Saputo Reports Financial Results for the Third Quarter of Fiscal 2025 Ended December 31, 2024

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MONTRÉAL, Feb. 06, 2025 (GLOBE NEWSWIRE) -- Saputo Inc. (TSX: SAP) (we, Saputo or the Company) reported today its financial results for the third quarter of fiscal 2025, which ended on December 31, 2024. All amounts in this news release are in millions of Canadian dollars (CDN), except per share amounts, unless otherwise indicated, and are presented according to International Financial Reporting Standards (IFRS).

"In the third quarter, our strong execution resulted in our highest adjusted EBITDA¹ performance since 2023, with $417 million, reflecting a 13% year-over-year increase,” said Carl Colizza, President and CEO. "We made significant strides in executing our strategic playbook and controlling costs, and benefited from accelerated contributions from our recently completed capital projects. Our solid cash generation also enabled us to return additional cash to shareholders through our share buyback program. We're confident in our ability to continue generating steady cash flows and we intend to focus our capital allocation strategy on share repurchases. As a result, we increased the total number of shares that can be purchased under our NCIB from 2% to 5% of shares outstanding.”

Fiscal 2025 Third Quarter Financial Highlights

• Revenues amounted to $4.994 billion, up $727 million or 17.0%.
• Net loss totalled $518 million.
  • A non-cash goodwill impairment charge of $674 million after tax was recorded in relation to the Dairy Division (UK) in our Europe Sector.
• Net loss per share (EPS) (basic and diluted) were $1.22, compared to $0.29.
• Adjusted EBITDA¹ amounted to $417 million, up $47 million or 12.7%.
• Adjusted net earnings¹ totalled $167 million, up from $163 million, and adjusted EPS¹ (basic and diluted) were stable at $0.39.

• Results reflected the following:
  • Revenue and adjusted EBITDA¹ growth of 17.0% and 12.7%, respectively;
  • Revenues were up in all our sectors;
  • Our Canada Sector had a strong performance with adjusted EBITDA of $175 million, up 16.7%;
  • Our USA Sector continued to deliver benefits from operational improvements, contributing to a 20.3% growth in adjusted EBITDA;
  • USA Market Factors² had a negative impact due to the unfavourable milk-cheese Spread². Pricing protocols for our dairy food products mitigated the impact of fluctuations of the average butter market price²;
  • In our International Sector, we benefited from lower milk costs in Australia, while in Argentina, the peso devaluation did not keep pace with inflation, which has led to higher costs of production, including higher milk costs;
  • In our Europe Sector, adjusted EBITDA increased as our Dairy Division (UK) margins continued to recover from the prior year, when we were selling off high-cost excess inventory. However, a non-cash goodwill and intangible assets impairment charge was recorded due to ongoing challenging market conditions in the United Kingdom leading to a slower-than-expected cadence of margin recovery for our Dairy Division (UK); and
  • Solid cash generation from operating activities of $382 million.
• Normal course issuer bid (NCIB):
  • Saputo increased from 2% to 5% the number of common shares that may be purchased under the NCIB, allowing for the purchase of up to 21,217,922 common shares of its 424,358,459 issued and outstanding common shares as of November 8, 2024.
  • During the third quarter of fiscal 2025, the Company purchased approximately 1.2 million common shares for a total purchase price of approximately $32 million.
• Dividend:
  • The Board of Directors approved a dividend of $0.19 per share payable on March 14, 2025, to shareholders of record on March 4, 2025.

FY25 OUTLOOK

• Factors impacting our performance in FY25 will be the economic health of consumers, the rate of input cost inflation, commodity market and foreign exchange volatility, the supply chain environment, and benefits from our Global Strategic Plan.
• Inflationary pressures are anticipated to moderate versus the prior fiscal year. However, labour costs may remain elevated in addition to increases in marketing and advertising investments to support new product launches and our brands.
• We expect USA dairy markets to progressively improve throughout the year, supported by a better balance between milk supply and dairy demand, but with continued volatility in the short to medium-term.
• Global demand for dairy products is expected to remain moderate, alongside subdued international dairy market prices due to macroeconomic conditions.
• We expect a gradual ramp-up in contribution from optimization and capacity expansion initiatives, notably in the USA Sector, through the end of FY25 and FY26.
• We expect to see continued margin recovery in the Europe Sector, although at a slower-than-expected cadence. The sector is also expected to further benefit from its strong brand portfolio but will be impacted by rising input costs and challenging market conditions in the United Kingdom.
• The International Sector should benefit from lower overall milk prices in Australia, while Argentina will be operating under macroeconomic volatility.
• Cash flow generation should increase as we harvest the benefits from operational improvements and from a reduction in capital expenditures following the completion of the bulk of our Global Strategic Plan investments.
• Given the Company's flexible balance sheet and expected cash generation, Saputo intends to focus its capital allocation strategy on share repurchases in the near-term. See ''Increase to Normal Course Issuer Bid'' below.

Increase to Normal Course Issuer Bid

Saputo announces that the Toronto Stock Exchange (TSX) has accepted its notice to amend its NCIB.

The amendment increases the number of common shares that may be purchased for cancellation under the NCIB from 8,487,169 (representing 2% of its issued and outstanding common shares as of November 8, 2024) to 21,217,922 (representing 5% of its issued and outstanding common shares as of November 8, 2024). The effective date of the amendment is February 11, 2025. No other terms of the NCIB have been amended.

Saputo is increasing the number of common shares it can purchase under the NCIB as it believes that, from time to time, the common shares may trade in price ranges that do not fully reflect their value. Given the Company's flexible balance sheet and expected cash generation, Saputo intends to focus its capital allocation strategy on share repurchases in the near term, to the extent the common shares trade at a discount from what management considers to be an appropriate value for the common shares.

Other than to reflect the increase in the maximum number of common shares that may be repurchased under the NCIB, the automatic purchase plan (APP) established in connection with the NCIB remains unchanged.

Saputo believes that the purchase of its own shares may, under appropriate circumstances, be a responsible allocation of cash. Although Saputo presently intends to continue to purchase common shares under the NCIB, there can be no assurances that any such purchases will be completed.

As at November 8, 2024, date of Saputo's original NCIB application to the TSX, 424,358,459 common shares were issued and outstanding. Under the NCIB, as at February 6, 2025, Saputo had repurchased 1,782,863 common shares at a weighted-average purchase price of $25.28.

GLOBAL STRATEGIC PLAN UPDATE

The cumulative effect of depressed dairy commodity markets, inflationary pressure, and a challenging consumer spending environment has significantly impacted the Company's ability to deliver against its previous expectations. Given this, we have decided to withdraw our previously disclosed long-term adjusted EBITDA¹ aspirations.

The expected benefits from the initiatives that are under our control represent meaningful improvement opportunities. With greater cost efficiency and an ability to capture additional growth opportunities, we strongly believe that our initiatives will enable us to execute on our strategic ambitions and ensure our Company's long-term success.

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 third quarter of fiscal 2025. These documents can be obtained on SEDAR+ under the Company's profile at www.sedarplus.ca and in the "Investors” section of the Company's website, at www.saputo.com.

Webcast and Conference Call

A webcast and conference call will be held on Friday, February 7, 2025, at 8:30 a.m. (Eastern Time).

The webcast will begin with a short presentation followed by a question and answer period. The speakers will be Carl Colizza, President and CEO, and Maxime Therrien, CFO and Secretary.

To participate:

• Webcast : A live webcast of the event can be accessed using this link.

  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: 1-888-596-4144 Conference ID: 2834054 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”.

About Saputo

Saputo, one of the top ten dairy processors in the world, 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 a leading cheese manufacturer and fluid milk and cream processor in Canada, a leading dairy processor in Australia and the top dairy processor in Argentina. In the USA, Saputo ranks among the top three cheese producers and is one of the top producers of extended shelf-life and cultured dairy products. In the United Kingdom, Saputo is the leading manufacturer of branded cheese and dairy spreads. In addition to its dairy portfolio, Saputo produces, markets, and distributes a range of dairy alternative products. Saputo products are sold in several countries under market-leading brands, as well as private label brands. Saputo Inc. is a publicly traded company and its shares are listed on the Toronto Stock Exchange under the symbol "SAP”. Follow Saputo's activities at www.saputo.com or via Facebook, Instagram, and LinkedIn.

Investor Inquiries

Nicholas Estrela

Senior Director, Investor Relations 1-514-328-3117

Media Inquiries

1-514-328-3141 / 1-866-648-5902

[email protected]

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 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 June 6, 2024, available on SEDAR+ under the Company's profile at www.sedarplus.ca.

Such risks and uncertainties include the following: product liability; the availability and price variations of milk and other inputs, our ability to transfer input costs increases, if any, to our customers in competitive market conditions; supply chain strain and supplier concentration; the price fluctuation of dairy products in the countries in which we operate, as well as in international markets; our ability to identify, attract, and retain qualified individuals; the increased competitive environment in our industry; consolidation of clientele; cyber threats and other information technology-related risks relating to business disruptions, confidentiality, data integrity business and email compromise-related fraud; unanticipated business disruption; continuing economic and political uncertainties, including those that may result from recent tariff announcements, actual or perceived changes in the condition of the economy or economic slowdowns or recessions; public health threats, such as the recent global COVID-19 pandemic, 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. There may be other risks and uncertainties that we are not aware of at present, or that we consider to be insignificant, that could still have a harmful impact on our business, financial state, liquidity, results, or reputation.

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; 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; reliance on third parties; our ability to gain efficiencies and cost optimization from strategic initiatives; 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 successful execution of our M&A strategy; the market supply and demand levels for our products; our 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. To set our financial performance targets, we have made assumptions regarding, among others: the absence of significant deterioration in macroeconomic conditions; our ability to mitigate inflationary cost pressure; the USA Market Factors², ingredient markets, commodity prices, foreign exchange; labour market conditions and staffing levels in our facilities; the impact of price elasticity; our ability to increase the production capacity and productivity in our facilities; and the demand growth for our products. 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; the development and performance of technology, innovation and the future use and deployment of technology and associated expected future results; the accessibility of carbon and renewable energy instruments for which a market is still developing and which are subject to risk of invalidation or reversal; 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 and our sustainability advocacy efforts.

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.

Unless otherwise indicated by Saputo, forward-looking statements in this news release describe our estimates, expectations and assumptions as of the date hereof, and, accordingly, are subject to change after that date. 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.

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 the Management's Discussion and Analysis.}

SELECTED QUARTERLY FINANCIAL INFORMATION