PR Newswire
MISSISSAUGA, ON, Aug. 3, 2023
TSX: MFI
www.mapleleaffoods.com
Meat Protein delivers strong top-line growth of 6.6% and Adjusted EBITDA Margin of 9.3% in the quarter
Plant Protein progressing toward Adjusted EBITDA target of neutral or better in the latter half of 2023
MISSISSAUGA, ON, Aug. 3, 2023 /PRNewswire/ - Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") (TSX: MFI) today reported its financial results for the second quarter ended June 30, 2023.
"In our second quarter, we successfully executed our playbook, improving the financial performance of our business and marking a significant step toward the next inflection point in our journey. With our supply chain stabilized and pricing now in place to mitigate current levels of inflation, we are well positioned to meet our Adjusted EBITDA margin target of 14-16% once pork markets normalize," said Curtis Frank, CEO of Maple Leaf Foods.
"In the quarter, we delivered over 6% revenue growth driven by our portfolio of leading brands, we sequentially improved our Adjusted EBITDA margins in the Meat Protein business, and we advanced our strategic plan to achieve Adjusted EBITDA neutral or better in our Plant Protein business in the second half of 2023."
"Looking forward to 2024 and beyond, we can't help but be optimistic," continued Mr. Frank. "We are on track to realize the benefits of the major capital investments we've made at our London Poultry and Bacon Centre of Excellence facilities as we continue to advance our vision of becoming The Most Sustainable Protein Company on Earth."
Second Quarter 2023 Highlights
- Total Company sales grew 6.2% to $1,269.7 million, with an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")(i) Margin of 8.1%.
- Meat Protein Group sales grew to $1,236.7 million, an increase of 6.6% year over year. Adjusted EBITDA was $115.3 million, and Adjusted EBITDA Margin was 9.3% an improvement of 30 basis points from a year ago and 170 basis points from last quarter.
- Plant Protein Group sales were $36.7 million. Plant Protein Group Adjusted EBITDA improved by 61.3% year over year to a loss of $11.6 million, en route to an Adjusted EBITDA target of neutral or better in the latter half of 2023.
- Capital expenditures were $52.7 million.
- The London Poultry facility transition is progressing on schedule. Two legacy facilities have fully transitioned their production volumes, and the transition from the third facility has begun. The Company expects London Poultry to be fully ramped up by the end of 2023.
Outlook Remains Unchanged
- Meat Protein: Expect mid-to-high single digit sales growth in 2023, and Adjusted EBITDA Margin expansion to achieve a target range of 14% - 16% when markets normalize.
- Plant Protein: Targeting to deliver Adjusted EBITDA neutral or better in the latter half of 2023.
- Capital expenditure: For 2023 is expected to be less than $250 million with up to $120 million attributable to Maintenance Capital(i) and the balance attributable to Growth Capital(i).
(i) Refer to the section titled Non-IFRS Financial Measures in this news release. |
Financial Highlights
As at or for the | As at or for the | |||||||||||
Measure(i) (Unaudited) | Three months ended June 30, | Six months ended June 30, | ||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | |||||||
Sales | $ 1,269.7 | $ 1,195.1 | 6.2 % | $ 2,444.6 | $ 2,321.7 | 5.3 % | ||||||
Net (Loss) | $ (53.7) | $ (54.6) | 1.7 % | $ (111.4) | $ (40.9) | (172.2) % | ||||||
Basic Loss per Share | $ (0.44) | $ (0.44) | — % | $ (0.92) | $ (0.33) | (178.8) % | ||||||
Adjusted Operating Earnings(ii) | $ 45.9 | $ 23.6 | 94.3 % | $ 65.2 | $ 39.7 | 64.0 % | ||||||
Adjusted (Loss) Earnings per Share(ii) | $ 0.00 | $ 0.00 | nm(iv) | $ (0.12) | $ 0.03 | nm(iv) | ||||||
Adjusted EBITDA - Meat Protein Group(ii) | $ 115.3 | $ 104.1 | 10.8 % | $ 202.6 | $ 201.6 | 0.5 % | ||||||
Adjusted EBITDA - Plant Protein Group(ii) | $ (11.6) | $ (30.0) | 61.3 % | $ (23.6) | $ (60.7) | 61.1 % | ||||||
Free Cash Flow(ii)(iii) | $ (76.3) | $ 0.2 | nm(iv) | $ (64.0) | $ (99.5) | 35.7 % | ||||||
Construction Capital(ii) | $ 37.3 | $ 665.8 | (94.4) % | |||||||||
Net Debt(ii) | $ (1,807.4) | $ (1,421.2) | (27.2) % | |||||||||
Adjusted EBT(ii) | $ 6.7 | $ 10.9 | (38.5) % | $ (7.3) | $ 17.8 | nm(iv) | ||||||
(i) All financial measures in millions of dollars except Basic and Adjusted Earnings per Share. |
(ii) Refer to the section titled Non-IFRS Financial Measures in this news release. |
(iii) Certain comparative figures have been restated to conform with current year presentation. |
(iv) Not meaningful. |
Sales for the second quarter of 2023 were $1,269.7 million compared to $1,195.1 million last year, an increase of 6.2%, driven by higher sales in the Meat Protein Group more than offsetting a decrease in the Plant Protein Group. For more details on sales performance by operating segment, please refer to Operating Review.
Year-to-date sales for 2023 were $2,444.6 million compared to $2,321.7 million last year, an increase of 5.3%, due to similar factors as noted above.
Net loss for the second quarter of 2023 was $53.7 million ($0.44 loss per basic share) compared to loss of $54.6 million ($0.44 loss per basic share) last year. The Meat Protein Group showed improved commercial and operational results partly offset by market headwinds and cost inflation, along with increased start up costs. The Plant Protein Group delivered improved margins along with lower Selling, General, and Administrative ("SG&A") spending as the segment continues to reduce costs as part of its short term strategy. In addition, results were negatively impacted by higher interest expense with increased rates and higher debt largely to fund strategic capital expenditures, partly offset by changes in unrealized mark to market valuation adjustments on biological assets driven by changes in feed and hog markets, and income tax recoveries.
Year-to-date net loss for 2023 was $111.4 million ($0.92 loss per basic share) compared to loss of $40.9 million ($0.33 loss per basic share) last year due to similar factors as noted above.
Adjusted Operating Earnings for the second quarter of 2023 were $45.9 million compared to $23.6 million last year, and Adjusted Earnings per Share for the second quarter of 2023 was $0.00 compared to $0.00 last year. The increase was a result of commercial and operational improvements partly offset by market headwinds and cost inflation.
Year-to-date Adjusted Operating Earnings for 2023 were $65.2 million compared to $39.7 million last year, and Adjusted Earnings per Share for 2023 were a loss of $0.12 compared to earnings of $0.03 last year due to similar factors as noted above.
Adjusted Earnings Before Taxes ("Adjusted EBT") for the second quarter of 2023 were $6.7 million compared to $10.9 million last year. Adjusted EBT was negatively impacted by pork market headwinds and cost inflation, partly offset by improved margins and lower SG&A spending in the Plant Protein Group. Adjusted EBT was also negatively impacted by higher interest expense.
Year-to-date Adjusted EBT for 2023 were loss of $7.3 million compared to earnings of $17.8 million last year due to similar factors as noted above.
For further discussion on key metrics and a discussion of results by operating segment, refer to the section titled Operating Review.
Note: Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing operational activities. Refer to the section entitled Non-IFRS Financial Measures at the end of this news release for a description and reconciliation of all non-IFRS financial measures. |
Operating Review
The Company has two reportable segments. These segments offer different products, with separate organizational structures, brands, and financial and marketing strategies. The Company's chief operating decision makers regularly review internal reports for these businesses. Performance of the Meat Protein Group is based on profitable revenue growth, Adjusted Operating Earnings, Adjusted EBITDA, and Adjusted EBT while the performance of the Plant Protein Group in the short term is focused on obtaining Adjusted EBITDA neutral or better results.
The following table summarizes the Company's sales, gross profit (loss), SG&A, Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBT by operating segment for the three months ended June 30, 2023 and June 30, 2022.
Three months ended June 30, 2023 | Three months ended June 30, 2022 | |||||||
($ millions)(i) | Meat | Plant | Non- | Total | Meat | Plant | Non- | Total |
Sales | $ 1,236.7 | 36.7 | (3.7) | $ 1,269.7 | $ 1,160.2 | 40.8 | (5.9) | $ 1,195.1 |
Gross profit (loss) | $ 120.2 | (1.8) | (24.7) | $ 93.6 | $ 136.0 | (10.1) | (38.7) | $ 87.2 |
Selling, general and administrative expenses | $ 91.7 | 14.4 | — | $ 106.2 | $ 87.3 | 26.3 | — | $ 113.6 |
Adjusted Operating Earnings(iii) | $ 62.2 | (16.3) | — | $ 45.9 | $ 57.7 | (34.0) | — | $ 23.6 |
Adjusted EBITDA(iii) | $ 115.3 | (11.6) | (0.6) | $ 103.1 | $ 104.1 | (30.0) | — | $ 74.1 |
Adjusted EBITDA Margin(iii) | 9.3 % | (31.7) % | n/a | 8.1 % | 9.0 % | (73.6) % | n/a | 6.2 % |
Adjusted EBT(iii) | $ 23.8 | (16.5) | (0.6) | $ 6.7 | $ 47.5 | (36.6) | — | $ 10.9 |
(i) | Totals may not add due to rounding. |
(ii) | Non-allocated includes eliminations of inter-segment sales and associated cost of goods sold, changes in the fair value of biological assets and derivatives, and non-allocated costs which are comprised of expenses not separately identifiable to reportable segments or are not part of the measures used by the Company when assessing a segment's operating results. |
(iii) | Refer to the section titled Non-IFRS Financial Measures in this news release. |
The following table summarizes the Company's sales, gross profit (loss), SG&A, Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBT by operating segment for the six months ended June 30, 2023 and June 30, 2022.
Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||
($ millions)(i) | Meat | Plant | Non- | Total | Meat | Plant | Non- | Total |
Sales | $ 2,380.5 | 74.1 | (10.0) | $ 2,444.6 | $ 2,249.6 | 85.7 | (13.6) | $ 2,321.7 |
Gross profit (loss) | $ 210.7 | (5.1) | (35.5) | $ 170.0 | $ 266.9 | (16.3) | (9.5) | $ 241.1 |
Selling, general and administrative expenses | $ 181.0 | 27.9 | — | $ 208.9 | $ 176.0 | 57.1 | — | $ 233.1 |
Adjusted Operating Earnings(iii) | $ 98.2 | (33.0) | — | $ 65.2 | $ 108.7 | (68.9) | — | $ 39.7 |
Adjusted EBITDA(iii) | $ 202.6 | (23.6) | (0.6) | $ 178.4 | $ 201.6 | (60.7) | — | $ 140.9 |
Adjusted EBITDA Margin(iii) | 8.5 % | (31.9) % | n/a | 7.3 % | 9.0 % | (70.8) % | n/a | 6.1 % |
Adjusted EBT(iii) | $ 26.8 | (33.5) | (0.6) | $ (7.3) | $ 91.8 | (74.0) | — | $ 17.8 |
(i) | Totals may not add due to rounding. |
(ii) | Non-allocated includes eliminations of inter-segment sales and associated cost of goods sold, changes in the fair value of biological assets and derivatives, and non-allocated costs which are comprised of expenses not separately identifiable to reportable segments or are not part of the measures used by the Company when assessing a segment's operating results. |
(iii) | Refer to the section titled Non-IFRS Financial Measures in this news release. |
Meat Protein Group
The Meat Protein Group is comprised of prepared meats, ready-to-cook and ready-to-serve meals, snack kits, value-added fresh pork and poultry products that are sold to retail, foodservice and industrial channels, and agricultural operations in pork and poultry. The Meat Protein Group includes leading brands such as Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina®, Greenfield Natural Meat Co.®, and other leading regional brands.
Sales for the second quarter of 2023 increased 6.6% to $1,236.7 million compared to $1,160.2 million last year. Sales growth was driven by an increase in volumes, pricing actions taken to mitigate inflation, favourable foreign exchange rate impacts, and a favourable mix-shift in product sales.
Year-to-date sales for 2023 increased 5.8% to $2,380.5 million compared to $2,249.6 million last year. Sales growth was driven by factors consistent with those mentioned above.
Gross profit for the second quarter of 2023 was $120.2 million (gross margin(i) of 9.7%) compared to $136.0 million (gross margin(i) of 11.7%) last year. Gross profit was negatively impacted by pork market headwinds, cost inflation, and startup expenses, partially offset by pricing action to address inflation and improved product mix. Gross profit for the second quarter included start-up expenses of $33.8 million (2022: $9.0 million) associated with Construction Capital projects, which are excluded in the calculation of Adjusted Operating Earnings.
Year-to-date gross profit for 2023 was $210.7 million (gross margin(i) of 8.8%) compared to $266.9 million (gross margin(i) of 11.9%) last year. Gross profit was negatively impacted by factors consistent with those mentioned above. Gross profit year-to-date included start-up expenses of $68.5 million (2022: $17.7 million) associated with Construction Capital projects, which are excluded in the calculation of Adjusted Operating Earnings.
SG&A expenses for the second quarter of 2023 were $91.7 million compared to $87.3 million last year. The increase in SG&A expenses was driven by higher people costs from stabilizing staffing levels and discretionary spend, partially offset by lower advertising and promotional expenses.
Year-to-date SG&A expenses for 2023 were $181.0 million compared to $176.0 million last year. The increase in SG&A expenses was also driven by factors consistent with those noted above.
Adjusted Operating Earnings for the second quarter of 2023 were $62.2 million compared to $57.7 million last year, driven by factors noted above.
Year-to-date Adjusted Operating Earnings for 2023 were $98.2 million compared to $108.7 million last year, consistent with factors noted above.
Adjusted EBITDA for the second quarter of 2023 were $115.3 million compared to $104.1 million last year, driven by factors consistent with those noted above. Adjusted EBITDA Margin for the second quarter was 9.3% compared to 9.0% last year, driven by factors consistent with those noted above.
Year-to-date Adjusted EBITDA for 2023 were $202.6 million compared to $201.6 million last year, driven by factors consistent with those noted above. Year-to-date Adjusted EBITDA Margin for 2023 was 8.5% compared to 9.0% last year, also driven by factors consistent with those noted above.
During the second quarter of 2023 the Meat Protein Group Adjusted EBT were $23.8 million compared to $47.5 million last year, driven by factors consistent with those noted above, as well as a $29.2 million increase in interest expense as a result of increased interest rates and higher debt, and increased depreciation expense related to continued capital investment.
Year-to-date Adjusted EBT were $26.8 million compared to $91.8 million last year, driven by factors consistent with those noted above, as well as a $55.6 million increase in interest expense as a result of increased interest rates and higher debt, and increased depreciation expense related to continued capital investment.
Plant Protein Group
The Plant Protein Group is comprised of refrigerated plant protein products, premium grain-based protein, and vegan cheese products sold to retail, foodservice and industrial channels. The Plant Protein Group includes the leading brands Lightlife® and Field Roast™.
Sales for the second quarter of 2023 decreased 10.2% to $36.7 million compared to $40.8 million last year. Excluding the impact of foreign exchange, sales decreased 14.5%, driven by lower volumes across all channels, partially offset by pricing action implemented in prior quarters to mitigate inflation.
Year-to-date sales for 2023 decreased 13.6% to $74.1 million compared to $85.7 million last year. Excluding the impact of foreign exchange, sales decreased 18.5%, consistent with factors noted above.
Gross profit for the second quarter of 2023 was a loss of $1.8 million (gross margin loss(i) of 5.0%) compared to a loss of $10.1 million (gross margin loss(i) of 24.7%) last year. The improvement in gross margin was driven by operational improvements, reduction in start-up expenses, and price increases, partially offset by lower volumes. Gross profit for the second quarter of 2022 included start-up expenses of $2.3 million associated with Construction Capital projects which are excluded in the calculation of Adjusted Operating Earnings that were not repeated in the second quarter of 2023.
Year-to-date gross profit for 2023 was a loss of $5.1 million (gross margin loss(i) of 6.9%) compared to a loss of $16.3 million (gross margin loss(i) of 19.1%) last year. The increase in gross profit was also driven by factors consistent with those noted above. Year-to-date gross profit for 2022 included start-up expenses of $4.5 million associated with Construction Capital projects which are excluded in the calculation of Adjusted Operating Earnings, that were not repeated in 2023.
SG&A expenses for the second quarter of 2023 were $14.4 million (39.4% of sales) compared to $26.3 million (64.4% of sales) last year. The decrease in SG&A was largely driven by lower advertising and promotional expenses, as well as decreased consulting and headcount expenses.
Year-to-date SG&A expenses for 2023 were $27.9 million (37.7% of sales) compared to $57.1 million (66.6% of sales) last year. The decrease in SG&A was driven by factors consistent with those noted above.
Adjusted Operating Earnings for the second quarter of 2023 were a loss of $16.3 million compared to a loss of $34.0 million last year. The improvement in Adjusted Operating Earnings is consistent with the factors noted above.
Year-to-date Adjusted Operating Earnings for 2023 were a loss of $33.0 million compared to a loss of $68.9 million last year. The improvement in Adjusted Operating Earnings is consistent with the factors noted above.
Adjusted EBITDA for the second quarter of 2023 were a loss of $11.6 million compared to a loss of $30.0 million last year, driven by factors consistent with those noted above. Adjusted EBITDA Margin for the second quarter was a loss of 31.7% compared to a loss of 73.6% last year, also driven by factors consistent with those noted above.
Year-to-date Adjusted EBITDA for the second quarter of 2023 were a loss of $23.6 million compared to a loss of $60.7 million last year, driven by factors consistent with those noted above. Year-to-date Adjusted EBITDA Margin for the second quarter was a loss of 31.9% compared to a loss of 70.8% last year, also driven by factors consistent with those noted above.
(i) | Gross margin is defined as gross profit (loss) divided by sales. |
Other Matters
On August 2, 2023, the Board of Directors approved a quarterly dividend of $0.21 per share, $0.84 per share on an annual basis, payable September 28, 2023 to shareholders of record at the close of business September 8, 2023. Unless indicated otherwise by the Company at or before the time the dividend is paid, the dividend will be considered an eligible dividend for the purposes of the "Enhanced Dividend Tax Credit System". The Board of Directors has also approved the issuance of common shares from treasury at a two percent discount under the Company's Dividend Reinvestment Plan ("DRIP"). Under the DRIP, investors holding the Company's common shares can receive common shares instead of cash dividend payments. Further details, including how to enroll in the program, are available at https://www.mapleleaffoods.com/investors/stock-information/.
Conference Call
A conference call will be held at 8:00 a.m. ET on August 3, 2023, to review Maple Leaf Foods' second quarter financial results. To participate in the call, please dial 416-764-8650 or 1-888-664-6383. For those unable to participate, playback will be made available an hour after the event at 416-764-8677 or 1-888-390-0541 (Passcode: 102212 #).
A webcast of the second quarter conference call will also be available at: https://www.mapleleaffoods.com
The Company's full consolidated interim financial statements ("Consolidated Interim Financial Statements") and related Management's Discussion and Analysis are available on the Company's website.
An investor presentation related to the Company's second quarter financial results is available at www.mapleleaffoods.com and can be found under Presentations and Webcasts on the Investors page.
Outlook Remains Unchanged
Maple Leaf Foods is a leading consumer protein company, supported by a portfolio of market leading brands. Over the last several years, the Company has developed a foundation to pursue compelling growth vectors across its business and to create value for all stakeholders.
Meat Protein Group
In Meat Protein, the Company's strategy is to drive profitable growth. Given the unprecedented market dynamics, marked by a challenging post-pandemic economy, the conflict in Europe, high inflation and significant market disruption, Maple Leaf Foods expects that its Meat Protein Group will achieve the following:
- Mid-to-high single digit sales growth in 2023, supported by brand leadership, and growth in the U.S. market and sustainable meats.
- Adjusted EBITDA Margin expansion to a 14% - 16% target range once markets normalize, including a pork complex in-line with the five year average.
Plant Protein Group
- In late 2021, the Company announced that it was re-evaluating its outlook for the Plant Protein Group and launching a comprehensive review of the overall plant protein category. This decision was driven by a pronounced slowdown in growth rates in the category, particularly in the second half of the year, which fueled the Company's imperative to identify and thoroughly assess the causes, near and long-term trends, and overall implications. The Company's analysis to date confirms that the very high category growth rates previously predicted by many industry experts are unlikely to be achieved given current customer feedback, experience, buy rates and household penetration. Based on this information, the Company believes that the category will continue to grow at more modest, but still attractive rates. Current estimates suggest that the category will grow at an average annual rate of 10% to 15%, making it a $6 billion to $10 billion market by 2030. Accordingly, the Company has pivoted its strategy and investment thesis for the Plant Protein Group and has set a new goal to deliver neutral or better Adjusted EBITDA in the latter half of 2023. Work is ongoing to implement this pivot. The Company expects steady Adjusted EBITDA improvement to continue throughout the year.
Capital
- The Company's capital expenditures estimate for the full year 2023 remains unchanged at less than $250 million. Up to $120 million will be Maintenance Capital with the remainder being Growth Capital. The Growth Capital will mainly consist of an increase in further processed poultry capacity at the Prepared Meats facility in Brampton, Ontario, residual expenditures for the London Poultry facility, and expanded capacity in the snacking kits category.
- The Company expects the London, Ontario poultry facility to start to deliver approximately $100 million annually of additional Adjusted EBITDA once fully ramped up which is expected to be by the end of 2023. Additionally, the Company expects the Bacon Centre of Excellence in Winnipeg, Manitoba to contribute approximately $30 million annually of additional Adjusted EBITDA once fully ramped up which is expected to be in the second half of 2023.
The ongoing effects of the post-pandemic economy induced supply chain disruptions and the war in Ukraine are unpredictable and may impact a number of factors that drive growth in the business, including:
- Agricultural commodity and foreign exchange markets;
- Inflationary cost pressures;
- Disruptions in the global supply chain;
- Availability of labour; and
- Demand for products and changes in product mix.
The execution of the Company's financial and operational priorities are embedded in a commitment to deliver shared value for the benefit of all stakeholders. The Company's guiding pillars to be the "Most Sustainable Protein Company on Earth" include Better Food, Better Care, Better Communities, Better Planet and are core to how Maple Leaf Foods conducts itself. To that end, the Company's priorities include:
- Better Food - leading the real food movement and transitioning key brands to 100% "raised without antibiotics".
- Better Care - further advancement of animal care, after achieving our transition of all sows under management to open housing systems in 2021, we have an ongoing program to convert any new sow barns that we acquire.
- Better Communities - investing a minimum of approximately 1% of pre-tax profit to advance sustainable food security.
- Better Planet - continuing to amplify its commitment to carbon neutrality, while focusing on eliminating waste in any resources it consumes, including food, energy, water, packaging, and time.
Non-IFRS Financial Measures
The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBT, Construction Capital, Net Debt, Free Cash Flow and Return on Net Assets. Management believes that these non-IFRS measures provide useful information to investors in measuring the financial performance of the Company for the reasons outlined below. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.
Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBT
Adjusted Operating Earnings, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBT are non-IFRS measures used by Management to evaluate financial operating results. Adjusted Operating Earnings is defined as earnings before other income, income taxes and interest expense adjusted for items that are not considered representative of ongoing operational activities of the business and certain items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying or related asset is sold or transferred. Adjusted EBITDA is defined as Adjusted Operating Earnings plus depreciation and intangible asset amortization, adjusted for items included in other expense that are considered representative of ongoing operational activities of the business. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by sales. Adjusted EBT is used annually by the Company to evaluate its performance and is a component of calculating the bonus entitlements under the Company's short term incentive plan. It is defined as Adjusted EBITDA, less depreciation and amortization, and interest expense. Interest expense is allocated to the operating segments for this metric on a legal entity basis.
The table below provides a reconciliation of earnings (loss) before income taxes as reported under IFRS in the Consolidated Interim Financial Statements to Adjusted Operating Earnings, Adjusted EBITDA and Adjusted EBT for the three and six months ended June 30, 2023 as indicated below. Management believes that these non-IFRS measures are useful in assessing the performance of the Company's ongoing operations and its ability to generate cash flows to fund its cash requirements, including the Company's capital investment program.
Three months ended June 30, 2023 | Three months ended June 30, 2022 | |||||||
($ millions)(i) | Meat | Plant | Non- | Total | Meat | Plant | Non- | Total |
(Loss) earnings before income taxes | $ 22.5 | (23.2) | (63.0) | $ (63.7) | $ 46.4 | (55.1) | (50.0) | $ (58.6) |
