Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q2 2022 Earnings Presentation
20 slides from Maple Leaf Foods's earnings presentation, Aug 4, 2022
Slide 1: Creating Long-term Value in an Unpredictable Environment
Creating Long-term Value in an Unpredictable Environment All dollar amounts are presented in Q2 2022 Business & Financial Review 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: The Maple Leaf Foods Blueprint
The Maple Leaf Foods Blueprint 3 MAPLE LEAF FOODS – Q2 2022 BUSINESS AND FINANCIAL REVIEW | August 4, 2022
Slide 4: Long-term value creation for all stakeholders driven by our Maple Leaf Blueprint
Long-term value creation for all stakeholders driven by our Maple Leaf Blueprint To activate our Blueprint, our value creation levers include… ✓ Advancing our sustainability agenda, including our food, climate leadership, animal welfare and community building ✓ Continuing to invest in our portfolio
Slide 5: Our Blueprint is consistently delivering top and bottom-line growth
Our Blueprint is consistently delivering top and bottom-line growth Maple Leaf Total Annual Sales Meat Protein Adjusted EBITDA ($ millions) ($ millions and margin %) 2 2 2 • Driven by growth strategies in brand renovation, • Benefits of profitable growth strategies and operational sustainable meats
Slide 6: 2022: A year of unpredictable abnormalities in a post-pandemic economy
2022: A year of unpredictable abnormalities in a post-pandemic economy Challenges: People, Pork and Pricing People Pork Pricing • From absenteeism problem to • Disrupted global markets with • Inflation beyond what Transitory vacancy problem: supply high feed costs and weak pork expected in Q2 chain
Slide 7: Post pandemic economy and disruption from the Russia/Ukraine conflict contributing to pork market conditions
Post pandemic economy and disruption from the Russia/Ukraine conflict contributing to pork market conditions well behind 5yr average Hog Production Margins Pork Processor Margins Pork By-Product Markets 5yr avg. 5-yr avg. Hog production margins = live hog cost (CME) less Hog Raising Index Pork proce
Slide 8: Meat Protein business remains structurally "on target" and we are executing our plans
Meat Protein business remains structurally “on target” and we are executing our plans Investing in our Growing Broadening our reach Operational Leading Brands Sustainable Meats into new geographies Excellence ✓ 13 consecutive quarters ✓ Sustainable Meats, now ✓ 7th consecutive quarter ✓ Continued ra
Slide 9: What these conditions mean for our target of 14-16% Adjusted EBITDA Margin
What these conditions mean for our target of 14-16% Adjusted EBITDA Margin • Our commitment was to achieve the 14-16% target in normal (5-year average) market conditions • The current operating and agricultural market conditions are not normal • We remain confident that we will achieve our targets a
Slide 10: Meat Protein – Q2 2022 financial results
Meat Protein – Q2 2022 financial results Q2 2022 vs. LY Drivers • Pricing action implemented in prior quarters to mitigate inflation Sales $1,160.2 +3.8% and structural cost increases, and favourable mix-shift • Partially offset by lower volumes Gross Profit $136.0 -18.6% • Pork market headwinds, co
Slide 11: Meat Protein capital projects to deliver $130 million in Adjusted EBITDA once fully ramped
Meat Protein capital projects to deliver $130 million in Adjusted EBITDA once fully ramped up by end of 2023 Bacon Centre of Excellence London Poultry Facility Strategic Rationale Strategic Rationale • Captures growing demand for pre-cooked bacon, improves • Increases processing capacity for value-a
Slide 12: Our pivot in Plant Protein is in full motion, with a clear pathway to Adjusted EBITDA neutral
Our pivot in Plant Protein is in full motion, with a clear pathway to Adjusted EBITDA neutral in back half of 2023 • SG&A to be less than US$50 million • Half spent for brand development activities and the remainder on back- office support Our revised playbook at 2021 • Targeting 30% gross margin th
Slide 13: Q2 2022 - Significant SG&A actions in Plant Protein take us halfway to our Adjusted EBITDA target
Q2 2022 - Significant SG&A actions in Plant Protein take us halfway to our Adjusted EBITDA target Actions Completed Planned Adj. EBITDA Progression • Aggressively scaled back SG&A including Ad & Promo • Initiated supply chain optimization, including Neutral some right-sizing at legacy facilities or
Slide 14: Plant Protein – Q2 2022 financial results
Plant Protein – Q2 2022 financial results Q2 2022 vs. LY Drivers • Lower retail volumes more than offsetting pricing action Sales $40.8 (18.4%) implemented to mitigate inflation and structural cost (ex-FX, in USD) increases Gross Profit ($10.1) ($10.4) • Inflationary costs and lower capacity utiliza
Slide 15: Plant Protein capital investments focused on Tempeh, a high-growth, high margin category
Plant Protein capital investments focused on Tempeh, a high- growth, high margin category Indianapolis Tempeh Facility Strategic Rationale • Cost effective and scalable approach to meet burgeoning consumer demand for high-growth, high-margin tempeh products • Additional space for future growth oppor
Slide 16: Total Company – Q2 2022 key financial metrics
Total Company – Q2 2022 key financial metrics Q2 2022 vs. LY Drivers Sales $1,195.1 +3.1% • Growth in Meat, partially offset by lower sales in Plant Adj. Operating Earnings $23.6 (59.5%) Adj. EBITDA $74.1 (29.9%) • Challenging operating environment due to pork market headwinds, inflation, and labour
Slide 17: Long-term Outlook focused on profitable growth
Long-term Outlook focused on profitable growth Mid-to-high single digit sales growth in 2022, driven by continued momentum in sustainable meats, leveraging brand leadership, and growth into the U.S. market. Meat Protein Adjusted EBITDA expansion to 14%-16% target range once markets normalize, driven
Slide 18: Appendix
18 Appendix _ BECAUSE ANTIBIOTICS ARE | Tt S TIME FOR BETTER. ‘fh FOR MEAT THAT TASTES THEWAY IT SHOULD LIKE MEAT. | ~ MADE FROM ANIMALS THAT ARE RASED, NOT PRODUCED ITS TIME FOR MORE FARM AND LESS PHARM, OR THE SICK, NOT THE HUNGRY. ITS TIME TO LET; NATURE boITS THING: IT’S TIME FOR BETTER MEAT FOR
Slide 19: Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin
Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin Three months ended June 30, 2022 Three months ended June 30, 2021 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (loss) befo
Slide 20: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share Three months ended June 30, ($ per share) (Unaudited) 2022 2021 Basic earnings per share ($0.44) 0.07 Restructuring and other related costs(1) 0.13 0.01 Items included in other expense (income) not ___ 0.02 considered representative of