CAL-MAINE FOODS, INC. May 2017

Transcription

1 CAL-MAINE FOODS, INC. May

2 FORWARD-LOOKING STATEMENTS This presentation includes forward-looking statements, which are all statements other than historical facts, can be identified by use of words such as expect, will, and anticipate, and include statements regarding expected operating results, acquisition transactions and potential effects of industry events or trends on our business. Important factors that can cause our results to differ materially from those anticipated in the forward-looking statements include egg prices and feed costs; changes in consumer demand or requirements of major customers; unanticipated results of acquisitions or joint ventures; ability to obtain eggs from outside producers; agricultural, regulatory and litigation risks; and other factors described in the cautionary language included in our filings with the Securities and Exchange Commission, including in the Risk Factors section of our annual report on Form 10- K and subsequent filings. We undertake no obligation to update any forward-looking statements. 2

3 CAL-MAINE FOODS PROFILE We are the largest producer and marketer of shell eggs in the United States Founded in 1957 in Jackson, Mississippi Acquired Ralston-Purina egg operations in 1972 Completed 20 acquisitions since 1989 Fully-integrated egg producer Since 1996, publicly traded on NASDAQ under symbol CALM FY 2016 U.S. fresh shell egg market share - 23 percent Achieved record sales of $1.9 billion in FY 2016 YTD Sales FY 2017 $799.9 million, down 50.2% from prior year 3

4 KEY INVESTMENT POINTS Largest egg producer and marketer in the United States Efficient, state-of-the-art operations Solid customer base of leading retail and food service companies Strong consumer demand for eggs Leading producer and marketer of high-margin specialty eggs Solid financial position Proven management team 4

5 THE U.S. EGG INDUSTRY In calendar year 2016, the United States produced about 89 billion eggs. Egg Products (Liquid, Frozen) 31% Exports 3% 66% Shell Eggs to Foodservice & Consumers 5

6 SALES HISTORY Cal-Maine Annual Net Sales ($ in millions) Total Shell Eggs Sold (in millions of dozens) Net Sales Eggs Sold $2,000.0 $1, ,200.0 $1,800.0 $1,600.0 $1,400.0 $1,288.1 $1,440.9 $1, , ,000.0 $1,200.0 $1,000.0 $800.0 $600.0 $477.6 $598.1 $915.9 $928.8 $910.1 $ $1, $400.0 $ $

7 CAL-MAINE LOCATIONS Cal-Maine Locations 7

8 FULLY-INTEGRATED OPERATIONS Feed mills Sales and distribution Breeder flocks Processing and packaging Hatcheries Egg production Pullet growing 8

9 EGG PRODUCTION FACILITIES Contract production 7% 93% Companyowned 9

10 COMPANY-OWNED FACILITIES State-of the-art Fully-automated Temperature controlled Labor efficient Located near our customers 10

11 CAL-MAINE CUSTOMERS Retail 88% 8% 4% Food Service Egg Products (and Miscellaneous) 11

12 TOP 10 CUSTOMERS % Fiscal 2016 Sales 1. Walmart and Sam s Club 28.9% 2. H.E. Butt Co. 9.1% 3. CCF Brands 8.3% 4. Publix Super Markets 8.2% 5. Food Lion 6. Eggs America (Sysco, US Foodservice, etc.) 7. Topco 8. McLane 9. Costco 10. Shoprite Total Top 10 customers 70.6% 12

13 Avian Influenza Spring 2015 outbreak in the upper Midwestern United States affected over 40 million laying hens and pullets 12% reduction in the national laying flock Recent outbreaks in Southeastern states have not affected table egg production 13

14 MONTHLY HEN INVENTORY Million Hens First Day of Month Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 14 Source: USDA Chicken and Egg Report as Revised March 2017

15 ANNUAL EGG PRICES $2.00 $1.80 Urner Barry Southeastern Regional Large Egg Market Price (per dozen eggs) $1.79 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.79 $0.66 $0.78 $0.78 $0.69 $1.05 $0.72 $0.75 $0.93 $1.38 $1.21 $1.22 $1.12 $1.13 $1.53 $1.35 $1.43 $0.86 $0.40 $0.20 $ * 15 (Monthly average by fiscal year) *Fiscal year 2017 reflects YTD through 2/25/17

16 VOLATILE FEED INGREDIENT PRICES Soy Bean Meal Dollars per Ton Corn Dollars per Bushel Corn $/bushel Soy Meal $/ton (Monthly average)

17 FEED COSTS Cents per Dozen Eggs Produced

18 GROWTH STRATEGY Pursue acquisitions of existing shell egg production and processing facilities Enhance production capacity and efficiency Increase value-added specialty egg business 18

19 GROWTH STRATEGY Pursue acquisition opportunities Leverage solid track record with completion of 20 acquisitions since 1989 Extend ability to identify, execute and integrate additional operations Expand capabilities in existing markets and broaden geographic reach Enhance national presence and strengthen customer relationships 19

20 ACQUISITION OPPORTUNITIES Top U.S. Egg Producers 20 Layers in Production, December 31, 2016, in thousands Source: Egg Industry Magazine February 2017

21 FOODONICS INTERNATIONAL, INC. Cal-Maine Foods acquired substantially all of the assets of Foodonics International, Inc. and its related entities doing business as Dixie Egg Company. Includes capacity for 1.6 million laying hens and related feed production, milling and distribution facilities in Georgia, Alabama and Florida as well as contract grower arrangements for an additional 1.5 million laying hens. Acquired Egg-Land s Best franchise with licensing rights for portions of certain markets in Alabama, Florida and Georgia as well as Puerto Rico, Bahamas and Cuba. 21

22 HAPPY HEN EGG FARMS, INC. Cal-Maine Foods acquired substantially all of the assets of Happy Hen Egg Farms, Inc. Includes capacity for 350,000 laying hens and distribution facilities near Harwood and Wharton, Texas. Site is designed for capacity of up to 1.2 million laying hens. 22

23 GROWTH STRATEGY Enhance production capacity and efficiency Over $70 million of capital projects currently underway Projects in Kentucky, Texas, Arkansas, Utah, Georgia and Florida will increase Cage-Free and Organic capacity Project in Utah will increase California compliant capacity up to 620,000 hens, with a net 345,000 additional hens 23

24 RED RIVER VALLEY EGG FARM, LLC Cal-Maine Foods and Rose Acre Farms have entered a production joint venture to build a shell egg production complex near Bogata, Red River County, Texas Features Rose Acre Farms patent-pending cage-free aviary designs and systems Provides for capacity of approximately 1.8 million laying hens, with permits for up to 2.9 million hens Creates new jobs in local community Fully online in 2017 Enhances ability to meet growing demand for cage-free and other specialty eggs 24

25 GROWTH STRATEGY Increase value-added specialty egg business Offer nutritionally enhanced eggs, cage-free and organic eggs Meet consumer demand in rapidly growing segment Benefit from higher and less cyclical selling prices Through Q3 FY 2017, represented 23.0 percent of dozens sold and 44.1 percent of sales revenue 25

26 SPECIALTY EGG SALES Dozen Eggs Sold (in millions) ,014 1,063 1, FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Total Specialty 26

27 RETAIL EGG MARKET ANALYSIS* Dollars Dozens Total Fresh Eggs -30.4% +3.4% Total Specialty Eggs -5.6% +2.5% Cage Free Eggs +6.9% +19.6% Organic Eggs +11.1% +13.1% 52 weeks ending March 11, 2017, compared with same period for prior year. Source: 27

28 KEY STRENGTHS Low Cost Producer Favorable Consumer Demand Trends Attractive Growth Profile Solid Customer Base Fully-integrated operations located in 16 states Focused on automation throughout the supply chain Eggs taste great and provide an affordable and convenient source of protein Solid track record of internal growth and acquisitions Increasing sales of high-margin specialty eggs Leading names of retail and institutional food service customers Strong Balance Sheet Solid financial position supports future growth 28

29 FINANCIAL HIGHLIGHTS- FY2016* Fiscal Year 2016 Annual Sales - $1.9 billion Fiscal Year 2016 EBITDA - $528 million Working Capital - $543 million Total Debt - $26 million Debt to EBITDA -.05:1 *Reported for fiscal year ended May 28,

30 INCOME STATEMENT YTD FY2017 (Unaudited; in thousands except per share amounts) 39 Weeks Ended February 25, February 27, Net sales $ 799,929 $ 1,605,630 Gross profit (loss) 33, ,394 Operating income (loss) (92,441) 472,038 Other income 11,298 14,143 Income (loss) before income taxes (81,134) 484,256 Net income (loss) $ (49,807) $ 316,417 Net income (loss) per common share: Basic $ (1.03) $ 6.57 Diluted $ (1.03) $ 6.54 Weighted average shares outstanding: Basic 48,285 48,177 Diluted 48,285 48,359 30

31 OPERATING HIGHLIGHTS YTD FY Weeks Ended February 25, February 27, Dozen Eggs Sold (000) 758, ,520 Dozen Eggs Produced (000) 633, ,356 % Specialty Egg Sales (Dozen) 23.0% 22.8% % Specialty Sales (Dollars) 44.1% 27.0% Net Average Selling Price (Dozen) $ $ Net Avg Selling Price Specialty Egg (Doz) $ $ Feed Cost (Dozen) $ $

32 BALANCE SHEET HIGHLIGHTS (Unaudited; in thousands) February 25, May 28, Cash and short-term investments $ 189,575 $ 389,545 Total assets $ 1,085,275 $1,111,765 Long-term debt, less current maturities $ 7,302 $ 9,250 Shareholders' equity $ 868,362 $ 917,361 Working capital $ 392,224 $ 542,832 Debt to Capital.03:1.03:1 32

33 CASH USE PRIORITIES Variable Dividend 1/3 of Net Income Paid Quarterly Acquisition of Existing Capacity 33

34 CASH DIVIDENDS PAID* *Cents per share, as adjusted for October 31, 2014, two-for-one stock split

35 STOCK OWNERSHIP & FLOAT Holdings as of July 29, 2016 Shares % of Ownership Outstanding Total Shares Owned by Adams Family (Excludes ESOP) 15,127, % Shares Owned by Other Insiders (Excludes ESOP) 1,910, % Shares Owned by ESOP 2,345, % Public Float 29,151, % Total Outstanding Shares 48,534, % 35

36 KEY INVESTMENT POINTS Largest egg producer and marketer in the United States Efficient, state-of-the-art operations Solid customer base of leading retail and food service companies Strong consumer demand for eggs Growing market for high-margin specialty eggs Solid financial position Proven management team 36

37 FINANCIAL SUMMARY Annual Net Sales and Operating Income ($ in millions) $2,000.0 $1,800.0 $1,600.0 $1,400.0 $1,200.0 $1,000.0 $800.0 $600.0 $400.0 $200.0 $0.0 Net Sales Operating Income $1,288 $1,113 $915.9 $928.8 $910.1 $942.0 $1,909 $1,441 $1,576 $470.3 $235.3 $477.6 $598.1 $223.6 $121.5 $146.1 $102.6 $88.7 $83.5 $59.6 $4.5 $ $500.0 $450.0 $400.0 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 FY 2013 Operating Income of $87.6 million excluding litigation settlement Dozen Eggs Sold (In millions) ,014 1,063 1,054 37

38 INCOME STATEMENT FY (Unaudited; in thousands except per share amounts) FY2016 FY2015 FY2014 Net sales $1,908,650 $1,576,128 $1,440,907 Gross profit 648, , ,764 Operating income 470, , ,052 Other income (expense) 16,935 11,214 15,790 Income before income taxes 487, , ,549 Net income $ 316,041 $ 161,254 $ 109, Net income per common share (1) : Basic $ 6.56 $ 3.35 $ 2.27 Diluted $ 6.53 $ 3.33 $ 2.26 Weighted average shares outstanding (12) : Basic 48,195 48,136 48,095 Diluted 48,365 48,437 48,297 (1) As adjusted for October 31, 2014, two-for-one stock split

39 OPERATING HIGHLIGHTS FY2016 May 28, May 30, Dozen Eggs Sold (000) 1,053,597 1,063,086 Dozen Eggs Produced (000) 819, ,842 % Specialty Egg Sales (Dozen) 22.9% 19.8% % Specialty Sales (Dollars) 29.1% 27.2% Net Average Selling Price (Dozen) $ $ Net Average Selling Price Specialty Egg (Dozen) $ $ Feed Cost (Dozen) $ $