BMO Capital Markets 2013 Farm to Market Conference New York, New York. May 14, 2013

Transcription

1 0 BMO Capital Markets 2013 Farm to Market Conference New York, New York May 14, 2013

2 1 Forward Looking Statement Warning This presentation contains forward-looking statements about the business, financial condition and prospects of the Company. The actual performance of the Company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties. These risks and uncertainties are described in our most recent Annual Report on Form 10-K.

3 The Company 2

4 3 We Are a Leading Chicken Producer Organized in 1947 Incorporated in 1955 Who We Are Vertically integrated in 1961 Initial public offering in rd largest poultry processor in the U.S. Current processing capacity of 9.375MM head/week

5 4 Top 10 Poultry Companies for 2012 All Other 39.3% Tyson 21.4% Source: WATT PoultryUSA Survey, March 2013 Pilgrim's 19.0% Koch 6.1% Perdue 7.0% Sanderson 7.3% Processing Further Processing Million Million Lbs Average Million Lbs % R-T-C Company Plants Operations Head Live Weight Live Weight R-T-C Market Share Tyson Foods, Inc. 33 9/ % Pilgrim's Corporation 26 0/ % Sanderson Farms, Inc. 9 0/ % Perdue Farms Incorporated 12 3/ % Koch Foods, Inc. 8 4/ % Mountaire Farms, Inc % Wayne Farms, LLC 8 0/ % Peco Foods, Inc. 5 1/ % House of Raeford Farms, Inc. 5 2/ % Foster Farms 5 5/ % Total Top / % All Others 40 23/ % Total / %

6 5 Balanced Asset Base Poultry Plants Big Bird Deboning Full Capacity Live Pounds Processed Pounds Per Week (1) Per Week (2) Per Week (3) Hazlehurst, MS ,000 5,343,750 4,782,500 Kinston, NC Laurel, MS ,000 5,343,750 4,782,500 Hammond, LA ,000 5,343,750 4,782,500 Collins, MS ,250,000 10,687,500 9,565,000 Waco, TX ,250,000 10,687,500 9,565,000 Waco, TX McComb, MS Jackson, MS Hazlehurst, MS Palestine, TX (4) 1,250,000 10,687,500 9,565,000 Retail Total 5,625,000 48,093,750 43,042,500 McComb, MS ,250,000 8,187,500 7,041,250 Bryan, TX ,250,000 8,187,500 7,041,250 Moultrie, GA ,250,000 8,187,500 7,041,250 Kinston, NC ,250,000 8,187,500 7,041,250 Total 5,000,000 32,750,000 28,165,000 Expected Capacity 10,625,000 80,843,750 71,207,500 Prepared Chicken Plant Jackson, MS 1986 Note: (1) Capacity measured in head/w eek. (2) Based on target live w eights. (3) Based on historical yields. (4) Announced; No construction date set. Moultrie, GA Collins, MS Laurel, MS Hammond, LA Bryan, TX Palestine, TX (4) Big Bird Deboning Plants Retail Tray Pack Plants Prepared Chicken Plant

7 6 4,000 3,500 3,000 2,500 2,000 1,500 1, Strong Track Record of Organic Growth % 986 1,077 1,167 1,308 24% 9% 8% 12% Pounds Processed (millions) 2,441 2,426 21% -1% 2,025 1,802 12% 1,530 1,580 14% 1,437 10% 6% 3% 3,550 3,588 3,259 9% 1% 3,108 3,044 5% 2,959 2% 2,805 3% 5% 2,567 9% 6% * 2014* 2015* 2016* 2017* * Estimated. Assumes 6% production cut is restored during 3 rd Quarter of Assumes Palestine, TX construction begins in 2013, opens January 2015, and reaches full production in March 2016.

8 7 Key Strengths Low Cost Producer As one of the industry s most efficient producers, well positioned to capture share Favorable Product Mix New plant focused on higher margin tray pack / retail markets Attractive Growth Profile Track record of generating strong internal growth History of delivering above industry average returns Strong Balance Sheet Managed and maintained appropriate capital structure Strong balance sheet enables growth even during industry downturns

9 8 Strong Portfolio of Customers Prepared Foods / Foodservice DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI

10 9 Strong Portfolio of Customers Retail

11 10 Favorable Product Mix Operating Margin / Head (Cents) (1) Shift to Higher Margin Foodservice Market (10) (20) (30) Mix (%) Tray Pack / BBD (2) 59/41 57/43 53/47 55/45 49/51 46/54 46/54 49/51 53/47 53/47 Source: Agri Stats, Company Filings Note: (1) Industry average. (2) YTD through March. Small Bird Tray Pack Big Bird Deboning

12 11 Export Destinations (SAFM) Fiscal 2012 Sales Pounds (million) 20.7% of total Gross Sales Dollars $318.7 (million) 13.0% of total Other 12% Mexico 24% Other 13% Mexico 21% Central Asia 24% China 11% Central Asia 23% China 16% Russia 29% Russia 27%

13 US Export Volumes RTC million pounds, paws excluded Country Mexico ,007 1,236 Russia 1, Angola Canada Cuba Taiwan Hong Kong China Kazakhstan Lithuania Other 2,409 3,151 3,516 3,250 Total 6,818 6,765 6,971 7,281 Source: ERS calculations using data from U.S. Department of Commerce, Bureau of the Census 12

14 Market Overview 13

15 14 Current Market Overview Broiler egg sets declined year over year during 2012; have moved higher over the past few weeks; pullet placements have been lower than prior year every month but four since July 2011; breeder flock remains lower Cold storage inventories remain manageable Retail grocery demand remains steady Casual dining traffic remains weak; jobs and high priced gasoline are the key; unemployment remains a drag; wing concepts remain strong; new chicken items on QSR and casual dining menus helping demand Corn and soybean meal prices remain significantly higher than historical averages; late plant a growing concern Export market steady; one eye on avian influenza in China

16 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr Pullet Placements Potential Breeder Placements 120% 115% 110% 105% 100% 95% 90% 85% 80% Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb % 106% 104% 102% 100% 98% 96% 94% 92% Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Source: USDA % of Prior Year Source: USDA % of Prior Year Broiler Eggs Set Avg. Weekly Broiler Egg Sets 110% % 106% 104% 102% 100% 98% 96% % 92% % YTD Source: USDA Current Year Prior Year Source: USDA

17 16 Intended Placements: Broiler-Type Pullet Chicks for Hatchery Supply Flocks by Month and Total, Cumulative Potential Placements Month Pullet Chicks Hatched as % of as % of as % of Relative to Current Supply Flocks Months Earlier ,000 1,000 1,000 1,000 Percent Percent Percent 1,000 1,000 1,000 1,000 US Placements Jan 6,637 6,557 6,673 6, ,833 62,996 64,111 60,864 Feb 7,021 7,284 7,025 7, ,005 63,283 63,679 60,646 Mar 6,673 7,058 6,753 6, ,142 63,250 63,323 61,094 Apr 6,825 7,044 6, ,672 63,751 63,209 61,342 May 8,351 7,721 7, ,918 63,990 62,941 60,934 Jun 7,128 7,211 6, ,049 64,558 62,547 60,676 Jul 6,675 6,444 6, ,903 64,656 61,927 60,591 Aug 7,313 7,233 7, ,300 64,388 61,556 60,370 Sep 7,128 6,657 6, ,663 63,321 60,860 60,054 Oct 6,876 6,289 6, ,179 63,251 60,402 59,579 Nov 7,589 6,890 6, ,790 63,620 60,482 Dec 6,771 6,438 6, ,978 64,028 60,721 Annual Total 84,987 82,826 81,

18 17 USDA Broiler-Type Eggs Set (in thousands) Week Ending Week Ending Jan , , , , ,205 Jul , , , ,765 Jan , , , , ,004 Jul , , , ,111 Jan , , , , ,604 Jul , , , ,117 Jan , , , , ,531 Jul , , , ,294 Feb , , , , ,420 Aug , , , ,058 Feb , , , , ,087 Aug , , , ,962 Feb , , , , ,947 Aug , , , ,718 Feb , , , , ,646 Aug , , , ,248 Mar , , , , ,971 Aug , , , ,242 Mar , , , , ,188 Sep , , , ,586 Mar , , , , ,737 Sep , , , ,443 Mar , , , , ,429 Sep , , , ,027 Mar , , , , ,484 Sep , , , ,350 Apr , , , , ,743 Oct , , , ,879 Apr , , , , ,352 Oct , , , ,818 Apr , , , , ,256 Oct , , , ,135 Apr , , , , ,463 Oct , , , ,104 May , , , , ,086 Nov , , , ,603 May , , , ,790 Nov , , , ,391 May , , , ,720 Last 6 weeks Nov , , , ,628 May , , , , vs 2012 Nov , , , ,887 Jun , , , , % Nov , , , ,061 Jun , , , ,864 Dec , , , ,428 Jun , , , ,536 Dec , , , ,792 Jun , , , ,500 Dec , , , ,196 Jun , , , ,717 Dec , , , ,303 Average 200, , , ,141

19 18 USDA Young Chickens Slaughtered by Month and Total, Month Head as % of as % of Live Pounds as % of as % of ,000 1,000 1,000 % % 1,000 Avg Wt 1,000 Avg Wt 1,000 Avg Wt % % Jan 713, , , ,176, ,131, ,349, Feb 659, , , ,799, ,931, ,838, Mar 764, , , ,397, ,060, ,991, Apr 686, , ,953, ,986, May 745, , ,330, ,370, Jun 752, , ,370, ,135, Jul 699, , ,035, ,166, Aug 767, , ,436, ,420, Sep 721, , ,240, ,899, Oct 701, , ,124, ,435, Nov 666, , ,879, ,011, Dec 658, , ,809, ,801, Annual 8,537,060 8,428, ,552, ,349, Source: NASS, USDA - Poultry Slaughter Report

20 19

21 20 160,000 Breasts & Breast Meat Total Frozen Chicken United States Cold Storage Stocks, ,000 Wings 150,000 80, , , , , ,000 70,000 60,000 50,000 40,000 30,000 20,000 90,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ,000 Leg Quarters 26,000 Whole Chickens 130,000 24, , ,000 22, ,000 20,000 90,000 18,000 80,000 16,000 70,000 60,000 14,000 50,000 12,000 40,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

22 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr Georgia Dock Year Average Source: ubcomtell.com

23 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr UB Boneless Skinless Breast (Approx. 8.0 million pounds/week assuming 22.50% yield) UB Breast Tenders (Approx. 1.6 million pounds/week assuming 4.50% yield) Year Average Year Average Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr UB Jumbo Wings (Approx. 2.7 million pounds/week assuming 7.65% yield) UB Leg Quarters (Approx million pounds/week assuming % yield) Year Average Year Average Source: ubcomtell.com

24 CBOT - CORN 23

25 CBOT SOYBEAN MEAL 24

26 25 Corn/Soy Sensitivity Quantity Purchased Hypothetical Price Change Fiscal 2012 Impact on Cash Ultimate Impact on COGS Corn 87.6 Million Bushels $0.10 / bushel $8.76 million $ / lb processed Soybean M 766,000 Tons $10.00 / ton $7.66 million $ / lb processed Quantity Purchased Q1 Fiscal 2013 Hypothetical Price Change Impact on Cash Ultimate Impact on COGS Corn 20.7 Million Bushels $0.10 / bushel $2.07 million $ / lb processed Soybean M 194,000 Tons $10.00 / ton $1.94 million $ / lb processed

27 Financial Summary 26

28 Strong Track Record of Financial Performance Pounds Sold Operating and Net Margin (MM) 3,500 3,000 2,500 2,000 1,500 1, ,800 2,956 2,399 2,463 2,581 2,049 1,809 1,449 1,537 1, EPS 25% 20% 15% 10% 5% 0% -5% -10% -15% Gross Profit Operating Income Net Income ($/Share) (2.00) (4.00) (6.00) (8.00) (0.57) (2.13) (5.74)

29 28 Capital Expenditures $160 $140 $120 $100 $80 $60 $40 $20 $ Maintenance Waco Complex General Office Foods Collins Expansion Georgia Complex Kinston Complex

30 29