Maple Leaf Foods Reports Third Quarter 2025 Financial Results

MISSISSAUGA, ON, Nov. 5, 2025 /PRNewswire/ - Maple Leaf Foods Inc ("Maple Leaf Foods" or the "Company") (TSX: MFI) today reported its financial results for the third quarter ended September 30, 2025.

Third Quarter Highlights Total Company⁽ⁱ⁾

• Total Company Sales⁽ⁱⁱ⁾ were $1,356.3 million for the third quarter, compared to $1,255.5 million for the same period last year, an increase of 8.0%. Sales in the Prepared Foods, Poultry, and Pork operating units⁽ⁱⁱⁱ⁾ increased by 4.4%, 15.7%, and 10.4% respectively.
• Total Company Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")⁽ⁱⁱ⁾ grew to $171.4 million, a 21.7% increase from the third quarter of last year, with Adjusted EBITDA margin increasing from 11.2% to 12.6% for the same period.
• Earnings for the third quarter of 2025 were $43.1 million ($0.35 earnings per basic share) compared to $17.7 million ($0.14 earnings per basic share) last year. Adjusted Earnings per Share⁽ⁱⁱ⁾ for the third quarter of 2025 was $0.49 compared to $0.18 last year.
• Net Debt⁽ⁱⁱ⁾ was $1,354.9 million, with Net Debt to Trailing Twelve Months Total Company Adjusted EBITDA⁽ⁱⁱ⁾ of 2.0x improving from 2.1x at the end of the second quarter of 2025 and 3.1x at the same time a year ago.

Third Quarter Highlights Continuing Operations^(iv)

• Sales were $1,010.5 million for the third quarter, compared to $935.5 million for the same period last year, an increase of 8.0%. 
• Adjusted EBITDA⁽ⁱⁱ⁾ grew to $111.7 million, a 19.1% increase from the third quarter of last year, with Adjusted EBITDA margin increasing from 10.0% to 11.1% for the same period.
• Earnings from continuing operations for the third quarter of 2025 were $23.3 million ($0.19 earnings per basic share) compared to a loss of $1.8 million ($0.01 loss per basic share) last year. Adjusted Earnings per Share⁽ⁱⁱ⁾ for the third quarter of 2025 was $0.21 compared to a loss of $0.01 per share last year.

Executive Commentary

"The completion of the Canada Packers spin-off marks a defining milestone for Maple Leaf Foods, positioning us to unlock the full potential of our purpose-driven, brand-led consumer packaged goods business," said Curtis Frank, President and Chief Executive Officer of Maple Leaf Foods. "This separation establishes two strong, independent companies, each with a clear strategic focus and the agility to pursue its own growth path, while maintaining a valued long-term partnership."

"Our third quarter results highlight the strength of that focus, with total company sales rising 8.0 percent to $1,356.3 million and Adjusted EBITDA increasing 22 percent to $171.4 million," Frank added. "Sales growth remained strong in our continuing operations, with our CPG business also delivering 8.0 percent growth. While Adjusted EBITDA margins in this business improved significantly year over year, we did experience a sequential step back due to a rapid and sustained increase in raw material markets which, while supportive of pork operations, pressured the CPG business within the quarter. The decisive actions we have taken to mitigate these inflationary costs, together with the launch of two new brands, Musafir and Mighty Protein, reinforce our confidence in delivering sustainable, profitable growth as we look forward, while advancing our vision to be the most sustainable protein company on Earth."

Outlook

The Company continued to look at its business on a holistic basis prior to the completion of the spin-off and as such its previous 2025 outlook, including sales growth, expected Adjusted EBITDA range, and capital expenditures, included the expected performance of its pork operations.

At the close of the third quarter, the year-to-date run rate performance for the Total Company was tracking within the range of its previous 2025 outlook.

With the completion of the spin-off of its pork operations, the Company's previously issued 2025 outlook no longer reflects the Company's current structure and as such is no longer applicable.

The Company experienced significant input cost inflation to its Prepared Foods business in the third quarter due to sustained strength in pork market conditions that the Company expects to persist into the fourth quarter. The Company is implementing pricing actions to address input cost increases that will begin to be effective in the first quarter of 2026. While the Company expects the consumer environment to stay relatively stable for the remainder of the year, evolving macro-economic factors may influence consumer sentiment, supply chain activity, access to markets, and foreign exchange rates among other impacts. The Company leverages its data-driven insights to stay close to these evolving circumstances and is confident in the resilience of its brands, business model and strategy to manage through prevailing economic conditions.

Total Company Highlights

As at September 30, 2025, Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") had met the required conditions to proceed with the spin-off of its pork operations. The spin-off was completed on October 1, 2025, subsequent to the reporting date for the third quarter. As a result, the Company's pork operations, including its hog production operations and primary pork processing, have been presented as a disposal group held for distribution on the Consolidated Interim Balance Sheet and as discontinued operations on the Consolidated Interim Statement of Earnings as required under IFRS Accounting Standards. Further information regarding the spin-off transaction was included in the Company's Management Information Circular dated May 1st, 2025 and filed on SEDAR+. 

For reference, income statement amounts referred to as "Total Company" throughout this news release include the pork operations as if they had been consolidated. A reconciliation from the financial statements as presented to Total Company results is provided in the Non-IFRS Financial Measures at the end of this news release.

For the three and nine months ended September 30, 2025, the Company consisted of three operating units; Prepared Foods, which encompasses its prepared meats and plant protein categories, Poultry, which encompasses its fresh poultry category, and Pork. These operating units represent approximately 55%, 20%, and 25% of Total Company Sales respectively.

The table below summarizes key metrics for the Total Company including the pork operations. For analysis of the Company's continuing operations, see Section Operating Review of Continuing Operations.

Total Company Sales for the third quarter of 2025 were $1,356.3 million compared to $1,255.5 million last year, an increase of 8.0%. Prepared Foods sales increased by 4.4% driven by pricing and improved mix, which were partially offset by increased trade promotions. Poultry sales increased by 15.7% driven by improved channel mix tied to retail and foodservice volume growth and pricing, which were partially offset by increased trade promotions. Pork sales increased by 10.4% due to an increase in the number of hogs processed, higher average hog weights, and favourable market pricing. 

Total Company Sales year-to-date for 2025 were $3,959.8 million, compared to $3,658.0 million last year, an increase of 8.3%. Prepared Foods sales increased by 6.3% driven by pricing, improved mix, volume growth, and favourable foreign exchange impacts related to US sales, which were partially offset by higher trade promotions. Poultry sales increased by 10.1% driven by improved channel mix tied to retail and foodservice volume growth and pricing, which were partially offset by increased trade promotions. Pork sales increased by 11.0% due to an increase in the number of hogs processed, higher average hog weights, and favourable foreign exchange impacts.

Total Company Gross Profit for the third quarter of 2025 increased to $220.4 million (gross margin of 16.2%) compared to $186.2 million (gross margin of 14.8%) last year. The increase in gross profit was driven by improved pork market conditions, favourable Poultry channel mix, operating efficiencies inclusive of benefits from the investments in the London poultry and Bacon Centre of Excellence facilities, and lower depreciation. These factors were partially offset by a decrease in mark-to-market valuation of biological assets and commodity futures contracts, as well as input cost inflation and higher trade promotion costs which more than offset pricing impacts.

Total Company Gross Profit year-to-date for 2025 was $673.9 million (gross margin of 17.0%) compared to $543.7 million (gross margin of 14.8%) last year. The increase in gross profit was driven by improved pork market conditions, favourable mix in Prepared Foods and Poultry, lower start-up expenses, operating efficiencies inclusive of benefits from the investments in the London poultry and Bacon Centre of Excellence facilities, and pricing impacts which were mostly offset by input cost inflation and higher trade promotion costs. These factors were partially offset by a decrease in mark-to-market valuation of biological assets.

Total Company Selling, General and Administrative ("SG&A") expenses for the third quarter of 2025 were $115.3 million compared to $108.5 million last year. The increase in SG&A expenses was primarily driven by higher variable compensation.

Total Company SG&A expenses year-to-date for 2025 were $343.1 million compared to $335.2 million last year. The increase in SG&A expenses was driven by higher variable compensation and higher advertising and promotional expenses, which were partially offset by lower consulting fees.

Total Company Earnings for the third quarter of 2025 were $43.1 million ($0.35 earnings per basic share) compared to $17.7 million ($0.14 earnings per basic share) last year. Earnings were impacted by the same factors as noted above for gross profit and SG&A as well as reduced interest expense due largely to lower interest rates, all partly offset by higher income tax expense and incremental costs associated with the upcoming spin-off of the pork operations which were recorded outside of Adjusted Operating Earnings.

Total Company Earnings year-to-date for 2025 were $150.4 million ($1.21 earnings per basic share) compared to $43.1 million ($0.35 earnings per basic share) last year. Year-to-date earnings were impacted by the same factors as noted above for gross profit and SG&A, as well as reduced interest expense due to lower interest rates and debt levels, all partly offset by income tax expenses and incremental costs associated with the upcoming spin-off of the pork operations and the "Fuel for Growth" initiative, both of which were recorded outside of Adjusted Operating Earnings. 

Total Company Adjusted Operating Earnings for the third quarter of 2025 were $110.9 million compared to $73.6 million last year, and Adjusted Earnings per Share for the third quarter of 2025 was $0.49 compared to $0.18 last year. The increase was driven by factors consistent with those noted above for gross profit and SG&A expenses, excluding the impact of unrealized mark-to-market valuation adjustments.

Total Company Adjusted Operating Earnings year-to-date for 2025 were $329.4 million compared to $204.7 million last year, and Adjusted Earnings per Share for 2025 was $1.48 compared to $0.41 last year due to factors consistent with those noted above for gross profit and SG&A expenses excluding the impact of unrealized mark-to-market valuation adjustments and start-up expenses.

Total Company Adjusted EBITDA for the third quarter of 2025 was $171.4 million, compared to $140.8 million last year, driven by factors consistent with those noted above for Adjusted Operating Earnings excluding the reduction of depreciation expense. Total Company Adjusted EBITDA Margin was 12.6% compared to 11.2% last year, also driven by factors consistent with those noted above.

Total Company Adjusted EBITDA year-to-date for 2025 was $519.3 million compared to $398.1 million last year, driven by factors consistent with those noted above for Adjusted Operating Earnings excluding reduction of depreciation expense and lower other expense, largely a result of timing and non-recurring items from the first quarter. Year-to-date Total Company Adjusted EBITDA Margin for 2025 was 13.1% compared to 10.9% last year, also driven by factors consistent with those noted above.

Total Company Adjusted Earnings Before Taxes ("Adjusted EBT") for the third quarter of 2025 were $86.2 million compared to $32.1 million last year due to similar factors as noted above for Adjusted EBITDA, along with a reduction in interest expense.

Total Company Adjusted EBT year-to-date for 2025 were $255.5 million compared to $76.9 million last year due to similar factors as noted above for the third quarter.

Free Cash Flow for the third quarter of 2025 was $46.2 million compared to Free Cash Flow of $154.9 million in the prior year. The decrease included improved earnings after the removal of non-cash items which were more than offset by higher investment in working capital and lower tax refunds.

Year-to-date Free Cash Flow for 2025 was $248.6 million compared to Free Cash Flow of $255.6 million in the prior year. The decrease included higher earnings after deducting non-cash items which were more than offset by higher investment in working capital, lower tax refunds and higher maintenance capital expenditures.

Net Debt as at September 30, 2025 was $1,354.9 million, a decrease of $242.4 million compared to the prior year.

Operating Review of Continuing Operations

Maple Leaf Foods' continuing operations consists of two operating units; Prepared Foods and Poultry, which represent approximately 75% and 25% of sales, respectively. As a result meeting the conditions required to spin off the pork operations, the majority of the results of the pork operating unit have been presented as discontinued operations.

The following table summarizes the Company's sales, gross profit, earnings, basic earnings per share, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBT and Adjusted Earnings Per Share from their continuing operations for the three and nine months ended September 30, 2025 and September 30, 2024.

For further discussion on discontinued operations please refer to section 3. Discontinued Operations.

Sales from continuing operations include transactions between the Prepared Foods and Pork operating units that are eliminated when results are shown on a total company basis. Sales from continuing operations for the third quarter of 2025 were $1,010.5 million, compared to $935.5 million last year, an increase of 8.0%. Prepared Foods sales increased by 5.3% driven by pricing and improved mix, which were partially offset by increased trade promotions. Poultry sales increased by 15.7% driven by improved channel mix tied to retail and foodservice volume growth and pricing, which were partially offset by increased trade promotions.

Year-to-date sales from continuing operations for 2025 were $2,921.4 million compared to $2,716.4 million last year, an increase of 7.5%. Prepared Foods sales increased by 6.6% driven by pricing, improved mix, volume growth, and favourable foreign exchange impacts related to US sales, which were partially offset by higher trade promotions. Poultry sales increased by 10.1% driven by improved channel mix tied to retail and foodservice volume growth and pricing, which were partially offset by increased trade promotions.

Gross profit from continuing operations for the third quarter increased to $162.8 million, (gross margin of 16.1%) compared to $140.2 million (gross margin of 15.0%) last year. The increase in gross profit was driven by favourable Poultry channel mix, operating efficiencies inclusive of benefits from the investments in the London poultry and Bacon Centre of Excellence facilities, and lower depreciation. These factors were partially offset by input cost inflation and higher trade promotion costs which more than offset pricing impacts, and a decrease in mark-to-market valuation of futures contracts.

Year-to-date gross profit from continuing operations for 2025 was $504.4 million (gross margin of 17.3%) compared to $413.9 million (gross margin of 15.2%) last year. The increase in gross profit was driven by favourable mix in Prepared Foods and Poultry, lower start-up expenses, operating efficiencies inclusive of benefits from the investments in the London poultry and Bacon Centre of Excellence facilities, and pricing impacts which were mostly offset by input cost inflation and higher trade promotion costs.

SG&A expenses from continuing operations for the third quarter of 2025 were $101.5 million compared to $96.8 million. The increase in SG&A expenses was primarily driven by higher variable compensation.

Year-to-date SG&A expenses from continuing operations for 2025 were $304.2 million compared to $301.7 million last year. The increase in SG&A expenses was driven by higher variable compensation and higher advertising and promotional expenses, which were partially offset by lower consulting fees.

Earnings from continuing operations for the third quarter were $23.3 million, ($0.19 earnings per basic share from continuing operations) compared to a loss of $17.7 million ($0.01 loss per basic share from continuing operations) last year. Earnings from continuing operations were impacted by the same factors as noted above for gross profit as well as reduced interest expense largely due to lower interest rates, all partly offset by higher income tax expense.  

Year-to-date earnings from continuing operations for 2025 were $78.4 million ($0.63 earnings per basic share from continuing operations) compared to a loss of $18.3 million ($0.15 loss per basic share from continuing operations) last year. Earnings from continuing operations were impacted by the same factors as noted above for gross profit, as well as reduced interest expense due to lower interest rates and debt levels, and lower other expense, all partly offset by income tax expenses and costs associated with the "Fuel for Growth" initiative, which was recorded outside of Adjusted Operating Earnings.

Adjusted Operating Earnings from continuing operations for the third quarter were $62.4 million, compared to $40.4 million last year. Adjusted earnings per share from continuing operations for the third quarter were $0.21 per share, compared to $0.01 loss per share last year, due to factors consistent with those noted above for gross profit, excluding the impact of unrealized mark-to-market valuation adjustments.

Year-to-date Adjusted Operating Earnings from continuing operations for 2025 were $203.1 million, compared to $129.1 million last year. Year-to-date adjusted earnings per share from continuing operations for 2025 were $0.77, compared to $0.02 loss per share last year, due to factors consistent with those noted above for gross profit, excluding the impact of start-up expenses.

Adjusted EBITDA from continuing operations for the third quarter was $111.7 million, compared to $93.8 million last year. This increase was driven by factors consistent with those noted above for gross profit excluding the impacts of unrealized mark-to-market valuation adjustments and reductions of depreciation expense. Adjusted EBITDA Margin from continuing operations for the third quarter of 2025 was 11.1% compared to 10.0% last year, also driven by factors consistent with those noted above.

Year-to-date Adjusted EBITDA from continuing operations for 2025 was $358.4 million compared to $284.4 million last year. This increase was driven by factors consistent with those noted above for gross profit excluding the impact of start-up expenses along with lower other expense, largely a result of timing and non-recurring items from the first quarter. Year-to-date Adjusted EBITDA Margin from continuing operations for 2025 was 12.3% compared to 10.5% last year, also driven by factors consistent with those noted above.

Adjusted EBT from continuing operations for the third quarter was $40.0 million, compared to a loss of $0.8 million last year, due to similar factors as noted above for Adjusted EBITDA, along with a reduction in interest expense.

Year-to-date Adjusted EBT for 2025 from continuing operations was $135.0 million, compared to $5.1 million last year, due to similar factors as noted above for the third quarter.

Adjusted earnings per share from continuing operations for the third quarter were $0.21 loss per share, compared to $0.01 loss per share last year, due to factors consistent with those noted above for gross profit, excluding the impact of unrealized mark-to-market valuation adjustments.

Year-to-date adjusted earnings per share from continuing operations for 2025 were $0.77, compared to $0.02 loss per share last year, due to factors consistent with those noted above for gross profit, excluding the impact of start-up expenses.

Discontinued Operations

Discontinued operations pertain to the Company's pork operations which were spun-off as Canada Packers Inc. ("Canada Packers") subsequent to the reporting period on October 1, 2025.

The presentation of discontinued operations includes the elimination of intercompany transactions between the pork operations and Prepared Foods, and does not include any allocation of shared costs that will continue to be incurred by Maple Leaf after the spin-off, nor does it reflect the full impact of agreements between the two companies entered into in connection with the spin-off. Further information on Canada Packers can be found on Canada Packers' website at www.CanadaPackers.com, and on SEDAR+ under Canada Packers Inc. company filings.

Sales from discontinued operations for the third quarter were $345.8 million, compared to $320.0 million last year, an increase of 8.1%. This represents $481.8 million (2024: $420.2 million) of sales from the pork operations net of allocations and eliminations. The increase in pork operations sales was driven by increased sales volume, and favourable market pricing.

Year-to-date Sales from discontinued operations for 2025 were $1,038.3 million, compared to $941.6 million last year, an increase 10.3%. This represents $1,407.0 million (2024: $1,234.5 million) of sales from the pork operations net of allocations and eliminations. The increase in pork operations sales was driven by increased sales volume, favourable market pricing, and favourable foreign exchange.

Earnings from discontinued operations for the third quarter were $19.7 million compared to $19.5 million last year. Earnings from discontinued operations were impacted by improved vertically integrated pork markets, partly offset by reduction in mark-to-market valuation on biological assets and transaction costs recorded in discontinued operations.

Year-to-date Earnings from discontinued operations for 2025 were $72.0 million compared to $61.4 million last year. Year-to-date Earnings from discontinued operations were impacted by improved vertically integrated pork markets, partly offset by reduction in mark-to-market valuation on biological assets, and transaction costs recorded in discontinued operations.

For further information on discontinued operations, see Note 12 in the Company's third quarter Consolidated Interim Financial Statements.

Management's Estimates on the Pork Operations Spin-Off, and Related Non-IFRS Measures

The following tables present Management's estimates of the financial impact of the spin-off on both Maple Leaf and Canada Packer's results. These estimates have not been audited or reviewed by any third party, have been derived from internal management reporting, and reflect sales, cost and expense allocations, including with respect to corporate expenses, as well as other estimates and adjustments, each of which are subject to change. Management believes that these estimates are useful in providing an indication of the relative size of the businesses and the implications of the separation for each company. There is no guarantee that these estimates will accurately predict or reflect in the future performance of Canada Packers or the Company.

Management believes that these estimates are useful in providing an indication of the separate performance of each business as if the transaction had happened at the beginning of the reporting period.

Adjusted EBITDA, Pro Forma Adjusted EBITDA and related margin, as presented in the tables above, are non-IFRS metrics and do not have a standardized meaning prescribed by IFRS. Consequently, 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 EBITDA, Pro Forma Adjusted EBITDA and related margin, as presented in the tables above, are non-IFRS metrics and do not have a standardized meaning prescribed by IFRS. Consequently, 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.

Other Matters

On November 4, 2025, the Board of Directors approved a quarterly dividend of $0.19 per share, $0.76 per share on an annual basis, payable December 31, 2025, to shareholders of record at the close of business on December 10, 2025. Unless indicated otherwise by the Company at or before the time the dividend is paid, the dividend will be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System". The Company's Dividend Reinvestment Plan ("DRIP") permits eligible shareholders to direct their cash dividends to be reinvested in additional common shares of the Company. The Company eliminated the 2% discount on the treasury shares issued under the DRIP beginning in 2025. Therefore, for shareholders who wish to reinvest their dividends under the DRIP, Maple Leaf Foods intends to issue common shares from treasury at a price equal to 100% of the weighted average closing price of the shares for the five trading days preceding the dividend payment date. Full details of the DRIP, including how to enroll in the program, are available at https://www.mapleleaffoods.com/.

Conference Call

A conference call will be held at 8:00 a.m. ET on November 5, 2025, to review Maple Leaf Foods' third quarter financial results. To participate in the call, please dial 416-945-7677 or 1-888-699-1199. For those unable to participate, playback will be made available an hour after the event at 289-819-1450 or 1-888-660-6345 (Passcode: 37982#).

A webcast of the third quarter conference call will also be available at: https://app.webinar.net/Z3MK7nKEqdm.

The Company's full unaudited condensed consolidated interim financial statements ("Consolidated Interim Financial Statements") and related Management's Discussion and Analysis are available on the Company's website and on SEDAR+ at www.sedarplus.ca.

An investor presentation related to the Company's third quarter financial results is available at www.mapleleaffoods.com/investors.

Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBT, Construction Capital, Net Debt, Net Debt to Trailing Twelve Months Adjusted EBITDA, Free Cash Flow and Return on Net Assets. 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.

Total Company Results

Beginning in the third quarter of 2025, the pork operations were presented as discontinued operations as described in Total Company Overview. Management therefore uses the terms Total Company Sales, Total Company Gross Profit and, Total Company Selling, General and Administrative expenses to describe the results of the business as if the results of the pork operations were still consolidated for the reporting period. The table below provides a reconciliation of sales, gross profit and selling, general and administrative expenses between continuing operations, discontinued operations and total company results for the three and nine months ended September 30, 2025. For historical periods "Total Company" metrics refer to the Consolidated results as originally published for the relevant time period.

Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBT

Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBT are non-IFRS measures used by Management to evaluate financial operating results. Adjusted Operating Earnings is defined as earnings before income taxes adjusted for items that are not considered representative of ongoing operational activities of the business and certain items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Adjusted EBITDA is defined as Adjusted Operating Earnings plus depreciation and intangible asset amortization, adjusted for items included in other expense that are considered representative of ongoing operational activities of the business. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by sales. Adjusted EBT is used annually by the Company to evaluate its performance and is a component of calculating bonus entitlements under the Company's short term incentive plan. It is defined as Adjusted EBITDA plus interest income, less depreciation and amortization, and interest expense and other financing costs.

The table below provides a reconciliation of earnings before income taxes as reported under IFRS in the Consolidated Interim Financial Statements to Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBT for the three and nine months ended September 30, 2025 as indicated below. Management believes that these non-IFRS measures are useful in assessing the performance of the Company's ongoing operations and its ability to generate cash flows to fund its requirements.