Q4 2021 Saputo Inc Earnings and to Discuss New Global Strategic Plan Call

Greetings and welcome to the Poodle incorporated financial results for the fiscal year ended March 31, 2021, and global strategic plan presentation conference call. During the presentation, all participants will be in a listen only mode of.

Afterwards, we will conduct a question and answer session.

At that time, if you have a question. Please press the 1 followed by the for on your telephone.

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How's The reminder of this conference is being recorded on Thursday June 3rd 2021, I would now like to turn the conference over to Marlene. Please go ahead.

Good afternoon, everyone and thank you for joining us taking part in the webcast are Lino Saputo Maxime go Yeah, Hi, Bachmann and Carl could Itza today's webcast will be divided into 2 parts.

The first lien on will provide an overview of our fourth quarter results before opening it up for questions on this topic.

Nexsan Kai and Carl will then present, an overview of our new global strategic plan and overarching organic growth strategy, followed by a second Q&A period.

Analysts will be invited to ask questions. During the designated Q&A periods. All other participants will remain on a listen only mode.

Please note that if you are joining us by phone you will not be able to see the visual component of the presentation you must join the webcast for full access to the content before.

Before we begin I remind you. This webcast is being recorded and will be posted on our website along with the investor presentation, we are showing.

Please also note that some of the statements provided during this call are forward looking such statements are based on assumptions that are subject to risks and uncertainties.

We refer to our cautionary statements regarding forward looking information in our annual report press releases and filings. Please treat any forward looking information with caution as our actual results could differ materially.

We do not accept any obligation to update this information except as required under securities legislation.

I'll now hand, it over to Lino.

Thank you Marlene and this is an exciting day for us and I'm pleased to be here with key members of our executive team for the special edition of our conference call and webcast presentation.

In the year of exceptional challenges Ivy.

Again by saying I'm immensely proud of the resilience and the dedication of our passionate employees worldwide.

Without the waiver they remain focused on the job at hand, despite the many changes we've all lived through.

The effects of the pandemic still present to date lingered on them during our fourth quarter with the ongoing shift in consumer demand continuing to impact all of our sectors to varying degrees.

Overall sales volumes were lower when compared to our fourth quarter last year, which at the time current sided with the onset of the pandemic and the related surge in retail demand.

Moreover, U S market factors negatively impacted adjusted EBITDA of <unk>.

Current story than we saw in other quarters this fiscal year.

The international market prices were also lower versus the prior year of putting downward pressure on results.

Foodservice activities remain below pre pandemic levels with the U S sector, mostly affected although we expect demand to recover as vaccination efforts intensified.

The industrial market segment performed well.

And we recorded higher export sales, while still contending with country specific COVID-19 restrictions.

When I look at it globally.

On an unpredictable and difficult environment I'm satisfied with the solid performance we delivered this year.

We proved our ability to pivot our operations to new circumstances, while supporting our frontline and staying on course with strategic investments aimed at fueling growth.

Through the ebbs and flows of the fiscal year.

We were forced to adapt and leverage our strengths like never before.

We are now of more flexible organization on all fronts.

And we're certainly going to take advantage of this.

COVID-19 may have cost us a year of adjusted EBITDA growth, but.

But knowledge was gained in our business moving forward.

Notably this fiscal year, we merged our 2 legacy USA divisions and developed a concrete game plan.

To take our largest operating sector to the next level with guidance from our newly combined and enhanced U S leadership team.

We believe putting the right talent in the right place is vital as.

As we begin to write our next chapter.

Consequently, I'd like to shine a spotlight on the on cuts who will join US later in calendar 2021, ex President and C of O International in Europe.

Leon will bring a wealth of expertise to our ranks. She is currently the global Chief marketing officer of 1 of the world's largest banks and previously held senior management positions in Australia Asia and the U K.

The island will bring to the table extensive experience in marketing new product development manufacturing and operations, having worked for global companies and food and beverage and in the consumer health care industry.

Yeah.

And recent acquisition news, we're delighted that had 2 files come to fruition.

We work on the Butte Island foods team and a wealth of knowledge and dairy alternative cheese products to the us of poodle family.

<unk>.

Our commitment remains to expand our footprint in this space to meet the changing demands of customers and consumers.

This investment marks an important milestone, allowing us to accelerate our growth in dairy alternatives globally.

We're adding 180, new Scotland based colleagues to our family, including the founders who have decades of experience under their belt.

Now on this side of the pond, we recently closed the previously announced deal to purchase the reeds bird facility of Wisconsin specialty protein.

This facility manufacturers value added ingredients, such as go away organic lactose and other dairy powders.

We're pleased to walk on its 40 employees.

Our talented <unk> dairy USA team.

This acquisition will enable us to broaden and increase the value of our ingredients offerings enhancing our product portfolio in the U S as well as internationally.

Both of these acquisitions aligned with our M&A priorities.

And complement the objectives of our global strategic plan.

Unlocking new growth avenues for us.

As you can see.

We're already hitting the ground running in regard to launch of our new global scratch line.

It lays out how we will drive accelerated organic growth across our business as part of our 3 pronged approach to growth in addition to strategic acquisitions.

And our commitment to the saputo promise.

We'll go into more detail with this following the Q&A.

Once again I'd like to thank every sort of put our employee for their ongoing passion and dedication.

Although the pandemic continues to impact our business to some degree of.

Our consistent results mirror, the care and expertise of our exceptional team.

So I'll pause here to answer a few questions you may have about Q4 and the year end results before we get into our Strat plan presentation.

So Frank your queue up our analysts for questions. Please.

Thank you.

If you would like to register a question. Please press the 1 for on your telephone you will hear of 3 Tom from technology of request. If your question has been answered and you would like to withdraw your registration. Please press. The 1 followed by the 3.1 moment. Please for the first question.

Our first question comes from Irene <unk> with RBC capital markets. Please proceed.

Thank you Ken and good afternoon, everyone. I was wondering if you could please provide just a little bit more color on what you saw through the course of fiscal <unk> for particularly in the U S.

We're kind of with the pace of reopening I think that we all expected a little bit of the I'm not a little bit a somewhat stronger outcome.

Yes. Thank you for that question Irene. So let me just say that we came out of this pandemic in great shape, although as I indicated in my opening statements of our ebbs and flows and there were some very strong points in some very Uh huh, I guess low levels of of results in certain specific areas.

I would say the U S business has been challenged throughout the 4 quarters.

A lot of our sales and a lot of our volume was directed towards our foodservice and industrial accounts, which had some difficulty adjusting.

Adjusting to the new realities of consumer demand.

And then of course, we had other issues.

Specifically in the U S with the labor shortages.

And some spikes in certain regions with the with COVID-19, I'm going to ask Kai first the lead the way in terms of what we saw in terms of market dynamics and perhaps maybe you get the Carl to add a bit of color for Q4, specifically on.

I'll talk to international and then I'll hand, it off to Carl since he's here with us today to talk to the U S.

If you look at our export business in Q4.

Just some context of lot of our.

Contracts in the Asia Pacific primarily are longer term in nature, so of quarterly to half of year in nature and when these contracts were locked in this was during this was at the peak of the pandemic, which saw depressed pricing across a large variety of the commodity products that we produce in our international.

That for them.

And we also had an issue in terms of the challenge of the shortage of containers container availability. Its a widely known that this was an issue facing our industry as well as other manufacturers and exporters.

And we're in fact actually seeing a trickling of.

Some of the volumes at those depressed prices as we enter this quarter. The good news is that as we enter the second quarter that we already are seeing a lot.

More robust.

<unk> agreements in place as a result of these key markets recovery from the pandemic as these markets continue to open up on an aggressive pace with that I'll pass it on to call just to give some color on the U S.

Thanks Scott.

Yes for sure the reopening of the of the markets on the foodservice side was welcome but let's keep in mind that there are a significant amount if not over 10% of the.

Restaurant the.

Businesses that did not reopen and that that is the fact that we're going to have to deal with moving forward so of.

The small moms and Pops and so forth debt, we have good business through the broad based distributors.

So that did not come back in full strength.

We did have the challenges and continue to have challenges around labor.

Less so around the impacts of Covid.

As far as our impacted employees, but rather 1 of the availability and we're no different than many manufacturers right now on the U S that are struggling with reality the app.

The access and the availability of of the of.

Of labor.

I would also tell you that in that quarter, we were hit with some material inflation.

Number of areas, especially freight so of freight and distribution was a real problem on the.

The U S territory.

With the cost and availability of lanes.

Put quite a bit of pressure on us and then I would say lastly.

It's actually 1 of the only quarters that the market conditions as far as the block and milk price relationship was not favorable for us.

So welcome the opening of the markets but.

But we had some very unfavorable conditions, the but you'll hear a little bit more about it for us here in our strat plan on how we're going to address some of these things.

Now of inflation is the challenge that we're facing as the <unk>.

Group, However, Carl together with the U S team on the Canadian teams are.

Implementing.

Price cost recovery initiatives to make sure that we capture of those inflationary pressures.

So I ran uninterrupted for more than just the Q for USA, we've covered a little bit of of the international markets. I'm wondering if you of any follow up questions.

Now the follow up questions are around the acquisitions and what youre going to do but I guess, we're going to hear about that in the next part of the call correct.

But let me tell you that the pipeline still remains full our balance sheet is clean.

Beyond the Strat plan on you're giving me a great opportunity to talk about this as well I mean, we are focusing a lot on the strat plan today, but beyond the strat plan.

We still have a strong appetite to materialize acquisitions in those markets, where we think they could complement our plans for organic growth as well.

So yes more of the time on that front I'll give you a definition of all of the different geographies and areas. We're looking at once we get to our presentation.

That's great. Thanks Nina.

Our next question comes from Mark Petrie with CIBC. Please proceed.

Yeah. Good afternoon, I just wanted to follow up actually on that comment with regards to pricing to offset some of the inflationary pressures is it your expectation that sort of Q1 would be a bit of a transition period, and then Q2 with more fully reflect those price increases on a more normalized balance or how should we think.

But the.

Okay.

Yes, I would say that the from a quarter perspective, we will be taking some actions and have begun taking action here in Q1.

Q2 would better reflect both in the U S and Canada.

The the.

Pricing actions that we are going to take throughout our portfolio.

On the international front, the pricing initiatives have already taken place and the good news is that our retailers it's not.

They are expecting price increases from their suppliers because we're in an environment that is.

Is there significant inflationary pressure, so that bodes well for us and we will continue to roll that out across the other divisions as well.

And Mark loans, 1 final comment that I would make there too with the compared to historical levels of balance between.

Supply and demand solid available and demand there is a much better balance in the industry globally today than there has been I would say on the last the probably for years or so.

Okay, and that's sort of segue to my second question I guess, which is just a general outlook will you know if you could with regards to the commodity environment. Obviously it has been volatile as you noted Carl on.

The market factors in the U S a bad bounce around a lot.

What's your what's your general expectation, obviously with the caveat that you know nobody knows for sure, but your general expectation with regards to the commodity environment.

Over for for fiscal 'twenty.

Yeah, I'll take that 1 mark from a commodity standpoint, as Lino alluded to we're seeing a better balance from a supply and demand.

Standpoint, if we look at total global milk production, we're looking at 1 to 1.5% growth.

And with the.

The key.

Key markets opening up we're seeing increased demand and we are seeing a firming up of prices across the key commodity products not only on the cheese side, but also on the ingredients and we are seeing this reflected in the the prices we're securing for our orders moving into Q2 and the balance of the.

The fiscal year.

Carl I don't know if you have something to.

Touch on in the U S.

Oh I see.

I'd say the same the same is occurring here in the U S. The abundance of there is an abundance of milk in the U S. So it's a you know.

It has grown at low single digits throughout the year I would say that day, if we look a little bit for to some of the inflationary pressures on the feed side for milk.

No farming is going to get more expensive. So we're going to see some of the dynamic play into the availability of milk in the pricing of milk, which would be subsequent to the you know.

The pricing of block.

But overall.

On the supply of milk has been the right where we needed to be.

Okay helpful. Thanks for all of these are right for for the second half price.

Yeah.

Our next question comes from Michael Van <unk> with TD Securities. Please proceed.

Thank you.

Want to start by clarifying a few things on the international side, you talked about pricing being down.

Year over year, although the commodities I look at the spot prices of all of these higher year over year Jesus flat. The other ones are or a decent amount of higher so when you're on.

And your commentary is that a year of basically alluding to the to the 3 to 6 of them on the contracts that you're locked into on international and therefore your pricing.

That is correct, Michael Theres, a lag effect and we were in a situation, where we had to move volumes in the at the peak of the pandemic.

And as I mentioned earlier, we're seeing a little bit of that volume trickling into the first quarter, but we are anticipating a Q2 moving forward that the pricing will improve noticeably.

Alright, and then.

In the U S.

So when we look at other foodservice suppliers a lot of them are talking about the the level of activity being pretty comparable to 2019 levels during.

At least kind of February March April and I'm wondering.

Is it all right.

As of year foodservice lower year over year because of just.

Just as the timing like you don't really have the April in April of starting to pick up.

Or is it because you have a decent amount of business that goes to that 10% of restaurants that didn't reopen.

It's a good question.

I would tell you that the combination of both of them.

Again with the the <unk>.

Broad based distributors that we work with.

Do have a material amount of volume that goes to that kind of full service restaurants.

That is not the ones that are rebounding right now on what Youre seeing is those that still offer the most of the conveniences.

It's a lot better now than it was in Q4, but I got to tell you of the slow ramp up from that perspective.

And in some cases.

We some of the majors that we work with on the national level did not perform as well as others.

So we got to bear that in mind, but we are a lot more optimistic about Q1 Q2 here for the entirety of the foodservice sector.

Okay, and then finally on Europe I understand that you had some pantry stocking last year, but can you help us understand of how much of the decrease in revenues and profits year over year was tied to the pantry stocking versus how much is due to lower industrial business.

And whether or not that industrial business is still on track.

Come back in Q1.

Yes, Mike this is Max.

So the debt down.

About 2020 plus million.

On the revenue side for the U K is really attributable to volume and within the the volume not so much ingredient it was.

Cheese butter and spread type categories.

Okay and on the ingredient side.

Has that have you started to see any benefits from expanding your customer base.

Well, we you know.

It's sort of we're pressing the reset button on the ingredients side because the efforts of we had some struggles last year.

In terms of landing on certain key accounts and China was in a situation where demand was on the downside, but as of this quarter, we're seeing a pickup in volume. So we're seeing a better conditions as we move forward on the ingredient side.

And Michael just on the node, probably what you're referring to as well as are we controlling our own destiny, there and the answer is yes, we've gotten out of.

Some of the limitations, we had a relative to the contracts that were signed before we acquired the business. So we are now in a position where we can control of our own destiny.

Okay, but I would assume youre not youre still ramping up and you're not back to where you were before and ingredient so for the in some.

For a minute.

No, we're definitely ramping up Michael and.

What we're doing this for diversifying our portfolio of customers and markets and not trying to put not trying to rely on.

All of our eggs in 1 basket.

Alright, thank you.

Our next question comes from Peter Sklar with BMO. Please proceed.

Thanks.

I'm, sorry to belabor the point about the U S performance and Carl you've done a good job.

Lining all of the factors.

That impacted the U S business in the fourth fiscal quarter.

But what I was curious about if you look like in the fourth fiscal quarter of the U S business had $94 million of EBITDA.

You look at Q3, the immediately preceding quarter. The U S business had $171 million of EBITDA and Karl I would've thought that many of the things that you talked about that negatively impacted Q4 results.

Would've also impacted negatively impacted Q3 results the.

Decline in foodservice, the labor shortage restaurants, not reopening freight costs et cetera et cetera. So why why was I am just trying to understand why was there such a significant decline in the profitability performance of the U S.

In Q4 versus Q3.

Peter This is Max just to to put in perspective, when we compare Q3 to Q4, we called out at Q3 are you know on market factor led by the spread was favorable of.

To the tune of $34 million and this was driven by a positive spread of around 18.19.

That positive spreads did not materialize.

In in the queue for in fact, it was negative of about 11 cents.

That creating us.

And a negative impact of the market factor. So when you combine the negative $4 million in Q4 versus the 34 plus.

In the Q3 of the Delta is around the $38 million just to put in perspective, when we're comparing the Q4 and Q3.

Maybe calling you Wanna add up on that.

Yeah, I won't go back to the market factors, but I will say that you know.

January and February were particularly difficult months, even on the fluid side of our business.

We were impacted by a couple of different weather events in the U S and you know no 1 ever likes to blame weather for anything, but it was real and.

We ended up having to shift supply from our network to different parts of the country to keep our customers and consumers satisfied.

But that comes out of out of material costs at a time when the availability of freight freight lanes on the cost of those lanes.

We're really not in line with the with the historical rates. So for of course, our supply of commitments, we do what we do.

But all of that was negative so I will tell you that in some.

It would be the the milk side that was not as as the as performing as what it had been in the the earlier quarters, Yeah. Peter I just wanted to clarify when Karl talks about fluid milk, it's really the dairy foods.

He's got his head on from 1 of you used to be the Canadian President and dividing the 2 businesses between fluid and cheese, but when he refers to the fluid milk, it's really dairy foods business I just wanted to clarify that because that was my next question. So thanks for clarifying that and then.

My last question as the U S recovers.

As society climbed out of Covid in <unk>.

People start going back to restaurants, and so as you get.

Youll see some weakness in the retail channel.

That will be offset by the strength.

On the foodservice channel So net net how do you think <unk>.

<unk> businesses in the U S will perform because your the proportion of your business that is food that's foodservice as opposed to retail channel was about the same so.

Taking this a lot more complex than just in 1 pocket of the other end you think youre going to be net positive. If you can just kind of go through how the recovery.

Yeah.

It's a really good question and we you heard us say that over the the the last.

The last fiscal year 2 of the pandemic.

On the gains and in the retail side did not offset the losses, we had in our industrial and foodservice sector.

And you would expect that now that there's that rebound, we would we would benefit and I'm glad I'm going to say that yes, we will.

Yes, the retail sector is slowing down the demand is not as high as it used to be.

But what we're going to see specific for <unk> is our customer base in foodservice coming back with the kinds of demand that we are used to and on the retail side we struggled.

Throughout this pandemic year on supply in some key categories of our products are on the written on the retail shelf when the demand was very high.

We have solved and are solving for some of those supply shortages.

And we'll be able to actually despite a lower demand and retail being a better position for supply of our brands and our products. So am I.

I expect this change in the consumer channels to be favorable for us.

Okay. That's all I have thanks.

Our next question comes from Vishal Street here with the National Bank Financial Please proceed.

Hi, Thanks for taking my questions with respect to the price increases implemented.

Are those being followed in the market I know baldino in the past at several of the juncture as you've talked about irrational competition. So I'm wondering yes, it's the.

If you are seeing competition, followed the side of these inflationary price increases as well.

Specific from the North American perspective, I would say that our pricing protocols vary from customer to customer and channel the channel.

Overall, and you would've heard other CPG speak of this and the need to come to market with price increases because of these inflationary pressures so.

From the I'll say, the recognizance that we have in the market space.

It is of generalized increase coming from.

From all angles and the same is true in the in Canada.

Canada is not shielded from these these inflationary pressures and we are building that into the coming price increases.

The little bit different in Canada of course because of supply management.

But overall the pricing protocols that we have we will see some benefits of that as I mentioned through the end of Q1 in the into Q2.

Yeah.

Okay. So is it too early to tell if there's been an elasticity of demand of factor on the price where you increase the price.

And that's of course, yes.

I would tell you from the information we have today, which is very early.

There is there has been no changes in demand because of that.

Nor would I expect that truthfully 2 to change with the kind of price increases we're talking about.

Okay and.

I don't suppose you can reveal the but could you give us an idea of the net price increase year over year and that's the put is taken.

Well for sensitive. The reason this is another area, where we're going to go but certainly we'll be acting responsibly as we move forward with our customers.

Yeah.

Okay.

Thanks, I'll follow up on the <unk>.

Strategic plan part.

Our next question comes from Patricia Baker with Scotia Capital. Please proceed.

Well. Thank you very much of good afternoon, everyone. I just wanted to follow up on the European discussion and the performance in Q4, I certainly understand the bulk of our next behind.

The.

The.

The revenue in Q4, but you had 150 basis point decline.

EBITDA margin on the European operations can you just provide us with.

For more information on the dynamics that drove that decline in the margin.

Well as we alluded to earlier the.

Ingredients business was a was a key part of the downturn on the U K performance.

And in terms of what we're seeing coming off of the pandemic there was reduced demand.

From our from our partners. If we look at the 3 major partners that are that we do business with that are focused on the Asia Pacific part of the world for.

For some accounts they were down close to 50% the.

2 other accounts for were down in the double digits. So they were significantly impacted in their infant formula business, which is the.

The key components that we produce that go into these products. So that ingredient for piece of the business had a had a had a big impact on the UK performance on Max has some more color around the other segment of it yeah. So relative to the volume that we come on the provide.

Provided comment on cheese.

Butter and spread on the retail side.

The volume was the 1 that was the most mainly down and that created the reduction in revenue and this is where the highest margins.

The tweaking of the generate from the product and that drives the EBITDA margins down by the point than the half of that you were talking about.

Okay.

We just just wanted to add another another some more color.

If you look back at the beginning of the pandemic in the U K. There was a lot of pantry loading that was taking place and what we saw in Q4 for the UK business was more of a normalization in terms of.

The purchase on the retail side. So there wasn't that the same level of panic buying and in that last quarter.

Yeah, no I would've expected at that time.

Anticipated bad debt.

I wouldn't have thought that that specifically would impact the margins for more would impact the <unk>.

On the revenue and volume.

But I understand it.

Uh huh.

Disproportionately impact of the margin quarter I just wanted to ask about these islands foods.

Okay.

Rolling that up in Canada.

European results, presumably you will be end of it just talk about what the mix.

Is in that business.

The retail.

Yes, we will be rolling the Butte Island of results as part of our UK sector.

And this could evolve pending the the growth of our the evolution of our business on on the plant based side.

Yes.

And kind of do you really.

We'll go into more detail with you the island and how strategic fit because I kind of in the straight line because I know you've got locked the say on that but.

But just from a from a rollout perspective in terms of the numbers, yes, it will be.

The part of the U K.

The European sector.

Thank you look forward the hearing more about it.

Our next question comes from Chris Li with Desjardin Securities. Please proceed.

Oh, Hi, good afternoon, I was wondering if you can give us an update in terms of what you're seeing in the competitive environment in each of the key regions.

Yeah. So I'll have the call will start with the U S.

The of market, where we're seeing the most competition.

And then kind of will give you the rest of the world.

Thanks, So yeah, I would say that.

Maybe I'll just speak to.

1 category in particular being the mozzarella.

The competition of Mozzarella is still very active.

Lots of capacity in the system in fact, I would say excess capacity.

So we don't anticipate that the change of any time soon and quite frankly, the volatility that we've seen in the markets in milk pricing and so forth.

It's creating a number of challenges with the cheese inventory positions that the they are in all of the industry as a whole is holding and in itself is creating a lot of uncertainty and people wanting to bulk buy and the bulk on load if you like so.

That volatility has created a lot of competitive pressures and more specifically the mozzarella I'll.

I'll say the overcapacity continues to be something that we navigate through.

Karl why don't you talk about the categories outside of months' as well if you don't mind. Please sure.

In the less commoditized areas.

We're in a good place I'm going to say that the there's healthy competition in the U S. A variety of brands that are.

Out in the marketplace, but can cheese consumption continues to grow and I think that's the key to remember.

With the 2% to 3% growth in the overall cheese category.

<unk> to be and I'm talking dairy here, specifically right. So it continues to be in the area, where we will be investing in innovation and so forth and you'll hear a little bit more about that in our strat plan on the areas that we will exploit in the USA and Canada.

On the international side, starting with the <unk>.

The Cathedral City brand, we talk a lot about it but it continues to perform extremely well.

Hitting record the revenue.

Revenue figures on this last fiscal year and even on the spread side on the U K, we're seeing very strong performance with our Culver brand.

We don't talk about Fry of late a lot, but that's hitting record levels as well, 15% growth year over year on that side of the business. If we go to Argentina Paulina.

<unk> continues to perform extremely well on our competitors are having a tough time in that geography, there's a lot of COVID-19.

Covid related.

The angst, but as a result of our export platform lot Paulina does performed very well in other markets as well, including Brazil, and Russia and then when you go down under a where you're excited about the share rebranding.

And that's the number 1 brand on the everyday everyday cheese side that continues to perform very well for us the Devon Dale on the Dallas on the lactose free range continues to lead the market and then our specialty brands are also performing very well on the lion's specialty legacy side.

So there is increased activity competitive activity when it comes to milk supply in Australia. So we are seeing some of our competitors that are offering higher milk prices.

But we do have initiatives underway to ensure that we protect the milk base that we have and to continue to grow on the on the base of volume that we have.

Okay very helpful. Maybe just a form of just on the U S. Mozzarella competition do you expect maybe the volatility on the intensity of competition start moving.

Moving to ease a little bit on.

So the sales volumes of hopefully improve.

Later in the year to absorb some of the excess capacity.

Certainly the day, you know increased demand.

<unk> will help as well as the increased demand internationally, let's not forget that we have players in the U S, including <unk> debt do sell internationally and in international markets.

Had been struggling with Covid no different than here in North America and outlets for some of that cheese.

<unk> had been diminished some of that is on the rebound and we do expect that also to help but I would also underscore the pre Covid. We were also in the overcapacity.

The city situation.

So the.

The I'll see the of.

It will take a few more it'll take a little bit more time due to COVID-19 to get back in line with the supply and demand.

Okay. That's helpful. And then the last question just on a very high level basis.

We're able to execute on these pricing initiatives that you plan to offset the Inc.

The cost plus.

Just on the high level basis, do you expect that to more of less fully offset those pressure on therefore, it'll be mostly neutral on the EBITDA line or do you still expect this to be on.

The net negative on on EBITDA of at least for the for the current fiscal year.

Yes, so Chris it'll be a combination of 2 things pricing.

Pricing action, 1 and then cost containment on the other so on and.

We'll talk a little bit about that in the strap plan moving forward just some of the continuous improvement initiatives that would require some capex allocation to get there, but it would be a combination of the 2 things price increases as well as cost containment or continuous improvement in our operations.

Okay, great. Thanks.

There are no further questions at this time.

Excellent so right.

Now we will transition into the second part of today's event.

Before we do so we have a short video for you I hope you'll enjoy it.

Well it is good to come from.

Wow.

Close to the hearts of hard working people around the world.

The good is global.

Angela.

Good day, everyone needs, what we share and what we give back to our communities even when times are tough.

When it comes down to it.

At the heart of everything we do.

And that sounds pretty good to us.

Yes.

Alright, So now we will switch gears a way of getting in.

For the exciting news debt.

We shared earlier today, the unveiling of our new global strategic plan.

So I'll kick it off with the presentation and I'll move right along into.

Uh huh.

Page number 6 of the presentation.

Just sort of high level.

Snapshot of where we are we won't go into too much detail here because I'm sure. All of you know our evolution in the different parts of the world that we operate in.

But just to let you know that we are in a leading position.

In all of the regions, where we operate whether that would be in Canada U S, Australia, Argentina and the U K.

All told we were processing over 11 billion liters of milk of year, we have 61 manufacturing facilities in 5 different countries and we export product into 60 different countries around the world.

So despite the fact that we have.

Had gone into.

A difficult pandemic.

Pandemic environment.

Our our business continues to build very solid foundations.

Move on to page 7 we've got the history of our growth. So I'll remind you that in.

In 1997, when we went public we were selling for $450 million in sales we haven't conclude.

Concluded 30 for acquisitions with the last 2 being viewed the island and by original.

And we closed our fiscal year at $14.3 billion in sales and I would say that all of these acquisitions in some shape or form have been strategic to us.

And have created a platform that allows us to be more diverse and.

I think more resilient.

We closed on a consolidated performance this year at 1 point for 7.7 billion slightly ahead of last year.

And I point that out because I think it's important for us to note.

The early as March 2020, we Werent quite sure what this year would look like for us.

If somebody would have asked me back then.

Would you be happy with results of equal to or slightly lower than the previous year and of Covid environment.

If you were able to continue to rollout the journey of a S. P.

Through our operations and that we would continue to be on or be able to honor. Our ESG promises I would've said it would've been a very successful year.

And so I would say looking back on this year I view this as being a very successful year.

We've been able to further strengthen the support of values and culture with our key stakeholders that are our employees are there was nobody has lost of days wage because of the pandemic.

In fact, we've created an environment of safety and security.

Enhance safety and security to all of the manufacturing facilities that we've operated and we've tried to the best degree possible to deliver on the order fill rates that has been asked of us.

I will say this though over the past 5 years.

We have not.

Not performed to the way that we would have liked and there are a number of reasons for that if I take you back to 2015.2.

2016, with the stockpiles and the oversupply in Europe of products that create the.

On a competitive pressures are and and and and.

Pressure on pricing we lived through that.

Then of course, we had the devaluation of the byproducts were a onetime WPC for us was a.

The real strong element to our revenues and profit.

The byproducts of specifically on WPC had been depressed of late with the increase of capacity on the market and of course those of you that have been following us for the last 3 or 4 years, there were some price wars and the market irresponsible behavior for.

On some of our competitors in key markets.

I would say some of the pain was self inflicted like the early on days of the S&P rollout, where we did struggle we had some challenges I think we've since recovered.

And we've been on.

On the track.

Whereas the SAP rollout.

Is going much smoother and seamless for our customers.

Of course, you had some in between all of that some geopolitical issues and then to end things off.

In the last 5 years, we had this pandemic of COVID-19.

So had room, where do we have expected better performance in the last 5 years. The answer is yes. There are reasons for all of that.

But I'm not going to be looking backwards I'm going to be looking forward.

We are very very optimistic about the foundation that we built over those 5 years and how we can leverage those foundations into the next for years.

We've got very healthy and very solid.

Revenues by market segment, where a good balance of our sales are of retail good balance are in foodservice and a good balance or an industrial very healthy now within that of course, there are certain sectors that have to improve that balance, which we're going to be talking about as the as we rollout. This.

Net plant.

So what we're going to be talking about is leveraging our strength to deliver competitive advantage. So what are the learnings that we've had over the course of this last year, while we know that the industry continues to growth and thats not just in the U S or in Canada, but globally.

<unk> continues to grow at a rate of 225, 3% per year.

We know that we've thought of very strong culture, we have a a culture of operational excellence, we can produce product.

Much more effective and much more efficient than most of our competitors in fact.

More than I would say all of our competitors now that doesn't mean that there's not going to be more irrational behavior on the market there would be.

And if we choose to walk away it's are choosing.

Not because we can't compete with others, but because we choose not to lose money in certain areas and certain products in certain regions.

We know how of that our values of very strong. The our people are the cornerstone of our success and I think we've got great talent within the organization that has the opportunity to grow within the suite of system and from time to time as you've seen.

We will go out to market and hire the talent that we believe can help us look at things, perhaps a little differently.

And finally, I would say that our foundations are of great with high quality product portfolios, but also very very strong brands.

And that's sort of if I think about leveraging our strength talking to our brands we've.

Recognize through the COVID-19 environment that our brands do resonate with consumers.

Not only do they resonate with consumers, but our customers are finding and looking to us to offer solutions and so we are innovative we've got the innovation center in the U K, we've got the innovation center in the U S and we're leveraging all of that to build resilient strong synergistic platforms.

And so what does that mean for us it means that we got size and scale some things that our competitors don't have.

We've got diversified businesses when I talk about diversified its geography, its product portfolio and its market market segmentation.

And what we like to do within Saputo as we challenge each other to come up with the best practices. So that's the U K business has a better practice in the U S. Well, then we'll apply that to the U S and vice versa.

So we're not afraid to challenge each other.

To determine and define what the best practices are and as we looked at the Strat plan over the course of the for years.

It started off with our U S platform thinking about how we can bring things together under 1 umbrella between dairy foods and the cheese business and then as that exercise was the ongoing we thought to ourselves that that's a very good practice, maybe some of the other platforms can look at what their strat plan will be over the course of the.

The next 3 or 4 years.

And so this is how we rolled this out and we came to a really I think very optimistic conclusion.

That we have all the elements in place to be successful and to deliver on the.

It was very ambitious.

Targets.

We have a very disciplined financial structure and cash management.

Focus on our balance sheet of screen.

And oddly through the pandemic, that's gotten even cleaner.

Our cash flows are good we're generating very positive cash flows. So we can reinvest in our business either through capex allocation or.

The continued to be the market consolidator.

The opportunities, where we see that there is value for us.

And so on.

Al.

I think that our foundations are better than they've ever been.

We have expertise in operation so our operational strategies, our efficiencies on our productivity best practices integration and synergies are strong as they've ever been.

We don't mind investing in ourselves. So we've got a very healthy capex strategy, which you'll see as we rollout the strat plan that means investments to optimize our operations.

We're looking at innovation to expand our growing markets beyond.

But the healthy levels of growth we have within the industry. So the industry is growing at a rate of 2% to 3%. We're looking at high single digit numbers of more than double where the industry is going.

And of course, we're in.

Not going to forget that we got here through our M&A strategy.

We still have a very very strong appetite to look at businesses that make us bigger better and stronger whether that would be bolt on businesses to our current platforms or new platforms that get us into new categories with new consumers. So all of them did here and I'll hand, it off to <unk>.

Hi to take you through our well defined growth strategy and our ability to be able to deliver on this thank you laid out so.

With the strength that we've established over the years you know we talk about our people our global supply of platform of high quality products of the phenomenal brands like we have our operational excellence you take that together with the strong foundations of that Lino talked about.

And we were very well positioned to not only develop a comprehensive growth strategy, but more importantly, it gives us a lot of confidence that we're going to deliver on this plan.

So this comprehensive growth strategy is made up of 2 key growth drivers that you see on the slide here organic growth and strategic acquisitions. The global strap plan is going to focus on accelerating organic growth.

Net doesn't mean, we're going to stop doing acquisitions, because that's always going to complement our organic growth strategy. In fact, when you look at the acquisitions that we have materialized over the last 5 years, whether it's WC BMG dairy crest, even the specialty acquisitions like more ship, we wouldn't be in a position today.

To be able to accelerate our growth had we not materialize those acquisitions. So that's an important point to make.

And finally, the support of promise is going to continue to be an integral part of our overall strategy and I'll talk to that in a moment.

So in terms of our journey on getting to this plan. This is not a lien on plan. This is not of Max plan, it's not a call plan. It's not of Kai plan. This plan was built from the ground up.

And work started last fall the divisions, they all identified key initiatives.

The leverages the strengths in and look at the opportunities that were out in the marketplace and the plants were developed with the very high level of granularity.

And so what we did is we took all of these initiatives and we created the 5 pillars of growth to make sure that our teams are laser focused.

And this isn't our first draft plan a lot of similar work was done in Canada on your call and I'll ask Carl just to share some of the you know some some elements of that journey.

Thanks, Scott Yes.

The multiyear strategic plan is not new to us and in fact back in 2016, we began a journey in Canada.

That actually concludes this year with the commissioning of our new fluid milk plant.

And also the plant capable of producing plant based beverages in for Cook with them.

And over that 5 year span.

We consolidated operations, we should be closed 7 facilities. Despite.

Despite that we increased our cheese capacity by over 15% and we invested heavily in our 2 key brands, both being Armstrong and <unk> to take our market leading shares. So multiyear plans are not new to <unk> and you will hear more about debt shortly.

Thank you Carl moving on to the next slide on.

Our 5 pillars. So I will start from left to right. The first 1 is strengthening our core business and this is all about our existing portfolio of brands and products and we're going to get into each of these pillars to give you guys a little bit more color. The next pillar is accelerating product innovation. This is about new products, new skus of new formats, new packaging.

This is this also includes our dairy alternatives push on again, we'll get into some more detail on the second.

The next pillar is increasing the value of our ingredients portfolio.

These are round our ingredients focused initiatives.

Because right now we're operating largely on a commoditized space. So it's really about how do we move up the value chain.

This includes gateway, which we'll talk about nutritionals.

Next we have optimizing and enhancing operations. This is really our bread and butter. This is something we've done in our history and it'll be a big part of what we do moving forward. These are operations focused initiatives and not only around manufacturing, but on the supply chain side warehousing logistics and so on it's about network optimization and finally, we have.

Creating enablers to fuel investments, that's really doing more with less so.

So if we jump over to the next slide we're going to give you a little bit more color on each of the pillars, starting with strengthening our core business, which is about our existing portfolio of products and brands and you can see on the right. We've got some phenomenal brands market, leading brands, whether its cathedral city, we talked about that 1 of what in the U K the number 1 retail cheese brand.

Share the number 1 everyday cheese brand claw, we're the number 1 spreads Brian.

Frigo.

Number 1 on the true strength space, a lot of Paulina market, leading in Argentina, and more share of and by the light and so on and so on so there's a long list of commercial initiatives that have been developed by each of the respective divisions, they're gonna look be looking to harness the power of these brands on taking them to the next level for.

From an international expansion standpoint, we've got some some great brands that are doing phenomenally, well example, Devon Dale on China, It's 1 of the leading brands in the E Commerce channel on the milk Sachet side. So how do we take that brand equity and parlayed into other product categories that we produce from an Australian platform, which is very much of demand from our Chinese.

Consumers.

And then and and the key export markets on the retail side I talked a little bit of about Cathedral city are when we are asked for the Q&A on the fourth quarter, but we're looking at phenomenal growth in North America.

And in Germany, that's going to be 1 of our key markets on the export side.

Where we see volumes tripling over the next 3 to 4 years in that very important market for us I'm going to ask Carl to give us. Some examples of up in North America in terms of optimizing our product portfolio and the e-commerce as well please.

Thanks Scott.

Well for sure we're going to go into this with the.

The accelerating the optimization of our brands and it isn't necessarily about eliminating brands that is part of the thought process, but some of it is about the types of products that we manufacture and we commercialized under each brand are we're going to go in with the mindset really of left us more so than it allow us to invest more efficiently in our core strengths.

Specific to North America that being the strain cheeses deli cheese don't cheese as well as allow us to amplify our spend in areas to broaden really our Italian cheese and snacking portfolio in that same geography.

We will be of stronger player on the retail space through these brands.

Well of supply offerings to the private label, a little bit you know sort of emulating what we did and do today in Canada.

Furthermore, we will have additional investments in value added the beverage.

Areas such.

Such as the investing.

Investing in aseptic technologies mixed use facilities.

Well to safely process dairy and other blended ingredient beverages.

And we're going to leverage our existing network. We have you know we have a important and material network with brick and mortar lots.

Lots of resources, and we are going to leverage that here are moving forward with our investments.

From an e-commerce perspective, we're actively developing a robust it platform to support our commercialization plans in the a b to b to C and any of the direct to consumer channel.

We are alive and of beta mode right now with the direct to consumer activity through what was launched.

Early on in the pandemic with lesser he goes up total.

And that was launch if you remember in the Montreal area, we've since expanded through Quebec, and Ontario, and I got to say that by diving headfirst into this at the early onset of the pandemic, we learned a whole bunch of about the ecosystem of E Commerce, and it's making us a lot more confidence in our next step.

In fact, with the S&P, the appointment's advancing well through our divisions.

Our e-commerce capabilities will be enhanced and ready for some exciting new developments specifically in the direct to consumer interface. We have plans to launch a second premium cheese experienced platform.

As early as the fall of 2021.

The next pillar is accelerating product innovation.

This is about introducing new products flavors and formats.

Look at Argentina of the new cream cheese flavors are looking to launch new snacking formats in Australia. So it's all about innovation in product development. If you look at packaging, that's becoming an area of great interest of consumers. If you look at the U K as an example of 85% of our packaging is recyclable.

And we've leveraged the Terracycle program, which is a initiative where consumers drop off their.

Packaging for recycling at the <unk>.

500 points of a pick up in the U K, our plans are to move to a 100% recycled the recyclability and our packaging as we move forward, which will be appointed differentiation in the marketplace.

And if we look at you know the big the big New initiatives that we're all very excited about.

Product innovation would include the dairy alternative space and this is a prime example of how we have support of our adapting our offerings to meet the quickly evolving tastes and preferences of our customers and consumers. We recently announced the acquisition of the Butte Island to help accelerate our ambitions, we've kicked off our global team.

With our newest teammates which call. It was also a member of because we've got to make sure. We're operating in a coordinated fashion and the focus will very much be on capacity expansion, we're looking to more than triple the capacity.

That platform to help accelerate the development of of that space not only in the United States, but in the U K as well.

We're also looking to optimize our operations on the supply chain front.

Well.

Our intent of our ambition in the space is to become a market leader by the end of the strike your plan.

So we have the Knowhow, we have the R&D, we have the customers we have the sales infrastructure and we've got an expensive and extensive network that we can leverage.

This is the category that are you know more.

Intel is telling us is about $1 billion in size globally.

<unk>, a tremendous growth at around 12% to 15% on an annual basis, but we feel that that growth can be accelerated if the right product with the right attributes is is introduced on the marketplace. So it's gonna be of great growth category for us and I'll ask Carl just to touch on some of the U S. A U S initiatives around.

Dairy alternatives.

Thanks, Guy and you know, maybe just add a little color on that plant based food category.

Category you know, it's it's now topping $7 billion in sales.

And has been the.

Growing at an accelerated rate over the last 3 years and we do have very strong objectives here that are double digit share globally. So lots of activity and in fact, we've invested quite a bit of time and money in 2 distinct distinct streams for plant based of course, being a cheese alternatives and beverages I would see.

The first we will materialize financial returns on our non dairy beverage investments that earlier in our multiyear plan.

This is something that was active prior to 2021 with bottling capabilities that we've installed in the 3 key geographical areas of North America spin.

Specifically in British Columbia in the southeast in Florida, and in the northeast of the U S and we will be utilizing that platform to support our customers and our markets across North America.

The focus is going to be on securing contracts and manufacturer for a.

The major retailer private labels as well as the key branded players.

As for cheese, we currently have.

Excellent plant based mozzarella style cheese product on sale in the foodservice channel in the U S and Canada and in the U K and our focus is on pizza applications. We've made significant progress in securing listings with the major foodservice distributors as well as some medium sized the regional pizza chains.

And we continue to work with the large multinational pizza chains to get the plant based on their menus across North America, but I got to say that our product has been received very very well here over the last couple of months.

Regarding the retail sector I would say following the acquisition of viewed island foods lots of exciting opportunities are now available for us and and to build out of portfolio and that portfolio will consist of blocks slices treads and spreads we are accelerating our plans and expect to be on shelf.

This fall under the Vitalize brand in the U S.

And that will be followed by Canada in the early calendar of 2022 and just the note that the cheese, which is the the brand.

That we acquired 2 of the butyl and foods is already on shelf in the U K and in parts of Australia.

And.

Of course.

We have of core business and that's dairy and we will continue to invest in and innovate in the space with the kind of offering and the portfolio that we have that spans blue cheese Mediterranean. She just go strength and dairy fruit products, such as the Aerostar and cultured we're planning a bunch of the line extensions and <unk>.

Innovations.

And really that's the center of our growth opportunities, we're already making important investments to support the growth in these areas. We're investing in some areas of the U S. Specifically, Las Cruces, and the Los Angeles area to grow our string cheese business. We're also exploring different options for investment in.

Cut in the rap.

The facilities are basically, allowing us the opportunity to be more flexible on what we supply to each of the sales segments as well as meet the consumer and customers' evolving needs for formats and a convenience. So very exciting things that are going to happen in our portfolio of both dairy and nondairy.

The alike.

For the next pillar is increasing the value of our ingredients portfolio on this this key drivers about building internal capability to really be more aggressive when it comes to moving up the value chain and beauty item was the catalyst for us in the dairy alternative space. We've got another catalyst and buyer original which are Carl if you could share a little bit more color on.

On that please.

Certainly with the acquisition of the facility and read the Burgh <unk>. The intent really is 2 to 2 day commoditize, a greater portion of our current wait portfolio and.

We will begin with our go way solids.

And to a smaller percentage or of bovine way solids, and just the kind of provide a little bit of history of now over 10 years ago support of successfully invested in value added whey protein offerings like WPC 83.

Through capital investments and of course of acquisitions and the demand for more refined ingredients extracted from both milking and way of examples would include things like lactoferrin protein hydrolysate and so forth are continue to grow and in our emerging from the Nutritionals of night if markets.

We're going to really exploit the important quantity of way that we generate from our north American operations are too.

Service these markets and complement our international platform where for.

Prepared to make further capital investments in the space for assets as well as acquiring a new resources on boarding new resources with the necessary knowledge and of course strategic partnerships and M&A will formulate a part of our plan here.

In order to meet our objectives.

And the good news is that you know are similar to the other pillars that we've discussed there are already a lot of initiatives that are underway. This is not to say that the strap plan starts a day. It's already started a while ago. If you look at the ingredients space, we've already developed some products to tap into new segments of new geographies.

Which will give us some some some further growth platforms.

The next pillars optimizing enhancing operations again this has been our bread and butter are this has been about our network optimization efforts, it's about driving operational efficiencies and a big part of those efforts are going to come from the U S. So again I'm going to ask Carl to give some more color around that please.

Yeah, and really you know trudeau of operating operational strength in our history, we're going to invest several hundred millions of dollars in our manufacturing network.

Relative to further enhance our low cost high quality positioning in the market and there's no better time than now with the kind of inflationary pressures that we have on our opex costs are we're not going to get the kind of relief through just price increases in all of our customers on our consumers don't expect us to pass on every single cost we do need to do our end and end the investments.

In our operations will will benefit us for years to come we're going to be investing in capacity and retail formats and of course in and in automation as well as the number of all the cost out scenarios.

And it shouldn't come as the surprise to anybody there will be more investments in mozzarella as well, there's there's more for us to be doing in the space. Despite the the are they competitive.

Pressures.

On the automation front.

We've talked a little bit about the difficulty in accessing labor and that is square into our priorities here.

On the ongoing concern like I said of of ours and many other manufacturers in the space is going to lead us to automate as many functions as we can that don't require really of dairy associates. Okay. So there are still of a number of areas in the plant that we know we can automate and there are a number of other areas that we are going to explore new technologies and new.

Ways of working.

We're going to continue to optimize the operations platform and you know.

Expanding in the communities that we can where there is access to labor and quite frankly potentially exiting in some of the areas where it is more difficult and we we can hide behind that in fact, I would say that unfortunately, there's some rural areas of 10 in the U S that are no longer sustainable are for manufacturing operation.

And we're going to need to solve for that in our multiyear plan.

I would also add debt the dairy the dairy supply chain is evolving quickly with the.

Changes in consumer and in sales demands, we're adopting and leveraging S&P tools.

In the sort of the sphere of integrated business planning or also known as sales and operations planning really to maximize our forecast accuracy our production planning.

The to consistently meet our customer promise fill rate and quality all of this will of course contribute positively to our inventory positions and our working capital.

Incremental investments will be made to leverage our dairy processing and bottling expertise to service the growing total manufacturing segment, our dairy foods business was built on providing solutions to to to our customers and we don't shy away from being a contract manufacturer. There's a number of startups that have the emerge in Bulgaria.

Non dairy that do require that expertise.

Let's not forget that the barrier to entry is high for 4 of bottling and for for dairy processing, even for non dairy and our we have the brick and mortar of the expertise and the.

Capabilities.

The service that area and we are further investing in here as well.

The last of pillar is creating enablers to fuel investments on essentially this is about doing more with less.

We've talked a lot about harmony and how much it costs and so on for US its about now looking to realize the value that the system offers us we've got a lot of overhead cost reduction initiatives across all of our divisions.

A big part of the enabler pillar is the 1 USA, which I'll ask Carl to give some color around.

Okay.

Certainly.

There were several months into our journey of merging our 2 legacy U S businesses and we are now a single operating unit and we do feel we are better a better position to service our customers for today and tomorrow, we've been able to identify and materialized on a number of synergies.

In the sphere.

The spear of milk and in another dairy component procurement.

And of course.

The optimizing some of our basic overheads.

In a difficult labor environment as we have today. This is welcomed pooling of our resources is something that is a must as well as streamlining our business processes.

And I would say that in many ways are the basket of goods that we now go to market with which as you know.

Very comprehensive and complete.

Does mirror what it is we have in Canada, when we provide solutions and products to our customers and we are quite confident about our future with the U S and you know of.

Specific to the ERP.

Safety continues to be successfully deployed through the U S operations and as we come to the end of this journey, we'll be able to capitalize on what a fully deployed division can do and unlock some of the synergies as we mature with the the the tools that the that's offered to us and.

Say that standardizing some of our business practices will be the catalyst for those future efficiencies on our supply chain as well as our administrative tasks.

So the next slide outlines our go get.

So our accelerated strategic growth plan aims to deliver 2.125 billion by the end of F. 'twenty 5.

Okay. So.

Just wanted to provide some comments here.

So we expect our growth not to be linear so our target is a compound annual growth rate and that excludes EBIT. The derived from business acquisition. So our commitment is to achieve the high single digit organic growth over the next 4 year period.

But it doesn't mean the same growth percentage every single year.

Just wanted to point out of.

Yes, I appreciate that.

That color of Max because youre right. It will not be linear there'll be a lot of heavy lifting early on in this 4 year plan.

Building the foundations of getting equipment are aligning our teams, but the work has already started.

We've been in this for the last 2 or 3 months.

And I'm I'm really excited about the foundation that we're building.

On that we have built a.

To develop this accelerated organic growth rate that we expect to not only to achieve but I will tell you I'm challenging the team to find ways to surpassed the 2 went to $5 billion number.

So I'm optimistic about the.

The ideas and the initiatives I think with some of the leadership enhancements.

Talent that we brought into the system of United U S platform.

Key learnings from Covid I believe we have the talent we have the structure we of the roadmap to be successful.

So I'm I'm really excited about this plan that our teams have come up with.

And I will move it on to a Max to talk about Capex allocation sure thing. So we work on.

Alright, so we work on all of our capital allocation on the cycle basis. Our F. 'twenty was at the end of a 3 year cycle. That's completed that year. So F. 'twenty 1 wants to be the year 1 of the new cycle. We finished the year at $433 million in Capex.

But now with the start of the new cycle that coincide with the strap plan F. 'twenty, 1 becomes a more or less the standalone year. So F..22 is the beginning of a new 4 year cycle.

Our capital expenditure of calls for $2.3 billion over the next for years to achieve the plan F. 'twenty 2 will be at the $637 million.

That is for base in strategic Capex.

To give a bit of color of base capex everything that relates to stay in business replacement of equipment building maintenance, ERP et cetera relative to strategic capex everything that touches the ROI projects to fuel our pillars capacity innovation improvement automation.

Everything that we talk talk too.

The capex represent about 550 million above historical level over the last for years, but our capital allocation remains unchanged as we intend to maintain our usual approach to investing in our asset to a level, which is similar to our depreciation.

And amortization expense.

Over the next 4 year period.

Jeff.

Okay. So now I'm going to go into a irene's question about strategic acquisitions. So we still have a on immense on them.

Men's appetite to continue on our journey through M&A activity on our balance sheet is clean our financial flexibility is very very good.

And so there is no reason why we should not continue on the journey for acquisitions I just wanted to point out. The 212.5 billion dollar target is not including acquisitions that will be added to our system or the the EBITDA that we acquire.

If I look at the pipeline beyond the 2 that we just announced the pipeline still remains quite full I would say that were still actively looking at 2.3 for files are that will continue.

To create value for us and further propel.

The plan moving forward the regions that we're looking at of course, the key markets that we're in and I've talked about this on many different conference calls in the past, Canada very very limited U S lots of opportunity Latin America is still some opportunity.

Europe outside of the U K are perhaps even more opportunity there.

And of course Oceania to the degree that in Australia, we have the ability with a triple C limitations to make small tuck in businesses, we will and perhaps 1 day, we might be in New Zealand.

So the new markets or the EU markets.

The markets that we're not currently in and possibly New Zealand, so we need to be where the milk is.

Our first very much into the poodle character in support of culture.

Culture.

These are acquisitions.

<unk>, whether it be strategic in nature, we will take the disciplined approach we understand that the multiples that are being paid for businesses today are a little higher than what they may have been in 2005 and 6 we are aware of that.

But by no means where we overpay.

For the asset that ultimately will be of liability for us down the road these targets need to be accretive for us and they need to be the right strategic fit so where do I priorities lie on priorities lie in cheese, and let me be clear about this we talked about dairy.

Dairy alternatives, which is a key pillar for us in terms of meeting demands of consumers, but we are still of dairy oriented business and let me be even more clear about this even though we're focusing on brands and are getting into some segments of retail foodservice and industrial.

Real businesses are still important for us and let me be even more clear than that we're not shying away from the mozzarella industry, there's a lot of competition.

We think we know that we can win these wars as they come up we're making heavy investments in months that as part of our DNA. It's part of who we are we're not going to shy away from that and if there is opportunity for us to make acquisitions in March we will make acquisitions in March even if that is at the foodservice.

Level, so I want to be clear that we are not shying away from our heritage as we're rolling out the Strat plan. It is actually complementing the heritage that we have had over the last 6.7 years.

Our value added ingredients is a positive consequence of manufacturing cheeses.

And so when we think about the byproduct channels, we need to treat that byproduct and create some great value for us and yet we're looking at dairy alternatives and yes. We're looking at retail so we will build on our successful track record of executing acquisitions and integrating those acquisitions very.

Effectively.

And the support of promise on the next slide this continues to be at the heart of our business as we pursue profitable growth.

It's about creating shared value for all our stakeholders on ensuring the long term sustainability of our business by managing key ESG elements, which can materially impact our financial performance and I'd like to move to the next slide and bring your attention to the right side of the slide.

The environment, obviously top of mind, we launched some pretty ambitious targets around climate water and waste last year and as part of our 3 year of $50 million commitment. We've tackled 12 key projects that are going to bring some significant wins against our environmental pledges on we got some we got other very exciting projects on the <unk>.

So and we're very confident that we're going to exceed our targets when it comes to our environmental pledges.

You know, we also recognize that the environmental considerations don't stop at our facilities and that we have a key role to play to ensure a sustainable food system. So we'll be sharing our supply chain pledges with you which will be launched later this year.

Okay.

Capital structure.

On our capital structure is solid our financial position is strong when we combine it with our disciplined approach to cash management, and our steady cash flow generation, allowing aggressive debt reimbursement.

We are well position to fuel our growth both organically and true M&A.

We will continue to deploy cash in a responsible manner towards capex dividends debt repayment acquisition and share repurchase we still have horsepower.

In terms of financial capacity to materialize the acquisition north of $2.5 billion to $3 billion.

And we intend to bank on it to add on top of the Strat plan.

We just described.

So let me take us back in time of little bit on the early days of the COVID-19, and what our response was to that.

I remember back on March 12th was when the Lockdown happened I remember because it was my son's birthday.

And we weren't quite sure how long or how deep. This lockdown would be that we knew that a lot of our employees were extremely concerned about their lives and so we called that early on that.

That the first the most important.

Stakeholder, we need to take care of our employees.

And so we said we don't care how long. This goes we are going to be putting purpose over profit we're going to take care of our people first and foremost an inside sales part of the health and wellbeing of our employees.

And then once that was done we've made sure that we were adapting our commercial initiatives to meet the demand of consumers that was of course changing almost on a daily basis. We have further supported our customers as well as they were modifying their rollout plans to get product to consumers.

And we never forgot how important it was.

To support our communities and provide either financial help or other kinds of assistance to the communities.

We knew this crisis was going to be the ideal license for us to change the think about things that we never ever would have thought of before so we've pivoted extremely well.

We leveraged our brands once we knew that both brands are resonating with consumers and we launched an e-commerce business I.

I would tell you that I would never have accepted.

Our focus on e-commerce.

Before we had this pandemic.

And so our teams came to us with ideas.

That were somewhat for them to us early on.

That resonated with consumers and resonated with our customers.

And so we made the strategic investments to provide our teams the ability to pivot effectively and execute exceptionally at every turn.

I do the sitting in the in the enviable position to have a healthy balance sheet.

And we.

We do have great cash flow generation.

So as I looked at Covid moving forward or any other crisis.

1 of the things that we recognize is that we are resilient.

And so that doesn't necessarily have to be.

Purpose over profit it could be profit with purpose and that's what the Strat plan is moving forward.

We are living in volatile markets and volatile conditions and of course things change rapidly.

And despite the fact that there are going to be labor shortages. It is incumbent on us to find solutions how to overcome them.

1 of those we can control the controllable, we will maintain and enhance the solid foundations.

The solid foundations of course starts with a solid balance sheet debt balance sheets provides the so many opportunities to be able to grow organically to be able to make acquisitions and to be able to deliver on the food of promise.

And I say this with great confidence because I believe and our leadership team.

Plan is the only as good.

As the people that can execute it so thats not words on paper that matter, it's the execution and so if we looked at our leadership team there are seasoned individuals amongst this group.

There are folks that I've been with us for a long time that have grown there started their careers and grown their careers with us and then the others have joined US along the way the.

The last 2 hires linked cash stonegate and Leon cuts are going to be valuable contributors to this plan and to the execution of this these ideas.

So I'll take you to the the last slide here.

And I I I I made sure that we continue with the bigger better and stronger.

Because that is the non chart, we had for the last 10 or 15 years, but we recognize the market wants more of the market needs more content and so the bigger better stronger is defined by a plan.

That is also identifying a target that we are going to shoot for it.

Talking about our goals our growth ambitions, we're talking about our enhanced profitability and creating value for all stakeholders.

These are this growth strategy.

The the pillars that Cai spoke to the 5 different areas.

Where are we will derive that.

Of that profitability all of it.

Is identified with very clear initiatives in every single 1 of our geographies and then of course, we're going to complement that with the acquisitions.

That we will have along the way.

We will never waver from our support of promise. This is what our employees expect from US. This is what our customers expect from US. This is what we expect of ourselves.

Finally, we will be true to the support of values. So what has made us what we are today will continue to make us successful in the future.

So I will end the presentation on that note.

We will get back to a Q&A session right. After we show you.

On a video of regarding our approach colquitt them British Columbia plant. So do you assume through the presentation that capital expenditure is going to be key and enabling us.

To achieve our plans.

I just wanted to show you how we execute on those plans with a very very concrete example.

Like for them. So if we could I'd love to show this video.

Yeah.

For the project being.

The construction of all of the new.

Milkman in pool.

With the main objective of.

Please see our Buena the plan that is at the end of its lifecycle.

These are record investing for the.

The new plan.

Design of according to the highest standards of food safety and health and safety and efficiency.

We love all of Us.

The development of new products, and we are already planning of the implementation of the line dedicated to the production of plant based beverages I am actually very fortunate because I'm involved in the plant based portion of the new plant and we're only 1 of 3 plants in North America Kudos on.

We're gonna be producing.

Aside from the business is growing you feel good about the company went when they're expanding in the new thing.

And the but the market growing balance so.

So we need to follow the demand.

In terms of improvement over what we do today.

Much of the same process as we do today, but it's much faster processing of milk on how long it's in line, but that maybe isn't he treated are cool treated on the milk and considering the last time on the line the other.

The thing that's really different about this plan is that all of the different processing area.

Some opportunities to collapse, the segregation will be communication screens and every welfare area to ensure we of all kept on the loop on current information at all times, the stockman's for a separate door with a separate welfare area with the type of change from what the separate eating area of boot area of uniform area. So that won't require us to have put pharma on sand.

And the other things that create what we need to make sure every part of all the water needs to be saputo.

Then going directly to the drain and in the new plant at all from Marvell.

So they will press the button and the smart balance will change the line change the mix and the to Williams is built into the equipment well keep the records that they would in the past of written down and this layout, we have reduced our footprint considerably we've actually eliminated an entire conveyor.

In the same footprint are actually slightly smaller we've increased our output by upwards of 25 per cent.

The setup is safer than the previous it's safer and that we have clean travel PA.

For our equipment and in a different of that we've eliminated hydraulics in most of our equipment.

Energy emissions of something that we always look at however from this plant for that plant, we're going with energy efficient equipment energy efficient lighting and heating as well as looking at waste management of current and putting in a state of the art treatment facility.

Most important pieces of equipment in this building are the flock the leader in the dark.

As all of the airflow testing will be capturing rainwater from what's been the rating from the roof to be able to store it and use the makeup.

Moving to see what we can do.

Yeah.

All of these more environmentally friendly on the impact that it has on the world.

This is a state of the on site.

It's going to be clean, it's gonna be safe, it's going to be easily accessible the grand opening will happen in August.

After the close to 3 years.

The design and construction of award.

Yes.

So that is just a snapshot of what's the poodle is capable of we have had other projects are quite similar a greenfield I can think of the El Nino plant of which I know that's a lot of our analysts and investors have already seen and we've also had some upgrades to some of our other.

The ladies like St Leonards, and mozzarella and Saskatoon and Cheddar. So this kind of initiative is not for them to support all we're quite good at it.

And we know that it's going to be part of our success as we rollout the strat plan and the objectives and the results as we move along in the next 4 years. So on that note I'll pause here and then maybe Frank you can the Q our analysts for their questions. Please.

Thank you.

As a reminder to register a question. Please press the 1 for on your telephone.

Our first question comes from Mark Petrie with CIBC. Please proceed.

Yeah. Thanks, I guess first just with regards to the high single digit EBITDA growth target I'm wondering if you can give a little bit more granularity with regards to what assumptions, you're making there in terms of revenue growth. So how much of a bit of topline driven versus <unk>.

Is margin and then maybe just specifically on the cost side of the business are you able to give any kind of specific numbers with regards to the opportunity.

On the cost side from the 1 USA initiative or the harmony project.

Okay. So I'll start the mark them relative to the of the revenue growth yeah of the model definitely assumed of growth revenue, but as you know the revenue line.

It could vary pretty much from a debt from the market. The fluctuation perspective. So we are not looking at of problem.

Providing that number although the margins are that are within the 10% range today are expected to grow as part of this plan.

This is to the extent that we are we're prepared to share.

And from a cost perspective kind of call you want to take that 1.

Sure.

Certainly.

I'll say a material amount of the investment will go to optimizing of our platform and of our operations as I shared earlier and and that's going to result in in the material cost outs, so improving our overall cost of manufacturing.

And I would say that it doesn't mean that we're not investing in innovation in our brands.

It's debt not all not all of our brands require significant investments some of it is really getting to market.

What the appropriate portfolio.

And I'll say that are you know it.

The majority of the investment in the U S is going to be centered around our operations and we will see some of that from a cost out perspective.

And just from a revenue standpoint, I just want to point out that the focus in this exercise for all of the divisions was focus on profit not revenues.

So and the other point I wanted to share was that the the plan is a lot of the plant is going to be derived from the U S platform. Obviously it represents a significant part of our profitability.

But we are getting.

A lot of equal participation.

Dissipation of if you will so we've got a diversified plan, where all of the divisions are contributing to the overall objectives.

Okay. That's helpful and then with regards to the dairy ingredients opportunity specifically can you provide any context for the size of of that opportunity and is there potential for returns before the capital is deployed or is that the sort of key step to unlocking the opportunity.

Yeah.

Well were not prepare to.

Divulge the EBITDA contribution as a result of that initiative, but I would say that if you look at the buyer original acquisition as of as an example that that is gonna be a catalyst to help us accelerate on that space.

And we are already underway in terms of looking to.

Commercialize and and have that translate into profitability in this current fiscal year.

If I could just maybe add a mark to Cai.

Certainly you know by original is a stepping stone, but it goes way beyond that of what bio original can can I say by original I'm sorry. This range Berg facility, which is what we acquired from Wisconsin, Wisconsin specialty protein.

In the end, we are exploring a number of other avenues and the I'll.

I'll say customer basis for different uses of the ingredients that we can extract from both milka in way. So we will see right out of the gates in the fiscal 'twenty 2.

The improvement to our bottom line with the acquisition in Wisconsin.

But you will see in the out years of our multi year plan better returns coming from the choices. We're gonna make on the markets, we're going to service and the of the ingredients that we will commercialize.

And there are opportunities that are being pursued in the on.

On the international side of our business. If you look at sort of the declining birth rates in China, we understand that it's an aging population and that provides an opportunity for our business as a result of the MG acquisition, we picked up a nutritionals nutritionals business, we had not had a lot of experience in that space.

Previously since that acquisition, we've been able to leverage the knowledge that the business offers and through our commercial teams have been able to tap into new opportunities in segments like the growing up milk powders.

Yeah.

Okay helpful. And then just 1.1 last 1 with regards to M&A I mean, obviously you guys of deployed a significant amount of capital over the last number of years, it's generated sort of minimal net contribution have you refined your approach to M&A at all.

Or are you comfortable that this is as a result of.

Shifts in the commodity environment and the other circumstances that really couldn't have been anticipated.

Yeah. So if I look at our track record of on the acquisitions that we've made are there is not 1 of them that I would not.

I have repeated.

I'd say on the life.

But perhaps the the only 1 I would say on the life of our publicly traded life would be the rational business, which is.

Nothing no fault of Vas show, it's just the category of product that.

It didn't fit well with the <unk>, but every other acquisition we made for 1 reason or another had a great strategic fit.

So mark what you alluded to is a.

At the same time that we made those acquisitions, we derived the EBITA that we had expected to.

However, in the last 5 or 6 years, there were some headwinds that are made it difficult for us to elevate that EBITDA. So it seems like we've been spinning our wheels in the mud here.

But the reality is is that we've built really solid foundations, if I think about.

Some of the categories that we invested in some of the geographies that we're currently present in a if I look at some of the diversification outside of you know the industrial type businesses into more value added.

Branded businesses are there is not 1 of those acquisitions that I would not repeat again.

We're hoping moving forward at the market conditions will be better than they were in the last 5 years, but irrespective of market conditions. We.

We are holding to that $2.1 million to $5 million EBITDA.

And this accelerated organic growth plan again would not have been made possible will not be possible without having materialized. The most recent acquisition. So that's really what's going to be.

Allow us to deliver and execute this plan.

Okay, I understand and appreciate all of the comments thanks.

Our next question comes from Patricia Baker with Scotia Capital. Please proceed.

Good afternoon, and thank you for taking my questions just wanted to go back to the.

The ingredient.

A component of organic growth plan.

Just curious at the end of.

Of course.

For your growth plan, where we see the readings.

Hudson, representing a bigger portion.

Of the.

Each of the market or will you be seeing similar organic growth from the retail side on the surface lots on it won't change the mix of course is there are built on the mix shift here.

Sure.

Yeah.

Maybe I can answer part of that which would have from a total solids perspective, so no our ingredients business will.

Will be fueled by the way sellers that we have and and so I'm not from a tonnage standpoint.

We may not see material shifts in tonnage, but what we will see is.

He is I'll say margining up.

And with the choices that we're going to make for the types of ingredients that we were going to look to to manufacture and commercialize so.

You will also see an increase in in aside from the general market conditions, you will see an increase in revenue is a function of that.

But I would not you know from a tonnage perspective, I don't see that or expect that to change much versus what we have today in the foodservice and end of the.

The cheese and dairy side on unless of course, Patricia we make an acquisition of the cheese manufacturer and with that we have more waste solid the process. Well then of course, we will process the waste solids and value added categories of product, but the byproducts market the ingredients market really as a consequence of the cheese manufacturing.

Okay understood and I like that from March and they got the help me understand the better just sort of another question on the innovation.

You mentioned that Youll have any innovation center in the U S and of course, Gary came because of the innovation.

The center I'm, just curious about your view on your track record of innovation and do you believe that you wanted the opportunity for innovation.

So it had or did you learn from dairy crest, perhaps.

Were you aware that there is.

Further opportunities to lighten the mentioned.

All of your markets.

Yes.

Yeah, The innovation center in the U K was a was a great addition to the overall group and I would say that our track record has been has been very good. If you take a look at the plant based cheese opportunity. The the the ask was to develop a product that was superior to what was already out there in the marketplace.

A product that would deliver on performance of that Wouldnt tastes bad that didnt taste bad that had good mouth feel that had all of the properties that consumers are looking for and they weren't able to hit that 1 out of the park in less than 60 days and it took some time to commercialize those efforts now of the second phase is about.

Adding nutritional benefits qualities to our recipes on the team is on that as we speak because we know that that this space is changing very very quickly and there is only 1 opportunity to establish a first mover advantage and we feel that we have through the innovation center and the knowledge and now with the Butte Island.

Acquisition, we feel we're very well positioned together with all of the core competencies that I talked about earlier, whether it's our supply chain our relationship with our customers our sales infrastructure and so on I would say that we're extremely well positioned in terms of innovation.

Leveraging that experience.

And bringing it to our other groups, we have learnt a lot from from that process on how they do things and.

<unk> when we inherited that business. They had a very healthy innovation agenda, we have the innovation center in Dallas that we leverage to a win with our customers and consumers and it's proven very helpful for for our business down there and in Canada, We have a lot of examples where we've.

Tried to accelerate our innovation agenda and that's why it's 1 of our key pillars. We do have an of innovation agenda that has a.

A long list of commercial initiatives that'll be tackled by each of the respective divisions and call has some more comments.

And if I could just add debt.

Innovation comes in different forms and for for several years, we were focused on the sort of the inward innovation. So not the things that you would necessarily see out in the marketplace as a consumer but the innovative things that we were doing and how it is we manufacture our products and so forth.

In fact, as the EF was and they're of dairy foods business in the U S had a very high focus on this and brought a number of exceptional products 2 of the market.

Without it being under our brands.

That will continue of course in the background and we're going to amplify our investments and our focus in the brands that we now on and I know you've heard Casey the several times already but we do have through the years of the acquisitions that we've made an excellent platform to work with now and we that's why we feel so confident about the commercial.

<unk> ahead of us because we have the right mix of of tools brands, Inc.

Capabilities are to go hard at this and the commercial space.

And the other benefit.

Especially when we look at our recent acquisitions is that.

Innovation in those markets are products that they've launched in their respective divisions, we're able to leverage that interest you introduce those products that have been successful in other markets and introduce them to our legacy divisions. So there are a lot of examples.

Where we're gonna be looking to tap into the playbook that the other you know the recently acquired businesses will be able to offer us.

Okay. Thank you very much for that and then.

1 last question you gave us the targeted goal for where you think EBITDA would be at the end of June.

Scott plant and of course, you know.

In terms of the discussion.

In the past where mark.

The doctors and the other things on other I guess, the uncontrollable forgotten the way may be of achieving targets that you guys may have Seth so in setting the target what did you assume for for uncontrollable from each kind of stress test of that number some of that.

We should have a fair degree of confidence that you can achieve that independent of <unk>.

Some of the market factors.

1 of the lead to something like that of pandemic, but the normal disruptions that you've seen in the past.

Well the assumption that we've used are derived from what we've recently experienced so.

So we do feel confident that when we're going into the next for years, we of the ability to navigate true. So those I've been quantify to a sort of an extent and factored in so we do not.

Intend to use that as the as an excuse not to meet the number or the the the growth rate that we're targeting.

Thank you Max.

Okay.

Okay.

Our next question comes from Peter Sklar with BMO.

Please proceed.

So theres been a lot of discussion on ingredients, but bottom line.

Like your ingredients business has been commoditized for.

A few years and you've been talking about that on the calls for quite a few years. So like why is it now that you're able to margin up and like why hasn't the transformation in the business taken place over the last 3 years is it you have new capabilities now because of acquisitions or it's.

We've decided to focus on this business I'm just trying to see why like why things are changing now.

So there are a couple of factors that are positioned us well moving forward.

First you mentioned the first acquisitions, we didn't have capability and whether it was D 90, whether it was goss whether it was lactoferrin. These are all examples of margining up and a ingredients space and what we tried to do over the last couple of years is look to partner with the majors and are trying of fortune.

The alliance to be able to develop it.

Enter into of arrangements, where we would interest sort of into a joint venture type of arrangement, where we would need the manufacturing side of the equation and leveraging the brands that are some of these majors had well we've quickly realized is that they don't operate they don't operate at the same because we do so we have made the decision.

As part of the strap plan to internalize the capability, we're not gonna be waiting around anymore for a partner to to step up not to say that we're going to abandon commercial partnerships.

But we're not going to leave our fate in the hands of others. So we will be looking to.

Build that capability internally and the buyer of original is an excellent example of that to act as a catalyst for us to to build that capability.

Okay.

I also wanted to ask about.

Dairy alternative products you talked.

I talked a lot about that on the call.

Just go back and I'm, just a little confused like.

What capabilities do you have do you have now in terms of alternative products and cheeses and what are the capabilities you got through the debuted island acquisition.

It's Carl So let me try and clarify so on the the beverage side.

We are we basically are utilizing the assets and investing in some of our brick and mortar in the North American particular.

To be able to accommodate the kind of blending.

And the processing and bottling that's required now as far as the cheese alternatives.

The goes.

We were working with our R&D group in the U K.

Who already had a presence in the non dairy space through its vital life brand and different customer relationships or supplier relationships to develop of the mozzarella style cheese that we wanted with the attributes that you heard chi share for the marketplace and the along the way.

We were able to forge a strong relationship with the well what is viewed island foods and come through the with come through with the acquisition. So those things were happening sort of in parallel.

And now we have access to a broader portfolio of products through the Butte Islands acquisition to some IP and we will absolutely deploy that IP and that technology in manufacturing that product to different geographies and it will begin with North America.

So let me, let me add to that.

And I'll take you back in time of little bit Peter you know on.

On the beverage side, we've we did highlight and we did indicate that we were late in the game to come out with a brand.

And so on the beverage side, when you think about going back to the early 2 thousands when it was the soy beverage and then it was the almond beverage and now it's the oat beverage.

We never really deployed any resources, whether that would be marketing talent or marketing dollars to develop of brand and so we're sitting here, saying.

This is now of highly developed the category I think where we can add value for ourselves just to be a co packer for others that have invested in brands, but don't have a the the manufacturing capability to support their growth a lot of these companies are asset light.

We are asset rich and.

So that's our strategy for beverage very very different than the strategy, we're taking to market on the cheese alternatives, we're still in the Investor day here.

There is not a product on the market that is suitable for performance.

Our suite of the from a taste profile perspective, or a suitable for my nutritional perspective.

So we're saying we are experts in cheese.

We have the innovation center, we acquired a business in the U K that had a brand on a product that was going to market.

Why not leverage this and come up with the IP that will ultimately not just get into the sort of that debt. The cheddar cheese alternative but also the mozzarella cheese alternative that performs well on the pie in the market that week.

In every single day.

So all of the market going to the pizzeria <unk>, if we can offer them a natural cheese product and of choose alternative for those vegan pies that they want to make well know better supplier then so poodle. So our strategy for the cheese alternative very different in beverages. We are going to lead. This category is that the difference there and we are still on the <unk>.

You can see here.

1 thing Peter or we got to remember too that we didn't have the manufacturing capability. Prior to this acquisition all of our products were co packed by others.

The weather was in Continental Europe, and then we partnered with Butte Island, and that's how we develop the relationship and got to a point, where we're able to consummate a transaction.

Yeah.

Okay and then during the discussion I got confused about a couple of numbers you threw out there on the size of the market I heard of $1 billion number and I think I heard of $7 billion number can you clarify those 2 numbers.

But the $1 billion. The 1 billion is the plant based cheese category globally.

The $7 billion is plant based food category, which would include beverage cheese everything.

Yes.

Okay.

<unk>.

And then my last question was.

Just like when you show the video at the end of the new quote quit Lynn facility, which looked really impressive.

I thought I saw on the plan that said something like blow mold are you are you blow molding your own containers on that facility and is that something new for saputo to manufacturer of its own containers.

We.

It's certainly not new so.

I would say that what.

What we have is a is a partnership with the third party.

That does that blow molding for us and that's been kind of the same approach we've utilized in our western Canada for a number of years now so we've carried that over.

Into our new facility.

Okay. Thank you.

Yeah.

Our next question comes from Irene <unk> with RBC capital markets. Please proceed.

Thanks.

Afternoon, again, sorry to continue to keep I guess, you know eat the.

Drums, or I don't know whenever they'd be in Scotland or play the bagpipes on that.

Island transaction, but.

Accounts from that last answer that 1 of the keys is there something about the manufacturing process.

For cheese alternatives that isn't it sort of very.

Very challenging and now you have that are not sort of ex.

Really what you wanted it am I getting that right like that's sort of the special thing about Inc.

Well not exactly I mean, the intent the intellectual property what's the.

Led by our team and the innovation.

The the ingredients to use to bring it together.

It is something that we are bringing to the island of the unfortunate thing is that we did not have the processing capability.

All of the equipment to.

Produce a of dairy alternative products in our current facility now we could have very easily invested in it but it would've taken US 12 to 18 months before we get the equipment install it debug the process.

And I and get things running so we went through a third party, which was viewed island.

With our intellectual property to manufacture the product for us because they were equipped and they had capacity.

And sort of doing we got to know debuted island of founders are their ambitions their ideas their culture.

And we thought that there were so many commonalities between what they were doing and what we wanted to achieve and so it was there that we engage with them to acquire of that business. All of the though are the key people. There are 2 of the for founders.

Are going to be instrumental to us.

In terms of further developing the plant based strategy for us. So they do have some knowledge that our innovation team does not have that.

That will help us further develop products beyond the mozzarella and the chatter that we have but.

For us it was the question of speed the market, we want to be first movers, we couldn't afford 12 to 18 months.

Get installed and go to market. So we were heavily relying on mute and you know if we're going to rely on a third party might as well on the third party and that was our thought process.

Now in making that acquisition as well the she's brand is already export it to over 30 countries and it's actually the number 2 player in Australia. So it has an established presence in a lot of key markets in the U K. It does business with its the private label supplier to all of the major retailers.

So it already has a head start on that front.

The Johns Pizza service hub for Pizza operators, a pizza chains, they already have a business with them so that gives us.

That provides a catalyst to get into that space because that is our aspiration is to penetrate the foodservice space space and provide a product that performs well on the pizza. So this again has acted as a as the tremendous catalysts to accelerate our ambitions in the space.

I will also say Ah maybe going back the Peter's question relative to our strategy to go to market a beverage.

We are on.

Not quite sure if all actually we know for sure that not all players in the beverage space are profitable.

I won't guarantee and I will confirm.

Of that in the cheese space She's alternative it is a lucrative business.

Yeah.

Yeah, that's that's really helpful and presumably okay with you with sort of the strength of the the Tucano.

The global relationships and your reputation of franchise.

Behind now what is actual tangible capability to produce the product.

Got.

That package together has to be very powerful powerful as you go to market in the foodservice space right.

Okay.

Absolutely Irene in fact, the you know as we're rolling out this product we have some of the larger pizza change that I had asked for exclusivity. That's how good our product is a we are not going to get into an exclusivity agreement because look we're going to pizzeria of every single day to deliver our natural.

We are going to be offering this on a non dairy alternative a high performing product.

They complement our.

2 of the natural cheese that we're bringing to market.

Yeah, and you're absolutely right I mean, it bringing.

Bringing this into our supply chain is another area of strength for us and we will be manufacturing and size, reducing these products for both the retail and foodservice space.

In the geographies, where we plan to to accelerate our business. So you know right here in the North America.

We will use our brick and mortar.

In order for us to manufacture products, we're going to leverage the you know the I'm going to use the word the debt we have here in North America of the resources the talent.

And our commercial relationships to bring to market.

So absolutely we are going to have we're going to be able to make a lot of inroads in the space because of our current relationships.

And we're well positioned in that we.

We offer the per well.

I was just going to add the Irene that.

Together with our plant based beverage business. We also have the dairy alternative cheese business and most of the dairy alternative of cheese players do not have the plant based beverage business, which gives us some some of some leverage and then when we look at our pizza a pizza chain partners we can.

Because the 1 stop shop and that we provide not only of the mozzarella, but also of dairy alternatives and not of lot of players have that competitive advantage of at this point.

That's really interesting thank you and on and that's very that's really helpful.

Now the resolve this big strategic thing I'm, sorry that I need to bring it back to you now.

Let's bring it back for some numbers here so.

Going back to a comment that was made earlier about the path from from here to the 2.1 of <unk> 5 billion and.

You noted that it won't be linear, but presumably there's a step up that should happen as we come out of cold day to kind of get you to where you would otherwise have been if COVID-19 had not inc.

Wrapped up the path forward and does it then clearly how kind of little bit non kicked off like how should we be thinking about the cadence of.

Here does that cause the 8 percentage is not going to be linear or they start at the high single digits won't be linear.

Irene It smacks of so we intend to provide a market with regular update as to the you know the the various milestones that we will be of going through.

The the the theirs.

Competition sensitivity around providing quantum of pillars and are certain milestones that are we'd like to reserve the right, but the sure that I'm on the regular basis, we'll be providing them on.

Date that will help you understand where we're at.

That's very helpful. Thank you.

Our next question comes from Vishal <unk> with.

The National Bank financial please proceed.

Hi, all.

Thanks for taking my questions.

Just on the.

On the materiality of that.

All of these initiatives, there's a lot of the initiatives disclose.

You know what.

It's incumbent upon the analysts trying to figure out.

We're on when and how all of these all come through so I understand you don't provide specific numbers, but could you give us some sense.

The reality for for instance.

So from that place.

Food initiatives, while the repricing over the long term over the course of the Strat plan it doesn't sound like it will be.

More than 1 to 2 per cent of revenues.

With my initial come now not the scratch and I'm wondering if there's any other big.

And those sorts of problems that we should.

Thank you Cynthia.

Okay. So I'd like to address maybe the you know the.

The question around.

Maybe the quantum from the pillar perspective than the color I could provide.

You know the the the pillar that is optimizing our network and this is our operation. This is what the kind of referred to.

Some of our our bread and butter and this is the maybe the most important pillar of from a growth perspective from the generation of EBITDA perspective, but do you have to understand that this is the full organic strategies all of the pillars of our link 1 you know into.

2 the yoder.

I think if we we we you go out with having that pillar as the biggest 1 as well as the U S sector being the 1 of the major contributor that's to the extent that we're prepared to share from from you know of quantum of quantum of all of the Strat plan and.

And the various initiative per se and from the revenue perspective, Yeah. This is the affinity.

There will be volume increases there will be revenue increases, but certainly like I mentioned, we are focused on EBITDA and we are focusing on improving our EBITDA margin and that improvement goes for all of the sectors that we are operating in.

Okay.

And I understand the composition of the competition sensitivities that hurdle.

But if you're on and I understand that you intend to provide some more information, but if you were in our.

Shoes, and you were trying to evaluate some kudos progress against some of these initiatives Inc.

For year, knowing that its lumpy, but we don't know the cadence of how these initiatives kick in and when what metrics would you point of 2 to evaluate sequela of success I guess.

The other than other than the <unk>.

Final debt.

For or the comments, that's put on the provide that better.

The quality of the neutral.

I would then look at look at the our EBITDA, that's our that's our first and foremost metric in the U.

Good measure ourself.

When are we would be sure of releasing or the AR from a quarter perspective, and obviously this is a journey for us for the next 4 years. This world. We're in and we will provide a color as to the.

Where we stand and how we progress towards achieving these goals.

And that should be helpful on your own.

Okay. Thanks for the color appreciate it best of luck.

Okay.

Our next question comes from Michael Van <unk> with TD Securities. Please proceed.

Alright, thank you.

So I guess I wanted to go back to the.

Client base for a second just to clarify a few of things easier instead of you you're gonna want of double digit.

Market share globally with that of the $7 billion market of the $1 billion market.

That's on the $1 billion market and just to clarify we would like to be market, leading and all the geographies. We currently have the platform and so that would be Australia. The U S, Canada, the U K and Argentina.

And market, leading would it be of double digit so I'm I'm going to push Kai on that 1.

Okay.

Okay, well you know I was going on.

It's more of the low single double digits that's why.

And then the brands that you plan on using the bite of light in the U K did you say youre going to use bite of light in the U S as well.

Yes. So we are early on we did a number of market studies to see what resonated best.

And we're very confident that the vital life brand is what we will come.

Come to market with here in North America, She's will continue to exist for the markets that it's in today.

But yes, it'll be vital Ikea in North America.

Okay and on the milk side during the video.

I think the I'm not sure of is the plant manager, who it was but I think someone said the debt.

But it'll be 1 of only 3 processors of plant based milk in North America is that accurate.

No way so what would you say that you saw there was a 1 of our production of Supervisors say that the port quit them facility will be 1 of 3 within the <unk> network to process plant based beverages.

That makes more sense, okay, and what's the status of the other 2 in terms of ramping up I know of Florida as it was already done so is there 1 up and running.

Connecticut will be up and running in the August as well so right around the same timeframe as the pork equivalent.

Okay.

Alright, and then.

Adding back the Irene's question regarding.

The Canadian.

The knot of the improvement in EBITDA out of a similar question, but I guess on asking a little of that difference is there.

Yes, it does.

Irene, but it does seem that it does make sense and that you should have a bit of a.

Tom.

Pandemic as those headwinds disappear on the foodservice industry recovers in the volume to go back up but a read the belief that there are some upfront costs.

As part of the strategic plan that Mike.

Pushed some of those.

Some of those improvements are might hide some of those improvements.

The year over years.

Well you know the early years, yes, there will be the.

The favorable impact of maybe exiting the the COVID-19 environment.

But there's some investment are going to take place over the next year or even the next few years you could expect the higher margins on the higher EBITDA to be generated like the more on the year 3 of new for rather than you want on Youtube.

Okay. So you have some benefits from 1 USA coming this year the ERP sounds like it's not going to be done in the U S until the end of this year.

And then the optimization of the U S off of your operations in general.

Can you talk about some of the timing of when some of this equipment is going to be.

Available.

The Commission.

Yeah, what I would say as a general comment.

And in these times, our most recent times the it takes 18 to 24 months for any.

Sizable installation to come to fruition, Inc, including the commissioning phase. So you you got it you got to expect that as we embark on some of the more ambitious.

Investments in the network optimization, you have an 18 to 24 months lag.

And that is true, whether it's Canada, the U S or other parts of the globe.

And but are there any of these major projects that are actually already started so that we will see them come in staggered or we are they all 3 of the 3 years out of them.

No I mean, there are a couple of them of course, the plant based beverage side is well underway. So we're actually of the tail end of those and I would say that the investment in the street and cheese area and the the choices that we're making there are on.

Or probably about halfway through at the stage and we have begun.

On 1 maybe 2 actually of the.

The most intense capital investments so again that cycle, though will continue to be 18 to 24 months.

And as part of our Strat plan the in terms of Capex investments.

It reflects sort of of the lag in terms of the startup of some of these activities, but we're heavy upfront in year, 1 and 2 and then sort of sort of levels off in the year 3 and for from a capex investment standpoint. So that gives you a little bit of an indication in terms of when we would expect to materialize the benefits as a result of those investments.

Right.

Alright, thank you.

There are no further questions at this time.

Yes.

We thank you for taking part in this webcast, we hope you'll join us for the presentation of our fiscal 'twenty 'twenty 2 first quarter results on August 5th have a nice day.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your line have a great day every day.

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