Mr. Lino Saputo reports

SAPUTO REPORTS FOURTH QUARTER AND FISCAL 2024 RESULTS

Saputo Inc. today released its financial results for the fourth quarter and fiscal year ended on March 31, 2024. All amounts in this news release are in-millions of Canadian dollars, except per-share amounts, unless otherwise indicated, and are presented according to international financial reporting standards (IFRS).

Commenting on full-year results, Lino A. Saputo, chair of the board, president and chief executive officer, said: "Fiscal 2024 was a year of continued resilience. Our financial performance reflected our ability to stay the course even amidst a dynamic macroeconomic environment which included commodity price volatility, a challenged consumer and ongoing inflationary pressures. It was also a year of continued progress where, after three years of investing in and optimizing our global network, we have now completed the bulk of the major capital projects under our global strategic plan, and we are ramping up commercial production at several of our facilities. While these are important achievements, particularly amid challenging market conditions, we acknowledge that we still have work to do to realize our full potential.

"We delivered a solid performance in the fourth quarter, despite a negative $61-million impact from U.S. market factors and $15-million of duplicate operational costs in our U.S. sector," Mr. Saputo added. "Looking ahead to fiscal 2025, we can't help but be optimistic. Dairy commodities, while still volatile, are improving, and we are executing on our global strategic Plan. We have already started to see the benefits in our results from our major capital projects, and we expect for them to increase through FY25 and accelerate in FY26."

Fiscal 2024 fourth quarter financial highlights

• Revenues amounted to $4,545-million, up $77-million or 1.7 per cent.
• Net earnings totalled $92-million and EPS (earnings per share) (basic and diluted) were 22 cents, down from $159-million and 38 cents.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to $379-million, down $13-million or 3.3 per cent.
• Adjusted net earnings totalled $156-million, down from $196-million, and adjusted EPS (basic and diluted) were 37 cents, down from 47 cents and 46 cents, respectively.
• Strong cash generation from operating activities of $371-million.

• Global dairy market conditions and volatile commodity markets continued to be unfavourable to Saputo's results.
  • U.S. market factors had a negative impact of $61-million;
  • In the international sector, the disconnect in the relation between international cheese and dairy ingredient market prices and the cost of milk continued to be unfavourable.
• Adjusted EBITDA also reflected the following:
  • Higher sales volumes in both domestic and export markets;
  • Steady results in the Canada sector;
  • Continued improvement on operational controllables and higher sales volumes in the U.S. sector;
  • In the Europe sector, the selling of inventory produced at higher milk prices.
• Restructuring costs of $15-million after tax were incurred in relation to severance costs in the context of cost efficiency efforts.
• The board of directors approved a dividend of 18.5 cents per share payable on June 26, 2024, to shareholders of record on June 18, 2024.

FY25 outlook

• Inflationary pressures are anticipated to moderate versus the prior year, however labour costs may remain elevated in addition to increases in marketing and advertising investments to support new product launches and the company's brands.
• The company expects U.S. 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.
• The company expects a reduction in duplicate operating costs in FY25 and a gradual ramp-up in contribution from optimization and capacity expansion initiatives, notably in the company's U.S. sector, through the end of FY25 and FY26.
• The Europe sector is expected to benefit from the cycle through of high-cost inventory, an improved product mix from higher retail sales volume, as well as a lower cost base following cost-out initiatives and site consolidation.
• Cash flow generation should increase, driven by improvements in adjusted EBITDA and a reduction in capital expenditures following the completion of the bulk of the company's global strategic plan investments.
• The company's leverage ratio should progressively come down and is anticipated to be below its target of 2.25 times net debt to adjusted EBITDA as adjusted EBITDA and cash flow generation improve during FY25.
• The company expects to see steady improvements in FY25 and remain on course to deliver on its long-term goals. Factors impacting the company's performance in FY25 will be the economic health of consumers, the moderating rate of input cost inflation, the increasing stability of the supply chain environment and benefits from the company's global strategic plan.

Global strategic plan highlights

The company's global strategic plan is designed to accelerate organic growth. As part of this growth plan, the company expects to continue reaping benefits from its continuing efforts to optimize its existing footprint, add new capacity, adjust its product mix by facility, and align its portfolio more closely with customer and consumer needs. Global strategic plan benefits are expected to continue to come to fruition over the course of FY25 and accelerate in FY26.

FY25 priorities include

U.S. sector: Several capital projects focused on supporting the company's U.S. growth, including establishing new facilities and adding capacity to support key product categories, are either fully operational or ramping up and will be fully operational in the coming months. Near-term priorities in the U.S. sector include completing the company's cheese network transformation, executing on the planned closures of the Lancaster, Wis.; Big Stone, S.D.; Green Bay, Wis.; and South Gate, Calif., facilities, and continuing to ramp up the company's new automated cut-and-wrap facility in Franklin, Wis. Other priorities include strengthening the sector's innovation pipeline, developing new products and continuing to grow brands while expanding volume with key customers.

Canada sector: Focus is on automation and supply chain optimization initiatives, the expansion of the company's product portfolio, and maximizing its distribution capabilities to drive growth.

Europe sector: Near-term priorities include delivering on its cost-out plan, executing on the planned closure of the facility in Frome, United Kingdom, driving retail volume through consumer advertising and innovation, and onboarding new private label customers.

International sector: In Australia, priorities include executing the company's site consolidation road map, rebalancing its business between domestic and export activities, advancing its review of strategic alternatives for the King Island facility, and completing the sale of two milk processing facilities to Coles Group Ltd.

The Saputo promise

On June 6, 2024, the company issued its 2024 Saputo promise report as part of its commitment to be accountable to its stakeholders and transparent about its progress in managing key environmental, social and governance (ESG) aspects impacting its business.

Anchored in the most pressing ESG issues for the company's business, Saputo's current three-year plan (FY23 to FY25) builds on the momentum of the past few years and continues to drive, enable and sustain the company's growth. The report includes in-depth information on the progress the company has made throughout FY24 toward its three-year plan and highlights its performance across the seven pillars of its Saputo promise: food quality and safety, the company's people, business ethics, responsible sourcing, environment, nutrition, and community.

The 2024 Saputo promise report can be obtained in the "Our Promise" section of the company's website.

Additional information

For more information on the fourth quarter and year-end results for fiscal 2024, reference is made to the audited consolidated financial statements, the notes thereto and to the management's discussion and analysis for the fiscal year ended March 31, 2024. These documents can be obtained on SEDAR+ and in the investors section of the company's website.

Webcast and conference call

A webcast and conference call will be held on Friday, June 7, 2024, 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 Lino A. Saputo, chair of the board, president and CEO, and Maxime Therrien, chief financial officer and secretary.

To participate:

• Webcast: A live webcast of the event can be accessed on-line. Presentation slides will be included in the webcast and can also be accessed in the investors section of Saputo's website under calendar of events.
• Conference line: 1-888-596-4144, conference ID: 1644009, 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 in the investors section, under calendar of events.

About Saputo Inc.

Saputo, one of the top 10 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 United States, 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 is a publicly traded company and its shares are listed on the Toronto Stock Exchange under the symbol SAP.

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