Saputo Reports Financial Results for the Second Quarter of Fiscal 2023 Ended September 30, 2022
“We are pleased with the progress we have made in stabilizing the business while improving our execution. Again, our team's agility played a pivotal role this quarter as we delivered strong year-over-year growth across key metrics, including revenues, net earnings, adjusted EBITDA1, and adjusted EPS1, driven by our successful efforts to mitigate inflation, our efficiency and productivity, and sustained consumer demand,” said
Fiscal 2023 Second Quarter Financial Highlights
- Revenues amounted to
$4.461 billion , up$772 million or 20.9%. - Net earnings totalled
$145 million and net earnings per share (EPS) (basic and diluted) were$0.35 , up from$98 million and$0.24 , respectively. - Adjusted EBITDA1 amounted to
$369 million , up$86 million or 30.4%. - Adjusted net earnings1 totalled
$177 million , up from$116 million and adjusted EPS1 (basic and diluted) were$0.42 up from$0.28 .
(unaudited) | For the three-month periods ended |
For the six-month periods ended |
||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenues | 4,461 | 3,689 | 8,788 | 7,177 | ||||
Adjusted EBITDA1 | 369 | 283 | 716 | 573 | ||||
Net earnings | 145 | 98 | 284 | 151 | ||||
Adjusted net earnings1 | 177 | 116 | 338 | 238 | ||||
EPS | ||||||||
Basic | 0.35 | 0.24 | 0.68 | 0.37 | ||||
Diluted | 0.35 | 0.24 | 0.68 | 0.36 | ||||
Adjusted EPS1 | ||||||||
Basic | 0.42 | 0.28 | 0.81 | 0.58 | ||||
Diluted | 0.42 | 0.28 | 0.81 | 0.57 |
- Further progress during this recovery year was led by continued solid performances in the International Sector and Canada Sector and improved results in the
USA Sector. - Increased revenues reflected:
- Pricing initiatives implemented in all our sectors;
- Higher average block market price2 and higher average butter market price2 in the
USA Sector; and - Higher international cheese and dairy ingredient market prices.
- Ongoing inflationary pressures on input costs and commodity market volatility were successfully mitigated by pricing initiatives.
USA Market Factors2 continued to put pressure on adjusted EBITDA due to the persistent negative spread2 between the average cheese block market price and the cost of milk as raw material.- Restructuring costs of
$16 million after tax, which included non-cash fixed assets write-downs totalling$14 million , negatively impacted net earnings. These costs were incurred in connection with previously announced capital investments and consolidation initiatives in theUSA Sector being undertaken as part of our Global Strategic Plan. - We announced further consolidation initiatives intended to enhance our operational efficiency and strengthen our competitiveness in
Australia . As part of the Optimize and Enhance Operations pillar of our Global Strategic Plan, these initiatives include the intention to permanently close our Maffra,Victoria , facility. Additionally, while the sites will remain operational, we will streamline activities at our facilities located in Leongatha,Victoria , and Mil-Lel,South Australia . Costs related with the consolidation initiatives will be approximately$26 million after tax, which include non-cash asset write-downs of approximately$20 million . These costs will be recorded in the third quarter of fiscal 2023. - The Board of Directors approved a dividend of
$0.18 per share payable onDecember 16, 2022 , to shareholders of record onDecember 6, 2022 .
OUTLOOK
- We anticipate that input and logistics costs, such as consumables, packaging, transportation, and fuel, which have been subject to ongoing inflationary pressures, will remain at elevated levels, but we expect strong pricing contribution across all sectors in line with price increases.
- We will implement further price increases over the course of the fiscal year, as part of our pricing protocols, if inflation continues to persist.
Labour initiatives, fewer supply chain constraints, and the acceleration of our productivity and operational improvement projects are expected to further enhance our ability to service customers and return to historical order fill rate levels, particularly in theUSA Sector.
- We expect the Europe Sector to continue to be negatively impacted by the volatility in energy costs resulting from the European energy crisis.
- We expect to continue to benefit from cost containment measures aimed at minimizing the effect of inflation and our efforts to prioritize efficiency and productivity initiatives.
- We will continue to closely monitor changing consumer trends in key categories. Given broader macroeconomic trends and changes in consumer spending, we expect that the impact of pricing elasticity will increase moderately in the second half of the fiscal year. We anticipate the retail market segment to remain strong as at- home food spending should remain elevated, while the foodservice market segment is expected to remain competitive, particularly in the
USA Sector.
USA Market Factors2 will remain volatile, although we will aim to adjust our pricing to reflect commodity prices.
- Despite the volatile nature of international cheese and dairy ingredient markets, our outlook on export prices remains cautiously positive.
- While we continue to face macro-economic challenges, we expect a meaningful recovery in earnings in fiscal 2023, driven by the full impact of previously announced price increases, improved productivity and fixed cost absorption, a return to historical order fill rates, and benefits stemming from our Global Strategic Plan.
1 This is a total of segments measure, a non-GAAP financial measure, or a non-GAAP ratio. These measures and ratios do not have a standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. See the “Non-GAAP Measures” section of this news release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the primary financial statements, as applicable.
2 Refer to the "Glossary" section of the Management's Discussion and Analysis.
GLOBAL STRATEGIC PLAN HIGHLIGHTS
We will continue to leverage the momentum of our ongoing Global Strategic Plan initiatives to strengthen our position as a high-quality, low-cost processor with a relentless focus on productivity and efficiency.
We announced further consolidation initiatives intended to enhance our operational efficiency and strengthen our competitiveness in
These initiatives in our International Sector are expected to result in annual savings and benefits gradually, beginning in the fourth quarter of fiscal 2023, and reaching approximately
THE SAPUTO PROMISE
The Saputo Promise is our approach to social, environmental, and economic performance based on seven Pillars: Food Quality and Safety, Our People, Business Ethics, Responsible Sourcing, Environment, Nutrition, and Community. It is an integral part of our business and a key component of our growth. As we seek to create shared value for all our stakeholders, it provides a framework that ensures we manage ESG risks and opportunities successfully across our operations globally.
Anchored in the most pressing ESG issues for our business, our current three-year plan (FY23-FY25) builds on the momentum of the past few years, so our Saputo Promise continues to drive, enable, and sustain our growth.
Highlights for the first half of fiscal 2023 include:
- Continued execution of our Environmental Pledges including:
- Completing four additional capital projects aimed at reducing the water intensity of our operations.
- Progress on our packaging initiatives, including increasing the recycled content of our sliced cheese trays in the
United Kingdom and introducing recycled content in our shrink film for deli cups in theUSA .
- Launched our global Sustainable Agriculture Policy, which defines the sustainability standards we want to achieve in partnership with our producers and milk suppliers to ensure the responsible production of dairy ingredients.
- Launched our global Responsible Marketing Guidelines which aim to ensure we market our products responsibly, particularly to younger consumers, as lifelong healthy eating habits are established during childhood.
- Continued to support the communities where we operate through financial and food donations.
Additional Information
For more information, reference is made to the condensed interim consolidated financial statements, the notes thereto and to the Management’s Discussion and Analysis for the second quarter of fiscal 2023. These documents can be obtained on SEDAR under the Company’s profile at www.sedar.com and in the “Investors” section of the Company’s website, at www.saputo.com.
Earnings Conference Call
A webcast and conference call to discuss the fiscal 2023 second quarter financial results will be held on
The webcast will begin with a short presentation followed by a question and answer period. The speakers will be
To participate:
- Webcast : https://www.gowebcasting.com/12252
Presentation slides will be included in the webcast and can also be accessed in the “Investors” section of Saputo's website (www.saputo.com), under “Calendar of Events”.
- Conference line (audio only): 1-800-926-6349 Please dial-in five minutes prior to the start time.
Replay of the conference call and webcast presentation
For those unable to join, the webcast presentation will be archived on Saputo’s website (www.saputo.com) in the “Investors” section, under “Calendar of Events”. A replay of the conference call will also be available until
About Saputo
Saputo produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products, and dairy ingredients. Saputo is one of the top ten dairy processors in the world, a leading cheese manufacturer and fluid milk and cream processor in
Investor Inquiries
Director, Investor Relations
1-514-328-3117
Media Inquiries
1-514-328-3141 / 1-866-648-5902
media@saputo.com
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release contains statements which are forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to our objectives, outlook, business projects, strategies, beliefs, expectations, targets, commitments, goals, ambitions and strategic plans including our ability to achieve these targets, commitments, goals, ambitions and strategic plans, and statements other than historical facts. The words “may”, “could”, “should”, “will”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective”, “continue”, “propose”, “aim”, “commit”, “assume”, “forecast”, “predict”, “seek”, “project”, “potential”, “goal”, “target”, or “pledge”, or the negative of these terms or variations of them, the use of conditional or future tense or words and expressions of similar nature, are intended to identify forward- looking statements. All statements other than statements of historical fact included in this news release may constitute forward-looking statements within the meaning of applicable securities laws.
By their nature, forward-looking statements are subject to a number of inherent risks and uncertainties. Actual results could differ materially from those stated, implied, or projected in such forward-looking statements. As a result, we cannot guarantee that any forward-looking statements will materialize, and we warn readers that these forward- looking statements are not statements of historical fact or guarantees of future performance in any way. Assumptions, expectations, and estimates made in the preparation of forward-looking statements and risks and uncertainties that could cause actual results to differ materially from current expectations are discussed in our materials filed with the Canadian securities regulatory authorities from time to time, including the "Risks and Uncertainties" section of the Management's Discussion and Analysis dated
Such risks and uncertainties include the following: product liability; the COVID-19 pandemic and related ongoing impacts; the availability of raw materials (including as a result of climate change, extreme weather, or global or local supply chain disruptions caused by the COVID-19 pandemic, geopolitical developments, military conflicts and trade sanctions) and related price variations, along with our ability to transfer those increases, if any, to our customers in competitive market conditions; supply chain strain and supplier concentration; the price fluctuation of our products in the countries in which we operate, as well as in international markets, which are based on supply and demand levels for dairy products; our ability to identify, attract, and retain qualified individuals; cyber threats and other information technology-related risks relating to business disruptions, confidentiality, data integrity business and email compromise-related fraud; the increased competitive environment in our industry; consolidation of clientele; unanticipated business disruption; changes in consumer trends; changes in environmental laws and regulations; the potential effects of climate change; increased focus on environmental sustainability matters; the failure to execute our Global Strategic Plan as expected or to adequately integrate acquired businesses in a timely and efficient manner; the failure to complete capital expenditures as planned; changes in interest rates and access to capital and credit markets.
Forward-looking statements are based on Management’s current estimates, expectations and assumptions regarding, among other things; the projected revenues and expenses; the economic, industry, competitive, and regulatory environments in which we operate or which could affect our activities; our ability to identify, attract, and retain qualified and diverse individuals; our ability to attract and retain customers and consumers; our environmental performance; the results of our sustainability efforts; the effectiveness of our environmental and sustainability initiatives; the availability and cost of milk and other raw materials and energy supplies; our operating costs; the pricing of our finished products on the various markets in which we carry on business; the successful execution of our Global Strategic Plan; our ability to deploy capital expenditure projects as planned; our ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; our ability to leverage our brand value; our ability to drive revenue growth in our key product categories or platforms or add products that are in faster-growing and more profitable categories; the contribution of recent acquisitions; the anticipated market supply and demand levels for our products; the anticipated warehousing, logistics, and transportation costs; our effective income tax rate; the exchange rate of the Canadian dollar to the currencies of cheese and dairy ingredients. Our ability to achieve our environmental targets, commitments, and goals is further subject to, among others, our ability to access and implement all technology necessary to achieve our targets, commitments, and goals, as well as the development and performance of technology, innovation and the future use and deployment of technology and associated expected future results, and environmental regulation. Our ability to achieve our 2025 Supply Chain Pledges is further subject to, among others, our ability to leverage our supplier relationships.
Management believes that these estimates, expectations, and assumptions are reasonable as of the date hereof, and are inherently subject to significant business, economic, competitive, and other uncertainties and contingencies regarding future events, and are accordingly subject to changes after such date. Forward-looking statements are intended to provide shareholders with information regarding Saputo, including our assessment of future financial plans, and may not be appropriate for other purposes. Undue importance should not be placed on forward-looking statements, and the information contained in such forward-looking statements should not be relied upon as of any other date.
All forward-looking statements included herein speak only as of the date hereof or as of the specific date of such forward-looking statements. Except as required under applicable securities legislation, Saputo does not undertake to update or revise forward-looking statements, whether written or verbal, that may be made from time to time by itself or on our behalf, whether as a result of new information, future events, or otherwise. All forward-looking statements contained herein are expressly qualified by this cautionary statement.
SELECTED QUARTERLY FINANCIAL INFORMATION
2023 | 2022 | 2021 | ||||||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||
Revenues | 4,461 | 4,327 | 3,957 | 3,901 | 3,689 | 3,488 | 3,438 | 3,763 | ||||||||
Adjusted EBITDA1 | 369 | 347 | 260 | 322 | 283 | 290 | 303 | 431 | ||||||||
Adjusted EBITDA margin1 | 8.3 | % | 8.0 | % | 6.6 | % | 8.3 | % | 7.7 | % | 8.3 | % | 8.8 | % | 11.5 | % |
Net earnings | 145 | 139 | 37 | 86 | 98 | 53 | 103 | 210 | ||||||||
— | — | — | — | — | 50 | — | — | |||||||||
Acquisition and restructuring costs2 | 16 | 6 | 51 | — | (1 | ) | 1 | 2 | — | |||||||
Gain on disposal of assets2 | — | — | — | (8 | ) | — | — | — | — | |||||||
Impairment of intangible assets2 | — | — | — | 43 | — | — | — | — | ||||||||
Amortization of intangible assets related to business acquisitions2 | 16 | 16 | 20 | 18 | 19 | 18 | 19 | 18 | ||||||||
Adjusted net earnings 1 | 177 | 161 | 108 | 139 | 116 | 122 | 124 | 228 | ||||||||
Adjusted net earnings margin1 | 4.0 | % | 3.7 | % | 2.7 | % | 3.6 | % | 3.1 | % | 3.5 | % | 3.6 | % | 6.1 | % |
EPS basic | 0.35 | 0.33 | 0.09 | 0.21 | 0.24 | 0.13 | 0.25 | 0.51 | ||||||||
EPS diluted | 0.35 | 0.33 | 0.09 | 0.21 | 0.24 | 0.13 | 0.25 | 0.51 | ||||||||
Adjusted EPS basic1 | 0.42 | 0.39 | 0.26 | 0.34 | 0.28 | 0.30 | 0.30 | 0.56 | ||||||||
Adjusted EPS diluted1 | 0.42 | 0.39 | 0.26 | 0.33 | 0.28 | 0.29 | 0.30 | 0.55 |
Selected factors positively (negatively) impacting Adjusted EBITDA1
2023 | 2022 | 2021 | ||||||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||
(27 | ) | (7 | ) | (19 | ) | (40 | ) | (17 | ) | (42 | ) | (4 | ) | 34 | ||
Foreign currency exchange5,6 | (12 | ) | (7 | ) | (12 | ) | (18 | ) | (21 | ) | (21 | ) | (2 | ) | — |
1 This is a total of segments measure, a non-GAAP financial measure, or a non-GAAP ratio. These measures and ratios do not have a standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers. See the “Non-GAAP Measures” section of this news release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the primary financial statements, as applicable.
2 Net of income taxes.
3 On
4 Refer to the ‘‘Glossary’’ section of the Management's Discussion and Analysis.
5 As compared to the same quarter of the previous fiscal year.
6 Foreign currency exchange includes the effect of conversion of US dollars, Australian dollars, British pounds sterling and Argentine pesos to Canadian dollars.
CONSOLIDATED RESULTS FOR THE SECOND QUARTER AND FISCAL PERIOD ENDED
Revenues
Revenues for the second quarter of fiscal 2023 totalled
Revenues increased due to higher domestic selling prices in line with the higher cost of milk as raw material, together with pricing initiatives implemented in all our sectors to mitigate increasing input costs.
The combined effect of the higher average block market price2 and of the higher average butter market price2 had a positive impact of
Sales volumes were stable compared to those of the second quarter of fiscal 2022.
The contributions of the Carolina Acquisition3 and the Wensleydale Dairy Products Acquisition3 for the full quarter compared to partial contributions during the same quarter last fiscal year positively impacted revenues by
The fluctuation of foreign currencies versus the Canadian dollar had an unfavourable impact of
Revenues for the first six months of fiscal 2023 totalled
Revenues increased due to higher domestic selling prices in line with the higher cost of milk as raw material, together with pricing initiatives implemented in all our sectors to mitigate increasing input costs.
The combined effect of the higher average block market price2 and of the higher average butter market price2 had a positive impact of
Sales volumes were stable compared to the same period last fiscal year.
The contributions of the Recent Acquisitions2 for the full period compared to partial contributions in the same period last fiscal year totalled
The fluctuation of foreign currencies versus the Canadian dollar had an unfavourable impact of
Operating costs excluding depreciation, amortization, and restructuring costs
Operating costs excluding depreciation, amortization, and restructuring costs for the second quarter of fiscal 2023 totalled
Net earnings
Net earnings for the second quarter of fiscal 2023 totalled
Net earnings for the first six months of fiscal 2023 totalled
Adjusted EBITDA1
Adjusted EBITDA1 for the second quarter of fiscal 2023 totalled
Improved results reflected further recovery in the
We continued to benefit from previously announced pricing initiatives implemented to mitigate higher input costs, such as consumables, packaging, transportation, and fuel, in line with ongoing inflationary pressures and commodity market volatility.
The relation between international cheese and dairy ingredient market prices and the cost of milk as raw material in the International Sector had a positive impact.
We continued to benefit from our cost containment measures aimed at minimizing the effect of inflation and our efforts to prioritize efficiency and productivity initiatives.
The fluctuation of foreign currencies versus the Canadian dollar had an unfavourable impact of
Adjusted EBITDA1 for the first six months of fiscal 2023 totalled
Improved results reflected solid performances in the International Sector and Canada Sector and further recovery in the
We benefited from previously announced pricing initiatives implemented to mitigate higher input costs, such as consumables, packaging, transportation, and fuel in line with ongoing inflationary pressures and commodity market volatility.
The relation between international cheese and dairy ingredient market prices and the cost of milk as raw material in the International Sector had a positive impact. In the same period last fiscal year, fulfilling sales contracted at depressed commodity prices in our International Sector had an unfavourable impact.
We benefited from our cost containment measures aimed at minimizing the effect of inflation and our efforts to prioritize efficiency and productivity initiatives.
The fluctuation of foreign currencies versus the Canadian dollar had an unfavourable impact of
Depreciation and amortization
Depreciation and amortization for the second quarter of fiscal 2023 totalled
Acquisition and restructuring costs
Acquisition and restructuring costs for the second quarter of fiscal 2023 totalled
Acquisition and restructuring costs for the same quarter last fiscal year amounted to a net gain of
Acquisition and restructuring costs for the first six months of fiscal 2023 totalled
During the same period last fiscal year, acquisition and restructuring costs amounted to nil, as they were offset by a favourable purchase price adjustment and costs incurred for the Recent Acquisitions2.
Financial charges
Financial charges for the second quarter and first six months of fiscal 2023 totalled
Income tax expense
Income tax expense for the second quarter and first six months of fiscal 2023 totalled
The effective income tax rate for the second quarter and first six months of fiscal 2023 included the positive impact relating to the tax and accounting treatments of inflation in
The effective tax rate for the first six months of last fiscal year included a one-time non-cash
The effective tax rate varies and could increase or decrease based on the geographic mix of quarterly and year-to- date earnings across the various jurisdictions in which we operate, inflation in
Adjusted net earnings1
Adjusted net earnings1 for the second quarter of fiscal 2023 totalled
Adjusted net earnings1 for the first six months of fiscal 2023 totalled
1 This is a total of segments measure, a non-GAAP financial measure, or a non-GAAP ratio. See the “Non-GAAP Measures” section of this news release for more information, including the definition and composition of the measure or ratio as well as the reconciliation to the most comparable measure in the primary financial statements, as applicable.
2 Refer to the "Glossary" section of this MD&A.
3 On
INFORMATION BY SECTOR
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Revenues | 1,185 | 1,142 | 1,055 | 1,112 | 1,081 | 1,033 | ||||||
Adjusted EBITDA | 136 | 132 | 117 | 121 | 124 | 113 | ||||||
Adjusted EBITDA margin | 11.5 | % | 11.6 | % | 11.1 | % | 10.9 | % | 11.5 | % | 10.9 | % |
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Revenues | 2,062 | 2,043 | 1,743 | 1,627 | 1,533 | 1,506 | ||||||
Adjusted EBITDA | 102 | 97 | 42 | 83 | 67 | 96 | ||||||
Adjusted EBITDA margin | 4.9 | % | 4.7 | % | 2.4 | % | 5.1 | % | 4.4 | % | 6.4 | % |
Selected factors positively (negatively) impacting Adjusted EBITDA
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
(27 | ) | (7 | ) | (19 | ) | (40 | ) | (17 | ) | (42 | ) | |
US currency exchange2 | 3 | 3 | — | (6 | ) | (8 | ) | (18 | ) |
1 Refer to the ‘‘Glossary’’ section of the Management's Discussion and Analysis.
2 As compared to same quarter last fiscal year.
Other pertinent information
(in US dollars, except for average exchange rate)
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Block market price1 | ||||||||||||
Opening | 2.195 | 2.250 | 1.980 | 1.873 | 1.553 | 1.738 | ||||||
Closing | 1.968 | 2.195 | 2.250 | 1.980 | 1.873 | 1.553 | ||||||
Average | 1.927 | 2.287 | 2.005 | 1.805 | 1.706 | 1.657 | ||||||
Butter market price1 | ||||||||||||
Opening | 2.995 | 2.700 | 2.453 | 1.760 | 1.740 | 1.818 | ||||||
Closing | 3.145 | 2.995 | 2.700 | 2.453 | 1.760 | 1.740 | ||||||
Average | 3.035 | 2.808 | 2.692 | 1.975 | 1.716 | 1.805 | ||||||
Average whey powder market price1 | 0.469 | 0.600 | 0.759 | 0.622 | 0.522 | 0.626 | ||||||
Spread1 | (0.222 | ) | (0.261 | ) | (0.253 | ) | (0.099 | ) | (0.034 | ) | (0.164 | ) |
US average exchange rate to Canadian dollar2 | 1.306 | 1.275 | 1.266 | 1.260 | 1.259 | 1.231 |
1 Refer to the ‘‘Glossary’’ section of the Management's Discussion and Analysis.
2 Based on
INTERNATIONAL SECTOR
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Revenues | 989 | 916 | 922 | 919 | 858 | 754 | ||||||
Adjusted EBITDA | 97 | 82 | 62 | 85 | 56 | 45 | ||||||
Adjusted EBITDA margin | 9.8 | % | 9.0 | % | 6.7 | % | 9.2 | % | 6.5 | % | 6.0 | % |
Selected factor positively (negatively) impacting Adjusted EBITDA
2023 | 2022 | ||||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||
Foreign currency exchange1 | (9 | ) | (6 | ) | (12 | ) | (13 | ) | (14 | ) | (4 | ) |
1 As compared to same quarter last fiscal year.
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Revenues | 225 | 226 | 237 | 243 | 217 | 195 | ||||||
Adjusted EBITDA | 34 | 36 | 39 | 33 | 36 | 36 | ||||||
Adjusted EBITDA margin | 15.1 | % | 15.9 | % | 16.5 | % | 13.6 | % | 16.6 | % | 18.5 | % |
Selected factor positively (negatively) impacting Adjusted EBITDA
2023 | 2022 | |||||||||||
Fiscal years | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
Foreign currency exchange1 | (4 | ) | (2 | ) | (1) | — | — | — |
1 As compared to same quarter last fiscal year.
NON-GAAP MEASURES
We report our financial results in accordance with GAAP and generally assess our financial performance using financial measures that are prepared using GAAP. However, this news release also refers to certain non-GAAP and other financial measures which do not have a standardized meaning under GAAP, including the following.
Term Used | Definition | |
Adjusted EBITDA | Net earnings before income taxes, financial charges, acquisition and restructuring costs, gain on disposal of assets, impairment of intangible assets, and depreciation and amortization. | |
Adjusted net earnings | Net earnings before the |
|
Adjusted EBITDA margin | Adjusted EBITDA expressed as a percentage of revenues. | |
Adjusted net earnings margin | Adjusted net earnings expressed as a percentage of revenues. | |
Adjusted EPS basic | Adjusted net earnings per basic common share. | |
Adjusted EPS diluted | Adjusted net earnings per diluted common share. |
We use non-GAAP measures and ratios to provide investors with supplemental metrics to assess and measure our operating performance and financial position from one period to the next. We believe that those measures are important supplemental metrics because they eliminate items that are less indicative of our core business performance and could potentially distort the analysis of trends in our operating performance and financial position. We also use non-GAAP measures to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets and forecasts, and to determine components of management compensation. We believe these non-GAAP measures, in addition to the financial measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance, and future prospects in a manner similar to management. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution of GAAP results.
These non-GAAP measures have no standardized meaning under GAAP and are unlikely to be comparable to similar measures presented by other issuers. Our method of calculating these measures may differ from the methods used by others, and, accordingly, our definition of these non-GAAP financial measures may not be comparable to similar measures presented by other issuers. In addition, non-GAAP financial measures should not be viewed as a substitute for the related financial information prepared in accordance with GAAP. This section provides a description of the components of each non-GAAP measure used in this news release and the classification thereof.
NON-GAAP FINANCIAL MEASURES AND RATIOS
A non-GAAP financial measure is a financial measure that depicts the Company's financial performance, financial position, or cash flow and either excludes an amount that is included in or includes an amount that is excluded from the composition of the most directly comparable financial measures disclosed in the Company's financial statements. A non-GAAP ratio is a financial measure disclosed in the form of a ratio, fraction, percentage, or similar representation and that has a non-GAAP financial measure as one or more of its components.
Below are descriptions of the non-GAAP financial measures and ratios that we use as well as reconciliations to the most comparable GAAP financial measures, as applicable.
Adjusted net earnings and adjusted net earnings margin
We believe that adjusted net earnings and adjusted net earnings margin provide useful information to investors because this financial measure and this ratio provide precision with regards to our ongoing operations by eliminating the impact of non-operational or non-cash items. We believe that in the context of highly acquisitive companies, adjusted net earnings provides a more effective measure to assess performance against the Company's peer group, including due to the application of various accounting policies in relation to the amortization of acquired intangible assets.
We also believe adjusted net earnings and adjusted net earnings margin are useful to investors because they help identify underlying trends in our business that could otherwise be masked by certain write-offs, charges, income, or recoveries that can vary from period to period. We believe that securities analysts, investors, and other interested parties also use adjusted net earnings to evaluate the performance of issuers. Excluding these items does not imply they are non-recurring. These measures do not have any standardized meanings under GAAP and are therefore unlikely to be comparable to similar measures presented by other companies.
The following table provides a reconciliation of net earnings to adjusted net earnings.
For the three-month periods ended |
For the six-month periods ended |
|||||||
2022 | 2021 | 2022 | 2021 | |||||
Net earnings | 145 | 98 | 284 | 151 | ||||
— | — | — | 50 | |||||
Acquisition and restructuring costs1 | 16 | (1 | ) | 22 | — | |||
Amortization of intangible assets related to business acquisitions1 | 16 | 19 | 32 | 37 | ||||
Adjusted net earnings | 177 | 116 | 338 | 238 | ||||
Revenues | 4,461 | 3,689 | 8,788 | 7,177 | ||||
Margin | 4.0 | % | 3.1 | % | 3.8 | % | 3.3 | % |
1 Net of income taxes.
2 On
Adjusted EPS basic and adjusted EPS diluted
Adjusted EPS basic and adjusted EPS diluted are non-GAAP ratios and do not have any standardized meaning under GAAP. Therefore, these measures are unlikely to be comparable to similar measures presented by other issuers. We define adjusted EPS basic and adjusted EPS diluted as adjusted net earnings divided by the basic and diluted weighted average number of common shares outstanding for the period. Adjusted net earnings is a non-GAAP financial measure. For more details on adjusted net earnings, refer to the discussion above in the adjusted net earnings and adjusted net earnings margin section.
We use adjusted EPS basic and adjusted EPS diluted, and we believe that certain securities analysts, investors, and other interested parties use these measures, among other ones, to assess the performance of our business without the effect of the
TOTAL OF SEGMENTS MEASURES
A total of segments measure is a financial measure that is a subtotal or total of two or more reportable segments and is disclosed within the notes to Saputo's consolidated financial statements, but not in its primary financial statements. Consolidated adjusted EBITDA is a total of segments measure.
Consolidated adjusted EBITDA is the total of the adjusted EBITDA of our four geographic sectors. We report our business under four sectors:
Adjusted EBITDA and adjusted EBITDA margin
We believe that adjusted EBITDA and adjusted EBITDA margin provide investors with useful information because they are common industry measures. These measures are also key metrics of the Company's operational and financial performance without the variation caused by the impacts of the elements itemized below and provide an indication of the Company's ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations, and service its long-term debt. Adjusted EBITDA is the key measure of profit used by management for the purpose of assessing the performance of each sector and of the Company as a whole, and to make decisions about the allocation of resources. We believe that securities analysts, investors, and other interested parties also use adjusted EBITDA to evaluate the performance of issuers. Adjusted EBITDA is also a component in the determination of short-term incentive compensation for management.
The following table provides a reconciliation of net earnings to adjusted EBITDA on a consolidated basis.
For the three-month periods ended |
For the six-month periods ended |
|||||||
2022 | 2021 | 2022 | 2021 | |||||
Net earnings | 145 | 98 | 284 | 151 | ||||
Income taxes | 43 | 31 | 87 | 117 | ||||
Financial charges | 13 | 19 | 25 | 37 | ||||
Acquisition and restructuring costs | 22 | (2 | ) | 29 | — | |||
Depreciation and amortization | 146 | 137 | 291 | 268 | ||||
Adjusted EBITDA | 369 | 283 | 716 | 573 | ||||
Revenues | 4,461 | 3,689 | 8,788 | 7,177 | ||||
Margin | 8.3 | % | 7.7 | % | 8.1 | % | 8.0 | % |

Source: Saputo Inc.