Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q3 2022 Earnings Presentation
28 slides from Maple Leaf Foods's earnings presentation, Nov 8, 2022
Slide 1: Resilience and Opportunity: Q3 2022 Business & Financial Review
Resilience and Opportunity Q3 2022 Business & Financial Review All dollar amounts are presented in CAD dollars unless otherwise noted.
Slide 2: Forward-looking Statements and Non-IFRS Measures
Forward-looking Statements and Non-IFRS Measures This presentation contains “forward-looking information” within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates, as
Slide 3: Maple Leaf Foods is an iconic, purpose-driven Canadian food company
Maple Leaf Foods is an iconic, purpose-driven Canadian food company
Slide 4: We have transformed the Company and continue to create value
We have transformed the Company and continue to create value Building a dynamic, powerhouse brand portfolio Driving innovation Investing in world-class assets Establishing ourselves as a sustainability leader
Slide 5: Our ambitious Blueprint has guided us on our journey
Our ambitious Blueprint has guided us on our journey 5 MAPLE LEAF FOODS – Q3 2022 BUSINESS AND FINANCIAL REVIEW | November 8, 2022
Slide 6: We are proud of what we have delivered
We are proud of what we have delivered Iconic portfolio of Brands, with growing value-added production and US exposure Industry-leading sustainability practices, with long-term commitment to sustainable food production Growing sustainable meat production, drawing on powerful consumer trends re
Slide 7: Our track record demonstrates sustained top and bottom-line growth
Our track record demonstrates sustained top and bottom-line growth Maple Leaf Total Annual Sales Meat Protein Adjusted EBITDA ($ millions) ($ millions and margin %) 2 2 2 • And, we are now at our next inflection point! 1Compound annual growth rate calculated between 2016 and 2021, including impact o
Slide 8: Our business is resilient and growing
Our business is resilient and growing We understand the headwinds and they are short-term The strategic investments we have made are about to deliver
Slide 9: Meat Protein
Q3 2022 Meat Protein
Slide 10: Positive momentum in the underlying health of our Meat Protein business
We have positive momentum in the underlying health of our Meat Protein business, with world-class assets now starting up Driving Branded Leading in Broadening Delivering Growth Sustainable Meats our reach Operational Excellence 14 consecutive quarters of Double-digit sales growth in US Prepare
Slide 11: Transient external forces pressuring near-term margins
Transient external forces pressuring near-term margins – rebalancing in sight Q3 Impact What Happened Actions and Outlook Status Pricing • Significant and sustained cost inflation throughout 2022 • Fully executed latest round of price adjustments in September, • Our history is to plan for inflation
Slide 12: Excluding macro geopolitical factors, Adj EBITDA delivering on track
Excluding macro geopolitical factors, Adj EBITDA delivering on track 16%+ Adj. EBITDA Margin 12 MAPLE LEAF FOODS – Q3 2022 BUSINESS AND FINANCIAL REVIEW | November 8, 2022
Slide 13: $1.2B investment in organic projects to add $130M to annual Adj. EBITDA
$1.2B investment in organic projects to add $130M to annual Adj. EBITDA Incremental Capital Project Benefits Adj. EBITDA London Poultry facility More profitable product mix: through improved processing Annual Adj EBITDA The new 660,000 sq. ft. facility is one of the most capabilities $100M once
Slide 14: Preparing for first commercial production at our London Poultry plant
Preparing for first commercial production at our London Poultry plant Completed Current Remaining • Construction completed in Sep 2022 • Commissioning began in Sept. 2022 • Execute against the production plan • Equipment installation • Dry testing completed 2022 Q4 2023 Q1 2023 Q3 2023 Q4 • Producti
Slide 15: Bacon Centre of Excellence ramping up commercial production
Bacon Centre of Excellence ramping up commercial production Completed Current Remaining • Construction completed in Oct 2021 • Producing saleable product since • Transition from co-manufacturers and • Dry testing completed early 2022 ramp-up to be complete in H2 2023 • Commissioning remaining lines
Slide 16: Meat Protein – Q3 2022 financial results
Meat Protein – Q3 2022 financial results Q3 2022 vs. LY Drivers • Pricing action implemented in prior quarters to mitigate inflation, and a favourable mix-shift including growth in Sales $1,194.5 +3.8% sustainable meats, branded products and sales to the United States • Partially offset by lower vol
Slide 17: Plant Protein
Q3 2022 Plant Protein
Slide 18: On track to achieve Plant Protein Adj. EBITDA neutral in H2 2023
On track to achieve Plant Protein Adj. EBITDA neutral in H2 2023 Completed Remaining 12 months Target SG&A reduced by 42% • Repurpose excess plant-based footprint to Supply chain optimization, incl. further processed poultry production Achieve Adj EBITDA right-sizing legacy facilities • Produc
Slide 19: Production ramp-up at Indiana tempeh plant exceeding expectations
Production ramp-up at Indiana tempeh plant exceeding expectations Strategic Rationale Completed Current Status • Cost effective, scalable approach to • Existing 118,000 sq. ft. food facility • Product is available on shelves meet consumer demand • US$97 million for acquisition & build- • Plant is pr
Slide 20: Plant Protein – Q3 2022 financial results
Plant Protein – Q3 2022 financial results Q3 2022 vs. LY Drivers Sales $43.6 (12.3%) • Lower retail volumes more than offsetting pricing action (ex-FX, in USD) implemented to mitigate inflation and structural cost increases Gross Profit ($9.8) • Inflationary costs and lower capacity utilization, par
Slide 21: Maple Leaf Foods
Q3 2022 Maple Leaf Foods
Slide 22: Total Company – Q3 2022 financial results
Total Company – Q3 2022 financial results Q3 2022 vs. LY Drivers Sales $1,231.9 +3.6% • Growth in Meat, partially offset by lower sales in Plant Adj. Operating Earnings $24.1 (65.8%) Adj. EBITDA $76.7 (35.0%) • Challenging operating environment due to pork market headwinds, inflation, labour challen
Slide 23: Long-term outlook focused on delivering profitable growth
Long-term outlook focused on delivering profitable growth • Mid-to-high single digit sales growth in 2022, driven by continued momentum in sustainable meats, leveraging Meat brand leadership, and growth into the U.S. market. Protein • Adjusted EBITDA expansion to 14%-16% target range once markets no
Slide 24: Capital allocation focused on long-term business growth and shareholder return
Capital allocation focused on long-term business growth and shareholder return Capital Allocation Priorities Balanced 2023 Capital Expenditure Maintenance Capital Maintain existing operations and competitiveness ~$150M for Maintenance… $275M - $325M Maintain an investment grade balance sheet Bal
Slide 25: Balance sheet reflects projects in start-up phase, at an inflection point
Balance sheet reflects projects in start-up phase, at an inflection point of transitioning from “Cash OUT” to “Cash IN” ~ $1.5B • Two-thirds of debt attributable to our three new state of the art manufacturing facilities ~ $0.5B • Construction is completed at these facilities and they are at various
Slide 26: Appendix
Appendix
Slide 27: Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin
Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin Three months ended September 30, 2022 Three months ended September 30, 2021 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (
Slide 28: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share Three months ended September 30, ($ per share) (Unaudited) 2022 2021 Basic (loss) earnings per share ($1.86) 0.36 Impairment of goodwill 1.54 — Restructuring and other related costs(1) 0.01 0.01 Items included in other expense not cons