Maple Leaf Foods Reports First Quarter 2018 Financial Results - 02.05.18 - News

MISSISSAUGA, ON, May 2, 2018

MISSISSAUGA, ON, May 2, 2018 /PRNewswire/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the first quarter ending March 31, 2018.

Sales volume growth across the business, except in fresh pork with temporary supply interruption
Adjusted EBITDA margins(1) of 10.1%
Strong commercial and operating performance across the business, offset by less favorable market conditions
Excellent momentum in our U.S platform and in plant protein
Preparing for launch in core brand renovations in the second quarter

Financial Highlights

Measure^(a)

(Unaudited)

Three months ended March 31,

2018

ARIVA.DE Börsen-Geflüster

Kurse

Maple Leaf Foods

16,50 $

-7,30%

2017

% Change

Sales^(b)

$

817.5

$

811.2

0.8%

Net Earnings

$

27.9

$

30.1

(7.3)%

Basic Earnings per Share

$

0.22

$

0.23

(4.3)%

Adjusted EBITDA Margin

10.1%

10.8%

-70 bps

Adjusted Operating Earnings⁽²⁾

$

52.8

$

59.0

(10.6)%

Adjusted Earnings per Share⁽³⁾

$

0.29

$

0.33

(12.1)%

Free Cash Flow⁽⁴⁾

$

(3.3)

$

34.8

(109.5)%


^(a)	All financial measures in millions except Adjusted EBITDA Margin and Basic and Adjusted Earnings per Share.
^(b)	2018 sales include the impact of the adoption of new accounting standard IFRS 15 - Revenue from Contracts with Customers. Refer to note 2(b) of the unaudited condensed consolidated interim financial statements for further details on the impact of the adoption of new accounting standards.

Note: Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of all non-IFRS financial measures.

"As anticipated, it was a more challenging start to the year in 2018 although we were pleased to have delivered EBITDA margins of 10.1% in these conditions, which reflects our balanced portfolio, brand strength and value-added product mix," said Michael H. McCain, President and CEO. "We realized excellent commercial and operating gains in the prepared meat portfolio, offset by the much-anticipated headwinds of market conditions. We are now launching the most extensive food and brand renovation in our history, which will be one of our strategic growth foundations for years to come."

OPERATING REVIEW

The following table summarizes the Company's total sales and Adjusted Operating Earnings for the quarter.

($ thousands) (Unaudited)	Three months ended March 31,
	2018		2017
Total Sales	$	817,509	$	811,185
Adjusted Operating Earnings	$	52,772	$	59,030
Adjusted EBITDA Margin	10.1%		10.8%

Sales and Earnings Review

Sales in the first quarter increased 0.8% to $817.5 million, or 2.4% after adjusting for the adoption of a new accounting standard, foreign exchange, and acquisitions. Sales were driven by prepared meats, which benefited from innovation and the Company's expansion in the U.S. market as well as pricing taken in fall of 2017. The Lightlife and Field Roast brands contributed to sales increases in the quarter. Sales in value-added fresh pork were impacted by lower market values and a transitory reduction in hog supply from PEDv in 2017.

Adjusted Operating Earnings were $52.8 million compared to $59.0 million in the first quarter of 2017. Positive trends and commercial performance in the underlying business were offset by market conditions in pork markets which were materially below prior year. First quarter earnings benefited from improvement in prepared meats related to volume growth, strong margins and increased supply chain efficiency. Performance in value-added poultry and pork and plant protein also contributed to our earnings.

Net earnings for the first quarter were $27.9 million ($0.22 per basic share) compared to $30.1 million ($0.23 per basic share) in the first quarter of 2017.The decrease in net earnings was consistent with factors noted above and partially offset by lower restructuring costs.

Other Matters

On May 2, 2018, the Board of Directors approved a dividend of $0.13 per share payable June 29, 2018 to shareholders of record at the close of business on June 8, 2018. Unless indicated otherwise by the Company at or before the time the dividend is paid, this dividend will be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System".

Conference Call

An investor presentation related to the Company's first quarter financial results is available at www.mapleleaffoods.com and can be found under Investor Information on the Investors page. A conference call will be held at 2:30 p.m. EDT on May 2, 2018, to review Maple Leaf Foods' first quarter financial results. To participate in the call, please dial 416-340-2216 or 1-800-273-9672. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 or 1-800-408-3053 (Passcode: 9110367#).

A webcast presentation of the first quarter financial results will also be available at:

https://edge.media-server.com/m6/p/4xp9svdj

The Company's full unaudited condensed consolidated interim financial statements and related Management's Discussion and Analysis are available on the Company's website.

Reconciliation of Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Free Cash Flow and Net Cash. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.

Adjusted Operating Earnings

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is defined as earnings before income taxes adjusted for items that are not considered representative of ongoing operational activities of the business and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of net earnings as reported under IFRS in the unaudited condensed consolidated interim statements of net earnings to Adjusted Operating Earnings for the three months ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating results, as they are representative of the ongoing operations of the Company.

($ thousands)
(Unaudited)

Three months ended March 31,

2018

2017

Net earnings

$

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