Slide 1: Building a Sustainable Future: First Quarter Review
Building a Sustainable Future FIRST QUARTER REVIEW May 4, 2016 Michael McCain, President and Chief Executive Officer Debbie Simpson, Chief Financial Officer
Slide 2: A milestone accomplished
A milestone accomplished Delivered our financial target of 10% EBITDA Completed one of the largest transformations in the North American food industry Creating a sustainable value-added meat company Perseverance of over 11,500 people Laid the foundation for profitable growth Q1 2016 Review 2
Slide 3: Strategic transformation complete
Strategic transformation complete Eliminated or reformulated over ~$1 billion in capital invested 1800 products to run on faster from 2010-2015 lines with new technologies 11 prepared meats Invested in enhancing scale and manufacturing sites consolidated technology into 4 19 prepared meats distribut
Slide 4: Record first quarter earnings
Record first quarter earnings Adjusted Earnings per Share Adjusted Operating Earnings 54 ($ per share) ($ millions) 48 0.28 0.25 30 0.16 22 0.13 10 0.05 -0.08 -12 -14 -0.12 -0.12 -20 -20 -28 -30 -0.19 -32 -0.24 -0.25 -0.24 -56 -0.41 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 5: Six consecutive quarters of earnings growth
Six consecutive quarters of earnings growth Reached Adjusted EBITDA Margin Target 10.2% 8.7% 7.1% 6.0% 4.7% 0.7% 0.5% 0.5% 1.5% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 -1.1% -1.4% -1.3% Q1 2016 Q1 2015 SALES $796.9 $780.2 ADJUSTED OPERA
Slide 6: Q1 results driven by commercial and operating gains
Q1 results driven by commercial and operating gains Efficiency gains at Hamilton flagship facility contributing to margin expansion ~400 bps ~300 bps ~200 bps ~100 bps Q2 2015 Q3 2015 Q4 2015 Q1 2016 Ramp-up Inefficiency Costs - Gap to Margin Target Q1 2016 Review 6
Slide 7: Q1 results driven by commercial and operating gains
Q1 results driven by commercial and operating gains Strong commercial performance: • Increased North American market expansion in sustainable meat • Increased retail branded chicken volume • Increased value-added fresh pork margins • Increased prepared meats margins o Partly offset by short-term vol
Slide 8: The path forward…
The path forward… Maintaining a cost Driving strategic, culture and investing profitable growth in assets Q1 2016 Review 8
Slide 9: Maintaining a cost culture
Maintaining a cost culture Aggressive cost planning Further investments in our supply chain Continued overhead to increase and SG&A reduction productivity and efficiency Reinvesting material portion of savings in growth Q1 2016 Review 9
Slide 10: Driving strategic growth
Driving strategic growth Invest in advertising and promotion Growth in key categories: Lead in Sustainable meat innovation Healthy protein snacking Alternative proteins Q1 2016 Review 10
Slide 11: Revitalizing the Schneiders brand
Revitalizing the Schneiders brand LEADING MARKET SHARES Frozen/Smoked Wieners Lunch Kits Meat Snacks Sliced Meats Bacon 1 Sausages #1 #1 #1 #1 #2 # 1 1 Maple Leaf Foods holds the #1 market share. Q1 2016 Review 11
Slide 12: Engaging with consumers: digital and in-store campaigns
Engaging with consumers: digital and in-store campaigns Digital Always-On video content Prime Wing Belt at Super Bowl Total views online: 3.4M Total views online 2.3M Maple Leaf/Hayley Wickenheiser Surprise Visit Total views online: 1M Naturals Quebec Juste du Bon TV, online and in-store campaign Th
Slide 13: Launching Canadian Craft
Launching Canadian Craft Making Artisanal Accessible Products • Natural craft meats featuring regionally Ontario Inspired Cherry Wood Smoked Ham inspired Canadian flavours Atlantic Coarse Salt Prosciutto • Made with natural ingredients and no added preservatives Okanagan Inspired Garlic and Herb Sal
Slide 14: Launching Prime Turkey prepared meats
Launching Prime Turkey prepared meats MLF INNOVATION ADVANTAGE New portfolio of versatile, delicious turkey products • Nutritious for breakfast, lunch and dinner Products • Low in fat, high in protein • Made from Canadian farm raised turkey Prime Turkey bacon Prime Turkey wieners Prime Turkey sausag
Slide 15: Growth in sustainable meat
Growth in sustainable meat • Sustainable meat a primary growth platform, fueling targeted US expansion • Leading North American market share in raised without antibiotic pork; largest in Canadian poultry • Full line of “no antibiotics ever; no added hormones ever” fresh and prepared meats • Supporte
Slide 16: Structural margin improvement
Structural margin improvement Q1 2016 % of sales Q1 2015 % of sales Sales 796.9 780.2 Adjusted Cost of Goods Sold(1) 666.0 694.8 Adjusted Gross Margin 130.9 16.4% 85.4 11.0% SG&A 77.3 9.7% 75.0 9.6% Adjusted Operating Earnings 53.6 6.7% 10.4 1.3% Adjusted EBITDA 81.5 10.2% 36.9 4.7% Adjusted EPS 0.2
Slide 17: Improved cash flow
Improved cash flow Cash Flow from Operations • Cash on hand of $291 million at ($ millions) the end of the first quarter $45 • Completed NCIB in January; $195 million invested to buy- -$35 back 8.65 million shares Q1 2015 Q1 2016 • Increased dividend by 12.5% in the quarter Free Cash Flow ($ million
Slide 18: Building a sustainable future
Building a sustainable future • Embedding sustainability into our business to create shared value: drive commercial, social and environmental benefits • Four pillars include Health and Nutrition; People and Communities; Animal Care; Environmental Sustainability • Reporting to global standards – Glob
Slide 19: Summary
Summary • Delivered structural margin expansion and realized our near-term financial target • Built the foundation to enable higher levels of profitable growth • Optimizing capital allocation • Exciting value creation opportunities ahead Q1 2016 Review 19
Slide 20: Forward-looking and non-IFRS information
Forward-looking and non-IFRS information This document contains, and the Company’s oral and written public communications often contain, “forward-looking information” within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts, and projec