Maple Leaf Foods : Analyse de la direction (en anglais seulement) | MarketScreener

Management's Discussion and Analysis For the Year Ended December 31, 2022 MANAGEMENT'S DISCUSSION AND ANALYSIS | 2022 | MAPLE LEAF FOODS INC. Management's Discussion and Analysis 1 The Business 1 2 Financial Overview 1 3 Selected Financial Information 2 4 Company Vision and Strategic Plan 2 5 Cybersecurity Incident 3 6 Response to COVID-19 3 7 Operating Review 3 8 Restructuring and Other Related Costs 5 9 Interest Expense and Other Financing Costs 5 10 Income Taxes 5 11 Acquisitions and Divestitures 5 12 Capital Resources 6 13 Capital Expenditures 7 14 Normal Course Issuer Bid 7 15 Cash Flow and Financing 7 16 Contractual Obligations 8 17 Goodwill 8 18 Financial Instruments and Risk Management 8 19 Employee Benefit Plans 12 20 Transactions with Related Parties 12 21 Government Incentives 13 22 Share Capital 13 23 Other Matters 13 24 Maple Leaf Centre for Action on Food Security 14 25 Summary of Quarterly Results 15 26 Summary of 2022 Fourth Quarter Results 16 27 Discussion of Factors Impacting the Company's Operations and Results 17 28 Environment 18 29 Risk Factors 19 30 Critical Accounting Estimates 28 31 Significant Accounting Policies 30 32 Disclosure Controls and Internal Controls Over Financial Reporting 32 33 Outlook 32 34 Non-IFRS Financial Measures 33 35 Forward-Looking Statements 39 MANAGEMENT'S DISCUSSION AND ANALYSIS | 2022 | MAPLE LEAF FOODS INC. Management's Discussion and Analysis All dollar amounts are presented in Canadian dollars unless otherwise noted. March 8, 2023 1. THE BUSINESS Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") is a carbon neutral(i) company with a vision to be the most sustainable protein company on earth, responsibly producing food products under leading brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina®, Greenfield Natural Meat Co.®, Lightlife® and Field Roast™. The Company's portfolio includes prepared meats, ready-to-cook and ready-to-serve meals, snacks kits, value-added fresh pork and poultry, and plant protein products. The address of the Company's registered office is 6985 Financial Dr., Mississauga, Ontario, L5N 0A1, Canada. The Company employs approximately 14,000 people and does business primarily in Canada, the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI). See the Company's 2021 Sustainability Report that is available on the Maple Leaf Foods website at https://www.mapleleaffoods.com/sustainability- report/. 2. FINANCIAL OVERVIEW As at or for the ($ millions except earnings per share) Twelve months ended December 31, 2022 2021 % Change (Unaudited) Sales $ 4,739.1 $ 4,521.1 4.8 % Net (Loss) Earnings $ (311.9) $ 102.8 nm(ii) Basic (Loss) Earnings per Share $ (2.52) $ 0.83 nm(ii) Adjusted Operating Earnings(i) $ 65.7 $ 210.3 (68.7)% Adjusted (Loss) Earnings per Share(i) $ (0.26) $ 1.03 (125.2)% Adjusted EBITDA - Meat Protein Group(i) $ 378.7 $ 527.1 (28.2)% Adjusted EBITDA - Plant Protein Group(i) $ (105.4) $ (127.2) 17.1 % Sales - Plant Protein Group $ 169.3 $ 184.1 (8.0)% Free Cash Flow(i)(iii) $ (20.9) $ 213.0 (109.8)% Construction Capital(i) $ 9.6 $ 743.3 (98.7)% Net Debt(i) $ (1,619.3) $ (1,090.2) (48.5)% Refer to section 34. Non-IFRS Financial Measures of this document for the definition of these non-IFRS measures. Not meaningful. Certain comparative figures have been restated to conform with current year presentation. Sales for 2022 were $4,739.1 million compared to $4,521.1 million last year, an increase of 4.8%, driven by pricing action to mitigate inflation, growth in sustainable meats, and foreign exchange partly offset by lower volumes. Net loss for 2022 was $311.9 million ($2.52 loss per basic share) compared to earnings of $102.8 million ($0.83 per basic share) last year. Strong performance in the packaged meats portfolio was more than offset by weaker results in pork processing and hog production operations, inflation, and labour challenges, as well as an estimated economic impact of the cybersecurity incident of at least $23 million, as further described in section 5. Cybersecurity Incident. Interest expense increased by $33.2 million, reflecting the net debt levels associated with Construction Capital projects and increases in variable borrowing rates. Net Loss for the year also included a $190.9 million one-time impairment charge related to the Plant Protein Group, start-up expenses of $59.3 million (2021: $13.4 million) associated with Construction Capital projects, as well as net losses from non-cash fair value changes in biological assets and derivative contracts of $14.0 million (2021: $4.9 million), all of which are excluded in the calculation of Adjusted Operating Earnings. Adjusted Operating Earnings for 2022 were $65.7 million compared to $210.3 million last year, and Adjusted Earnings per Share for 2022 was a loss of $0.26 compared to $1.03 last year. For further discussion on key metrics and a discussion of results by operating segment, refer to section 7. Operating Review below. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS | 2022 | MAPLE LEAF FOODS INC. 3. SELECTED FINANCIAL INFORMATION The following table summarizes selected financial information for the three years ended December 31: ($ millions except earnings per share) 2022 2021 2020 Sales $ 4,739.1 $ 4,521.1 $ 4,303.7 Net (loss) earnings $ (311.9) $ 102.8 $ 113.3 Basic (loss) earnings per share $ (2.52) $ 0.83 $ 0.92 Diluted (loss) earnings per share $ (2.52) $ 0.82 $ 0.91 Total assets $ 4,439.4 $ 4,385.8 $ 3,860.2 Total long-term liabilities $ 2,144.9 $ 1,681.2 $ 1,260.7 Cash provided by operating activities $ 49.3 $ 304.8 $ 321.4 Cash dividends per share $ 0.80 $ 0.72 $ 0.64 The following table summarizes selected adjusted financial information for the two years ended December 31: ($ millions except EBITDA % margin, earnings per share, and RONA)(i) 2022 2021 Adjusted Operating Earnings $ 65.7 $ 210.3 Adjusted EBITDA $ 272.9 $ 399.5 Adjusted EBITDA Margin 5.8% 8.8% Adjusted (Loss) Earnings per Share $ (0.26) $ 1.03 Construction Capital $ 9.6 $ 743.3 Net Debt $ (1,619.3) $ (1,090.2) Return on Net Assets ("RONA") 0.3% 4.5% Free Cash Flow(ii) $ (20.9) $ 213.0 Refer to section 34. Non-IFRS Financial Measures of this document for the definition of these non-IFRS measures. Certain comparative figures have been restated to conform with current year presentation. 4. COMPANY VISION AND STRATEGIC PLAN Maple Leaf Foods strongly believes the Company is both defined and strengthened by the value it creates for stakeholders, including the planet. The Company's vision to become the most sustainable protein company on earth is embedded in its strategies and decision- making. The Company's purpose to Raise the Good in Food is a key point of distinction in the marketplace. The Company also believes that building shared valued requires engaging in social issues and advocating meaningful solutions. This engagement builds trust with stakeholders, which translates into commercial and financial results that sustain the business, and its efforts make communities, the country and the world a better place. A strategic blueprint guides the Company's efforts. Maple Leaf Foods' progress towards becoming the most sustainable protein company on earth is measured across four pillars: Better Food - Maple Leaf Foods is actively addressing the most pressing diet-related health issues faced by society, including reducing artificial ingredients, antibiotics use and sodium levels, and continually advancing leadership in food safety, including sustained progress in reducing its Food Safety Incident Rate. Better Planet - The Company embraces a culture that focuses on reducing its environmental impact to sustainable levels by eliminating waste in any resource it consumes, including food, energy, water, packaging and time. The Company maintained carbon neutrality for the third year in 2022. Better Care - Maple Leaf Foods extends its strong values-based culture to how it treats animals. The Company continued to advance its open sow housing commitment for pigs under its management and in its supply chain, and also significantly advanced a number of other environmental enrichment initiatives for animals under its care in 2022. Maple Leaf Foods also became one of only two North American protein companies and the only Canadian-owned company ranked in the Business Benchmark on Animal Welfare's top two tiers. Better Communities - The Maple Leaf Centre for Food Security continues its partnerships with external organizations in identifying and championing systemic solutions to the unacceptable problem of food insecurity in Canada. Within Maple Leaf 2 MANAGEMENT'S DISCUSSION AND ANALYSIS | 2022 | MAPLE LEAF FOODS INC. Foods, the Company maintains a strong, supportive culture that provides both mental and physical safety to team members. The Company's annual workplace safety performance leads the industry. To drive long term shared value creation, Maple Leaf Foods relies upon key strategies: Leveraging leadership in sustainability - Maple Leaf Foods completed its third year as a carbon neutral food company and amplified this commitment in 2022 through its brand marketing, packaging and its advocacy. These efforts, coupled with its ongoing advancements in animal welfare and minimizing use of antibiotics, helped drive growth in sustainable meats in 2022. Eliminating waste and improving efficiency - Maple Leaf Foods embraces efforts to improve efficiency and profitability. In 2022, the Company completed construction of its London, Ontario poultry facility and its Indianapolis, Indiana tempeh plant and the Bacon Centre of Excellence in Winnipeg, Manitoba, completed in late 2021, ramped up production. These capital projects will optimize Maple Leaf's poultry processing and bacon and tempeh production, meeting consumer demand for these high quality protein products. Broadening reach into new geographies, channels and protein alternatives - In 2022, the Company continued to grow its presence in foreign markets. The Meat Protein Group continued growing sales in the U.S., led by its Greenfield Natural Meat Co. brand, and continued exports into Asian markets. Embracing a digital future across the business - Maple Leaf Foods believes that a sustainable future is a digital future and has embraced technology to enable its vision. The Company integrates IT and data science into manufacturing operations to streamline production processes, reduce costs and innovate at a faster pace. In addition, the Company leverages technology to optimize the hybrid work experience and promote better work life balance. Investing in brands to build demand and consumer loyalty - Leveraging the Meat Protein Group brand renovation work completed in 2018, Maple Leaf Foods saw notable sales growth in 2022 across its portfolio of brands and a high degree of resiliency despite the inflation that characterized the year. Packaged meats lead sustainable meat sales, which have experienced sustained growth in Canada and the U.S. for the past several years. Investing in people so talent thrives - In 2022, we continued efforts to build knowledge and understanding of our values through hundreds of team-based discusses that explored each value individually. The Company remains committed to developing people and enabling them to maximize their contributions and build strong careers at Maple Leaf Foods. 5. CYBERSECURITY INCIDENT On November 6, 2022 the Company confirmed that it experienced a system outage stemming from a cybersecurity incident. Upon learning of the incident, Maple Leaf Foods took immediate action and engaged cybersecurity and recovery experts. The Company executed is business continuity plans as it restored the impacted systems, and worked with customers and suppliers to minimize service disruptions. While the Company was able to maintain operations throughout the event, normal business activities were interrupted. The Company estimates that the direct and indirect economic impact of this event in the fourth quarter was at least $23 million. 6. RESPONSE TO COVID-19 As an essential service, Maple Leaf Foods is focused on protecting the health and well-being of its people, maintaining business continuity and broadening its social outreach. To manage through this unprecedented environment, the Company has taken a number of measures in its business and operating practices that include heightened safety policies and procedures, adopting a vaccination mandate for all employees and contractors, and close communication and collaboration with public health authorities, including hosting on-site vaccination clinics in 2021. The measures enacted to protect the health and safety of employees increased the Company's cost structure during the pandemic due to higher labour, personal protective equipment, sanitation and other expenses. Overall, the Company believes its proactive and comprehensive efforts have, and should continue to mitigate adverse operational impacts. As the COVID-19 situation evolves, Maple Leaf Foods will continue to adapt and adopt best practices that prioritize the health and safety of its employees and the stability of the food supply. As part of Maple Leaf Foods' broader social responsibility during the pandemic, the Company has provided extensive support to front-line staff, emergency food relief efforts and health care providers. 7. OPERATING REVIEW During the year ended December 31, 2022, the Company had two reportable segments. These segments offer different products, with separate organizational structures, brands, and financial and marketing strategies. The Company's chief operating decision makers regularly review internal reports for these businesses. Performance of the Meat Protein Group is based on profitable revenue growth, Adjusted Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), while the performance of the Plant Protein Group in the short term is focused on obtaining Adjusted EBITDA neutral or better results. 3 Attachments Original Link Original Document Permalink Disclaimer Maple Leaf Foods Inc. published this content on 09 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 March 2023 12:04:07 UTC.