Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Investor Presentation (November 2011)
26 slides from Smithfield Foods's investor presentation, Nov 7, 2011
Slide 1: November 2011 Investor Presentation
"ta ’ . d 4 i Sans > ~<a Zz i a 7. . Eee Ue Ap November 2011 Investor Presentation
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: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations
Slide 4: Smithfield At A Glance
Smithfield At A Glance Fiscal 2011 Sales=$12.2 billionFiscal 2011 Operating Profit=$1.1 billion PorkSales=$10.3 billionOperating Profit= $753 million Fresh PorkSales=$4.6 billionOperating Profit= $407 million Packaged MeatsSales=$5.7 billionOperating Profit= $347 million Hog ProductionSales=$2.7 bil
Slide 5: Sales by Segment
Sales by Segment Hog Production 19% International 9% Packaged Meats40% Fresh Pork32% Total Pork72% Pork segment accounted for nearly three- quarters of segment sales in fiscal 2011 Note: Segment sales before inter-segment eliminations
Slide 6: Leading Positions In Pork Industry
Leading Positions In Pork Industry 28% Others27% Tyson17% JBS11% Cargill9% Hormel8% Pork Processing Sources: National Pork Board Spring 2009; U.S. Pork Powerhouses2011 New.Smithfield trans.png 14% Triumph6% 4% 3% 3% Others70% Hog Production Seaboard Maschhoffs Prestage New.Smithfield trans.png #1 #1
Slide 7: #1 U.S. Packaged Pork Company
#1 U.S. Packaged Pork Company Retail45% Foodservice23% Export13% Deli7% Processor/Industrial12% Sales Retail39% Foodservice16% Export16% Deli3% Processor/Industrial26% Volume Note: FY 11 Pork segment sales and volume before inter-segment eliminations #1Supplier to RetailFoodserviceExport #1Supplier
Slide 8: Consumer-Winning Brands
Consumer-Winning Brands Cooks.eps http://www.trademarkia.com/services/logo.ashx?sid=77949721 http://www.trademarkia.com/services/logo.ashx?sid=77914462 Eckrich_Logo.eps New.Smithfield trans.png http://doclibrary.com/BRO222/CMM/Farmland%20Logo%20New%20Mar03.jpg Private Label/Other24% Core Brands65% N
Slide 9: Earnings Growth Driven By Pork Segment
Earnings Growth Driven By Pork Segment $219 $449 $483 $573 $753 $113 $137 $- $100 $200 $300 $400 $500 $600 $700 $800 FY 07 FY 08 FY 09 FY 10 FY 11 FY 11 Q1 FY 12 Q1 Pork segment adjusted operating profit(in millions) Fresh pork Packaged meats Total Pork Segment Note: Results represent management’s e
Slide 10: Packaged Meats
Packaged Meats Note: Results represent management’s estimated allocation of total Pork Segment results; FY 09 and FY 10 results adjusted for restructuring and impairment charges; Refer to Non-GAAP measure reconciliations; Sales before inter-segment eliminations Fiscal 2011 Fiscal2012 Sales $5.7 bill
Slide 11: Achieving Strategic Branded Growth
Achieving Strategic Branded Growth 17% 0% 4% 17% -1% -2% 16% 12% 11% 8% 5% 4% 138% 23% 23% 13% 5% 4% Boneless Ham Steaks Bacon Tub Lunchmeats BBQ Smoked Dinner Sausage Portable Lunches YOY Volume Growth Category Smithfield Total Smithfield Lead Brand Source: Information Resources, Inc. (IRI) 12 week
Slide 12: Product Innovation
Product Innovation ArmourLunchkitwith Apples New ArmourActive Packs offers lunchkitswith better-for-you ingredients for consumers with active lifestyles ArmourLower Sodium Pepperoni Innovative full-flavor product packs 50 percent less sodium than regular pepperoni Smithfield PouchPackBaconInnovative
Slide 13: Brand Activation
Brand Activation Billboards Consumer Promotions Digital FSIs Print Radio Retail POS Social Media Television Commercials Website PP Ad Slick.png 726281 Dinner Sausage Ad-15-8-11.jpg image002 Actual Ham Shop Multideck Display.jpg Smithfield has increased its consumer marketing spending by 20% this yea
Slide 14: Fresh Pork
Fresh Pork $1 $5 $3 $3 $15 $7 $6 0.9% 3.4% 2.0% 1.9% 8.9% 4.0% 2.8% FY 07 FY 08 FY 09 FY 10 FY 11 FY 11 Q1 FY 12 Q1 Adjusted Operating profit ($ per head) Adjusted Operating profit (% of sales) Fiscal 2011 Fiscal2012 Sales $4.6 billion Balanced domestic supply & demand Verystrongexports Volume 27.3
Slide 15: Exports
Exports China-HK26% Japan26% Mexico22% Korea7% Russia6% Other13% Smithfield FY 12 Q1 Export Markets by Volume .Volume +13% YOY .Dollars +28% YOY Note: Live hog cost estimate week ending 10/22/11; EU is average of Denmark, France, Germany, Hungary, Netherlands, Poland, Romania and Spain; FY 12 Q1 Smi
Slide 16: Pork Exports Trending To Record
Pork Exports Trending To Record 7% 19% 22% Industry % of Pork Production Exported 2000 2010 January-August 2011 20% 24% Smithfield World population has increased almost 17% Global GDP has nearly doubled World hog inventories have declined Strong growth in U.S. pork exports Since 2000…
Slide 17: Hog Production
Hog Production $15 $(26) $(28) $13 $17 $30 12.1% -1.1% $(1) -20.2% -22.5% 7.9% 9.9% 15.2% FY 07 FY 08 FY 09 FY 10 FY 11 FY 11 Q1 FY 12 Q1 Adjusted Operating profit ($ per head) Adjusted Operating profit (% of sales) Fiscal 2011Fiscal2012 Sales $2.7 billion Continued low global protein inventories Ra
Slide 18: Improved Hog Production Outlook
Improved Hog Production Outlook Corn prices have declined while hog futures have increased Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 ISU Model Cost of Production 09/08/11 11/01/11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 O
Slide 19: Hog Production Profitability
Hog Production Profitability Industry hog production profitability averages normalized range of $10-15 per head for next twelve months Note: Industry profitability based on futures curves for live hogs and grains on 11/01/11; cost is pre-interest $55 $60 $65 $70 $75 Nov-11 Dec-11 Jan-12 Feb-12 Mar-1
Slide 20: Sensitivity Analysis
Sensitivity Analysis $1 per bushel in corn $10 per head $50 per ton in soybean meal $3 per head $5 per cwt in live hog price $13 per head
Slide 21: International
International $46 $3 $5 $128 $116 $25 $0 FY 07 FY 08 FY 09 FY 10 FY 11 FY 11 Q1 FY 12 Q1 Operating profit ($ in millions) Fiscal 2011 Fiscal2012 Sales $1.3 billion Continued high raw material costs & soft demand Sequential improvement from Q1 Operating Profit $115.9 million NormalizedOperating Profi
Slide 22: Balance Sheet
Balance Sheet $68.6 $65.5 $60.3 $51.0 $48.1 FY 11 Q1 FY 11 Q2 FY 11 Q3 FY 11 Q4 FY 12 Q1 FY 12 Q2* FY 12 Q3* FY 12 Q4* Quarterly Interest Expense ($ in millions) Project 100 Goal = $45 million *Estimate Balance Sheet Weakness to Strength •Eliminated $100 million in annual interest expense •Reduced d
Slide 23: Maintaining Conservative Balance Sheet
Maintaining Conservative Balance Sheet FY 12 Q1 Target Liquidity $1.2 billion $500 million –$1billion Net debt to TTM adjusted EBITDA 1.6x <3x Net debt to total capitalization 35% <40% Note: Net debt is equal to long-term debt and capital lease obligations, including current portion, less cash and c
Slide 24: Uses of Excess Cash
Uses of Excess Cash Cash Reinvest in packaged meats business Share repurchases Extraordinary pension contribution Debt reduction Acquire branded packaged meats companies
Slide 25: Investment Thesis
Investment Thesis •Record year over year results for five straight quarters with positive outlook for fiscal 2012 •Improved Pork and Hog Production segment outlook •Continuing to exhibit strong packaged meats pricing power •Capitalizing on robust export demand •Competitive cost structure in all oper
Slide 26: November 2011
"ta ’ . d 4 i Sans > ~<a Zz i a 7. . Eee Ue Ap November 2011 Investor Presentation
Smithfield Foods — Investor Presentation (November 2011) on 6ix