Maple Leaf Foods Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Maple Leaf's fourth quarter and full year 2023 financial results conference call. As a reminder, this conference call is being broadcast live on the Internet and recorded. All lines have been placed in 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 Janet Craig, Investor Relations at Maple Leaf Foods. Please go ahead, Ms. Craig.

Thank you, Lara. Good morning, everyone. Speaking on the call this morning will be Curtis Frank, President and Chief Executive Officer, and David Smels, Chief Financial Officer. Before we begin, I would like to remind you that some statements made on today's call They constitute forward-looking information, and our future results may differ materially from what we discussed. Please refer to our Q4 full year 2023 MD&A 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 updated our Q4 investor deck to our website, which includes support material for the quarter. 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 Curtis Frank. Curtis?

Thank you, Janet, and good morning, everyone. It's great to be with you here again today. Right off the top, I want to welcome and introduce our new CFO, David Smales, who joined Maple Leaf in late January. David is an accomplished executive leader with over 30 years of diverse experiences, and we feel incredibly fortunate to have him as part of our team. I'm sure many of you will be connecting with David separately. If you haven't already, welcome, David. You likely seen in our materials, we've got a lot to share this morning. In addition to announcing our Q4 and 2023 results, we've also unveiled the next evolution of our strategic blueprint, along with the new business and organizational structure that will propel us into an exciting chapter ahead. And so with that, I'm going to jump right in with a recap of our year before turning it over to David for a deeper dive into our financial results. And then I'll spend a few minutes towards the end of my remarks to provide some color on our new blueprint. And of course, we'll leave some time for your questions on the line. Over the full year of 2023, we delivered year over year top line sales growth of 2.7% and adjusted EBITDA of $428 million, a $155 million or 57% improvement from 2022. Our business and our people demonstrated exceptional resilience in the face of a post-pandemic economy headlined by dislocated pork markets, hyperinflation, disrupted supply chains, and a consumer increasingly under stress. And we took meaningful steps forward to position ourselves for success in 2024 and beyond. We met our goal to achieve adjusted EBITDA neutral or better in our plant protein business, which was accomplished this past quarter in Q4. This is a material pivot, and we are confident that there is more success to follow. We completed the startup of over $1 billion in major capital projects at London Poultry and the Bacon Centre of Excellence. We restored the health of the supply chain following the impacts of a global pandemic and the implications of global conflicts. We caught our pricing up to current levels of inflation. We significantly outperformed our competitive peers on a relative basis in our pork complex, Weathering the storm of dislocated pork markets that have persisted deeper and longer than we could have anticipated. And we demonstrated discipline in capital management while starting to deliver our balance sheet. These achievements demonstrate positive momentum building in our business, and while we're really pleased with how we've advanced the strategic execution of our blueprint. We look back on 2023 as a year of progress, but not perfection. fully acknowledging that there is still work to do to realize our full business potential. Haston Point is our fourth quarter of 2023. While we more than doubled our consolidated adjusted EBITDA year over year, including delivering on our promise in plant protein, we were disappointed with the outcome in the meat protein business. Our meat protein adjusted EBITDA margin of 10.5%, beat last year's result of 6.6%, but was lower than we were striving for and remained below our structural margin target of 14 to 16% in normal market conditions. There are three reasons why this occurred. First, pork markets in Q4 did not move as we anticipated. After some positive progress in Q3, we would have expected pork markets to improve in Q4 as they typically do. Instead, Vertically integrated pork margins worsened, turning negative once again in Q4 and remained significantly below what we would describe as a normal range. While these market conditions look to be continuing into the early parts of Q1, there is promising news on the horizon. As we look ahead, we expect global protein markets to progressively improve throughout 2024. Feed prices, largely corn, are continuing to decline. European production has been reduced, improving the global supply and demand balance, and pork continues to be affordable relative to other competitive proteins, setting up a favorable demand environment. A second, exiting the year, the run rate benefits from London poultry and our Bacon Center of Excellence were approximately 200 basis points in Q4, which means we have an additional 60 basis points or so of benefits yet to be captured in 2024. At London Poultry, we ended the year very close to capturing our targeted exit rate of $100 million of adjusted EBITDA. While we can definitely put the completion of the London startup in the success column, we need to remain focused on chasing down the last of the commercial benefits while navigating through the short-term noise of the consumer demand environment. At our Bacon Center of Excellence, the startup is on track, and our focus of effort has been centered in on onboarding new customer volumes to fill the plant and continuing to fine tune our operations. Here too there is good news on the horizon as just this week we confirmed the expansion of our partnership with one of the world's largest food service QSRs to include precooked bacon slices produced at our Bacon Center of Excellence. This new volume is expected to begin to come on stream early in Q2 and be fully ramped up by the end of Q2. Once this is complete, we expect that this will mark the last of the onboarding of new customer volume to the Bacon Center of Excellence, an exciting milestone required to reach the full financial benefits of this project. And third, like most CPG companies, we experienced a challenging macro consumer demand environment in Q4. With higher interest rates and inflationary pressures, we saw a natural impact on consumer behavior, which affected our commercial volume and mix in the short term, and led to softer results than we would have liked in our prepared meats and poultry businesses. Let me give you an example of how this played out in our poultry business. Q4 experienced some level of oversupply in the chicken market due to allocations from the supply management system coming in slightly higher than the demand from consumers. This, mixed with the complexity of being in a new plant startup environment, caused us to temporarily divert sales to other channels where we ultimately earn less margin. Here as well, we believe that things are set to improve. We have a dedicated team that is constantly working on optimizing our poultry performance and our London plant will only become more agile. Plus, it has already been announced that poultry allocations for the May-June growing period will be lower than the prior year. These supply reductions, which are the first since the onset of the pandemic, along with easing inflationary pressures, should help the system to come back into balance and restore the financial performance of not only the poultry industry, but also our own business in relatively short order. It's important to note that we aren't sitting idle and waiting for the external environment to change. Instead, we are taking decisive action to adapt our plans to recover volume and mix. By investing in our brands, accelerating the pace of impactful innovation, leveraging our strengths in revenue management, taking advantage of our broad portfolio of brands, including value and regional brands, and winning with in-store execution, we believe we'll restore volume growth in the retail channel in very short order. If we look at our food service channel, we are benefiting from the consumer's value-seeking behavior. We are very well positioned in quick service restaurants, and overall our food service performance has been robust, with some very exciting things to come ahead. The food service channel is a real growth area for us, and the business is very sticky. So look for us to be talking about this more in the quarters ahead. As we close out 2023, we are bringing an end to an intense period of investment as we completed the build-out of our world-class network and have now started our path to deleveraging the balance sheet. As we move into our next phase, we are deploying a disciplined approach to capital management as we focus on filling up our plants, optimizing our operations, and delivering growth on the strengths of our leading brands. Put a fine point on this, after investing over $1 billion in 2020 and 2021, we have already brought our CapEx down to 199 million in 2023. And we are on track for more discipline in 2024, with CapEx spending coming in between 170 and $190 million. This return to more normal capital spending levels, along with the improved profitability of our business, will allow us to accelerate our deleveraging objectives. As we look to 2024 and beyond, I'm super excited about what the future holds for Maple Leaf Foods and what we will be able to accomplish by leveraging the platform we have built. Early this morning, we unveiled the evolution of our strategic blueprint, along with a new business and organizational structure that will lead us into this next chapter. I'll be back to share a little bit more about this in the next few minutes, but first I want to turn it over to David to walk us through the detailed financial results. David.