Cedarbrook Foods — Q1 2026 Monitoring Memo
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Period: 2026-Q1    Status: final

NARRATIVE
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Cedarbrook Foods delivered LTM Q1 2026 revenue of approximately $148.5M and CFO-reported adjusted EBITDA of $46.5M (reported $38.9M before five add-backs totaling $7.6M). All §7.02 covenants remain comfortably compliant — leverage 3.22x against the 5.00x cap, FCCR 1.38x against the 1.15x floor, liquidity $43.9M against the $15.0M minimum. The decisional question is not covenant compliance; it is add-back quality. Two of the five Schedule A add-backs are credit-relevant: $1.4M of sponsor management fees (recurring per §1.01 but worth lender review) and $1.8M of ARPA reclassification labeled "customer accommodations." If a lender disallows both, leverage re-rates from 3.22x to 3.45x — still compliant, but the cushion narrative shifts. Operationally, AR build of $4.2M from year-end is concentrated in two named customers (Atlas Markets, Northstar Grocers) with confirmed April receipts. Atlas renewal is in active negotiation; June-close is the marker.

COMPLIANCE SUMMARY
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Leverage 3.22x / cap 5.00x. FCCR 1.38x / floor 1.15x. Liquidity $43.9M / floor $15M. All covenants compliant on a CFO-reported basis.

ADD-BACK QUALITY (THE DECISIONAL QUESTION)
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Schedule A includes five add-backs: restructuring (Columbus consolidation, $2.4M, legitimate one-time), Atlas legal ($0.8M, late-stage resolution), Grand Rapids commissioning ($1.2M, substantially complete). Two are contested: sponsor management fees ($1.4M, recurring quarterly, permitted under §1.01 but worth lender judgment) and ARPA reclassification ($1.8M, framed as one-time customer accommodation but recurring in pattern). Conservative read: leverage 3.45x — 23bps tighter than reported.

AR COLLECTIONS — ATLAS + NORTHSTAR TIMING
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Trade receivables grew from $17.1M at Dec-25 to $21.3M at Mar-26. Both drivers (Atlas, Northstar) confirmed April receipts. DSO at 73 days vs 52-day target; expected to step back through Q2.

ATLAS MARKETS RENEWAL
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Largest customer; renewal in active negotiation. Final terms expected by June close. Downside case (10% pricing concession + sustained DSO regression) holds compliance through year-end with FCCR cushion narrowing to 0.07 turns above the 1.15x floor.

RECOMMENDED ACTIONS
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(1) 30-day cash receipts confirmation file (Atlas + Northstar); (2) lender review of contested add-backs; (3) updated covenant forecast post-June close incorporating final Atlas terms.

RECOMMENDATION
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Hold — flag Schedule A add-back quality; track Atlas renewal to June close.
