Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — BMO Capital Markets 2011 Farm to Market Conference
34 slides from Smithfield Foods's conference presentation, May 17, 2011
Slide 1: BMO Capital Markets 2011 Farm to Market Conference
BMO Capital Markets 2011 @ Farm to Market Conference > Smithfield Smithfield Foods, Inc. May 17, 2011
Slide 2: Addressing Investors' Frequently Asked Questions
Addressing Investors’ Frequently Asked Questions C. Larry Pope President and Chief Executive Officer Robert W. Manly Executive Vice President and Chief Financial Officer
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking” statements within the meaning of the federal securities laws. The forward-looking statements include statements concerning the Company’s outlook for the future, as well as other statements of beliefs, future plans and strategies
Slide 4: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations Non-GAAP Measure Reconciliations
Slide 5: Frequently Asked Questions
Frequently Asked Questions 1.Can Smithfield deliver a record year in fiscal 2012? 2.What are Smithfield’s core strategies for growth? 3.How will the Campofrío acquisition benefit Smithfield shareholders? 4.Is Smithfield committed to maintaining a conservative balance sheet?
Slide 6: Can Smithfield deliver a record year in fiscal 2012?
Can Smithfield deliver a record year in fiscal 2012?
Slide 7: Pork segment profitability has tripled since fiscal 2007
Pork segment profitability has tripled since fiscal 2007 Note: Fresh pork and packaged meats results represent management’s estimated allocation of total Pork Segment results; FY 09, FY 10and TTM FY 11 Q3 results adjusted for restructuring and impairment charges; Refer to Non-GAAP measure reconcilia
Slide 8: Leveraging coordinated sales & marketing platform to manage packaged meats margins
Leveraging coordinated sales & marketing platform to manage packaged meats margins within the normalized range Normalized range = $0.10-0.15 per pound Note: Fresh pork and packaged meats results represent management’s estimated allocation of total Pork Segment results; FY 09, FY 10and TTM FY 11 Q3 r
Slide 9: Balanced supply & demand & strong exports should yield normalized fresh pork margins
Balanced supply & demand & strong exports should yield normalized fresh pork margins in fiscal 2012 Normalized range = $3-7 per head Note: Fresh pork and packaged meats results represent management’s estimated allocation of total Pork Segment results; FY 09, FY 10and TTM FY 11 Q3 results adjusted fo
Slide 10: Low global protein inventories supporting a higher hog futures curve
Low global protein inventories are supporting a higher hog futures curve & yielding continued hog production profitability, despite higher grain prices Note: Industry profitability based on futures curves for live hogs and grains on 05/12/11; cost is pre-interest
Slide 11: Smithfield has reduced its domestic exposure to the corn markets by more than 40%
Smithfield has reduced its domestic exposure to the corn markets by more than 40% since fiscal 2008 Smithfield Beef Group Divestiture Sale of Turkey Interests U.S. Sow Herd Reduction Initiated
Slide 12: Continued Strong Results In Fiscal 2012
Continued Strong Results In Fiscal 2012 Fresh porkPackaged meatsHog ProductionBalance SheetHigh end of normalized rangeNormalized rangeContinued profitability, despite higher grain pricesHog Production Cost Savings InitiativeAchieve Project 100Balanced supply and demand and strong exports supporting
Slide 13: What are Smithfield's core strategies for growth?
What are Smithfield’s core strategies for growth?
Slide 14: Long-Term Strategies For Growth
Long-Term Strategies For Growth Organic•Leverage highly coordinated sales and marketing platform and consolidated brand portfolio to drive profitable top and bottom line growth and improve ROICMergers & Acquisitions•Disciplined approach to acquiring branded packaged meats companies while enhancing R
Slide 15: Organic Growth Drivers
Organic Growth Drivers Driving profitable top and bottom line growthFocus on quality and consistent earningsCompetitive cost structure in all operating segmentsClosely coordinated sales & marketing platformConsolidated portfolio of leading consumer brands
Slide 16: Pork Group Restructuring Created A Highly Competitive Platform For Growth
Pork Group Restructuring Created A Highly Competitive Platform For Growth 16 Before Restructuring After Restructuring IndependentOperating Companies 7 3 Freshpork plants 9 8 Packagedmeats plants 36 30 Capacityutilization <80% >90% Fresh pork sales organizations 3 2 Exportsales organizations 3 1 Reta
Slide 17: Smithfield Brand Portfolio
Smithfield Brand Portfolio 100 + brandsConsolidating acquisitionsinto 12 powerful key brands 50 + brands Note: Computed as TTM FY 11 Q3 branded sales plus retail and operator markup of 35% across all trade channels
Slide 18: How will the Campofrío acquisition benefit Smithfield shareholders?
How will the Campofrío acquisition benefit Smithfield shareholders?
Slide 19: Transaction Status
Transaction Status •Executed non-binding letters of intent •Conducting confirmatory due diligence and negotiating definitive agreements •Takeover bid subject to various regulatory approvals and approval of Campofrío's shareholders •Anticipated closing in second quarter of fiscal 2012
Slide 20: Rationale
Rationale •Positions Smithfield as leading global consumer packaged meats company •Increases percentage of sales and operating profit from branded packaged meats and geographically diversifies earnings base •Unlocks existing investment to provide cash flow and earnings stability •Integration synergi
Slide 21: Financing
Financing •Purchase price = €500 million or ~$725 million •Proposed financing •Focus on enhancing shareholder value while maintaining a conservative balance sheet Cash andrevolver draw 50% ~$400 million Equity 25%-40% $200-300 million Debt 10%-25% $100-200 million Note: Equity purchase price; does n
Slide 22: Is Smithfield committed to maintaining a conservative balance sheet?
Is Smithfield committed to maintaining a conservative balance sheet?
Slide 23: Project Objectives Achieved
Project 100 Objectives Achieved Project 100Eliminate $100 million in interest expenseReduce debt by $1 billionImprove credit metricsExtend and smooth debt maturitiesEnsure ample liquidityReduce idle cash
Slide 24: Committed To Maintaining Conservative Balance Sheet
Committed To Maintaining Conservative Balance Sheet Prioritize cash toward debt retirement Maintain tight control of capital expendituresContinued focus on ROICTarget liquidity in the $500 million to $1 billion range
Slide 25: Net debt to total capitalization ceiling of 50% with target of 40% or below
Net debt to total capitalization ceiling of 50% with target of 40% or below Note: Net debt is equal to notes payable and long-term debt and capital lease obligations, including current portion, less cash and cash equivalents; computed using net debt divided by the sum of net debt and shareholders’ e
Slide 26: Net debt to adjusted EBITDA ceiling of 4x with target of 3x or below
Net debt to adjusted EBITDA ceiling of 4x with target of 3x or below Target= 3x Net debt to EBITDA Note: Refer to Non-GAAP measure reconciliations for adjusted EBITDA calculations
Slide 27: BMO Capital Markets 2011 Farm to Market Conference
BMO Capital Markets 2011 @ Farm to Market Conference > Smithfield Smithfield Foods, Inc. May 17, 2011
Slide 28: Appendix – More about Campofrío Food Group
Appendix – More about Campofrío Food Group
Slide 29: Smithfield & Campofrío: The Undisputed Global Leader In Consumer Packaged Meats
Smithfield & Campofrío: The Undisputed Global Leader In Consumer Packaged Meats #1Global Packaged Meats Company #1U.S. Packaged Pork Company#1European Packaged Meats Company
Slide 30: Who Is Campofrío?
Who Is Campofrío? #1 European Packaged Meats Company Netherlands €1.5 billion #1 France €6.2 billion #1 Spain €1.9 billion #1 Portugal €0.1 billion #1 Germany €9.0 billion <1% Belgium €1.3 billion #2 Romania €0.6 billion #2 Italy €10.1 billion #1 Source: Euromonitor2010; chilled processed meats mark
Slide 31: Market Share
Market Share 70% 60% 50% 40% 30% 20% 10% O% 65% 29% 25% 23% SBE mmo . Belgium Netherlands France Romania Italy Germany fies arn Qh.
Slide 32: European Packaged Meats Acquisition Strategy
European Packaged Meats Acquisition Strategy 1998-99Acquire SBS SFGP in France2004Acquire Jean Caby in FranceMerge SBS and SFGP into Jean CabyAcquire 15% stake in Campofrío from HormelAccumulate 22% of Campofrío through private purchases and stock dividends2006Contribute Jean Caby into 50/50 joint v
Slide 33: Strengthens Packaged Meats Portfolio Mix
Strengthens Packaged Meats Portfolio Mix On a pro forma basis, Smithfield will have dramatically increasedpackaged meatssales, operating profit and invested capital. Sales Operating Profit InvestedCapital
Slide 34: BMO Capital Markets 2011 Farm to Market Conference
BMO Capital Markets 2011 @ Farm to Market Conference > Smithfield Smithfield Foods, Inc. May 17, 2011
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