Sidoti & Company, LLC West Coast Road Show San Francisco, California February 4, 2015
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
The Company 2
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 3
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 9/13 36.00 201.48 5.60 168.00 21.3% Pilgrim's Corporation 25 0/9 32.88 178.32 5.54 138.33 17.5% Sanderson Farms, Inc. 9 0/1 8.70 66.19 7.61 58.47 7.4% Perdue Farms Incorporated 12 3/4 12.34 69.79 5.66 56.20 7.1% Koch Foods, Inc. 8 4/1 12.00 61.20 5.10 48.00 6.1% Wayne Farms, LLC 9 0/2 6.30 48.54 7.70 42.89 5.4% Mountaire Farms, Inc. 3 5.97 46.71 7.83 41.04 5.2% Peco Foods, Inc. 5 1/1 4.00 31.62 7.94 23.93 3.0% House of Raeford Farms, Inc. 5 2/0 3.43 28.84 8.41 23.48 3.0% Foster Farms 5 5/2 5.84 35.65 6.10 21.03 2.7% Total Top 10 114 24/33 127.46 768.34 6.03 621.37 78.7% All Others 40 23/10 38.28 211.69 5.53 168.14 21.3% Total 154 47/43 165.74 980.03 5.79 789.51 100.0% 4
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 5,625,000 5,062,500 Laurel, MS 1965 625,000 5,625,000 5,062,500 Hammond, LA 1974 625,000 5,625,000 5,062,500 Collins, MS 1981 1,250,000 11,250,000 10,125,000 Waco, TX 2007 1,250,000 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 1993 1,250,000 8,437,500 7,256,250 Bryan, TX 1997 1,250,000 8,437,500 7,256,250 Waco, TX McComb, MS Jackson, MS Hazlehurst, MS Kinston, NC Moultrie, GA Moultrie, GA 2005 1,250,000 8,437,500 7,256,250 Kinston, NC 2011 1,250,000 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, 2015. Big Bird Deboning Plants Prepared Chicken Plant Retail Tray Pack Plants 5
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 1,000 500 722 795 10% 986 1,077 1,167 24% 9% 8% 1,308 12% 1,437 1,530 1,580 10% 6% 3% 14% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 2018* * Estimated. Assumes Palestine, TX opens February 2015, and reaches full production in March 2016. 6% production cut was restored during 3 rd Quarter of 2013. 6
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
Prepared Foods Strong Portfolio of Customers 8
Strong Portfolio of Customers Big Bird Deboning / Foodservice 9
Tray Pack / Retail Strong Portfolio of Customers 10
Operating Margin / Head (Cents) (1) 110 100 90 80 70 60 50 40 30 20 10 0 (10) (20) (30) Mix (%) Tray Pack / BBD Favorable Product Mix Shift to Higher Margin Foodservice Market 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 57/43 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 2014 53/47 53/47 53/47 (2) 11
Export Destinations (SAFM) Fiscal 2014 Sales Pounds 592.4 (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
US Export Volumes RTC million pounds, paws excluded Country 2009 2010 2011 2012 2013 2014 thru Nov Mexico 816 965 1,007 1,237 1,408 1,414 Angola 167 326 359 401 456 470 Canada 258 278 312 381 372 329 Russia 1,609 712 469 588 609 317 Cuba 321 313 218 333 306 286 China 729 123 150 209 288 240 Taiwan 154 223 218 261 212 220 Hong Kong 174 430 516 226 158 215 Iraq 223 186 225 162 238 184 Georgia 132 198 215 182 191 179 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
Market Overview 14
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
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% 215 210 205 208.6 211.9 210.8 214.8 208.6 205.8 202.9 206.0 100% 98% 96% 200 195 200.3 198.3 195.0 199.6 94% 190 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Source: USDA Current Year Prior Year 16
Intended Placements: Broiler-Type Pullet Chicks for Hatchery Supply Flocks by Month and Total, 2011-15 2012 2013 2014 Cumulative Potential Placements Month Pullet Chicks Hatched as % of as % of as % of Relative to Current Supply Flocks 2011 2012 2013 7-15 Months Earlier 2011 2012 2013 2014 2011 2012 2013 2014 2015 1,000 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 6,470 102 94 103 62,996 64,111 60,864 60,546 62,018 Feb 7,284 7,025 7,156 7,239 96 102 101 63,283 63,679 60,646 60,850 61,999 Mar 7,058 6,753 6,589 6,790 96 98 103 63,250 63,323 61,094 61,214 62,220 Apr 7,044 6,524 6,222 6,710 93 95 108 63,751 63,209 61,342 61,457 62,804 May 7,721 7,472 7,565 7,600 97 101 100 63,990 62,941 60,934 61,385 63,157 Jun 7,211 6,800 7,011 7,094 94 103 101 64,558 62,547 60,676 61,444 63,509 Jul 6,444 6,071 6,569 6,212 94 108 95 64,656 61,927 60,591 61,524 63,744 Aug 7,233 7,338 7,131 7,436 101 97 104 64,388 61,556 60,370 61,772 Sep 6,657 6,686 6,911 7,253 100 103 105 63,321 60,860 60,054 61,446 Oct 6,289 6,265 6,231 6,823 100 99 110 63,251 60,402 59,843 61,225 Nov 6,890 6,767 7,215 7,591 98 107 105 63,620 60,482 59,994 61,366 Dec 6,438 6,668 6,669 7,025 104 100 105 64,028 60,721 60,221 61,835 Annual Total 82,826 81,042 81,572 84,243 98 101 103 Source: USDA 17
Source: USDA USDA Broiler-Type Eggs Set (in thousands), 19 State Total Week End 2011 2012 2013 2014 2015 Week Ending 2011 2012 2013 2014 Jan 03 205,691 193,911 197,214 199,379 206,065 Jul 04 194,961 194,569 203,441 204,300 Jan 10 205,186 193,837 197,137 201,500 205,529 Jul 11 196,576 197,070 203,754 206,414 Jan 17 204,327 194,639 196,454 199,325 206,450 Jul 18 195,141 195,872 201,322 206,918 Jan 24 203,989 194,747 198,499 200,647 205,857 Jul 25 194,434 197,132 202,055 205,751 Jan 31 205,787 193,933 198,372 200,539 Aug 01 195,036 195,916 200,263 205,587 Feb 07 204,205 196,245 198,238 199,206 Last 6 wks Aug 08 194,164 193,853 202,910 204,943 Feb 14 207,066 195,514 199,781 199,653 2015 vs 2014 Aug 15 193,090 192,619 201,531 205,276 Feb 21 206,605 196,112 200,779 199,905 102.7% Aug 22 193,007 193,195 202,613 205,515 Feb 28 208,567 198,403 201,085 201,828 Aug 29 189,258 191,168 201,413 204,108 Mar 07 207,931 199,320 200,301 202,824 Sep 05 185,218 186,534 195,381 202,044 Mar 14 208,714 198,233 200,864 202,408 Sep 12 179,528 185,520 194,249 200,100 Mar 21 209,434 197,270 200,508 200,460 Sep 19 187,841 188,784 192,192 197,448 Mar 28 207,520 198,809 201,485 201,659 Sep 26 181,765 186,045 196,846 201,019 Apr 04 207,969 200,075 200,610 203,743 Oct 03 186,317 188,891 186,077 194,727 Apr 11 208,968 200,419 201,544 204,529 Oct 10 181,852 182,710 191,350 199,199 Apr 18 209,132 200,975 200,039 205,307 Oct 17 183,537 178,934 187,859 195,603 Apr 25 207,087 199,040 200,234 203,559 Oct 24 185,172 187,862 194,990 198,331 May 02 207,982 200,942 201,984 203,783 Oct 31 186,594 181,406 190,888 194,821 May 09 206,342 200,357 202,803 203,123 Nov 07 194,224 191,285 192,486 199,278 May 16 206,792 201,588 204,579 204,866 Nov 14 195,158 197,546 202,412 208,953 May 23 205,932 201,727 203,766 205,656 Nov 21 194,560 197,725 201,388 209,106 May 30 205,234 202,395 204,291 206,667 Nov 28 194,178 202,174 202,619 209,155 Jun 06 204,659 200,840 204,076 205,523 Dec 05 194,887 191,138 200,906 205,102 Jun 13 199,826 197,346 203,422 203,256 Dec 12 194,602 196,354 202,293 206,785 Jun 20 198,340 196,546 203,017 205,197 Dec 19 195,380 197,911 202,090 207,175 Jun 27 197,158 196,572 201,788 203,948 Dec 26 192,967 196,247 201,475 205,946 Average 205,975 198,267 194,966 199,571 202,925 18
USDA Young Chickens Slaughtered by Month and Total, 2012-2014 2013 2014 2013 2014 Month Head as % of as % of Live Pounds as % of as % of 2012 2013 2012 2013 2012 2013 2014 2012 2013 2014 1,000 1,000 1,000 % % 1,000 Avg Wt 1,000 Avg Wt 1,000 Avg Wt % % Jan 707,215 734,639 704,432 104 96 4,131,497 5.84 4,350,217 5.92 4,226,487 6.00 105 97 Feb 674,192 649,727 664,590 96 102 3,931,177 5.83 3,839,339 5.91 3,992,540 6.01 98 104 Mar 699,277 679,303 689,189 97 101 4,060,986 5.81 3,992,487 5.88 4,120,110 5.98 98 103 Apr 683,191 719,688 711,014 105 99 3,986,151 5.83 4,252,051 5.91 4,260,061 5.99 107 100 May 749,248 743,372 712,142 99 96 4,370,321 5.83 4,366,772 5.87 4,254,278 5.97 100 97 Jun 706,126 679,881 712,605 96 105 4,135,595 5.86 4,000,691 5.88 4,265,976 5.99 97 107 Jul 722,612 748,385 743,158 104 99 4,166,439 5.77 4,370,093 5.84 4,418,499 5.95 105 101 Aug 760,582 742,973 709,909 98 96 4,419,889 5.81 4,383,333 5.90 4,244,342 5.98 99 97 Sep 663,470 694,243 731,821 105 105 3,899,244 5.88 4,128,872 5.95 4,385,388 5.99 106 106 Oct 745,981 768,507 770,431 103 100 4,435,745 5.95 4,615,229 6.01 4,680,099 6.07 104 101 Nov 674,146 655,869 644,616 97 98 4,011,475 5.95 3,941,014 6.01 3,910,929 6.07 98 99 Dec 642,807 687,163 728,227 107 106 3,801,045 5.91 4,117,659 5.99 4,443,540 6.10 108 108 Annual 8,428,847 8,503,750 8,522,134 101 100 49,349,564 5.85 50,357,757 5.92 51,202,249 6.01 102 102 Source: NASS, USDA - Poultry Slaughter Report 19
Chicken US Cold Storage Stocks, 2011-2014 (1,000 pounds) 800,000 Total Chicken 750,000 700,000 650,000 600,000 550,000 500,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 2014 2013 2012 2011 20
170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 Chicken US Cold Storage Stocks, 2011-2014 (1,000 pounds) Breasts & Breast Meat Wings 110,000 100,000 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 2014 2013 2012 2011 2014 2013 2012 2011 170,000 Leg Quarters 29,000 Whole Chickens 160,000 27,000 150,000 25,000 140,000 23,000 130,000 120,000 110,000 100,000 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 2014 2013 2012 2011 7,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2013 2012 2011 21
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 1.1600 1.1400 1.1200 1.1000 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 -.9687 Source: comtell.com 22
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-14 2.1000 UB Boneless Skinless Breast (Approx. 9.4 million pounds/week assuming 23.95% yield*) 2.4000 UB Breast Tenders (Approx. 1.7 million pounds/week assuming 4.30% yield*) 2.0000 1.9000 5 Year Average - 1.5023 2.3000 2.2000 2.1000 5 Year Average - 1.6083 1.8000 1.7000 2.0000 1.9000 1.8000 1.6000 1.7000 1.5000 1.4000 1.6000 1.5000 1.4000 1.3000 1.2000 1.3000 1.2000 1.1000 1.1000 1.0000 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-14 1.9000 UB Jumbo Wings (Approx. 3.1 million pounds/week assuming 7.75% yield*) 0.5500 UB Leg Quarters (Approx. 13.7 million pounds/week assuming 34.90 % yield*) 1.8000 1.7000 0.5000 1.6000 1.5000 1.4000 0.4500 1.3000 1.2000 0.4000 1.1000 1.0000 0.9000 0.8000 5 Year Average 1.2866 0.3500 0.3000 5 Year Average -.4504 0.7000 0.6000 0.2500 * Estimated pounds for BBDB plants based on target live weights and historical yields. Source: comtell.com 23
CBOT - CORN Source: CMEgroup.com 24
CBOT SOYBEAN MEAL Source: CMEgroup.com 25
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 $0.0028 / lb processed Soybean M 801,000 Tons $10.00 / ton $8.01 million $0.0026 / 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 $0.0029 / lb processed Soybean M 768,198 Tons $10.00 / ton $7.68 million $0.0025 / lb processed 26
Financial Summary 27
($/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 2,500 25.00% 20.00% 15.00% Margins (in millions) 2,000 1,500 1,537 1,537 1,809 2,049 10.00% 5.00% 0.00% 1,000-5.00% 500-10.00% 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-15.00% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Gross Profit Operating Income Net Income 11.00 Earnings per Share 10.80 $100 Stock Price 9.00 7.00 5.00 3.00 1.00 4.62 3.53 3.91 3.94 6.07 2.35 5.68 $90 $80 $70 $60 $50 $40 (1.00) (0.57) $30 (3.00) (2.13) $20 (5.00) (7.00) (5.74) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $10 $- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 28
$180 Capital Expenditures $160 $140 $120 $100 $80 $60 $40 $20 $0 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 5.7 44.4 49.2 48.8 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Maintenance Waco Complex General Office Foods Collins Expansion Georgia Complex Kinston Complex Palestine Complex 104.6 66.4 39.9 61.6 * Estimated 29