MAPLE LEAF FOODS INC. Corrected Transcript
02-May-2024
Maple Leaf Foods, Inc. (MFI.CA)
Q1 2024 Earnings Call
Total Pages: 21 | |
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Maple Leaf Foods, Inc. (MFI.CA) | Corrected Transcript |
Q1 2024 Earnings Call | 02-May-2024 |
CORPORATE PARTICIPANTS
Janet Craig | David Smales |
Vice President-Investor Relations, Maple Leaf Foods, Inc. | Chief Financial Officer, Maple Leaf Foods, Inc. |
Curtis E. Frank | |
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc. |
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OTHER PARTICIPANTS
Luke Hannan | Michael Van Aelst |
Analyst, Canaccord Genuity Corp. | Analyst, TD Cowen |
Irene Nattel | Vishal Shreedhar |
Analyst, RBC Capital Markets | Analyst, National Bank Financial, Inc. |
George Doumet | Tamy Chen |
Analyst, Scotiabank | Analyst, BMO Capital Markets Corp. (Canada) |
Mark Petrie
Analyst, CIBC World Markets, Inc.
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MANAGEMENT DISCUSSION SECTION
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Maple Leaf's First Quarter 2024 Financial Results Conference Call. As a reminder, this conference call is being broadcast live on the Internet 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 over to Janet Craig, Investor Relations at Maple Leaf Foods. Please go ahead, Ms. Craig.
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Janet Craig
Vice President-Investor Relations, Maple Leaf Foods, Inc.
Thank you, Joel, and good morning, everyone. Speaking on the call this morning will be Curtis Frank, President and Chief Executive Officer; and Dave Smales, Chief Financial Officer. 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 materially differ from what we discuss. Please refer to our Q1 2024 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 uploaded our Q1 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.
And with that, I'll turn the call over to Curtis Frank. Please go ahead, Curtis.
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Maple Leaf Foods, Inc. (MFI.CA) | Corrected Transcript |
Q1 2024 Earnings Call | 02-May-2024 |
Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
Thank you, Janet, and good morning, everyone. It's great to be with you here again today. When we were last together in February, we had just announced our Refreshed Strategic Blueprint. We also communicated our plans to migrate to a new business structure that will lead us into our next chapter of creating shared value. With these changes now in place, we have updated our reporting for this quarter. Now that Plant Protein is integrated as a category, we've moved away from reporting the Meat Protein and Plant Protein segment separately and have migrated instead to reporting a One Maple Leaf view of our consolidated earnings. That said, to help bridge through this transition, we've also provided you with some additional information that outlines how we think about our two operating units, the key drivers of our business, and some helpful reference points to help you to understand our performance.
The supporting materials that we issued this morning also include the evolved Maple Leaf Blueprint. It's important to understand the blueprint serves as the foundation for all we do on our transformational journey to becoming a globally-admired and brand-led consumer packaged goods company.
To reflect this ambition, we have structured our business into two operating units. The first is our Prepared Foods business, which includes Prepared Meats, Poultry and Plant Protein and represents approximately 75% of our total company sales. Our Prepared Foods business houses the number one and number two packaged meats brands in Canada, Schneiders and Maple Leaf; the number one sustainable meats brand in Canada and number three in the US in Greenfield Natural Meat; the number one brand in Fresh Poultry in Maple Leaf Prime; the number one Halal Fresh Poultry brand in Mina Halal; and a portfolio of leading brands in the US Plant Protein category through the combination of Lightlife, Field Roast and Chao Cheese.
These leading brands supported by a broad portfolio of regional and specialty brands are engaged in more than 20 product categories. You will find our products distributed throughout thousands of North American grocery stores and available to consumers across the vast offering of North American foodservice operations.
The second operating unit is our Pork Complex, which has a very attractive business mix that includes intercompany supply for prepared meats, North American retail sales and a long-standing global presence, headlined by strategic relationships in the Japanese market.
Just like our Prepared Foods business, within the Pork Complex, we have established unique capabilities in sustainability programs such as Raised without Antibiotics and Gestation Crate Free. In our MD&A and in the investor deck we've provided, you'll be able to see more details on each of our operating units.
With that as important context, I'm going to jump in with a recap of our first quarter, before I turn it over to David for a deeper dive into our financial results. I'll also spend a few minutes towards the end of my remarks to update you on our strategic priorities looking forward. And, of course, we will leave some time toward the second half of our call today to answer your questions.
The headline is that in the first quarter of 2024, we delivered results that were in-line with our expectations and consistent with the outlook that we shared the last time we were together. We grew our first quarter adjusted EBITDA to CAD 116 million, a 55% improvement from Q1 2023 and our adjusted EBITDA margin expanded to 10.1%, 370 basis points better than the 6.4% we delivered in the same quarter last year.
In our Meat Protein business, we delivered an adjusted EBITDA margin of 10.8%, a 310 basis point improvement versus last year, and a 30 basis point sequential improvement from the 10.5% that we delivered in the fourth
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quarter of 2023. The year-over-year improvement was predominantly driven by contributions from our major capital investments, along with improving pork market conditions. Pork markets, while still compressed, now appear to be starting to show the sequential improvement that we expected in time. Quarter-over-quarter adjusted EBITDA margins benefited from these improving pork markets, stronger results in prepared meats, and experienced the slight offset by increased SG&A expense.
And turning now to sales, you'll see that top line sales were 1.5% lower than Q1 2023. It's important to note that this modest decline is not reflective of the underlying health and performance of our business. The positive news in the quarter, is we saw sales growth return to our Prepared Meats business, in what a traditionally seasonally weaker quarter is, and the lower volumes into commodity markets for both pork and poultry, which led to lower sales but improving mix. Within Prepared Meats, our top line growth was 2.9%, supported by sales growth in our brands and volume growth in the combined retail and foodservice channels. This underscores the strength and resilience of our brands in the face of broader macroeconomic challenges that the consumer is facing today.
We held our market share in packaged meats in aggregate and delivered market share growth in many key categories, including bacon, ham, meat snacks, kits and further processed poultry. In Poultry, we saw sales depth of 7.1% in the quarter, mostly a function of repatriating co-pack volumes back into London Poultry, which also subsequently reduced sales into the lower margin commodity market relative to last year and will lead to improving sales mix over time.
It's also important to note that in poultry, while commodity market values remain depressed, combined our retail and foodservice channels grew in the first quarter, setting us up well for the eventual return of the supply and demand balance within the poultry markets.
In Plant Protein, we experienced a year-over-year top line decline of 5.7% as overall category headwinds continued to persist. While we held Plant Protein market share flat over this period, our focus is squarely set on stimulating category growth as reflected in our plans for both new product innovation and the renovation of several key items within our portfolio. This, along with the synergies that will come from completing the integration of the Greenleaf business, will continue to drive improved financial results in Plant Protein as the year progresses.
And lastly, although both markets and profits improved in the pork business in Q1, pork complex sales declined by 4.5% as compared to last year, driven by two factors. Firstly, a strategic decision to purchase and process fewer external hogs than last year; and secondly, there was also a smaller impact from foreign exchange.
To put a fine point on it, our first quarter can best be summarized as another quarter of progress, but certainly not perfection. And while we took an excellent step forward, we continue to be motivated by the momentum that's building in our business. Here's why. We delivered a significant profit improvement versus last year in Q1 and with a seasonal margin in the Meat Protein business of 10.8%, our results are improving in line with our expectations.
We drove improvements in branded sales growth in the face of the overall macroeconomic environment that has been so difficult for consumers. This is reflective of the strength of our brands and our ability to adapt to the current consumer demand environment. Within the upcoming spring launch window, we are launching more than 25 new items into the market that will deliver on convenience, taste and appeal to a broad and changing population in North America.
We continue to be excited about the forward-looking growth prospects of our sustainable meats business, which broadly speaking, is about 15% of our sales, serves as one of our differentiators and represents a significant competitive advantage for us as we look to accelerate growth across our footprint in the US, led by our Greenfield
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Q1 2024 Earnings Call | 02-May-2024 |
Natural Meat's product line. We are continuing our disciplined approach to capital management, and we remain focused on deleveraging our balance sheet, while we continue to make progress. And we are confident in our ability to deliver our consolidated adjusted EBITDA margin target of 14% to 16%, updated to include Plant Protein in normal market conditions, where we have clear priorities and the right team and the right structure in place to deliver.
I'll be back to share a little bit more on this in a few minutes. But first, I want to turn the call over to David to walk us through our detailed financial results. David?
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David Smales
Chief Financial Officer, Maple Leaf Foods, Inc.
Thank you, Curtis, and good morning, everyone. Based on the realignment and focus as an integrated protein company that Curtis covered in his opening remarks, we are now reporting our business and operational results as one segment to align with how we monitor and measure the business, as well as providing additional visibility into our performance, including with respect to our two primary operating units. Prepared Foods, which accounts for approximately 75% of sales and pork, which is approximately 25% of sales. Prepared Foods combines the operations of Prepared Meats, Poultry and Plant Protein, which represent on average, approximately 50%, 20% and 5% of total company revenue, respectively.
Turning to our results this quarter, I'll touch briefly on the company's consolidated results before addressing balance sheet items and discussing the outlook for 2024. Total sales in the first quarter were CAD 1.15 billion, a decrease of 1.5% compared to last year. Adjusted EBITDA increased by 55% to CAD 116 million, with an adjusted EBITDA margin of 10.1%, compared to 6.4% last year. Earnings in the quarter were CAD 52 million or CAD 0.42 per basic share, compared to a loss of CAD 58 million or CAD 0.48 per basic share last year.
After removing the impact of the non-cash fair value changes in biological assets and derivative contracts, startup costs in both years and restructuring costs in last year's results, adjusted earnings were CAD 0.04 per share for the quarter, compared to a loss of CAD 0.12 per share last year.
Looking at our key metrics in greater detail. As I mentioned, sales were lower in the first quarter by 1.5% compared to last year. Within Prepared Foods, sales were down 0.4% year-over-year. We saw an increase in sales in prepared meats of 2.9%, which was offset by declines in poultry of 7.1% and plant protein of 5.7%.
Within prepared meats, we saw higher volumes and improving mix across our portfolio of brands as Curtis noted. In plant protein, sales declined at rates consistent with category performance. And in poultry, with our increased production capacity for tray packs, as we ramped up the new facility in London, we no longer require a third party to fulfill tray pack demand for us. This allowed us to repatriate this higher value volume to London and reduced sales into the industrial channel.
In essence, London has allowed us to improve our mix by increasing our tray pack capacity by replacing lower value and volatile industrial channel volume, resulting in the decline in poultry sales year-over-year that improved margin performance. Pork sales came in 4.5% lower year-over-year as we processed fewer hogs. In Q1 2023, we opportunistically sourced additional hogs that were margin positive due to short-term market dislocations within Ontario and Québec, whereas this wasn't a factor this year. This led to a 3% decline in hogs processed this quarter compared to Q1 last year.
Pork sales were also negatively impacted by foreign exchange versus the same quarter last year. Adjusted EBITDA significantly improved year-over-year, growing to CAD 116 million, a 55% increase compared to last year
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Maple Leaf Foods, Inc. (MFI.CA) | Corrected Transcript |
Q1 2024 Earnings Call | 02-May-2024 |
with both Prepared Foods and Pork contributing positively. Within Prepared Foods, higher adjusted EBITDA was primarily driven by poultry and plant results. Poultry saw better mix and contributions from the London facility and plant's improved performance reflects efforts through 2023 to right size the business and drive cost down.
Pork markets were also a tailwind to our year-over-year results as market conditions have improved, although remaining well below what we define as normal. Q1 adjusted EBITDA was negatively impacted CAD 18 million or 160 basis points relative to normal market conditions. Adjusted EBITDA margin came in at 10.1%, up 370 basis points from the year previous and flat compared to the fourth quarter of 2023, whereas meat protein adjusted EBITDA margin of 10.8% was an improvement from 10.5% in Q4. Plant protein results in the first quarter were down sequentially due to lower sales and as we balance production and inventory levels to better align with the demand environment.
Compared to the fourth quarter of 2023, drivers of adjusted EBITDA performance were improving pork market conditions and prepared meats, where the execution of our brand plans resulted in stronger volume and mix, despite Q1 typically being a seasonally softer quarter. These positive developments were somewhat offset by a dip in plant protein by the factors noted above and oversupplied market conditions, which led to slightly lower margin in poultry.
Also contributing to the flat adjusted EBITDA margin was higher SG&A cost relative to Q4 levels due largely to an increase in variable compensation. We expect SG&A costs as a percentage of sales to moderate for the balance of the year relative to 9.5% in Q1. In total during the quarter, we invested CAD 24 million in capital expenditures compared to CAD 53 million last year. The decrease is largely due to the completion of our large capital projects. CAD 13 million of our capital expenditures in the quarter were maintenance related.
Free cash flow improved year-over-year to CAD 74 million, up CAD 62 million from CAD 12 million in the first quarter last year as we start to see the year-over-year benefit of capital projects and improved earnings. On the balance sheet, net debt decreased CAD 25 million from the end of the fourth quarter to approximately CAD 1.7 billion. A majority of this debt is related to our now completed major capital projects. In line with our stated priorities, we saw a significant improvement in leverage ratios over the past four quarters, with a net debt to trailing 12-month adjusted EBITDA ratio of 3.7 times at the end of the first quarter of 2024, compared to 6 times at the end of Q1 last year, and 4.1 times at the end of 2023.
Moving now to the outlook. For the full year 2024, we continue to expect low- to mid-single-digit revenue growth, adjusted EBITDA margin expansion from 2023, CapEx of CAD 170 million to CAD 190 million, largely focused on maintenance capital and optimization of our existing network and further balance sheet deleveraging as free cash flow increases. Market conditions will continue to play a role in our results and through the balance of the year, we expect to see feed costs improving, inflation stabilizing and the supply demand imbalance in poultry to ease.
Longer term, we expect to achieve our adjusted EBITDA margin target of 14% to 16%, inclusive of plant protein as markets normalize.
I'll now turn the call back to Curtis.
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
Okay. Thank you, David. As we wrap up our call this morning, I'll close by saying that I am pleased with our progress this quarter, with our results coming in largely as we expected. As a result, and as we look forward, our 2024 outlook remains unchanged and our focus remains on executing five key priorities. The first is driving adjusted EBITDA margin expansion toward our 14% to 16% target in normal market conditions and we remain
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Q1 2024 Earnings Call | 02-May-2024 |
confident in our ability to achieve this target, including plant protein. The second is harvesting the remaining benefits of our recent capital projects at London Poultry and our Bacon Center of Excellence, where after startup success, we are now focused on the commercial and the operational performance of the assets. The third is adapting our brand strategies to the evolving consumer environment. This includes investing in our brands and bringing impactful innovation to restore volume and mix in our brand-centric prepared foods business. The fourth is completing the integration of our plant protein business, aligning our team to focus on Canadian growth, while at the same time accelerating US platform expansion. And lastly, we are sharpening our cost focus and our competitive edge, taking steps to simplify the business, drive cost efficiencies across the supply chain, all while leveraging the unique capabilities and capacity that we've already invested in and have already created.
Executing these priorities will bring strength to the balance sheet, by generating strong free cash flow through improved profitability and disciplined capital management, all of which will support momentum in the pace of deleveraging. The opportunities ahead of us at Maple Leaf Foods are tremendous. We are clear on what needs to be done. There is positive momentum building in our business and I am very confident that we are on the path to delivering.
Before I turn it over to questions, I just want to take one moment to express my thanks and my gratitude to the team at Maple Leaf. I feel so very fortunate to work alongside so many talented and very passionate people, and we certainly wouldn't be where we are today without them.
With that, I'll turn the call over to questions.
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QUESTION AND ANSWER SECTION
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Luke Hannan. Please, your line is now open.
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Luke Hannan
Analyst, Canaccord Genuity Corp.
Q
Thanks, and good morning, everyone. Appreciate the added disclosure when it comes to the breakdown of revenues in the meat protein business. And maybe we'll start there. You've maintained your revenue guidance for the year, despite the decline at start of the year, which implies you have some degree of confidence of being able to recover well for the balance of the year. And I was wondering, can you help us think about the cadence of growth for the components of each unit, or at least the dynamics that we should be thinking about as we progress through the balance of the year?
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
Hi. Good morning, Luke. Sure. I'd be happy to help with that. In my comments, I gave you a description of kind of how the first quarter played out. I think what's really important before I move on to looking forward is just to take the important perspective away that in 50% of our business, which is our prepared meats business, our revenues did grow at nearly 3%, 2.9%. And in the face of the kind of the challenges that the consumer has been facing and what we experienced certainly last quarter, we are really pleased with our ability to pivot here in the second quarter. So I don't want that to get lost in the first quarter story.
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When I look forward to the balance of the year, we have maintained our outlook for the low- to mid-single-digit revenue growth rates. But there are a number of factors to your point that I think are important to be thinking through. It's mostly related to a back half story, I think would be fair to say and I'll maybe take you through three or four things that I think are important to keep in context. The first is that we do fully expect the poultry markets to normalize over the course of the year. The pace of that is somewhat out of our control, but we know allocations are coming down within the second quarter and we fully expect that that over the course of the year and as the year unfolds, we'll see improvements in poultry revenues, again, likely a back half improvement.
The second is we did see declines of in and around 6% in the plant protein category and our business fell along that same pace, holding market share. And in plant protein there, too, we expect an improvement in sales revenues as the year progresses. And that we start to lap some of the quarters that we experienced a year ago. The third important factor is the consumer recovery, which we expect again to improve overall as the year progresses. There's the fact that the macroeconomic headwinds are easing or subsiding throughout the year. Inflation's certainly stabilizing. There's lots of evidence that our brand plans are taking hold. We're onboarding new businesses, predominantly in the US, but also in Canada, supported by our new assets, including pre-cooked bacon. And I think you would have seen in our materials that we're launching up to 25 new items here in the spring planogram. So we'll get some support from new items and innovation.
Now the last couple of points that I think are important is I also expect that we'll have some level of annual inflation pricing coming in the back parts of the year that will assist on the revenue side and the last kind of outstanding item to think through is just the pace of revenue in the pork business and we did have a transitory decline in the first quarter where we opportunistically purchased harvest from the outside within the first quarter. We don't expect that that's going to be as material as a headwind moving forward, that's more transitory in nature. But in the pork business, that's little bit less in our control. But we'll update you obviously as the year unfolds and progresses. So we maintain our outlook based on those important points.
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Luke Hannan
Analyst, Canaccord Genuity Corp.
Q
That's very helpful. Thank you. And then as my follow-up here, Curtis, you spoke about the consumer recovery for the balance of the year. Just curious, are you noticing any difference in the behavior of consumers in Canada compared to the US? And then maybe as sort of an add-on to that, has the pace of consumer trade down, have those dynamics changed at all since we spoke last quarter?
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
I'll start, I'll answer those in reverse, if it's okay, Luke?
A
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Luke Hannan
Analyst, Canaccord Genuity Corp.
Yeah.
Q
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
But the pace hasn't changed materially from the last quarter. We did see improvements in the prepared meats business. Obviously, as I said, that that was a lot of heavy lifting and I think more brand-led than market-led. Some of the plans that we put in place came to fruition. So we're pleased with that. The poultry business continues to be impacted in the first quarter by the consumer elements that are driving an imbalance in supply
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Q1 2024 Earnings Call | 02-May-2024 |
and demand. We talked about that last quarter and it played out pretty much like we expected, but it didn't get materially better and we didn't expect it to. And we do expect it to improve throughout the year. So I think the first answer is - the answer to the first question, it hasn't improved materially, although our business has improved. Now, we do expect it will improve throughout the year here in the Canadian market for sure.
In terms of differences between Canada and the US, there are a few. The promotional intensity, similar consumer backdrop, lots of stress and pressure. The promotional intensity in the US in select categories continues to be pretty varied. The Bacon category would be the headline in that. We actually had in the first quarter a sales decline in the US market. But if you look at our prepared meats business and strip our Bacon, our revenues were up nearly 3%, between 2% and 3%. So the Bacon tends to be the - in our categories, the lead category in terms of promotional intensity. So that maybe would be one slightly different nuance factor from the US that we're seeing in our product categories. But broadly, I would describe them as very similar in nature.
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Luke Hannan
Analyst, Canaccord Genuity Corp.
Okay, great. Thank you very much.
Q
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Operator: Your next question comes from Irene Nattel. Your line is now open.
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Irene Nattel
Analyst, RBC Capital Markets
Q
Thanks. Hi. Good morning, everyone. First of all, just a follow-up, Curtis, on your answer to Luke's question. One of the factors you cited in terms of the evolution of the year is consumer recovery. If we don't see any change in consumer behavior, if let's say rate increases get kicked down the road or whatever, how material would that be in your ability to deliver low- to mid-single-digit revenue and show margin gains as we move through the year?
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
Good morning, Irene. I think it'll be less impactful from a margin expansion point of view, unless volumes take a material step backward, which I do not expect will be the case. All signs from our perspective point towards improving market conditions and I think what I'm probably most - I'm mindful not to get too far ahead of ourselves here it's one quarter. But what I'm most impressed with, with our operating team was our ability to adapt and pivot in here in the first quarter with 2.9% revenue growth in the prepared meats business, 50% of our portfolio. That's a really good thing, Irene. So that gives us confidence in the outlook moving forward, maybe more than anything else.
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Irene Nattel
Analyst, RBC Capital Markets
Q
Thanks, Curtis. That's really helpful. Could you give us some tangible examples of some of the initiatives you referred to adapting and pivoting some of the initiatives that you implemented that seem to bear fruit or pigs or whatever it is in Q1?
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
Well. Yeah, sure, sure, I can of course. We did - we did - which shows up in the SG&A line, frankly. Irene, we did increase our ad and promo investments, our advertising and promotion investments in the first quarter. Any time
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you're the number one and number two brand and you tend to be price leaders, it's important to continue to invest in and support those brands. So we did increase our investments in the first quarter, proved to be a timely and appropriate and I think certainly benefited us. The second is we had a very overt and directive fast start initiative that we completed with our selling and marketing organizations, which was customer by customer and we'll get into the details of how the customer plays in this particular case.
But customer by customer, making sure that we had the support in place, but frankly, we deserve given the given the size and strength of our brand. So I think, the combination of ad and promo investment, a little bit more promotional intensity in select categories where we're very thoughtful. I think that speaks to our skills in revenue and revenue management, Irene, which as you know, is a function we've built out over the last number of years. When you combine those two things along with the customer execution and support that we got from our customers in the first quarter led to a pretty good outcome.
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Irene Nattel
Analyst, RBC Capital Markets
Q
That's great. Thank you. And then just one final question, if I may. Totally understand the decision around sort of bringing more - sort of let me - let's call, right sizing some of the primary processing. Can you give us an idea of the magnitude of the revenue headwind in Q1 and then how that evolves over the year? Thank you.
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
Yeah. And I think you're referring to the pork and poultry businesses. In pork...
A
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Irene Nattel
Analyst, RBC Capital Markets
Yes.
Q
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
...we did disclose that we had a 4.5% revenue decline. That was more than less that was more of a situation where we had an opportunistic opportunity to procure hogs outside of our normal buying rhythm. We do that from time to time when it's in our best interest from a optimization point of view. That led to most of the decline and then there was a small impact, smaller impact from FX. That was more of a transitory thing, Irene. I don't think that that's going to be a big issue in Q2 Q3 and Q4, just given the size of the purchase that we made in Q1. So I would view that more as a Q1 item than anything else. And I think it's less so going to be an impact moving forward. In poultry, one of the big levers that we pulled to improve the profitability as embedded in our investment thesis for London Poultry was to bring whole [Technical Difficulty] (00:33:01-00:33:14)
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Operator: This is the operator. I'm sorry. We can't hear you anymore. Did your line go? [Technical Difficulty] (00:33:27-00:33:52) I'm sorry. This is the operator. We can't hear you anymore. Can you hear me? [Technical Difficulty] (00:34:01-00:34:34). Sorry for the interruption. It'll just be a moment. We are having some technical difficulties. [Technical Difficulty] (00:34:39-00:37:11)
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Curtis E. Frank
President, Chief Executive Officer & Director, Maple Leaf Foods, Inc.
A
Irene, I'm terribly sorry. We had a technological challenge here. We're back on the line. Can you hear us okay?
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