In a press release dated November 8th Maple Leaf Foods Inc. (MFI-TO) announced results for the third quarter of FY 2022 ended September 30th.
The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS (conversion: CAN$1=US$0.79)
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3rd Quarter Ending September 30th.
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2022
|
2021
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Difference (%)
|
|
Sales:
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$973,165
|
$939,028
|
+3.6
|
|
Gross profit:
|
$65,144
|
$149,198
|
-56.3
|
|
Operating income:
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$(16,068)
|
$53,637
|
-130.3
|
|
Pre-tax Income
Net Income1
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$(183,129)
$(181,286)
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$49,246
$35,138
|
-289.5
-415.9
|
|
Diluted earnings per share:
|
$(1.47)
|
$0.28
|
-625.0
|
|
Gross Margin (%)
|
6.7
|
15.8
|
-57.6
|
|
Operating Margin (%)
|
-1.7
|
5.7
|
-129.8
|
|
Profit Margin (%)
|
-18.6
|
3.7
|
-602.7
|
|
Long-term Debt and lease obligations:
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$1,404,593
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$1,311,593
|
+7.1
|
|
12 Months Trailing:
|
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Return on Assets (%)
|
-0.1
|
|
Return on Equity (%)
|
-14.4
|
|
Operating Margin (%)
|
-0.1
|
|
Profit Margin (%)
|
-5.8
|
|
Total Assets
Intangibles and goodwill as % of assets
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$3,509,770
19.0
|
$3,410,099
23.8
|
+2.9
|
|
Market Capitalization November 11th
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$2,315,000
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- Restructuring charge of $2.3 million. Charge for impairment of goodwill (Plant Protein Segment) of $150.8 million in Q3
Q3 2022 Meat Protein Segment:
Sales, $943 million, up 3.8% from Q3 2021.
Adjusted operating earnings $42.3 million down 50.2% from Q3 2021.
Q3 2022 Plant Protein Segment:
Sales, $34.4 million, down 9.2% from Q3 2021.
Adjusted operating loss $(29.5) million 2% improvement from Q3 2021.
52-Week Range in Share Price: $14.89 to $25.75 50-day Moving average $16.80
Forward P/E 15.6 Beta 0.5
Market Close pre-release November 7th $15.46
Market Open close post-release November 8th $17.39
Insider shareholding 39.6%. Institutional shareholding 27.7%
In commenting on Q3 results Michael H. McCain, president and CEO of Maple Leaf Foods stated, “We are at an important inflection point in our business, grounded in exceptional underlying strength and opportunity even though this is not immediately obvious in current performance or reflected in our share price.” He added “The post pandemic economy has been challenging, but the headwinds it has created are transitional and short term. Quite simply, if global pork markets and labor constraints normalized, we would be delivering above our 14% Adjusted EBITDA margin target in the third quarter of 2022 and expecting that to continue. The good news is we are seeing strong signs of improvement on these fronts, plus we are on track with our London Poultry and Bacon Centre of Excellence projects which will deliver $130 million annually in Adjusted EBITDA once we get through the normal start-up work and are ramped up to full commercial production."
Addressing the loss-making Plant Protein Segment McCain noted "In our plant protein business we are firmly on track to meet our Adjusted EBITDA neutral target in the latter half of 2023. Our plans are clearly working. We expect to cut our Adjusted EBITDA losses in the fourth quarter this year by half year-over-year, and we are now examining initiatives which have the potential to take us beyond our target on this path to profitability.
McCain concluded, “We do not believe the underlying strength and value of our business, including the significant returns that our major capital investment will soon be delivering, are currently reflected in our share price, yet are optimistic it will in time."
The Company provided the following comments on strategy and guidance:-
- Meat Protein: Expect mid-to-high single digit sales growth in 2022, and Adjusted EBITDA Margin expansion to achieve a target range of 14% - 16% when market conditions normalize.
- Plant Protein: Targeting to deliver neutral or better Adjusted EBITDA in the latter half of 2023.
In late 2021, the Company announced that it was re-evaluating its outlook for the Plant Protein Group and launching a comprehensive review of the overall plant protein category. This decision was driven by a pronounced slowdown in growth rates in the category, particularly in the second half of the year, which fueled the Company’s imperative to identify and thoroughly assess the causes, near and long-term trends, and overall implications. The Company’s analysis confirmed that the very high category growth rates previously predicted by many industry experts are unlikely to be achieved given current customer feedback, experience, buying rates and household penetration. Based on this evaluation, the Company believes that the category will continue to grow at more modest, but still attractive rates. Notwithstanding optimistic predictions in 2021 Maple Leaf Foods took a charge of $150 million on the Plant Protein Segment in Q3
The Company announced in May 2022 that it is moving forward with a planned leadership transition plan for the Board and Management. Michael McCain will serve as the Executive Chair of the Board and will continue as CEO for the next year as part of the management transition plan. Curtis Frank, currently the President and COO, will assume the role of CEO during Q2 of 2023.