Q3 gross margin compressed 690bp to 10.2% as raw material costs outpaced pricing gains

Filed July 16, 2026 · Period ending June 27, 2026 · Compared to 10-Q Jul 17, 2025 · ~2 min read

Key Changes

• high

  Gross margin fell to 10.2% from 17.1% in Q3 FY25 as raw material costs rose $20.5M and freight increased $2.7M, while selling price gains of $14.7M only partially offset the increases—a reversal from FY25 when price increases successfully recovered cost escalation.

  MD&A: Gross Margin verify on EDGAR →
• high

  Operating cash flow declined 59% to $18.0M from $44.2M as working capital consumed $17.5M (vs. $0.2M prior year), driven by a $29.2M inventory build reflecting higher raw material purchases and unit costs.

  MD&A: Cash Flow verify on EDGAR →
• high

  Net earnings fell 40.5% to $9.0M ($0.46/share) from $15.2M ($0.78/share) in Q3 FY25, driven by the $10.7M gross profit decline and lower interest income, partially offset by reduced SG&A and no restructuring charges.

  MD&A: Net Earnings verify on EDGAR →