Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Barclays Capital High Yield Bond and Syndicated Loan Conference (March 2011)
41 slides from Smithfield Foods's conference presentation, Mar 25, 2011
Slide 1: Barclays Capital High Yield Bond and Syndicated Loan Conference
Smithfield Barclays Capital High Yield Bond and Syndicated Loan Conference March 25, 2011
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: Robert W. Manly, Executive Vice President and Chief Financial Officer
Robert W. Manly Executive Vice President and Chief Financial Officer
Slide 5: Leading Positions In Food Industry
Leading Positions In Food Industry
Slide 6: Leading Positions In Food Industry
Leading Positions In Food Industry Sources: Information Resources, Inc. (IRI); FreshLook Marketing Group; Successful Farming Pork Powerhouses 2010
Slide 7: #1 World Pork Processor
#1 World Pork Processor New.Smithfield trans.png TTMFY 11 Q3 Fresh Pork PackagedMeats Sales $4.4 billion $5.6 billion Volume 28 millionhogs 2.7 billion pounds Operating Profit $300.3 million $367.9 million Normalized EBIT Range $3-7per head 10to 14 centsper pound Note: TTM FY 11 Q3 sales (before int
Slide 8: Pork segment accounts for 71% of the company's sales
Pork segment accounts for 71% of the company’s $12 billion in sales TTM FY 11 Q3 Sales = $12.0 billion Note: Percentages do not reflect the elimination of inter-segment sales
Slide 9: #1 U.S. Packaged Pork Company
#1 U.S. Packaged Pork Company Smithfield brands are ranked #1 in numerous packaged meats categories FY 10 Packaged Meats Volume = 2.9 billion pounds
Slide 10: Consumer packaged meats drives Pork segment earnings contribution
Consumer packaged meats drives Pork segment earnings contribution Note: TTM FY 11 Q3 sales (before inter-segment eliminations) and operating profit
Slide 11: #1 World Hog Producer
#1 World Hog Producer TTMFY 11 Q3 Sales Operating Profit Volume Hog Production $2.7billion $53.6 million 16.8 million hogs Note: TTM FY 11 Q3 sales (before inter-segment eliminations), operating profit and volume; results have been reclassified to reflect realignment of international hog production
Slide 12: #1 Market share in several European countries
#1 Market share in several European countries Company Location/ Ownership TTMFY 11 Q3 Sales TTM FY 11 Q3 Operating Profit Animex Poland/ 100% $1.0 billion $73.1 million AgriPlus Smithfield Prod Romania/ 100% $188.3 million $11.8 million Smithfield Ferme Norson Mexico/ 50%JV $400.3 million1 $25.5 mil
Slide 13: #1 Supplier to Retail
#1 Supplier to Retail Source: IRI Total U.S. Food 52 weeks ending 02/27/11; Freshlook: Total U.S. Food 52 weeks ending 02/01/11 #1 #1 #1 #2 #2 #1 #2 #3 #2 #4
Slide 14: America's Pork and Packaged Meats Provider
America’s Pork and Packaged Meats Provider Source: IRI Total U.S. Food 52 weeks ending 02/27/11; Freshlook Total U.S. Food 52 weeks ending 02/01/11 Categories = 22 retail protein categories including: Smoked Meats, Dinner Sausage, Franks, Breakfast Meats, Lunchmeat, Deli, and multiple othersegments
Slide 15: #1 Pork Supplier to Foodservice
#1 Pork Supplier to Foodservice Source: SRC Poultry Beef Pork Report 2010 (Final Edition) New.Smithfield trans.png sara_lee_logo_2420 Hormel-Foods-logo TysonLogo_color image001 image002
Slide 16: Leading market share positions in all foodservice pork categories
Smithfield holds leading market share positions in all foodservice pork categories Source: SRC Poultry, Beef, and Pork Report 2010 (Final Edition) #1 #1 #1 #1 #1 #1 #1 #1 #1 #2
Slide 17: #2 Supplier to Deli
#2 Supplier to Deli Source: IRI Total U.S. Food 52 weeks ending 02/27/11; Freshlook Total U.S. Food 52 weeks ending 02/01/11 sara_lee_logo_2420 Hormel-Foods-logo TysonLogo_color dietzandwatson logo_bh New.Smithfield trans.png
Slide 18: #1 Supplier to Export
#1 Supplier to Export Note: FY 11 YTD through 02/26/11; Smithfield export markets; Other Category consists of sales to the following countries: Australia, The Bahamas, Bermuda, Brazil, Bulgaria, Caribbean, Chile, Columbia, Croatia, Cuba, Dominican Republic, El Salvador, EU, Guatemala, Haiti, Hondura
Slide 19: The New Era of Smithfield
The New Era of Smithfield
Slide 20: The New Era of Smithfield
20 The New Era of Smithfield Focus on quality and consistent earnings Competitive cost structure in all operating top and segments bottom line growth Conservative balance sheet Driving with focus on profitable ROIC Consolidated Closely portfolio of coordinated leading sales & consumer marketing bran
Slide 21: Restructured Pork Group
Restructured Pork Group… Before Restructuring After Restructuring IndependentOperating Companies 7 3 Freshpork plants 9 8 Packagedmeats plants 36 30 CapacityUtilization <80% >90%
Slide 22: A Competitive Platform For Growth
…Is A Competitive Platform For Growth Before Restructuring After Restructuring Fresh pork sales organizations 3 2 Exportsales organizations 3 1 Retail packagedmeats sales organizations 10 3 Computer systems >20 1 Brands 50+ 12
Slide 23: Fresh pork and consumer packaged meats profitability has tripled since fiscal 2007
Fresh pork and consumer packaged meats profitability has tripled since fiscal 2007 Note: FY 09 and FY 10 results adjusted for restructuring and impairment charges; Refer to Non-GAAP measure reconciliations
Slide 24: Consumer packaged meats drives earnings growth and stability
Consumer packaged meats drives earnings growth and stability Note: FY 09 and FY 10 results adjusted for packaged meats restructuring and impairment charges; Refer to Non-GAAP measure reconciliations
Slide 25: Packaged meats delivers margins within or above normalized range
Packaged meats delivers margins within or above normalized range, despite record high raw material costs Note: FY 09 and FY 10 results adjusted for packaged meats restructuring and impairment charges; Refer to Non-GAAP measure reconciliations
Slide 26: Fresh pork has remained consistently profitable
Fresh pork has remained consistently profitable Note: FY 09 and FY 10 results adjusted for fresh pork restructuring and impairment charges; Refer to Non-GAAP measure reconciliations
Slide 27: Brand Portfolio Consolidation
Brand Portfolio Consolidation $1.3 billion $1.1 billion $560 million $439 million $427 million $398 million $330 million $192 million $123 million $103 million $102 million $76 million Margherita1_Logo.eps Carando Logo4C.eps Cooks.eps Curly's logo only_CMYK.eps Eckrich_Logo.eps farmland_color_vector
Slide 28: Hog Production Cost Savings Initiative
Hog Production Cost Savings Initiative Philosophy –Least cost is only competitively sustainable position Plan –Improve operating efficiencies, productivity, competitive cost structure and profitability Benefits –Fully achieved by end of three-year period
Slide 29: Initiative provides less than 1.5 year payback and more competitive cost structure
Initiative provides less than 1.5 year payback and more competitive cost structure
Slide 30: Industry Hog Production should be profitable in fiscal 2012
Industry Hog Production should be profitable in fiscal 2012 Note: Industry profitability based on futures curves for live hogs and grains on 03/17/11; cost is pre-interest
Slide 31: Return on Invested Capital
Return on Invested Capital Note: ROIC computed as adjusted operating profit, less income taxes at an estimated 34% effective tax rate, divided by invested capital. Invested capital is equal to total capitalization less cash. ROIC excludes returns on disposed turkey and beef assets. Refer to Non-GAAP
Slide 32: Financial Management
Financial Management
Slide 33: Project Objectives
ee) Project 100 Objectives Extend and smooth debt Eliminate maturities $100 million in interest expense Reduce debt by $1 billion Ensure ample liquidity Reduce idle cash
Slide 34: Reduce annual interest expense run rate by $100 million by end of fiscal 2012
Project 100 Objective: Reduce annual interest expense run rate by $100 million by end of fiscal 2012
Slide 35: Reduce total debt levels below $2 billion by end of fiscal 2012
Project 100 Objective: Reduce total debt levels below $2 billion by end of fiscal 2012 Note: Debt consists of notes payable and long-term debt and capital lease obligations, including current portion; FY 11 Q3 adjusted to reflect $391 million of 2013 and 2014 bond repurchases on 02/10/11
Slide 36: Maintain net debt to total capitalization below 40%
Project 100 Objective: Maintain net debt to total capitalization below 40% by end of fiscal 2012 Note: Net debt is equal to notes payable and long-term debt and capital lease obligations, including current portion, less cash and cash equivalents; computed using net debt divided by the sum of net deb
Slide 37: Extend and smooth debt maturities
Project 100 Objective:Extend and smooth debt maturities $1 billion ABLundrawn Note: Presented on a maturity basis; Adjusted to reflect $391 million of 2013 and 2014 bond repurchases on 02/10/11; Excludes premiums, discounts and capital leases; Reflects undrawn portions of international credit facili
Slide 38: Ensure ample liquidity in the $500 million to $1 billion range
Project 100 Objective:Ensure ample liquidity in the $500 million to $1 billion range Note: Amounts reflect unused borrowing capacity under credit facilities at quarter end plus invested and liquid cash
Slide 39: Conclusion
Conclusion
Slide 40: Continued Strong Results In Fiscal 2012
Continued Strong Results In Fiscal 2012
Slide 41: Smithfield
Smithfield Barclays Capital High Yield Bond and Syndicated Loan Conference March 25, 2011