Pilgrim's Pride Corporation · NASDAQ:PPC
Pilgrim's Pride — Investor Presentation (December 2017)
37 slides from Pilgrim's Pride's investor presentation, Dec 5, 2017
Slide 1: Investor Presentation December 2017
Investor Presentation December 2017 Pilgrim’s Pride Corporation (NASDAQ: PPC)
Slide 2: Cautionary Notes and Forward-Looking Statements
Cautionary Notes and Forward-Looking Statements square6 Statements contained in this presentation that share our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,” “should,” “expect,” “project,” “plan,” “imply,” “intend,” “fores
Slide 3: Our Vision to be the BEST Through Operational Excellence & Acquisitions
Shared on XX/XX/XX Our Vision to be the BEST Through Operational Excellence & Acquisitions Closing GAPS Expanding TARGET U.S. Focus
Slide 4: Highlights of Our Business
Highlights of Our Business Largest poultry company in the world with a unique portfolio and geographic diversification Combination with Moy Park creates a stronger, more diverse and safer global leader Balanced portfolio of fresh, prepared and value-added chicken products Broad, differentiated produ
Slide 5: Our Vision and Strategy
Our Vision and Strategy Va re Relentless pursuit of operational excellence Become a more valued partner with our key customers / / ' Become the best and most \ respected company in our \ industry creating the XN Opportunity of a better future for our team Unique portfolio of im prencis ard p —— memb
Slide 6: Industry Trends Remain Positive
Industry Trends Remain Positive Chicken is the fastest growing protein both in U.S. and abroad Poultry industry in balance with demand Increase in production to meet demand and inventories at adequate levels Poultry industry close to operational capacity Increased demand for chicken across both food
Slide 7: U.S. Per Capita Chicken Consumption Continues to Rise
U.S. Per Capita Chicken Consumption Continues to Rise 7 Annual Pounds-Per-Person Chicken Consumption: 1960 to 2017 Projected Source: USDA Last updated August 2017 square4 Due to growth in retail and foodservice square4 Millennials, Gen Z AND people (40-69) are consuming more chicken than consumers o
Slide 8: A U.S. Market Share Leader in Ready-to-Cook Pounds
A U.S. Market Share Leader in Ready-to-Cook Pounds NEARLY CHICKENS IN THE U.S. COMES FROM ___________________________ Source: Watt Poultry USA March 2017, PPC. 8
Slide 9: Geographic and Business Diversification in U.S.
Geographic and Business Diversification in U.S. LARGE 8+ LBS RETAIL 6–7 LBS SMALL 4–5 LBS BUSINESS UNITS CASE READY SMALL BRID BIG BIRD/COMMERCIAL PREPARED FOODS FRESH FOODSERVICE PROTEIN CONVERSION GNP HATCHERIES33 TEAM MEMBERS~32K BIRDS PERWEEK~33MFEED MILLS26 PROCESSING PLANTS31 4 PROTEIN CONVERS
Slide 10: Broad Portfolio With Commodity Upside and Market Downside Protection
Broad Portfolio With Commodity Upside and Market Downside Protection circle5 8+ Lbs. Live Weight circle5 Commodity Price Correlation circle5 Foodservice/Industrial circle5 6 Lbs. Live Weight circle5 Program Pricing circle5 Retail/Consumer Brands circle5 4 Lbs. Live Weight circle5 Contract Pricing ci
Slide 11: Delivering Higher Order Attributes to Meet Growing Consumer Needs
Delivering Higher Order Attributes to Meet Growing Consumer Needs Grew 11% and 14% in dollars and volume vs. conventional at -4% and 1.9%, respectively 2nd highest sales growth claim (28.7%), after organic (44%) 76% of retailers report success with converting shoppers 61% of consumers willing to pay
Slide 12: Diverse Channel Mix Drives Value to Key Customers
Diverse Channel Mix Drives Value to Key Customers; Addresses Multiple Consumer Needs square4 Cut-up Parts square4 Boneless Skinless square4 Wings square4 Whole Chickens square4 Par-fried, Breaded • Breasts/Other Boneless • Wings/Other Bone-In square4 Fully Cooked • Breaded • Glazed • Roasted square4
Slide 13: Our Brands and Production Mix
Our Brands and Production Mix B R A N D S M I X * * YE2016, U.S. only circle5 Recent acquisitions expand our ability to deliver against underserved consumers, surprise and delight circle5 Brands can gain share via differentiation, especially against Millennials 13
Slide 14: Our KEY Customer Strategy Drives Growth and Loyalty
Our KEY Customer Strategy Drives Growth and Loyalty 2011 2012 2013 2014 2015 2016 2017 14
Slide 15: On-Line/Digital Grocery Also Growing in Alternative Channels
https://www.cnbc.com/2017/01/30/online-grocery-sales-set-surge-grabbing-20-percent-of-market-by-2025.html https://www.cnbc.com/2017/06/21/dont-worry-wal-mart-amazon-buying-whole-foods-is-just-a-drop-in-the-bucket.html On-Line/Digital Grocery Also Growing in Alternative Channels
Slide 16: Our Methods to Achieve Operational Excellence
Our Methods to Achieve Operational Excellence • Called “ZBB” • ALL expenses justified for each new period • Starts from a ZERO base • Built around what’s NEEDED • Analyzes EVERY function • Optimizes COSTS not just revenue COST/EFFICIENCY IMPROVEMENT FEWER POSITIONS DUE TO PERFECT STAFFING 17
Slide 17: Creating Efficiencies in the Operation
Creating Efficiencies in the Operation 2011 2012 2013 2014 2015 2016 +1.5% +0.9% +1.5% +0.8% +0.3% 2011 2012 2013 2014 2015 2016 -1.2c/lb. -0.4c/lb. -0.8c/lb. -1.4c/lb. +0.4c/lb. Yield Plant Cost $250 $125 $200 $180 $24 $174 2012 2013 2014 2015 2016 2017 Target Operational Improvement ($ in millions
Slide 18: Reducing Costs and Increasing Agility
Reducing Costs and Increasing Agility $0 $50 $100 $150 $200 $250 $300 $350 $400 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Reduced, Sustainable SG&A Levels 2.5%-3.0% 4.7% ($ in millions) circle5 De-layering: Closer to customers circle5 Shared Service Center with JBS circle5 Zero-Based Budget
Slide 19: Growing in US and Integrating the Gold'n Plump Business
Growing in US and Integrating the Gold’n Plump Business Expanded Geography Differentiated Brands circle5 Vertically Integrated, State-of-the-Art circle5 Operationally Excellent & Flexible circle5 2 Primary Processing Plants circle5 2 Hatcheries, 2 Feed Mills circle5 Fresh and Frozen circle5 Multiple
Slide 20: Growing in Mexico Through Acquisition and Greenfields
Growing in Mexico Through Acquisition and Greenfields Geographic Diversity Product Diversity Growth Opportunity circle5 Strong player in central and north regions circle5 Demand growth for chicken circle5 New complex in Veracruz – starting with 100K live birds/week growing to 500K in 2 years circle5
Slide 21: Opening New Platforms for Growth – Moy Park Increases Diversification
Opening New Platforms for Growth – Moy Park Increases Diversification circle5 Provides further geographic diversification with exposure to the European market circle5 Platform for growth in Europe and its export destinations Improves Earnings Stability circle5 Attractive structural market dynamics i
Slide 22: Moy Park – A Leading Prepared Foods Platform
Moy Park – A Leading Prepared Foods Platform circle5 Top 15 UK food company providing fresh, prepared, value- added and locally farmed poultry and complementary convenience food products for more than 70 years circle5 Highly regarded and innovative manufacturer of convenience food products square4 P
Slide 23: Significant Synergy and Growth Opportunities
Significant Synergy and Growth Opportunities Pilgrim’s has a history of successfully identifying and rapidly realizing synergy opportunities checkbld Synergies realized in Mexico post- integration exceeded original target and the acquired asset is performing at the same level as the legacy checkbld
Slide 24: Financial Overview
aS 1] ou Financial Overview gh
Slide 25: Our Vision – Total Shareholder Return Growth
Our Vision – Total Shareholder Return Growth ___________________________ Note: Peer Group includes Hormel Foods Corp, Sanderson Farms Inc. and Tyson Foods Inc. 1. $100 invested on 12/30/12 in stock or 12/31/12 in index, including reinvestment of dividends. Indexes calculated on month-end basis. 23 $
Slide 26: Progress Report – Growth
$1,226 $1,565 $1,632 $1,627 $1,556 $1,396 $1,574 $3,544 2010 2011 2012 2013 2014 2015 2016 2017 LTM PF International (Export + Mexico + Europe) $5,656 $5,971 $6,336 $6,784 $7,027 $6,784 $6,358 $6,853 2010 2011 2012 2013 2014 2015 2016 2017 LTM PF U.S. Domestic Progress Report – Growth ______________
Slide 27: Progress Report – Results
Progress Report – Results ___________________________ Note: 2012 Lbs. adjusted to 52 weeks as fiscal 2012 contained 53 weeks. Adjustment was to reduce lbs. by 1/53rd. … and ProfitabilityGrowth Volume … (MM lbs.) Adj. EBITDA % Margin 7.0% (2.0%) 5.0% 9.6% 15.8% 14.8% 11.3% 13.0% 2010 2011 2012 2013 2
Slide 28: Progress Report – Capital Spending
136 90 115 171 176 272 213 2011 2012 2013 2014 2015 2016 YTD Progress Report – Capital Spending circle5 Strong Free Cash Flow generation has enabled us to direct more capital spending towards identified projects with rapid payback and structural projects. $1B invested in the last 6 years circle5 New
Slide 29: Third Quarter 2017 Financial Results
Third Quarter 2017 Financial Results circle5 Strength across all US business units, GNP operations significantly improved, MX results above expectations. circle5 SG&A higher due to addition of GNP and Moy Park, investments in brands in USA and Mexico, and $19MM non- recurring acquisition/restructuri
Slide 30: Appendix
Appendix
Slide 31: Historical Chicken Prices
Historical Chicken Prices 31 Source: USDA-WASDE. Source: USDA-WASDE Chicken Cutout Retail Chicken Compared to Beef and Pork
Slide 32: EBITDA and Adjusted EBITDA Definitions
Source: PPC. “EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing opera
Slide 33: Reconciliation of EBITDA Margin
Source: PPC. EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period. Source: PPC PILGRIM'S PRIDE CORPORATION Reconciliation of EBITDA Margin (Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended Thirteen Weeks En
Slide 34: Reconciliation of Adjusted Earnings
Source: PPC. A reconciliation of net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share to adjusted net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share is as follows: Source: PPC PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted
Slide 35: Reconciliation of GAAP EPS to Adjusted EPS
Source: PPC. A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows: Source: PPC PILGRIM'S PRIDE CORPORATION Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended September 24, 2017 September 25, 2016 Septemb
Slide 36: Supplementary Selected Segment and Geographic Data
Source: PPC. Source: PPC PILGRIM'S PRIDE CORPORATION Supplementary Selected Segment and Geographic Data Thirteen Weeks Ended Thirty-Nine Weeks Ended September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016 (Unaudited) (In thousands) Sources of net sales by country of origin: US: $
Slide 37: Pilgrim's
pilgrims
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