Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q4 2020 Earnings Presentation
29 slides from Maple Leaf Foods's earnings presentation, February 2021
Slide 1: Q4 2020 Business & Financial Review
Maple Leaf Foods Q4 2020 Business All dollar amounts are presented in CAD dollars unless otherwise noted. & Financial Review
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: Built for Growth
Built for Growth 3
Slide 4: En Route to Becoming the Most Sustainable Protein Company on Earth
Enroute to Becoming the Most Sustainable Protein Company on Earth 13,500 employees Total Sales $4,304 million Meat Protein Group Plant Protein Group 31 manufacturing facilities* 2020 Adj. 2020 prepared meats, fresh pork, fresh poultry and plant protein 12.4% EBITDA Margin 19.5% Sales Growth 4M hogs
Slide 5: Blueprint for our Purpose and Vision
Blueprint for our Purpose and Vision 55 MAPLE LEAF FOODS – Q4 2020 BUSINESS AND FINANCIAL REVIEW | FEBRUARY 25, 2021
Slide 6: We Built a Profitable Base; Now We're Focused on Profitable Growth
We Built a Profitable Base; Now We’re Focused on Profitable Growth 2010 Transformation 2014 2015 Brand-led Growth Today Exited non-core businesses Expanding sustainable meats platform Rothsay (2013) Olivieri (2013) Canada Bread (2014) Renovated core brands Transformed our supply chain
Slide 7: Well-defined Strategies and the Leading Brands to Support Them
Well-defined Strategies and the Leading Brands to Support Them Two businesses, with two distinct strategies Meat Protein Group Plant Protein Group Strategy: Drive profitable growth Strategy: Invest for growth Our Brands Adjusted EBITDA Dollars & Margin Sales (in millions; margin as % of sales) (in m
Slide 8: Built for Growth: 20% of Portfolio now Growing at 3-yr CAGR >25%
Built for Growth: 20% of Portfolio now Growing at 3-yr CAGR* >25% Percentage of Total Company Sales in Sustainable Meats and Plant-based Protein ~10% ~20% 2020 High growth 2017 $3.5B Steady growth $4.3B Unprecedented repositioning of portfolio towards two high-growth categories, now generating a com
Slide 9: Maple Leaf Continues to Deliver Compelling Growth
Maple Leaf Continues to Deliver Compelling Growth Average Sales Growth, Last 12 Months excluding acquisitions/divestments 1 Meat Protein Growth Vectors: Building leadership in sustainable meats Rapidly growing U.S. market reach >1.5x Fueling growth through brand renovation Constructing new s
Slide 10: Q4 2020 Results
MAPLE LEAF v? = =) rm ® % =) ql =) q st O
Slide 11: Key Highlights from Q4 2020
Key Highlights from Q4 2020 • Exhibited supply chain resilience & safety through second wave of COVID-19 Ensured the health and safety of our team members through adherence to our COVID-19 playbook All facilities remained fully operational, despite rising community transmission • Executed our st
Slide 12: Meat Protein Group – Q4 2020 Strategic & Operational Highlights
Meat Protein Group – Q4 2020 Strategic & Operational Highlights Drive Profitable Growth by… Q4 2020 Highlights • Double-digit growth and market share expansion Investing in our brands across renovated Maple Leaf & Schneiders brands1 to build demand & loyalty • Continued double-digit growth within
Slide 13: Meat Protein Group – Q4 2020 Key Financial Metrics
Meat Protein Group – Q4 2020 Key Financial Metrics Q4 2020 vs. LY Drivers • Favourable mix-shift towards sustainable meats and Sales $1,080.3 11.3% branded products, as well as annual pricing action • Extra week in Q4 2020 also contributed Gross Profit $185.7 +23.4% • Favourable product and channel
Slide 14: Meat Protein Group – Putting the Q4 Pork Complex in Context
Meat Protein Group – Putting the Q4 Pork Complex in Context Hog Production Margins Pork Processor Margins Pork By-Product Markets $20 $55 $8.0 $7.0 $10 $40 US/CWT $6.0 US/CWT US/CWT $0 $25 5-yr avg. $5.0 $4.0 5-yr avg. -$10 $10 $3.0 -$20 Q1 Q2 Q3 Q4 -$5 Q1 Q2 Q3 Q4 $2.0 Q1 Q2 Q3 Q4 Hog production ma
Slide 15: Plant Protein Group – Q4 2020 Strategic & Operational Highlights
Plant Protein Group – Q4 2020 Strategic & Operational Highlights Invest for Growth by… Q4 2020 Highlights • Disappointing performance (+5.5%) trailing full year growth (+19.5%), influenced by three components Entrenching prominent market share position Strong, continued momentum in core retail b
Slide 16: Three components of Greenleaf performance in Q4
Three components of Greenleaf performance in Q4 Strong momentum in core branded retail products Foodservice activity impacted by COVID-19 Soft demand for fresh meat department items • Consists of 40+ Lightlife & Field Roast • Second wave of COVID-19 hindered • Consists of Lightlife burgers, gr
Slide 17: Building a Foundation for Long-Term Sustained Growth
Building a Foundation for Long-Term Sustained Growth Renovating and Amplifying our Brands Accelerating Product Innovation Pipeline > > Lightlife Lightlife Buffalo Tempeh Field Roast Classic Nuggets Burger 2.0 Q1 2020 Q2 2020 Q1 2020 5 new forms of Lightlife & Field Roast Chao Cheese Breakfast Pattie
Slide 18: Plant Protein Group – Q4 2020 Key Financial Metrics
Plant Protein Group – Q4 2020 Key Financial Metrics Q4 2020 vs. LY Drivers • Impact of extra week in Q4 2020 and annual pricing action Sales $52.5 5.5% • Strong growth in core product line partially offset by softer (+6.7% ex-FX) demand in fresh line and foodservice activity Gross Profit $0.3 (96.3%
Slide 19: Total Company – Q4 2020 Key Financial Metrics
Total Company – Q4 2020 Key Financial Metrics Q4 2020 vs. LY Drivers • Solid growth in both Meat and Plant Protein Groups Sales $1,129.2 +11.1% • Extra week in Q4 2020 also contributed Adj. Operating Earnings $59.2 +108.9% Adj. EBITDA $109.1 +44.9% • Continued structural margin expansion in Meat Pro
Slide 20: Update on Key Large-Scale Capital Projects
Update on Key Large-Scale Capital Projects London Poultry Facility Indianapolis Tempeh Facility • Increases processing capacity for value- • Cost effective and scalable approach to meet Strategic added, higher margin poultry products Strategic burgeoning consumer demand for high- Rationale • Gains o
Slide 21: Q4 COVID-19 Cost Headwinds Materialized as Expected
Q4 COVID-19 Cost Headwinds Materialized as Expected Discretionary Gross Costs Net Impact Spend Reductions • Tied to PPE, sanitation, • Reduced spending in travel, screening & testing training and conferences, A&P • Largely reflected in COGS • Reflected in SG&A Q4 2020 Impact $15 million $2 million $
Slide 22: 2021 & Long-Term Outlook
2021 & Long-Term Outlook 22
Slide 23: Uncertainty Related to COVID-19 Expected to Continue into 2021
Uncertainty Related to COVID-19 Expected to Continue into 2021 Unknown Factors for 2021: Volatility in pork & Balance between Potential production Duration of gov’t poultry commodity retail and foodservice disruptions or measures, including and foreign exchange demand shutdowns social distancing mar
Slide 24: 2021 Financial Priorities – Progress Towards Long-Term Targets
2021 Financial Priorities – Progress Towards Long-Term Targets Mid-to-high single digit sales growth on a 52-week comparable basis, driven by continued momentum in Meat sustainable meats, leveraging brand renovation and growth into the U.S. market. Protein Adj. EBITDA margin expansion, progressing t
Slide 25: Reconfirming our Long-Term Outlook
Reconfirming our Long-Term Outlook 2022 Adjusted EBITDA margin target of 14-16%, driven by: Meat Protein • Growth in sustainable meats • Mix-shift benefits from our brand and food renovation work Group • Cost and operational efficiencies Plant 2029 ambitious goals for high-growth business: Protein •
Slide 26: Appendix
MAPLE LEAF Appendix i IPS TIME OR BETTER, v \' ||) FOR MEAT THAT TASTES THE WAY IT SHOULD LIKE MEAT. ~ MADE FROM ANIMALS THAT ARE RAISED, NOT PRODUCED, _ ITSTIME FOR MORE FAIRINN AND LESS PHARM, BECAUSE ANTIBIOTICS ARE FOR THE SIOK, NOT THE HUNGRY, ITS TIME TO LETNATURE DoITs THING: IT’S TIME FOR BE
Slide 27: Reconciliation of Non-IFRS Metrics – Adjusted EBITDA Margin
Reconciliation of Non-IFRS Metrics – Adjusted EBITDA Margin Three months ended December 31, 2020 Three months ended December 31, 2019 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (lo
Slide 28: Reconciliation of Non-IFRS Metrics – Adjusted Earnings per Share
Reconciliation of Non-IFRS Metrics – Adjusted Earnings per Share Three months ended December 31, ($ per share) (Unaudited) 2020 2019 Basic earnings per share $0.20 0.14 Restructuring and other related costs(1) 0.01 0.03 Items included in other expense (income) not 0.06 (0.03) considered representati
Slide 29: Capital Allocation Priorities
Capital Allocation Priorities Growth capacity and efficiency initiatives 1 Reinvest in the Business with a focus on returns metrics & timing Capitalize on inorganic opportunities 2 Accretive Acquisitions with financial and strategic appeal 3 Dividend Appreciation Deliver consistent predictable growt