Maple Leaf Foods (MFI) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA rose 37% year-over-year to $141 million in Q2 2024, with margin up 310 bps to 11.2%, driven by prepared meats growth, improved pork markets, and capital project returns.

• Free cash flow improved to $27 million from negative $76 million last year, supporting deleveraging and a stronger balance sheet.

• Revenue was essentially flat at $1.26 billion, with prepared meats up 3.2%, poultry down 3.9%, and pork down 4.2%.

• Announced spin-off of pork business into a separate public company, targeted for 2025, to create two focused public companies.

• 2024 priorities include margin expansion, capital project benefits, brand strategy adaptation, and cost focus.

Financial highlights

• Q2 2024 sales were $1,261 million, down 0.4% year-over-year; prepared foods up 1%, pork down 4.2%.

• Q2 adjusted operating earnings were $78 million (up from $45.9 million); adjusted EBITDA: $140.9 million (up from $103.1 million).

• Q2 gross profit was $131 million (gross margin 10.4%), up from $93.6 million (7.4%).

• Q2 net loss was $26 million ($0.21/share), improved from $54 million loss last year.

• Q2 free cash flow was $27 million, up $103 million year-over-year.

Outlook and guidance

• 2024 revenue growth revised to low single digits; adjusted EBITDA margin target remains 14%-16% in normal markets.

• Capital expenditures for 2024 expected at $120–$140 million, focused on maintenance and optimization.

• Full benefits from capital projects expected by Q4 2024.

• Ongoing deleveraging and increasing free cash flow expected.

• Expects progressive improvement in market conditions for the rest of 2024, with declining interest rates and stabilizing inflation.