Investor Presentation April 2018

Transcription

1 Investor Presentation April 2018

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 CAL-MAINE FOODS PROFILE 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 2017 U.S. fresh shell egg market share - 20 percent Achieved record sales of $1.9 billion in FY 2016 FY YTD 2018 sales $1.1 billion, up 32.5% 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 Total fresh eggs up 5.3% YTD through March 11, 2018 according to consumer market research firm IRI Leading producer and marketer of high-margin specialty eggs Solid financial position Proven management team 4

5 THE U.S. EGG INDUSTRY 5

6 SALES HISTORY 6

7 CAL-MAINE LOCATIONS 7

8 FULLY-INTEGRATED OPERATIONS 8

9 EGG PRODUCTION FACILITIES Guthrie, Kentucky 9

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

11 CAL-MAINE CUSTOMERS 11

12 ToP 10 CUSTOMERS % Fiscal 2017 Sales 1. Walmart and Sam's Club 28.9% 2. Publix Super Markets 10.8% 3. H.E. Butt Co. 9.2% 4. Food Lion 5. Eggs America (Sysco, US Foodservice, etc.) 6. CCF Brands 7. Shoprite 8. Kroger 9. Costco 10. Specialty Egg Total Top 10 Customers 69.5% 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 Repopulation efforts have increased bird numbers above pre-outbreak levels 13

14 MONTHLY HEN INVENTORY Source: USDA Chicken and Egg Report Revised March

15 ANNUAL EGG PRICES 15

16 VOLATILE FEED INGREDIENT PRICES Source: Monthly Average of Daily Closing Prices per Chicago Board of Trade 16

17 FEED COSTS Cents per dozen produced 17

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 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 Company Total Layers Company Total Layers Company Total Layers Cal-Maine Foods 40,100 S & R Egg Farms 4,350 Pine Hill Egg Ranch 1,650 Rose Acre Farms 26,900 Mid-States Specialty Eggs 4,230 Country Charm Eggs 1,600 Hillandale Farms 16,730 National Food Corp 4,080 Lathem Farms 1,600 Versova Holdings 16,400 Mahard Egg Farms 4,000 Schipper Eggs 1,600 Daybreak Foods 12,800 RW Sauder 3,500 Berne Hi-Way Hatchery 1,500 Rembrandt 12,500 Ritewood/Oakdell Egg 3,400 Demler Enterprises 1,500 Michael Foods 12,180 Cooper Farms 3,150 Egg Innovations 1,400 Center Fresh 9,700 Esbenshade Farms 2,800 J.S. West/JEM Eggs 1,400 Midwest Poultry 9,500 Creighton Bros. 2,660 Simpson's Eggs 1,300 Prairie Star Farms 9,400 Konos Inc. 2,580 Mercer Landmark 1,280 Herbruck's Poultry 8,400 CHS(Hamilton Farm) 2,280 Dakota Layers 1,250 Weaver Brothers 8,000 Sunrise Acres Egg Farm 2,280 Hertzfield Poultry Farms 1,200 Hickman's Egg 7,350 Minnich Poultry 2,250 Morning Fresh Farms 1,200 Fremont Farms 7,300 Wenger Feeds/Dutchland 2,200 Wilcox Farms 950 Sparboe Farms 6,100 Forsman Farms 2,150 Pearl Valley Eggs 920 ISE America 6,000 Braswell Foods 2,090 Hillside Poultry Farms 670 Kreider Farms 5,200 Giroux's Poultry Farm 2,000 The Happy Egg Co. 600 Opal Foods 5,180 Heritage PMS/LaValle 1,940 Sunrise Farms 530 Gemperle Farms 4,900 Kreher's Eggs 1,880 SKS Enterprises 500 Sunrise Farms Inc. 4,500 Chino Valley/MCM 1,800 Weber Family Farms 400 Wabash Valley 4,390 Hemmelgarn & Sons 1,660 Vital Farms 300 Total 314,160 Layers in Production, December 31, 2017, in thousands Source: Egg Industry Magazine - February

21 FOODONICS INTERNATIONAL, INC. On October 16, 2016, 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 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. On February 19, 2017, 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 ENHANCE CAPACITY AND EFFICIENCY Over the last five years we have spent over $310 million to expand and upgrade our facilities Projects in Kentucky, Texas, Arkansas, and Florida will increase Cage-Free and Organic capacity 23

24 RED RIVER VALLEY EGG FARM, LLC Cal-Maine Foods and Rose Acre Farms entered a production joint venture to build a cage-free shell egg production complex near Bogata, Red River County, Texas Provides for capacity of approximately 1.8 million laying hens, with permits for up to 2.9 million hens Production facilities fully online in 2017 Enhances ability to meet growing demand for cagefree and other specialty eggs 24

25 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 2018, represented 22.9 percent of dozens sold and 33.3 percent of sales revenue 25

26 SPECIALTY EGG SALES 26

27 KEY STRENGTHS Low Cost Producer Favorable Consumer Demand Trends Attractive Growth Profile Fully-integrated operations 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 Solid Customer Base Leading names of retail and institutional food service customers Strong Balance Sheet Solid financial position supports future growth 27

28 FINANCIAL HIGHLIGHTS - THIRTY-NINE WEEKS ENDED MARCH 3, 2018 YTD 2018 Sales - $1.1 billion YTD 2018 EBITDA - $62 million up from $(47.7) million YTD in 2017 Working Capital - $392 million Total Debt - $7 million Debt to EBITDA :1 28

29 INCOME STATEMENT - YEAR TO DATE (Unaudited; in thousands except per share amounts) 39 Weeks Ended March 3, 2018 February 25, 2017 Net sales $ 1,059,837 $ 799,929 Gross profit (loss) 219,830 33,544 Legal settlement expense 80,750 Operating income (loss) 11,360 (93,802) Other income 12,087 12,659 Income (loss) before taxes 23,447 (81,143) Net income (loss) $ 54,165 $ (49,807) Net income (loss) per common share: Basic $ 1.12 $ (1.03) Diluted $ 1.12 $ (1.03) Weighted average shares outstanding: Basic 48,340 48,285 Diluted 48,460 48,285 29

30 OPERATING HIGHLIGHTS - YEAR TO DATE 39 Weeks Ended March 3, 2018 February 25, 2017 Dozen Eggs Sold (000) 785, ,114 Dozen Eggs Produced (000) 657, ,246 % Specialty Sales (dozen) 22.9% 23.0% % Specialty Sales (dollars) 33.3% 44.1% Net Average Selling Price (dozen) $ $ Net Average Selling Price Specialty Eggs (dozen) $ $ Feed Cost (dozen) $ $

31 BALANCE SHEET HIGHLIGHTS March 3, June 3, Cash and short-term investments $ 283,448 $ 156,026 Total assets $ 1,143,683 $ 1,033,094 Long-term debt, less current maturities $ 3,351 $ 6,113 Shareholders' equity $ 899,659 $ 844,493 Working capital $ 391,780 $ 371,527 Debt to Capital.01:1.01:1 31

32 CASH USE PRIORITIES Variable Dividend 1/3 of Net Income Paid Quarterly (after recovery of losses) Acquisition of Existing Capacity Selected capital expansion to meet customer cage-free requirements 32

33 CASH DIVIDENDS PAID* 33

34 STOCK OWNERSHIP AND FLOAT Ownership Holdings as of July 21, 2017 Shares Outstanding % of Total Shares Owned by Adams/Baker Family (Excludes ESOP) 16,828, % Shares Owned by Other Insiders (Excludes ESOP) 221, % Shares Owned by ESOP 2,280, % Public Float 29,242, % Total Outstanding Shares 48,574, % Cal-Maine Foods is a "controlled company" as defined in Rule 5615(c)(1) of NASDAQ's listing standards due to the Adams family's beneficial ownership of 66.2% of total voting power of all Common Stock and Class A Common Stock 34

35 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 35

36 FINANCIAL SUMMARY Dozen Eggs Sold (in millions) ,014 1,063 1,054 1,

37 INCOME STATEMENT - FISCAL 2017 & Weeks Ended 52 Weeks Ended June 3, 2017 May 28, 2016 Net sales $ 1,074,513 $ 1,908,650 Gross profit (loss) 45, ,074 Operating income (loss) (132,094) 471,877 Other income 17,800 15,372 Income (loss) before taxes (114,145) 485,243 Net income (loss) $ (74,278) $ 316,041 Net income (loss) per common share: Basic $ (1.54) $ 6.56 Diluted $ (1.54) $ 6.53 Weighted average shares outstanding: Basic 48,362 48,195 Diluted 48,362 48,365 37

38 OPERATING HIGHLIGHTS - FISCAL 2017 & Weeks Ended 52 Weeks Ended June 3, 2017 May 28, 2016 Dozen Eggs Sold (000) 1,031,130 1,053,597 Dozen Eggs Produced (000) 870, ,307 % Specialty Sales (dozen) 22.9% 22.9% % Specialty Sales (dollars) 43.6% 29.1% Net Average Selling Price (dozen) $ $ Net Average Selling Price Specialty Eggs (dozen) $ $ Feed Cost (dozen) $ $