Maple Leaf Foods Reports First Quarter 2017 Financial Results

 TSX: MFI
www.mapleleaffoods.com

MISSISSAUGA, ON, April 27, 2017 /PRNewswire/ - Maple Leaf Foods Inc. (TSX: MFI) today reported its financial results for the first quarter, March 31, 2017.

• Strong quarter with growth in sales and Adjusted Operating Earnings⁽¹⁾
• Balanced business portfolio offset impact of volatile pork market
• Fifth consecutive quarter of double-digit Adjusted EBITDA Margins⁽²⁾ reflects strong business fundamentals

Financial Highlights

First quarter sales increased 1.8% and Adjusted Earnings per Share⁽³⁾ increased 17.9% compared to the same quarter of last year. Adjusted EBITDA margin was 10.8% in the quarter and contributed to Free Cash Flow⁽⁴⁾ of approximately $34.8 million.

"We are coming into 2017 with solid performance, delivering 10.8% Adjusted EBITDA Margin on 2% revenue growth, up from 10.2% last year," said Michael H. McCain, President and CEO. "We had modest volume growth in the quarter, and delivered excellent performance improvement despite some relatively turbulent market conditions. The highlight for the quarter was our acquisition of Lightlife Foods, which is a great step forward in advancing our long-term growth agenda. We aspire to be the most sustainable protein company in the world, and that is reflected in all of our strategies."

Sales and Earnings

The Company's products include value-added prepared meats, lunch kits and snacks, value-added fresh pork and poultry products and refrigerated plant protein products sold under flagship national brands such as Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina® and Lightlife®.

Sales in the first quarter increased 1.8% to $811.2 million, or 2.1% after adjusting for the impact of foreign exchange and acquisitions. Stronger volume and higher value-added fresh pork export sales to Japan contributed to the increase.

Adjusted Operating Earnings increased to $59.0 million compared to $53.6 million last year, benefiting from stronger prepared meats volume and improved operational performance in our supply chain. Adjusted Operating earnings also increased as a result of the contribution from value-added fresh pork, including higher Canadian retail and export sales. These improvements were partially offset by lower poultry performance and margin compression in packaged bacon.

Net earnings for the first quarter decreased to $30.1 million ($0.23 per basic share) compared to $42.3 million ($0.31 per basic share) last year. The underlying progress in the business reflected in positive revenue and margin growth was more than offset by factors excluded in calculating Adjusted Operating Earnings, such as the change in fair value of biological assets and higher restructuring costs.

Other Matters

On April 26, 2017, the Board of Directors approved a dividend of $0.11 per share payable June 30, 2017, to shareholders of record at the close of business on June 9, 2017. Unless indicated otherwise by the Company in writing on 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".

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 April 27, 2017, to review Maple Leaf Foods' first quarter financial results. To participate in the call, please dial 416-340-2218 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: 6698923#).

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

http://edge.media-server.com/m/p/xaou62ae

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, and Free Cash Flow. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company. 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.

Forward Looking Statements

This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities law. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates, as well as beliefs and assumptions made by Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and goals, in addition to statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates, and intentions. Specific forward-looking information in this document includes, but is not limited to, statements with respect to: the increases in operating efficiencies and cost reductions; expectations regarding the use of derivatives, futures and options; expectations regarding improving efficiencies; the expected use of cash balances; source of funds for ongoing business requirements; capital investments and expectations regarding capital expenditures; expectations regarding the implementation of environmental sustainability initiatives; expectations regarding the adoption of new accounting standards and the impact of such adoption on financial position; expectations regarding pension plan performance and future pension plan liabilities and contributions; expectations regarding levels of credit risk; and expectations regarding outcomes of legal actions. Words such as "expect", "anticipate", "intend", "may", "will", "plan", "believe", "seek", "estimate", and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict.   

In addition, these statements and expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., and Japanese economies; the rate of exchange of the Canadian dollar to the U.S. dollar, and the Japanese yen; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments; and the general assumption that none of the risks identified below or elsewhere in this document will materialize. All of these assumptions have been derived from information currently available to the Company, including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied, or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.  

Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or forecasted by forward-looking information include, among other things: 

• risks associated with the Company focusing solely on the protein business;
• risks related to the Company's decisions regarding any potential return of capital to shareholders;
• risks associated with the concentration of production in fewer facilities;
• risks associated with the availability of capital;
• risks associated with changes in the Company's information systems and processes;
• risks associated with cyber threats;
• risks posed by food contamination, consumer liability, and product recalls;
• risks associated with acquisitions, divestitures, and capital expansion projects;
• impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity securities and changes in interest rates;
• cyclical nature of the cost and supply of hogs and the competitive nature of the pork market generally;
• risks related to the health status of livestock;
• impact of a pandemic on the Company's operations;
• the Company's exposure to currency exchange risks;
• ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and options;
• impact of changes in the market value of the biological assets and hedging instruments;
• risks associated with the supply management system for poultry in Canada;
• risks associated with the use of contract manufacturers;
• impact of international events on commodity prices and the free flow of goods;
• risks posed by compliance with extensive government regulation;
• risks posed by litigation;
• impact of changes in consumer tastes and buying patterns;
• impact of extensive environmental regulation and potential environmental liabilities;
• risks associated with a consolidating retail environment;
• risks posed by competition;
• risks associated with complying with differing employment laws and practices, the potential for work stoppages due to non-renewal of collective agreements, and recruiting and retaining qualified personnel;
• risks associated with pricing the Company's products;
• risks associated with managing the Company's supply chain; and
• risks associated with failing to identify and manage the strategic risks facing the Company.

The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more detail under the heading "Risk Factors" in the Company's Management's Discussion and Analysis for the fiscal year ended December 31, 2016 that is available on SEDAR at www.sedar.com. The reader should review such section in detail. Some of the forward-looking information may be considered to be financial outlooks for purposes of applicable securities legislation including, but not limited to, statements concerning future capital expenditures. These financial outlooks are presented to evaluate anticipated future uses of cash flows, and may not be appropriate for other purposes and readers should not assume they will be achieved. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by law. Additional information concerning the Company, including the Company's Annual Information Form is available on SEDAR at www.sedar.com.              

About Maple Leaf Foods Inc.

Maple Leaf Foods Inc. is a leading consumer protein company, making high quality, innovative products under national brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina® and Lightlife®. Maple Leaf employs approximately 11,500 people and does business in Canada, the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI).

 Footnote Legend

Consolidated Interim Balance Sheets

Consolidated Interim Statements of Net Earnings

Consolidated Interim Statements of Other Comprehensive Income (Loss)

Consolidated Interim Statements of Changes in Total Equity

Consolidated Interim Statements of Cash Flows

SOURCE Maple Leaf Foods Inc.