Slide 1: Fourth Quarter Review 2015
FOURTH QUARTER REVIEW 2015 MICHAEL McCAIN President and Chief Executive Officer DEBBIE SIMPSON Chief Financial Officer March 1, 2016
Slide 2: Fourth quarter highlights
Fourth quarter highlights • Consistent earnings growth in the quarter and for the year • EBITDA margin rose to 8.7% from 1.5% last year; 7.1% in Q3 • Adjusted operating earnings of $48M; up $62M from last year • Closing remaining gap to 10% EBITDA margin target • Entering 2016 with momentum Q4 REVIE
Slide 3: Closing in on 10% margin target
Closing in on 10% margin target Quarterly Consolidated Adjusted EBITDA Margin 9.0% 8.7% 7.1% 6.0% 6.0% 4.7% 3.0% 0.7% 0.5% 0.5% 1.5% 0.0% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 -1.4% -1.3% -1.1% Q4 2015 Q4 2014 -3.0% SALES $873.1M $794.0M ADJU
Slide 4: Network gains, commercial performance drove results
Network gains, commercial performance drove results • Operating efficiency gains o Reducing start-up variances at Hamilton facility o Winnipeg bacon plant exceeding expectations o Lower operating costs in poultry o Streamlined operating structure • Strong commercial and marketing execution o Growing
Slide 5: Accelerating our growth agenda
Accelerating our growth agenda • Advancing leadership in sustainable meat protein o Leading processor of raised without antibiotics pork in North America; largest in Canadian poultry o Continuing conversion from sow gestation crates to loose housing o Committed to leadership in animal care • Increas
Slide 6: Financial highlights
Financial highlights • Cash on hand of $292M at the end of the fourth quarter • Invested $44M to repurchase 2M shares of MFI stock in Q4; $195M invested by end of January/16 to purchase the full 8.65M shares authorized under the NCIB • Capital expenditures were $38M in the quarter and $148M in 2015
Slide 7: 2016 capital expenditure forecast of $175M
2016 capital expenditure forecast of $175M Including: • Animal welfare • Loose sow housing conversion Including: • Enhanced bacon manufacturing • Pork packaging redesign Q4 REVIEW 2015 7
Slide 8: Summary
Summary • New prepared meats network driving margin expansion • Commercial platform is strong and accelerating • Closing in on 10% EBITDA margin target • Balance sheet is strong and provides financial flexibility • Pursuing strategic high growth platforms • Entering 2016 with momentum Q4 REVIEW 2015
Slide 9: Non-IFRS measures
Non-IFRS measures Adjusted Operating Earnings: Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes from continuing operations adjusted for items that are not considered representative of ongoing