Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q2 2023 Earnings Presentation
26 slides from Maple Leaf Foods's earnings presentation, Aug 3, 2023
Slide 1: Another Step Closer: Q2 2023 Business & Financial Review
Another Step Closer Q2 2023 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: Maple Leaf Foods established itself as an iconic, purpose-driven Canadian food company
Maple Leaf Foods established itself as an iconic, purpose-driven Canadian food company. 1995 2009 2010 2016 2017 Today Foundation Building Era Transformation Era Purpose Driven, Set to Deliver Structural Adj. EBITDA Margin ~3.5% Delivered 10% Adj. EBITDA Margin Established 14-16% Adj. EBITDA Target
Slide 4: Approaching the next natural inflection point in our journey
We are approaching the next natural inflection point in our journey to a Purpose-Driven, Globally-Admired and Brand-Led CPG company. Capitalize On the platform we have built • Brand-led growth, constant Renovation & Realize Innovation Our near-term potential • Expanding geographic footprint, with U.
Slide 5: Our ambitious Blueprint continues to guide us
Our ambitious Blueprint continues to guide us on the next chapter in our journey. 5
Slide 6: Raising the Good in Food: leadership in Sustainability and Shared Value
Driven by our purpose of Raising the Good in Food, Maple Leaf Foods has demonstrated authentic leadership in Sustainability and Shared Value creation. Better Food Better Care Better Communities Better Planet Double-digit growth in Sustainable Meats 100% of Maple Leaf sow spaces Advancing our goal to
Slide 7: Our focus is on creating long-term value and Total Shareholder Returns
Our focus is on creating long-term value and Total Shareholder Returns. Leading portfolio of Brands, with growing value-added sales and US exposure Leading sustainable meat production, drawing on powerful consumer trends reshaping the industry to drive innovation Plant protein pivot to profita
Slide 8: Our outlook is focused on delivering profitable growth and TSR
Our outlook is focused on delivering profitable growth and TSR. Meat Protein Plant Protein Capital Sustainability For 2023, mid-to-high single Steady Adjusted EBITDA Disciplined and balanced Authentic Leadership in digit sales growth, supported improvement to continue approach to capital allocation
Slide 9: Q2 2023 Financial Results
Q2 2023 Financial Results 9
Slide 10: Q2 2023 Highlights: Excellent progress in stabilizing and improving financial performance
Q2 2023 Highlights: Excellent progress in stabilizing and improving financial performance, while pork markets remain dislocated. Underlying strength of the Meat Protein Plant Protein transition to profitability on business remains healthy track for back half of 2023 • Topline growth of +6.6% driven
Slide 11: Q2 2023 Meat Protein Financial Results
Q2 2023 Meat Protein Financial Results Q2 2023 vs. LY • Pricing action implemented to mitigate inflation, Sales $1,236.7 +6.6% favourable mix shift, higher volumes and Sales growth favourable FX of +6.6% Gross Profit $120.2 (11.6%) • Pork market headwinds and inflation partially offset by pricing Gr
Slide 12: Meat Protein business has proven extremely resilient
Q2 2023 Meat Protein business has proven extremely resilient; topline growth driven by the strength of our Consumer Packaged Goods brands. Driving Branded Leading in Broadening Delivering Growth Sustainable Meats our Reach Operational Excellence Growth in Branded Sales and Greenfield brand has t
Slide 13: Adj. EBITDA margin progress while pork markets remain dislocated
Excellent progress in stabilizing and improving financial performance, while pork markets remain dislocated. 14% - 16% Growth Capital Returns Adj. EBITDA Margin Adj. EBITDA ~60bps ~200bps Delta to Normal Market Conditions Margin ~60bps ~40bps ~270bps 9.3% Pricing implemented 7.6% within Q2, Gap refl
Slide 14: Solid progress in solving for short-term impacts of post-pandemic economy
Solid progress in solving for short-term impacts of post-pandemic economy. Q2 Impact What Happened in Q2 Outlook ∆ Q1 • Normal levels of vacancies, progress in training, • Maintain normalized supply chain Supply Chain significant improvement in service levels • Closed the gap exiting Q2 Pricing • To
Slide 15: "One Profit in a Pig" dislocation worsened in Q2
“One Profit in a Pig” dislocation worsened in Q2. However, “green shoots” for a recovery continue to emerge with negative spreads starting to abate. USDA Pork Cutout – Hog Production Cost Q1-23 Cost of Hog Production: US$102/CWT Spread US$ (CWT) Price US$ (CWT) Pork Cutout: US$93/CWT Negative spread
Slide 16: $1.2B investment in organic projects now coming online
$1.2B investment in organic projects are now coming online and are set to add $130M to annual Adjusted EBITDA. Incremental Capital Project Benefits Adjusted EBITDA London Poultry facility More profitable product mix through improved processing Annual Incremental The new 660,000 sq. ft. facility
Slide 17: London Poultry transition and ramp-up
London Poultry: transition from St. Marys and Toronto facilities complete, Brampton transition started, ~75% of production online. Completed Current Remaining Construction completed in Sept, 2022 2nd shift now fully in start-up • Q3 2023: Complete the transition of Brampton 2nd shift volume, emp
Slide 18: Bacon Centre of Excellence continues to ramp up
Bacon Centre of Excellence continues to ramp up commercial production while onboarding new business. Completed Current Remaining Construction completed in October 2021 Producing saleable product since early 2022 • Transition from co-manufacturers and ramp- up to be complete in H2 2023 First co
Slide 19: Q2 2023 Plant Protein Financial Results
Q2 2023 Plant Protein Financial Results Q2 2023 vs. LY Drivers • Lower retail and foodservice volumes, (14.5%) Sales $36.7 partially offset by increased pricing and (in USD) favourable FX • Price increases, operational Strong Gross Profit ($1.8) +$8.3 improvements and reduction in start- progress on
Slide 20: Plant Protein Adjusted EBITDA losses reduced in Q2 2023
Plant Protein Adjusted EBITDA losses reduced in Q2 2023 by 63% (USD), On track to achieve Adjusted EBITDA neutral in H2 2023. Plant Protein Adjusted EBITDA (USD) Completed Rest of 2023 Q4 2021 to Q2 2023 Profitable SG&A reduced by 45% in • Further rightsized operational Q2 2023 structure and SG&A
Slide 21: Total Company – Q2 2023 financial results
Total Company – Q2 2023 financial results Q2 2023 vs. LY Drivers Growth in Meat, partially offset by Sales $1,269.7 +6.2% lower sales in Plant Sales growth Adj. Operating Earnings $45.9 +94.3% of +6.2% Adj. EBITDA $103.1 +39.3% Improved mix and pricing more than offset challenging operating environm
Slide 22: Capital allocation focused on long-term growth and shareholder return
Capital allocation focused on long-term growth and shareholder return. Capital Allocation Priorities Up to $120M for Maintenance Capital: Non-discretionary – maintains existing Maintenance… operations and competitiveness Balance Sheet Optimization: Investment grade balance sheet Less than $250M thro
Slide 23: Balance sheet reflects projects in start-up phase
Balance sheet reflects projects in start-up phase – as production ramps up we are moving from “Cash OUT” to “Cash IN”. ~ $1.8B • Nearly two-thirds of debt attributable to construction of our three new manufacturing ~ $0.8B facilities • With construction complete, we are completing commissioning and
Slide 24: Appendix
Appendix MAPLE LEAF FOODS – Q2 2023 BUSINESS AND FINANCIAL REVIEW | August 3, 2023 24
Slide 25: Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin
Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin Three months ended June 30, 2023 Three months ended June 30, 2022 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (loss) befo
Slide 26: 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) 2023 2022 Basic (loss) earnings per share ($0.44) (0.44) Restructuring and other related costs(1) 0.08 0.13 Items included in other expense not considered 0.01 — representative of o