Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Barclays Capital Back-to-School Consumer Conference 2011
27 slides from Smithfield Foods's conference presentation, Sep 8, 2011
Slide 1: Barclays Capital Back-to-School Consumer Conference
BARCLAYS CAPITALBACK-TO-SCHOOL CONSUMER CONFERENCE September 8, 2011
Slide 2: Platform for Growth
C. Larry Pope President and Chief Executive Officer Robert W. Manly Executive Vice President and Chief Financial Officer PLATFORM FOR GROWTH
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 reconciliation
Non-GAAP measure reconciliation (in millions) FY 09FY 10Operating profit-Pork segment395$ 539$ Add: Pork segment restructuring and impairment charges88 34 Pork segment adjusted operating profit483$ 573$ Non-GAAP measure reconciliation (in millions) FY 09FY 10Operating profit-Pork segment395$ 539$ Le
Slide 5: Platform for Growth
PLATFORM FOR GROWTH ..Leverage highly coordinated sales and marketing platformand consolidated brand portfolioto drive profitable top and bottom line growth and improve ROIC
Slide 6: Fiscal 2012 First Quarter Highlights
FISCAL 2012 FIRST QUARTER HIGHLIGHTS ..Record year over year results for fifth consecutive quarter led by strong packaged meats earnings ..Record first quarter packaged meats profits in spite of higher raw material costs ..Packaged meats sales +6% and average unit selling prices +8% ..Total retail p
Slide 7: Earnings Growth Driven by Pork Segment
EARNINGS GROWTH DRIVEN BY PORK SEGMENT ..Pork segment profitability has tripled since fiscal 2007 ..On track for fifth consecutive year of record Pork segment earnings $219 $449 $483 $573 $753 $113 $137 $- $100 $200 $300 $400 $500 $600 $700 $800 FY 07FY 08FY 09FY 10FY 11FY 11 Q1FY 12 Q1Pork segment
Slide 8: Achieving Strategic Growth
ACHIEVING STRATEGIC GROWTH ..Focus and investment grows key brands despite category declines and higher input costs Key Brands Other& Private Label Total Retail 2.8% -6.3% -0.6% Foodservice 0.3% -6.1% -3.8% Export/Other 20.4% 1.5% 2.7% Total 2.5% -4.9% -1.3%
Slide 9: Packaged Meats
PACKAGED MEATS ..Achieved record first quarter packaged meats profits $0.06 $0.10 $0.12 $0.17 $0.13 $0.11 $0.17 4.6% 5.6% 6.9% 9.6% 6.1% 5.3% 7.5% FY 07FY 08FY 09FY 10FY 11FY 11 Q1FY 12 Q1Adjusted Operating profit ($ per pound) Adjusted Operating profit (% of sales) Note: Results represent managemen
Slide 10: Smithfield Brand
SMITHFIELD BRAND ..Smithfield brand is gaining share in many categories… 40%37%37% 27% 14%13% -20% -10% 0% 10% 20% 30% 40% 50% Bone-In HamsMarinated LoinSmoked HamBacon Boneless HamsSmoked Dinner SausageYOY Volume GrowthSmithfield BrandCategory Source: FreshLook Marketing Group 12 weeks ending 06/19
Slide 11: Smithfield Brand
SMITHFIELD BRAND ..…fueled by increased marketing and distribution +3.2+3.3+5.6+2.3+1.20% 10% 20% 30% 40% 50% Smoked HamBaconBoneless HamsMarinated LoinSpiral HamSmithfield Brand ACV % and Point Change Source: FreshLook Marketing Group 12 weeks ending 06/19/11; Information Resources, Inc. (IRI) 12 w
Slide 12: Smithfield Brand Activation
SMITHFIELD BRAND ACTIVATION
Slide 13: John Morrell Food Group
JOHN MORRELL FOOD GROUP ..Innovation and focus driving volume growth Source: FreshLook Marketing Group 12 weeks ending 06/19/11; Information Resources, Inc. (IRI) 12 weeks ending 07/17/11; Internaldata 25% 11% -10% 0% 10% 20% 30% Healthy Ones Tub LunchmeatKretschmar DeliYOY Volume GrowthJohn Morrell
Slide 14: Armour-Eckrich
ARMOUR-ECKRICH ..Innovation and distribution gains driving record market shares Source: Information Resources, Inc. (IRI) 12 weeks ending 07/17/11 23%23% -10% 0% 10% 20% 30% Eckrich Smoked SausageArmour PepperoniYOY Volume GrowthArmour-Eckrich BrandsCategory
Slide 15: Armour Brand Activation
ARMOUR BRAND ACTIVATION 15
Slide 16: Farmland Foods
FARMLAND FOODS ..Focus on core brands driving growth 52% 41% 31% 22% -10% 0% 10% 20% 30% 40% 50% 60% Cook's Specialty CutsCook's Bone-in Half HamsFarmland All Natural PorkFarmland Seasoned LoinsYOY Volume GrowthFarmland Foods BrandsCategory Source: Information Resources, Inc. (IRI) 12 weeks ending 0
Slide 17: Farmland Brand Activation
FARMLAND BRAND ACTIVATION 17
Slide 18: Fresh Pork
FRESH PORK ..Profits revert to norm in fiscal 2012 $1 $5 $3 $3 $15 $7 $6 0.9% 3.4% 2.0%1.9% 8.9% 4.0% 2.8% FY 07FY 08FY 09FY 10FY 11FY 11 Q1FY 12 Q1Adjusted Operating profit ($ per head) Adjusted Operating profit (% of sales) Fiscal 2011 Fiscal2012 Sales $4.5 billion Balanced supply & demand Strong
Slide 19: Exports
EXPORTS China-HK26% Japan26% Mexico22% Korea7% Russia6% Other13% Smithfield FY 12 Q1Export Markets by Volume ..Volume +13% YOY ..Dollars +28% YOY Note: Live hog cost estimate week ending 08/06/11; EU is average of Denmark, France, Germany, Hungary, Netherlands, Poland, Romania and Spain; FY 12 Q1 Sm
Slide 20: Hog Production
HOG PRODUCTION Fiscal 2011 Fiscal2012 Sales $2.7 billion Raising costs in mid to high $60s Continued low global protein inventories Volume 16.4 millionhogs Operating Profit $224.4 million NormalizedOperating ProfitRange $10-15 per head Below normalized operating profit range $17 $18 $21 $29 9.8% 11.
Slide 21: Reduced Commodity Exposure
REDUCED COMMODITY EXPOSURE ..Smithfield reduced its domestic corn market exposure by more than 40% since fiscal 2008 ..FY 08 –Beef Group divestiture ..FY 09 –U.S. sow herd reduction ..FY 11 –Sale of turkey interests 214185160150128FY 08FY 09FY 10FY 11FY 12 ECorn Usage (millions of bushels)
Slide 22: International
INTERNATIONAL ..Higher raw material costs and soft demand squeeze hog production and processing margins $46 $3 $5 $128 $116 $25 $0FY 07FY 08FY 09FY 10FY 11FY 11 Q1FY 12 Q1Operating profit ($ in millions) Fiscal 2011 Fiscal2012 Sales $1.3 billion Continued high raw material costs & soft demand Operat
Slide 23: Balance Sheet
BALANCE SHEET ..Project 100 Objectives Achieved ..Eliminated $100 million in annual interest expense ..Reduced debt by $1 billion ..Extended and smoothed debt maturities ..Improved credit metrics ..Reduced idle cash ..Increased liquidity $68.6 $65.5 $60.3 $51.0 $48.1 FY 11 Q1FY 11 Q2FY 11 Q3FY 11 Q4
Slide 24: Maintaining Conservative Balance Sheet
MAINTAINING CONSERVATIVE BALANCE SHEET FY 12 Q1 Target Net debt $1.9 billion <$2.0billion Liquidity $1.2 billion $500 million –$1billion TTM Net debt to adjusted EBITDA 1.6x <3x Net debt to total capitalization 35% <40% ..FY 12 YTD ..Repurchased $65 million of stock ..Repaid $91 million of 2011 and
Slide 25: Uses of Excess Cash
USES OF EXCESS CASH CashReinvest in consumer packaged meats businessShare repurchasesExtraordinary pension contributionDebt reductionDisciplined approach to acquiring branded packaged meats companies
Slide 26: Questions?
QUESTIONS? C$) ‘Smithfield
Slide 27: Barclays Capital Back-to-School Consumer Conference
BARCLAYS CAPITALBACK-TO-SCHOOL CONSUMER CONFERENCE September 8, 2011
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