Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q1 2020 Earnings Presentation
29 slides from Maple Leaf Foods's earnings presentation, Apr 1, 2020
Slide 1: Maple Leaf Foods Q1 2020 Business & Financial Review
Maple Leaf Foods Q1 2020 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: Our COVID-19 Response
Protect the Health & Safety of our People Our COVID-19 Ensure Business Response Continuity Social Purpose 3
Slide 4: Took Swift Action to Protect and Support our People
Took Swift Action to Protect and Support our People 1. Applied COVID-19 screening tools at all locations 2. Implemented work-from-home where possible and eliminated in-person meetings unless absolutely necessary 3. Prohibited business travel and imposed self isolation conditions on Team Members who
Slide 5: As an Essential Service, Business Continuity is Imperative
As an Essential Service, Business Continuity is Imperative • Government has designated our food system an essential service, and “critical infrastructure” • We developed and adhere to a comprehensive COVID-19 playbook, with key stakeholder input Business Continuity • To-date, seven of our facilities
Slide 6: Expanding our Community Support Efforts
Expanding our Community Support Efforts • Launched #ApartTogether $2 million campaign to support emergency food relief $1 million commitment from Maple Leaf, with funds supporting Community Food Centres of Canada and Food Banks Canada Re-directed media spend to promote campaign on TV, Facebook a
Slide 7: Our Strategy
Our Strategy 7
Slide 8: Continuing to Execute our Strategic Blueprint
Continuing to Execute our Strategic Blueprint 88 MAPLE LEAF FOODS – Q1 2020 BUSINESS AND FINANCIAL REVIEW | APRIL 29, 2020
Slide 9: 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 10: Maple Leaf's Growth Vectors Have Delivered Compelling Results
Maple Leaf’s Growth Vectors Have Delivered Compelling Results 1 Meat Protein Growth Vectors: 3-year Average Sales Growth excluding acquisitions/divestments Building leadership in sustainable meats Rapidly growing U.S. market reach Fueling growth through brand renovation Constructing new scal
Slide 11: 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 12: Q1 2020 Results
MAPLE LEAF Q1 2020 Results
Slide 13: Progress on Strategic, Financial & Operational Priorities in Q1 2020
Progress on Strategic, Financial & Operational Priorities in Q1 2020 Strategic Financial Operational Maple Leaf Increased quarterly dividend Foods Delivered on shared value through supporting emergency 10% commencing Q1/20 Mitigated COVID-19 supply disruptions through quick Becoming the most susta
Slide 14: Meat Protein Group – Q1 2020 Key Financial Metrics
Meat Protein Group – Q1 2020 Key Financial Metrics Q1 2020 Change Drivers • Strong retail channel volumes, increased sales to Asian Sales $981.4 12.7% markets and favourable mix towards sustainable meats • COVID-19 impact slightly accretive Gross Profit $157.3 +19.3% • Mix-shift towards sustainable
Slide 15: Meat Protein Group – Q1 Pork Complex Broadly in-line with 5-yr Avg.
Meat Protein Group – Q1 Pork Complex Broadly in-line with 5-yr Avg. Hog Production Margins Pork Processor Margins Pork By-Product Market $20 $30 $6.5 $6.0 $10 $20 US/CWT $5.5 US/CWT US/CWT $0 $10 $5.0 $4.5 -$10 $0 $4.0 -$20 Q1 Q2 Q3 Q4 -$10 Q1 Q2 Q3 Q4 $3.5 Q1 Q2 Q3 Q4 Hog production margins = live
Slide 16: Plant Protein Group – Q1 2020 Key Financial Metrics
Plant Protein Group – Q1 2020 Key Financial Metrics Q1 2020 Change Drivers • Expanded distribution of recent product innovations Sales $46.3 25.9% (raw burgers, sausages and grounds) • Continued volume growth in legacy portfolio Gross Profit $6.8 -20.5% • Increased trade and promotional expenditures
Slide 17: Greenleaf Continues to Command a Strong #2 Position
Greenleaf Continues to Command a Strong #2 Position • U.S. refrigerated market +111% y/y Market growth • Canadian market +32% y/y remains high1 • Growth lead by products in fresh meat case • Maintaining solid #2 market share position1 • Innovation velocities accelerating: +32% in U.S. and Greenleaf
Slide 18: Plant Protein Group – Gross Margin and SG&A Expense Evolution
Plant Protein Group – Gross Margin and SG&A Expense Evolution Gross Margin SG&A Expenses Product margins remain near 30%* Sequential decline in spend due to timing $44.9M $45.3M (95% of sales) (91% of sales) 7.6% Short 12.8% 13.2% term $30.1M inefficiencies (67% of sales) Ad & promo: Ad & 21.3% prom
Slide 19: Total Company – Q1 2020 Key Financial Metrics
Total Company – Q1 2020 Key Financial Metrics Q1 2020 Change Drivers Sales $1,022.8 +12.8% • Double-digit growth in both Meat & Plant Protein Adj. Operating Earnings $45.1 +7.3% Adj. EBITDA $90.5 +7.2% • Strong underlying margins in Meat Protein • Impacted by strategic investment in Plant Protein Ad
Slide 20: Update on Key Large-Scale Capital Projects
Update on Key Large-Scale Capital Projects London Poultry Facility Shelbyville Plant Protein Facility • Increases processing capacity for value- • Increases production capacity to meet Strategic added, higher margin poultry products Strategic growing demand with low cost Rationale • Gains operating
Slide 21: 2020 & Long Term Outlook
2020 & Long Term Outlook 21
Slide 22: COVID-19 Introduces Incremental Costs & Uncertainty
COVID-19 Introduces Incremental Costs & Uncertainty Known Factors for Q2: Unknown Factors for Q2 & FY2020: o Strong demand in retail channel and lower o Volatility in pork & poultry commodity and sales in foodservice FX markets (+/-) o Strong pork demand from Asian markets o Retail & foodservice dem
Slide 23: 2020 Financial Priorities Remain Largely Unchanged
2020 Financial Priorities Remain Largely Unchanged Notwithstanding the potential unknown impacts of COVID-19, we expect to achieve: Meat Protein Group Plant Protein Group Total Company 1. Mid-to-high single digit sales 1. Sales growth of approximately 1. Capital expenditure at least $50M growth, dri
Slide 24: 2020 Strategic & Operational Priorities
2020 Strategic & Operational Priorities Company Wide Leverage our Carbon Neutral commitment with our brands Maintain a strong balance sheet with ample liquidity Magnify our contribution to the war effort during COVID-19 crisis Meat Protein Group Grow sustainable meats, including continued mo
Slide 25: Long Term Outlook – Focused on Material Value Creation
Long Term Outlook – Focused on Material Value Creation 2022 Adjusted EBITDA margin target of 14-16%, driven by: Meat Protein • Growth in sustainable meats • Mix-shift benefits from our brand and food renovation work Group • Cost and operational efficiencies 2029 ambitious goals for high-growth busin
Slide 26: Appendix
MAPLE LEAF Appendix iA —TTSTIME FOR BETTER iil FOR MEAT THAT TASTES THE WAY IT SHOULD LIKE MEAT, | _ MADE FROM ANIMALS THATHRE RAISED, NOT PRODUCED, IT'S TIME FOR MORE FARIM AND LESS PHARM, _ BECAUSE ANTIBIOTICS ARE FOR THE SICK, NOT THE HUNGRY. IT'S TIMETO LETNATURE DOTS THING) IT’S TIME FOR BETTER
Slide 27: Reconciliation of Non-IFRS Metrics – Adjusted EBITDA Margin
Reconciliation of Non-IFRS Metrics – Adjusted EBITDA Margin Three months ended March 31, 2020 Three months ended March 31, 2019(2) Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(3) Total Group Group allocated(3) Total Earnings (loss)
Slide 28: Reconciliation of Non-IFRS Metrics – Adjusted Earnings per Share
Reconciliation of Non-IFRS Metrics – Adjusted Earnings per Share Three months ended March 31, ($ per share) (Unaudited) 2020 2019 Basic earnings per share $(0.03) $0.41 Restructuring and other related costs(1) — 0.02 Items included in other expense not considered 0.02 0.01 representative of ongoing
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