Pilgrim's Pride Corporation · NASDAQ:PPC
Pilgrim's Pride — Harris Nesbitt Agriculture & Protein Conference 2006
67 slides from Pilgrim's Pride's conference presentation, May 17, 2006
Slide 1: Harris Nesbitt Agriculture & Protein Conference
Harris Nesbitt Agriculture & Protein Conference May 18, 2006
Slide 2: Forward-looking statements
Statements cortained in this presetation thet state the intentions, hapes, beliefs, aricipetions, expectations or presictons of the Ture of Plgri’s Pride Corporation and fs management are ferwarsiioakng statements. Is Iiporenl to note thet the actual resus could fer meter” tvam thace projected such
Slide 3: Executive Management Presenting
Executive Management Presenting OB Goolsby, Jr. Chief Executive Officer, President Rick Cogdill Chief Financial Officer, Secretary and Treasurer
Slide 4: Company Overview
Company Overview
Slide 5: Pilgrim's Pride at a Glance
Pilgrim’s Pride at a Glance Founded in 1946 by Pilgrim family brothers; IPO in 1986 Sales by Division ) + Second-largest poultry producer inthe U.S. and Mexico Turkey + Award-winning preferred supplier to foodservice ve Mexico and retail industry leaders Chieten! Chicken = Over 43.5% of LTM 4/1/06 U
Slide 6: Pilgrim's Pride Business Strategy
Pilgrim’s Pride Business Strategy Capitalize on significant scale with leading industry position and brand recognition ¥ Capitalize on attractive U.S. prepared foods market v Emphasize customer-driven research and technology v Enhance U.S. fresh chicken profitability through value- added, branded pr
Slide 7: Solid Leadership Position
Solid Leadership Position Top 8 Companies U.S. Chicken Market Share % 2005 RTC 2005 RTC Pounds* Market Share (%) Tyson Foods, inc. is 150.00 218 Pigin's ride TT 113.00 4 | Gold Kist, Inc. [62.38 31 Perdue Farms, Inc. [n)51.33 75 Sanderson Farms, Inc. [30.39 44 Wayne Farms, Inc. []jn)30.4 44 Mountair
Slide 8: Vertically Integrated Operation
Vertically Integrated Operation Chicken Pilgrim’s Pride is a fully integrated chicken company. We control all aspects of production from egg to finished product to keep quality high and costs low.
Slide 9: Poultry Processing Facilities
ce Poultry Processing Facilities
Slide 10: Prepared Foods Plants
Prepared Foods Plants \ ¢ BD © Prepares Foods. chicken \ ¥ {
Slide 11: North American Distribution Centers
ce North American Distribution Centers "1
Slide 12: U.S. Industry Overview
U.S. Industry Overview
Slide 13: Challenging Operating Environment
Challenging Operating Environment Growing Supply of Meat Proteins | International Effects =H5N1 Avian Influenza — Poultry =BSE (Mad-Cow) & Hoof & Mouth Disease - Beef | (Pressure on Pricing) (High inventories) (Export Disruptions ) 13
Slide 14: GA, Leg Qtr, Wings
GA, Leg Qtr, Wings Lannie A es a hie 93 94°95 95 ‘G7 8 NOM UTD AMI J ASONDJ FMA [SSA Dom Leg Guarter Boneless Skinless Breast ‘Source: UtnerEary Publations, Is Boneless Brat 14
Slide 15: U.S. Industry Outlook
US. Industry Outlook m= Pricing environment during (vs. prior year periods) : Change from End of 2nd Qtr FY 06 2nd atrvtd 2nd Qtr FY 2006" Primary: * GA Dock > 6.2% to $0.69 -4.4% to $0.71. -1.5% to $0.68 * LegQuarters > — -30.8% to $0.21 -9.6% to $0.27! +19.0% to $0.25, Other, * Wings > 16.0% to $0
Slide 16: April 2006 forward forecast
oR 000 ‘Apri 2008 forward forecast J oF M A M J JS &B S OO N D 400 Source: USDA and Informa Economics Projections dated Ap 27,2008 16
Slide 17: U.S. Industry Outlook - Continued
U.S. Industry Outlook - Continued * Grain Market FY2006 Actuals: 2” Qtr FYOS Near-by Futures vs, Prior Year Qtr — Com* +8.3% to $2.21ibushel — SoybeanMeal" +10.0% te $181.56iton FY2006 Outlook: 2005-2006 Crop Year USDA Projections vs. 2" Qtr YTD FYO6 — Corn* 4.9% to $1.95ibushel - Soybean Meal” -1.9
Slide 18: Corn Futures Trading Ranges
Corn Futures Trading Ranges 3.00 May 12 Clases Z 2.90 = $/Bushel 06 Sep 06 Dec 06 Maro? May 07 shlO7 MCBOT Com Futures Contract —Upper Level Range & Lower Level Range Projections by Informa Economics, Ine 18
Slide 19: Soybean Meal Futures Trading Ranges
Soybean Meal Futures Trading Ranges 195 190 May 12 Closes ass = 0b -- = s < 15 170 165 160 ass 150 Mas 140 135 130 ass alte sagt sqee oto Dect in Mare Maye MICEOT Soybean Meal Futures Contract Upper Level Range & Lower Level Range Projections by Informa Econoraics, Ine. 19
Slide 20: Energy Pricing
Energy Pricing Energy Inform ation Administration (EIA) -U.S. Energy Prices: Medium Recavery Case [ 2005 2006 pist | 2nd | nd [ah [tt [2nd | ad [a Diese’ Giga) 207 226 288 271 280 279 274 275 Natural Gas ime) Ger 7.14 S81 1264 784 7.07 7.78 962 *on-hiokmay etal" Residential verage Analysis of Estima
Slide 21: Continued Consolidation of U.S. Chicken
Continued Consolidation of U.S. Chicken Industry Has Led to More Rational Behavior 70.25 64.94 62.15 iS 3 = 3 Ss 3 a: $s s oy cy % i g g = 3 ey es = Ey Ey = e 1905 1995 2005 *PPC Ranke Source: Watt Publshing 21
Slide 22: Pilgrim's Outpaces Industry Growth
Pilgrim’s Outpaces Industry Growth Organically & thru Acquisitions 30.0% 25.5% 20.0% 16.7% 10.0% (Growth in Ready-to-Gook Pounds) 2005 2000-2005 1995-2005 my Pilari's Pride ME US. Chicken Industry IE Pilgrim's Pride a a raanic Growth Pilgrim's Pride’s business strategy has enabled it to dramatically
Slide 23: U.S. Chicken Consumption Continues to Outpace Other Proteins
U.S. Chicken Consumption Continues to Outpace Other Proteins $68 (In Pounds} © g a E a & 5 Ss n g rs a é ry i 1330 1993 1996 199 mu (2 — Chicken — Turkey — Pork — Beef Source: Api 17,2006 National Chichen Cau 33)
Slide 24: U.S. Meat Supply
U.S. Meat Supply Beef Supply 27,500 8% 27000 6% 26.500 4% 26000 26500 Fe 25000 24500 2 24,000 AB: 23500 8% 23000 8% Sv g SES LS Pork Supply 21,500 % 21000 ot 20,500 oe m» 2n00 m 19.500 es 19.000 1% 18.500 o% SFG KE Chicken Supply 37,000 5% 36,000 e 36,000 es 34,000 3% 33,000 2% 2% 32,000 ae 31,000,
Slide 25: Industry Exports Slowly Rebounding
Industry Exports Slowly Rebounding = Markets appear to be recovering from HEN1 Avian Influenza disruptions 25 ___| = Cold storage inventories are being worked down =_Russia import permits still unresolved 20 15 10 % of U.S. Chicken Exported 14.8 — 15.5% EEPEELEREEELEPESE ELS “Od Source: Ape 17, 2008
Slide 26: U.S. Business Overview
U.S. Business Overview
Slide 27: Geographic Sales Mix
Geographic Sales Mix U.S. 92.2% LTM 4/01/2006 Net Sales*: $5.5 billion F "See Popendis Sforreconcliaton a7
Slide 28: Largest Pure-Play Company in Poultry
Largest Pure-Play Company in Poultry Sales by n U.S. Chicken Sales U.S. Chicken Prepared) Chicken Turkey Mexico Chicken Other US Other Mexico Fresh Chicken Total Sales LTM 41172006": Total Sales LTM 41112006": $5,532.2 mm $4,305.1 mm. *See Appendix Jand Appendix for reconediafons of Sales and U.S. C
Slide 29: 29
29
Slide 30: Pilgrim's First to Introduce 100% Natural Enhanced Product
Pilgrim’s First to Introduce 100% Natural Enhanced Product Both Marinated & Non- Marinated Products Introduced in January 2006 Full line of case ready products 100% Leak-proof, bead sealed packaging Marketing Support: TV & Print New Packaging Graphics Bilingual Product Description
Slide 31: What Does 100% Natural Mean?
What Does 100% Natural Mean? To make the claim, USDA guidelines require that the product must meet the following criteria: Minimal processing with no fundamental alteration of the raw product ® Contains no artificial flavor, color, chemical preservative, or any artificial or synthetic ingredient ® T
Slide 32: Consumers Prefer Enhanced Products
Consumer's Prefer Enhanced Products Consumer Preference Blind Taste Test Among Consumers 100 m 82% fanainaed lton-Marinated lato Preterence 82% of consimners preferred enhanced marinated products ‘Source: Murphy ® Aasoonbs Lamzry 2005
Slide 33: Slide 33
Slide 34: Pilgrim's is Well-Positioned for Future Growth & Acquisitions
Pilgrim's is Well-Positioned for Future Growth & Acquisitions Aleading Growing Great supplier of presence in position to quick-service food-service grow in restaurants distribution retail National Coverage Ability to serve the largest customers
Slide 35: Financial Overview
cee itp Financial Overview Rick Cogdill Chief Financial Officer
Slide 36: U.S. Sales Breakdown
A ’ U.S. Sales Breakdown FY2005 LTM Ending 4/1/06 Fresh Turkey export & Fresh Ghicken Cae Other 40.0%" 65% Fresh Turkey export & Other 19% ese Fresh Ghicken 40.5% Other Products 11.9% Other Products 12.4%" Prepared Foods Products Prepared Foods Products 39.4% 39.380") Net Sales: $5.2 Billion Net Sal
Slide 37: Our Prepared Foods Focus Differentiates Pilgrim's
Our Prepared Foods Focus Differentiates Pilgrim’s CAGR 2o00- / 4999-2003 12.6% sharers aces) 81 5225 1,800) 1999-2005 22.8% 298.9 1,400 1,200) 3 od e182 Pa $7353 $eu7.1 158.3 573.9 103.2 woo 22 we 400 59.3 gos o> 200) o 1999-2000 2001 2002 2003 «200420042005 L™ Proforma an ae" HM roodservice = ME Re
Slide 38: Prepared Foods Chicken Product Mix
Prepared Foods Chicken Product Mix Focused on Highest Value Products (MM of Ibs.) 1000. CAGR 1999-2003 15.4% 742 8550 3947 200) 1999-2005 21.7% 8245 800 481 ess) = 700 5226 eon 4696 ee i299 756.4 » 400) 232 4 729.2 300) a 200 bs ga G too] 7a } ®""ys9 2000 2001 2002 20037004 004 2005 L™ Proforma 016"
Slide 39: Gross Margin % of Sales
Gross Margin % of Sales Fiscal Years Ended 14% 13.2% 11.8% my 1% 17% are 93% 10% 77% a 65% 60% & 4 | 23% 2 0% 2000 2001 2002 2003 2004 2005 2q 2a 6-0 6-MO FYOS FYOS FY0S FYOS 2 2 2 2 39
Slide 40: Operating Income Summary
Operating Income Summary Fiscal Years Ended Million $ 4358 ‘00001 aoe 08nd 200d 008 LM 29 FV0520 FrOS wo 6MO Freforra anime FOS FYE *See Appendix forreconditaton ofl
Slide 41: Fiscal Years Ended
Fiscal Years Ended ‘a $3.00 en | ; ee | ae sass ° $1.58 ‘$1.50. $1.36 ‘$1.00. be) ‘$0.85 ‘$0.00 ee | aii $0.50+ (50.48) Gen tee S 9 matmmcn 4
Slide 42: Strong EBITDA
Strong EBITDA Fiscal Years Ended agus a0 seut ant Million $ mre Bea mi 25a 2007 Wm % j | j WE cua Hl ro format MB rrotorma Adjusted? MM Adjusted™! ton at YEON te FY A Aa i or eect ‘gemice tr ernaed stent eve off bac S052 malo ra Fat Fras seme eck ote esti tant tney art limes ny Be comgayate Weis Rec
Slide 43: Prudent Management of Capital Expenditures
Prudent Management of Capital Expenditures Fiscal Years Ended ME Maintenance/Other ExpansioweEfficiency Gin nilions) = 2000 2001 02 03 moa mos LTMain108 The Company projects FY 2006 capital expenditures of approximately $140-175 million 43
Slide 44: Strong Balance Sheet
Strong Balance Sheet Million $ $2,512 $2,392 $2,400 $2,246 $2,000 $1,600 $1,224 fen 1.147 $923 $800 ie ses3 {551 $400 $0 2004 2005 aa FY6 Assets © Short-Term Liabilties mLongTermLiabilties mEquity 44
Slide 45: Debt maturities
$2339 239.8 io milions) $43 $88 $4 $3 sto ee fan —_ 200s a007== 200200921 20H 2012 aoa 7 20a Other lafond wibtes Payable industrial Revenue Bond 45
Slide 46: Capitalization
Capitalization so2i04 Cashand Cash Equvalerts 382 Sericr Secured Credit Facilies < Notes Payable to insurance Company 1739 9SIE% Serior Notes due 2011 3030 919% Serior Subordinated Notes due 2013 1000 Cther Dekt 174 Total Delt 443 Talal Stockholders Equity 9230 Total Capitalization 74673 sot tom = 1
Slide 47: Book Value Per Share
= $18.00 Book Value Per Share Fiscal Years Ended $18.00 $17.00 $13.00 $11.00 $7.00 $5.00 $3.00 2000 2001 2002 203 stae 7.24 fSa2 2QFYOS «= 2QFYOS 47
Slide 48: Total Debt to Total Capitalization
Total Debt to Total Capitalization 554 gas 48.4 a 344 | : | L 30.1 30.1 2000 2001 2002 2003 2004 205 FS FYE GOAL < 45% 48
Slide 49: Summary Credit Ratios
Summary Credit Ratios FYE 2005 6-Mo 2005 6-Mo 2006 EBITDA? Interest Expense [") 12.82x 11.83x 387x Total Debt? EBITDA ()¢") o.94x 1.04x 1.25x Net Debt/ EBITDA f‘)f"} 0.70x 0.75x 1.08x Total Debt! Total Capital 30.1% 34.1% 30.1% Net Debt! Total Capital 24.4% 27.2% 27.1% Net Worth (millions) $1,2236 $
Slide 50: PPC Stock Comparison
PPC Stock Comparison PPG Closing Stock Price & Peers NA, ele cal 2 10 a ot gt tt FP CO SC CC FC x " x * & & a wr x x eo & a we * w PPC Close —=TSN Close ——SAFM Close ——GKIS Close
Slide 51: Going Forward...
Going Forward... We believe our growth opportunities are still outstanding. Financial goals remain clear: Selectively pursue Utilize free cash flow to Continue reducing expansion fund internal growth leverage with opportunities that and repay excess cash-flow generate high rates indebtedness of retu
Slide 52: Reconciliation of Non-GAAP Measures and Other Computations
Reconciliation of Non-GAAP Measures and Other Computations
Slide 53: Appendix A
(Bin mitions) Chicken Sales: United States Mexico Total Chicken Sales Total Turkey Sales Sale of Other Products United States Mexico Total Sale of Other Products Total Net Sales Appendix A Summary Operating Results - Sales Segments Fy2005 Fy2006 FY2005 Fy2006 2 YD 2 YD Quarter2 Quarter2 § 2126 $§ 20
Slide 54: Appendix B
Appendix B Summary Operating Results — Operating Income inmitons) Fynos = FY2006 Fyeo05FY2008 20¥1D. 20 1D Quater2 Quarter 2 Operating Income (Los): Chicken ard Other Products: United States 3 1707 § 164 8 ern) Mesica 14.0 GA) 18 Sub Total ota $110 3 G53) Turkey 102) (124) 67) Other Products: United
Slide 55: Appendix C
Appendix C EBITDA Reconciliation — FY2000 thru FY2002 @ in thousands) Fiscal Years Fy2000 Fy2001 Fy2002 EBITDA Reconciliation Net Income’ $ 5234 $ 41,137 $ 14,335 Add Income Tax Expense (benefit) 10442 20,724 (12.425) Interest expense, net 17.779 30,775 32,008 Depreciation and am ortiz ation 36,027
Slide 56: Appendix D
Appendix D EBITDA Reconciliation — FY2003 thru FY2005 G inthousands) Fiscal Years Fy2003 Fy2004 Fy2005 EBITDA Reconciliation Net Income $ 66036 $ 126,341 $ 264,979 Addl Income Tax Expense (benefit) 7,199 80,195 138,544 Interest expense, net 37,981 52,129 43,982 Depreciation and amortization 74,187 1
Slide 57: Appendix E
Appendix E Ea). Reconciliation of Adjusted EBITDA FY2003 - FY2005__ (B in thousands) Proforma Adj. Proforma Adjusted FY2003 Fy2004* FY2005 Net Income § M731 8 142.797 § 264.979 Add: Income Tax Expense 6.963) 89054 138,544 Interest expense, net 70813 56,500 43,932 Depreciation and amortization 116,85
Slide 58: Appendix F
Appendix F Reconciliation - Summary Credit Ratios & Other Information EBITDA Reconeiliation of FY2005 and LTM Periods EBITDA Lim Lim ev tomate Fy2005 Ending 472105 Ending 411106 Net Income 8 masa $ some 8 wares Ade Inoome Tac Expene # 3.98 383 ores Interest expense, net asc 7.703 p35 Depreciation an
Slide 59: Appendix G
Appendix G Reconciliation — Adjusted LTM EBITDA 302004 © 402004 «102005202005 LT™ Actual _ Actual __Actual Actual Ending 4205 Net Income § 9814 $ 75290 §48809 $§ 55,389 § 190002 Add: Income Tax Ewense (benefit) 12283 46016 = 31.400 34.204 123883 Interest expense, net 1469011471 12.224 9318 47703 Dep
Slide 60: Appendix H
Appendix H Net Income Add Income Tax Expense (benef) Interest expense, net Depreciation and amortization Minus: Amortization of capitalized financing casts EBITDA Adjustments: Turkey Restructuring Adjusted EBITDA Reconciliation — Adjusted LTM EBITDA sazo0s © 4g2005 102006 © 202006 Lt Actual Actual A
Slide 61: Appendix I
Appendix | Non-recurring Effects Affecting Fiscal 2003 - 2005 Fy2006 October 1, 2005 Non- Miscellaneous Total Net Income (rnitions) Recurring Net Income Expenses Loss) Litigation Proceeds 8 - $ m7 6 + § - 8 117 Turkey Restructuring asset sales : - : 53 63 Total 5 = 5 a Sf - § 53 8 17.0 FY 2004 Non-
Slide 62: Appendix J
(in rilions) Chicken: United States Mexico Total Chicken Sales Total Turkey Sales Sale of Other Products United States Mexico Total Sale of Other Products Total Net Sales Appendix J Reconciliation - Sales LTM 4/1/06 3Q2005 4Q2005 192006 = 22006 = LTMEnding Actual Actual Actual Actual 4i06 $ 11231 $
Slide 63: Appendix K
Appendix K Reconciliation - Operating Income LTM 4/1/06 (in ritions) 302008 4q2005 1a2006 = 202006 LTMEnding Actual Actual Actual Actual 4 06 Chicken: United States $ 1168 $ 1139 $ 539 $ @77) $ 2469 Mexica 17.8 73 @.1) 18 20.4 Total Chicken Sales $ 1346 § 1218 $ 468 $ (59) $ 2673 Total Turkey Sales
Slide 64: Appendix L
inmilions) US Chicken Sales Prepared Foods: Foodservice Retail Total Prepared Foods Fresh Chicken: Foodservice Retail Total Fresh Chicken Export & Other Export: Prepared Foods Chicken Total Export Other Chicken By Products Total Export and Other Total U.S. Chicken Appendix L Reconciliation — Sales L
Slide 65: Appendix M
Appendix M Reconciliation —- Turkey Sales LTM 4/1/06 Ginmilions) 302005 402005 = 102006 ©» 202006» LTMEnding Actual Actual Actual Actual 4s 06 Turkey Sales: Prepared Foods: Foodservice § 106 $ 80 § 134 § 63 § 383 Retail Q7 10.6 79 45 327 Total Prepared Foods $203 § 186 § 23 § 18 $§ 710 Fresh Turkey.
Slide 66: Appendix N
Appendix N Vertically Integrated Operation Tore me Corn and Soy oo S/o t fot Day ow nee | & Farms Sooo aa| 22 - 25|26 Farms Capitalized F2E *B0— Bi Bird Dotoring
Slide 67: Pilgrim's Pride Corporation
Pilgrim’s Pride Corporation
Pilgrims Pride — Harris Nesbitt Agriculture & Protein Conference 2006 on 6ix