Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Investor Presentation (October 2010)
33 slides from Smithfield Foods's investor presentation, Oct 8, 2010
Slide 1: Smithfield Investor Presentation
aU Smithfield Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking” statements within the meaning of the federal secu s 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 or
Slide 3: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations Non-GAAP measure reconciliation (in millions) Tm FY FY FY FY QUFY 2011 2010 2009 2008 2007 Operating profit-Pork segment $551 $539 $395 $449 $219 Less: Fresh pork EBIT (112) 61) 76) (141) 4) ‘Add: Packaged meats restructuring and impasment charges uF . a Packaged mea
Slide 4: Agenda
Agenda 1. The New Era of Smithfield 2. Pork Segment — Delivering Quality & Consistent Earnings Category Leadership Hog Production Return To Profitability Exports Financial Management N Oo oF F Ww Conclusion Smithfield ¢
Slide 5: The New Era of Smithfield
The New Era of Smithfield Smithfield
Slide 6: Leading Position In Food Industry
Leading Position In Food Industry #1 U.S. Packaged Pork Company #1 World Pork Processor #1 World Hog Producer #1 Market share in several European countries es, Inc. (IRI); FreshLook Marketing Group; Successful Smithfield 6
Slide 7: Market Leader: Pork Processing
Market Leader: Pork Processing Por k Segment TTM Sales: $9.5 billion TTM Operating Profit: $551.0 million “World's largest pork processor and largest packaged pork company in U.S. *Sold 2.9 billion pounds of x " Tyson Foods packaged meats in FY 10 19% «Processed 30 million hogs in FY 10 *Sold 4.0 bi
Slide 8: Market Leadership: International
Market Leadership: International {International Segment _| TTM Sales: $1.3 billion TTM Operating Profit: $126.9 million «Segment comprised of international meat processing operations and international hog production operations «Subsidiaries in Poland, Romania and the United Kingdom *37% ownership of
Slide 9: Market Leader: Hog Production
Market Leader: Hog Production Christensen Family Farms 3% Hog Production Segment TTM Sales: $2.4 billion TTM Operating Loss: $(295.1) million FY 11 Q1 Operating Profit: $63.8 million «Segment consists of U.S. hog production operations Prestage Farms’ 2% «Produced 17.4 million hogs in U.S. in FY 10 «
Slide 10: Other Segment
Other Segment { OtherSeqment _| TTM Sales: $112.5 million TTM Operating Profit: $9.4 million «Segment comprised of turkey production operations and 49% interest in Butterball Jennie-O 19% «Joint venture partner has accepted offer to buy company’s 49% interest in Butterball and its related turkey pro
Slide 11: Pork Segment — Delivering Quality & Consistent Earnings
Pork Segment — Delivering Quality & Consistent Earnings Smithfield
Slide 12: Pork Segment Earnings Growth
Pork Segment Earnings Growth meats doubled since fiscal 2007 profitability 1as more than $700 5 5 $600 + $573 $579 Tt} 483 3 $500 | $449 $ an 55 $400 | Le 5 & $300 - $386 a o $200 + a x S $100 | 7 a 4 $9 7 $0 a, . + + 1 FY 08 FY09 FY10 TTMFY 11 fey) Fresh pork Packaged meats Note: FY 09 and FY 10 re
Slide 13: Consumer Packaged Meats Earnings Growth
Consumer Packaged Meats Earnings Growth earnings growth and stability . Consumer packaged meats adjusted EBIT (in millions) $185 FY07. FYO8 FY09 FY10 TIMFY 11Q1 (Adjusted EBIT -*-Adjusted EBIT (% of sales) Note: FY 09 and FY 10 results adjusted for packaged meats restructuring and impairment charges
Slide 14: Optimizing Consumer Packaged Meats
Optimizing Consumer Packaged Meats Adjusted EBIT ($ per pound) Note: FY 09 and FY 10 results adjusted for packaged meats restructuring and impairment charges $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 growth while optimizing product mix and pricing Benefit of Pork Group Restructurin
Slide 15: Packaged Meats Raw Material Price History
Packaged Meats Raw Material Price History $120 5 $116 $110 + $100 + $90 $90 $84 $85 $80 $70 $60 | $50) $54 — $53 $51 $40 T T r 1 FY 07 FY 08 FY 09 FY 10 FY 11Q1 = 14/16 Belly -©-72% Trim -*-20/23 Ham | Smithfield'® $icwt aid co o sd J
Slide 16: Stable Fresh Pork Profitability
Stable Fresh Pork Profitability consistently profitaple” 160 S450 sass] © & $140 + 5 a w = $120 + 3 ov “sd @2 $100 + 38 = so zs | are ‘S $80 28 = On gs $60 oo = no 3 $40 £ “$20 $0 FY07 FY08 FY09 FY10 TTMFY 11Q1 CAdjustedEBIT ——Adjusted EBIT ($ per head) Note: FY 09 and FY 10 results adjusted for fre
Slide 17: Category Leadership
Category Leadership Smithfield
Slide 18: Leading Retail Position In Key Consumer Categories
Leading Retail Position In Key Consumer Categories leading consumer packaged meats categories Market share = NO F&F A DD oocoeos:s See ES ES ES SE = Wi = = = = ij = ay Nn a Nn ED | a a) Nn e @ + Ss RS G fo eo RG a & 2 s - oo e ys x. x x © g wg s © > J e ey < Ss gw 8 eg S Ve « > sv RS we ° Branded Re
Slide 19: The Leader In Foodservice Pork
The Leader In Foodservice Pork Doris sales, more than 2.5 times its $3,000 | $2,710 closest competitor n = $2,500 + 5 $2 $2,000 + ao SE $1,500 - ee $1,040 goo4 &= $1,000 + 3 $662 g550 2 $500 - i i $179 $136 $0 - T r T > i od & s a i SF SF S oe Ss < Ce & ¥ “ Ss + ) x ©, ET: 19 Source: Strategic Resea
Slide 20: A Leader In the Deli
A Leader In the Deli market share of the nearly 700 million pound category Market share S222 Pe Oe oA 3 8 =e N rs] Sources: IRI 52 weeks ending 08/12/10; FreshLook 52 weeks ending 09/12/10 i 20 Note: Includes slice to order and self-service deli meats Smithfield
Slide 21: Hog Production Return To Profitability
Hog Production Return To Profitability Smithfield
Slide 22: Hog Production Return To Profitability
Hog Production Return To Profitability $150 lower hog supplies and raising costs in the mid-$50’s per hundredweight in fiscal 2011 = nal mn, i= ‘ ONEONTA ($100) z ($150) ($200) EBIT (in millions) Fy 06 Qi [ FY 07 at | FY 08 Q1 FY 11Q1 | ($250) ($300) i 22 Note: Results have been reclassified to refl
Slide 23: Hog Production Outlook Remains Positive
Hog Production Outlook Remains Positive ¢ Higher grain prices should have minimal impact on company’s results in second half of fiscal 11 — Hog consumes 10 bushels of corn from weaning to sale * Company expects profitability in Hog Production segment in fiscal 2011 and beyond despite higher grain pr
Slide 24: Hog Production Group Restructuring Opportunity
Hog Production Group Restructuring Opportunity * Company projects $90 million or $.02 per pound potential benefit to raising costs from long-term multi- year program ¢ Approximately $86 million CAPEX + $44 million one time charges = less than 1.5 year payback « Reconfiguration of farms and breeding
Slide 25: Exports
Exports Smithfield
Slide 26: Export Customer Reliability
Export Customer Reliability " China/HK 15% Sm e adin port markets. China and Russia continue to be unreliable markets. Note: FY 11 G1 YTD Smithfield export markets by volume; Other Category consists of sales to the following countries: Australia, The Bahamas, Bermuda, Brazil, Bulgaria, Caribbean, Ch
Slide 27: Financial Management
Financial Management Smithfield
Slide 28: Long-Term Debt Maturities
Long-Term Debt Maturities significant debt maturities $1,600 » until August (May) 2011 $1,400 + $1,200 + $1,000 + $800 - $600 $400 $200 + $451 $0 399 i 4,37 in millions $903 $1 billion ABL undrawn Note: Schedule as of 08/29/10 adjusted to reflect $190 million of 2011 bond repurchases Smithfield” thr
Slide 29: Net Debt to Total Capitalization
Net Debt to Total Capitalization ‘o total capitalization — below 40% 60% 55% 50% 9 45% 58% rr 52% 40% 48% 35% 0 v 30% + , ; T T T 1 FY 07 FY 08 FY 09 FY10 FY11Q1 FYT1E Net debt to total capit: Note: Net debt is equal to nates payable and long-term debt and capital lease obligations, including curren
Slide 30: Improving Liquidity
Improving Liquidity qd = Ay debt by nearly $1.4 billion since fiscal 2008 in millions Smithfield* Note: Amounts reflect unused borrowing capacity under credit facilities at quarter end plus invested and liquid cash
Slide 31: Conclusion
Conclusion Smithfield
Slide 32: Positive Outlook
Positive Outlook « Reported record fiscal 2011 first quarter results ¢« Domestic Hog Production — Sharp rebound « Pork — Fresh pork — Positive year over year comparison — Packaged meats — Continued strong results with margins in normalized range « International — Poland meat processing — Continued r
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