TSX: MFI
www.mapleleaffoods.com
MISSISSAUGA, ON, Oct. 30, 2019 /CNW/ - Maple Leaf Foods Inc.
("Maple Leaf Foods" or "the Company") (TSX: MFI) today reported its
financial results for the third quarter ended September 30,
2019.
Quarterly Highlights
- Initial quarter with segmented results; meat protein and
plant protein each with distinct value creation strategies
- Sales increased 13.8%, or 5.4% excluding acquisitions,
driven by growth in both meat and plant
protein businesses
- Meat Protein Group delivered Adjusted EBITDA
margin(1) of 9.0% in erratic markets
- Plant Protein Group sales grew 30.1%, while maintaining a
solid core gross margin of 28.9%, or 21.3% including start-up costs
related to high growth
"Our third quarter marks our first on the journey to operating
two significant segments with different economics: one in meat
protein with a robust multi-year agenda of profit growth, and one
in plant protein that is capitalizing on enormous opportunities for
rapid revenue growth", said Michael H.
McCain, President and CEO. "Our plant protein business saw
30% growth and accelerating, and we are intentionally investing
very heavily in that growth. Meat protein faced an unexpectedly
erratic market condition in the quarter connected with global
trade, and we expect that to reverse in short order. We are very
excited about how we are positioned and where we are headed!"
Financial Highlights
During the third quarter of 2019, the Company completed a
comprehensive analysis of the role of its rapidly expanding plant
protein business in the Company's meat and plant protein portfolio,
their respective financial profiles and long-term value creation
opportunities. Based on the importance of these two distinct
businesses and differing strategic and financial requirements to
maximize their market leadership and long-term shareholder value,
the Company has disaggregated its business into two operating
segments. As described below, these segments offer different
products, with separate organizational structures, brands,
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
revenue growth, Adjusted Operating Earnings and Adjusted EBITDA,
while the performance of the Plant Protein Group is based
predominately on revenue growth rates, while managing gross margins
and controlling investment levels which generate high revenue
growth rates.
Measure(a)
(Unaudited)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
2019
|
2018
|
% Change
|
2019
|
2018
|
% Change
|
Sales
|
$
|
995.8
|
$
|
874.8
|
13.8%
|
$
|
2,925.6
|
$
|
2,601.6
|
12.5%
|
Net
Earnings
|
$
|
13.4
|
$
|
26.6
|
(49.5)%
|
$
|
57.2
|
$
|
89.4
|
(36.0)%
|
Basic Earnings per
Share
|
$
|
0.11
|
$
|
0.21
|
(47.6)%
|
$
|
0.46
|
$
|
0.71
|
(35.2)%
|
Adjusted Operating
Earnings(3)
|
$
|
9.7
|
$
|
51.0
|
(81.0)%
|
$
|
117.0
|
$
|
161.6
|
(27.6)%
|
Adjusted Earnings per
Share(2)
|
$
|
0.03
|
$
|
0.29
|
(89.7)%
|
$
|
0.55
|
$
|
0.93
|
(40.9)%
|
(a)
|
All financial
measures in millions of dollars except Basic and Adjusted Earnings
per Share.
|
Third quarter sales increased 13.8% to $995.8 million and Adjusted Earnings per Share
for the quarter was $0.03. For the
nine months ended September 30, 2019,
sales increased 12.5% and Adjusted Earnings per Share was
$0.55.
Net earnings for the third quarter of 2019 were $13.4 million ($0.11 per basic share) compared to $26.6 million ($0.21 per basic share) last year. Strong
performance in prepared meats, value-added pork and poultry and
plant protein, and a tax recovery from the favourable resolution of
an income tax audit was more than offset by adverse pork market
conditions, including heightened volatility in hog prices and the
Chinese import suspension of Canadian pork, and strategic
investments in plant protein to drive top line growth and market
leadership. Year-to-date results were also impacted by changes in
the fair value of biological assets and derivative contracts, which
are excluded in the calculation of Adjusted Operating Earnings
below.
Adjusted Operating Earnings for the third quarter of 2019 were
$9.7 million compared to $51.0 million last year, and Adjusted Earnings
per Share for the third quarter of 2019 was $0.03 compared to $0.29 last year. Year-to-date Adjusted Operating
Earnings for 2019 were $117.0 million
compared to $161.6 million last year,
and Adjusted Earnings per Share for 2019 were $0.55 compared to $0.93 last year.
For further discussion on key metrics and a discussion of
results by operating segment, refer to the section titled Operating
Review.
Note: Several
items are excluded from the discussions of underlying earnings
performance as they are not representative of ongoing operational
activities. Refer to the section titled Reconciliation of Non-IFRS
Financial Measures at the end of this news release for a
description and reconciliation of all non-IFRS financial
measures.
|
Operating Review
The following table summarizes the Company's sales, gross
profit, selling, general and administrative expenses, Adjusted
Operating Earnings, Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA"), and Adjusted EBITDA
Margin by operating segment for the three months ended September 30, 2019 and September 30, 2018:
|
Three Months Ended
September 30, 2019
|
Three Months Ended
September 30, 2018
|
($ thousands)
(Unaudited)
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(i)
|
Total
|
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(i)
|
|
Total
|
Sales
|
$
|
953,306
|
46,998
|
(4,517)
|
$
|
995,787
|
$
|
838,709
|
36,118
|
—
|
$
|
874,827
|
Gross
profit
|
$
|
123,351
|
9,995
|
6,371
|
$
|
139,717
|
$
|
119,342
|
9,056
|
(9,816)
|
$
|
118,582
|
Selling, general
and
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
|
78,783
|
44,867
|
—
|
$
|
123,650
|
$
|
68,750
|
8,627
|
—
|
$
|
77,377
|
Adjusted Operating
Earnings
|
$
|
44,568
|
(34,872)
|
—
|
$
|
9,696
|
$
|
50,592
|
429
|
—
|
$
|
51,021
|
Adjusted
EBITDA
|
$
|
85,430
|
(31,616)
|
(392)
|
$
|
53,422
|
$
|
79,087
|
2,045
|
—
|
$
|
81,132
|
Adjusted EBITDA
Margin
|
|
9.0%
|
(67.3)%
|
— %
|
|
5.4%
|
|
9.4%
|
5.7%
|
— %
|
|
9.3%
|
i)
|
Non-Allocated
includes eliminations of inter-segment sales and associated cost of
goods sold, and non-allocated costs which are comprised
of expenses not separately identifiable to reportable segments and
are not part of the measures used by the Company when assessing
a
segment's operating results.
|
The following table summarizes the Company's sales, gross
profit, selling, general and administrative expenses, Adjusted
Operating Earnings, Adjusted EBITDA, and Adjusted EBITDA Margin by
operating segment for the nine months ended September 30, 2019 and September 30, 2018:
|
Nine Months Ended
September 30, 2019
|
Nine Months Ended
September 30, 2018
|
($ thousands)
(Unaudited)
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(i)
|
Total
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(i)
|
Total
|
Sales
|
$
|
2,807,699
|
126,673
|
(8,796)
|
$
|
2,925,576
|
$
|
2,500,830
|
100,750
|
—
|
$
|
2,601,580
|
Gross
profit
|
$
|
417,507
|
27,815
|
(15,108)
|
$
|
430,214
|
$
|
385,034
|
29,386
|
(24,411)
|
$
|
390,009
|
Selling, general
and
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
|
254,679
|
73,646
|
—
|
$
|
328,325
|
$
|
228,071
|
24,723
|
—
|
$
|
252,794
|
Adjusted Operating
Earnings
|
$
|
162,828
|
(45,831)
|
—
|
$
|
116,997
|
$
|
156,963
|
4,663
|
—
|
$
|
161,626
|
Adjusted
EBITDA
|
$
|
282,956
|
(36,674)
|
(392)
|
$
|
245,890
|
$
|
245,556
|
9,666
|
—
|
$
|
255,222
|
Adjusted EBITDA
Margin
|
|
10.1%
|
(29.0)%
|
— %
|
|
8.4%
|
|
9.8%
|
9.6%
|
— %
|
|
9.8%
|
i)
|
Non-Allocated
includes eliminations of inter-segment sales and associated cost of
goods sold, and non-allocated costs which are comprised
of expenses not separately identifiable to reportable segments and
are not part of the measures used by the Company when assessing
a
segment's operating results.
|
Meat Protein Group
The Meat Protein Group is comprised of prepared meats,
ready-to-cook and ready-to-serve meals, hog production and
value-added fresh pork and poultry products that are sold to
retail, foodservice and industrial channels. The Meat Protein Group
includes leading brands such as Maple Leaf®, Maple Leaf
Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®,
Swift® and many leading sub-brands.
Sales for the third quarter of 2019 increased 13.7% to
$953.3 million compared to
$838.7 million last year. Excluding
acquisitions, sales grew 4.8%, driven by favourable mix tied to
food renovation supporting major brand strategies and pricing
actions implemented during the quarter and in late 2018 to mitigate
higher raw material input costs. Continued expansion of sustainable
meats, including double-digit growth in the U.S., also contributed
to strong sales.
Year-to-date sales for 2019 increased 12.3% to $2,807.7 million compared to $2,500.8 million last year. Excluding
acquisitions, sales grew 3.1% consistent with the factors noted
above.
Gross profit for the third quarter of 2019 was $123.4 million (gross margin of 12.9%) compared
to $119.3 million (gross margin of
14.2%) last year. Stronger commercial and operational performance,
including favourable mix attributed to food renovation, continued
expansion of sustainable meats and pricing action taken to mitigate
higher raw material costs, contributed to higher gross profit
in the quarter. This improved performance was partially offset by a
significant decline in North American pork markets, which traded
approximately 220 basis points below five-year averages, as well as
a temporary import suspension of Canadian pork into China. In addition, the Company locked in raw
material costs for its prepared meats business in anticipation of
rising meat prices that were not fully recovered by subsequent
pricing action in the quarter. These factors resulted in a decline
in gross margin.
Year-to-date gross profit for 2019 was $417.5 million (gross margin of 14.9%) compared
to $385.0 million (gross margin of
15.4%) last year. The change in gross profit is attributable
to strong commercial and operational performance offset by adverse
market conditions and the Chinese import suspension of Canadian
pork.
Selling, general and administrative ("SG&A") expenses for
the third quarter of 2019 were $78.8
million (8.3% of sales), compared to $68.8 million (8.2% of sales) last year. The
increase in SG&A expenses was due to investments in advertising
and promotion. On a percentage of sales basis, SG&A expenses
were in line with last year.
Year-to-date SG&A expenses for 2019 were $254.7 million (9.1% of sales), compared to
$228.1 million (9.1% of sales) last
year. The change in SG&A is consistent with the factors noted
above.
Adjusted Operating Earnings for the third quarter of 2019 were
$44.6 million compared to
$50.6 million last year. Improved
commercial and operational performance was driven by favourable mix
attributed to food renovation, higher sustainable meats sales and
pricing action taken to mitigate higher raw material costs. This
was offset by adverse market conditions, the Chinese import
suspension of Canadian pork and increased investment in advertising
and promotion.
Year-to-date Adjusted Operating Earnings for 2019 were
$162.8 million compared to
$157.0 million last year. The change
in Adjusted Operating Earnings is consistent with factors noted
above.
Adjusted EBITDA Margin for the third quarter was 9.0% compared
to 9.4% last year.
Year-to-date Adjusted EBITDA Margin was 10.1% compared to 9.8%
last year, with the increase consistent with the factors noted
above. Adjusted EBITDA Margin was impacted by the adoption of IFRS
16 - Leases ("IFRS 16"). Upon the adoption of IFRS 16, leases
previously classified as operating leases were capitalized on the
Company's consolidated interim balance sheet. For the third quarter
an incremental $8.2 million in
depreciation and $1.8 million in
interest was recorded on the Company's consolidated interim
statement of earnings, not included in Adjusted EBITDA. Incremental
increases in depreciation and interest for the first nine months
were $24.4 million and $5.3 million, respectively.
Plant Protein Group
The Plant Protein Group is comprised of refrigerated plant
protein products, premium grain-based protein and vegan cheese
products sold to retail, foodservice and industrial channels. The
Plant Protein Group includes the leading brands Lightlife® and
Field Roast Grain Meat Co.™
Sales for the third quarter of 2019 increased 30.1% to
$47.0 million compared to
$36.1 million last year. Sales growth
was driven by expanded distribution of new products and continued
volume increases in its existing portfolio.
Year-to-date sales for 2019 increased 25.7% to $126.7 million compared to $100.8 million last year. Excluding acquisitions,
sales grew 20.6% consistent with the factors noted above.
Gross profit for the third quarter of 2019 was $10.0 million (gross margin of 21.3%) compared to
$9.1 million (gross margin of 25.1%)
last year. The increase in gross profit was attributed to
improved manufacturing and operating processes. The Company is
strategically investing in SG&A to drive higher levels of
growth and brand leadership in the rapidly growing plant protein
market. After excluding the impact of inefficiencies associated
with start-up production and other costs related to building scale
to support high growth, core gross margin was approximately
28.9%.
Year-to-date gross profit for 2019 was $27.8 million (22.0% of sales) compared to
$29.4 million (29.2% of sales) last
year. Excluding investments in growth initiatives, core gross
margin was approximately 29.9%. The change in gross profit is
consistent with the factor noted above.
SG&A expenses for the third quarter of 2019 were
$44.9 million (95.5% of sales),
compared to $8.6 million (23.9% of
sales) last year. The increase in SG&A expenses reflects the
evolution of the Company's plant protein strategy to drive sales
growth and secure market share in a rapidly growing market.
Supporting this strategy, significant investment in advertising,
promotion and marketing was incurred during the quarter to enhance
brand awareness and support new product launches and expanded
distribution. In addition, the Company invested to broaden
organizational capacity and its innovation pipeline.
Year-to-date SG&A expenses for 2019 were $73.6 million (58.1% of sales), compared to
$24.7 million (24.5% of sales) last
year.The change in selling, general and administrative expenses is
consistent with the factors noted above.
Adjusted Operating Earnings for the third quarter of 2019 were a
loss of $34.9 million compared to
earnings of $0.4 million last year.
The decline in Adjusted Operating Earnings reflects a deliberate
focus on accelerating sales growth through increased investments in
advertising, promotion and marketing, organizational capacity,
product development and operational efficiency.
Year-to-date Adjusted Operating Earnings for 2019 were a loss of
$45.8 million compared to earnings of
$4.7 million last year. The change in
Adjusted Operating Earnings is consistent with factors noted
above.
Other Matters
On October 29, 2019, the Board of
Directors approved a dividend of $0.145 per share payable December 31, 2019 to shareholders of record at
the close of business on December 6,
2019. Unless indicated otherwise by the Company at or before
the time the dividend is paid, this dividend will be considered an
eligible dividend for the purposes of the "Enhanced Dividend Tax
Credit System".
Conference Call
An investor presentation related to the Company's third 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 October 30,
2019, to review Maple Leaf Foods' third quarter financial
results. To participate in the call, please dial 416-764-8609 or
1-888-390-0605. For those unable to participate, playback will be
made available an hour after the event at 416-764-8677 or
1-888-390-0541 (Passcode: 289271#).
A webcast presentation of the third quarter financial results
will also be available at:
https://event.on24.com/wcc/r/2107264/A4A3634EC8B34054D06D5EB1035E8C5B
The Company's full unaudited condensed consolidated interim
financial statements and related Management's Discussion and
Analysis are available on the Company's website.
Outlook
Maple Leaf Foods is committed to creating shared value with a
focus on driving commercial and financial results and enhancing
competitive advantage through addressing some of society's most
pressing issues. The Company is a leading consumer protein company,
with the competitive advantages of a portfolio of leading brands, a
robust pipeline of opportunities in attractive expanding markets
and a proven-track record of execution. Combined with its solid
balance sheet and capital structure that provide the financial
flexibility to invest in future growth, Maple Leaf Foods is
well-positioned to drive sustainable growth and create shareholder
value.
Ongoing uncertainty in fresh pork markets is expected with
continued global trade negotiations, the confirmation of African
Swine Fever ("ASF") in China and
China's temporary suspension of
Canadian pork imports. ASF is leading to a shortage of pork protein
in China, which is expected to
increase worldwide market pricing of lean hogs as well as processed
pork. Maple Leaf Foods is partially mitigating the impact of the
Chinese import suspension of Canadian pork with exports to other
countries and inventory management strategies. Within this
environment, Management remains focused on existing opportunities
to grow the core business by improving commercial performance,
operational efficiencies and progressing against strategic
initiatives for longer-term value creation.
In 2017, Maple Leaf Foods set a profitability target to achieve
an Adjusted EBITDA margin between 14% - 16% within five years. The
Company remains focused on meeting this target in its
profitable Meat Protein Group with ongoing progress in key margin
expansion initiatives, including its sustainable meat strategy,
poultry network strategy, its food renovation strategy supporting
Maple Leaf's flagship brands and its cost culture to deliver
operational savings and efficiencies to fuel growth. Distinct from
the more mature meat protein market, plant protein is rapidly
expanding and presents a dynamic marketplace with vast growth
opportunities. Leveraging its market leadership, Maple Leaf has
changed its plant protein strategy and is pursuing aggressive new
growth goals focused on expanding sales. Continued investments in
its plant protein brands' strength, product innovation, people and
supply chain excellence serve to secure Maple Leaf Foods' leading
position in this burgeoning market.
In 2019 the Company expects to:
- Invest approximately $300.0
million in capital expenditures, including approximately
$100.0 million related to the
construction of the new value-added poultry facility in
London, Ontario and the new plant
protein facility in Shelbyville,
Indiana. This includes continuing construction of its London
Poultry facility and advancing its Shelbyville plant protein facility. The
Company's net debt includes $79.5
million of Construction Capital(9) related
to these projects;
- Continue to build its leadership in sustainable meat with
further advancement in animal care including progress towards
transitioning all sows under management to open housing systems by
2021, and ongoing retail and food service growth of the raised
without antibiotics category in Canada and the U.S.;
- Gain further momentum in prepared meats sales volume as the
Company benefits from the food renovation and brand repositioning
of its Maple Leaf®, Schneiders® and Swift® brands; and
- Pursue aggressive new growth goals focused on expanding sales
and accelerating its leadership in the refrigerated plant protein
market under its flagship Lightlife® and Field Roast Grain Meat
Co.TM brands, targeting 2020 sales to exceed
$280.0 million with an opportunity of
greater than $3.0 billion in sales on
a 10-year horizon, based on the plant protein market's growth
potential and the Company's anticipated share of the market.
Reconciliation of Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted
Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA,
Adjusted EBITDA Margin, Construction Capital and Net Debt.
Management believes that these non-IFRS measures provide useful
information to investors in measuring the financial performance of
the Company for the reasons outlined below. These measures do not
have a standardized meaning prescribed by IFRS and therefore they
may not be comparable to similarly titled measures presented by
other publicly traded companies and should not be construed as an
alternative to other financial measures determined in accordance
with IFRS.
Adjusted Operating Earnings, Adjusted EBITDA and Adjusted
EBITDA Margin
Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBITDA
Margin 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 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
not considered representative of ongoing operational activities of
the business. Adjusted EBITDA Margin is calculated as Adjusted
EBITDA divided by sales.
The tables below provide a reconciliation of earnings (loss)
before income taxes as reported under IFRS in the consolidated
financial statements to Adjusted Operating Earnings and Adjusted
EBITDA for the three and nine months September 30. 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 cash requirements, including the Company's capital
investment program.
|
Three months ended
September 30, 2019
|
Three months ended
September 30, 2018(i)
|
($ thousands)
(Unaudited)
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(ii)
|
Total
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(ii)
|
Total
|
Earnings (loss)
before income taxes
|
$
|
39,617
|
(34,925)
|
(2,884)
|
$
|
1,808
|
$
|
50,293
|
384
|
(15,092)
|
$
|
35,585
|
Interest expense and
other financing costs
|
—
|
—
|
8,137
|
8,137
|
—
|
—
|
2,274
|
2,274
|
Other
expense
|
363
|
53
|
1,118
|
1,534
|
299
|
45
|
3,002
|
3,346
|
Restructuring and
other related costs
|
4,588
|
—
|
—
|
4,588
|
—
|
—
|
—
|
—
|
Earnings (loss)
from operations
|
$
|
44,568
|
(34,872)
|
6,371
|
$
|
16,067
|
$
|
50,592
|
429
|
(9,816)
|
$
|
41,205
|
Decrease in fair
value of biological assets(5)
|
—
|
—
|
1,289
|
1,289
|
—
|
—
|
5,781
|
5,781
|
Unrealized (gain)
loss on derivative contracts(5)
|
—
|
—
|
(7,660)
|
(7,660)
|
—
|
—
|
4,035
|
4,035
|
Adjusted Operating
Earnings
|
$
|
44,568
|
(34,872)
|
—
|
$
|
9,696
|
$
|
50,592
|
429
|
—
|
$
|
51,021
|
Depreciation and
amortization
|
41,225
|
3,309
|
—
|
44,534
|
28,794
|
1,661
|
—
|
30,455
|
Items included in
other expense representative of
|
|
|
|
|
|
|
|
|
ongoing
operations(6)
|
(363)
|
(53)
|
(392)
|
(808)
|
(299)
|
(45)
|
—
|
(344)
|
Adjusted
EBITDA
|
$
|
85,430
|
(31,616)
|
(392)
|
$
|
53,422
|
$
|
79,087
|
2,045
|
—
|
$
|
81,132
|
Adjusted EBITDA
Margin
|
9.0%
|
(67.3)%
|
—%
|
5.4%
|
9.4%
|
5.7%
|
—%
|
9.3%
|
(i)
|
Comparative
figures have been presented to align with current reportable
segments.
|
(ii)
|
Non-Allocated
includes eliminations of inter-segment sales and associated cost of
goods sold, and non-allocated costs which are comprised
of expenses not separately identifiable to reportable segments and
are not part of the measures used by the Company when assessing
a
segment's operating results.
|
|
Nine months ended
September 30, 2019
|
Nine months ended
September 30, 2018(i)
|
($ thousands)
(Unaudited)
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(ii)
|
Total
|
Meat
Protein
Group
|
Plant
Protein
Group
|
Non-
Allocated(ii)
|
Total
|
Earnings (loss)
before income taxes
|
$
|
155,923
|
(45,979)
|
(46,574)
|
$
|
63,370
|
$
|
156,081
|
4,437
|
(37,498)
|
$
|
123,020
|
Interest expense and
other financing costs
|
—
|
—
|
24,648
|
24,648
|
—
|
—
|
5,793
|
5,793
|
Other (income)
expense
|
926
|
148
|
6,818
|
7,892
|
(3,089)
|
226
|
7,294
|
4,431
|
Restructuring and
other related costs
|
5,979
|
—
|
—
|
5,979
|
3,971
|
—
|
—
|
3,971
|
Earnings (loss)
from operations
|
$
|
162,828
|
(45,831)
|
(15,108)
|
$
|
101,889
|
$
|
156,963
|
4,663
|
(24,411)
|
$
|
137,215
|
Decrease in fair
value of biological assets
|
—
|
—
|
13,316
|
13,316
|
—
|
—
|
33,134
|
33,134
|
Unrealized loss
(gain) on derivative contracts
|
—
|
—
|
1,792
|
1,792
|
—
|
—
|
(8,723)
|
(8,723)
|
Adjusted Operating
Earnings
|
$
|
162,828
|
(45,831)
|
—
|
$
|
116,997
|
$
|
156,963
|
4,663
|
—
|
$
|
161,626
|
Depreciation and
amortization
|
121,054
|
9,305
|
—
|
130,359
|
85,504
|
5,229
|
—
|
90,733
|
Items included in
other (expense) income
|
|
|
|
|
|
|
|
|
representative of
ongoing operations
|
(926)
|
(148)
|
(392)
|
(1,466)
|
3,089
|
(226)
|
—
|
2,863
|
Adjusted
EBITDA
|
$
|
282,956
|
(36,674)
|
(392)
|
$
|
245,890
|
$
|
245,556
|
9,666
|
—
|
$
|
255,222
|
Adjusted EBITDA
Margin
|
10.1%
|
(29.0)%
|
—%
|
8.4%
|
9.8%
|
9.6%
|
—%
|
9.8%
|
(i)
|
Comparative
figures have been presented to align with current reportable
segments.
|
(ii)
|
Non-Allocated
includes eliminations of inter-segment sales and associated cost of
goods sold, and non-allocated costs which are comprised
of expenses not separately identifiable to reportable segments and
are not part of the measures used by the Company when assessing
a
segment's operating results.
|
Adjusted Earnings per Share
Adjusted Earnings per Share, a non-IFRS measure, is used by
Management to evaluate financial operating results. It is defined
as basic earnings per share adjusted on the same basis as Adjusted
Operating Earnings. The table below provides a reconciliation of
basic earnings per share as reported under IFRS in the consolidated
statements of net earnings to Adjusted Earnings per Share for the
three and nine months ended September
30, as indicated below. Management believes this basis is
the most appropriate on which to evaluate financial results as they
are representative of the ongoing operations of the Company.
($ per share)
(Unaudited)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
2019
|
2018
|
2019
|
2018
|
Basic earnings per
share
|
$
|
0.11
|
$
|
0.21
|
$
|
0.46
|
$
|
0.71
|
Income tax recovery
not considered
|
|
|
|
|
representative of
ongoing operations
|
(0.08)
|
—
|
(0.08)
|
—
|
Restructuring and
other related costs(4)
|
0.03
|
—
|
0.04
|
0.02
|
Items included in
other expense not
|
|
|
|
|
considered
representative of ongoing
operations
|
0.01
|
0.02
|
0.04
|
0.05
|
Change in the fair
value of biological
|
|
|
|
|
assets(7)
|
0.01
|
0.03
|
0.08
|
0.19
|
Unrealized loss
(gain) on derivative
|
|
|
|
|
contracts(7)
|
(0.05)
|
0.02
|
0.01
|
(0.05)
|
Adjusted Earnings
per Share(8)
|
$
|
0.03
|
$
|
0.29
|
$
|
0.55
|
$
|
0.93
|
Construction Capital
Construction Capital, a non-IFRS measure, is used by Management
to evaluate the amount of capital resources invested in specific
strategic development projects that have not yet entered commercial
production. It is defined as investments in projects over
$50.0 million that are related to
longer-term strategic initiatives, with no returns expected for at
least 12 months in the future and the asset will be re-categorized
from Construction Capital once operational. Current strategic
initiatives primarily include the investments in the London, Ontario poultry production facility,
and the plant protein production facility in Shelbyville, Indiana. The following table is a
summary of Construction Capital activity and debt financing for the
periods indicated below.
($
thousands)
(Unaudited)
|
2019
|
2018
|
Opening balance at
January 1
|
$
|
22,422
|
$
|
12,950
|
Additions
|
|
18,100
|
|
1,925
|
Balance at March
31
|
$
|
40,522
|
$
|
14,875
|
Additions
|
|
23,127
|
|
3,693
|
Balance at June
30
|
$
|
63,649
|
$
|
18,568
|
Additions
|
|
15,832
|
|
2,014
|
Balance at
September 30
|
$
|
79,481
|
$
|
20,582
|
Construction
Capital debt financing(i)
|
$
|
79,481
|
$
|
20,582
|
(i)
|
Assumed to be
fully funded by debt to the extent that the Company has Net Debt
outstanding.
|
Net Debt
The following table reconciles Net Debt to amounts reported
under IFRS in the Company's consolidated financial statements as at
September 30, as indicated below. The
Company calculates Net Debt as cash and cash equivalents, less
long-term debt and bank indebtedness. Management believes this
measure is useful in assessing the amount of financial leverage
employed.
($ thousands)
(Unaudited)
|
As at September
30,
|
2019
|
2018
|
Cash and cash
equivalents
|
$
|
70,760
|
$
|
109,643
|
Current portion of
long-term debt
|
(887)
|
(839)
|
Long-term
debt
|
(472,990)
|
(174,276)
|
Total
debt
|
$
|
(473,877)
|
$
|
(175,115)
|
Net
Debt
|
$
|
(403,117)
|
$
|
(65,472)
|
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: future performance; expectations regarding the use of
derivatives, futures and options; the expected use of cash
balances; source of funds for ongoing business requirements;
expectations regarding capital projects, investments and
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. All
statements in this document, other than statements of historical
fact, are forward looking statements. 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., Japanese, and Chinese
economies; the rate of exchange of the Canadian dollar to the U.S.
dollar, the Japanese yen, and the Euro; 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 execution of capital projects,
including cost, schedule and regulatory variables;
- risks associated with international trade and access to
markets;
- risks associated with 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 product innovation and product
development;
- risks associated with rapidly changing market dynamics in the
plant protein sector;
- 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;
- risks associated with failing to identify and manage the
strategic risks facing the Company; and
- impact of changes in International Financial Reporting
Standards and other accounting standards that the Company is
required to adhere to for regulatory purposes.
In addition to the factors referenced above, the Company's
expectations with respect to future sales associated with the
anticipated growth of its plant protein business as of the date
hereof are based on a number of assumptions, estimates and
projections that have been developed based on experience and
anticipated trends, including but not limited to: market growth
assumptions, market share assumptions, new product innovation,
foreign exchange rates and competition.
The Company cautions the reader that the foregoing list of
factors is not exhaustive. More information about risk factors can
be found under the heading "Risk Factors" in the Company's Annual
Management's Discussion and Analysis for the year ended
December 31, 2018, 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 is a producer of food products under leading
brands including Maple Leaf®, Maple Leaf Prime®, Schneiders®,
Mina®, Greenfield Natural Meat Co.®, Lightlife®, Field Roast Grain
Meat Co.TM and Swift®. Maple Leaf employs approximately
12,500 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
- Adjusted EBITDA, a non-IFRS measure, is defined as Adjusted
Operating Earnings plus depreciation and intangible asset
amortization, adjusted for items included in other expense that are
not considered representative of ongoing operational activities of
the business. Adjusted EBITDA Margin is calculated as Adjusted
EBITDA divided by sales. Please refer to the section titled
Reconciliation of Non-IFRS Financial Measures in this news
release.
- Adjusted Earnings per Share, a non-IFRS measure, is used by
Management to evaluate financial operating results. It is defined
as basic earnings per share and is adjusted on the same basis as
Adjusted Operating Earnings. Please refer to the section titled
Reconciliation of Non-IFRS Financial Measures in this news
release.
- Adjusted Operating Earnings, a non-IFRS measure, is defined
as earnings before income taxes adjusted for items that are not
considered representative of ongoing operational activities of the
business and items where the economic impact of the transactions
will be reflected in earnings in future periods when the underlying
asset is sold or transferred. Please refer to the section titled
Reconciliation of Non-IFRS Financial Measures in this news
release.
- Includes per share impact of restructuring and other related
costs, net of tax.
- Unrealized gains/losses on derivative contracts is reported
within cost of sales in the Company's 2019 third quarter unaudited
condensed consolidated interim financial statements. For biological
assets information, please refer to Note 5 of the Company's 2019
third quarter unaudited condensed consolidated interim financial
statements.
- Primarily includes acquisition related costs, interest
income, and litigation costs, net of tax.
- Includes per share impact of the change in unrealized losses
on derivative contracts and the change in fair value of biological
assets, net of tax.
- May not add due to rounding.
- Construction Capital, a non-IFRS measure, is used by
Management to evaluate the amount of capital resources invested in
specific strategic development projects that have not yet entered
commercial production. It is defined as investments in projects
over $50.0 million that are related
to longer-term strategic initiatives, with no returns expected for
at least 12 months in the future and the asset will be
re-categorized from Construction Capital once operational. Please
refer to the section titled Reconciliation of Non-IFRS Financial
Measures in this news release.
Consolidated Interim Balance Sheets
(In thousands of
Canadian dollars)
(Unaudited)
|
As at September
30,
2019
|
As at September
30,
2018(i)
|
As at December
31,
2018(i)
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
70,760
|
$
|
109,643
|
$
|
72,578
|
Accounts
receivable
|
151,479
|
150,232
|
146,283
|
Notes
receivable
|
32,418
|
26,823
|
30,504
|
Inventories
|
384,115
|
307,495
|
348,901
|
Biological
assets
|
108,558
|
87,935
|
111,493
|
Income and other taxes
recoverable
|
2,107
|
—
|
—
|
Prepaid expenses and
other assets
|
37,815
|
17,082
|
38,222
|
Assets held for
sale
|
37,044
|
—
|
—
|
|
$
|
824,296
|
$
|
699,210
|
$
|
747,981
|
Property and
equipment
|
1,346,625
|
1,152,900
|
1,283,950
|
Right of use
assets
|
229,864
|
—
|
—
|
Investment
property
|
1,864
|
5,109
|
5,109
|
Employee
benefits
|
—
|
39,658
|
5,389
|
Other long-term
assets
|
12,769
|
8,212
|
8,074
|
Goodwill
|
659,612
|
613,178
|
664,879
|
Intangible
assets
|
350,898
|
282,100
|
424,616
|
Total
assets
|
$
|
3,425,928
|
$
|
2,800,367
|
$
|
3,139,998
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accruals
|
$
|
406,697
|
$
|
308,288
|
$
|
344,460
|
Current portion of
provisions
|
2,701
|
3,917
|
3,457
|
Current portion of
long-term debt
|
887
|
839
|
80,897
|
Current portion of
lease obligations
|
39,650
|
—
|
—
|
Income taxes
payable
|
—
|
11,382
|
42,884
|
Other current
liabilities
|
31,166
|
45,042
|
24,031
|
|
$
|
481,101
|
$
|
369,468
|
$
|
495,729
|
Long-term
debt
|
472,990
|
174,276
|
302,524
|
Lease
obligations
|
205,750
|
—
|
—
|
Employee
benefits
|
154,276
|
101,427
|
103,982
|
Provisions
|
46,020
|
8,937
|
49,895
|
Other long-term
liabilities
|
2,583
|
14,771
|
53,564
|
Deferred tax
liability
|
116,091
|
133,329
|
127,465
|
Total
liabilities
|
$
|
1,478,811
|
$
|
802,208
|
$
|
1,133,159
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
$
|
851,068
|
$
|
820,588
|
$
|
849,655
|
Retained
earnings
|
1,120,286
|
1,208,848
|
1,178,389
|
Contributed
surplus
|
4,577
|
—
|
4,649
|
Accumulated other
comprehensive income (loss)
|
1,564
|
(4,891)
|
3,532
|
Treasury
stock
|
(30,378)
|
(26,386)
|
|
(29,386)
|
Total shareholders'
equity
|
$
|
1,947,117
|
$
|
1,998,159
|
$
|
2,006,839
|
Total liabilities and
equity
|
$
|
3,425,928
|
$
|
2,800,367
|
$
|
3,139,998
|
(i)
|
Restated, see Note
18(a) of the Company's 2019 third quarter consolidated financial
statements.
|
Consolidated Interim Statements of Net Earnings
(In thousands of
Canadian dollars, except share amounts)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
(Unaudited)
|
2019
|
2018
|
2019
|
2018
|
Sales
|
$
|
995,787
|
$
|
874,827
|
$
|
2,925,576
|
$
|
2,601,580
|
Cost of goods
sold
|
856,070
|
756,245
|
2,495,362
|
2,211,571
|
Gross
profit
|
$
|
139,717
|
$
|
118,582
|
$
|
430,214
|
$
|
390,009
|
Selling, general and
administrative expenses
|
123,650
|
77,377
|
328,325
|
252,794
|
Earnings before the
following:
|
$
|
16,067
|
$
|
41,205
|
$
|
101,889
|
$
|
137,215
|
Restructuring and
other related costs
|
4,588
|
—
|
5,979
|
3,971
|
Other
expense
|
1,534
|
3,346
|
7,892
|
4,431
|
Earnings before
interest and income taxes
|
$
|
9,945
|
$
|
37,859
|
$
|
88,018
|
$
|
128,813
|
Interest expense and
other financing costs
|
8,137
|
2,274
|
24,648
|
5,793
|
Earnings before
income taxes
|
$
|
1,808
|
$
|
35,585
|
$
|
63,370
|
$
|
123,020
|
Income tax (recovery)
expense
|
(11,601)
|
9,029
|
6,199
|
33,621
|
Net
earnings
|
$
|
13,409
|
$
|
26,556
|
$
|
57,171
|
$
|
89,399
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic earnings per
share
|
$
|
0.11
|
$
|
0.21
|
$
|
0.46
|
$
|
0.71
|
Diluted earnings per
share
|
$
|
0.11
|
$
|
0.21
|
$
|
0.46
|
$
|
0.70
|
Weighted average
number of shares (millions)
|
|
|
|
|
Basic
|
123.8
|
124.6
|
123.7
|
125.6
|
Diluted
|
125.2
|
126.6
|
125.4
|
128.0
|
Consolidated Interim Statements of Other Comprehensive Income
(Loss)
(In thousands of
Canadian dollars)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
(Unaudited)
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
Net
earnings
|
$
|
13,409
|
$
|
26,556
|
$
|
57,171
|
$
|
89,399
|
Other comprehensive
income (loss)
|
|
|
|
|
Actuarial gains
(losses) that will not be reclassified to profit or loss
|
|
|
|
|
(Net of tax of $1.8
million and $14.1 million; 2018: $4.1 million and
|
|
|
|
|
|
|
|
|
$13.4
million)
|
$
|
5,192
|
$
|
11,542
|
$
|
(39,808)
|
$
|
38,191
|
Items that are or may
be reclassified subsequently to profit or loss:
|
|
|
|
|
Change in accumulated
foreign currency translation adjustment
|
|
|
|
|
(Net of tax of $0.0
million and $0.0 million; 2018: $0.0 million and $0.0
|
|
|
|
|
million)
|
$
|
4,154
|
$
|
(6,330)
|
$
|
(11,563)
|
$
|
12,868
|
Change in foreign
exchange (losses) gains on long-term debt
|
|
|
|
|
designated as a net
investment hedge
|
|
|
|
|
(Net of tax of $0.6
million and $1.5 million; 2018: $0.1 million and $0.3
|
|
|
|
|
million)
|
(3,505)
|
$
|
604
|
7,956
|
$
|
(2,251)
|
Change in unrealized
(losses) gains on cash flow hedges
|
|
|
|
|
(Net of tax of $0.2
million and $0.6 million; 2018: $0.2 million and
|
|
|
|
|
$0.7
million)
|
(461)
|
479
|
1,639
|
(5,888)
|
Total items that are
or may be reclassified subsequently to profit or loss
|
$
|
188
|
$
|
(5,247)
|
$
|
(1,968)
|
$
|
4,729
|
Total other
comprehensive income (loss)
|
$
|
5,380
|
$
|
6,295
|
$
|
(41,776)
|
$
|
42,920
|
Comprehensive
income
|
$
|
18,789
|
$
|
32,851
|
$
|
15,395
|
$
|
132,319
|
Consolidated Interim Statements of Changes in Total
Equity
|
|
|
|
Accumulated
other
comprehensive income
(loss)(i)
|
|
|
(In thousands of Canadian dollars)
(Unaudited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
Balance as at
December 31, 2018
|
$
|
849,655
|
|
1,178,389
|
|
4,649
|
|
8,518
|
|
(4,986)
|
|
(29,386)
|
$
|
2,006,839
|
Impact of new IFRS
standards(iii)
|
—
|
(1,100)
|
—
|
—
|
—
|
—
|
|
(1,100)
|
Net
earnings
|
—
|
57,171
|
—
|
—
|
—
|
—
|
57,171
|
Other comprehensive
income (loss)(ii)
|
—
|
(39,808)
|
—
|
(3,607)
|
1,639
|
—
|
(41,776)
|
Dividends declared
($0.44 per share)
|
—
|
(53,903)
|
—
|
—
|
—
|
—
|
(53,903)
|
Share-based
compensation expense
|
—
|
—
|
13,352
|
—
|
—
|
—
|
13,352
|
Deferred taxes on
share-based compensation
|
—
|
—
|
1,160
|
—
|
—
|
—
|
1,160
|
Obligation for
repurchase of shares
|
(6,347)
|
—
|
(7,556)
|
—
|
—
|
—
|
(13,903)
|
Exercise of stock
options
|
7,760
|
—
|
—
|
—
|
—
|
—
|
7,760
|
Settlement of
share-based compensation
|
—
|
(20,463)
|
(7,028)
|
—
|
—
|
13,986
|
(13,505)
|
Shares purchased by
RSU trust
|
—
|
—
|
—
|
—
|
—
|
(14,978)
|
(14,978)
|
Balance as at
September 30, 2019
|
$
|
851,068
|
|
1,120,286
|
|
4,577
|
|
4,911
|
|
(3,347)
|
|
(30,378)
|
$
|
1,947,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
comprehensive income
(loss)(i)
|
|
|
(In thousands of Canadian dollars)
(Unaudited)
|
Share
capital
|
Retained
earnings
|
Contributed
surplus
|
Foreign
currency
translation
adjustment
|
Unrealized
gains and
losses on
cash flow
hedges
|
Treasury
stock
|
Total
equity
|
Balance as at
December 31, 2017
|
$
|
835,154
|
|
1,253,035
|
|
—
|
|
(11,420)
|
|
1,800
|
|
(26,961)
|
$
|
2,051,608
|
Impact of new IFRS
standards
|
—
|
(3,695)
|
—
|
—
|
—
|
—
|
(3,695)
|
Net
earnings
|
—
|
89,399
|
—
|
—
|
—
|
—
|
89,399
|
Other comprehensive
income (loss)(ii)
|
—
|
38,191
|
—
|
10,617
|
(5,888)
|
—
|
42,920
|
Dividends declared
($0.39 per share)
|
—
|
(49,023)
|
—
|
—
|
—
|
—
|
(49,023)
|
Share-based
compensation expense
|
—
|
—
|
13,785
|
—
|
—
|
—
|
13,785
|
Deferred taxes on
share-based compensation
|
—
|
—
|
(1,100)
|
—
|
—
|
—
|
(1,100)
|
Repurchase of
shares
|
(30,406)
|
(101,495)
|
(12,685)
|
—
|
—
|
—
|
(144,586)
|
Exercise of stock
options
|
15,840
|
—
|
—
|
—
|
—
|
—
|
15,840
|
Settlement of
share-based compensation
|
—
|
(17,564)
|
—
|
—
|
—
|
10,575
|
(6,989)
|
Shares purchased by
RSU trust
|
—
|
—
|
—
|
—
|
—
|
(10,000)
|
(10,000)
|
Balance at September
30, 2018
|
$
|
820,588
|
|
1,208,848
|
|
—
|
|
(803)
|
|
(4,088)
|
|
(26,386)
|
$
|
1,998,159
|
(i)
|
Items that are or may
be subsequently reclassified to profit or loss.
|
(ii)
|
Included in other
comprehensive income (loss) is the change in actuarial gains and
losses that will not be reclassified to profit or loss and has
been
reclassified to retained earnings.
|
(iii)
|
See Note 2(b) of the
Company's 2019 third quarter consolidated financial
statements.
|
Consolidated Interim Statements of Cash Flows
(In thousands of
Canadian dollars)
(Unaudited)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
2019
|
2018
|
2019
|
2018
|
CASH PROVIDED BY
(USED IN):
|
|
|
|
|
Operating
activities
|
|
|
|
|
Net
earnings
|
$
|
13,409
|
$
|
26,556
|
$
|
57,171
|
$
|
89,399
|
Add (deduct) items not
affecting cash:
|
|
|
|
|
Change in fair value
of biological assets
|
1,289
|
5,781
|
13,316
|
33,134
|
Depreciation and
amortization
|
44,534
|
30,467
|
130,359
|
90,764
|
Share-based
compensation
|
3,948
|
4,547
|
13,352
|
13,785
|
Deferred income
taxes
|
(2,897)
|
7,590
|
2,803
|
23,250
|
Income tax
current
|
(8,704)
|
1,439
|
3,396
|
10,371
|
Interest expense and
other financing costs
|
8,137
|
2,274
|
24,648
|
5,793
|
Loss on sale of
long-term assets
|
375
|
806
|
1,092
|
4,638
|
Change in fair value
of non-designated derivative
|
|
|
|
|
financial
instruments
|
(6,450)
|
3,818
|
624
|
(8,482)
|
Change in net pension
liability
|
854
|
1,915
|
1,804
|
5,520
|
Net income taxes
paid
|
(7,172)
|
(2,154)
|
(37,956)
|
(6,424)
|
Interest
paid
|
(7,264)
|
(1,695)
|
(21,006)
|
(4,334)
|
Change in provision
for restructuring and other related costs
|
3,819
|
(2,356)
|
3,965
|
(6,643)
|
Change in derivatives
margin
|
(721)
|
(1,702)
|
1,804
|
14,583
|
Other
|
2,255
|
(2,014)
|
2,191
|
(6,878)
|
Change in non-cash
working capital
|
52,360
|
14,926
|
(8,528)
|
(65,752)
|
Cash provided by
operating activities
|
$
|
97,772
|
$
|
90,198
|
$
|
189,035
|
$
|
192,724
|
Financing
activities
|
|
|
|
|
Dividends
paid
|
$
|
(17,993)
|
$
|
(16,179)
|
$
|
(53,903)
|
$
|
(49,023)
|
Net (decrease)
increase in long-term debt
|
(667)
|
118,110
|
99,630
|
162,964
|
Payment of lease
obligation
|
(8,848)
|
—
|
(25,719)
|
—
|
Exercise of stock
options
|
4,789
|
—
|
7,760
|
15,840
|
Repurchase of
shares
|
—
|
(68,472)
|
—
|
(139,416)
|
Payment of deferred
financing fees
|
(769)
|
(475)
|
(5,597)
|
(554)
|
Purchase of treasury
stock
|
(9,978)
|
(5,000)
|
(14,978)
|
(10,000)
|
Cash (used in)
provided by financing activities
|
$
|
(33,466)
|
$
|
27,984
|
$
|
7,193
|
$
|
(20,189)
|
Investing
activities
|
|
|
|
|
Additions to long-term
assets
|
$
|
(60,544)
|
$
|
(45,070)
|
$
|
(185,960)
|
$
|
(127,971)
|
Acquisition of
business, net of cash acquired
|
—
|
—
|
(847)
|
(138,380)
|
Proceeds from sale of
long-term assets
|
71
|
34
|
146
|
34
|
Payment of income tax
liabilities assumed on acquisition
|
—
|
—
|
(11,385)
|
—
|
Cash used in
investing activities
|
$
|
(60,473)
|
$
|
(45,036)
|
$
|
(198,046)
|
$
|
(266,317)
|
Increase
(decrease) in cash and cash equivalents
|
$
|
3,833
|
$
|
73,146
|
$
|
(1,818)
|
$
|
(93,782)
|
Cash and cash
equivalents, beginning of period
|
66,927
|
36,497
|
72,578
|
203,425
|
Cash and cash
equivalents, end of period
|
$
|
70,760
|
$
|
109,643
|
$
|
70,760
|
$
|
109,643
|
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SOURCE Maple Leaf Foods Inc.