Goldman Sachs Non-Deal Road Show. Boston, Massachusetts

Transcription

1 Goldman Sachs Non-Deal Road Show Boston, Massachusetts April 12, 2017

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 MM head/week 3

5 Top 10 Poultry Companies for 2016 All Other 42.6% Tyson 20.0% Source: WATT PoultryUSA Survey March 2017 Pilgrim's 16.3% Sanderson 8.3% 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 32 10/ % Pilgrim's 24 0/ % Sanderson Farms, Inc. 10 1/ % Perdue Foods 11 3/ % Koch Foods, Inc. 8 4/ % Wayne Farms, LLC 9 0/ % Mountaire Farms, Inc % Peco Foods 6 1/ % House of Raeford Farms, Inc. 5 2/ % Keystone Foods, LLC 3 0/ % Total Top / % All Others 40 27/ % Total / , % Koch 5.7% Perdue 7.2% 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 5,118,750 Laurel, MS ,000 5,625,000 5,118,750 Hammond, LA ,000 5,625,000 5,118,750 Collins, MS ,250,000 11,250,000 10,237,500 Waco, TX ,250,000 11,250,000 10,237,500 Palestine, TX ,250,000 11,250,000 10,237,500 St. Pauls, NC ,250,000 11,250,000 10,237,500 Retail Total 6,875,000 61,875,000 56,306,250 McComb, MS ,250,000 8,437,500 7,425,000 Bryan, TX ,250,000 8,437,500 7,425,000 Waco, TX Tyler, TX McComb, MS Jackson, MS Hazlehurst, MS Kinston, NC St. Pauls, NC Moultrie, GA Moultrie, GA ,250,000 8,437,500 7,425,000 Kinston, NC ,250,000 8,437,500 7,425,000 Tyler, TX 2019(4) 1,250,000 8,437,500 7,425,000 Total 6,250,000 42,187,500 37,125,000 Expected Capacity 13,125, ,062,500 93,431,250 Bryan, TX Collins, MS Laurel, MS Hammond, LA Palestine, TX Prepared Chicken Plant Jackson, MS 1986 Note: (1) Capacity measured in head/week. (2) Based on target live weights. (3) Based on historical yields. (4) Expected to open 1st Quarter of Big Bird Deboning Plants Prepared Chicken Plant Retail Tray Pack Plants 5

7 ,077 1,167 1,308 1,437 1,530 1,580 1,802 2,025 2,441 2,426 2,567 2,805 2,959 3,041 3,058 3,441 3,765 4,157 4,321 4,446 4,683 5,000 4,500 4,000 3,500 Strong Track Record of Organic Growth Pounds Processed (millions) 4% 3% 10% 9% 13% 5% 3,000 9% 5% 3% 1% 2,500 21% -1% 6% 2,000 14% 12% 1,500 1,000 10% 24% 9% 8% 12% 10% 6% 3% *2018*2019*2020* * Estimated. Assumes St. Pauls, NC reaches full production in 1 st Quarter Assumes Tyler, TX opens 1 st Quarter 2019 and reaches full production in 2 nd Quarter

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 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

12 130 Favorable Product Mix (2) 0% 48% 52% 0% 41% 59% 0% 40% 60% 0% 38% 62% 0% 42% 58% 0% 45% 55% 0% 46% 54% 0% 47% 53% 0% 44% 56% 0% 41% 59% 0% 39% 61% 120 Industry Average Operating Margin, Cents per Head (1) (10) (20) Small Bird Tray Pack Big Bird Deboning (3) Notes: (1) Agri Stats, calendar year. (2) SAFM s % of pounds processed, fiscal year. (3) Margin-calendar YTD Feb, Mix-fiscal Q1 11

13 100 Industry Average Operating Margin, Cents per Head (1) (10) (20) Russian embargo Avian influenza $8 corn; recession Drought induced high grain prices; oversupply Note: (1) Agri Stats, calendar quarters. 12

14 Export Destinations (SAFM) Fiscal 2016 Sales Pounds (million) 19.6% of total Gross Sales Dollars $213.5 (million) 7.4% of total Middle East Middle East 6% Other 6% Other 5% 5% Central Asia Central Asia Africa 13% 12% 4% Africa 4% Mexico 72% Mexico 73% 13

15 160% Strengthening U.S. Dollar 150% 140% 130% 120% 110% 100% 90% Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 USD Index Euro Canadian Dollar Brazilian Real Mexican Peso Source: Bloomberg 14

16 Domestic US Chicken Consumption January & February in thousands Impact on Change % Change US Cons Source Head Processed 1,399,242 1,428,784 29, % USDA Poultry Slaughter Bird Weight (0.00) -0.1% USDA Poultry Slaughter Total Live Pounds 8,651,533 8,828, , % USDA Poultry Slaughter Beg Stocks 853, ,824 (58,158) -6.8% -1.1% USDA Cold Storage Ready to Cook Pounds 6,513,439 6,649, , % 2.5% USDA Poultry Slaughter Exports 1,108,254 1,180,326 72, % -1.3% USDA Chicken Exports End Stocks 793, ,292 (13,562) -1.7% 0.2% USDA Cold Storage Domestic Consumption 5,465,313 5,485,048 19, % 0.4% Domestic US Chicken Consumption January thru December in thousands % Change (Est) 2017 (Proj) 15 vs vs 17 Source Beg Stocks Less Paws 680, , , % -6.5% USDA WASDE - Mar 2017 Ready to Cook Pounds 39,620,000 40,260,000 41,081, % 2.0% USDA WASDE - Mar 2017 Imports 131, , , % 6.9% USDA WASDE - Mar 2017 Exports, No Paws 6,321,000 6,647,000 6,925, % 4.2% USDA WASDE - Mar 2017 End Stocks Less Paws 832, , , % -4.2% USDA WASDE - Mar 2017 Domestic Consumption 33,278,000 33,798,000 34,329, % 1.6% USDA WASDE - Mar 2017 Per Capita % 0.7% USDA WASDE - Mar

17 Market Overview 16

18 Current Market Overview Supply Broiler egg sets increased in 2015 and 2016 Pullet placements increased in 2015; continued to increase in 2016, perhaps for export market and has since moderated Cold Storage Cold storage inventories now lower than a year ago Leg quarter inventories lower compared to 2015 Demand Retail grocery demand remains strong; supply steady Casual dining traffic improved in 2015 (probably because of lower gasoline prices); flat to lower during 2016; lower again in Q1 of 2017 Jobs, consumer confidence and macro economic conditions are the key Competing Meats Wholesale pork and beef prices now lower Retail spread between chicken and red meat still wide, but lower Exports Export market improved Avian influenza Strong US Dollar Geopolitical environment a question 17

19 Dec 31 Jan 21 Feb 11 Mar 04 Mar 25 Apr 15 May 06 May 27 Jun 17 Jul 08 Jul 29 Aug 19 Sep 09 Sep 30 Oct 21 Nov 11 Dec 02 Dec 23 Broiler-Type Hatching Egg Layers (thousands) Broiler-Type Eggs Set (millions) Pullet Placements Potential Breeder Placements 9,000 72,000 Broiler-Type Pullet Chicks Hatched (thousands) 8,500 8,000 7,500 7,000 6,500 Broiler-Type Cumulative Potential Placements (thousands) 70,000 68,000 66,000 64,000 62,000 60,000 6,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10-Yr High-Low Range 10-Yr Median ,000 Layers 58, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10-Yr High-Low Range 10-Yr Median Broiler Eggs Set 58, , , , , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10-Yr High-Low Range 10-Yr Median Yr High-Low Range 10-Yr Median Source: USDA 18

20 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 Jan 6,470 6,944 6,726 7, ,864 60,546 62,018 65,531 68,864 Feb 7,239 7,892 8,098 7, ,646 60,850 61,999 66,136 69,731 Mar 6,790 7,160 8, ,094 61,214 62,220 66,452 70,191 Apr 6,710 6,995 7, ,342 61,457 62,804 68,230 70,256 May 7,600 7,541 8, ,934 61,385 63,157 68,149 70,439 Jun 7,094 7,790 8, ,676 61,444 63,509 67,487 70,051 Jul 6,212 7,428 7, ,591 61,524 63,514 67,871 69,443 Aug 7,436 7,907 7, ,370 61,772 63,763 67,602 68,991 Sep 7,253 8,573 7, ,054 61,446 64,084 68,159 68,740 Oct 6,823 6,863 6, ,843 61,225 64,150 68,512 Nov 7,591 7,230 7, ,994 61,366 64,933 68,699 Dec 6,795 7,544 7, ,221 61,835 65,038 68,875 Total 84,013 89,867 92,410 14, Source: USDA 19

21 USDA Layers in Inventory on First Day of the Month by Month and Total, Month Broiler-Type Hatching Layers as % of as % of ,000 1,000 1,000 Percent Percent Jan 53,699 54,797 54, Feb 53,844 54,952 54, Mar 53,830 55,510 55, Apr 54,913 54, May 55,011 54, Jun 55,600 54, Jul 54,829 54, Aug 54,754 54, Sep 54,570 53, Oct 54,288 53, Nov 54,434 53, Dec 54,481 54, Average 54,521 54, Source: USDA 20

22 USDA Broiler-Type* Eggs Set (in thousands), 19 State Total W/E Date W/E Date Dec , , , , , , ,668 Jul , , , , , ,050 Jan , , , , , , ,212 Jul , , , , , ,153 Jan , , , , , , ,003 Jul , , , , , ,812 Jan , , , , , , ,171 Jul , , , , , ,288 Jan , , , , , , ,180 Jul , , , , , ,816 Feb , , , , , , ,495 Aug , , , , , ,966 Feb , , , , , , ,885 Aug , , , , , ,206 Feb , , , , , , ,518 Aug , , , , , ,100 Feb , , , , , , ,271 Aug , , , , , ,793 Mar , , , , , , ,001 Sep , , , , , ,985 Mar , , , , , , ,193 Sep , , , , , ,928 Mar , , , , , , ,245 Sep , , , , , ,797 Mar , , , , , , ,243 Sep , , , , , ,269 Apr , , , , , , ,765 Sep , , , , , ,691 Apr , , , , , ,869 Oct , , , , , ,041 Apr , , , , , ,568 Last 6 wks Oct , , , , , ,841 Apr , , , , , , vs 2016 Oct , , , , , ,645 Apr , , , , , , % Oct , , , , , ,544 May , , , , , ,557 Nov , , , , , ,112 May , , , , , ,102 Nov , , , , , ,376 May , , , , , ,446 Nov , , , , , ,733 May , , , , , ,075 Nov , , , , , ,032 Jun , , , , , ,782 Dec , , , , , ,087 Jun , , , , , ,576 Dec , , , , , ,837 Jun , , , , , ,080 Dec , , , , , ,797 Jun , , , , , ,504 Dec , , , , , ,564 Average 212, , , , , , ,698 * Broiler-Type: Chicks or chickens of meat-type strains for meat or other uses, such as breeding or research. Source: USDA 21

23 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan % -3.5% -3.0% -2.9% -2.8% -2.8% -2.6% -2.2% -2.0% -2.1% -2.2% -1.8% -1.5% -0.9% -1.0% -1.0% -0.8% -0.9% -1.0% -1.0% -1.0% -1.0% -0.6% -0.4% -0.5% -0.3% -0.3% 0.1% 0.1% 0.0% 0.2% 0.3% 0.3% 0.4% 0.5% 0.4% 0.6% US Hatching Egg Exports to Mexico Hatching Egg Exports to Mexico Impact on US Hatching Egg Supply 5, % 5,000 4, % 4,000 3, % 3,000 2, % 2, % 1,500 1,000 0% % Dozens of Eggs (thousands) Y/Y Source: USDA 22

24 US Hatching Eggs* Exports Hatch Egg Exports to: Mexico Canada ROW World % of Required % of Total % of Required % of Total % of Required % of Total % of Required % of Total Dozens Prior Layers Layers Dozens Prior Layers Layers Dozens Prior Layers Layers Dozens Prior Layers Layers Feb-15 2,433, % 1, % 839,122 92% % 2,050, % 1, % 5,322, % 3, % Mar-15 3,172, % 2, % 1,121, % % 2,238, % 1, % 6,533, % 4, % Apr-15 3,371, % 2, % 985,877 97% % 2,395, % 1, % 6,753, % 4, % May-15 2,999, % 1, % 1,004, % % 2,333, % 1, % 6,338, % 4, % Jun-15 4,239, % 2, % 920, % % 2,503, % 1, % 7,664, % 5, % Jul-15 4,274, % 2, % 925,419 97% % 2,355, % 1, % 7,555, % 4, % Aug-15 4,409, % 2, % 1,012, % % 2,006, % 1, % 7,428, % 4, % Sep-15 4,140, % 2, % 1,102, % % 2,194, % 1, % 7,437, % 4, % Oct-15 4,775, % 3, % 811,934 98% % 2,485, % 1, % 8,072, % 5, % Nov-15 3,919, % 2, % 802, % % 2,117, % 1, % 6,839, % 4, % Dec-15 4,287, % 2, % 871,700 95% % 2,246, % 1, % 7,406, % 4, % Jan-16 3,884, % 2, % 1,085, % % 1,921,837 86% 1, % 6,891, % 4, % Feb-16 3,999, % 2, % 1,038, % % 1,704,524 83% 1, % 6,742, % 4, % Mar-16 4,161, % 2, % 1,052,037 94% % 2,138,697 96% 1, % 7,352, % 4, % Apr-16 3,633, % 2, % 1,176, % % 1,740,812 73% 1, % 6,550,844 97% 4, % May-16 3,994, % 2, % 1,119, % % 1,671,444 72% 1, % 6,784, % 4, % Jun-16 4,036,020 95% 2, % 902,018 98% % 1,391,335 56% % 6,329,373 83% 4, % Jul-16 4,026,090 94% 2, % 941, % % 1,388,265 59% % 6,355,373 84% 4, % Aug-16 5,389, % 3, % 938,187 93% % 1,381,478 69% % 7,709, % 4, % Sep-16 4,568, % 2, % 958,166 87% % 1,820,737 83% 1, % 7,347,634 99% 4, % Oct-16 4,353,913 91% 2, % 918, % % 1,829,379 74% 1, % 7,102,222 88% 4, % Nov-16 4,191, % 2, % 885, % % 1,287,019 61% % 6,364,013 93% 4, % Dec-16 4,287, % 2, % 974, % % 1,349,274 60% % 6,611,114 89% 4, % Jan-17 3,639,153 94% 2, % 1,404, % % 1,667,787 87% 1, % 6,711,710 97% 4, % Feb-17 3,449,619 86% 2, % 1,145, % % 1,263,690 74% % 5,858,621 87% 4, % * Includes all chicken eggs, fertilized for incubation Source: USDA 23

25 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 724, , , ,432, ,330, ,644, Feb 654, , , ,982, ,321, ,184, Mar 741, , ,503, ,683, Apr 725, , ,436, ,379, May 704, , ,304, ,601, Jun 747, , ,550, ,632, Jul 762, , ,609, ,313, Aug 740, , ,534, ,823, Sep 748, , ,623, ,584, Oct 743, , ,602, ,535, Nov 674, , ,159, ,429, Dec 720, , ,428, ,395, Annual 8,688,465 8,767,431 1,428, ,168, ,031, ,828, Source: USDA 24

26 6.30 U.S. Broiler Live Weights (lbs) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 25

27 Pounds (thousands) Chicken US Cold Storage Stocks, (1,000 pounds) 900,000 Total Chicken 850, , , , , , , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 26

28 Pounds (thousands) Pounds (thousands) Pounds (thousands) 200, , , , , , , , , , ,000 90,000 Chicken US Cold Storage Stocks, (1,000 pounds) Breasts & Breast Meat Wings 110, ,000 Pounds (thousands) 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 180,000 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 7,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA 27

29 4-Jan 25-Jan 15-Feb 7-Mar 28-Mar 18-Apr 9-May 30-May 20-Jun 11-Jul 1-Aug 22-Aug 12-Sep 3-Oct 24-Oct 14-Nov 5-Dec 26-Dec Georgia Dock Yr High-Low Range 10-Yr Median Source: comtell.com 28

30 2-Jan 23-Jan 13-Feb 6-Mar 27-Mar 17-Apr 8-May 29-May 19-Jun 10-Jul 31-Jul 21-Aug 11-Sep 2-Oct 23-Oct 13-Nov 4-Dec 25-Dec 2-Jan 23-Jan 13-Feb 6-Mar 27-Mar 17-Apr 8-May 29-May 19-Jun 10-Jul 31-Jul 21-Aug 11-Sep 2-Oct 23-Oct 13-Nov 4-Dec 25-Dec UB Boneless Skinless Breast (Approx million pounds/week assuming 23.95% yield*) 2-Jan 23-Jan 13-Feb 6-Mar 27-Mar 17-Apr 8-May 29-May 19-Jun 10-Yr High-Low Range 10-Yr Median UB Jumbo Wings (Approx. 4.8 million pounds/week assuming 7.75% yield*) 10-Jul 31-Jul 21-Aug 11-Sep 2-Oct 23-Oct 13-Nov 4-Dec 25-Dec UB Breast Tenders (Approx. 2.7 million pounds/week assuming 4.30% yield*) 2-Jan 23-Jan 13-Feb 6-Mar 27-Mar 17-Apr 8-May 29-May 19-Jun 10-Jul 31-Jul 21-Aug 11-Sep 2-Oct 23-Oct 13-Nov 4-Dec 25-Dec 10-Yr High-Low Range 10-Yr Median UB Leg Quarters (Approx million pounds/week assuming 34.90% yield*) Yr High-Low Range 10-Yr Median Yr High-Low Range 10-Yr Median Source: comtell.com * Estimated pounds for BBDB plants based on target live weights and historical yields. 29

31 Chicken Market History Current GA Dock n/a n/a Boneless Breast Tender Small Wing Jumbo Wing Leg Quarter Boneless Thigh Thighs Drumsticks Source: comtell.com 30

32 Est 2017 Est Cents/pound Pounds 650 Retail Meat Prices US Per Capita Consumption Choice Beef Pork Composite Broiler Beef Pork Broilers Source: USDA 31

33 Live Cattle Lean Hogs 32

34 Corn Soy 33

35 SAFM Feed Cost, Cents per Processed Pound Corn/Soy Sensitivity Quantity Purchased Hypothetical Price Change Fiscal 2016 Impact on Cash Ultimate Impact on COGS Corn Million Bushels $1.00 / bushel $104.5 million $ / lb processed Soybean Meal 961,074 Tons $10.00 / ton $9.6 million $ / lb processed Quantity Purchased Fiscal st Quarter Hypothetical Price Change Impact on Cash Ultimate Impact on COGS Corn 27.5 Million Bushels $1.00 / bushel $27.5 million $ / lb processed Soybean Meal 252,396 Tons $10.00 / ton $2.5 million $ / lb processed 34

36 Financial Summary 35

37 ($/Share) (in millions) Strong Track Record of Financial Performance Poultry Pounds Sold 4,000 3,765 3,455 3,500 2,956 3,038 3,066 3,000 2,800 2,399 2,463 2,581 2,500 2,049 2,000 1,809 1,537 1,537 1,500 1, (1) 4, % Margins 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% % % (2) Gross Profit Operating Income Net Income Earnings per Share $100 $90 Stock Price (1.00) (0.57) $80 $70 $60 $50 $40 $30 (3.00) (2.13) $20 (5.00) (7.00) (5.74) (2) $10 $ Note: (1) Estimated (2) Through first quarter 36

38 $260 $240 Capital Expenditures and Depreciation & Amortization (in millions) $220 $200 $180 $160 $ $ $ $ $60 $ $20 $ * Maintenance Depreciation Georgia Complex General Office Prepared Foods Collins Expansion Waco Complex Kinston Complex Palestine Complex St. Pauls Complex Tyler Complex * Estimated 37

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