Mr. Lino Saputo reports

SAPUTO REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2024 ENDED JUNE 30, 2023

Saputo Inc. has released its financial results for the first quarter of fiscal 2024, which ended on June 30, 2023. All amounts in this news release are presented according to international financial reporting standards (IFRS).

"Our business delivered solid results in the first quarter in the face of significant commodity market headwinds and lower consumer demand. We had another quarter of adjusted [earnings before interest, taxes, depreciation and amortization] and margin growth with a strong performance in our Canada sector, significant operational improvements in our Australia division and more operational stability in the USA sector. Despite unprecedented market conditions, the underlying health of the business is strong, and some of the current headwinds are expected to be transitional," said Lino A. Saputo, chair of the board, president and chief executive officer.

Mr. Saputo added: "We are at an important inflection point in our business although it is not yet reflected in our results. We continue to make progress against our global strategic plan initiatives, and we are moving forward with several of our capital investment projects, which are expected to deliver meaningful returns once fully operational."

First quarter fiscal 2024 financial highlights:

• Revenues amounted to $4,207-million, down $120-million or 2.8 per cent.
• Net earnings totalled $141-million, up from $139-million. Net earnings per share (EPS) (basic and diluted) were stable at 33 cents.
• Adjusted EBITDA amounted to $362-million, up $15-million or 4.3 per cent.
• Adjusted net earnings totalled $154-million, up from $143-million, and adjusted EPS (basic and diluted) was 37 cents and 36 cents, up from 34 cents and 34 cents.

• Its first quarter performance reflected:
  • The positive carry-over effect of previously implemented pricing initiatives in all its sectors;
  • Lower average block market price and average butter market price in the USA sector;
  • Softening of the global demand for dairy products negatively impacting its sales volumes;
• Increased adjusted EBITDA reflected a solid performance in the Canada sector and modest increases in the USA sector and the Europe sector; results in the international sector were slightly lower;
• USA sector adjusted EBITDA increased by $6-million despite a $24-million unfavourable impact from lower commodity prices;
• Continued execution toward its long-term strategic priorities through investments in its major capital projects;
• The board of directors reviewed the dividend policy and increased the quarterly dividend from 18 cents per share to per share cents, representing a 2.8-per-cent increase; the quarterly dividend will be payable on Sept. 15, 2023, to shareholders of record on Sept. 5, 2023.

Fiscal 2024 outlook:

• The company expects to benefit from the carry-over impact of price increases, additional capacity and capabilities, cost containment and efficiency initiatives, new product innovations, and investments in its brands and advertising.
• It expects inflation on its overall input costs to moderate but to remain at elevated levels. It will continue to manage the current inflationary environment through its pricing protocols and cost containment measures.
• A more stabilized work force, fewer supply chain constraints, and the acceleration of its productivity and operational improvement projects are expected to further enhance its ability to service customers, particularly in the USA sector.
• Global demand for dairy products is expected to remain moderate due to macroeconomic conditions and the impact of pricing elasticity.
• The outlook for U.S. market factors remains mixed. Management believes that the long-term environment is likely to be relatively supportive for commodity prices, but with continued volatility in the short to medium term.
• The international sector is expected to be negatively impacted by lower cheese and dairy ingredient prices.
• Capital expenditures are expected to remain at similar levels versus last fiscal year, driven by global strategic plan optimization and capacity expansion initiatives, as well as continued investments in automation.
• It expects strong operating cash flow to continue to support a balanced capital allocation strategy and provide the financial flexibility to consider value-enhancing opportunities, with priority given to: (i) organic growth initiatives through capital expenditures; (ii) shareholder dividends; and (iii) debt repayments.

Additional information

For more information, reference is made to the condensed interim consolidated financial statements, the notes thereto, and management's discussion and analysis for the first quarter of fiscal 2024. These documents can be obtained on SEDAR+ under the company's profile and in the investors section of the company's website.

Webcast and conference call

A webcast and conference call will be held on Friday, Aug. 11, 2023, at 8:30 a.m. Eastern Time.

The webcast will begin with a short presentation followed by a question-and-answer period. The speakers will be Mr. Saputo, and Maxime Therrien, chief financial officer and secretary.

To participate:

• Webcast: Presentation slides will be included in the webcast and can also be viewed in the investors section of Saputo's website under calendar of events.
• Conference line (audio only): 1-800-379-4140; please dial in five minutes prior to the start time.

Replay of the conference call and webcast presentation

For those unable to join, the webcast presentation will be archived on Saputo's website in the investors section under calendar of events. A replay of the conference call will also be available until Friday, Aug. 18, 2023, at 11:59 p.m. ET, by dialling 1-800-558-5253 (ID No.: 22027517).

About Saputo Inc.

Saputo, one of the top-10 dairy processors in the world, produces, markets and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended-shelf-life milk and cream products, cultured products, and dairy ingredients. Saputo is a leading cheese manufacturer and fluid milk and cream processor in Canada, a leading dairy processor in Australia, and the top dairy processor in Argentina. In the United States, Saputo ranks among the top-three cheese producers, and is one of the top producers of extended-shelf-life and cultured dairy products. In the United Kingdom, Saputo is the leading manufacturer of branded cheese and dairy spreads. In addition to its dairy portfolio, Saputo produces, markets and distributes a range of dairy alternative cheeses and beverages. Saputo products are sold in several countries under market-leading brands, as well as private label brands. Saputo is a publicly traded company, and its shares are listed on the Toronto Stock Exchange under the symbol SAP.

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