Earnings call transcript: Maple Leaf Foods Q2 2025 sees strong earnings beat

Maple Leaf Foods Inc. reported robust financial results for the second quarter of 2025, surpassing earnings and revenue expectations. The company reported earnings per share (EPS) of $0.56, significantly higher than the forecasted $0.43, resulting in a 30.23% surprise. Revenue also exceeded expectations, reaching $1.36 billion compared to the forecasted $1.33 billion. Following the announcement, Maple Leaf Foods’ stock rose by 8.25%, closing at $29.46. According to InvestingPro analysis, the company appears overvalued at current levels, with a Fair Value calculation suggesting potential downside. For comprehensive valuation insights and more detailed analysis, investors can access the full Pro Research Report, one of 1,400+ available on InvestingPro.

Key Takeaways

• EPS of $0.56 beat expectations by 30.23%.
• Revenue reached $1.36 billion, exceeding forecasts.
• Adjusted EBITDA increased by 29% year-over-year.
• Stock surged by 8.25% post-earnings announcement.
• Raised 2025 adjusted EBITDA outlook to $680-700 million.

Company Performance

Maple Leaf Foods demonstrated a strong performance in Q2 2025, marked by an 8.5% year-over-year increase in total sales and a significant turnaround from a loss in the previous year to earnings of $57.8 million. The company’s strategic focus on product innovation and operational efficiencies contributed to its robust results. InvestingPro data shows the company maintains strong liquidity with a current ratio of 2.0, and its liquid assets exceed short-term obligations. With a strong branded portfolio and market leadership in sustainable meats, Maple Leaf Foods is well-positioned against industry competitors.

Financial Highlights

• Revenue: $1.36 billion, up 8.5% year-over-year.
• Earnings per share: $0.56, up from $0.18 in Q2 2024.
• Adjusted EBITDA: $182 million, a 29% increase year-over-year.
• Free cash flow: $216 million.
• Net debt reduced to $1.34 billion from $1.8 billion.

Earnings vs. Forecast

Maple Leaf Foods reported an EPS of $0.56, beating the forecast of $0.43 by 30.23%. This represents a significant improvement from the previous year’s adjusted EPS of $0.18. Revenue also exceeded expectations, with a 2.26% surprise over the forecasted $1.33 billion.

Market Reaction

Following the earnings announcement, Maple Leaf Foods’ stock experienced a substantial increase, rising by 8.25% to $29.46. This surge reflects investor optimism driven by the company’s strong financial performance and positive outlook. The stock’s movement positions it closer to its 52-week high of $32.05, indicating strong market sentiment. InvestingPro reveals impressive momentum metrics, with a 510% total return over the past year. Subscribers can access 13 additional ProTips and comprehensive momentum indicators through the platform’s advanced analytics tools.

Outlook & Guidance

Maple Leaf Foods has raised its adjusted EBITDA outlook for 2025 to a range of $680-700 million, signaling confidence in sustained business momentum. The company anticipates mid-single-digit sales growth and continues to focus on sustainability and strategic initiatives, including the upcoming Canada Packers spin-off. This optimistic outlook is supported by InvestingPro data showing five analysts have revised their earnings estimates upward for the upcoming period, while net income is expected to grow this year. The complete analysis of these growth prospects and more detailed forecasts are available in the comprehensive Pro Research Report.

Executive Commentary

CEO Curtis Reich highlighted the company’s sustained momentum and capacity for future growth, stating, "We are sustaining strong momentum across the business" and "We will have significant capacity available to support growth in the future." These statements underscore Maple Leaf Foods’ strategic focus on expanding its market presence and brand portfolio.

Risks and Challenges

• Inflationary pressures affecting consumer purchasing power.
• Supply chain disruptions could impact production and delivery.
• Competitive pressures within the meat and poultry industry.
• Potential regulatory changes in international markets.
• Economic uncertainties that could affect overall demand.

Q&A

During the earnings call, analysts raised questions about the company’s confidence in its second-half performance and potential share buybacks. Management reaffirmed its commitment to maintaining an investment-grade balance sheet and continuing investments in trade promotions, while ruling out imminent mergers and acquisitions plans.

Full transcript - Maple Leaf Foods Inc. (MFI) Q2 2025:

Conference Operator: Morning, ladies and gentlemen. Thank you for standing by. Welcome to Maple Leaf’s Second Quarter twenty twenty five Financial Results Conference Call. As a reminder, this conference call is being webcast and recorded. All lines have been placed on mute to prevent any background noise.

Please note that there will be a question and answer session following the formal remarks. We will go over the instructions for the question and answer session following the conclusion of the formal presentation. I would now like to turn the conference call over to Omar Javed, Investor Relations at Maple Leaf Foods. Please go ahead, Mr. Javed.

Omar Javed, Investor Relations, Maple Leaf Foods: Thank you, and good morning, everyone. Before we begin, I would like to remind you that some statements made on today’s call may constitute forward looking information, and our future results may differ materially from what we discuss. Please refer to our second quarter twenty twenty five MD and A and financial statements and other information on our website for a broader description of operations and risk factors that could affect the company’s performance. We’ve also uploaded our second quarter investor presentation to our website. As always, the Investor Relations team will be available after the call for any follow-up questions you may have.

With that, I’ll turn the call over to our President and CEO, Curtis Reich.

Curtis Reich, President and CEO, Maple Leaf Foods: Thank you, Omar, and good morning, everyone. It’s great to be with you today to share our second quarter twenty twenty five results. Joining me on today’s call are David Smales, our Chief Financial Officer and Dennis Oregon, President of our Port Complex and the incoming CEO of Canada Packers. I’ll begin our call today with a strategic and operational update, after which Dennis will provide insights into the performance of our port complex, and David will walk you through a more detailed review of our financial results. I’ll then return to share some closing thoughts before we open the line to your questions.

The key takeaway today is that we are sustaining strong momentum across the business, driven by the disciplined execution of our strategic blueprint and an unwavering focus on value creation. In the second quarter, we again made meaningful progress to delivering on our annual objectives, showcasing the earnings potential of our business as we move beyond the heavy capital investment phase, execute our profitable growth strategies, and benefit from a return to more normalized pork market conditions. It was another strong quarter of financial performance where sales increased by over 8%, adjusted EBITDA increased by 29% to $182,000,000 Our adjusted EBITDA margin rose to 13.3%, a year over year gain of two ten basis points. Free cash flow grew to $216,000,000 and we further deleveraged our balance sheet. Given the strength of our year to date performance, our growing confidence in the resiliency of the Maple Leaf Blueprint, the underlying expectation of a stable operating environment through the remainder of the year, we are increasing our 2025 adjusted EBITDA outlook to be in the range of $680,000,000 to $700,000,000 Now coming back to Q2, the strength of our results across the CPG and pork businesses clearly demonstrates the effectiveness of our strategy and the resilience of our portfolio as we continue to drive disciplined execution.

You’ll note from the pro form a quarter and LTM views provided today, showcasing each business on a standalone basis, that we continue to deliver margin progression in both the Maple Leaf Foods CPG company and the future Canada Packers company. Within our pork operating unit, top line growth of 10.7% was driven by an increase in the volume of hogs processed, and with markets operating at more normal levels, improved financial results followed, of which Dennis will provide more details. In our prepared foods and poultry business, sales growth of 7.8% was driven by solid execution of our proven growth strategies, where we continue to be pleased with the resilience of our brands and the agility that our commercial teams have demonstrated as they navigate a stable yet challenging consumer environment. We continue to leverage our portfolio of market leading brands anchored by Canada’s number one prepared meats brand Schneider’s, the number two prepared meats brand in the category Maple Leaf, and the number one fresh poultry brand, Maple Leaf Prime. At the same time, we are building the next generation of distinctive brands that resonate deeply with consumers and strengthen our competitive edge.

Our proven ability to incubate, scale and sustain these brands alongside our core portfolio is a powerful driver of long term growth and value creation. We are not only brand builders, we are brand creators. Take Greenfield Natural Meat Company for example, cross border brand that has become the number one raised without antibiotics meat brand in Canada and the number three antibiotic free meat brand in The US since its launch in 2015. Greenfield continued to grow at a double digit pace this past quarter and has delivered a five year compound annual sales growth rate of 15%. Built on industry leading commitments to sustainability and animal welfare, Greenfield products are raised with antibiotics, humanely raised, gestation crate free, and produced by a carbon neutral company.

This suite of consumer relevant attributes uniquely positions Greenfield to meet the growing demand for responsibly sourced protein across Canada and The United States. Similarly, our MENA Halal brand demonstrates our strength in serving culturally relevant markets. Since its launch in 2012, MENA has grown into the number one Halal poultry brand in Canada. Rooted in authenticity and backed by the Halal Monitoring Authority certification, Mina delivered double digit sales growth this past quarter and has achieved a five year compound annual sales growth rate of 23% supported by rising consumer demand, accelerating brand awareness, and expansion across the fresh poultry, packaged meats, and frozen foods categories. These results highlight the power of our purpose led portfolio strategy, meeting evolving consumer needs, capturing both mainstream and niche opportunities in the pursuit of building loved brands.

Armed with a robust innovation pipeline and deep insight into emerging consumer trends, we are well positioned to launch the next generation of distinctive, market shaping and protein focused brands. This portfolio of brands will continue to set Maple Leaf Foods apart and drive enduring shareholder value for the many years to come. While our brand building initiatives and the execution of our growth strategies continues to drive excellent top line performance that is outpacing the broader North American CPG industry, We also remain equally focused on expanding our adjusted EBITDA margins and strengthening our overall profitability. As we highlighted last quarter, we are making steady progress on our Fuel for Growth initiative. We have implemented a leaner, more agile organizational structure.

We are realizing the benefits from our supply chain sourcing initiative. And in Q2, we reached a key milestone by completing the planned decommissioning of our aging Brantford facility, successfully transitioning production to other sites. This step also advances our broader strategic manufacturing review, which is expected to deliver meaningful cost savings through 2026 and beyond. Consistent with our objective to reshape our portfolio as a purpose driven protein focused brand led consumer packaged goods company, we made significant progress on the Canada Packers spin off this past quarter. At our annual and special general meeting in June, shareholders overwhelmingly approved all motions, including the spin off of Canada Packers, with support from over 99% of all shareholder votes cast.

This strong endorsement marks a major milestone in our strategy to unlock long term value. Following shareholder approval, the spin off is on track to be completed in the 2025, subject to receipt of the advanced tax ruling and satisfaction of customary closing conditions. I should also note that we have made significant progress advancing our operational readiness complete this historic transaction. On July 28, Canada Packers began operating as a wholly owned subsidiary, Maple Leaf Foods, allowing it to start operating in many ways as a separate entity. This planned and thoughtful approach further enhances our readiness to complete the transaction once we have received the advanced tax ruling, which is expected later this year.

Before concluding, I want to highlight that we recently released our 2024 integrated report, which outlines our progress towards realizing our vision to become the most sustainable protein company on earth. Among the many successes that we featured in the report, I am particularly proud to highlight that we have celebrated our fifth year as a carbon neutral company, an accomplishment that continues to set us apart. We’ve reduced our Scope one and two emissions by over 5% in absolute terms and cut scope three emissions intensity by nearly 16% versus our 2018 baseline. We’ve achieved a 98.9% reduction in antibiotic use in our hog operations since 2014. We are delivering on our safety promise in food safety, people safety, and animal care, and we continue to work through the Maple Leaf Centre for Food Security to see to it that food insecurity in Canada is reduced by 50% by 02/1930.

By leading in sustainability, we are building a stronger, more resilient company, one that we believe will continue to earn the trust of consumers, of customers and of shareholders for decades to come. With that, I will pass things over to Dennis to discuss the Pork Complex and then to Dave to review our financial results. Dennis?

Dennis Oregon, President of Port Complex, Incoming CEO of Canada Packers, Maple Leaf Foods: Thank you, Curtis, and good morning, everyone. The Port Complex, now known as Canada Packers, delivered a strong quarter of operational and financial performance. We remain focused on disciplined execution and are beginning to see the full benefit of the operational improvements we have made over the past eighteen months. This translated into a 6% year over year increase in hog processing volumes in Q2, driven primarily by gains in our internal hog raising operations. Through targeted improvements in areas such as animal health, nutrition, and overall farm management, we were able to produce more market ready hogs within our own system.

In addition to improving our supply reliability and cost structure, these gains have delivered a positive environmental impact by raising more hogs using fewer resources per animal. We expect this level of growth to normalize in the coming quarters as we begin to cycle the incremental hogs generated from these internal improvements. In Q1, we noted that stability had returned to the relationship between input costs and meet values. That trend continued in second quarter contributing to quarter over quarter consistency and year over year improvement. These dynamics supported another period of strong performance and have increased our trailing twelve month pro form a adjusted EBITDA to $170,000,000 We continue to benefit from a supportive backdrop, including tightening North American supply, low freezer stocks, and pork’s compelling value proposition compared to other animal proteins like beef.

Canada Packers holds a strong presence in the world’s most attractive importing countries. These are premium high margin markets where our solution based products such as customized cuts, branded programs, specification driven offerings, and labor friendly formats give us a competitive advantage and build long term customer relationships. And back at home in Canada, we’re also seeing growing demand for premium produced pork that solves real world challenges for our customers. Our solutions are labor friendly, traceable, and aligned with the highest standards of quality and sustainability. This approach resonates strongly with the values of the Canadian market.

Our domestic offerings are well aligned with the evolving consumer expectations and we are capturing increased value in retail channels. Our ability to meet both global and domestic demand for premium pork combined with the capital light path to scale positions Canada packers uniquely in the market. Looking ahead, we will focus on our vision to be the global standard in sustainable pork, selling a better mix of products to a better mix of countries while driving consistent and profitable growth. Before I turn it over to Dave, I want to take a moment to thank all our employees across Canada Packers and Maple Leaf Foods, as well as the countless number of external resources that have supported this transaction. Performance we are delivering and the opportunity ahead is a direct result of their hard work, discipline and belief in our purpose.

The fact that we are already operating as a wholly owned subsidiary with established systems, structures and processes significantly increases our readiness to complete the spin transaction and positions us to hit the ground running on day one as a standalone company. A century ago, Canada Packers set the standard for pork in Canada. In the century to come, we were made committed to that legacy, proudly raised, responsibly made. With that, I will turn it over to Dave to walk through the financials in more detail.

David Smales, Chief Financial Officer, Maple Leaf Foods: Thank you, Dennis, and good morning, everyone. Turning to our results, I’ll comment on the company’s consolidated results for the quarter before addressing the balance sheet and discussing the overall outlook for 2025. Total sales in the second quarter were $1,360,000,000 an increase of 8.5% compared to last year, driven by solid growth across prepared foods, poultry, and pork, where sales were up 7.5%, 8.5%, and 10.7% respectively. Prepared foods, which includes meat and plant protein, saw the impact of inflationary pricing along with improved product mix and higher volumes in the quarter. In poultry, sales were up due to improved channel mix with growth in both retail and food service volume, as well as pricing impacts.

And pork sales increased due to volume growth from a 6% increase in the number of hogs processed in the quarter, as well as higher average hog weights. Earnings for the quarter were $57,800,000 or $0.47 per basic share, compared to a loss of $26,200,000 or $0.21 per share last year. After removing the impact of the non cash fair value changes in biological assets and derivative contracts, start up and restructuring costs, and items included in other expense that are not representative of ongoing operations, adjusted earnings represented $0.56 per share for the quarter compared to $0.18 per share in the 2024. Adjusted EBITDA increased by 29% to $182,000,000 in the quarter, with adjusted EBITDA margin improving by two ten basis points to 13.3% compared to 11.2% in the second quarter of last year. Within prepared foods and poultry, increased profitability was primarily driven by favorable mix impacts and improved operating efficiencies, including the year over year benefits from our London Poultry and Bacon Centre of Excellence facilities, Increased trade promotions to support our brands were a partial offset in the quarter.

Our pork operating unit saw another quarter of what we consider to be near to more normal pork markets, reflecting a significant improvement in the vertically integrated spread due to lower feed costs and a stronger cutout compared to the 2024. SG and A decreased by $3,600,000 in the second quarter compared to last year, mostly due to a higher level of consulting fees that were incurred in the second quarter of last year, partially offset by higher variable compensation costs this year. During the quarter, we invested $24,700,000 in capital compared to $15,700,000 in the second quarter of last year. While we expect capital expenditures to increase in the 2025 compared to the first half, we are adjusting our full year outlook to be in the range of 160,000,000 to $180,000,000 down from our previous outlook of 175,000,000 to $200,000,000 due to the timing of projects. Our capital expenditure plan for the year remains primarily focused on maintenance capital, along with capital related to cost efficiency and support for profitable growth initiatives.

As we progress through 2025, our capital allocation priorities remain focused on strengthening the balance sheet through free cash flow generation, maintaining leverage in an investment grade range, and creating flexibility to execute on investor friendly capital choices. In the second quarter, free cash flow was $216,000,000 due to strong profitability and the timing of capital spend and working capital. Last twelve months free cash flow remained strong at $487,000,000 although due to the timing of capital spend and working capital investments, it’s expected to moderate to some extent over the balance of 2025. On the balance sheet, net debt ended the quarter down by $379,000,000 versus a year ago to approximately $1,340,000,000 and down from a peak level of 1,800,000,000.0 during our large capital project investment phase. In line with our stated priorities, our leverage ratio is well within an investment grade range, with a net debt to trailing twelve month adjusted EBITDA ratio of 2.1 times at the end of the quarter, compared to 2.6 times at the end of the 2025 and three point four times a year ago.

Based on the strength of our first half results, supported by relatively normal port market conditions and a stable consumer environment, we are increasing our full year 2025 adjusted EBITDA outlook to be in the range of $680,000,000 to $700,000,000 up from $634,000,000 or greater previously. We continue to expect mid single digit sales growth for the year. I will now turn the call back to Curtis.

Curtis Reich, President and CEO, Maple Leaf Foods: Okay, thank you, David. I’ll close our remarks today by restating today’s key message. We exited the second quarter with strong momentum. We have growing confidence in our execution and the positive trajectory of our business, and we are firmly on track to deliver against our increased 2025 outlook. This includes mid single digit revenue growth and adjusted EBITDA, as David said, that is now in the range of $680,000,000 to $700,000,000 and investment grade leverage to enable investor friendly capital allocation choices.

We also remain on track to complete the successful execution of the spin off of our pork complex in the 2025, unleashing Canada Packers as a global leader in sustainably produced, premium quality, value added pork, focused on capturing the significant growth potential of its business. In parallel, Maple Leaf Foods stands today as a purpose driven, protein focused, and brand led consumer packaged goods company with a clear vision to be the most sustainable protein company on earth. We are well positioned to meet the growing global demand for sustainably produced protein and unlock the full potential of our business, and we have the right strategy, the blueprint, and the people to make it happen. Now before we move to questions, I want to thank the entire Maple Leaf Foods team. It’s a privilege to work alongside such passionate and capable individuals, and the progress we’re making is a direct reflection of your dedication and your energy.

With that, operator, please open the line for questions.

Conference Operator: Thank you. We will now begin the question and answer session. Our first question comes from the line of Irene Nattel. Your line is open.

Irene Nattel, Analyst: Thanks and good morning, everyone. Great quarter. So I guess my question is, you walk us through what is going better than you had anticipated or maybe feared might not go so well year to date and your confidence in the sustainability as we look out through the balance of the year.

Curtis Reich, President and CEO, Maple Leaf Foods: Hi, good morning Irene, thank you. A couple of comments I think that might be helpful. You know, number one, we’re now in a position where we’ve had three consecutive quarters of very strong results and that’s certainly driving confidence for us as we raised our outlook over the balance of the year, you heard. There’s really three things from my perspective that are contributing to, you know, number one, the quality of the results and number two, our confidence as we look out to the future into the sustainability of the results. Those three are the quality of the execution of our growth strategies, the fact that our cost reduction playbook is right on track, and of course the fact that pork market conditions have normalized here as we expected that they would.

Maybe a little bit of commentary on those three. In the first one, the quality of the execution of our growth strategies is something I’m really pleased with and proud of. Our brands are proving to be very resilient in the market, and in what’s still, you know, a challenging consumer demand environment. Our US platform is growing. We had another quarter of double digit growth in the prepared foods part of our business in the quarter, led by our Greenfield brand, which we highlighted in our materials today.

Our leadership in sustainable meats continues to be a very meaningful point of difference for us, and the innovation engine is really accelerating. We had 20 items launched in the first part of this year, 20 plus actually, that are contributing to the results. The second area with respect to cost reduction, playbook remains on track. You’re seeing obviously the benefits of the large capital projects coming to fruition in a way that we expected. They’re materializing in a way that we had expected.

The work that we’ve completed so far in the procurement area and in the SG and A components of our business are supportive. We’ve recently retired our Brantford plant as we committed that we would, and there’s still more work to do in our Fuel for Growth playbook that will contribute over the course of this year and into next year and beyond actually. And you know, when you take that combined with the fact that our operations and supply chain is performing extremely well in the context of the current environment, very happy with how cost reductions shaping up. And then finally, pork market conditions, as David and Dennis commented, are all but normal here and in more normalized range within the quarter. So we expect all of that to continue into the second half, and we’ve updated our outlook in a very positive way in response.

Irene Nattel, Analyst: That’s really helpful. Thank you. And then just, on return of capital, as as we move through the back half of the year, you know, are you would you start to execute on the NCIB ahead of the spin? Is this more likely something that occurs post spin? Any color you can give us there would be great.

Thank you.

Curtis Reich, President and CEO, Maple Leaf Foods: Yes. Thanks, Saree. And David, maybe you take that one.

David, CFO, Maple Leaf Foods: So obviously, as we generate free cash flow, we’re very mindful of our ability to deploy capital. We’re focused on the fact we have the NCIB in place in the short term and intend to be active on that as we move forward. That could be we have the flexibility to utilize the NCIB before the spin as well as post spin obviously, and so we’ll look at that when we come out of the blackout period here, and we do intend to be active over the second half of the year. We don’t know exactly the timing of the spin yet, obviously, but we can be active before and after. So that’s how we intend to look at it.

We do believe our share price today still doesn’t reflect the full fundamental value of the business. We’ve seen a run up this year, but that’s more in our view on the back of strong performance, not necessarily on the back of multiple expansions. So if you look at the valuation of the business today relative to our peers, we believe we’re outperforming in terms of operations and growth. We still think there’s a good opportunity to buy back stock at an undervalued level today.

Irene Nattel, Analyst: That’s great. Thank you.

Conference Operator: Our next question is from Michael Van Aelst. Your line is open.

Michael Van Aelst, Analyst: Thank you. Yeah. And I wanted to follow-up on Irene’s questions because, obviously, very strong quarter and very strong first half. And usually mid single digit for people means 4% to 6% and you’re running at 8.4% revenue growth in the first half. So I know you’re lapping some tougher comps as you get to the back half, but can you give us some kind of broader assumptions that you’re building into that second half outlook on the top line and how much of that is conservatism around the client and the customer?

How much of that is lapping tougher comps? Are you and did you see your volumes pull back after your price increase at the June?

Curtis Reich, President and CEO, Maple Leaf Foods: Great. Thanks, Mike. Good morning. Yeah, we’re as you noted in our outlook, we’ve maintained our view of mid single digit revenue growth over the course of the year. I’ll answer your last question first maybe, which is the volumes haven’t pulled back in a material way, but it’s early days in our pricing and we’re paying particular attention to the volume performance in the third quarter, just given the macro consumer environment and the fact that we’ve recently implemented in and around 3% pricing in the throughout the last throughout the last quarter.

There’s a couple of things that I think are important in outlining that our revenue outlook hasn’t changed. The first is to your point, we do expect to be lapping more challenging quarters or better quarters from a year ago. So that certainly plays a role. But also we do expect that the growth that we’re experiencing in hog processing compared to a year ago will moderate to a certain extent in the second half as well. And that will be a factor.

We had over 10% revenue growth in the pork complex last quarter and that’s likely to moderate in the second part of the year. So, you know, those two factors are predominantly the reasons that we’ve kept our guidance in line with what you would have seen historically.

Michael Van Aelst, Analyst: Okay, that’s helpful. Thank you. And just to follow-up on that, when I look at your geographic revenue growth, seems seems like like Japan and other international markets are seeing some pretty strong growth right now other than China. And then US is relatively flat even though you had your double digit growth in prepared foods. Maybe this is a question for Dennis, I’m assuming this is where most of that business is, but is it right to assume that your fresh pork business is maybe declining in The US and growing in Japan and other and what’s behind that move

Curtis Reich, President and CEO, Maple Leaf Foods: if that’s the case? So Dennis can give you some color, Mike, if that’s okay. Good morning, Mike. Yeah, remember

Dennis Oregon, President of Port Complex, Incoming CEO of Canada Packers, Maple Leaf Foods: optimization is critical for us. And with the impact of tariffs, there is some sort of repositioning of pork throughout the world. So The US is typically sort of it’s not our primary location, right? They’re a net exporter of pork. So if we’re down there, it means we found a better place to position it.

And your comment on Japan is sort of well received because obviously that’s a focus for us. Domestic Canada is critical. We’re using solution based selling and getting into labor friendly items to grow in Canada. But Japan is the one place that we act as close to a CPG company as we act anywhere. We have multi tier branded strategy.

We have go to market strategy on brand reviews. And early days, but we’ve talked a lot about Japan here, but early days and we’re doing a sort of a strategy revisit and have had some early successes on volume wins there. And then the other thing to remember when it comes to revenue in pork, the markets and the increase in markets relative to prior quarter or prior year will always impact revenue as well.

Curtis Reich, President and CEO, Maple Leaf Foods: The only thing that I would add, Mike, that’s a good summary obviously on the pork side. In prepared foods, we did see double digit sales growth in The US market. So our momentum continues there. And the beachhead was the sustainable meats portfolio and led by our greenfield brand in particular. Great.

Thank you.

Conference Operator: Our next question is from Do Cannon. Your line is open.

Do Cannon, Analyst: Thanks. Good morning. I wanted to follow-up on the CapEx guidance. You mentioned that some of those projects were delayed into 2026. This year is going be more focused on maintenance CapEx.

But can you just give us a rough sense? I mean, what is CapEx for next year going to look like? And how much, I mean, roughly speaking, is going to be split between maintenance and growth CapEx?

Curtis Reich, President and CEO, Maple Leaf Foods: David, go ahead.

David, CFO, Maple Leaf Foods: So we’re not giving guidance for 2026 Obviously, as we move through the second half of the year and we put our plans together in more detail, we’ll be able to give some more color around that. I think from a I would say from a maintenance capital perspective, we’re pretty comfortable with the run rate that we have for 2025, and it will just be a question of other projects that we choose to add to the overall growth capital envelope for 2026. So we don’t have a number for 2026 at this point, but obviously as we move through the year and we start to get more detail on our plans for 2026, we’ll be able to communicate more around that.

Do Cannon, Analyst: Okay. Thanks. And I wanted to follow-up on poultry and specifically sustainable poultry sales. It was mentioned in the earnings deck that there was strength with the RWA with Maple Leaf Prime, but that it remained below potential. So I just wanted to follow-up on that.

Is that just a function of the consumer being a little bit weaker or is there anything else to call out there?

Curtis Reich, President and CEO, Maple Leaf Foods: No, Luke, thanks for clarifying that question. No, it’s just simply a function of the consumer environment, the consumer being a little bit weaker. The fact that we had growth in sustainable meats was something we were quite pleased with in the quarter, and that was the very reason we pointed it out, but it’s very modest growth and doesn’t reflect the full potential of the RWA and sustainable meats portfolio within poultry. I should also point out was a very strong quarter in poultry. We had branded sales growth, a market share expansion, the Maple Leaf Prime brand grew significantly, the MENA brand, which we highlighted in our materials, contributed to growth.

We had growth in both the retail and the foodservice channels, and London poultry is obviously contributing in a way that we’re pleased with and proud of. So overall, it’s a very positive and constructive quarter in the poultry business.

Do Cannon, Analyst: Okay. Thanks. Last one for me and then I’ll pass the line. I wanted to follow-up on the decommissioning of the Brantford facility. I know you mentioned that the broader strategic manufacturing review, it sounds like most of the cost savings there will be ’26 and beyond, but do you expect to get specifically at the Brantford facility?

Will there be meaningful cost savings associated with that in the back half of 2025 as well?

Dennis Oregon, President of Port Complex, Incoming CEO of Canada Packers, Maple Leaf Foods: I wouldn’t

Curtis Reich, President and CEO, Maple Leaf Foods: view it as material in terms of, you know, there’s obviously cost savings associated with the closure of a facility, but I don’t think you should be thinking about it as material in the context of the back half of 2025, Luke. And where I would point you is to our outlook for the back half and just, you know, simply state that the positive impacts of that decommissioning are included in our outlook for the back part of the year. It’s just an example of, you know, the types of things that can add up to give us benefit in the P and L over the course of time. Got it. Appreciate it.

Thank you. Thank you.

Conference Operator: Our next question is from Vishal Shreedhar. Your line is open.

Vishal Shreedhar, Analyst: Hi. Thanks for taking my questions. With regard to the $6.80 to $700,000,000 guide that you gave us for the year, it suggests very strong progress on a year over year basis, on a margin rate basis, on a year over year. Notwithstanding,

Curtis Reich, President and CEO, Maple Leaf Foods: if

Vishal Shreedhar, Analyst: you look sequentially, it doesn’t suggest H2 improvement, notwithstanding the momentum that you indicated that you’re seeing and the confidence in your initiatives. So just wondering, as I look into H2, what are some of the bigger puts and takes? And as I reflect upon your supply chain, your sourcing and your optimization initiatives, how that should all figure into H2?

Curtis Reich, President and CEO, Maple Leaf Foods: Yeah, thanks Michelle and good morning. You know the way we’re thinking about Q2 right now, H2, the second half of the year, and our confidence in the second half is really simply an extension of the first half of the year. As I noted earlier, we are seeing the benefits of years of hard work and the investments that we’ve made in the network in particular coming to fruition and paying off over the first half of the year and we expect that to continue into the second half. So first and foremost, it’s not an accident that we are where we are today. It’s been long planned and those benefits are surfacing in a way that we knew they would at some stage and probably most importantly, we continue to believe that there’s more potential to unlock from where we are today.

The big contributors, as I noted earlier, are the continued execution of our proven growth strategies and again I would consider that an extension of the first half of the year where we’ve seen very high quality execution of the benefits of the cost playbook that are already materializing and will continue into the second half of the year, and you know we’re forecasting pork market conditions to the best of our ability, which is more of the same of what we’re seeing today, stability, improvement, and that’s very good news in our business. We’re also operating in the context of an environment where the consumer demand environment continues to be what I would describe as very stable, which is a good thing, but also continues to be challenged given the magnitude of inflation that consumers experienced and some of the geopolitical know overtones that exist more broadly in the market. We’ve also tried to be cognizant of you know that there is still a lot of trade and geopolitical uncertainty you know to play out here over the course of the year. We’ve taken we’ve advanced inflationary based pricing that you know certainly will enter the market in a material way in the second half of the year and you know we’ve got to migrate and manage through those things.

So the underlying I think comment that we’d like you to take away or highlight is that very confident in our second half outlook. We expect a continuation of the first half, which was excellent in terms of the progress that we’ve made over the last three quarters and look forward to obviously continuing to update you along the way.

Vishal Shreedhar, Analyst: Okay. Thank you for that. And with respect to the to the sales trends, obviously, trending above above the guide, and and you you commented on that. But wondering if we dig deeper in that number and, you know, as best to the best of your abilities, there there’s there’s seemingly a lot of things going on. There’s trade down from beef into into other proteins.

There is the buy Canadian movement. There’s a strong general trends in retail in general associated in part with perhaps less vacationing into The US. Wondering if any of that you’re noticing that lifting your trends on a transient basis or you think the underlying momentum is strong in those attributes that I discussed are less significant?

Curtis Reich, President and CEO, Maple Leaf Foods: Yeah, well really important points, mean, and very hard to tease apart as you know and we’ve commented on in prior calls. I mean, we’re certainly to some extent getting some benefit from the Buy Canadian movement and what’s happening and the pride that Canadians have in Canadian based products. So, you know, we’re certainly getting, we think some benefit from that regard, but it’s really hard in the data to tease that apart, Vishal. At the same time, we know for certain that a demand for protein in particular continues to be very, very strong and we’re a protein company obviously, and our growth strategies have been very, very resilient, very diverse and are performing, you know, on or ahead of our expectations. So, you know, I think it’s the combination of momentum, really great work from our commercial teams in terms of leveraging the moment that’s on us in terms of the pride that Canadians have in Canadian food and obviously high quality execution.

Vishal Shreedhar, Analyst: Thank you and congrats on the quarter.

Omar Javed, Investor Relations, Maple Leaf Foods0: Thank you.

Conference Operator: Our next question is from Martin Landry. Your line is open.

Omar Javed, Investor Relations, Maple Leaf Foods1: Good morning, guys, and congrats on a strong quarter. My first question, I want to touch on your Fuel for Growth initiative that you’ve announced at the beginning of the year. That includes a strategic manufacturing review. I was wondering if you can give us an update on where you are in that review process. Should we expect more consolidation of your capacity in the near future?

Curtis Reich, President and CEO, Maple Leaf Foods: Sorry, could you repeat the last part of your question? Just missed the last part.

Omar Javed, Investor Relations, Maple Leaf Foods1: Just wondering if we should expect more consolidation of your capacity in the near future.

Curtis Reich, President and CEO, Maple Leaf Foods: Well, we’re it’s premature to comment on consolidation at this stage. Think it would be the short answer to be premature. The development of our strategic manufacturing review program is well underway. In fact, we’re now in a place where from a data and analytics perspective, I would say that portion of our work is complete and we’re now transitioning what we’ve learned into a more succinct playbook. So we’re in playbook development mode as opposed to information gathering mode.

You know, as we start to, to David’s point earlier, start to formulate our 2026 outlook, which we’ll pull together over the course of the year, both through the development of our 2026 plan and the presentation to our board and all of the discipline that comes with and attach to that, we’ll be in a better position to outlook you on, to give you an outlook on the benefits of the Fuel for Growth platform beyond what we’re delivering today. But as a reminder, you know, many of those benefits are already showing up in our results or supporting our results today. And certainly there’s more upside from today into the future, but we’ll quantify that at a bit of a later date. But progressing well would be the headline and very confident. What I can say with a very high level of confidence is that we will have availability of capacity available in our network without any consideration for diminishing our potential for growth.

So we’ll have significant capacity available to support growth in the future, which is exactly what we want given the growing demand for protein.

Omar Javed, Investor Relations, Maple Leaf Foods1: Okay. And I was wondering if you can just comment on M and A. Where is, you know, M and A in your priorities at this point? Is this a lower down? Are you actively looking?

Just a bit of color on where that stands in your order of priorities.

Curtis Reich, President and CEO, Maple Leaf Foods: Yeah, David can comment on kind of the capital allocation priorities and the hierarchy of where M and A sits. There’s nothing, I think the most important point is there’s nothing imminent in the pipeline today, but we’re obviously active in studying the market, and given the balance sheet health at some stage it will be appropriate for us to be active from an M and A point of view, but in the short term we’re solely focused on delivering our commitments in the year, our outlook on the year, and we don’t want to disrupt the quality of our execution at a time when, you know, the primary objectives are: number one, continuing to improve the financial results in the business, making great progress And number two, the very important work that comes alongside us spitting out Canada Packers, and we’re nearing that milestone, but not across the finish line yet, and it’s important we don’t get distracted. And then number three, advancing our vision, of course, to be the most sustainable protein company on earth. So, David, maybe you’d add some color, but but those are our priorities in the near term. And, Dave, you

David, CFO, Maple Leaf Foods: could you could add some extra commentary. Yeah. I building on what Curt said around timing, with M and A being kind of further out with the blue areas being more near term focus, that means the priority for us between now and then is two things. One, preserving that investment grade balance sheet level of leverage, which will then give us the capacity to execute on the growth opportunities at the right time. But I think we’re comfortable that we’ll be able to with the cash flow we’re generating, we’ll be able to do that and look at other opportunities for deployment of capital, whether that’s for internal growth initiatives or return of capital initiatives.

Obviously, dividend’s been a strong focus for us with ten years of strong growth there, an NCIB in place. I think we’re building a platform for lots of flexibility and optionality around capital ahead of any M and A opportunities, but it will all be in the context of maintaining that strong balance sheet so that we can execute the right opportunities at the right time.

Omar Javed, Investor Relations, Maple Leaf Foods1: Okay. Thank you for the color and best of luck.

Curtis Reich, President and CEO, Maple Leaf Foods: Thank you.

Conference Operator: Our next question is from Chantal Pierce. Your line is open.

Omar Javed, Investor Relations, Maple Leaf Foods0: Hey. Thanks for taking my question. I’m on for Mark Petrie. I know you have provided some commentary on the expected debt issuance at Canada Packers, but given the strong results in commodity environment, can you update us on the latest thinking, including the implied leverage of the core MSI business post spin off?

David Smales, Chief Financial Officer, Maple Leaf Foods: Yeah, Dave, go ahead. Yeah, so I think there

David, CFO, Maple Leaf Foods: was if you go back to the management information circular, there were pro form a numbers in there. There was a pro form a balance sheet as if the transaction had taken place. So if you look at that balance sheet for Canada Packers in the circular, we were using a number of $450,000,000 of initial debt at Canada Packers, which was an assumption at that point in time. We disclosed that under the terms of the financing arrangements for Canada Packers, the ultimate number will be the lesser of three times financeable EBITDA or $450,000,000 and that’s what we modeled in the management information circular, and that’s how you should continue to think about the position on closing.

Omar Javed, Investor Relations, Maple Leaf Foods0: Great, thank you.

Conference Operator: Our next question is from Beya Fabrero.

Omar Javed, Investor Relations, Maple Leaf Foods2: Referenced higher trade investments. This seems like an evolution when we think about your trade spend. Do you expect this elevated spending to continue going forward?

Curtis Reich, President and CEO, Maple Leaf Foods: Yeah, we do for a period of, you know, for some period of time. I don’t think you’re seeing a consumer environment yet that’s quite returned to, you know, what we would define as somewhat more normal or somewhat more consistent. The consumer still has a lot of stress related to multiple years of significant inflation, a wallet that stretched pretty assertively, and obviously some of the more kind of geopolitical stress that exists in the environment. So, you know, I think it would be reasonable to assume that that will continue into certainly the back half of this year. We’ve factored to the best of our knowledge and ability that consumer sentiment into our outlook.

And again, I think that the headline would be more of the same, not better, not worse, more of the same. And that means practically that we’re investing a little bit more trade than we would like to be or have historically, but I think is appropriate from what the moment we’re in. What’s important in that is to get the outcomes that we expect, and we have a high quality revenue management team that’s very active, And what we experienced in the second quarter, as an example, was 2% growth in volume in the prepared foods business. Very happy with that. Again, you know, in the context of broader North American CPG, that was very strong Revenue growth that we were obviously pleased with and market share expansion in our prepared meats business and in our poultry business.

So I think we’re, you know, we’re managing the environment quite well, but certainly expect it to continue into the second half.

Omar Javed, Investor Relations, Maple Leaf Foods2: Thank you. And then just a follow-up. On your SG and A, it looks relatively flat year over year, and that’s fairly impressive given the top line. Can you talk about the sustainability of that? Or does that give you the ability to make other investments to grow the business?

Curtis Reich, President and CEO, Maple Leaf Foods: Yes. David can comment on that. Thank you. Important point, actually. So appreciate you bringing that up.

David, CFO, Maple Leaf Foods: Yes. So obviously, we factored in what we expect for SG and A into our overall guidance for the year. We don’t give specific SG and A guidance, but it’s factored into the overall EBITDA expectation for the year. And as you noted in the context of strong top line growth, the number has been pretty flat. So, we’ve seen on a percentage basis, for example, Q2 this year was closer to 8% versus 9% in the same quarter a year ago.

So we would expect on a percentage basis continued improvement, just given the initiatives we’ve talked to already in terms of fuel for growth. But that’s all factored into the guidance for the full year EBITDA

David Smales, Chief Financial Officer, Maple Leaf Foods: number. Thank you.

Conference Operator: Thank you. There are no more questions at this time. I would like to hand the conference back to Mr. Frank.

Curtis Reich, President and CEO, Maple Leaf Foods: Okay. Thank you, everyone, and appreciate your questions and discussion this morning. I would like to leave with the message that we’re exiting the first half with very positive momentum. We’ve had three consecutive quarters inside of Maple Leaf Foods with very strong and excellent performance. We’ve had a very strong first half of the year with 8.5% revenue growth, a 35% improvement in our adjusted EBITDA and very strong margin performance of 13.4%.

So we’re raising our outlook in response for the second half of the year, given the positive momentum and very much look forward to providing further updates when we have an opportunity to discuss Q3. So thank you for your support and engagement today and look forward to reconnecting after our next quarter.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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