Maple Leaf’s transformational journey Transforming the business Building the foundation Pre-2014 2014 – 2015 2016 – 2017 2018+ Broad meat Focused branded Defined strategic 10% EBITDA Launched purpose • • • • • and bakery protein company growth platforms milestone and vision portfolio achieved Prepared meats Branded entry into Commenced • • • Multiple network U.S. market Accelerated focus largest brand • • independent transformation on cost culture repositioning operating units completed strategy in our history Established Maple • Eliminated debt Comprehensive Leaf Centre for • • – significant sustainability Action on • Acquired Lightlife financial strategy Food Security Foods flexibility developed 7 | November 8, 2017 | Investor Day | Michael H. McCain
Our journey has significantly rewarded shareholders Total shareholder return vs. indices – last five years S&P 500 TSX +218% 260.0% 230.0% 200.0% 170.0% 140.0% +79% 110.0% 80.0% +28% 50.0% 20.0% (10.0%) Oct 12 Oct 13 Oct 14 Oct 15 Oct 16 Oct 17 8 | November 8, 2017 | Investor Day | Michael H. McCain
What’s next? Five mega trends are shaping the food industry Big foods, big brands under attack Growth in responsible consumption FOOD INDUSTRY Digital disruption MEGA TRENDS Cost reduction imperative Global food security 9 | November 8, 2017 | Investor Day | Michael H. McCain
The path forward: creating shared value WHAT THE BUSINESS SHARED WORLD NEEDS OPPORTUNITY VALUE A sustainable food system Creating high-growth, profitable markets 10 | November 8, 2017 | Investor Day | Michael H. McCain
We arrived at a clear vision for Maple Leaf 11 | November 8, 2017 | Investor Day | Michael H. McCain
This is not a new direction: building the foundation for many years Sustainability elevated from strategy to • company purpose and vision Expanding into alternative proteins • Established North American leadership in • raised without antibiotics Aggressive environmental footprint reduction • Building leadership in animal care • Increasing social impact through the • Maple Leaf Centre for Action on Food Security Category leadership in natural prepared meats • Maintaining strong team engagement through • our values-based culture 12 | November 8, 2017 | Investor Day | Michael H. McCain
Pursuing our vision will accelerate profitable growth Driving profitability Driving growth Five-year goal • Attracting and inspiring great talent • Commercializing our leadership 14% to 16% in sustainability 2016 • Activating purpose through our brands • Building our U.S. growth platform • Expanding our leadership in 10%+ alternative proteins 2005 – 2012 • Investing in assets and driving out costs 3.5% to fuel growth 13 | November 8, 2017 | Investor Day | Michael H. McCain
What we would like to accomplish with you today • Understand our vision and plans • Understand how shared value translates into profitable growth • Understand where we expect to deploy capital to support our vision 14 | November 8, 2017 | Investor Day | Michael H. McCain
Activating our vision Gary Maksymetz, Chief Operating Officer 15 | November 8, 2017 | Investor Day | Gary Maksymetz
First… some context on who we are Canada’s leading Employing more than 11,000 people, we are: branded protein Canada’s largest prepared meats and poultry producer • company, with Top 10 pork producer in North America, largest in pork raised • sales exceeding without antibiotics $3 billion Leading refrigerated plant-based protein player in the U.S. • Leader in sustainability including sustainable meat • 16 | November 8, 2017 | Investor Day | Gary Maksymetz
We have an unparalleled breadth of leading brands with #1 and #2 market shares 17 | November 8, 2017 | Investor Day | Gary Maksymetz
We have built a tremendous value-added business Virtually all Canadian households A portfolio of value-added purchase Maple Leaf products consumer products ~10% ~20% ~80% ~90% MLF products Other Value-added Other 18 | November 8, 2017 | Investor Day | Gary Maksymetz
Competitive advantage from scale vertical integration Processing and Delivers competitive market advantage for our brands Raising distribution and customer relationships Market-leading brands Company-owned Top 10 pork producer • • farms supply 40%+ of in North America processed pork State-of-the-art pork • Chicken hatcheries processing • solidify relationships with growers Scale assets to • support U.S. growth Significant company- • owned supply of hogs Deepening strategic relationships Revamped network • raised without built for minimal antibiotics double-handling and efficiency Vertical integration provides strategic supply, Deep relationships with Canadian scale facilitates and enables RWA customers and growing relationships with key U.S. customers 19 | November 8, 2017 | Investor Day | Gary Maksymetz
Our six core strategies fuel our vision 20 | November 8, 2017 | Investor Day | Gary Maksymetz
Our broad sustainability platform is a catalyst for growth Leading the industry in health and nutrition • Advancing food security • Executing animal wellness strategy • Reducing environmental footprint by 50% • 21 | November 8, 2017 | Investor Day | Gary Maksymetz
Creating shared value requires extraordinarily talented and passionate people Purpose and vision are magnets for top talent • who can make a difference Being a purpose-driven company drives high • engagement Continuing to lead our industry in workplace • safety Fostering a workplace that deeply embraces • diversity and inclusion – where people can bring their whole selves to work 22 | November 8, 2017 | Investor Day | Gary Maksymetz
A food movement is underway at Maple Leaf Deeply connecting with our consumers by • offering great food choices and options Directly connecting our brands to our vision and • strategic advantages Reformulating our portfolio to Raise the Good in • Food across multiple dimensions, including taste, nutrition, affordability and sustainability Next generation food safety and quality • management systems 23 | November 8, 2017 | Investor Day | Gary Maksymetz
Expanding into new markets led by sustainable protein Broadening our leadership in alternative • plant-based proteins Building out our U.S. growth platform with • sustainable meat a core diffentiator Strategic, accretive acquisitions that align • with our vision 24 | November 8, 2017 | Investor Day | Gary Maksymetz
Sustainability enabled by exciting digital opportunities New ways of working – enabling seamless • collaboration “anywhere” New ways of operating – unleashing the • potential of new technologies New ways of engaging customers – leveraging • data visualization, machine learning and streamlined customer engagement 25 | November 8, 2017 | Investor Day | Gary Maksymetz
Eliminating waste in all forms; sustainability a key enabler Embedded cost culture • Standardizing best-in-class operating processes • Driving tangible benefits from our environmental • action plan Continuing to invest in our assets to support • continued margin growth 26 | November 8, 2017 | Investor Day | Gary Maksymetz
A proven track record of execution • Successful execution of network transformation • Delivered on our previous 10%+ margin target • Strong governance and management rhythms • Culture of accountability and delivering results • Disciplined approach to investment • Resilient, fast paced and adept at change 27 | November 8, 2017 | Investor Day | Gary Maksymetz
Why sustainability matters Randy Huffman, Chief Food Safety & Sustainability Officer 28 | November 8, 2017 | Investor Day | Randy Huffman
We have a unique opportunity to create shared value WHAT THE BUSINESS SHARED WORLD NEEDS OPPORTUNITY VALUE A sustainable food system Creating high-growth, profitable markets 29 | November 8, 2017 | Investor Day | Randy Huffman
The food system is at the epicentre of critical global issues; meat production and consumption is a core contributor 800 million Food system contributes North American meat Rising lack of trust in the • • • • undernourished, ~30% of greenhouse gas consumption 4x that of food industry 2 billion overweight emissions the non-industrial world 600,000 die yearly from Livestock production Not sustainable on a Trust needs to be • • • • contaminated food responsible for ~15% of global basis restored and water global greenhouse gas emissions 30 | November 8, 2017 | Investor Day | Randy Huffman
Addressing these needs is creating high-growth profitable markets • “Responsible product” consumption vastly outpacing conventional retail growth • Reducing antibiotic use creating a fast-growing market • Rise in “flexitarianism” means more demand for plant-based proteins and fusion foods • Sustainability key to attracting, engaging and retaining great people 31 | November 8, 2017 | Investor Day | Randy Huffman
Consumer interest in responsible consumption is driving fastest-growing and highest-margin segments in the food sector Responsible consumption (RC) …and price premiums out -index conventional products account for 15% of U.S. protein by 10-50% retail chain sales but 70% of growth $120B of U.S. SALES GROWTH 25 – 50% 15% 10 – grocery growth over 20% next five years 70% 125 – 9% growth 85% 150 100 annually in the past Index 30% three years Responsible consumption Regular consumption Conventional RC branded RC specialty branded Source: Boston Consulting Group (2014), based on U.S. retail chains. Responsible consumption means social, environmental, natural, organic and local brands. Specialty refers to non – major product brands with similar attributes. 32 | November 8, 2017 | Investor Day | Randy Huffman
Sustainability is becoming mainstream in how people think about food Sustainable protein increasingly part Chain restaurants are driving awareness with their high profile of the digital consumer conversation raised without antibiotics (RWA) options Seafood sustainabilty +97% Animal welfare +120% Meat certification/claims +223% Food waste +50% Fair food/fair wage +104% (Social media mentions in last year) 33 | November 8, 2017 | Investor Day | Randy Huffman
We define sustainable meat very broadly through our principles Sustainable meat is produced with respect, within environmental limits, and consumed in moderation as part of a healthy balanced diet. Sustainable meat is nutritious , healthy and safe . • Sustainable meat is accessible , affordable and eaten in moderation , in balance with other nutrients, consistent with nutritional • guidelines. Sustainable meat is produced adhering to environmentalstandards that measurably reduce impacts across the lifecycle, limiting • greenhouse gas emissions and impacts on water quality and quantity, avoiding loss of biodiversity and eliminatingwaste . Sustainable meat comes from animals that are raised withcare , with minimal use of antibiotics , and to standards that respect the Five • Freedoms of animal welfare. Sustainable meat is produced through a resilient , fair and efficient food system that makes optimal use of land and natural resources . • Sustainable meat is produced by a company that is responsive to the needs of society and transparently demonstrates our • accountability to social and environmental responsibility . We embrace these principles, recognizing that sustainability is aspirational and evolving. We will measure ourselves against progress, not perfection. 34 | November 8, 2017 | Investor Day | Randy Huffman
We are thinking big about what it will take to be the most sustainable protein company in the world and how we can accelerate change Better Food Better Care Better Communities Better Planet • Making better, more natural food Showing leadership in crate- • Reducing food insecurity by 50% • Becoming carbon neutral • with simple ingredients and cage-free housing by 2030 • Maximizing renewal energy • Raising more animals without Providing more natural sunlight • Being the leading industry • • Achieving zero waste to landfill antibiotics and space to roam advocate on this critical issue • Transitioning to 100% • Restoring artisanal recipes and Investing in better • Deeply engaging our people in • recyclable/compostable craftsmanship transportation systems to social change packaging protect welfare • Being leaders in consumer • Connecting with our consumers • Encouraging consumers to eat transparency Creating enrichment programs and customers to increase • meat in moderation – less beef, that support natural behaviours impact • Developing fusion foods with plant more pork and poultry and animal proteins • Leveraging remote video • Using precision farming auditing to further improve • Being a global leader in techniques to protect land and animal care outcomes food safety with full traceability water Leading-edge C0 2 stunning for • humane processing 35 | November 8, 2017 | Investor Day | Randy Huffman
With some groundbreaking accomplishments… One of the first North American scale producers to commit to transitioning sows to open housing and the only scale producer in North America to implement an enhanced system that provides 100% gestation crate-free housing. 36 | November 8, 2017 | Investor Day | Randy Huffman
VIDEO 37 | November 8, 2017 | Investor Day | Randy Huffman
With some groundbreaking accomplishments… Bold goal to reduce food insecurity by One of the first North American scale We have an aggressive goal to reduce 50% by 2030 through the Maple Leaf producers to commit to transitioning sows our environmental footprint by 50% by Centre for Action on Food Security. We to open housing and the only scale 2025, and we are tracking ahead of plan. are going well beyond conventional producer in North America to implement Reducing our environmental impact is an enhanced system that provides 100% critical to our vision, market differentiation corporate philanthropy to advance gestation crate-free housing. and cost reduction. sustainable change and social impact. 38 | November 8, 2017 | Investor Day | Randy Huffman
VIDEO 39 | November 8, 2017 | Investor Day | Randy Huffman
40 | November 8, 2017 | Investor Day | Randy Huffman
Brand strategies to Raise the Good in Food Adam Grogan, SVP Marketing & Innovation 41 | November 8, 2017 | Investor Day | Adam Grogan
How our vision comes to life in our food is unique to each of our brand strategies 42 | November 8, 2017 | Investor Day | Adam Grogan
Targeting higher-growth demand spaces in total food landscape Total annual food Making our categories top of mind for consumers when feeding children, consumption in Canada: entertaining and needing a quick fix, $64B to drive growth in prepared meats. All it takes is two extra occasions per year from existing prepared meats buyers to grow our categories by 2% $39B annually and expand prepared meats by $300M over the next five years. Three priority demand spaces $3B Prepared meats 43 | November 8, 2017 | Investor Day | Adam Grogan
We are positioning our brands to win across demand spaces; most ambitious brand and product reformulation in our history • Brand strategy target 85% of prepared meats demand spaces • Sweeping reformulation effort of 900 SKUs to meet strict brand specifications • Changing the way we Responsible Parenting Connect & Savour Quick Fix connect with consumers Natural and simple Authentic and indulgent Convenience and value ~30% ~25% ~30% Total PM Total PM Total PM demand demand demand 44 | November 8, 2017 | Investor Day | Adam Grogan
Raising the good in food by aligning brand attributes to demand spaces • Brand strategy target 85% of prepared meats demand spaces • Sweeping reformulation effort of 900 SKUs to meet strict brand specifications • Changing the way we Responsible Parenting Connect & Savour Quick Fix connect with consumers Natural with nothing artificial Craftsmanship All about affordability • • • Clean and simple ingredients Provenance Easy-to-prepare and eat • • • Family friendly flavours Authenticity Standout, fun, energizing • • • ingredients Irresistible taste • • Family friendly flavours 45 | November 8, 2017 | Investor Day | Adam Grogan
Maple Leaf will lead a real food movement with Canadian parents REAL, SIMPLE INGREDIENTS All ingredients parents recognize. No unpronounceables ALL NATURAL – NOTHING ARTIFICIAL No artificial ingredients in any of our products OUR PREMIUM CUTS OF MEAT Pork. Chicken. Beef. Turkey. FLAVOURS THE WHOLE FAMILY WILL LOVE Using familiar favourites and new popular tastes EASY TO PREPARE, SHARE AND EAT Delicious and simple food made convenient for families 46 | November 8, 2017 | Investor Day | Adam Grogan
To spark this real food movement, Maple Leaf will show up differently 47 | November 8, 2017 | Investor Day | Adam Grogan
VIDEO 48 | November 8, 2017 | Investor Day | Adam Grogan
Schneiders will stand for craftsmanship, authenticity and provenance to deliver irresistible-tasting food BEST TASTING Best-tasting, most irresistible meat products in Canada ORIGINAL RECIPES All products use original recipes, each with an enticing provenance story MEATS AND INGREDIENTS Premium cuts of meat prepared with quality ingredients APPETIZING DESIGN Freshness, authenticity and craftsmanship EXCELLENT VALUE EXCHANGE Premium but accessible price for the best-tasting food 49 | November 8, 2017 | Investor Day | Adam Grogan
Relaunching Schneiders to be the leading crafted meats brand in the market Craftsmanship Worth Sharing 50 | November 8, 2017 | Investor Day | Adam Grogan
VIDEO 51 | November 8, 2017 | Investor Day | Adam Grogan
Swift makes good food accessible to all Canadians AFFORDABILITY Priced for everyday value PRODUCT DESIGN High levels of protein at low cost TASTE Satisfies consumer expectations with good taste PACKAGING Packaging stands out with appealing food photography 52 | November 8, 2017 | Investor Day | Adam Grogan
Standing out on shelf with breakthrough packaging and graphics #MakeItSwift 53 | November 8, 2017 | Investor Day | Adam Grogan
54 | November 8, 2017 | Investor Day | Adam Grogan
Greenfield brand represents the true north of our sustainable meat platform BETTER FOOD Without any antibiotics, hormones or anything artificial BETTER CARE Humanely, more naturally raised, grain-fed animals BETTER COMMUNITIES Deeply committed to advancing food security BETTER PLANET Raising animals more sustainably and encouraging meat consumption in moderation 55 | November 8, 2017 | Investor Day | Adam Grogan
Greenfield is a start-up brand within Maple Leaf and is building great momentum as a disrupter • Launched in 2015 • #1 new brand in Canada in 2016 • Double-digit sales growth in Canada and the U.S. BREAKTHROUGH GREENFIELD LAUNCHED NEW, CONSUMER COMMUNICATION DISRUPTIVE PACKAGING • Expanding retail listing coverage across North America DIGITAL AND SOCIAL AMPLIFICATION DRIVING CLAIMS PROGRESSION 56 | November 8, 2017 | Investor Day | Adam Grogan
57 | November 8, 2017 | Investor Day | Adam Grogan
Prime raised without antibiotics meets changing consumer needs and extends our sustainability leadership 58 | November 8, 2017 | Investor Day | Adam Grogan
Raising the bar on sustainability, so that consumers can feel good about the food they’re eating 59 | November 8, 2017 | Investor Day | Adam Grogan
VIDEO 60 | November 8, 2017 | Investor Day | Adam Grogan
Raising the good in food through our brand strategies Most ambitious brand and product reformulation in our history • Clearly differentiates our flagship prepared meats brands • Aligns brands to distinct demand spaces • Raises the good in food through nutrition, taste, affordability and • sustainability Invigorates brand and category growth, and margin expansion • 61 | November 8, 2017 | Investor Day | Adam Grogan
Broadening our reach: U.S. growth platform Curtis Frank, SVP Retail Sales 62 | November 8, 2017 | Investor Day | Curtis Frank
Our sales organization is energized by Maple Leaf’s vision and market differentiating capabilities Leading brands in Canadian market • Focused on executing growth agenda • Cost-competitive network to support • market expansion Compelling and diverse sustainable meat • platform 63 | November 8, 2017 | Investor Day | Curtis Frank
Our strategy provides credentials to broaden our reach into high-growth segments within a large U.S. market U.S. grocery composite Perimeter outpacing total food and 11x size of Canadian retail beverage growth New entrants changing the retail market 3.8% Challenger brands ~11X (4-year CAGR) capturing market share Shifting consumer $637B preferences to health 1.8% and wellness $57B Rapidly growing demand for sustainable meat U.S. Canada Total FB Perimeter With an aspiration to be the most sustainable protein company on earth, we are well positioned to succeed in this environment. 64 | November 8, 2017 | Investor Day | Curtis Frank
Market demand for sustainable meat increasing rapidly in the U.S. High consumer awareness… …is driving purchasing Households behaviour… 47% 86% Buying no antibiotics of consumers want RWA choice …is translating into higher …resulting in average basket… rapid category Average basket with no antibiotics growth. U.S. Fresh RWA $94.67 Average basket +23% $42.59 3-year CAGR Source: Information Resources, Inc. 65 | November 8, 2017 | Investor Day | Curtis Frank
We will succeed in the U.S. due to our differentiated sustainable meat platform and capabilities • Breadth and scale of sustainable meat platform differentiates us • Vertical integration to meet scale demand • World-class scale assets and end-to-end supply chain assurance • On-the-ground sales team and established relationships with leading U.S. retailers • Building off an existing, growing sales platform 66 | November 8, 2017 | Investor Day | Curtis Frank
Deepening our on-the-ground U.S. sales team and capabilities • Integrated cross-functional group with full end-to-end accountability • Balance of seasoned Maple Leaf and U.S.-based sales leaders who bring deep U.S. industry and customer relationships • Average tenure of 20 years • Top Maple Leaf talent assigned to reflect size of growth platform 67 | November 8, 2017 | Investor Day | Curtis Frank
Leveraging scale and vertical integration Network is cost competitive with North American peers • Vertical integration provides consistent and growing supply of sustainable pork • to meet scale demand from farm to fork Strategically located manufacturing assets enable efficient distribution • Advanced food and safety standards meet all U.S. regulatory requirements – • significant experience complying with USDA requirements 68 | November 8, 2017 | Investor Day | Curtis Frank
Greenfield Natural Meat Co. leads our U.S. branded platform and is outpacing the category Greenfield U.S. growth significantly • outpacing broader sustainable meat category Leveraging our competitive • advantage as North America’s largest producer of pork raised without antibiotics Robust innovation and • sustainability claims pipeline to support continued growth Working with major U.S. retailers, • investing in customized brand building 69 | November 8, 2017 | Investor Day | Curtis Frank
Working with majority of the largest U.S. retailers Maple Leaf brands distributed in over 3,300 stores across the U.S. North America – wide Deepening relationships with relationships major U.S. chains 70 | November 8, 2017 | Investor Day | Curtis Frank
We are proving our ability to win in sustainable meat Greenfield brand distributed in 1100+ stores, Ahold has 800+ stores in northeast U.S. • • primarily southeast U.S. Excellent strategic partnership • Delivered high double-digit growth • Listings across the Ahold network • 71 | November 8, 2017 | Investor Day | Curtis Frank
Excellent progress on our U.S. platform to date, delivering a significant growth trajectory Breadth of our sustainable meat platform is differentiated and • provides a competitive moat Leveraging our cost-competitive scale manufacturing network • Building U.S. sales organization with deep experience and • relationships Have built relationships with leading U.S. scale retailers • Significant runway with both retail and food service channels • 72 | November 8, 2017 | Investor Day | Curtis Frank
Expanding our reach in alternative proteins Dan Curtin, President, Alternative Protein 73 | November 8, 2017 | Investor Day | Dan Curtin
Alternative protein advances our vision and is the sweet spot of macro trends Focus on health Increased Appeals to millennials; category benefiting from • and wellness protein intake purchasing power demographic shift Offers nutritious protein alternative to meat • ALTERNATIVE offering dietary choice PROTEIN Environmental footprint significantly lower • than meat Demographic Desire for plant- shift based food Product assortment fits all eating occasions • Demand for convenience 74 | November 8, 2017 | Investor Day | Dan Curtin
Purchasing power shifting to millennials – the largest demographic segment of alternative protein Millennials’ purchasing power is increasing… …with radically different interests in food Purchasing Power High-Frequency Meal Alternative Consumption (% Change of CPG Colume L52W) (% of consumers who consume meat alternatives daily or a few times a week) Millennials are expected to account for 75% of the growth in packaged food sales through 2025 * 12% 23% 0% 2% (4%) 8% 2% 3% Millennials GenXers Boomers Seniors Millennials GenXers Boomers Seniors * Mintel, The Protein Report 75 | November 8, 2017 | Investor Day | Dan Curtin
High-growth emerging platform, a compelling opportunity to create shared value Refrigerated meat alternatives category growth (Retail Sales; Canada 1,3 and U.S. 2 ) $645 million (1) Plant-based food category +14.8% $460 million (3) Frozen meat alternatives category $159 million ( 3 ) +8.7% 126 Refrigerated meat 109 alternatives category 34 31 U.S. Canada 1 Canada data: Nielsen 52 ending July 23, 2017; converted to USD based on 1.3 exchange rate 2 U.S. data: Spins/IRI 52 weeks ending July 16, 2017 3 Canadian sales converted to USD at 1.3 exchange rate 76 | November 8, 2017 | Investor Day | Dan Curtin
Lightlife is the clear U.S. market leader, delivering double-digit growth across its categories Refrigerated meat alternatives retail sales market share Retail Sales growth by product category Trailing 52-week Retail Sale Product Category ($M) (1) Tempeh Dogs Sausage/Breakfast Other Refrigerated 22% 21% 12% 15% 37% Oct 16 Oct 17 Oct 16 Oct 17 Oct 16 Oct 17 Oct 16 Oct 17 1 IRI/SPINS, combined MULO, natural and Whole Foods Market data, L52W ending October 2017. 77 | November 8, 2017 | Investor Day | Dan Curtin
Broadest portfolio in the market with leading market shares across all core categories Sausage/Breakfast Tempeh Dogs Other Refrigerated New Platforms 78 • 78 | November 8, 2017 | Investor Day | Dan Curtin
Acquisition exceeding expectations with capacity to support growth • Manufacturing capacity to support growth • Integration exceeding expectations, strong cultural and values alignment • Excellent financial and sales contributions post-acquisition Plant certifications 79 | November 8, 2017 | Investor Day | Dan Curtin
Compelling opportunities to build on Lightlife’s leadership Expand existing platform Innovation pipeline Product extensions Broaden the platform The opportunity Expand into other high- Plant protein space is highly Broaden channels and listing Accelerate our innovation growth categories through fragmented. Assessing coverage, as well as pipeline to bring pioneering product extensions in both opportunities to broaden geographies, to deliver innovation to the category. refrigerated and frozen plant platform through category growth. protein. acquisitions. 80 | November 8, 2017 | Investor Day | Dan Curtin
Growing oh naturel! in the Canadian frozen segment to complement broadened Canadian Lightlife distribution Reformulated to deliver • great taste and convenience with vibrant new packaging Provides both soy-based • and vegetable-based options Listings at all major national • Canadian retailers. Will be complemented by Canadian Lightlife expansion 81 | November 8, 2017 | Investor Day | Dan Curtin
Broadening market leadership in emerging, high-growth alternative proteins is a core growth platform • Leveraging the strong Lightlife brand across North America • Renewed focus on oh naturel! • Increasing household penetration, driving demand and targeting new customers • Expanding meat substitutes, pursuing adjacencies and accelerating innovation 82 | November 8, 2017 | Investor Day | Dan Curtin
Eliminating waste to fuel our growth Gary Maksymetz, Chief Operating Officer 83 | November 8, 2017 | Investor Day | Gary Maksymetz
Eliminating waste advances our purpose and adds to profitability 84 | November 8, 2017 | Investor Day | Gary Maksymetz
Driving out costs in all forms… Deeply embedded cost culture • Aggressive elimination of process waste • Reduction of environmental footprint • Strategic supplier relationships • Operating efficiencies throughout our network • Investing capital to reduce operating costs • 85 | November 8, 2017 | Investor Day | Gary Maksymetz
Tight controls on SG&A Adhering to zero-based budgeting • Savings enable increased investment Cost control embedded in short-term • in growth incentive plans Aggressively targeting non-strategic • spend Delivering SG&A within the range of 9.5% • to 10% of sales Reinvesting SG&A savings in growth • drivers 86 | November 8, 2017 | Investor Day | Gary Maksymetz
Driving continuous improvement in our plant network Operating our plants “the Maple Leaf way” with • standardized best-in-class processes Leveraging real-time data to lower costs • Lower direct-product costs • Reduced electrical and mechanical downtime - Reduced change-over times - Improved yields and labour productivity - Improving supervisory productivity - 87 | November 8, 2017 | Investor Day | Gary Maksymetz
Sustainability reduces costs and environmental footprint Driving a conservation mindset across our network Anticipated to generate • Reducing energy and water usage millions of dollars • Heat recovery initiatives in annualized savings • Diverting product waste to energy by 2025 88 | November 8, 2017 | Investor Day | Gary Maksymetz
Anticipated future investments to reduce costs and enable growth Establishing scale efficiencies in our Investing in new technology value-added fresh poultry network Significant cost take-out opportunity • Increase capacity in bacon, sausage and Italian • meats to meet demand Adding capacity in value-added production • Investing in packaging technology in Scale efficiencies in further processed poultry value-added fresh pork Increase productivity and capacity to meet • Increase productivity and capacity in Brandon • increasing market demand 89 | November 8, 2017 | Investor Day | Gary Maksymetz
Cost reduction a key enabler to growth A core part of our culture, vision and strategies • Embedded in all our business processes • Well-defined action plans to eliminate waste in all forms • Significant efficiency gains from future capital investments • A low-risk/high-return path to deploy capital • 90 | November 8, 2017 | Investor Day | Gary Maksymetz
Our vision of shared value for shareholders Debbie Simpson, Chief Financial Officer 91 | November 8, 2017 | Investor Day | Debbie Simpson
We have step-changed structural profitability Consistent, sustained earnings growth • Balanced portfolio significantly reducing market impacts • ~$1 billion of strategic investments made in the last five years • Strong operating cash flow and balance sheet • Excellent return to shareholders • 92 | November 8, 2017 | Investor Day | Debbie Simpson
Accelerating growth and profitability Rationalized manufacturing/distribution footprint • …and strong earnings growth State-of-the-art manufacturing facilities in prepared • meats and fresh pork operations Adjusted EPS ($/share) Transformation into a pure-play protein company • $2.00 Significant margin expansion $1.50 $1.00 Adjusted EBITDA margin $1.51 $1.23 12.0% 10.9% $0.50 10.3% 10.0% $0.58 8.0% 6.7% $0.00 $2.07+ 6.0% 4.0% ($0.50) 0.5% ($0.56) 2.0% 0.0% ($1.00) 2014 2015 2016 Q3 YTD 2017 2014 2015 2016 2017 1 ¹ Q3 2017 YTD plus Q4 Consensus Estimate 93 | November 8, 2017 | Investor Day | Debbie Simpson
Accelerating margin performance consistent with best-in-class CPG Five-year goal 14% to 16% 2016 10%+ 2005 – 2012 3.5% 94 | November 8, 2017 | Investor Day | Debbie Simpson
Well-defined strategies to deliver next phase of margin expansion Operating efficiencies ~60% 1. Investment in poultry network 2. Tight cost controls in SG&A/plant efficiencies 14% to 16% Bridging from Adjusted EBITDA Margin today’s 10%+ adjusted EBITDA margin Strategic growth initiatives Five-year goal ~40% 1. Sustainable protein 2. Core brand strategies 3. Investment in poultry network to create capacity 95 | November 8, 2017 | Investor Day | Debbie Simpson
Taking a balanced, disciplined approach to capital allocation Returning value to shareholders Investing in growth Dividends Capital Acquisitions Share buybacks Continued growth in dividends Investment in core and Disciplined approach to Buybacks considered for as earnings grow strategic capital spending acquisitions to accelerate distribution of excess capital growth 96 | November 8, 2017 | Investor Day | Debbie Simpson
Generating steady cash flow and returning value to shareholders Free cash flow Dividends per share Share buyback through NCIB ($M) ($/share) ($M) Total 15.7M shares for $409M +40% $244 $204 $12 + 183 0.44 154 ($621) 0.36 0.32 72 0.16 2014 2015 2016 2017 YTD 2014 2015 2016 2017E 2015 2016 2017 Q3 YTD 97 | November 8, 2017 | Investor Day | Debbie Simpson
Flexible balance sheet enabling investment in growth Cash on hand of $210 million (Q3 2017) Strategic investments creating value + Investing in capital projects that are • Revolving credit facility of productivity and growth enablers $400 million Investing in strategic acquisition opportunities • + Additional borrowing capacity through conservative balance sheet 98 | November 8, 2017 | Investor Day | Debbie Simpson
Disciplined approach to acquisitions to accelerate growth Selectively targeting value creation opportunities in attractive • categories to supplement our product portfolio and improve our growth and margin profile Prudent and rigorous assessment with high return on capital • requirements: Alignment with core growth platform - Strong, value-added brands - Category leadership - Accretive M&A opportunities represent additional upside to our • strategic growth targets 99 | November 8, 2017 | Investor Day | Debbie Simpson
Executing on our strategies to drive future value creation Delivered structural margin expansion • Compelling opportunity to drive profitable growth and • generate additional cost savings Significant cash generation and capacity to invest in growth • Disciplined and balanced capital allocation • Excellent value creation for shareholders • Well-defined plans for growth – clear path to deliver 14 to 16% • adjusted EBITDA margin 100 | November 8, 2017 | Investor Day | Debbie Simpson
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