Sanderson Farms — Investor Presentation (November 2009)
95 slides from Sanderson Farms's investor presentation, Nov 5, 2009
Slide 1: Risk Management Presentation & Feed Grain/Oilseed Outlook
Risk Management Presentation & Feed Grain/Oilseed Outlook Prepared For: October 29, 2009
Slide 2: General Outline
General Outline Current Grain markets & harvest progress Elements of feed procurement 2010 Outlook
Slide 3: October USDA Crop Report
October USDA Crop Report National average corn yield projection increased from 161.9 bu/acre to 164.2 Production estimated at 13.018 billion bushels Carryover estimated at 1.672 billion bushels Increased production estimates were offset by a 50 million bushel increase in the feed & residual usage es
Slide 4: October USDA Crop Report: Soybeans
Soybean national yield projected at 42.4 bu/acre vs. 39.6 in 08/09 09/10 soybean production projected at 3.25 billion bushels with ending stocks estimate raised to 230 million bushels. Exports projected to increase to 1.305 billion bushels from 1.28 in 08/09. World ending stocks projections were rai
Slide 5: USDA: Crop Progress as of October -- Corn
USDA: Crop Progress as of October 18 -- Corn
Slide 6: USDA: Crop Progress as of October -- Soybeans
USDA: Crop Progress as of October 18 -- Soybeans
Slide 7: Four Elements to Procurement
Four Elements to Procurement Develop a fundamental price forecast Develop a purchasing plan Track results Control emotions
Slide 8: Develop a fundamental price forecast
Develop a fundamental price forecast The use of supply and demand tables and how they affect prices Domestic balance sheets as well as world Advantages of fundamental analysis: Determine an expected value Establish a reference to implement goals
Slide 9: Develop a fundamental price forecast: Disadvantages
Develop a fundamental price forecast Disadvantage: Fundamental facts change Fundamental facts do not always impact prices Fundamental facts do not always help with actual purchasing decisions
Slide 10: Develop a purchasing plan: Establish a realistic goal
Develop a purchasing plan Establish a realistic goal and remain flexible Primary Goals: After combining cash purchases; the final price should be below the average price of the year and as much as possible in the bottom one-third of the annual price range Secondary Goals: Develop a realistic budgete
Slide 11: Develop a purchasing plan: Decision making environment
Develop a purchasing plan Identify your decision making environment Who is there that can second-guess purchasing decisions Someone has to make the call Decision making by committee just does not work
Slide 12: Develop a purchasing plan: Price outlook
Develop a purchasing plan Develop a price outlook Develop two strategies; A & B Strategy A is followed based on your price outlook and as long as the fundamentals remain the same Strategy B must be implemented when major fundamentals change Example: USDA September Supply & Demand Report, ie, US soyb
Slide 13: Develop a purchasing plan: Risk-bearing ability
Develop a purchasing plan Consider risk-bearing ability Example: Vera Sun should have given more consideration when buying high $7 corn 5. Avoid emotional decisions Too often, purchasing decisions are based on emotions. Greed, wishful thinking and fear result in making or not making the majority of
Slide 14: Track results - Evaluate performance
Track results - Evaluate performance Assists in maintaining focus on principal goals Provides a tool for discussion Provides a way to track performance Sanderson Farms uses Agri Stats
Slide 15: Control your emotions
Control your emotions The Purchasing Life-Cycle Po) Fear & Remorse wy @®> Brock Associates 2009
Slide 16: Develop a purchasing plan Summary
Develop a purchasing plan Summary Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives you good results. Warren Buffet
Slide 17: Index Funds -- % of Open Interest
Index Funds -- % of Open Interest
Slide 18: Index Fund Net Positions
; | Index Fund Net Posi 225% 200% 175% 150% 125% 100% 75% 60% 25% af ._ = | i | in Corn Ch.Wheat Soybeans SoyOil Cattle. Hogs KC Wheat 2009 & BROCK ASSOCIATES
Slide 19: US Corn Supply and Demand
US CORN SUPPLY AND DEMAND USDA. Brock Est DaOTESt, O80 Taos _——oeno tort 7 RCREAGE (ii. Reresy Pianted Area 25.0 864 250 8648.0 880 Harvested Area 738 733 Ts 793800 80.1 iets 15391642 1539 ©1625 16301640 SUPPLY (Mil, Bushels) Beg, Stocks (Sep 1) 16244674 162446744722, A,772 Production 1210113018 | 1
Slide 20: US Corn Yield
US Corn Yield Brock 2009/10 Projection: 162.5 Bushels per Acre 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 @®e Brock Associates 2009
Slide 21: Corn Ending Stocks
Corn Ending Stocks @ Actual Ending Stocks (USDA) Brock Associates Projected Ending Stocks 5,000 Brock 2009/10 Projection: 1,722 Million Bushels 4,000 3,000 Million Bushels 41,000 2009 I BROCK ASSOCIATES
Slide 22: US Corn Harvested Acreage
US Corn Harvested Acreage jaysny m Harvested Area (Actual) DB Harvested Area (Projected) & BROCK ASSOCIATES 2009
Slide 23: Expected Corn Yield and Production by State
———— Expected Corn Yield and Production by State 2009 Projected Yield Change vs. Estimated 2008 Yield _|SeptemberReport October Report_| LastMonth | 2009 Production llowa 171.0 187.0 188.0 1.0 2,509.8 Ilinois 179.0 179.0 179.0 - 2,112.2 Nebraska 163.0 169.0 178.0 9.0 1,584.2 Minnesota 164.0 167.0 17
Slide 24: U.S. Corn Production and Utilization
RS h U.S. Corn Production and Utilization 14,000 3000 |@m™Production maTotal Use 12,000 2500 . Ending Stocks gs so 22 10,000 2000 35 za = 2s 8,000 1500 = 3 3 3= & Hy 6,000 1000 a 3 E 4,000 500 2,000 oO rN teen weaoranreewonwaaors BSSSSSERSSESSSSSESEEEE STAD THSR SASH AHDTHSRSTSSE SESSSPSRSSSSSIZZSZS
Slide 25: Percent Change in US Total Corn Usage
Percent Change in US Total Corn Usage x 8 8 2 e6ueyo qussied Source: USDA and Brock Associates Estimates 15% zu bob 01/60 60/80 80/20 20/90 90/90 s0/v0 volco 20/20 Zoro 40/00 0066 66/86 86/26 26/96 96/96 96/96 veIe6 26/26 zee 16/06 06/68 aes, 98/28 28/98 98/98 98/08 vate aes, zee, 19/08 2009 & BROCK
Slide 26: Percent of U.S. Corn Production Utilized
Percent of U.S. Corn Production Utilized For Exports, Ethanol, & Feed —#-Feed & Residual ~+Com Used For Ethanol -*- Exports g g 5 BSgre & onanpoid WoD gf Jo 1UsdI0q g s 2009 & BROCK ASSOCIATES
Slide 27: US Corn Food, Seed, & Industrial Use
. a US Corn Food, Seed, & Industrial Use 6,500 6,000 mSeed 5,500 BCereal m Beverage Alcohol 5,000 Fuel Alcohol 4,500 mStarch 4,000 DGlucose & Dextrose BHFCS 3,500 3,000 2,500 2,000 1,500 4,000 500 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00701 01/02 0
Slide 28: US Corn Food, Seed, & Industrial Use for 2009/10
eS US Corn Food, Seed, & Industrial Use for 2009/10 seed Beverage Aconol RSS rcs m% 10% Glucose & Dextrose 4% Starch 5% @®e Brock Associates 2009
Slide 29: Annual Ethanol Capacity as % of Corn Production
Annual Ethanol Capacity (including plants under construction) as a % of Corn Production 80% @ 2008/09 Corn Production @ 2009/10 Corn Production 60% 40% 20% Corn Used for Ethanol as a % of State Corn Production 0% & BROCK ASSOCIATES ze2¢: 5 ¢5 @8 g¢ gs 6¢ § § @ 2 56 8 @ § £ 2 € 8 2 & 2 3 5 Hy 8 8 es
Slide 30: Corn Used for Ethanol Production
Corn Used for Ethanol Production 4500 [=a Com Used for Ethanol (USDA) (Brock Associates Projected Com for Ethanol + Com for Ethanol as a Percent of Production Brock 2009/10 Projection: 4,200 Million Bushels ‘Com Used for Ethanol (Million Bushels) oo == wn —= nn = seq 405 9506 oso7 = ores sso 9900 01
Slide 31: Historical Ethanol Margins
Historical Ethanol Margins Source: Iowa State University Extension
Slide 32: Ethanol Profitability Based on Current Futures Prices
Ethanol Profitability Based on Current Futures Prices Per Bushel of Corn $750 $7.00 Projected Net Profit (Loss) per bushel ofcom soso || sosss —s0.8a5 sosee $0372 so2s2 $0,304 $0251 $0220 $6.00 $550 & ss.00 $450 $400 $350 $300 $250 $200 S150 $1.00 $050 0.00 Costs per Bushel of Co octo8 Nov 08 Dec 08
Slide 33: US December Corn Stocks
US December 1 Corn Stocks 11,000 10,000 9,000 8,000 eee 83838 888 re 6 ‘s}eysng UOITIN 1,000 60/80 80/20 20/90 90/90 s0/v0, voleo 20/20 zorLo, +o/00 00/66 66/86 96/26 26196 96/96 96/6 vele6 26/26 zee 46/06 06/68, 68/88, 88/28 28/98, 98/98, 98/08, va/ee e8/ze, zaiLg, 19/08 2009 & BROCK ASSOCIATES
Slide 34: Change in US Corn Ending Stocks
———— Change in US Corn Ending Stocks 3,000 2,500 2,000 1,000 | | 500 | l [ | | hol. a5 foo. 3 2 5 a . a ° 5 ay 3 eo |] l I f ] = (1,000) (1,500) (2,000) (2,500) Source: USDA and Brock Associates Estimates (3,000) & BROCK ASSOCIATES
Slide 35: Corn Ending Stocks
Corn Ending Stocks @ Actual Ending Stocks (USDA) Brock Associates Projected Ending Stocks 5,000 Brock 2009/10 Projection: 1,722 Million Bushels 4,000 3,000 Million Bushels 41,000 2009 I BROCK ASSOCIATES
Slide 36: U.S. Corn Ending Stocks and Stocks-to-Use
it U.S. Corn Ending Stocks and Stocks-to-Use 2,750 27.5% mm Ending Stocks 25.0% ~= Ending Stocks to Use Ratio 2,500 (2,250 22.5% » 2,000 20.0% g 8 Ba 1750 175% 3 as” Se 23 1,500 150% 8 aa FA es 1,250 12.5% 3 SE 1,000 10.0% 3 Q ° 750 7.5% 500 5.0% 250 2.5% 0.0% sNereornweaocransnonaaors ‘Source: USDA
Slide 37: Farm Input Costs -- Annual Percentage Change
‘arm Input Costs -- Annual Percentage Change 30.00% 20.00% 10.00% 00% oll La 2009 Total Expenditures 10.00% eet Fertilizer & Lime $16.9 Billion 200% Fuels and Oils $11.3 Billion DElectricity $4.7 Billion sn00% Pesticides $12 Billion WAIl Manufactured Inputs $44.9 Billion 40.00% 2005 2006 2007 2008 2
Slide 38: Farm Production Expenses and Income
Farm Production Expenses and Income = Total Production Expenses + Net Farm Income 5150 Billions of Dollars Es 1900 1982 1984 1905 1988 1900 1992 1994 1096 1908 2000 2002 2008 2006 2008 2009 Source: USDA & BROCK ASSOCIATES 2009
Slide 39: National Farm Cash Income
National Farm Cash Income si20 s100 seo ions of Dotars 8 sto 1900 1862 1984 1005 1988 1900 1652 1804 1095 1996 2000 2022004 2000 2008 20? ‘Source: USDA & BROCK ASSOCIATES 2009
Slide 40: World Corn Supply and Demand
World Corn Supply and Demand Million Metric Tonnes Production Consum| Beginning Year __ Stocks 1995/96 153 516 1996/97 133 593 1997/98 166 574 1998/99 166 606 1999/00 191 608 2000/01 194 591 2001/02 175 601 2002/03, 151 603 2003/04 127 627 2004/05 105 715 2005/06 131 699 2008/07 124 712 2007/08 109
Slide 41: US, China and Rest of the World
= US, China and Rest of the World Corn Production 450 400 350 eae 8 rege co * = 300 & 5 250 = 2 200 150 ee nl 100 —+ United States 60 —=—China Rest of the World 0 e@begzgezssee2teeyegsyupgee:res $5888 58 88 88588 82:8 #e2 2a 8 8 RR RR FR RR RA ‘Source: 1996-2009 USDA DatalProjections, 2010-12 Brock
Slide 42: Total World Grain Production and Consumption
———EE7~ Total World Grain Production and Consumption 2300 + Production 2200 | —consumption 2100 3 2000 5 © 1900 = = 1800 § 3 1700 1600 1500 USDA 2009/10 Production Projection: 2176 Million Tonnes USDA 2009/10 Consumption Projection: 2171 Million Tonnes 1400 Sees eee eee eee ee eh ee eeseseesege SESS
Slide 43: World Corn Ending Stocks
World Corn Ending Stocks 3 £ & 6 & g = s 8 g g 3 3 g a 2 s g 8 & < 5 a 3 e~2ge2eregx28e888 Ss gs FSBek SRXBR aS &€& & 28 & souuol ounEW U 60/8002 2019002 solvooz 20/2007 voroo0z 66/66 26/9661 selvesL e6/z66b vel066L ea/gg6L 28/9861 seive6L eg/zg6b 180861 62/8261 2u9261 SLIvLeL eLZ26b +2026 69/8961 2
Slide 44: US Soybean Supply and Demand
& BROCK ASSOCIATES US SOYBEAN SUPPLY AND DEMAND USDA Brock Est Ogos Est o9/t0est | 08/09 ooo 101444112 [ACREAGE (Mil. Acres) Planted Area 78.7 778 18.7 75 76.0 75.0 Harvested Area TAT 766 TAT 766 75.0 740 Yield 39.7 42.4 39.7 43000 43.8 44.0 SUPPLY (Mil. Bushels) IBeg. Stocks (Sep 1) 205 138 205 138
Slide 45: Expected Soybean Yield and Production by State
a Expected Soybean Yield and Production by State 2009 Projected Yield Change vs. | Estimated 2008 Yield _|September Report October Report_| Last Month | _2009 Production llowa 46.0 52.0 52.0 - 495.6 IMlinois 47.0 44.0 44.0 - 411.4 Minnesota 38.0 40.0 40.0 - 284.0 Nebraska 46.5 51.0 52.0 1.0 247.0 In
Slide 46: US Soybean Yield
US Soybean Yield Brock 2009/10 Projection: 43. Bushels per Acre 46 aioy sed sjeysng oLoz 800z 900z v00z zooz oo0z a66L 966L veh ze6r Oger ager 9g6L 86h zeer oger al6L 9z6L 2009 & BROCK ASSOCIATES
Slide 47: Soybean Planted Acreage
Soybean Planted Acreage '™ Actual Planted Acreage (USDA) Brock Associates Projected Plantings 75.0 Brock 2009/10 Projection: 77.6 Million Acres & BROCK ASSOCIATES
Slide 48: US Soybean Production
US Soybean Production 3,500 3,000 2,500 Million Bushels 1,500 1,000 8081 '™ Actual Production (USDA) Brock Associates Projected Production Brock 2009/10 Projection: 3,294 Million Bushels I BROCK ASSOCIATES 02/03, 03/04 04/05 05/06 06/07 07/08
Slide 49: US Soybean Crush
US Soybean Crush Uonanpolg Jo % e Se sig Ueaqhog Sx xe 8 8 8 BF ¥ BEES ee SS EE 2282 28 82 Rk 2 § 3 3 3 8 é 7] z 5 8 5 é c aa 66 Be e2R8 SBS R snug ueaghog sn 2009 & BROCK ASSOCIATES
Slide 50: U.S. Soybean Production and Utilization
U.S. Soybean Production and Utilization 600 (sjeysng oun) 94901g BulpuS [= sProduction [=Total Use ~# Ending Stocks 3,500 3,000 1,000 zu uOL ow60 60/80 80120 20190 90/30 s0iv0 voreo 20/20 zon bo100 00/66 66/86 86/6 26196 96/96 S66 eles e6/Z6 zene +6106 2009 & BROCK ASSOCIATES
Slide 51: Annual US Soybean Meal Use
Annual US Soybean Meal Use ~+Domestic Use ‘suo, HOUS 000‘ e 8 2 0° 10,000 5,000 HOE 160 60/80 80/20 20190 90/30 s0/v0 voreo 0/20 Zoro +o100 00/66 66/86 86126 26196 96/96 966 eres e616 zene +6106 06/68 69/88 88128 28/98 99/58 sae aes e978 zane +9108 2009 & BROCK ASSOCIATES
Slide 52: Percent Changes in Meal and Oil Domestic Usage
———EE~ Percent Changes in Meal and Oil Domestic Usage Year-Over-Year % Change in Soybean Meal Domestic Use Year-Over-Year % Change in Soybean Oil Domestic Use 10% . il ii , Attidlhstt, slut 5% 10% 15% Percent Change, Year-Over-Year 5/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/
Slide 53: Soybean Export Commitments
Soybean Export Commitments 40,000 35,000, ‘Thousand Metric Tons 8 8 5 Soo reeererers FLEE EHECELE CEE EEL ECE ECE ELE EE Week of Crop Year @®e Brock Associates 2009
Slide 54: US Soybean Exports
US Soybean Exports 1,400 ‘m Actual Exports (USDA) Brock Associates Projected Exports Brock 2009/10 Projection: 1,280 Million Bushels Million Bushels I? BROCK ASSOCIATES 0102
Slide 55: US Soybean Ending Stocks
US Soybean Ending Stocks o 1) < o 4 oO ote 7 300 200 100 (100) sleysng UollIW (200) (300) (400) zubb FOL oW60 60/80 80/20 20/90 90/50 sorvo yoreo 0/20 zorLo +0100 00/66 66/86 86/26 26/96 96/96 sive verse 6/26 zeiL6 +6106 06/68 ease 98/28 28/98 gg/s8 seve yas 8/28 zeiLe +8108 2009 & BROCK ASSOCIATES
Slide 56: Soybean Ending Stocks
Soybean Ending Stocks Actual Ending Stocks (USDA) Brock Associates Projected Ending Stocks Brock 2009/10 Projection: 326 Million Bushels Million Bushels 2009 I BROCK ASSOCIATES
Slide 57: US December Soybean Stocks
US December 1 Soybean Stocks 3,000 2,500 2,000 1,500 slousng UomIW 1,000 500 60/0 80/20 20/90 90/0 sorvo voreo 0/20 zoo +0100 ose 66/86 96/26 26/96 96/s6 serve velee 6/26 zerLe 16106 oes eggs 88/28 28/98 ese sive yale 28/28 zaiLs +3108 2009 & BROCK ASSOCIATES
Slide 58: Share of 2009/10 World Soybean Imports
——— Share of 2009/10 World Soybean Imports Rest of the World 22% @e Brock Associates 2009
Slide 59: World Soybean Supply and Demand
———— World Soybean Supply and Demand Million Metric Tonnes ——egnnng Ending Stocks Use Year __Stocks Production Consumption Stocks _Ratio 1996/97 19 132 135 16 11.8% 1997/98 16 158 146 28 18.9% 1998/99 28 160 158 29 18.5% 1999/00 29 160 159 30 18.9% 2000/01 30 176 172 34 19.6% 2001/02 34 185 183 36 1
Slide 60: US, Brazil, Argentina Production
US, Brazil, Argentina Production
Slide 61: Brazil Soybean Exports
Brazil Soybean Exports 16 4 e © souuol o1neW o16007 60/800z 80/2002 20/9007 90/5002 sorrooz voreooz 0/2007 zouLooz boroo0z 00/6661 66/8661 26/661 26/9661 96/S661 s6/re6t veeest 26/2661 ze/66t +6066) 06/6861 68/8861 88/2861 28/9861 2009 & BROCK ASSOCIATES
Slide 62: Projected Hog Profitability Based on Current Futures Prices
Projected Hog Profitability Based on Current Futures Prices (270 pound live weight) 5180.00, Projected Net Prot (Loss) por head steo.o0 | ss203) (2597) (52597) S407) (S1882) (265), (sa4e) _si384 5140.00 120.00 oon Novo Dec] dant. Feb 10 = Mar10 = Apr. May 10 (i Gi0ss Prot Before Fixed Costs Soybean
Slide 63: Milk to Feed Ratio
a Milk to Feed Ratio +2008 —*2007 3.25 —2008 - 08 Average 2009 4.25 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec @®e Brock Associates 2009
Slide 64: Summary
Summary Farm income will be down in 2009, due primarily to livestock Yield increases in corn and soybeans are starting to ramp up sharply Livestock prices have already made a major bottom
Slide 65: Disclaimer
Disclaimer There is a risk of losses as well as profits when trading futures and options. This market analysis is not a solicitation or recommendation to buy or sell any futures contract or other security.
Slide 66: Brock Associates contact details
2050 West Good Hope Road Milwaukee, WI 53209 Phone: 888/351-6066 Fax: 414-351-3140 Email: [email protected]
Slide 67: Sanderson Farms, October 29, 2009
Sanderson Farms’ October 29, 2009
Slide 68: Forward Looking Statement Warning
2 Forward Looking Statement Warning This presentation contains forward-looking statements about the business, financial condition and prospects of the Company. The actual performance of the Company could differ materially from that indicated by the forward-looking statements because of various risks
Slide 69: Who We Are
3 Who We Are LTM Revenue: $1,781MM LTM Adj EBITDA (1): $114MM Plants: 9 Pounds Sold: 2.5Bn Organized in 1947 Incorporated in 1955 Vertically integrated in 1961 Initial public offering in 1987 4th largest poultry processor in the U.S. Current processing capacity of 8.125MM heads/week We Are a Leading
Slide 70: Balanced Asset Base
4 Balanced Asset Base Waco, TX Bryan, TX Hammond, LA Moultrie, GA McComb, MS Hazlehurst, MS Jackson, MS Collins, MS Laurel, MS Kinston, NC Retail Tray Pack Plants Prepared Food Plant Poultry Plants Big Bird Deboning Full Capacity/ Per Week (1) Hazlehurst, MS 1961 625,000 Laurel, MS 1965 625,000 Hamm
Slide 71: Strong Portfolio of Customers
5 Retail Prepared Foods / Foodservice Strong Portfolio of Customers Central Grocers, Inc. DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI DELI
Slide 72: Key Strengths
6 Key Strengths Low Cost Producer As one of the industry's most efficient producers, well positioned to capture share Favorable Product Mix New plant focused on higher margin tray pack / retail markets Attractive Growth Profile Track record of generating strong internal growth History of delivering
Slide 73: Sanderson Has Consistently Posted Profitability Above Its Peers
7 Sanderson Has Consistently Posted Profitability Above Its Peers Margin Tyson PPC 2000 4.3 8.2 7.69054293 2001 10.9 6.4 6.232729131 2002 9.4 9 4.454007905 2003 11.8 6.1 9.16248146 2004 16.1 9.7 9.065867123 2005 13.1 10.2 10.57615453 2006 0.7 4.6 2.760440147 2007 10.8 7.2 5.786324189 2008 1.6 1.7 -3
Slide 74: Favorable Product Mix
8 Favorable Product Mix Small Bird Tray Pack Big Bird Deboning 2003 12.89 21.72 37.9 2004 31.9 37.87 77.34 2005 30.3 31.45 52.54 2006 10.45 6.33 5.12 2007 20.24 23.32 55.02 2008 -8.27 -16.54 -11.14 Jan-09 -2.02 12.09 10.62 Feb-09 2.46 25.46 34.12 Mar-09 8.03 27.6 50.13 Apr-09 12.73 36.21 61.3 May-09
Slide 75: Strong Track Record of Organic Growth
9 Strong Track Record of Organic Growth 1st Qtr 1997 722 1998 795 1999 986 2000 1077 2001 1167 2002 1308 2003 1437 2004 1530 2005 1580 2006 1802 2007 2025 2008 2441 2009E 2419 2010E 2598 2011E 2598 150 2012E 2598 311 2013E 2598 331 Pounds Processed Pounds Processed (Millions) 10% 24% 9% 8% 12% 10% 6
Slide 76: Kinston/Market Overview
10 Kinston/Market Overview
Slide 77: The Kinston Complex
11 The Kinston Complex Kinston Retail / Tray Pack Target Market 1.25 million heads/wk 6.46 million lbs/wk Capacity Total: $220 million SAFM: $120 million Estimated Investment
Slide 78: Strategic Rationale
12 Strategic Rationale Per capita consumption of chicken has remained strong and stable over time Through this most recent cycle, demand at retail grocery stores has remained strong Some of the industry-wide production cuts are likely to be permanent Egg sets and potential breeder placements down si
Slide 79: Per Capita Consumption of Chicken Remains Strong
13 Per Capita Consumption of Chicken Remains Strong Source: Economic Research Service, USDA
Slide 80: Restaurant Guest Traffic Trends (Brinker)
Note: "Brinker Int'l" represents cumulative data for Chili's Grill and Bar, Maggiano's Little Italy, and On the Border Mexican Grill and Cantina. Brinker Int'l sold Romano's Macaroni Grill at the end of its fiscal 2Q09. 14
Slide 81: Casual Dining: Guest Traffic Trends
Casual Dining: Guest Traffic Trends Variance over Prior Year Source: Stephens Inc. 15
Slide 82: Quick Service Restaurant Traffic Trends (YUM)
Note: "YUM" represents cumulative data for KFC, Pizza Hut, Taco Bell, Long John Silver's, and A&W All-American Food Restaurants. Note: No data available for Burger King or Steak n Shake 2Q09 16
Slide 83: USDA Broiler Eggs Set, Pullet and Breeder Placements
17 Source: USDA Broiler Eggs Set Pullet Placements Potential Breeder Placements Source: USDA Source: USDA Avg. Weekly Broiler Egg Sets Source: USDA
Slide 84: USDA Broiler-Type Eggs Set
USDA Broiler-Type Eggs Set (in thousands) 2004 2005-2008. «= 200720082009 Weekof ©2004 «2008. « 200620072008 205650 210241 213691 210475 217,209 202740 © JulOd 210314 200457 | 210K 216018 207813 20eo 210732 219887 211204 215444 201800 Jul 211382 212.174 219869 218,175 211457 207059 200419 ASAT 70850
Slide 85: Georgia Dock Year Average
Georgia Dock 5 Year Average - .7821 Source: Comtell.com 19
Slide 86: Urner Barry Chicken Part Prices
20 UB Boneless Skinless Breast 5 Year Average - 1.3667 UB Breast Tenders 5 Year Average - 1.3200 UB Wings 5 Year Average - 1.0946 UB Leg Quarters 5 Year Average - .3819 Source: Urner Barry
Slide 87: Broiler Export Pounds January - August 2008 and 2009
Broiler Export Pounds January - August 2008 and 2009 (in metric tons) 21 *Top 5 markets in 2009 represent 62% of total exports. *
Slide 88: Chicago Board of Trade Corn Soybean Meal
Chicago Board of Trade Corn Soybean Meal 22
Slide 89: Financial Summary
23 Financial Summary
Slide 90: Strong Track Record of Financial Performance
24 Strong Track Record of Financial Performance 2003 872 2004 1095 2005 1053 2006 1048 2007 1475 2008 1724 LTM 1781 Revenue ($MM) CAGR: 14.6% 2003 103 2004 176 2005 138 2006 7 2007 159 2008 28 LTM 114 Adjusted EBITDA (1) ($MM) 2003 2.78 2004 4.62 2005 3.53 2006 -0.57 2007 3.91 2008 -2.13 2009 3.04 E
Slide 91: GAAP Financial Results
25 GAAP Financial Results Quarter Ended July 31, Quarter Ended July 31, Quarter Ended July 31, Nine Months Ended July 31, Nine Months Ended July 31, Nine Months Ended July 31, ($MM) 2009 2008 Change 2009 2008 Change Sales 504.8 466.9 38.8 1,320.5 1,263.3 57.2 EBIT 69.5 (3.4) 72.9 105.7 18.7 87.0 Net
Slide 92: ROIC and Share Price
ROIC Share Price 2001 3.8 9.833333 2002 3.7 9.666667 2003 6 9.5 2004 8.3 9 2005 6.7 8.666667 2006 -3.71897104069528 9 2007 5.3 9.166667 2008 -1.50775527641307 9.041667 2009 4.7 SAFM 1/1/2001 5 1/2/2001 4.92 1/3/2001 5.08 1/4/2001 5.42 1/5/2001 5.29 1/8/2001 5.33 1/9/2001 5.33 1/10/2001 5.33 1/11/200
Slide 93: Capital Expenditures
= aa Capital Expenditures millions, 2 8 S$ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 "Operating OKinston
Slide 94: Pounds Sold & Processed Comparison
PoundsSold & Processed Comparison 7000 6000 5000 400.0 3 000 5 2000 1000 (100.0) 1a | and | ard | ath | 14 | 2nd | ord 1a | and | ord Qtr | Gtr Gtr | Gtr Gtr Gtr | Gtr | Gtr tr | tr | tr 2007 | 2007 | 2007 2007 | 2008 2008 | 2008 | 2008 | 2009 2009 ‘PoundsSold 4065 | 4796 5038 | 5789 5075 6072 | 643
Slide 95: Sanderson Farms 100% Natural
a Sanderson Farms’ 100% Natural
Sanderson Farms — Investor Presentation (November 2009) on 6ix