Maple Leaf Foods (MFI) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales grew 1.8% year-over-year to CAD 1.26 billion, led by 3.1% growth in prepared meats and 2.0% in prepared foods, with plant protein and U.S. expansion contributing.

• Adjusted EBITDA rose 9.1% to CAD 141 million, with margin expanding to 11.2%, up 80 basis points year-over-year and 240 basis points year-to-date.

• Free cash flow increased by CAD 65 million year-over-year to CAD 155 million, supporting rapid deleveraging and a year-to-date improvement of CAD 230 million.

• Net debt reduced by CAD 126 million in the quarter and by CAD 173 million year-over-year, with leverage ratio down to 3.1x trailing 12-month adjusted EBITDA from 4.9x.

• Announced a tax-free butterfly reorganization for the planned 2025 spin-off of the pork business (Canada Packers), pending regulatory and tax approvals.

Financial highlights

• Q3 Adjusted EBITDA grew 9.1% to CAD 141 million; YTD Adjusted EBITDA up 29.5% to CAD 398 million.

• Q3 Adjusted EBITDA margin was 11.2% (up from 10.4% in Q3 2023); YTD margin at 10.8% (up from 8.4%).

• Q3 Free Cash Flow was CAD 155 million, up 72.9% year-over-year; YTD Free Cash Flow at CAD 256 million, up from CAD 26 million.

• Basic EPS for Q3 was CAD 0.14 (vs. -0.04 in Q3 2023); Adjusted EPS was CAD 0.18 (vs. 0.13).

• Gross profit rose to CAD 186.2 million (14.8% margin) from CAD 145.9 million (11.8% margin) year-over-year.

Outlook and guidance

• 2024 sales growth expected to be low single digits versus 2023, with continued progress toward a 14%-16% adjusted EBITDA margin target.

• Full-year 2024 capital expenditures forecasted at approximately CAD 100 million; 2025 capex expected at CAD 175-200 million, focused on maintenance and growth initiatives.

• Expecting sequential margin improvement in Q4 2024 as capital projects (London Poultry, Bacon Centre of Excellence) reach full operational benefit.

• Confident in achieving full operational benefits from major projects and continued deleveraging through year-end 2024.

• Spin-off of pork business expected in 2025, subject to regulatory and tax approvals.