MISSISSAUGA, Ontario — Maple Leaf Foods Inc. has reported its financial results for the third quarter ended Sept. 30, 2023.
“For the third consecutive quarter, we delivered sequential improvement in Adjusted EBITDA margin in our Meat Protein business, while also making meaningful strides toward achieving our Adjusted EBITDA neutral goal in our Plant Protein business,” said Curtis Frank, president and CEO of Maple Leaf Foods. “Delivering 11.4% Adjusted EBITDA margin in our Meat Protein business in the face of improving, but still challenging market conditions, demonstrates clear momentum in our core business.”
“Looking ahead, we will continue to build on this momentum by remaining firmly focused on delivering the benefits from our capital investments, executing our strategic Blueprint, and deleveraging our balance sheet,” Frank added. “We have already started to see some benefits in our results from our two largest capital projects, London Poultry and the Bacon Centre of Excellence, and we expect to exit the year with an annualized run rate of about $130 million in Adjusted EBITDA contribution from these projects. At the same time, we are forecasting lower capital spend as we wrap up these large-scale organic projects.”
“Based on the strength of our assets, the power of our leading brands and product innovation, and the passion of our people, we are confident that we are poised to achieve our goal of 14-16% Adjusted EBITDA margin in our Meat Protein business when markets normalize,” Frank said.
Third quarter highlights include:
· Total company sales grew 1.1 percent to $1.245 billion, with an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin of 10.4 percent.
· Meat Protein Group sales grew to $1.211 billion, an increase of 1.4 percent year over year. Adjusted EBITDA was $138.4 million, and Adjusted EBITDA Margin was 11.4 percent, an improvement of 290 basis points compared to the same period last year, and 210 basis points from the second quarter of 2023.
· Plant Protein Group sales were $36.4 million. Plant Protein Group Adjusted EBITDA improved by 61.3 percent year over year to a loss of $9.4 million, en route to an Adjusted EBITDA target of neutral by the end of 2023.
· Capital expenditures were $50.5 million.
· The London Poultry facility transition is progressing on schedule. Three legacy facilities have fully transitioned their production volumes, and the transition from the fourth facility will begin shortly. The company expects London Poultry to be fully ramped up by the end of 2023.
Maple Leaf also notes outlook highlights including:
· Meat Protein: Expect mid-single digit sales growth in 2023, and Adjusted EBITDA Margin expansion to achieve a target range of 14 percent to 16 percent when markets normalize.
· Plant Protein: On track to deliver Adjusted EBITDA neutral by the end of 2023.
· Capital expenditure: For 2023 is expected to be roughly $200 million, down from prior guidance of less than $250 million. Approximately half of the spend will be attributable to Maintenance Capital and the balance attributable to Sales for the third quarter of 2023 were $1.245 billion compared to $1.231.9 billion last year, an increase of 1.1 percent. Sales growth in the Meat Protein Group was mostly offset by a 16.4 percent sales decline in the Plant Protein Group.
· Year-to-date sales for 2023 were $3.689.6 billion compared to $3.553.5 billion last year, an increase of 3.8 percent. Meat Protein Group sales grew 4.3 percent, which more than offset the 14.5 percent decline in the Plant Protein Group during the same period.
Net loss for the third quarter of 2023 was $4.3 million (4 cents loss per basic share) compared to a loss of $229.5 million ($1.86 loss per basic share) last year. The prior year net loss included a $190.9 million one-time non-cash impairment charge related to the Plant Protein Group, as well as a $31.5 million decrease in the fair value of biological assets compared to a $0.3 million increase in 2023.
The Meat Protein Group showed improved commercial results and pork market conditions, partly offset by cost inflation, along with increased start-up costs. The Plant Protein Group delivered improved margins along with lower Selling, General, and Administrative spending as the segment continues to reduce costs as part of its short term strategy. In addition, current year results were negatively impacted by higher interest expense with increased rates and higher debt largely to fund strategic capital expenditures, and by income tax expenses, which were a recovery in the prior year.
Year-to-date net loss for 2023 was $115.7 million (95 cents loss per basic share) compared to loss of $270.4 million ($2.18 loss per basic share) last year due to similar factors as noted above, with the exception of increased pork market headwinds for the year to date.
Adjusted Operating Earnings for the third quarter of 2023 were $70.5 million compared to $24.1 million last year, and Adjusted Earnings per Share for the third quarter of 2023 was 13 cents compared to loss of 1 cents last year. The increase was a result of improved commercial results and pork market conditions, partly offset by cost inflation.
Year-to-date Adjusted Operating Earnings for 2023 were $135.7 million compared to $63.9 million last year, and Adjusted Earnings per Share for 2023 were a loss of 1 cents compared to earnings of 2 cents last year due to similar factors as noted above, with the exception of increased pork market headwinds for the year to date.
Adjusted Earnings Before Taxes for the third quarter of 2023 were $25.1 million compared to $8.4 million last year. Adjusted EBT was driven by improved commercial performance and pork market conditions, partly offset by cost inflation in the Meat Protein Group, as well as improved margins in the Plant Protein group. This was partly offset by higher interest expense with increased rates and higher debt largely to fund strategic capital expenditures.
Year-to-date Adjusted EBT for 2023 was a loss of $17.8 million compared to earnings of $26.2 million last year due to similar factors as noted above with the exception of increased pork market headwinds for the year to date, Maple Leaf Foods reports.