Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q3 2023 Earnings Presentation
27 slides from Maple Leaf Foods's earnings presentation, Nov 6, 2023
Slide 1: Building Momentum Investor Presentation
Building Momentum Investor Presentation All dollar amounts are presented in CAD dollars unless otherwise noted. 1
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 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 TODAY Foundation Building Era Transformation Era Purpose Driven, Set to Deliver Structural Adjusted Delivered 10% Adjusted Established 14%-16% Adjusted EBITDA Margin ~3.5% EBITDA Margi
Slide 4: Our ambitious Blueprint continues to guide us into the future
Our ambitious Blueprint continues to guide us into the future MAPLE LEAF FOODS – INVESTOR PRESENTATION | NOVEMBER 6, 2023 4
Slide 5: Leadership in Sustainability and Shared Value creation
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 • 100% of Maple Leaf-owned sow spaces • Advancing our goal to reduce food insecurity • World’
Slide 6: Our portfolio of leading brands includes the #1 and #2 brands in the category
Our portfolio of leading brands includes the #1 and #2 brands in the category #1 #2 #1 Schneiders is #1 brand in Maple Leaf is #2 brand in Greenfield is the #1 brand total Packaged Meats total Packaged Meats in Sustainable Packaged Meats (#3 in U.S.) #1 #1 #3 Maple Leaf Prime is the Mina is the #1 H
Slide 7: Approaching the next natural inflection point on our journey
We are approaching the next natural inflection point on our journey to a Purpose-driven, Globally-admired and Brand-led CPG company Capitalize On the platform we have built, Organic + Strategic Realize • Brand-led growth, constant Renovation Our near-term potential & Innovation Stabilize • Deliver $
Slide 8: Excellent progress executing our playbook in the third quarter of 2023
Excellent progress executing our playbook in the third quarter of 2023 Meat Adjusted London Bacon Centre EBITDA margin Poultry Plant of Excellence improved to 11.4% on track ramp up continues Third consecutive quarter Over 85% of production Maple Leaf “Ready Crisp” of Adjusted EBITDA Margin online;
Slide 9: New product innovation will continue to stimulate consumer demand and fuel growth
New product innovation will continue to stimulate consumer demand and fuel growth MAPLE LEAF FOODS – INVESTOR PRESENTATION | NOVEMBER 6, 2023 9
Slide 10: Clear line of sight to 14% - 16% Meat Protein Adj. EBITDA margins
Clear line of sight to 14% - 16% Meat Protein Adj. EBITDA margins in normal markets Executing the 14% - 16% Blueprint Adj. EBITDA Margin ✓ Completing the ramp up of London and Bacon CoE capital projects ~250 bps ✓ Fully leveraging the strength of our leading brands ∆ to Normal 11.4% Market ✓ Doublin
Slide 11: Vertically integrated pork margins showing progress, not full recovery
Vertically integrated pork margins showing progress, not full recovery Vertically integrated margin turned positive USDA Pork Cutout – Hog Production Cost and quickly reversed to ~breakeven in Q3 $140 $50 $45 $10 $130 $40 $5 $0 $35 -$5 $120 $30 -$10 $25 -$15 Spread US$ (CWT) $110 $20 -$20 Price US$
Slide 12: Vertically integrated pork margins (one profit in a pig)
Vertically integrated pork margins (one profit in a pig) Q4-22 to 2023 YTD, Updated to include October 2023 Q4-22 Q2-23 $120 $15 Q4TD 2023 $10 $100 $5 $80 $0 Spread US$ (CWT) Price US$ (CWT) -$5 $60 -$10 $40 -$15 -$20 $20 -$25 Q1-23 Q3-23 $0 -$30 Oct'22 Nov'22 Dec'22 Jan'23 Feb'23 Mar'23 Apr'23 May'
Slide 13: London Poultry capital program on track to deliver $100M incremental Adjusted EBITDA
London Poultry capital program on track to deliver $100M incremental Adjusted EBITDA exiting 2023 ✓ Fully completed transition of three of four legacy plants, now fully absorbed Brampton ✓ Processing over 1.5M birds per week, 88% of total expected volume ✓ Set to complete the final stage of transiti
Slide 14: Winnipeg Bacon Centre of Excellence capital program on track to deliver $30M
Winnipeg Bacon Centre of Excellence capital program on track to deliver $30M incremental Adjusted EBITDA exiting 2023 ✓ Operational start-up fully on track with transition from co- manufacturers complete ✓ New commercial volumes online in Food Service and Retail ✓ Maple Leaf Ready Crisp Bacon Brand
Slide 15: Pivot to a profitable Plant Protein business on track
Pivot to a profitable Plant Protein business on track with over a 60% improvement in Plant Protein Adjusted EBITDA in Q3 Greenleaf Sales (USD) have stabilized over course Greenleaf Adjusted EBITDA (USD) on pace to of 2023, providing a stable platform from which to achieve interim target of Adj. EBIT
Slide 16: Firmly focused on deleveraging through improving profitability and lower capex
Firmly focused on deleveraging through improving profitability and lower capex Improving profitability Conclusion of large-scale Higher cash flow and of the business capex programs natural deleveraging Capex now focused on Lowering net debt Improving maintenance and to EBITDA, profitability organic
Slide 17: Cash flow opportunities in near-term are significant
Cash flow opportunities in near-term are significant Capex Near–term cash flow generation expected: $629M • Capex levels to be lower in 2024, ranging from $170M to $190M, compared to approximately $491M $200M in 2023 • As London and Bacon begin operating at optimal $312M efficiency, we expect ~$80M
Slide 18: Our outlook is focused on delivering profitable growth and value creation
Our outlook is focused on delivering profitable growth and value creation Meat Protein Plant Protein Capital Sustainability For 2023, mid-single digit sales Steady Adjusted EBITDA Disciplined and balanced approach Authentic Leadership in growth, supported by brand improvement to continue throughout
Slide 19: Financial and Operational Results
Financial and Operational Results 19
Slide 20: Q3 Consolidated Results
Q3 Consolidated Results Q3 2023 Change YoY Significant margin improvement Sales (millions) $1,245.0 +1.1% across all businesses Gross profit $145.9 +76.8% • Continued momentum in improving Meat Protein financial performance Gross margin 11.7% +500 bps • Plant Protein transition to breakeven on track
Slide 21: Q3 Meat Protein Results
Q3 Meat Protein Results Q3 2023 Change YoY Continued momentum in improving financial performance Sales (millions) $1,211.0 +1.4% • Top line growth driven by pricing and mix, partially Gross profit $143.5 +14.3% offset by lower volume Gross margin 11.8% +130 bps • Third consecutive quarter of sequent
Slide 22: Q3 Plant Protein Results
Q3 Plant Protein Results Q3 2023 Change YoY On track to achieve target of Sales (millions) $36.4 -18.5%* Adjusted EBITDA neutral Gross profit $(2.2) +77.6% • Strong progress in improving profitability continued, driven by operational improvement Gross margin (5.9%) +1,660 bps and lower SG&A SG&A $11
Slide 23: Balance Sheet
Balance Sheet Q3 2023 Change YoY Solid balance sheet affords Total Assets $4,614.4 +$168.2 operational flexibility Long Term Debt $1,575.4 $(52.2) • Disciplined approach to capital allocation Total Debt $1,974.1 +$345.7 • London Poultry and Bacon Centre of Excellence capital expenditures are complet
Slide 24: Appendix
Appendix 24
Slide 25: Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin
Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin Three months ended September 30, 2023 Three months ended September 30, 2022 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (
Slide 26: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share Three months ended September 30, ($ per share) (Unaudited) 2023 2022 Basic (loss) earnings per share ($0.04) (1.86) Impairment of goodwill — 1.54 Restructuring and other related costs(1) 0.03 0.01 Items included in other expense not co
Slide 27: Reconciliation of non-IFRS metrics – Free Cash Flow
Reconciliation of non-IFRS metrics – Free Cash Flow Three months ended September 30, ($ thousands) (Unaudited) 2023 2022 Cash provided by operating activities $115,161 $75,499 Maintenance Capital(1) (25,190) (17,491) Interest paid and capitalized related to Maintenance Capital (404) (63) Free Cash F