Maple Leaf Foods
December 2015
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• Canada’s premier meat company with leading brands and market shares
• Completing transition to low cost, state-of-the-art supply chain
• A highly competitive and focused protein business
• Well-positioned to deliver on strategic target of 10% EBITDA margin in 2016
• Strong balance sheet
• Attractive opportunities to expand margins and drive growth
Investment Thesis
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CRISIS
Food Safety Tragedy
ACQUISITIONS
30 Completed
ECONOMIC
Currency Shift
INVEST
Complete Supply Chain Rebuild
Change Hardened Company
MONO-LINE PROTEIN
COMPANY
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Fresh and Prepared Meats
Produces high-quality prepared meats and meals, and value-added fresh pork, poultry and turkey products
Agribusiness
Hog production operations that primarily supply livestock, supporting fresh and processing facilities
Our Business Segments
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Core Business: Consumer Protein Products
Do what’s right
Deliver winning results
Build collaborative teams
Get things done in a fact based, disciplined way
Learn and grow, inwardly and outwardly
Dare to be transparent, passionate and humble
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Commitment To Leadership Values
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Winning in the Food Business
1 2 3 Strong Brands
Leading Market Shares
Competitive Cost
Structure
Maple Leaf
Maple Leaf
Maple Leaf
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Strong National & Regional Brands
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Source: Nielsen Market Track, 52 week period ending 19 Sept 2015.
Market Share Leader
Category Market Share (%) Share Ranking
Wieners 50 #1
Bacon 34 #1
Sliced Meats 27 #1
Frozen Sausages 72 #1
Canned Meats 59 #1
Lunch Kits 99 #1
Meat Snacks 33 #2
Fresh Poultry 13 #1
Frozen Boxed Poultry 7 #2
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Investment in Restructuring Complete
• Approximately $1 billion in capital invested over the last 5 years
• Includes significant investment in scale and technology
• 11 prepared meats manufacturing sites consolidated into 4
• 19 prepared meats distribution centres consolidated into 2
• Completed conversion of multiple legacy systems to SAP
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Restructuring Creates Competitive Cost Structure
• Our vision: become the best protein company in the world
• Transformation from a food conglomerate to a mono-line protein company
Efficiency gains Adjusted EBITDA
1.7x
2010 End-State
3.5%
10%
2005 to 2012 End-State
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Simplified Distribution Network
Old Network: 19 DCs Current Network: 2 DCs
Eastern DC Western DC
• Ship zones = 1,746 (DC-to-customer)
• 34 million kilometres
• Avg. delivery < 1,000 kgs
• Ship zones = 323
• 26 million kilometres
• Avg delivery = 12,000 kgs
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-1.4% -1.3%
0.5%
-4.3%
-1.1%
0.7% 0.5% 1.5%
4.7%
6.0%
7.1%
-6.0%
-3.0%
0.0%
3.0%
6.0%
9.0%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Quarterly Consolidated Adjusted EBITDA Margin
Steady Trend of EBITDA Margin Expansion
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Today
7.1%
Remaining
2.9%
Target
10.0%
Growing Our EBITDA Margin: Elimination of Ramp-up Inefficiencies Delivers 10%
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Ramp-up Inefficiencies
Contributing Factors in Ramp-up
Excess labour
Reduced line production rates
Lower yields than anticipated
Excess supervisory staff
Excess equipment maintenance
Higher utility costs than expected
Additional SG&A support
Indirect consequences: out-of-code; service deficiency; volume limitations
Very high confidence in resolving these inefficiencies; unpredictable pace & timelines
• Sustainable meat
• Growth in value-added poultry
• Ethnic offerings
• Protein snacking
• Alternative proteins
• Artisanal meats
Growing Our EBITDA Margin: Robust Growth Agenda Provides Opportunities Beyond 10%
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No hormones or antibiotics
All vegetarian feed; raised on Canadian
farms
Leadership in animal care
Simpler, more natural
products
A Different Kind of Meat Company
Enabled by a Robust Sustainability Strategy
Building a Powerful Growth Platform in Sustainable Meat
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• Dividend was doubled in 2015
• Executing NCIB – invested $175M to buy-back 7.8M shares during the first eleven months of 2015
• Debt-free with cash on hand of $307M as of September 30, 2015
Strong Balance Sheet; Focus on Capital Allocation
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• State-of-the art, low cost, manufacturing and distribution network
• Leading brands and market position
• Well positioned to deliver 10% EBITDA margin in 2016
• Strong balance sheet
• Opportunities to expand beyond our target:
• High potential growth platforms
• Increase asset utilization
• Remove non-strategic costs
Summary