Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Barclays Capital 2010 High Yield Bond and Syndicated Loan Conference
31 slides from Smithfield Foods's conference presentation, Mar 26, 2010
Slide 1: Barclays Capital 2010 High Yield Bond and Syndicated Loan Conference
Barclays Capital 2010 High Yield Bond and Syndicated Loan Conference Robert W. Manly Executive Vice President and Chief Financial Officer Smithfield Foods, Inc. March 26, 2010
Slide 2: 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 3: Emerging As A Global Leader In Packaged Meats
Emerging As A Global Leader In Packaged Meats
Slide 4: Pork Sales: $9.3 billion; Market Leader: Pork Processing
Pork Sales: $9.3 billion Operating Profit: $538.2 million Market Leader: Pork Processing • World’s largest pork processor • Sold approximately 3.1 billion pounds of packaged meats in FY09 • Processed 33 million hogs in FY09 • Sold approximately 4.5 billion pounds of fresh pork in FY09 Note: TTM FY 1
Slide 5: Smithfield sold approximately 3.1 billion pounds of packaged meats in fiscal 2009
Smithfield sold approximately 3.1 billion pounds of packaged meats in fiscal 2009 (% of Smithfield U.S. packaged meats volume)
Slide 6: International Sales: $1.2 billion; Market Leadership: International
International Sales: $1.2 billion Operating Profit: $39.5 million #1 #1 Market Leadership: International • Subsidiaries in Poland, Romania and the United Kingdom • 37% ownership of Campofrío Food Group (public company) with #1 packaged meats market share in France, Spain, The Netherlands, Belgium an
Slide 7: Other Segment: Market Leader: Turkey Processing
Other Segment Sales: $189 million Operating Loss: $(17.1) million Market Leader: Turkey Processing • Butterball is the largest turkey processor in the U.S. • Segment comprised of turkey production operations, 49% interest in Butterball and interest in live cattle joint venture operations Note: TTM F
Slide 8: Hog Production Sales: $2.4 billion; Market Leader: Hog Production
Hog Production Sales: $2.4 billion Operating Loss: $(555.8) million Market Leader: Hog Production • World’s largest hog producer • Produced 18.7 million hogs in U.S. in FY09 • Produced 1.7 million hogs in Poland and Romania and 1.7 million hogs at Mexican joint ventures in FY09 Note: TTM FY 10 Q3 sa
Slide 9: The New Era of Smithfield
The New Era of Smithfield
Slide 10: The New Era of Smithfield
The New Era of Smithfield • Restructured Pork Group primed for higher performance and stability of earnings • Focus on synergies, efficiency, ROIC and margins • Increased financial management with focus on deleveraging the balance sheet and maintaining strong liquidity • Business focus on maximizing
Slide 11: Pork Group Restructuring Update
Pork Group Restructuring Update • Streamlined Pork Group management structure - DONE • Consolidated seven IOC’s into three and closed five processing plants; sixth to close in third quarter - DONE • Merged three fresh pork sales organizations into two and consolidated three overseas export teams int
Slide 12: Pork Group Restructuring Costs/Benefits
Pork Group Restructuring Costs/Benefits $54 million $34 million $74 million $125 million
Slide 13: Pork Group Restructuring Costs/Benefits
Capital requirements One time expenses Non-cash asset write-off Annual EBT Improvements Total $52 million $34 million $74 million $125 million Amount previously incurred/achieved $44 million $28 million $74 million $111 million Amount remaining after FY 10 Q3 $8 million $6 million - $14 million Pork
Slide 14: Packaged Meats Margin Growth
Packaged Meats Margin Growth Note: FY 09 and FY 10 results before restructuring charges
Slide 15: Packaged Meats EBT Growth
Packaged Meats EBT Growth Note: FY 09 and FY 10 results before restructuring charges
Slide 16: Packaged meats will continue to drive pork segment earnings contribution
Packaged meats will continue to drive pork segment earnings contribution Packaged Meats Contribution $5.71 $9.34 $14.32 $15.00 Note: FY 09 and TTM results exclude impairments mostly related to segment restructuring. All periods reflect an apportionment of "Pork Other" consistent with the apportionme
Slide 17: Leading position in key consumer categories
Category Size 1 Growth 2 Packaged Lunchmeat 741.1 -2.5% 11.1% 2 Deli Meats 685.2 +2.6% 13.3% 1 Turkey 631.9 +0.8% 20.7% 1 Bacon 604.1 +7.2% 18.4% 1 Smoked Hams 544.0 +10.6% 55.0% 1 Cooked Dinner Sausage 361.8 -1.2% 17.0% 2 Breakfast Sausage 341.3 +0.7% 7.7% 3 Smoked Pork 161.8 -3.5% 49.5% 1 Value Ad
Slide 18: Smithfield has reduced its sow herd by 13%
Smithfield has proactively reduced the size of its sow herd by 13% in an effort to return hog production to normalized levels of profitability Hog production losses moderated significantly in the third quarter of fiscal 2010 Hog Production Operating Profit (Loss)
Slide 19: U.S. Sow Herd Reduction
Smithfield will produce approximately 1.4 million fewer market hogs in fiscal 2010 and approximately 2.2 million fewer market hogs annually thereafter U.S. Sow Herd Reduction
Slide 20: Smithfield
Smithfield a
Slide 21: U.S. Pork Exports 2000 vs. 2008
U.S. Pork Exports 2000 vs. 2008 1.3 billion pounds; 7 million hogs; 7% of U.S. production
Slide 22: Financial Management
Financial Management
Slide 23: Restructuring the Balance Sheet
Restructuring the Balance Sheet • Reduced total debt • Removed risk – Covenant – Liquidity – Maturities
Slide 24: Restructured $2 Billion In Debt
Size Maturity Asset-Based Revolving Credit Facility $1.0 billion July 2012 Senior Secured Notes $625 million July 2014 Senior Secured Notes $225 million July 2014 Term Loan Maturity Extension $200 million October 2013 New credit facility contains no currently applicable maintenance covenants Estimat
Slide 25: Improving Liquidity
Smithfield continues to improve liquidity and has reduced net debt in excess of $1 billion since fiscal 2009 Improving Liquidity Note: Amounts reflect unused borrowing capacity under U.S. credit facility at quarter end plus invested and liquid cash
Slide 26: Long-Term Debt Maturities
Smithfield has no significant debt maturities until fiscal 2012 Long-Term Debt Maturities
Slide 27: Total Debt to Total Capitalization
Total Debt to Total Capitalization Note: FY 10 Pro forma debt is net of short-term cash investments
Slide 28: Smithfield
Smithfield a
Slide 29: Where do we go from here?
Where do we go from here? • De-emphasize domestic hog production • Devote additional resources to marketing • Concentrate on packaged meat capabilities • Continue to search for international value added opportunities
Slide 30: Conclusion
Conclusion • Pork Group profitability is already benefitting from restructuring plan and will increase in fiscal 2011 • Packaged meats business performing at record levels • Continuing to maintain very strong liquidity position, reduce debt and strengthen the balance sheet • Hog production results a
Slide 31: Smithfield
Smithfield @
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