Fourth Quarter 2018 Advancing our vision to be the most sustainable protein company on earth
Forward-looking and non-IFRS information T his pre se ntatio n c o ntains “fo rward-lo o king info rmatio n” within the me aning o f applic able se c uritie s law. T he se state me nts are base d o n c urre nt e xpe c tatio ns, e stimate s, fo re c asts, and pro je c tio ns abo ut the industrie s in whic h the Co mpany o pe rate s, as we ll as be lie fs and assumptio ns made by the Manag e me nt o f the Co mpany. T he se state me nts are no t g uarante e s o f future pe rfo rmanc e and invo lve assumptio ns and risks and unc e rtaintie s that are diffic ult to pre dic t. T he se assumptio ns have be e n de rive d fro m info rmatio n c urre ntly available to the Co mpany, inc luding info rmatio n o btaine d by the Co mpany fro m third-party so urc e s. T he se assumptio ns may pro ve to be inc o rre c t in who le o r in part. I n additio n, ac tual re sults may diffe r mate rially fro m tho se e xpre sse d, implie d, o r fo re c aste d in suc h fo rward-lo o king info rmatio n, whic h re fle c t the Co mpany’ s e xpe c tatio ns o nly as o f the date he re o f. Ple ase re fe r to the se c tio ns e ntitle d “Risk F ac to rs” and “F o rward-L o o king State me nts” in the Co mpany's Manag e me nt Disc ussio n and Analysis fo r the fisc al ye ar e nde d De c e mbe r 31, 2018 fo r additio nal de tail. I n additio n, this pre se ntatio n c o ntains the fo llo wing no n-I F RS me asure s: Adjuste d Ope r ating E ar nings: De fine d as e arning s be fo re inc o me taxe s adjuste d fo r ite ms that are no t c o nside re d re pre se ntative o f o ng o ing o pe ratio nal ac tivitie s o f the busine ss, and ite ms whe re the e c o no mic impac t o f the transac tio ns will be re fle c te d in e arning s in future pe rio ds whe n the unde rlying asse t is so ld o r transfe rre d. e : De fine d as basic e arning s pe r share adjuste d fo r all ite ms that are no t c o nside re d re pre se ntative o f o ng o ing Adjuste d E ar nings pe r Shar o pe ratio nal ac tivitie s o f the busine ss, and ite ms whe re the e c o no mic impac t o f the transac tio ns will be re fle c te d in e arning s in future pe rio ds whe n the unde rlying asse t is so ld o r transfe rre d. tization: De fine d as e arning s be fo re inte re st and inc o me taxe s plus Adjuste d E ar nings Be for e Inte r e st, T axe s, De pr e c iation and Amor de pre c iatio n and intang ible asse t amo rtizatio n, adjuste d fo r ite ms that are no t c o nside re d re pre se ntative o f o ng o ing o pe ratio nal ac tivitie s o f the busine ss, and ite ms whe re the e c o no mic impac t o f the transac tio ns will be re fle c te d in e arning s in future pe rio ds whe n the unde rlying asse t is so ld o r transfe rre d. low: De fine d as c ash pro vide d by o pe ratio ns, le ss additio ns to lo ng -te rm asse ts. F r e e Cash F Ne t (De bt) Cash: De fine d as c ash and c ash e quivale nts, le ss lo ng -te rm de bt and bank inde bte dne ss. Re fe r to slide s 14-16 fo r the re c o nc iliatio n o f no n-I F RS financ ial me asure s Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019 2
Wrapping up a challenging, but important year Flat sales with 90bps of margin compression driven by: Unprecedented market environment Start-up costs to renovate flagship brands Three of four quarters delivered adjusted EBITDA margin of 10% or more Excellent progress on strategic initiatives to FOURTH QUARTER 2018 deliver structural margin expansion ADJUSTED EBITDA MARGIN 10.0% 3 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Setting up for a future of profitable growth Advanced sustainability leadership on every dimension Successfully renovated flagship brands Completed three strategic acquisitions Announced investment in world-class poultry facility Delivered continued high double-digit growth in plant protein 4 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Financial results reflect positive momentum in the face of unusual market conditions Q4 2018 FY 2018 $3,496 $894 Sales ($ Millions) Adjusted 10.0% 9.9% EBITDA (%) $0.29 $1.22 Adjusted EPS $311 $311 Net debt ($ Millions) 5 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Continued momentum in underlying performance Favourable sales mix supported by food renovation Continued growth in plant protein and sustainable meats Strong commercial performance in prepared meats Expanded U.S. footprint driven by sustainable meat offering 6 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Reconciling “noise” versus “signal” Adjusted EBITDA Margin 7 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
V alue creation with a disciplined approach to capital allocation and an investment grade balance sheet Total Capital Expenditure Dividends per share ($M) ($/share) 11.5% London Poultry Share buybacks via NCIB Strategic Acquisitions ($M) ($M) +11.5% $140 $80 $190 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019 8
Our Blueprint The Path to Our Financial Goal… Sustainability strategy Accelerating Investing in poultry network Announced Renovating our brands Launched Growth in plant protein Investing in hyper-growth 14 % - 16 % Driving a cost culture Everyday 9 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Accelerating sustainability leadership across our portfolio 8,000 + stores including 12 of top 15 retailers Greenfield brand continues to Sustainable meat platform Canada’s #1 brand now Raised deliver double-digit growth Without Antibiotics driving U.S. expansion 10 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Messages that parents can relate to…and food they can feel great about serving their kids. Super Bowl spots generated 10M + impressions … accelerating awareness for Maple Leaf real food movement 11 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
NEW Lightlife burger wows with great taste, nutrition and exceptional experience A breakthrough burger delivering the delicious taste and juicy texture that consumers crave Developed to win in the hyper-growth plant protein market ~US$1 billion North American market Refrigerated segment up 40% in 2018 Burgers now 21% of refrigerated category, up from 12% in 2017 #1 and 2# brands in refrigerated space, with decades of innovation and culinary expertise 12 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Setting up for a future of profitable growth Executing on all growth levers to deliver structural EBITDA margin expansion Proven track-record and industry expertise to capitalize on pipeline of opportunities Investing in attractive and growing markets Committed to delivering exceptional returns and creating shared value 13 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Reconciliation of Non-IFRS Measures Adjusted Operating Earnings Q4 2018 Q4 2017 2018 2017 ($ millions) Net earnings 11.9 59.1 101.3 164.1 Income taxes 6.1 12.2 39.8 50.2 Earnings before income taxes (i) 18.1 71.2 141.1 214.3 Interest expense and other financing costs 4.2 1.3 10.0 5.2 Other expense (income) 8.5 5.3 13.0 (3.6) Restructuring and other related costs 42.2 5.9 46.2 23.0 Earnings from operations (i) 73.1 83.7 210.3 238.9 Decrease in fair value of biological assets (22.2) (27.6) 10.9 (1.3) Unrealized loss (gain) on derivative contracts 3.1 8.5 (5.6) 26.2 Adjusted Operating Earnings (i) 54.0 64.7 215.6 263.8 (i) May not down-add due to rounding 14 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Reconciliation of Non-IFRS Measures Adjusted EBITDA Q4 2018 Q4 2017 2018 2017 ($ millions) Net earnings 11.9 59.1 101.3 164.1 Income taxes 6.1 12.2 39.8 50.2 Earnings before income taxes (i) 18.1 71.2 141.1 214.3 Interest expense and other financing costs 4.2 1.3 10.0 5.2 Items in other expense (income) not considered representative of ongoing 8.3 3.0 15.6 (3.6) operations Restructuring and other related costs 42.2 5.9 46.2 23.0 Change in the fair value of biological assets and unrealized (gain) losses on (19.1) (19.1) 5.3 25.0 derivative contracts Depreciation and amortization 35.3 31.2 126.0 117.2 Adjusted EBITDA (i) 89.1 93.5 344.3 381.1 (i) May not down-add due to rounding 15 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
Reconciliation of Non-IFRS Measures Adjusted EPS Q4 2018 Q4 2017 2018 2017 ($ per share) Basic earnings per share 0.10 0.47 0.81 1.28 Restructuring and other related costs 0.25 0.03 0.27 0.13 Items included in other expense (income) not considered representative of 0.06 0.02 0.11 (0.01) ongoing operations Change in the fair value of biological assets (0.13) (0.16) 0.06 (0.01) Change in the fair value of unrealized loss (gain) on derivative contracts 0.02 0.05 (0.03) 0.15 Adjusted EPS (i) 0.29 0.41 1.22 1.54 (i) May not down-add due to rounding 16 Q4 2018 BUSINESS AND FINANCIAL REVIEW – MAPLE LEAF FOODS | FEBRUARY 28, 2019
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