Cal-maine Foods, Inc. · NASDAQ:CALM
Cal-maine Foods — Stephens 2022 Annual Investment Conference
44 slides from Cal-maine Foods's conference presentation, Nov 16, 2022
Slide 1: Stephens 2022 Annual Investment Conference
EXHIBIT 99.1 CM CAL-MAINE FOODS STEPHENS 2022 ANNUAL INVESTMENT CONFERENCE NOVEMBER 2022
Slide 2: Forward-Looking Statements and Use of Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND USE OF NON-GAAP FINANCIAL MEASURES CM CAL-MAINE FOODS, INC. FORWARD‐LOOKING AND CAUTIONARY STATEMENTS THIS PRESENTATION CONTAINS “FORWARD‐LOOKING STATEMENTS” RELATING TO OUR SHELL EGG BUSINESS, INCLUDING ESTIMATED FUTURE PRODUCTION DATA, EXPECTED CONSTRUCTION SCHEDULES
Slide 3: Mission and Goal
CM CAL-MAINE FOODS, INC. WE ARE THE #1 U.S. PRODUCER AND DISTRIBUTOR OF FRESH EGGS, COMMITTED TO OFFERING OUR CUSTOMERS CHOICE IN A SAFE, COST-EFFECTIVE AND SUSTAINABLE MANNER OUR MISSION TO BE THE MOST SUSTAINABLE PRODUCER AND RELIABLE SUPPLIER OF CONSISTENT, HIGH-QUALITY FRESH EGGS AND EGG PRODUCT
Slide 4: Corporate Snapshot: Fiscal Year 2022
CORPORATE SNAPSHOT: FISCAL YEAR 2022 CM CAL-MAINE FOODS, INC. U.S. EGG MARKET SCALE #1 SHELL EGG PRODUCER AND DISTRIBUTOR(,) ~20% RETAIL EGG MARKET SHARE (2) ~14% SHARE OF U.S. TABLE EGG LAYER FLOCK,3) CATEGORY SALES (4) 3% 58% 39% ■ CONVENTIONAL ■SPECIALTY ■ EGG PRODUCTS AND OTHER FISCAL YEAR ENDED
Slide 5: Tenured Management Team with Deep Industry Experience
TENURED MANAGEMENT TEAM WITH DEEP INDUSTRY EXPERIENCE CM CAL-MAINE FOODS, INC. ADOLPHUS B. BAKER CHAIRMAN OF THE BOARD OF DIRECTORS 35+ YEARS AT CALM )35 YEARS OF INDUSTRY EXPERIENCE SERVED AT CAL‐MAINE FOODS SINCE 1986; MEMBER OF THE BOARD OF DIRECTORS SINCE 1991 SERVED AS CEO FROM 2010 TO 2022; EL
Slide 6: Competitive Advantages Differentiate Cal-Maine Foods in the Protein Market
COMPETITIVE ADVANTAGES DIFFERENTIATE CAL-MAINE FOODS IN THE PROTEIN MARKET CM CAL-MAINE FOODS, INC. PROVEN OPERATOR HIGHLY EFFICIENT OPERATIONAL EXPERTISE, CALM MANAGEMENT SYSTEM ENSURES PROACTIVE COST CONTROL AND ABILITY TO ADAPT TO MARKET PRESSURES THROUGHOUT BUSINESS CYCLE MANAGEMENT DRIVES GROWT
Slide 7: Why Cal-Maine Foods?
WHY CAL-MAINE FOODS? CM CAL-MAINE FOODS, INC. FOCUS ON FOOD CHOICE AFFORDABLE AND NUTRITIOUS PROTEIN PORTFOLIO SHIFT TO PREMIUM, INCLUDING CAGE-FREE, NUTRITIONALLY ENHANCED, ORGANIC AND HARD-COOKED OFFERINGS LEVERAGE SCALE TO DRIVE NETWORK EFFICIENCIES AND CUSTOMER REACH DEPLOY KEY CONSUMER INSIGHTS
Slide 8: A History of Growth Through Adaptation and Successful Market Consolidation
A HISTORY OF GROWTH THROUGH ADAPTATION AND SUCCESSFUL MARKET CONSOLIDATION (1) CM CAL-MAINE FOODS, INC. 1957 ■ 1963 FOUNDED IN JACKSON, MS EXPANDED TO BUILD WORLD'S BY FRED ADAMS LARGEST EGG FARM IN EDWARDS, MS 1969 ■ 1972 ADAMS FOODS MERGED WITH ACQUIRED EGG OPERATIONS DAIRY FRESH PRODUCTS AND OF R
Slide 9: Latest Quarter Update: Fiscal Q1 2023
LATEST QUARTER UPDATE: FISCAL Q1 2023 (1) CM CAL-MAINE FOODS, INC. QUARTER ENDED AUG. 27, 2022 FINANCIAL HIGHLIGHTS $658 MN REVENUE $183 MN EBITDA (2) 275 MN DOZENS SOLD $2,275 NET AVG. SALE PRIE (PER DOZEN) 16.5 MN LBS. EGG PRODUCTS SOLD 131 $0.85 /SH DIVIDEND CATEGORY SALES (4) 5% 65% 30% CHANNEL
Slide 10: Volume & Sales Growth Continue to Outpace Industry
VOLUME & SALES GROWTH CONTINUE TO OUTPACE INDUSTRY (1) CM CAL-MAINE FOODS, INC. SHELL EGG VOLUME AND SALES: CHANGE VS. PRIOR YEAR QUARTER (%) CONVENTIONAL EGGS CAL-MAINE FOOD’S CONVENTIONAL EGG VOLUME IS DECREASING AT A SIGNIFICANTLY LOWER RATE THAN INDUSTRY WHILE STILL OUTPACING SALES GROWTH I ^■IN
Slide 11: Eggs Have Enjoyed Secular Tailwinds in the U.S.
EGGS HAVE ENJOYED SECULAR TAILWINDS IN THE U.S. CM CAL-MAINE FOODS, INC. STRENGTH IN RECENT DECADES (*) EGGS AND EGG PRODUCTS IN THE U.S. HAVE ENJOYED A CONTINUED DOMESTIC TAILWIND SINCE THE 1990’S CONSUMER PREFERENCES HAVE CONTINUED TO SHIFT TO CHICKEN, EGGS AND OTHER ANIMAL PROTEIN SOURCES 2020S:
Slide 12: Our Shell Egg Portfolio Is Positioned to Meet Nutrition Needs
OUR SHELL EGG PORTFOLIO IS POSITIONED TO MEET NUTRITION NEEDS CM CAL-MAINE FOODS, INC. A UNIVERSAL PROTEIN ~98% OF U.S. HOUSEHOLDS PURCHASE SHELL EGGS AND EGG PRODUCTS (,) ~98% HOUSEHOLD PENETRATION SUPPORT HEALTH NEEDS (3-4-5) A ‘‘HEALTHY FOOD" IN NEW PROPOSED FDA DEFINITION ONE OF THE MOST AFFORDA
Slide 13: Building on Our Cornerstone of Sustainability
BUILDING ON OUR CORNERSTONE OF SUSTAINABILITY CM CAL-MAINE FOODS, INC. QUALITY FOOD CHOICES OUR EFFORTS CONTINUE TO DRIVE STRONG RESULTS #1 SCORE ZERO #1 ISS SCORE: PRODUCT PRODUCT RECALLS OR SAFETY, QUALITY & BRAND (1) MARKET BANS IN PRIOR THREE FISCAL YEARS (2) 100% SQF™-CERTIFIED WITH VERY STRONG
Slide 14: Cal-Maine Foods Today: The Leading Global Egg Producer and Distributor
CAL-MAINE FOODS TODAY: THE LEADING GLOBAL EGG PRODUCER AND DISTRIBUTOR CM CAL-MAINE FOODS, INC. WORLD’S TOP-10 EGG PRODUCERS (LAYER MNS) (1) CAL-MAINE FOODS, 44.3 PROTEINA ANIMAL, 36.0 ROSE ACRE FARMS, 27.6 CP GROUP, 22.0 BEIJING DAT CO., 20.6 VERSOVA HOLDINGS, 20.1 HILLANDALE FARMS, 20.0 ISE INC.,
Slide 15: Blue-Chip Customer Base Minimizes Revenue Concentration Risk
BLUE-CHIP CUSTOMER BASE MINIMIZES REVENUE CONCENTRATION RISK CM CAL-MAINE FOODS, INC. MANAGE TOP-10 RELATIONSHIPS (1) 1 WALMART INC. SAM’S CLUB 6 ALDI 2 H E B 7 COSTCO 3 PUBLIX 8 SPECIALTY EGG (2) 4 FOOD LION 9 KROGER 5 WAKEFERN 10 C&S WHOLESALE GROCERS BROAD EGG OFFERING CAPABILITIES HELP US CONTIN
Slide 16: Fully Integrated Operations Allow for Scaled Production and Distribution Capacity
FULLY INTEGRATED OPERATIONS ALLOW FOR SCALED PRODUCTION AND DISTRIBUTION CAPACITY (1) CM CAL-MAINE FOODS, INC. FULLY INTEGRATED 25 FEED MILLS PRODUCTION FACILITIES ~7.2 MILLION EGGS PER HOUR PRODUCTION & PROCESSING CAPACITY BREEDING FACILITIES PACKAGING FACILITIES ROBUST PRODUCTION-TO -DISTRIBUTION
Slide 17: Scaling Production to Manage Costs and Reduce Purchase Dependency
SCALING PRODUCTION TO MANAGE COSTS AND REDUCE PURCHASE DEPENDENCY (1) CM CAL-MAINE FOODS, INC. SCALING PRODUCTION TO CONTROL COSTS SELF-PRODUCTION OFFERS RELATIVELY ATTRACTIVE EXPENSE PROFILE; SUPPORTS FLEXIBILITY DURING TIGHTENED EGG SUPPLY FY22 PRODUCED-TO-SOLD RATIO IMPROVED TO 93% FROM 84% IN FY
Slide 18: Leveraging Production to Manage Expense and Maintain Robust Supply Chain
LEVERAGING PRODUCTION TO MANAGE EXPENSE AND MAINTAIN ROBUST SUPPLY CHAIN (1) CM CAL -MAINE FOODS, INC. MANAGING COST OF SALES (COS) FARM PRODUCTION COSTS, LARGELY FEED INGREDIENTS, FACILITY AND AMORTIZATION, DRIVES COS EXPENSE CALM MANAGEMENT SYSTEM PROVIDES CONSTANT EVALUATION OF COSTS & PRICING TO
Slide 19: Scaling Hard-Cooked Egg Offerings
SCALING HARD-COOKED EGG OFFERINGS, OPTIMISING THROUGHPUT AND CATEGORY REACH CM CAL-MAINE FOODS, INC. HARD-COOKED IS AN ATTRACTIVE CATEGORY PROTEIN-PACKED KETO-FRIENDLY AND GLUTEN-FREE CONVENIENT FOR MEAL PREPARATION AND SNACKING KID-FRIENDLY CATEGORY CAPTURES VALUE INTEGRATED PRODUCTION AND PROCESSI
Slide 20: Conservative Approach to Capital Allocation, Executing on Strategic Priorities
CONSERVATIVE APPROACH TO CAPITAL ALLOCATION, EXECUTING ON STRATEGIC PRIORITIES (1) CM CAL-MAINE FOODS, INC. MANAGE CASH PRIORITIES SELECTIVE ACQUISITION POSTURE FOR CAGE-FREE CAPACITY VARIABLE DIVIDEND POLICY DRIVEN BY COMMODITY-BASED, CYCLICAL BUSINESS MODEL FY USE OF CASH ($ MM)* $169 $97 $13 $64
Slide 21: Variable Cash Dividend Provides Sustainable Returns Through Cycle
VARIABLE CASH DIVIDEND PROVIDES SUSTAINABLE RETURNS THROUGH CYCLE (1) CM CAL-MAINE FOODS, INC. 1/3 OF NET INCOME ALLOCATED EACH QUARTER UNDER OUR VARIABLE DIVIDEND POLICY $478MM OF DIVIDENDS PAID SINCE FY2000 SHAREHOLDER RETURNS COMMITTED TO ALLOCATION OF CAPITAL TO OUR SHAREHOLDERS THROUGH A VARIAB
Slide 22: Meeting Evolving Retail Market Needs by Driving Favorable Product Mix
MEETING EVOLVING RETAIL MARKET NEEDS BY DRIVING FAVORABLE PRODUCT MIX CM CAL-MAINE FOODS, INC. SERVE CHANGING CUSTOMER NEEDS IRI DATA INDICATES MOST SIGNIFICANT DEMAND GROWTH IS AMONG CAGE-FREE AND ORGANIC EGG PRODUCTS DESPITE SHIFT IN THIS MIX, CONVENTIONAL EGGS MAINTAIN CORE RETAIL MARKET POSITION
Slide 23: Historic Market Trends
HISTORIC MARKET TRENDS CM CAL-MAINE FOODS, INC. MARKET TRENDS HAVE BEEN IMPROVING OUR SHELL EGGS ARE SOLD AT PRICES RELATED TO INDEPENDENTLY QUOTED WHOLESALE MARKET PRICES OR FORMULAS RELATED TO OUR COSTS OF PRODUCTION OUR OPERATING RESULTS ARE MATERIALLY IMPACTED BY CHANGES IN THE DEMAND FOR, AND M
Slide 24: Volatile Feed Ingredient Pricing Provides Margin Opportunities
VOLATILE FEED INGREDIENT PRICING PROVIDES MARGIN OPPORTUNITIES CM CAL-MAINE FOODS, INC. MONITOR FEED INGREDIENT INPUTS (1) WASDE REPORTS CITE RUSSIA’S INVASION OF UKRAINE AS SIGNIFICANTLY INCREASING UNCERTAINTY OF AGRICULTURAL SUPPLY/DEMAND CONDITIONS USDA PROJECTIONS ESTIMATE THAT ‘22/23 U.S. CORN
Slide 25: HPAI: Seasoned Biosecurity Team Effectively Managing
HPAI SEASONED BIOSECURITY TEAM EFFECTIVELY MANAGING THOUGH U.S. 2022 OUTBREAK CM CAL-MAINE FOODS, INC. WHAT IS HIGHLY PATHOGENIC AVIAN INFLUENZA (HPAI?) (2) CAUSED BY AN “INFLUENZA TYPE A VIRUS”, IMPACTS CHICKENS, TURKEYS, AND OTHER DOMESTICATED AND WILD BIRDS HPAI HAS IMPACTED COMMERCIAL POULTRY AN
Slide 26: HPAI 2022 vs. 2014-2015 Snapshot
HPAI 2022 VS. 2014-2015 SNAPSHOT (1) CM CAL-MAINE FOODS, INC. 2022 HPAI INFECTIONS: NOV. 6, 2022 (L) ~39 MN TOTAL BIRDS IMPACTED MIX OF COMMERCIAL EGG LAYERS, PULLETS, BREEDERS, TURKEYS, BROILER CHICKENS AND BACKYARD MULTI-SPECIES ~38 MN ~1 MN ~100K TABLE EGG LAYER HENS PULLETS OF 3.7MM BREEDER DEPO
Slide 27: State Mandates Provide a Path to Cage-Free Eggs in 2026
STATE MANDATES PROVIDE A PATH TO CAGE-FREE EGGS IN 2026 CM CAL-MAINE FOODS, INC. STATE MANDATES ACCELERATE SHIFT TO CAGE-FREE EGGS (1) 10 U.S. STATES HAVE PASSED CAGE-FREE LEGISLATION OR REGULATION FOR IMPLEMENTATION BY 2026 %AGE OF U.S. HOUSEHOLDS WITHIN CAGE-FREE MANDATED STATES WILL CONTINUE TO I
Slide 28: Ideally Positioned to Supply Transitioning Cage-Free Demand
CAL-MAINE FOODS IDEALLY POSITIONED TO SUPPLY TRANSITIONING CAGE-FREE DEMAND CM CAL-MAINE FOODS, INC. CAGE-FREE DEMAND DRIVERS HUSBANDRY FOCUS APPETITE FOR DIVERSE HOUSING CONDITIONS CONSUMER SOCIAL RESPONSIBILITY FOCUS ON HUMAN AND ANIMAL HEALTH AND WELL-BEING LEGISLATIVE ACTIONS -27-32% HOUSEHOLDS
Slide 29: Shell Egg Industry Is Fragmented; Opportunities Remain
SHELL EGG INDUSTRY IS FRAGMENTED; OPPORTUNITIES REMAIN CM CAL-MAINE FOODS, INC. SUCCESSFUL INTEGRATION HISTORY INFORMS OUR OUTLOOK 23 SUCCESSFUL INTEGRATIONS SINCE 1989 (1) ACQUISITION BENEFITS GEOGRAPHY CAGE-FREE CAPABILITY MILLING PROCESSING SYNERGY HIGHLIGHTS CUSTOMER PROXIMITY SPECIALTY FRANCHIS
Slide 30: Key Takeaways
KEY TAKEAWAYS CM CAL-MAINE FOODS, INC. 1.1 BILLION DOZENS SOLD FY22 60+ YEARS OPERATING QUALITY FOOD CHOICES LARGEST PRODUCER AND DISTRIBUTOR OF FRESH SHELL EGGS AND EGG PRODUCTS IN THE U.S. PROVEN, HIGHLY EFFICIENT OPERATOR S WITH DEEP TALENT BENCH AND INDUSTRY EXPERTISE NIMBLE AND POISED TO MEET E
Slide 31: Questions?
CM CAL-MAINE FOODS, INC. QUESTIONS? IR@CMFOODS.COM
Slide 32: Appendix
CM CAL-MAINE FOODS, INC. APPENDIX IMAGE COURTESY OF KANAN KHASMAMMADOV, UNSPLASH. CAL-MAINE FOODS | STEPHENS 2022 ANNUAL INVESTMENT CONFERENCE | NOVEMBER 2022 32
Slide 33: Continue to Evolve Our Strong Human Capital and Community Focus
CONTINUE TO EVOLVE OUR STRONG HUMAN CAPITAL AND COMMUNITY FOCUS CM CAL-MAINE FOODS, INC. JIA SCOTT, LEFT, SERVES AS VICE PRESIDENT, TREASURY, AND OVERSEES THE COMPANY’S TREASURY MANAGEMENT, ACCOUNTS PAYABLE AND CORPORATE TAX FUNCTIONS. JIA ALSO HELPS OVERSEE THE COMPANY’S PHILANTHROPIC AND CORPORATE
Slide 34: Invest to Attract and Retain Top Talent
INVEST TO ATTRACT AND RETAIN TOP TALENT CM CAL-MAINE FOODS, INC. BRIAN BALLARD SERVES AS CORPORATE RECRUITER AND IS RESPONSIBLE FOR FINDING EARLY-CAREER TALENT AT UNDERGRADUATE INSTITUTIONS. HE LEADS OUR ENTERPRISE EFFORT TO ENHANCE CANDIDATE POOL DIVERSITY AND ATTRACT TOP-PERFORMING INDIVIDUALS TO
Slide 35: Drive Colleague Engagement and Safety Outcomes
DRIVE COLLEAGUE ENGAGEMENT AND SAFETY OUTCOMES CM CAL-MAINE FOODS, INC. TRISHA PERKINS, LEFT, AND MELVIN BONDS SERVE AS CORPORATE SAFETY MANAGERS WHO DEVELOP AND DEPLOY ENTERPRISE SAFETY PROTOCOLS AND TRAINING. THEY ALSO MANAGE ENTERPRISE HEALTH AND SAFETY COMPLIANCE AND REGULATORY REPORTING. DRIVE
Slide 36: Select Income Statement Highlights
SELECT INCOME STATEMENT HIGHLIGHTS CM CAL-MAINE FOODS, INC. FISCAL YEAR ENDED QUARTER ENDED $S, EXCEPT SHARE AMOUNT 2018 2019 2020 2021 2022 8/27/22 NET SALES $ 1,502,932 1,361,188 1,351,609 1,348,987 1,777,159 658,344 GROSS PROFIT $ 361,046 222,859 179,588 160,661 337,059 217,490 OPERATING INCOME (
Slide 37: Select Operating Results
SELECT OPERATING RESULTS CM CAL-MAINE FOODS, INC. FISCAL YEAR ENDED QUARTER ENDED $S, EXCEPT SALES VOLUME AND PERCENTAGE DATA 2018 2019 2020 2021 2022 8/27/22 DOZEN EGGS SOLD (000) CONVENTIONAL 780,362 778,051 813,255 785,446 747,914 179,712 SPECIALTY 257,352 260,848 255,895 287,765 335,875 95,605 T
Slide 38: EBITDA Reconciliation
EBITDA RECONCILIATION CM CAL-MAINE FOODS, INC. NON-GAAP MEASURE – EBITDA EBITDA IS A NON-GAAP MEASURE AND DEFINED AS NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC. PLUS INTEREST, TAXES, DEPRECIATION AND AMORTIZATION. THE FOLLOWING TABLE SETS FORTH A RECONCILIATION OF EBITDA TO NET INCOME ATTRIBUTA
Slide 39: Citations (1/6)
CITATIONS (1/6) CM CAL-MAINE FOODS, INC. SLIDE 4 – CORPORATE SNAPSHOT: FISCAL YEAR 2022 RANKINGS FROM WATT POULTRY. “2022 POULTRY TOP U.S. EGG PRODUCERS RANKINGS.” DATA AS OF DECEMBER 31, 2021. WORLD AGRICULTURAL SUPPLY AND DEMAND ESTIMATES (WASDE). U.S. MARKET SHARE DATA IS AS OF-CALENDAR YEAR-END;
Slide 40: Citations (2/6)
CITATIONS (2/6) CM CAL-MAINE FOODS, INC. SLIDE 10 – VOLUME & SALES GROWTH VS. INDUSTRY COMPANY FILINGS AND RESEARCH SLIDE 11 – EGGS HAVE ENJOYED SECULAR TAILWIND IN THE U.S. USDA ECONOMIC RESEARCH SERVICE. DATA MOST RECENTLY UPDATED ON JUNE 1, 2020. EGGS AVAILABLE PER CAPITA. CHICKEN WEIGHT PER CAPI
Slide 41: Citations (3/6)
CITATIONS (3/6) CM CAL-MAINE FOODS, INC. SLIDE 14 – LATEST QUARTER UPDATE – FISCAL Q1 2023 RANKINGS FROM WATT POULTRY. “2022 POULTRY TOP U.S. EGG PRODUCERS RANKINGS.” DATA AS OF DECEMBER 31, 2021. COMPANY FILINGS AND RESEARCH SLIDE 15 – EXCELLENT SERVICE FOR BLUE-CHIP CUSTOMER BASE DATA AS OF FISCAL
Slide 42: Citations (4/6)
CITATIONS (4/6) CM CAL-MAINE FOODS, INC. SLIDE 20 – EXECUTE AGAINST CAPITAL ALLOCATION PRIORITIES COMPANY FILINGS SLIDE 21 – EXECUTE AGAINST CAPITAL ALLOCATION PRIORITIES COMPANY FILINGS SLIDE 22 – DRIVE FAVORABLE MIX WHILE MEETING CUSTOMER NEEDS COMPANY FILINGS AND OTHER PUBLIC DISCLOSURES. SPECIAL
Slide 43: Citations (5/6)
CITATIONS (5/6) CM CAL-MAINE FOODS, INC. SLIDE 25 – SEASONED HPAI RISK MANAGEMENT TEAM CDC.GOV. MARCH 7, 2022 UPDATE: H5N1 BIRD FLU POSES LOW RISK TO THE PUBLIC. HTTPS://WWW.CDC.GOV/FLU/AVIANFLU/SPOTLIGHTS/2021 -2022/H5N1-LOW-RISK-PUBLIC.HTM. FDA. QUESTIONS AND ANSWERS REGARDING THE SAFETY OF EGGS D
Slide 44: Citations (6/6)
CITATIONS (6/6) CM CAL-MAINE FOODS, INC. SLIDE 29 – SHELL EGG INDUSTRY IS FRAGMENTED; OPPORTUNITIES REMAIN COMPANY PRESS RELEASES AND FILINGS 2022 WATT POULTRY TOP U.S. EGG PRODUCERS’ RANKINGS. HTTPS://WWW.EGGINDUSTRY-DIGITAL.COM/EGGINDUSTRY/JANUARY_2022/M OBILEPAGEDREPLICA.ACTION?PM=2&FOLIO=AD1#PG1
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