Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q3 2024 Earnings Presentation
45 slides from Maple Leaf Foods's earnings presentation, Nov 13, 2024
Slide 1: Q3 Financial Results & Business Update
Q3 Financial Results & Business Update November 13, 2024 All dollar amounts are presented in CAD unless otherwise noted.
Slide 2: Forward-looking statements
Forward-looking statements 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 well as beliefs and as
Slide 3: Non-IFRS Metrics
Non-IFRS Metrics The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBT, Construction Capital, Net Debt, Net Debt to trailing four quarters Adjusted EBITDA, Free Cash Flow and Return on Net Ass
Slide 4: Strategic Context and Near-Term Priorities
Maple Leaf Foods Strategic Context and Near-Term Priorities 4
Slide 5: Maple Leaf Foods has established itself as an iconic, purpose-driven Canadian Food company
Maple Leaf Foods has established itself as an iconic, purpose-driven Canadian Food company 1995 2005 2010 2017 2017 2023 2024 FUTURE Foundation Building Era Transformation Era Investing for Ready to Unlock Future Growth Our Full Potential Structural Adjusted EBITDA1 Delivered 10% Adjusted Establishe
Slide 6: We aspire to be a globally-admired and brand-led Consumer Packaged Goods company
We aspire to be a globally-admired and brand-led Consumer Packaged Goods company ~$4.9B ~13,500 23 #1 and #2 Leading First Manufacturing Prepared Meats Carbon Neutral Annual Sales Employees RWA Producer Facilities Brands Major Food Company Prepared Foods ~25% Pork Complex of Annual Sales Prepared Me
Slide 7: The Maple Leaf Blueprint
The Maple Leaf Blueprint serves as our strategic compass MAPLE LEAF FOODS — Q3 2024 BUSINESS AND FINANCIAL REVIEW | NOVEMBER 13, 2024 7
Slide 8: Driven by our purpose of Raising the Good in Food
Driven by our purpose of Raising the Good in Food, Maple Leaf Foods has demonstrated authentic leadership in sustainability and shared value creation Make Better Food Take Better Care Nurture a Better Planet • Established leadership in Sustainable Meats production, • Industry leader in workplace saf
Slide 9: Execution of our Blueprint has enabled top line growth and higher profitability
The execution of our Blueprint has enabled top line growth and higher levels of profitability Sales Sales Adjusted EBITDA Adjusted EBITDA11 and and margin margin Total Company Total Company ($ ($ millions) millions) Total Company Total Company ($ ($ millions millions and and %) %) +5.4% +7.4% $518 C
Slide 10: In July 2024, we announced a transformative transaction
In July 2024, we announced a transformative transaction… … to Unlock Value as a Purpose-Driven Consumer Packaged Goods Business via a Plan to Spin Off our World-Leading Pork Company The two independent public companies will each be unleashed with a sharper focus to execute their respective growth
Slide 11: Our near-term focus is set on executing our 2024 priorities
Our near-term focus is set on executing our 2024 priorities Drive Adjusted EBITDA1 strategic margin expansion toward 1 14% - 16% target Completing the spin-off of our world-leading Pork 2 Harvest the remaining benefits from our large capital projects, Company in 2025 London Poultry and the Bacon Cen
Slide 12: Third Quarter 2024 Financial & Business Results
Third Quarter 2024 Financial & Business Results 12
Slide 13: Today's key messages
Today’s key messages Q3 Sales grew by 1.8%, in line with 2024 outlook • Prepared Foods recorded 2.0% revenue growth year-over-year, fueled by Prepared Meats growth of 3.1% Adjusted EBITDA1 Margin expanded to 11.2% in Q3, another quarter of improvement • Q3 Adjusted EBITDA Margin expanded by 80 bps y
Slide 14: Adjusted EBITDA Margin expanded to 11.2% in Q3
Adjusted EBITDA Margin1 expanded to 11.2% in Q3 and has improved by 240 bps year to date Sales Adjusted EBITDA1 ($ millions) ($ millions) +240 bps vs YTD 23 Flat vs YTD 23 +80 bps 10.8% vs Q3 23 +1.8% $3,675 $3,674 vs Q3 23 $1,260 11.2% 8.4% +1.8 vs Q3 23 $1,238 $398 $1,238 $1,260 10.4% $141 $307 $1
Slide 15: Third quarter highlights
Third quarter highlights Prepared Foods Pork Complex ~25% of Annual Sales Prepared Meats ~50% Poultry ~20% Plant Protein ~5% of Annual Sales of Annual Sales of Annual Sales Strong sales growth, with inflation Financial results improved Making strides toward breakeven Financial results improved stres
Slide 16: Adapting brand and growth strategies to the evolving consumer environment
Adapting brand and growth strategies to the evolving consumer environment Investing in portfolio of leading brands Accelerating the pace of Leveraging leadership in to build consumer demand impactful innovation Sustainable Meats Expanding geographic reach in Plugging unique capabilities into Executi
Slide 17: Accelerating the pace of impactful innovation
Accelerating the pace of impactful innovation Through the launch of 22 new high-impact products in Q3 New Product Innovation Expanding Sustainable Meats Consumer-led Renovation There’s never anything in there that Restaurant shouldn’t be quality at home Authentic Italian deli meats Kid approved prod
Slide 18: Pork markets improving, but remain below normal market conditions
Pork markets improving, but remain below normal market conditions1 Market conditions negatively impacted Q3 by approximately $13.7M or ~110 bps Vertically Integrated Margin Industry Vertically Integrated Margin stable USDA Pork Cutout – Industry Hog Production Cost in Q3 $140 $55 USDA Pork Cutout –
Slide 19: Improving profitability and lower capex driving Free Cash Flow and deleveraging
Strengthening business performance, along with reduced capital expenditures, contributing to substantial Free Cash Flow1 generation and deleveraging Improving Profitability of the business Lower Capital Expenditures Improved near–term cash flow $629M generation: $518M Significant reduction in capi
Slide 20: Outlook
Outlook Market Conditions Revenue Outlook Margin Outlook Balance Sheet / Capital Outlook2 While headwinds are moderating, Low single-digit sales growth in 2024 Adjusted EBITDA1 margin expansion Generate increasing Free Cash Flow1 consumers remain under pressure supported by brand and revenue from 20
Slide 21: Unlocking Value, Unleashing Potential: Transaction Update
Unlocking Value, Unleashing Potential Transaction Update Q3 2024 21
Slide 22: Separating into two independent public companies
In July 2024, we announced a transformative transaction to unlock value and unleash potential by separating into two independent public companies Maple Leaf Foods Unlocking value: Two independent public companies, Realizing our vision to be the most each a leader in its field, accelerating purpose-d
Slide 23: A clear path to unlocking value by separating into two independent companies
A clear path to unlocking value and unleashing potential by separating into two independent companies Market Maple Leaf Foods Canada Packers Position Realizing our vision to be the most Sustainable Protein Company on An unleashed, world-leading organization producing sustainable meat the Earth, now
Slide 24: Maple Leaf Foods: a brand-led, protein-focused CPG company
Maple Leaf Foods: a brand-led, protein-focused Consumer Packaged Goods company with a vision to be the Most Sustainable Protein Company on Earth $3.6B(1) #1 First Maple Leaf Foods Pro Forma Prepared Meats, Fresh Poultry, Halal Carbon Neutral LTM Revenue Poultry & Sustainable Meats Brands2 Major Food
Slide 25: Maple Leaf Foods: investment highlights
Maple Leaf Foods: investment highlights Poised to capitalize on the growing demand for protein Global protein consumption is projected to nearly double by 2050 due to a growing population, rising affluence, urbanization, aging demographics, and dietary shifts toward protein-rich foods. Our diver
Slide 26: The Maple Leaf Playbook
The Maple Leaf Playbook Reshaping the Delivering Evolving Cost Focus portfolio to CPG Sustainable Growth and Competitive Edge • Unlocking Value as Purpose-Driven • Investing in portfolio of leading brands to • Harvesting the Benefits of recent Consumer Packaged Goods Business via build consumer dema
Slide 27: Canada Packers: a global leader in sustainably produced pork products
Canada Packers: a global leader in sustainably produced, premium quality, value-added pork products $1.7B(1) 93% Leading Canada Packers Pro Forma LTM Of owned spaces Gestation Producer of Pork Raised Annual Sales Crate Free Without Antibiotics World-class hog processing Globally admired pork Diversi
Slide 28: Canada Packers: investment highlights
Canada Packers: investment highlights Capitalizing on global leadership in sustainably produced, premium value-added pork products ✓ Significant growth opportunity in domestic value-added items while driving growth in new markets through best-in- class high quality pork products. ✓ Established sales
Slide 29: The Canada Packers Playbook
The Canada Packers Playbook Near Term Focus Longer Term Opportunities Focused on high return, low-risk investments ↑ Hogs processed Sourcing incremental hogs to process and sell 1 Optimizing utilization of existing assets ↑ Hog raising costs 2 Equipment modernization and automation Through optimizin
Slide 30: Next steps in the transformation of an iconic Canadian company
Next steps in the transformation of an iconic Canadian, purpose-driven company • Prepare Plan of Arrangement • File Management Information Circular • Advance customary approvals ― Special Committee Recommendation based on updated fairness opinion ― Final Board approval ― Shareholder approvals ― Cour
Slide 31: On track to deliver 2024 priorities
On track to deliver 2024 priorities Drive Adjusted EBITDA1 strategic margin expansion toward 1 14% - 16% target Completing the spin-off of our world-leading Pork 2 Harvest the remaining benefits from our large capital projects, Company in 2025 London Poultry and the Bacon Centre of Excellence Key mi
Slide 32: Supplemental Financial Slides
Supplemental Financial Slides Q3 2024 MAPLE LEAF FOODS — Q3 2024 BUSINESS AND FINANCIAL REVIEW | NOVEMBER 13, 2024 32
Slide 33: Pro Forma Estimates updated to include Third Quarter of 2024
Pro Forma Estimates updated to include Third Quarter of 2024 LTM ended September 30, 2024 LTM ended June 30, 2024 LTM ended March 31, 2024 Pro Forma Pro Forma Pro Forma Maple Leaf Pro Forma Pro Forma Maple Leaf Pro Forma Pro Forma Maple Leaf Pro Forma Pro Forma Canada Canada Canada Foods Maple Leaf
Slide 34: Q3 and YTD Results
Q3 and YTD Results Change Change Q3 Results Q3 2024 Q3 2023 YTD Results YTD 2024 YTD 2023 YoY YoY Sales $1,260 $1,238 1.8% Sales $3,674 $3,675 0.0% Gross profit $186 $146 27.6% Gross profit $544 $316 72.1% SG&A $109 $95 14.3% SG&A $335 $304 10.3% Adjusted operating earnings1 $74 $71 4.3% Adjusted op
Slide 35: Balance Sheet
Balance Sheet Balance Sheet Q3 2024 Q3 2023 Change YoY Total Assets $4,454 $4,614 -$160 Long Term Debt $1,478 $1,575 -$97 Total Long Term Debt2 $1,779 $1,974 -$195 Net Debt1 $1,597 $1,770 -$173 Net Debt1 to Trailing 4 Quarters Adjusted EBITDA1 3.1x 4.9x -1.8x Shareholders’ Equity $1,510 $1,547 -$37
Slide 36: Reconciliation of non-IFRS metrics – Adjusted Operating Earnings, Adjusted EBITDA
Reconciliation of non-IFRS metrics – Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBITDA Margin Three months ended September 30, Nine months ended September 30, ($ millions) (i) (Unaudited) 2024 2023 2024 2023 Earnings (loss) before income taxes $25.2 ($0.2) $66.5 ($133.9) Interest expe
Slide 37: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share ($ per share) Three months ended September 30 Nine months ended September 30 (Unaudited) 2024 2023 2024 2023 Basic earnings (loss) per share $0.14 ($0.04) $0.35 ($0.95) Restructuring and other related costs(i) $0.01 $0.03 $0.05 $0.17 I
Slide 38: Reconciliation of non-IFRS metrics – Net Debt
Reconciliation of non-IFRS metrics – Net Debt ($ thousands) As at September 30, (Unaudited) 2024 2023 Cash and cash equivalents $181,787 $204,598 Current portion of long-term debt ($300,771) ($398,685) Long-term debt ($1,478,318) ($1,575,418) Total debt ($1,779,089) ($1,974,103) Net Debt ($1,597,302
Slide 39: Reconciliation of non-IFRS metrics – Free Cash Flow
Reconciliation of non-IFRS metrics – Free Cash Flow ($ thousands) Three months ended September 30 Nine months ended September 30 (Unaudited) 2024 2023 2024 2023 Cash provided by operating activities $176,195 $115,161 $309,016 $93,871 (i) Maintenance Capital (21,023) (25,190) (52,709) (67,368) Intere
Slide 40: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Last twelve months ended September 30, 2024 (in millions of CAD) Consolidated Maple Canada Packers Maple Leaf Foods(1) Eliminations (unaudited) Leaf Foods Inc. Sales $1,652(2) $3,581(3) ($366)(4) $4,867(5) Adjusted EB
Slide 41: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Notes Continued: 5 Calculated by adding the previously reported results for the quarter ended December 31, 2023, to results for the nine months ended September 30, 2024. These results are reported in the Company’s MD&
Slide 42: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Last twelve months ended June 30, 2024 (in millions of CAD) Consolidated Maple Canada Packers Maple Leaf Foods(1) Eliminations (unaudited) Leaf Foods Inc. Sales $1,661(2) $3,562(3) ($378)(4) $4,845(5) Adjusted EBITDA
Slide 43: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Notes Continued: 5 Calculated by adding the previously reported results for the year ended December 31, 2023, to results for the six months ended June 30, 2024, and subtracting results for the six months ended June 30
Slide 44: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Last twelve months ended March 31, 2024 (in millions of CAD) Consolidated Maple Canada Packers Maple Leaf Foods(1) Eliminations (unaudited) Leaf Foods Inc. Sales $1,652(2) $3,553(3) ($355)(4) $4,850(5) Adjusted EBITDA
Slide 45: Management's estimates on the Pork business spin-off and related Non-IFRS measures
Management’s estimates on the Pork business spin-off and related Non-IFRS measures Notes Continued: 4 Primarily represents management’s preliminary estimate of sales from Canada Packers to Maple Leaf Foods for the period presented. 5 Calculated by adding the previously reported results for the year