0 BMO Capital Markets New York Road Show New York, New York December 5, 2013
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.
The Company 2
3 We Are a Leading Chicken Producer Organized in 1947 Incorporated in 1955 Who We Are Vertically integrated in 1961 Initial public offering in 1987 3 rd largest poultry processor in the U.S. Current processing capacity of 9.375MM head/week
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 9/13 35.40 196.23 5.53 167.51 21.4% Pilgrim's Corporation 26 0/9 33.11 165.47 5.46 149.03 19.0% Sanderson Farms, Inc. 9 0/1 8.62 64.91 7.53 56.90 7.3% Perdue Farms Incorporated 12 3/4 12.01 68.16 5.67 54.71 7.0% Koch Foods, Inc. 8 4/1 12.00 61.20 5.10 48.00 6.1% Mountaire Farms, Inc. 3 5.79 44.93 7.76 39.26 5.0% Wayne Farms, LLC 8 0/2 5.65 41.88 7.41 36.65 4.7% Peco Foods, Inc. 5 1/1 4.82 30.46 7.30 23.05 2.9% House of Raeford Farms, Inc. 5 2/0 3.54 27.52 7.78 21.88 2.8% Foster Farms 5 5/2 5.84 35.46 6.07 20.92 2.7% Total Top 10 114 24/33 126.78 736.22 5.81 617.91 78.8% All Others 40 23/11 37.78 208.73 5.52 166.64 21.2% Total 154 47/44 164.56 944.95 5.71 784.55 100.0%
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 1961 625,000 5,406,250 4,865,750 Kinston, NC Laurel, MS 1965 625,000 5,406,250 4,865,750 Hammond, LA 1974 625,000 5,406,250 4,865,750 Collins, MS 1981 1,250,000 10,812,500 9,731,250 Waco, TX 2007 1,250,000 10,812,500 9,731,250 Waco, TX McComb, MS Jackson, MS Hazlehurst, MS Palestine, TX 2015(4) 1,250,000 10,812,500 9,731,250 Retail Total 5,625,000 48,656,250 43,791,000 McComb, MS 1993 1,250,000 8,312,500 7,148,750 Bryan, TX 1997 1,250,000 8,312,500 7,148,750 Moultrie, GA 2005 1,250,000 8,312,500 7,148,750 Kinston, NC 2011 1,250,000 8,312,500 7,148,750 Total 5,000,000 33,250,000 28,595,000 Expected Capacity 10,625,000 81,906,250 72,386,000 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) Under construction. Moultrie, GA Collins, MS Laurel, MS Hammond, LA Bryan, TX Palestine, TX (4) Big Bird Deboning Plants Retail Tray Pack Plants Prepared Chicken Plant
6 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Strong Track Record of Organic Growth 795 722 10% 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% 3,623 3,647 3,313 9% 1% 3,133 3,035 6% 2,959 3% 2,805 3% 5% 2,567 9% 6% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015* 2016* 2017* * Estimated. 6% production cut was restored during 3 rd Quarter of 2013. Assumes Palestine, TX opens January 2015, and reaches full production in March 2016.
7 Key Strengths Low Cost Producer As one of the industry s most efficient producers, well positioned to capture share Favorable Product Mix Announced new plant 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
8 Strong Portfolio of Customers Prepared Foods DELI
9 Strong Portfolio of Customers Big Bird Deboning / Foodservice
10 Tray Pack / Retail Strong Portfolio of Customers
11 Favorable Product Mix Operating Margin / Head (Cents) (1) Shift to Higher Margin Foodservice Market 80 70 60 50 40 30 20 10 0 (10) (20) (30) Mix (%) Tray Pack / BBD 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(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 Small Bird Tray Pack Big Bird Deboning Note: (1) Industry average. Calendar year. (2) YTD through September.
12 Export Destinations (SAFM) Fiscal 2012 Sales Pounds 621.3 (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%
US Export Volumes RTC million pounds, paws excluded Country 2009 2010 2011 2012 2013 YTD Sep Mexico 816 968 1,006 1,237 1,069 Russia 1,609 712 469 588 470 Angola 167 326 359 401 327 Canada 258 278 312 381 281 Cuba 321 313 218 333 244 Taiwan 154 223 217 261 150 Hong Kong 174 430 516 226 111 China 729 123 149 209 230 Kazakhstan 25 36 60 198 107 Lithuania 157 205 146 193 120 Other 2,409 3,151 3,514 3,246 2,382 Total 6,818 6,765 6,968 7,274 5,491 Source: ERS calculations using data from U.S. Department of Commerce, Bureau of the Census 13
Market Overview 14
15 Current Market Overview Broiler egg sets declined year over year during 2012; have moved higher through the spring, summer and fall of 2013; breeder flock remains constrained Cold storage inventories remain manageable Retail grocery demand remains steady Casual dining traffic remains weak; jobs, consumer confidence and macro economic conditions are the key; unemployment remains a drag; wing concepts remain strong; new chicken items on QSR and casual dining menus helped demand this past summer Corn and soybean meal prices have moved lower based on optimism about 2013 crops Export market steady
Dec-12 Nov-09 Jan-10 Dec-12 Mar-10 May-10 Jan-13 Jul-10 Sep-10 Mar-13 Nov-10 Jan-11 Mar-13 Mar-11 May-11 Apr-13 Jul-11 Sep-11 May-13 Nov-11 Jan-12 Jun-13 Mar-12 May-12 Jul-13 Jul-12 Sep-12 Aug-13 Nov-12 Jan-13 Sep-13 Mar-13 May-13 Oct-13 Jul-13 Sep-13 16 Pullet Placements Potential Breeder Placements 120% 115% 110% 105% 100% 95% 90% 85% 80% % of Prior Year Broiler Eggs Set 108% 106% 104% 102% 100% 98% 96% 94% 92% 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 % of Prior Year Avg. Weekly Broiler Egg Sets 110% 108% 106% 104% 102% 100% 98% 96% 220 215 210 205 200 208.6 211.9 210.8 214.8 208.6 200.3 205.7 198.3 198.3 94% 92% 195 194.1 90% 190 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD Source: USDA Current Year Prior Year
17 Intended Placements: Broiler-Type Pullet Chicks for Hatchery Supply Flocks by Month and Total, 2011-14 2011 2012 2013 Cumulative Potential Placements Month Pullet Chicks Hatched as % of as % of as % of Relative to Current Supply Flocks 2010 2011 2012 7-15 Months Earlier 2010 2011 2012 2013 2011 2012 2013 2014 1,000 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 6,303 99 102 94 62,996 64,111 60,864 60,546 Feb 7,021 7,284 7,025 7,156 104 96 102 63,283 63,679 60,646 60,850 Mar 6,673 7,058 6,753 6,589 106 96 98 63,250 63,323 61,094 61,214 Apr 6,825 7,044 6,524 6,222 103 93 95 63,751 63,209 61,342 61,457 May 8,351 7,721 7,472 7,565 92 97 101 63,990 62,941 60,934 61,385 Jun 7,128 7,211 6,800 7,011 101 94 103 64,558 62,547 60,676 Jul 6,675 6,444 6,071 6,569 97 94 108 64,656 61,927 60,591 Aug 7,313 7,233 7,338 7,131 99 101 97 64,388 61,556 60,370 Sep 7,128 6,657 6,686 6,911 93 100 103 63,321 60,860 60,054 Oct 6,876 6,289 6,265 6,231 91 100 99 63,251 60,402 59,843 Nov 7,589 6,890 6,767 91 98 63,620 60,482 59,994 Dec 6,771 6,438 6,668 95 104 64,028 60,721 60,221 Annual Total 84,987 82,826 81,042 97 98 Source: USDA
18 USDA Broiler-Type Eggs Set (in thousands) Week Ending 2010 2011 2012 2013 Week Ending 2010 2011 2012 2013 Jan 05 202,247 205,419 193,220 196,205 Jul 06 206,138 194,961 193,765 202,502 Jan 12 200,307 205,099 193,079 196,004 Jul 13 209,753 196,576 196,111 202,737 Jan 19 202,034 204,116 193,909 195,604 Jul 20 208,724 195,141 195,117 200,313 Jan 26 202,304 203,933 193,924 197,531 Jul 27 208,549 194,434 196,294 201,122 Feb 02 204,076 205,787 193,162 197,420 Aug 03 207,588 195,036 195,058 199,085 Feb 09 205,734 204,337 195,481 197,087 Aug 10 206,602 194,164 192,962 202,022 Feb 16 206,981 207,150 194,663 198,947 Aug 17 207,381 193,090 191,718 200,520 Feb 23 207,365 206,633 195,259 199,646 Aug 24 206,575 193,007 192,248 201,626 Mar 02 206,494 208,530 197,687 199,971 Aug 31 203,941 189,258 190,242 200,308 Mar 09 205,825 207,931 198,739 199,188 Sep 07 204,833 185,218 185,586 195,444 Mar 16 207,915 208,714 197,551 199,737 Sep 14 196,963 179,528 184,443 193,058 Mar 23 205,735 209,434 196,488 199,429 Sep 21 205,808 187,841 188,027 191,190 Mar 30 204,921 207,520 198,100 200,484 Sep 28 197,354 181,765 185,350 195,618 Apr 06 209,257 207,969 199,324 199,712 Oct 05 200,470 186,317 187,879 185,238 Apr 13 206,893 208,968 199,648 200,291 Oct 12 196,697 181,852 181,818 190,356 Apr 20 207,422 209,132 200,195 199,242 Oct 19 200,202 183,537 178,135 186,897 Apr 27 207,319 207,087 198,162 199,333 Oct 26 200,781 185,172 187,104 194,181 May 04 209,188 207,982 199,964 201,072 Nov 02 199,721 186,594 180,603 189,749 May 11 210,586 206,342 199,790 201,913 Nov 09 204,203 194,224 190,391 190,155 May 18 211,658 206,792 200,720 203,696 Nov 16 205,716 195,158 196,628 200,112 May 25 211,315 205,932 201,023 202,847 Nov 23 207,175 194,560 196,887 199,875 Jun 01 211,771 205,234 201,501 203,424 Nov 30 203,973 194,178 201,061 Jun 08 211,108 204,659 199,864 203,145 Dec 07 205,282 194,887 190,428 Last 6 weeks Jun 15 210,421 199,826 196,536 202,524 Dec 14 205,187 194,602 195,792 2013 vs 2012 Jun 22 211,324 198,340 195,500 202,006 Dec 21 205,240 195,380 197,196 102.8% Jun 29 207,492 197,158 195,717 200,840 Dec 28 203,224 192,967 195,303 Source: USDA Average 205,688 198,259 194,141 198,285
19 USDA Young Chickens Slaughtered by Month and Total, 2011-2013 2012 2013 2012 2013 Month Head as % of as % of Live Pounds as % of as % of 2011 2012 2011 2012 2011 2012 2013 2011 2012 2013 1,000 1,000 1,000 % % 1,000 Avg Wt 1,000 Avg Wt 1,000 Avg Wt % % Jan 713,525 707,215 734,645 99 104 4,176,056 5.85 4,131,497 5.84 4,349,498 5.92 99 105 Feb 659,359 674,192 650,086 102 96 3,799,518 5.76 3,931,177 5.83 3,838,905 5.91 103 98 Mar 764,270 699,277 679,656 91 97 4,397,350 5.75 4,060,986 5.81 3,992,344 5.87 92 98 Apr 686,762 683,191 720,296 99 105 3,953,271 5.76 3,986,151 5.83 4,252,247 5.90 101 107 May 745,396 749,248 743,372 101 99 4,330,769 5.81 4,370,321 5.83 4,366,772 5.87 101 100 Jun 752,493 706,126 679,873 94 96 4,370,138 5.81 4,135,595 5.86 4,000,638 5.88 95 97 Jul 699,465 722,612 748,382 103 104 4,035,393 5.77 4,166,439 5.77 4,370,339 5.84 103 105 Aug 767,360 760,582 742,973 99 98 4,436,343 5.78 4,419,889 5.81 4,383,333 5.90 100 99 Sep 721,908 663,470 694,104 92 105 4,240,244 5.87 3,899,244 5.88 4,127,927 5.95 92 106 Oct 701,599 745,981 768,220 106 103 4,124,746 5.88 4,435,745 5.95 4,611,919 6.00 108 104 Nov 666,201 674,146 101 3,879,516 5.82 4,011,475 5.95 103 Dec 658,722 642,807 98 3,809,326 5.78 3,801,045 5.91 100 Annual 8,537,060 8,428,847 99 49,552,670 5.80 49,349,564 5.85 100 Source: NASS, USDA - Poultry Slaughter Report
20 Total Frozen Chicken United States Cold Storage Stocks, 2010 2013 (1,000 pounds) 850,000 Total Chicken 800,000 750,000 700,000 650,000 600,000 550,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 2013 2012 2011 2010
21 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 Total Frozen Chicken United States Cold Storage Stocks, 2010 2013 (1,000 pounds) Breasts & Breast Meat 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 Wings 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 2013 2012 2011 2010 2013 2012 2011 2010 160,000 Leg Quarters 28,000 Whole Chickens 150,000 26,000 140,000 24,000 130,000 120,000 110,000 100,000 22,000 20,000 18,000 90,000 16,000 80,000 14,000 70,000 12,000 60,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 2013 2012 2011 2010 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2012 2011 2010
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-13 Aug-13 Oct-13 22 1.0800 1.0600 1.0400 1.0200 1.0000 0.9800 0.9600 0.9400 0.9200 0.9000 0.8800 0.8600 0.8400 0.8200 0.8000 Georgia Dock 5 Year Average -.9116 Source: comtell.com
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-13 Aug-13 Oct-13 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-13 Aug-13 Oct-13 23 2.1000 UB Boneless Skinless Breast (Approx. 8.0 million pounds/week assuming 22.50% yield) 2.1000 UB Breast Tenders (Approx. 1.6 million pounds/week assuming 4.50% yield) 2.0000 1.9000 5 Year Average - 1.4313 2.0000 1.9000 5 Year Average - 1.5093 1.8000 1.8000 1.7000 1.7000 1.6000 1.6000 1.5000 1.5000 1.4000 1.4000 1.3000 1.3000 1.2000 1.2000 1.1000 1.1000 1.0000 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-13 Aug-13 Oct-13 1.0000 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-13 Aug-13 Oct-13 1.8500 1.7000 UB Jumbo Wings (Approx. 2.7 million pounds/week assuming 7.65% yield) 0.5500 0.5000 UB Leg Quarters (Approx. 12.3 million pounds/week assuming 34.50 % yield) 1.5500 1.4000 1.2500 1.1000 0.4500 0.4000 0.3500 0.9500 0.8000 0.6500 5 Year Average 1.3096 0.3000 0.2500 5 Year Average -.4335 0.5000 0.2000 Source: comtell.com
24 CBOT - CORN Source: CMEgroup.com
25 CBOT SOYBEAN MEAL Source: CMEgroup.com
26 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 $0.0030 / lb processed Soybean M 766,000 Tons $10.00 / ton $7.66 million $0.0026 / lb processed Quantity Purchased Q3 Fiscal 2013 Hypothetical Price Change Impact on Cash Ultimate Impact on COGS Corn 23.5 Million Bushels $0.10 / bushel $2.35 million $0.0030 / lb processed Soybean M 215,000 Tons $10.00 / ton $2.15 million $0.0028 / lb processed
Financial Summary 27
28 Strong Track Record of Financial Performance (MM) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 ($/Share) Pounds Sold 2,800 2,399 2,463 2,581 2,049 1,809 1,537 1,537 2,956 3,033 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(1) Operating and Net Margin 8.00 6.07 6.00 4.62 3.53 3.91 3.94 3.71 4.00 2.35 2.00 0.00 (2.00) (0.57) (4.00) (2.13) (6.00) (8.00) (5.74) (2) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: (1) Estimated (2) Through three quarters EPS 25% 20% 15% 10% 5% 0% -5% -10% -15% (2) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gross Profit Operating Income Net Income
29 $180 Capital Expenditures $160 $140 $120 $100 $80 $60 $40 $20 $0 Note: 23.4 27.5 92.3 15.1 20.7 24.2 4.8 9.4 15.2 88.2 29.0 26.2 8.1 40.7 25.4 107.7 37.1 18.6 44.4 3.8 110.0 16.2 49.2 52.0 55.0 55.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015* * Estimated Maintenance Waco Complex General Office Foods Collins Expansion Georgia Complex Kinston Complex Palestine Complex
30