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 operational efficiencies.

• 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% and poultry down 3.9%.

• Net loss narrowed to $26 million from $54 million in Q2 2023; adjusted EPS improved to $0.18 from $0.00.

• Announced spin-off of pork business into a separate public company, targeted for completion in 2025.

Financial highlights

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

• Q2 gross profit rose 40.2% to $131 million (gross margin 10.4%), up from $93.6 million (7.4%).

• Q2 adjusted operating earnings up 70.3% to $78 million; adjusted EBITDA: $141 million (up from $103 million).

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

• Net debt to trailing four quarters adjusted EBITDA reduced to 3.4x from 5.8x year-over-year.

Outlook and guidance

• 2024 guidance: low single-digit revenue growth, adjusted EBITDA margin expansion, increased free cash flow, and deleveraging.

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

• Full benefits from capital projects expected by Q4 2024.

• Targeting consolidated adjusted EBITDA margin of 14–16% in normal market conditions.

• Ongoing deleveraging and increasing free cash flow expected.