Metro Inc. · TSX:MRU
Metro — Investor Day (May 2023)
83 slides from Metro's investor day presentation, May 10, 2023
Slide 1: Investor Day 2023
TITRE INVESTOR DAY 2023 May 10th, 2023
Slide 2: Agenda
AGENDA Eric La Flèche President & Chief Executive Officer François Thibault EVP, Chief Financial Officer & Treasurer Carmen Fortino EVP, National Supply Chain and Procurement Marc Giroux EVP, Chief Operating Officer, Food - BREAK - Alain Tadros VP, Marketing Jean-Michel Coutu President, Pharmacy Div
Slide 3: Forward Looking Information
Forward Looking Information We would like to remind you that we will use in today’s discussion, different statements that could be construed as forward-looking information. In general, any statement which does not constitute a historical fact may be deemed a forward-looking statement. Words or expre
Slide 4: Eric La Flèche, President & CEO
TITRE Eric La Flèche President & Chief Executive Officer
Slide 5: Sales and Net Income growth F2018–F2023
Sales +36% Net Income +67% F2018 – F2023 (LTM)
Slide 6: Market Environment, Strategy, Key Priorities
AGENDA 01 Market Environment 02 Metro’s Strategy 03 Key Priorities
Slide 7: Current Market Environment
Current Market Environment ➢ Customer searching for value in this high inflation environment; ▪ Shift to discount continuing ▪ Private Label penetration up ▪ Promotional intensity back to pre-pandemic levels ➢ Cost pressures persisting across the supply chain, although moderating; ➢ Labour shortages
Slide 8: Consistant Purpose and Pillars
Consistant Purpose and Pillars
Slide 9: Metro's Strategy – How We Compete
METRO’S STRATEGY – HOW WE COMPETE ✓ Best Community Supermarkets ▪ Convenience, Value, Fresh and Health ✓ Best Community Pharmacies ▪ Patient care, Convenience, Value, Health and Beauty ✓ Omnichannel ✓ Decentralized merchandising and store operations ✓ Financial discipline
Slide 10: Key Priorities for F2023
Key Priorities for F2023 ✓ Deliver Food and Pharma business plans ✓ Open new Terrebonne distribution centre ✓ Launch new Quebec multi-banner loyalty program Moi ✓ Accelerate digital transformation to gain efficiencies ✓ Achieve Corporate Responsibility Targets ✓ Opportunistic M&A / Partnerships
Slide 11: Metro's Long-Term Financial Targets
METRO’s Long-Term Financial Targets* 2-4% growth in sales 4-6% growth in operating income 8-10% growth in earnings per share * On an annualized basis
Slide 12: François Thibault, CFO
TITRE François Thibault Executive VP, Chief Financial Officer & Treasurer
Slide 13: Exceeding our long-term targets
Exceeding our long-term targets CAGR 7.1% CAGR 16.2% $1 845 $18 889 $1 733 $17 998 $18 283 $1 684 $16 768 SALES ADJ. EBITDA $ million $ million $1 322 $14 383 $1 011 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 CAGR 12.3% CAGR 12.2% $3.82 $ 922 $3.44 $ 854 ADJ. F.D EPS $3.27 ADJ. NET INCOME $ 8
Slide 14: Adjusted EBITDA Margin Evolution
Adjusted EBITDA Margin Evolution 9.8% 9.9% 9.9% 10.0% 9.7% 9.8% 9.6% 9.7% 9.4% 9.4% 9.2% 9.3% 9.3% 9.3% Q1 Q2 Q3 Q4 2020 2021 2022 2023 14
Slide 15: Capital Allocation
Capital Allocation From a strong generation of cash flows, capital is allocated: 1. Capital expenditures 2. Dividends 3. Share buybacks → Targeting a financial leverage of 3x total Debt / EBITDA 15
Slide 16: Cash Flow Generation
Cash Flow Generation $1,269.4 $1,164.5 $1,147.9 $750.4 $678.0 $707.4 $696.0 $687.7 2015 2016 2017 2018 2019 2020 2021 2022 Cash Flow from Operations (in M$) F2019 – Taxes paid on the gain related to the disposal of our investment in ACT for ~ $195M F20-22 – Figures reclassified to remove the impact
Slide 17: Capital Expenditures
Capital Expenditures ➢ Disciplined capital investments / Rigorous governance process ➢ Retail network ➢ Supply chain and logistics ➢ Technology CAPEX (in M$) $ 800 $ 599 $ 621 $ 511 $ 402 $ 331 2018 2019 2020 2021 2022 2023 Projection 17
Slide 18: Dividend Policy
Dividend Policy Payout ratio between 30% to 40% of the previous year’s adjusted net earnings $1.10 $1.00 metro 27 +19% $0.80 $0.90 is committed to consecutive steadily grow its CAGR $0.72 years of growth dividend. $0.65 $0.56 $0.47 $0.40 $0.33 $0.29 $0.26 $0.23 $0.18 $0.15 $0.17 $0.13 $0.14 $0.11 $0
Slide 19: Cash Flow Generation
Cash Flow Generation $1,269.4 $1,164.5 $1,147.9 $750.4 $678.0 $707.4 $696.0 $687.7 $433.1 $430.0 $307.0 $267.0 $268.2 $268.9 $184.0 $92.5 2015 2016 2017 2018 2019 2020 2021 2022 Cash Flow from Operations (in M$) FCF net of dividends (in M$) F2019 – Taxes paid on the gain related to the disposal of o
Slide 20: Capital Allocation Over the Past Years
Capital Allocation Over the past 5 years(1) Cash Flow CAPEX Dividend Buybacks Ops. $5.4B $2.4B $1.1B $1.3B 20 (1) F2018-F2022 – excluding the impact of IFRS 16
Slide 21: Debt Profile
Debt Profile Total: $2.6 billion ❖ Investment Grade Blended rate: 4.5% ❖ S&P Credit Rating – BBB; Fixed debt: 88.5% ❖ DBRS Credit Rating – BBB; ❖ $600M unused credit revolver; Maturity Profile $450 $450 $400 $400 $300 $300 $300 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 20
Slide 22: Total Shareholder Return
Total Shareholder Return $90.00 $80.00 $77.00 Price-to-* Earnings $70.00 $60.00 17.3x $50.00 $40.00 Enterprise* $30.00 value-to- $23.08 EBITDA $20.00 $10.00 11.0x $0.00 2013-05-05 2014-05-05 2015-05-05 2016-05-05 2017-05-05 2018-05-05 2019-05-05 2020-05-05 2021-05-05 2022-05-05 2023-05-05 1 year 3 y
Slide 23: 2023 Financial Priorities
2023 Financial Priorities 1. Financial performance of key 2. Steadily improve: 3. Contain operating expenses automation projects Return on Invested Capital / Return on Equity 23
Slide 24: Carmen Fortino, Supply Chain and Procurement
TITRE Carmen Fortino Executive VP, National Supply Chain and Procurement
Slide 25: Agenda
Agenda 1 Global Supply Chain Trends 2023 2 Metro’s Employee Commitment 3 Future Supply Chain Network 4 Ongoing Initiatives 5 Toronto Freezer: 1st Year Major Impacts 6 Sustainability Initiatives
Slide 26: Global Supply Chain Trends 2023
Global Supply Chain Trends 2023 1 Prioritize people and factor our workforce into all our initiatives People 2 Supply chain disruptions highlight the need to focus more on resilience Resilience 3 Labour shortages and rising costs highlight automation as a priority Automation 4 It is important for ou
Slide 27: Metro's Employee Commitment
Metro’s Employee Commitment People • Ontario: Kept the new distribution centers in Etobicoke Retain our labour • Quebec: Built on the nearest available real estate in Terrebonne force • Quebec City: Converting perishable DC to dry grocery to retain the labour Improve the quality • Improved amenities
Slide 28: Future Supply Chain Network Resilience
Future Supply Chain Network Resilience After 2025 60% of the total Metro volume will flow through the modernized distribution centres by 2025 QC EAST: 3 DCs Métivier St-Jean-Port-Joli Newton ON EAST: 3 DCs GMA: 5 DCs Hawkesbury Terrebonne Jardin Bantree Merite 1 Industrial Phoenicia 12 CONVENTIONAL
Slide 29: Ongoing Initiatives Automation
Ongoing Initiatives Automation 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 CALENDAR YEAR Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Approved Projects
Slide 30: Toronto Freezer: Value Creation
Toronto Freezer: Value Creation Other Benefits Major Benefits Higher availability and 1 LABOUR SAVINGS freshness 2 Direct Store Delivery (DSD) CONVERSIONS 3 INBOUND SAVINGS Resilient Supply Chain, 4 STORE PROFIT less dependent on labour 5 SALES UPLIFT 6 CAPITAL INVESTMENT Fewer trucks on the road 7
Slide 31: ESG Initiatives Sustainability
ESG Initiatives Sustainability • Vehicles: Metro QC shunt trucks will be electric, upcoming tractor trailer Electric Vehicles and project pilot with our transportation providers Infrastructure • Infrastructure: Electric vehicle chargers installed at all new DCs and electrical outlets for refrigerate
Slide 32: Food – Marc Giroux
Metro Inc. FOOD Marc Giroux EVP, Chief Operating Officer – Food
Slide 33: Agenda
Agenda 1 WHO 2 3 MARKET HOW WE ARE POSITION WE WIN
Slide 34: Our customer promises
Our 5 customer promises It’s easy Great quality Competitive to shop fresh products prices Customers get what they The people want are great Everything starts and ends with the customer
Slide 35: Metro food leadership team
Metro food leadership team Joe Fusco Richard Pruneau Éric Provost SVP, Metro Ontario SVP, Metro Quebec VP, General Manager, Adonis Metro since 2009 Metro since 2012 Metro since 2015 Paul Bravi Loïc Cloutier Christina Bédard SVP, Food Basics SVP, Super C VP, eCommerce & Digital Metro since 1999 Metro
Slide 36: Right store in the right market
Right store in the right market Multiple store formats: ▪ Supermarkets ▪ Discount ▪ Neighbourhood ▪ Specialty eCommerce: ▪ Flexible operating platform
Slide 37: Network over time
Network over time QUEBEC ONTARIO 4 10 11 1 2 6 +5 +3 85 97 102 116 131 142 +17 +26 211 199 197 -14 147 134 130 -17 2013 2018 Q2 2023 2013 2018 Q2 2023 ~$2.0 Billion of store capital in QC and ON over 10 years Vast majority of network represents our standard model
Slide 38: Our network Q2 F2023
Our network Q2 F2023 Supermarkets 342 Discount stores 244 Neighbourhood stores 370 Specialty stores 25 TOTAL 981
Slide 39: Well positioned for growth
Well positioned for growth ▪ Market share opportunity in growing Ontario market ▪ Well positioned discount banners with competitive price position ▪ Invest in conventional stores, with differentiated fresh & health offering ▪ Leverage modernized supply chain to deliver improved customer experience a
Slide 40: How we win
How we win Our people Our fresh food Our brands differentiated customer offering, community portfolio with experience, 65,000 grocery store tailored differentiated taste engaged food colleagues to the communities and value we serve Health Improving Customer-centric improved assortment, efficiency an
Slide 41: People
People Employee Engagement ▪ Leadership development program (LEAD) ▪ Competitive wages and working conditions ▪ Flexible work schedule for part-time employees ▪ Commitment to student employees’ academic achievement ▪ Investments to ensure our employees’ physical and mental health, safety, and equity
Slide 42: Fresh food
Fresh food Great Quality ▪ Local suppliers ▪ Direct international sourcing ▪ Ready to eat, to heat, to cook Modernized fresh & frozen DCs in Quebec and Ontario Quality, value, and convenience Store tools improving just-in-time inventory, in-stock, freshness, and efficiency
Slide 43: Our brands
Our brands 6,600+ products Sales are up 32% since 2020 Sales penetration #2 in Canada
Slide 44: Health
Health Improved assortment in-store and online ▪ Private Label innovation Store-within-a-store partnership with "Nature Signature" and "Le Naturiste" Helping customers make better choices: My Health, My Choices tool MOI cross banner loyalty in Quebec
Slide 45: Improving efficiency and productivity
Improving efficiency and productivity Front-end efficiency (~70% of stores) ▪ Self-Checkout Electronic shelf label (~50% of stores) AI-powered fresh and grocery forecasting and replenishment AI-powered scheduling management Investing in DC automation
Slide 46: Bricks / online seamless experience
Bricks / online I get the products that I want, when & where I want, seamless experience with the same great freshness and value. In-Store Pickup F23 TO COME Market coverage 90%+ Omni Channel All Banners Click & collect locations 250+ ~80 Delivery hubs 20+ ~ 3- 5 Personalisation Partnerships for Nex
Slide 47: Data-driven unified commerce
Data-driven unified commerce A customer-centric approach since 2009 with continued evolution in our approach to market Customer & market data informs all our actions Loyalty Retail Vendor & Shopper Merchandising Activation Media Collaboration Best-in-class Advanced analytics Insight-driven personali
Slide 48: Our customer promises
Our 5 customer promises It’s easy Great quality Competitive to shop fresh products prices Customers get what they The people want are great Everything starts and ends with the customer
Slide 49: Thank you
food ‘&)\(JeanCoutu) <> Brunet Ea rt pharmacy) 4 pharmacy — & metro metro [toad Basis | Richelieu ADONIS
Slide 50: Loyalty – Alain Tadros
Metro Inc. LOYALTY Alain Tadros Vice President Marketing
Slide 51: We have leading & trusted brands in Quebec
We have leading & trusted brands in Quebec #1 #1 #1 in customer of the most admired for the best quality experience among companies in the & price in fresh Quebec conventional Quebec retail sector 2 among Quebec food food banners 1 banners 3 Sources: 1: Léger, WOW study on store experience, 13th Edi
Slide 52: Our loyalty vision
Our loyalty vision Pharma An ecosystem that connects all touch points and delivers a more relevant & personalised Consumer v In Store eCom experience to drive more customer loyalty. Food
Slide 53: Capitalising on the success of metro&moi
Capitalising on the success of metro&moi and extend across Quebec 1 Update the tech foundations & unify across banners Accelerate digital adoption 2 & create deeper connections 3 Extend Health & Wellness Community into Loyalty
Slide 54: In 5 banners, 900 stores
+ 1.2 million active members In 5 banners + 50% and close to of Quebec households 900 stores in late Spring 2023 Among the 10 best loyality programs in Canada 1 Source: Léger & R3, LoyalT, study on loyalty programs performance, 2021 Edition
Slide 55: Better positioned than ever to leverage our strengths in Quebec
We are better positioned than ever to leverage our strengths in Quebec #1 grocery & 97% of Quebec Over 5M More than 60% pharmacy households have transactions cross-shop in our store network visited one of per week2 store network 3 in Quebec 1 our stores in the past year 1 Sources: 1- NielsenIQ, Home
Slide 56: Become the most popular loyalty coalition
Our ambition Become the most popular loyalty coalition in Quebec
Slide 57: Owning the customer relationship maximizes value
Owning the customer relationship maximizes value 30M+ 17% monthly digital more monthly reach spend via our platforms1 customers we reach by email2 Sources: 1- P6FY2023 Québec Digital & Personalized Communications Dashboard 2- P7FY2023 Digital Engagement Segment Dashboard - dunnhumby & CI reporting
Slide 58: Digitally engaged members spend more
Digitally engaged members spend more 47% 72% digitally engaged more monthly loyalty members 1 spend digital vs non-digital members1 3x more yearly spend on an Omnichannel customer1 +90% retention rate Sources: 1- P7FY2023 Digital Engagement Segment Dashboard - dunnhumby & CI reporting
Slide 59: Bigger, more personalized and more generous
Bigger, more personalized and more generous 1 Base points * 100% points redeemed in-store 2 Bonus points ▪ Personalized offers with a score-based predictive model ▪ Mass offers including on-shelf and flyer points ▪ Bonus offers – Coalition and banner level 3 Additional points ▪ RBC and other partner
Slide 60: Moi-RBC multi-year strategic partnership
Moi-RBC multi-year strategic partnership Two leading Canadian brands come together to accelerate Moi reach & earning power 1 Overview Annual Fee $0 Welcome Offer 4,000 moi points ($32)* Purchase Protection, Extended Warranty Insurance & Mobile Device Insurance 2 Earn Rates In-store purchases 2 pts /
Slide 61: Thank you
THANK YOU.
Slide 62: Pharmacy – Jean-Michel Coutu
Metro Inc. PHARMACY Jean-Michel Coutu President, Pharmacy Division
Slide 63: Well-positioned in a growing market
WELL-POSITIONED IN A GROWING MARKET Demographic shifts driving Quebec government more than greater need for pharmacy ever recognizes the value services of pharmacists 24% of Canadians 15 new professional activities including prescribing will be 65+ by 2036* for many minor ailments* Patients are bene
Slide 64: One division, two strong banners
ONE DIVISION, TWO STRONG BANNERS More than 680 2nd largest store • Average of 9,800 sq. ft. • Average of 6,800 sq. ft. engaged footprint in New • Most admired pharmacy • Oldest pharmacy banner pharmacists owners Brunswick* banner in Quebec in Quebec Leading provider Over of prescriptions 23,000 empl
Slide 65: One division, two strong banners: leveraging unique positions
ONE DIVISION, TWO STRONG BANNERS Maximize market share by leveraging our banners’ unique position Common operational The pharmacy destination platform The community pharmacy for everyday essentials and with a personalized more, at competitive prices approach Leverage corporate strengths, processes,
Slide 66: Common operational platform
COMMON OPERATIONAL PLATFORM Rolled out common POS Transferred distribution volume Evolved operating and pharmacy systems to Varennes/Hawkesbury structure
Slide 67: Leveraging corporate strengths
LEVERAGING CORPORATE STRENGTHS Improved private Centralized procurement Deploying new loyalty platform label offering
Slide 68: One division, one common vision
ONE DIVISION, ONE COMMON VISION Our vision Our 2020-2025 Strategic Plan is making this a Be the health and wellness destination in the reality by: communities we serve Elevating the pharmacy experience and Front-End 1 increasing capacity for new services Putting digital at the center of all Health &
Slide 69: Elevating the patient experience
ELEVATING THE PATIENT EXPERIENCE Our key initiative to elevate patient- centered care by... Creating a seamless pharmacy 1 omnichannel patient experience Increasing and improving in-store 2 execution through centralization and reingeneering workflows
Slide 70: Online prescription refills up 240%
ELEVATING THE PATIENT EXPERIENCE Example of an integrated digital patient journey Rapid pickup Online payment Online consulting Delivery Mobile app Online prescription refills up 240% over the last 5 years And soon...Smart lockers
Slide 71: Increasing in-store capacity and digital tools
ELEVATING THE PATIENT EXPERIENCE Increasing in-store capacity and digital tools Accelerating centralization Enabling patients to Creating flexible capacity of compliance packaging complete online via telework and workflow review health assessments
Slide 72: Accelerating our digital offering
ACCELERATING OUR DIGITAL OFFERING We are focused on creating an engaging and convenient digital experience by… • Integrating the Rx and front-store transactional experience • Developing interactive tools to help consumers manage health objectives • Creating beauty-focused digital capabilities Added
Slide 73: Investing in the store experience
INVESTING IN THE STORE EXPERIENCE Piloting new store design in the Fall Highlights: • Increased cosmetics and beauty square footage • Improved cosmetics and beauty accessibility • Better use of seasonal section to create ambiance and excitement • More flexible front of store space to locally adapt o
Slide 74: Anchoring our health and wellness position
ANCHORING OUR H&W POSITION Building on an already strong health and ...to be the trusted health and wellness wellness position... destination in the communities we serve • Pharmacists delivered more than 2.6 M documented professional acts • 1.3 M vaccines over the past 3 years • Number of patients u
Slide 75: ESG Management – 2022-2026 Corporate Responsibility Plan
ESG Management 2022-2026 Corporate Responsibility Plan Marie-Claude Bacon Vice President, Public Affairs and Communications
Slide 76: Corporate Responsibility Approach
Corporate Responsibility Approach A structured approach for over 13 2010 2013 2017 2021 2022 years! ✓ 1st CR Roadmap ✓ Local Purchasing ✓ Responsible Procurement ✓ Animal Welfare ✓ 12th CR report ✓ Sustainable fisheries and Policy Framework Statement ✓ 15th CDP Climate Change aquaculture policy ✓ Su
Slide 77: Our 2022-2026 Corporate Responsibility Plan At A Glance
Our 2022-2026 Corporate Responsibility Plan At A Glance
Slide 78: Climate Change
Climate Change Our objective : GHG reduction of 37.5% by 2035 compared to 2020 emissions in scope 1, 2 and specific Scope 3 activities
Slide 79: Climate Change
Climate Change SBTi Business Case • METRO is evaluating the feasibility and costs of achieving the Science Based Targets net zero goals. TCFD Supporter • In 2022, METRO became supporter of the Task Force on Climate-related Financial Disclosures (TCFD).
Slide 80: Responsible Procurement
Responsible Procurement Working conditions Cage-free eggs Sustainable fisheries and aquaculture PRODUCT APPROACH Organic products Search for specific attributes Deforestation SUPPLIER APPROACH Expected behaviors Responsible cosmetics Animal welfare Ethnic communities Genetically modified foods
Slide 81: Responsible Procurement: Supplier Code of Conduct
Responsible Procurement Supplier Code of Conduct for Responsible Procurement 01 02 03 04 Business Ethics Respect for Environmental Respect for Workers protection animal health and welfare
Slide 82: Building stronger communities with you
Corporate Responsability Building stronger communities with you
Slide 83: Thank you
food ‘&)\(JeanCoutu) <> Brunet Ea rt pharmacy) 4 pharmacy — & metro metro [toad Basis | Richelieu ADONIS