Peller (TSE:ADW.A)
Andrew Peller Ltd is a wine producing company. It is engaged in the production and marketing of wine and spirit products in Canada. Some of the company’s brands are Peller Estates, Trius Winery, Thirty Bench, Wayne Gretzky, Sandhill, Red Rooster, Calona Vineyards and many more. The Company owns and operates over 100 well-positioned independent retail locations in Ontario under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store.
