Maple Leaf Foods (MFI) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales grew 1.8% year-over-year to $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 $141 million, with margin expanding to 11.2% (up 80 bps year-over-year), and net earnings reached $17.7 million, reversing a prior loss.

• Free Cash Flow increased by $65 million year-over-year to $155 million, supporting rapid deleveraging and a reduction in net debt to $1.60 billion (3.1x trailing EBITDA).

• Announced a tax-free “butterfly reorganization” for the planned 2025 spin-off of the pork business (Canada Packers), with both companies to pursue focused growth strategies.

• Comprehensive income for Q3 2024 was a loss of $45.2 million, mainly due to actuarial losses, despite positive net earnings.

Financial highlights

• Gross profit for Q3 2024 was $186.2 million (14.8% margin), up from $145.9 million (11.8%) in Q3 2023.

• Adjusted Operating Earnings for Q3 were $73.6 million; Adjusted EPS was $0.18 (Q3), up from $0.13 last year; reported EPS was $0.14, reversing a loss.

• Net Debt at Q3 2024 was $1.60 billion, down $172 million year-over-year; Net Debt/Trailing Adjusted EBITDA improved to 3.1x from 4.9x.

• Cash provided by operating activities for the nine months ended September 30, 2024 was $309 million, up from $93.9 million year-over-year.

• Total assets as of September 30, 2024 were $4.45 billion, with shareholders' equity at $1.51 billion.

Outlook and guidance

• 2024 sales growth expected to be low single digits, with continued progress toward a 14%-16% adjusted EBITDA margin target and full benefits from major capital projects in Q4.

• 2024 capital expenditures forecasted at ~$100 million; 2025 capex expected at $175–200 million, focused on maintenance and growth initiatives.

• Confident in achieving full operational benefits from London Poultry and Bacon Center of Excellence in Q4.

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

• Adoption of new accounting standards (IFRS 18) planned for 2027; no material impact expected from other upcoming standards.