Maple Leaf Foods Inc. · TSX:MFI
Maple Leaf Foods — Q2 2024 Earnings Presentation
43 slides from Maple Leaf Foods's earnings presentation, Aug 8, 2024
Slide 1: Q2 Financial Results & Business Update
Q2 Financial Results & Business Update August 8, 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 ~$4.9B ~13,500 23 #1 and #2 Leading First Manufacturing Prepared Meats Carbon Neutral Annual Sales Employees RWA Producer Facilities Brands Major Food Company Prepared Foods ~25% Pork Complex of Annual Sales Prepared Me
Slide 7: The Maple Leaf Blueprint
The Maple Leaf Blueprint serves as our strategic compass MAPLE LEAF FOODS — Q2 2024 BUSINESS AND FINANCIAL REVIEW | AUGUST 8, 2024 7
Slide 8: Driven by our purpose of Raising the Good in Food
Driven by our purpose of Raising the Good in Food, Maple Leaf Foods has demonstrated authentic leadership in sustainability and shared value creation Make Better Food Take Better Care Nurture a Better Planet • Established leadership in Sustainable Meats production, • Industry leader in workplace saf
Slide 9: Execution of our Blueprint has enabled top line growth and higher profitability
The execution of our Blueprint has enabled top line growth and higher levels of profitability Sales Adjusted EBITDA1 and margin Total Company ($ millions) Total Company ($ millions and %) +5.4% +7.4% $506 CAGR 2019-2023 500,000,000 CAGR 2019-2023 $4,739 $4,868 $4,845 $428 $4,521 $400 $400 450,000,00
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: 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 Maple Leaf Foods The new Pork Company Market Position Realizing our vision to be the most Sustainable Protein Company on An unleashed, world-leading organization producing sustainable meat the Earth
Slide 12: 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 Brands* Major Food
Slide 13: The new Pork Company: a global leader in sustainably produced pork
The new Pork Company: a global leader in sustainably produced, premium quality, value-added pork products $1.7B(1) 93% Leading The new Pork Company Pro Forma LTM Of owned spaces Gestation Producer of Pork Raised Annual Sales Crate Free Without Antibiotics World-class hog processing Globally admired
Slide 14: 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 margin expansion toward 1 14% - 16% target, in normal market conditions2 Completing the spin-off of our world-leading Pork 2 Harvest the remaining benefits from our large capital projects, Company in 2025 London Poult
Slide 15: Second Quarter 2024 Business Results
Second Quarter 2024 Business Results 15
Slide 16: Excellent progress advancing the execution of our priorities in Q2
Excellent progress advancing the execution of our priorities in Q2 Q2 Adjusted EBITDA1 increased 37% year over year to $141 million • Year-over-year margins increased 310 bps to 11.2%, largely driven by improving pork markets and return on capital projects • Sequential margin expansion of 110 bps th
Slide 17: Adjusted EBITDA Margin expanded to 11.2% in Q2
Adjusted EBITDA Margin1 expanded to 11.2% in Q2 and has improved by 340 bps in first half of 2024 Sales Adjusted EBITDA1 ($ millions) ($ millions) -0.9% vs YTD 23 +340 bps vs YTD 23 -0.4% $2,437 $2,414 +310 bps 10.7% vs Q2 23 vs Q2 23 7.3% $1,266 $1,261 11.2% 8.1% $257 $141 $178 $103 Q2 2023 Q2 2024
Slide 18: Second quarter highlights
Second 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 Solid results in a dynamic Financial results improved Did not achieve breakeven levels Financial results improved consumer dem
Slide 19: 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 20: Pork markets improving, but remain below normal market conditions
Pork markets improving, but remain below normal market conditions1 Market conditions negatively impacted Q2 by approximately $16M or ~125 bps Vertically Integrated Margin Industry Vertically Integrated Margin USDA Pork Cutout – Industry Hog Production Cost positive in Q2 $140 $55 USDA Pork Cutout –
Slide 21: Capital expenditures now expected to be $120M - $140M
Capital expenditures for year now expected to be $120M - $140M, further advancing deleveraging efforts Improving profitability Conclusion of large- Higher cash flow and of the business scale capex programs natural deleveraging Capex now focused on Lowering net debt Improving maintenance and to Adjus
Slide 22: Reduced capital expenditure outlook supports further Free Cash Flow generation
Reduced capital expenditure outlook supports further Free Cash Flow1 generation Improved near–term cash flow Capital Expenditures Free Cash Flow1 generation: Capex levels will be lower in 2024, ranging from $120M to $140M $629M +$165M Significant reduction in start-up expenses $491M vs YTD 2023
Slide 23: Outlook
Outlook Market Conditions Revenue Outlook Margin Outlook Balance Sheet / Capital Outlook Anticipate balance of year Low single-digit sales growth in 2024 Adjusted EBITDA1 margin expansion Generate increasing Free Cash Flow1 conditions to progressively supported by brand and revenue from 2023 improve
Slide 24: Unlocking Value, Unleashing Potential: Transaction Update
Unlocking Value, Unleashing Potential Transaction Update Q2 2024 24
Slide 25: 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 26: Pro Forma Estimates updated to include Second Quarter 2024
Pro Forma Estimates updated to include Second Quarter 2024 LTM ended June 30, 2024 LTM ended March 31, 2024 Maple Leaf Pro Forma Pro Forma Pro Forma new Maple Leaf Pro Forma Pro Forma Pro Forma new Foods Maple Leaf new Pork Pork Company Foods Maple Leaf new Pork Pork Company Consolidated Foods1 Comp
Slide 27: 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 28: 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 29: The new Pork Company: investment highlights
The new Pork Company: 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
Slide 30: The Pork Company Playbook
The Pork Company 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 Raising costs 2 Equipment modernization and automation Through optimizing feed
Slide 31: Next steps in the transformation of an iconic Canadian company
Next steps in the transformation of an iconic Canadian, purpose-driven company Prospectus to be filed to provide investors with detailed information on the new Pork Company Shareholder approval to be sought, supported by a detailed Information Circular describing the transaction, background and
Slide 32: On track to deliver 2024 priorities
On track to deliver 2024 priorities Drive Adjusted EBITDA1 margin expansion toward 1 14% - 16% target, in normal market conditions2 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
Slide 33: Supplemental Financial Slides
Supplemental Financial Slides Q2 2024 MAPLE LEAF FOODS — Q2 2024 BUSINESS AND FINANCIAL REVIEW | AUGUST 8, 2024 33
Slide 34: Q2 and YTD Consolidated Results
Q2 and YTD Consolidated Results Change Change Q2 Consolidated Results Q2 2024 Q2 2023 YTD Consolidated Results YTD 2024 YTD 2023 YoY YoY Sales $1,261 $1,266 (0.4%) Sales $2,414 $2,437 (0.9%) Gross profit $131 $94 +40.2% Gross profit $358 $170 +110.3% SG&A $117 $106 +9.8% SG&A $227 $209 +8.5% Adjuste
Slide 35: Balance Sheet
Balance Sheet Balance Sheet Q2 2024 Q2 2023 Change YoY Total Assets $4,630 $4,555 +$75 Long Term Debt $1,581 $1,566 +$15 Total Debt $1,881 $1,964 -$83 Net Debt1 $1,723 $1,807 -$84 Net Debt1 to Trailing 4 Quarters Adjusted EBITDA1 3.4x 5.8x (2.4)x Shareholders’ Equity $1,575 $1,554 +$21 All figures i
Slide 36: Reconciliation of non-IFRS metrics – Adjusted Operating Earnings, Adjusted EBITDA
Reconciliation of non-IFRS metrics – Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBITDA Margin Three months ended June 30 Six months ended June 30 ($ millions)(1) (Unaudited) 2024 2023 2024 2023 Earnings (loss) before income taxes $(33) $(64) $41 $(134) Interest expense and other finan
Slide 37: Reconciliation of non-IFRS metrics – Adjusted Earnings per Share
Reconciliation of non-IFRS metrics – Adjusted Earnings per Share Three months ended June 30 Six months ended June 30 ($ per share) (Unaudited) 2024 2023 2024 2023 Basic earnings (loss) per share $(0.21) $(0.44) $0.21 $(0.92) Restructuring and other related costs(1) 0.04 0.08 0.04 0.14 Items included
Slide 38: Reconciliation of non-IFRS metrics – Net Debt
Reconciliation of non-IFRS metrics – Net Debt As at June 30, ($ thousands, except for Net Debt to Trailing Four Quarters Adjusted EBITDA) (Unaudited) 2024 2023 Cash and cash equivalents $158,381 $156,859 Current portion of long-term debt $(300,371) $(398,394) Long-term debt $(1,581,093) $(1,565,822)
Slide 39: Reconciliation of non-IFRS metrics – Free Cash Flow
Reconciliation of non-IFRS metrics – Free Cash Flow Three months ended June 30 Six months ended June 30 ($ thousands) (Unaudited) 2024 2023 2024 2023 Cash provided by operating activities $45,496 $(57,004) $132,821 $(21,290) Maintenance Capital(1) (18,250) (19,070) (31,686) (42,178) Interest paid an
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 June 30, 2024 (in millions of CAD) Consolidated Maple New Pork Company Maple Leaf Foods(1) Eliminations (unaudited) Leaf Foods Inc. Sales $1,661(2) $3,562(3) ($378)(4) $4,845(5) Adjusted EBITD
Slide 41: Management's estimates on the Pork business spin-off: notes continued
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 42: Management's estimates on the Pork business spin-off, LTM March 31, 2024
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 New Pork Company Maple Leaf Foods(1) Eliminations (unaudited) Leaf Foods Inc. Sales $1,652(2) $3,553(3) ($355)(4) $4,850(5) Adjusted EBIT
Slide 43: Management's estimates on the Pork business spin-off: notes continued
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 the new Pork Company to Maple Leaf Foods for the period presented. 5 Calculated by adding the previously reported results for the