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Financial Performance & Profitability Analysis

Northgate Foods | Q3 FY2026 Review (Jan–Sep 2026)

Finance & Business Intelligence

Anita Analytics

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Agenda: connecting operations to financial outcomes

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1

Revenue, expenses and net profit

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Margins and profitability trends

3

Budget versus actual spending

4

Financial risks and cash health

5

Cost-saving opportunities and outlook

Northgate Foods | Financial Performance Review, Q3 FY2026

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Executive summary: profit grew 8%, but margins are slipping on input costs

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$86.4M

Revenue YTD

+9.1% YoY, $1.4M above budget

$12.0M

Operating profit

13.9% margin, down 0.4 pts

$7.9M

Net profit

+8.2% YoY, $0.3M below budget

38.9%

Gross margin

Down from 39.5% last year

Growth is healthy, but raw-material inflation (+14%) and over-budget distribution costs are eroding margin. We have identified $2.4M of annual run-rate savings to recover roughly 2 points of operating margin.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Revenue, expenses & net profit

How the income statement moved year over year

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Income statement: revenue +9.1%, cost of goods growing faster at +10.2%

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$M, Jan–Sep

2025

2026

Change

Revenue

79.2

86.4

+9.1%

Cost of goods sold

47.9

52.8

+10.2%

Gross profit

31.3

33.6

+7.3%

Operating expenses

20.0

21.6

+8.0%

Operating profit

11.3

12.0

+6.2%

Interest & other

1.6

1.5

-6.3%

Tax

2.4

2.6

+8.3%

Net profit

7.3

7.9

+8.2%

Because COGS outgrew revenue, gross profit rose only 7.3%.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Snacks and Breakfast generate 61% of revenue

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Revenue ($M)

  • Snacks: $31.1M (36%)
  • Breakfast: $21.6M (25%)
  • Sauces & condiments: $17.3M (20%)
  • Frozen meals: $12.1M (14%)
  • Other: $4.3M (5%)

Northgate Foods | Financial Performance Review, Q3 FY2026

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Net profit beat last year in every quarter, with Q3 the softest margin

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Net margin 2026

  • Q1: 9.1%
  • Q2: 9.9%
  • Q3: 8.5%, down from 8.9% in Q3 2025
  • Q3 pressure came from raw-material prices and diesel costs

Northgate Foods | Financial Performance Review, Q3 FY2026

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Where each revenue dollar goes: 9 cents reaches net profit

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Cost structure

  • COGS absorbs 61 cents, up from 60.5
  • Operating expenses total 25 cents
  • Distribution (6.9¢) is the fastest-growing overhead line

Northgate Foods | Financial Performance Review, Q3 FY2026

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Profit margins & trends

Gross, operating and net margin over time

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Gross margin has slid 2.1 pts since January and is now below last year

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Reading the trend

  • 2026 started 0.2 pts above 2025 and ended 1.3 pts below
  • Decline lines up with wheat and vegetable-oil price rises from March
  • Price increases only landed in June

Northgate Foods | Financial Performance Review, Q3 FY2026

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Margin scorecard: all three margins are a touch lower year over year

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Margin

2025

2026

Change

Gross margin

39.5%

38.9%

-0.6 pts

Operating margin

14.3%

13.9%

-0.4 pts

Net margin

9.2%

9.1%

-0.1 pts

Net margin held up better than operating margin thanks to lower interest costs after debt paydown.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Margin bridge: pricing and cost leverage only partly offset input inflation

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Operating margin, pts

  • Price and mix added 0.8 pts
  • Raw materials and packaging cost 1.1 pts
  • Labor and plant overhead cost 0.3 pts
  • Opex growing slower than revenue gave back 0.2 pts
  • Result: 14.3% to 13.9%

Northgate Foods | Financial Performance Review, Q3 FY2026

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Frozen meals and Other dilute margin; Snacks is the profit engine

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Segment

Revenue

Share

Operating margin

Snacks

$31.1M

36%

16.5%

Breakfast

$21.6M

25%

14.8%

Sauces & condiments

$17.3M

20%

15.1%

Frozen meals

$12.1M

14%

7.0%

Other

$4.3M

5%

6.0%

Frozen meals carry 14% of revenue but only about 7% of segment profit; a pricing and mix review is overdue.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Budget versus actual

Where spending and results diverged from plan

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Revenue beat budget, but cost overruns cost us $0.4M of operating profit

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$M, Jan–Sep

Budget

Actual

Variance

Var %

Revenue

85.0

86.4

+1.4

+1.6%

Cost of goods sold

51.0

52.8

+1.8

+3.5%

Gross profit

34.0

33.6

-0.4

-1.2%

Operating expenses

21.6

21.6

0.0

0.0%

Operating profit

12.4

12.0

-0.4

-3.2%

Net profit

8.2

7.9

-0.3

-3.7%

Revenue upside of $1.4M was consumed by $1.8M of extra COGS.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Operating expenses landed on budget in total, with distribution the outlier

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$M variance

  • Distribution: +$0.6M over (11%) on diesel and expedited freight
  • Sales & marketing: -$0.4M under, with campaign timing
  • G&A and R&D: each $0.1M under
  • Underspend in marketing offset the logistics overrun

Northgate Foods | Financial Performance Review, Q3 FY2026

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Variance to budgeted operating profit: COGS is the main culprit

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What drove the gap

  • COGS overran by $1.8M, more than revenue upside ($1.4M)
  • Distribution cost another $0.6M
  • Savings in marketing, G&A and R&D helped $0.6M
  • Net: operating profit $0.4M short

Northgate Foods | Financial Performance Review, Q3 FY2026

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Raw materials are 60% of COGS and growing 14% a year

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COGS YTD ($M)

  • Raw materials: $31.7M
  • Packaging: $8.0M
  • Direct labor: $7.4M
  • Plant overhead: $5.7M
  • Budget assumed +9% raw-material inflation; actual +14%

Northgate Foods | Financial Performance Review, Q3 FY2026

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Financial risks & savings

Cash health, exposure and opportunities

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Balance sheet is sound: cash generation covers capex and debt service

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$9.8M

Operating cash flow

Jan–Sep 2026

$5.7M

Free cash flow

After $4.1M capex

1.4x

Net debt / EBITDA

Net debt $28.6M, LTM EBITDA $20.4M

41 days

Receivable days

Up from 38 days a year ago

Watch point: slower collections added about $0.9M to working capital. Leverage is comfortably inside the 2.5x covenant.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Sensitivity: input costs are the largest single threat to profit

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Profit impact, YTD basis

  • A 5% rise in raw materials costs $1.6M
  • A 2% price increase gains $1.7M, enough to offset it
  • Volume and diesel risks are smaller but additive

Northgate Foods | Financial Performance Review, Q3 FY2026

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Risk register: five exposures and how we plan to respond

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Risk

Exposure

Mitigation

Input-cost inflation

Raw materials = 60% of COGS

Hedge 50% of Q1 volume; dual-source oils

Customer concentration

Top 3 retailers = 46% of revenue

Grow foodservice and direct-to-consumer

Distribution costs

Diesel +10% = -$0.2M

Renegotiate carrier contracts

Receivables

DSO 41 days vs. 38

Tighten terms; early-pay discount

Interest rates

40% of debt floating

Fix half of floating tranche

Northgate Foods | Financial Performance Review, Q3 FY2026

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We have identified $2.4M of annual cost savings

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Run-rate savings

  • Total: $2.4M a year
  • Equal to about 2.1 pts of operating margin
  • Procurement consolidation delivers 38% of the total
  • Most initiatives start within two quarters

Northgate Foods | Financial Performance Review, Q3 FY2026

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Savings roadmap: owners, timing and effort

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Initiative

Annual saving

Start

Effort

Procurement consolidation

$0.9M

Q1 FY27

Medium

Route optimization

$0.5M

Q4 FY26

Low

Packaging lightweighting

$0.4M

Q2 FY27

Medium

SG&A automation

$0.3M

Q1 FY27

Low

Energy efficiency upgrades

$0.3M

Q3 FY27

High (capex)

Total run-rate: $2.4M. Quick wins (low effort) deliver $0.8M by early FY27.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Outlook & recommendations

Full-year projection and next steps

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FY26 outlook: revenue ahead of budget, profit slightly behind

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$116.0M

FY26 revenue

Budget: $114.5M (+1.3%)

$10.6M

FY26 net profit

Budget: $11.0M (-3.6%)

9.1%

Net margin

Flat year over year

+$1.8M

FY27 savings (net)

$2.4M pre-tax, full run-rate

Closing the Q4 gap depends on landing the June price increase and the first procurement savings before the holiday season.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Recommendations and next steps

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Protect margin

Lock in raw-material hedges and a second price increase for Frozen

Control cost

Launch procurement and route programs; cap distribution overrun

Strengthen cash

Tighten credit terms to bring DSO back to 38 days

Re-plan

Re-base FY27 budget on 12% raw-material inflation

KPIs to track monthly: gross margin, budget variance by cost line, DSO, free cash flow, savings delivered.

Northgate Foods | Financial Performance Review, Q3 FY2026

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Questions & discussion