Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q4 2021 Earnings Presentation
29 slides from Maple Leaf Foods's earnings presentation, 2022
Slide 1: Pursuing Profitable Growth: Q4 2021 Business & Financial Review
Pursuing Profitable Q4 2021 Business All dollar amounts are presented in CAD dollars unless otherwise noted. Growth & Financial Review
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 at a Glance
MAPLE LEAF Maple Leaf Foods at a Glance
Slide 4: Maple Leaf Foods at a Glance
Our vision to be the Most Sustainable Protein Company on Earth 13,500 employees Total Sales (2021) $4,521 million Meat Protein Group Plant Protein Group 32 manufacturing facilities1 2021 Adj. prepared meats, fresh pork, fresh poultry and plant protein $527M EBITDA Margin $184M 2021 Sales 4M hogs pro
Slide 5: The Maple Leaf Foods Blueprint
The Maple Leaf Foods Blueprint 5 MAPLE LEAF FOODS – Q4 2021 BUSINESS AND FINANCIAL REVIEW | FEBRUARY 24, 2022
Slide 6: We built a profitable base; now we're focused on profitable growth
We built a profitable base; now we’re focused on profitable growth 2010 Transformation 2014 2015 Brand-led Growth Today Exited non-core businesses Expanding sustainable meats platform Rothsay (2013) Olivieri (2013) Canada Bread (2014) Renovated core brands Transformed our supply chain
Slide 7: Our Blueprint is consistently delivering top and bottom-line growth
Our Blueprint is consistently delivering top and bottom-line growth Maple Leaf Total Annual Sales Meat Protein Adjusted EBITDA ($ millions) ($ millions and margin %) 2 2 2 • Driven by growth strategies in Brand Renovation, • Benefits of profitable growth strategies and operational Sustainable Meats
Slide 8: We are uniquely positioned to succeed in a changed world following COVID-19
We are uniquely positioned to succeed in a changed world following the COVID-19 pandemic • Our economy, and business, is Maple Leaf has the necessary skills to thrive in experiencing burgeoning inflation • CPI rate1 3x to 7%; Pork1 25% this environment • Global supply chain is being disrupted •
Slide 9: Q4 and Year End 2021 Results
MAPLE LEAF Q4 and Year End 2021 Results
Slide 10: Record year of top line growth & EBITDA performance in meat
Record year of top line growth & EBITDA performance in meat; Unexpected Omicron tornado in Q4 but passing through quickly!; New plan for Plant Protein • Full year 2021 delivered another Meat Protein record performance Record top line of $4,367 million (+8.1%1) and Adj EBITDA of $527 million • In Q
Slide 11: Meat Protein Group – Q4 2021 strategic & operational highlights
Meat Protein Group – Q4 2021 strategic & operational highlights Drive Profitable Growth by… Q4 2021 Highlights • Brand renovation driving 11th consecutive quarter Investing in our brands of branded sales growth YoY to build demand & equity • Demonstrated operational resilience and maintained brand
Slide 12: Meat Protein – Q4 2021 financial results
Meat Protein – Q4 2021 financial results Q4 2021 vs. LY Drivers • Pricing action from prior quarters to mitigate inflation and Sales $1,085.2 +8.2%1 structural cost increases, and a favourable mix-shift Gross Profit $152.2 -18.1% • Labour and materials availability, inflation, lower volumes due to l
Slide 13: Neutral pork complex but weaker poultry markets
Neutral pork complex but weaker poultry markets Hog Production Margins Pork Processor Margins Pork By-Product Markets Hog production margins = live hog cost (CME) less Hog Raising Index Pork processor margins = pork cutout less live hog cost (CME) Notes: Figures shown represent USDA by-product drop
Slide 14: Plant Protein Q4 2021 – advancing from a strong base
Plant Protein Q4 2021 – advancing from a strong base Two established, leading brands in Lightlife® and Differentiated growth vectors in Lightlife® Tempeh Building from Field Roast™ and Field Roast™ Chao cheese a strong foundation… Nearly 20% share in U.S. refrigerated retail market1 Proven p
Slide 15: Charting a new path forward in Plant Protein
Charting a new path forward in Plant Protein What we communicated in Analytical tear-down of the We have a revised view of We are now pivoting to a November 2021 category now complete the category’s future revised playbook • Growth rates in the • Consumers are seeing the • We do see the category • W
Slide 16: The category's spectacular growth has stalled
The category’s spectacular growth has stalled After years of spectacular growth, Flexitarians led category trial, … Because consumers’ needs the category stalled in 2021 but did not repeat 2 … were not being fully met U.S. Retail Market Sales – Refrigerated Category Hyper exposure drove significant
Slide 17: We remain confident that the category will deliver steady growth
We remain confident that the category will deliver steady growth Some change in growth rate is not unusual for new categories, where innovation iterations and product improvements are constantly occurring, improving the eating experience for consumers Category fundamentals support steady growth rate
Slide 18: Our emerging conclusions: expect steady, not spectacular growth
Our emerging conclusions: expect steady, not spectacular growth Our insights so far Our future view of growth… … is driven by key assumptions Consumers see the category as Category growth of 10-15%, 1. Household trial will hold at an expensive novelty, with high with a market size of 2021 level (whi
Slide 19: Next steps and path forward
Next steps and path forward Our next steps Objectives: 1. Our goal is to have our Continue our strategic review and determine our own new strategy, plant protein business given adjusted category growth rates be Adjusted EBITDA neutral or better within 18 months Determine specific implications on
Slide 20: Plant Protein – Q4 2021 financial results
Plant Protein – Q4 2021 financial results Q4 2021 vs. LY Drivers Sales $45.5 (3.7%)1 • Lower retail product volumes which more than offset (ex-FX, in USD) growth in foodservice volumes Gross Profit ($10.0) ($9.7) • Lower sales volumes and capacity utilization • Includes start-up expenses of $2.0 mil
Slide 21: Total Company – Q4 2021 financials demonstrate continued growth
Total Company – Q4 2021 financials demonstrate continued growth Q4 2021 vs. LY Drivers Sales $1,120.5 +6.9%1 • Solid growth in Meat, partially offset by lower sales in Plant Adj. Operating Earnings $30.0 (49.9%) Adj. EBITDA $76.3 (30.3%) Adj. EBITDA Margin 6.8% -289 bps Net earnings $1.9 (92.5%) Adj
Slide 22: Summary of key Construction Capital projects – Meat Protein
Summary of key Construction Capital projects – Meat Protein Bacon Centre of Excellence London Poultry Facility Strategic Rationale Strategic Rationale • Captures growing demand for pre-cooked bacon, improves • Increases processing capacity for value-added, higher margin operating efficiency, and dri
Slide 23: Summary of key Construction Capital projects – Plant Protein
Summary of key Construction Capital projects – Plant Protein Indianapolis Tempeh Facility Strategic Rationale • Cost effective and scalable approach to meet burgeoning consumer demand for high-growth, high-margin tempeh products • Additional space for future growth opportunities Update • Existing 11
Slide 24: Outlook
MAPLE LEAF Outlook 24
Slide 25: Financial Outlook
Financial Outlook 2022 Outlook Mid-to-high single digit sales growth in 2022, driven by continued momentum in sustainable meats, leveraging brand leadership, and growth into the U.S. market. Meat Protein Adj. EBITDA margin expansion, reaching the lower end of the 14%-16% target by the end of 2022, d
Slide 26: Appendix
MAPLE LEAF Appendix _ BECAUSE ANTIBIOTICS ARE | Tt S TIME FOR BETTER. ‘fh FOR MEAT THAT TASTES THEWAY IT SHOULD LIKE MEAT. | ~ MADE FROM ANIMALS THAT ARE RUsED, NOT PRODUCED, ITS TIME FOR MORE FARM AND LESS PHARM, OR THE SICK, NOT THE HUNGRY. ITS TIME TO LET; NATURE DOITS THING: IT’S TIME FOR BETTER
Slide 27: Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin
Reconciliation of non-IFRS metrics – Adjusted EBITDA Margin Three months ended December 31, 2021 Three months ended December 31, 2020 Meat Plant Meat Plant ($ millions)(1) Protein Protein Non- Protein Protein Non- (Unaudited) Group Group allocated(2) Total Group Group allocated(2) Total Earnings (lo
Slide 28: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share Three months ended December 31, ($ per share) (Unaudited) 2021 2020 Basic earnings per share $0.02 0.20 Restructuring and other related costs(1) 0.01 0.01 Items included in other expense (income) not 0.02 0.06 considered representative
Slide 29: Capital allocation priorities
Capital allocation priorities Grow 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 growth