mF International Limited Q2 FY2026 earnings call

Core Financial & Transformation Progress

• The company delivered its seventh consecutive quarter of revenue growth, with expanded adjusted EBITDA margin and increased adjusted EBITDA, confirming the success of the company's post-spinoff transformation into a focused, protein-focused, brand-led CPG business.
• Disciplined capital allocation was maintained, with $78 million returned to shareholders in the first half of 2026 via a 10.5% increased quarterly dividend and share repurchases under the NCIB program. Leverage remains investment-grade at 2.2x net debt to trailing 12-month adjusted EBITDA.

Operational & Innovation Highlights

• The second phase of the Fuel for Growth operational excellence program continued to deliver expected benefits across the manufacturing network, driving improved operating efficiency that supported margin expansion despite input cost pressures.
• The protein snacking innovation platform gained traction, led by Mighty Protein and Greenfield Protein Kits, with expanded distribution in Canada, the U.S., and new channels including gas and convenience. Protein snacking delivers outsized margin and revenue contribution relative to its volume base.
• Sustainable meat portfolio growth remains strong, with branded sustainable meat sales up mid-single digits in Q2 even in a challenging consumer environment. Maple Leaf Prime (poultry) and Greenfield Natural Meat Company (U.S. sustainable meats) continue to gain market share.
• The company remains carbon neutral for the sixth consecutive year, with sustainability embedded as a core part of its long-term business strategy.

Competitive Positioning

• Poultry growth is supported by the London Poultry production asset, which enables the company to capture growing consumer demand for healthy, value-added poultry and gain market share relative to competitors.
• Recent pricing actions have fully taken hold in the market, with improved profitability already evident despite temporary volume sensitivity that is expected to normalize.

Maple Leaf Foods reported total Q2 2026 revenue of $1.02 billion, representing a 1.6% year-over-year increase. The company operates two core product segments: 1) Prepared Foods: Revenue declined 2% year-over-year, driven by the roll-off of lower-margin private label volume and temporary near-term volume sensitivity to Q1 2026 pricing actions. Despite the revenue decline, profitability improved in the segment, as pricing benefits, operating efficiencies from the Fuel for Growth program, and favorable product mix more than offset lower volumes and input cost inflation. This segment contributed approximately 54% of total Q2 revenue. 2) Poultry: Revenue increased 7.1% year-over-year, supported by higher retail and food service volume, improved channel mix, and pricing. This growth was partially offset by increased trade promotion spending. Demand for value-added and sustainable poultry remained resilient, and the Maple Leaf Prime brand gained market share during the quarter. This segment contributed approximately 46% of total Q2 revenue. On a consolidated basis, adjusted EBITDA for Q2 was $137.1 million, up 4.8% year-over-year, with an adjusted EBITDA margin of 13.4% (a 40 basis point improvement year-over-year). Through the first half of 2026, total revenue increased 4% to nearly $2 billion, and adjusted EBITDA increased more than 5% to approximately $260 million.

• Management reaffirmed its full-year 2026 guidance, maintaining prior targets with no upward or downward revision.
• Full-year 2026 guidance calls for mid-single-digit total revenue growth, and adjusted EBITDA in the range of $520 to $540 million.
• Full-year 2026 capital expenditure guidance is maintained at $160 to $180 million, with spending weighted to the second half, focused on maintenance, productivity improvements, technology, and automation.
• Management expects temporary volume sensitivity from Q1 2026 pricing actions to moderate over the second half of 2026, with prepared foods volume growth expected to return by late Q3 or Q4 2026, in line with historical CPG pricing response patterns.
• Q3 2026 is expected to be the low watermark for full-year margins due to historical seasonality of higher raw material input costs in the second half, but this normal seasonality does not change full-year guidance.

• Broad-based input cost inflation remains a key headwind: elevated costs are expected for beef, turkey, chicken, pork bellies, packaging, ingredients, energy, and transportation in the second half of 2026. While pork prices have recently declined, most other input categories are expected to see higher year-over-year costs in H2 2026.
• Persistent consumer stress from broader economic inflation continues to pressure demand, requiring elevated promotional spending to maintain volume and market share relative to historical levels.
• Geopolitical developments continue to create volatility in energy and transportation costs, adding uncertainty to input cost projections.
• Poultry supply is constrained by quota allocations that have not kept pace with growing consumer demand, limiting near-term upside from the strong growth trend in the segment.
• The plant protein category in the U.S. continues to face sustained headwinds that pressure results in that market.

Q: The 2% prepared foods revenue decline came after recent pricing actions. Is the higher-than-expected volume drop due to a change in consumer behavior, especially given Maple Leaf's positioning in the value segment? / A: The volume drop was not a surprise. Two key factors drove it: the planned roll-off of low-margin private label volume, which is a normal recurring portfolio adjustment, and the expected temporary near-term volume response to Q1 2026 pricing actions, which is standard across CPG categories after price increases. There is no material change in the overall consumer environment; consumers remain under inflationary pressure, which is consistent with what the company has seen for the past several quarters. Margin held strong at 13.4% in Q2, confirming pricing took hold as expected, and volume is projected to normalize through the second half.

Q: Why is management confident maintaining full-year guidance despite H2 seasonality and inflationary pressures? What are the core drivers of the H2 outlook? / A: The company is already on track to hit guidance through the first half: year-to-date revenue is up 4% (in line with mid-single-digit full-year targets) and adjusted EBITDA is $260 million, which is within the guided full-year range. Key H2 growth drivers include continued strong momentum in poultry, easing of pricing-related volume impacts in prepared foods, accelerating growth from protein snacking innovation (with expanded distribution in new channels including 1,500 gas/convenience locations and national U.S. retail distribution), and the upcoming relaunch of the well-known Eve's brand in Canada. From a margin perspective, the full impact of earlier pricing will be felt in H2, and the Fuel for Growth cost reduction program continues to deliver efficiency gains that offset inflation.

Q: What is the white space opportunity for the protein snacking innovation platform, and is poultry's relative affordability driving performance? / A: Significant white space remains across channels: the company is still closing distribution gaps in core Canadian retail, expanding into new channels like the dollar channel and gas/convenience (1,500 new net locations added already, with much more room for growth), and has barely scratched the surface of the large U.S. market after recently securing national distribution with three major U.S. retailers. While poultry's relative affordability likely provides a mild tailwind, the core driver of growth is strong consumer demand for healthy, portable, high-protein low-calorie snacks, which is a long-term structural trend. The company will continue expanding the snacking portfolio to include new product formats like protein kits to capture additional growth.

Q: With a strong investment-grade balance sheet, what is the latest thinking on additional capital return (like a special dividend) and M&A? / A: The company follows the balanced capital allocation playbook shared at Investor Day, which includes increasing the regular dividend (already done this year) and active share repurchases (0.8 million shares bought back in H2 2026, up from 0.7 million in all of 2025). Additional discretionary capital return remains part of the playbook, and management will act on it when appropriate given the company's strong balance sheet and cash generation, but there is no announcement today. For M&A, the company is only pursuing small tuck-in acquisitions (not transformational deals), and valuations in that space are currently reasonable, with the pipeline being actively monitored.