Sidoti & Company, LLC West Coast Road Show. San Francisco, California

Transcription

1 Sidoti & Company, LLC West Coast Road Show San Francisco, California February 4, 2015

2 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. 1

3 The Company 2

4 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 3

5 Top 10 Poultry Companies for 2013 All Other 40.6% Tyson 21.3% Source: WATT PoultryUSA Survey March 2014 Pilgrim's 17.5% Koch 6.1% Perdue 7.1% Sanderson 7.4% 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 25 0/ % Sanderson Farms, Inc. 9 0/ % Perdue Farms Incorporated 12 3/ % Koch Foods, Inc. 8 4/ % Wayne Farms, LLC 9 0/ % Mountaire Farms, Inc % Peco Foods, Inc. 5 1/ % House of Raeford Farms, Inc. 5 2/ % Foster Farms 5 5/ % Total Top / % All Others 40 23/ % Total / % 4

6 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 5,625,000 5,062,500 Laurel, MS ,000 5,625,000 5,062,500 Hammond, LA ,000 5,625,000 5,062,500 Collins, MS ,250,000 11,250,000 10,125,000 Waco, TX ,250,000 11,250,000 10,125,000 Palestine, TX 2015(4) 1,250,000 11,250,000 10,125,000 Retail Total 5,625,000 50,625,000 45,562,500 McComb, MS ,250,000 8,437,500 7,256,250 Bryan, TX ,250,000 8,437,500 7,256,250 Waco, TX McComb, MS Jackson, MS Hazlehurst, MS Kinston, NC Moultrie, GA Moultrie, GA ,250,000 8,437,500 7,256,250 Kinston, NC ,250,000 8,437,500 7,256,250 Total 5,000,000 33,750,000 29,025,000 Expected Capacity 10,625,000 84,375,000 74,587,500 Prepared Chicken Plant Bryan, TX Collins, MS Laurel, MS Hammond, LA Palestine, TX (4) Jackson, MS 1986 Note: (1) Capacity measured in head/w eek. (2) Based on target live w eights. (3) Based on historical yields. (4) Will open February 9, Big Bird Deboning Plants Prepared Chicken Plant Retail Tray Pack Plants 5

7 4,000 3,500 Strong Track Record of Organic Growth Pounds Processed (millions) 3,721 3,741 3,744 11% 1% 0% 3,351 3,000 2,500 2,000 1,802 2,025 12% 2,567 2,441 2,426 21% -1% 6% 2,805 9% 2,959 3,041 3,058 5% 3% 1% 10% 1,500 1, % 986 1,077 1,167 24% 9% 8% 1,308 12% 1,437 1,530 1,580 10% 6% 3% 14% * 2016* 2017* 2018* * Estimated. Assumes Palestine, TX opens February 2015, and reaches full production in March % production cut was restored during 3 rd Quarter of

8 Key Strengths Low Cost Producer As one of the industry s most efficient producers, well positioned to capture share Favorable Product Mix New plant under construction focused on higher margin big bird deboning market 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 7

9 Prepared Foods Strong Portfolio of Customers 8

10 Strong Portfolio of Customers Big Bird Deboning / Foodservice 9

11 Tray Pack / Retail Strong Portfolio of Customers 10

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

13 Export Destinations (SAFM) Fiscal 2014 Sales Pounds (million) 19.0% of total Gross Sales Dollars $282.3 (million) 9.9% of total China 13% China 22% Central Asia 17% Middle East 11% Other 11% Russia 15% Central Asia 14% Middle East 9% Other 10% Russia 13% Mexico 33% Mexico 32% 12

14 US Export Volumes RTC million pounds, paws excluded Country thru Nov Mexico ,007 1,237 1,408 1,414 Angola Canada Russia 1, Cuba China Taiwan Hong Kong Iraq Georgia Other 2,236 3,008 3,287 3,294 3,108 2,887 Total 6,818 6,762 6,978 7,274 7,345 6,741 Source: ERS calculations using data from U.S. Department of Commerce, Bureau of the Census 13

15 Market Overview 14

16 Current Market Overview Broiler egg sets declined year over year during 2012; moved higher through 2013 and through 2014; pullet placements increasing Cold storage inventories remain manageable Retail grocery demand remains strong; prices near record levels Casual dining traffic remains weak but improving slightly (probably because of lower gasoline prices); jobs, consumer confidence and macro economic conditions are the key; new chicken items on QSR and casual dining menus helped demand last two summers High cost of competing protein has helped chicken demand Corn and soybean meal prices have moved lower compared to fiscal 2013; 2014 crop was a record; balance tables restocked headed into 2015 planting season Export market soft; Russian ban; China ban 15

17 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Pullet Placements Potential Breeder Placements 120% 115% 110% 105% 100% 95% 90% 85% 80% 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 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 % of Prior Year 108% 106% 104% 102% 100% 98% 96% 94% 92% Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 % of Prior Year 110% Broiler Eggs Set 220 Avg. Weekly Broiler Egg Sets 108% 106% 104% 102% % 98% 96% % YTD Source: USDA Current Year Prior Year 16

18 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 1,000 US Placements Jan 6,557 6,673 6,303 6, ,996 64,111 60,864 60,546 62,018 Feb 7,284 7,025 7,156 7, ,283 63,679 60,646 60,850 61,999 Mar 7,058 6,753 6,589 6, ,250 63,323 61,094 61,214 62,220 Apr 7,044 6,524 6,222 6, ,751 63,209 61,342 61,457 62,804 May 7,721 7,472 7,565 7, ,990 62,941 60,934 61,385 63,157 Jun 7,211 6,800 7,011 7, ,558 62,547 60,676 61,444 63,509 Jul 6,444 6,071 6,569 6, ,656 61,927 60,591 61,524 63,744 Aug 7,233 7,338 7,131 7, ,388 61,556 60,370 61,772 Sep 6,657 6,686 6,911 7, ,321 60,860 60,054 61,446 Oct 6,289 6,265 6,231 6, ,251 60,402 59,843 61,225 Nov 6,890 6,767 7,215 7, ,620 60,482 59,994 61,366 Dec 6,438 6,668 6,669 7, ,028 60,721 60,221 61,835 Annual Total 82,826 81,042 81,572 84, Source: USDA 17

19 Source: USDA USDA Broiler-Type Eggs Set (in thousands), 19 State Total Week End Week Ending Jan , , , , ,065 Jul , , , ,300 Jan , , , , ,529 Jul , , , ,414 Jan , , , , ,450 Jul , , , ,918 Jan , , , , ,857 Jul , , , ,751 Jan , , , ,539 Aug , , , ,587 Feb , , , ,206 Last 6 wks Aug , , , ,943 Feb , , , , vs 2014 Aug , , , ,276 Feb , , , , % Aug , , , ,515 Feb , , , ,828 Aug , , , ,108 Mar , , , ,824 Sep , , , ,044 Mar , , , ,408 Sep , , , ,100 Mar , , , ,460 Sep , , , ,448 Mar , , , ,659 Sep , , , ,019 Apr , , , ,743 Oct , , , ,727 Apr , , , ,529 Oct , , , ,199 Apr , , , ,307 Oct , , , ,603 Apr , , , ,559 Oct , , , ,331 May , , , ,783 Oct , , , ,821 May , , , ,123 Nov , , , ,278 May , , , ,866 Nov , , , ,953 May , , , ,656 Nov , , , ,106 May , , , ,667 Nov , , , ,155 Jun , , , ,523 Dec , , , ,102 Jun , , , ,256 Dec , , , ,785 Jun , , , ,197 Dec , , , ,175 Jun , , , ,948 Dec , , , ,946 Average 205, , , , ,925 18

20 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 707, , , ,131, ,350, ,226, Feb 674, , , ,931, ,839, ,992, Mar 699, , , ,060, ,992, ,120, Apr 683, , , ,986, ,252, ,260, May 749, , , ,370, ,366, ,254, Jun 706, , , ,135, ,000, ,265, Jul 722, , , ,166, ,370, ,418, Aug 760, , , ,419, ,383, ,244, Sep 663, , , ,899, ,128, ,385, Oct 745, , , ,435, ,615, ,680, Nov 674, , , ,011, ,941, ,910, Dec 642, , , ,801, ,117, ,443, Annual 8,428,847 8,503,750 8,522, ,349, ,357, ,202, Source: NASS, USDA - Poultry Slaughter Report 19

21 Chicken US Cold Storage Stocks, (1,000 pounds) 800,000 Total Chicken 750, , , , , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA

22 170, , , , , , , ,000 90,000 Chicken US Cold Storage Stocks, (1,000 pounds) Breasts & Breast Meat Wings 110, ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 80,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ,000 Leg Quarters 29,000 Whole Chickens 160,000 27, ,000 25, ,000 23, , , , ,000 21,000 19,000 17,000 15,000 13,000 90,000 11,000 80,000 9,000 70,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

23 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-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec Georgia Dock 5 Year Average Source: comtell.com 22

24 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-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 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-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec UB Boneless Skinless Breast (Approx. 9.4 million pounds/week assuming 23.95% yield*) UB Breast Tenders (Approx. 1.7 million pounds/week assuming 4.30% yield*) Year Average Year Average 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-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 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-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec UB Jumbo Wings (Approx. 3.1 million pounds/week assuming 7.75% yield*) UB Leg Quarters (Approx million pounds/week assuming % yield*) Year Average Year Average * Estimated pounds for BBDB plants based on target live weights and historical yields. Source: comtell.com 23

25 CBOT - CORN Source: CMEgroup.com 24

26 CBOT SOYBEAN MEAL Source: CMEgroup.com 25

27 Corn/Soy Sensitivity Quantity Purchased Hypothetical Price Change Fiscal 2013 Impact on Cash Ultimate Impact on COGS Corn 87.4 Million Bushels $0.10 / bushel $8.74 million $ / lb processed Soybean M 801,000 Tons $10.00 / ton $8.01 million $ / lb processed Quantity Purchased Hypothetical Price Change Fiscal 2014 Impact on Cash Ultimate Impact on COGS Corn 88.1 Million Bushels $0.10 / bushel $8.81 million $ / lb processed Soybean M 768,198 Tons $10.00 / ton $7.68 million $ / lb processed 26

28 Financial Summary 27

29 ($/Share) Strong Track Record of Financial Performance Pounds Sold 3,038 3,066 2,956 3,000 2,800 2,581 2,399 2,463 2, % 20.00% 15.00% Margins (in millions) 2,000 1,500 1,537 1,537 1,809 2, % 5.00% 0.00% 1, % % % Gross Profit Operating Income Net Income Earnings per Share $100 Stock Price $90 $80 $70 $60 $50 $40 (1.00) (0.57) $30 (3.00) (2.13) $20 (5.00) (7.00) (5.74) $10 $

30 $180 Capital Expenditures $160 $140 $120 $100 $80 $60 $40 $20 $ * Maintenance Waco Complex General Office Foods Collins Expansion Georgia Complex Kinston Complex Palestine Complex * Estimated 29

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