CA L -MA I N E FO O D S , I N C
October 2016
1
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 10K and subsequent filings. We undertake no obligation to update any
forward-looking statements.
2
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 18 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 $1.9 billion in FY 2016
 FY 2016 sales up 21.1 percent
3
KEY INVESTMENT POINTS
 Largest egg producer and marketer in the United States
 Efficient, state-of-the-art operations
 Solid customer base of leading retail and food service companies
 Strong consumer demand for eggs
 Leading producer and marketer of high-margin specialty eggs
 Solid financial position
 Proven management team
4
THE U.S. EGG INDUSTRY
In calendar year 2014, the United States produced
about 86 billion eggs, or approximately
10 percent of the world egg supply.
Egg Products
(Liquid, Frozen)
Food
Service
Exports
5
31%
9%
5%
55%
Retail Eggs
(Consumer Package)
SALES REFLECT STRONG DEMAND
Cal-Maine Annual Net Sales ($ in millions)
Total Shell Eggs Sold (in millions of dozens)
Net Sales
Eggs Sold
$2,000.0
$1,908.7
$1,800.0
1,100.0
$1,576.2
$1,600.0
$1,440.9
$1,400.0
1063.1
$1,288.1
$1,200.0
$915.9
$928.8
$910.1
$800.0
$598.1
$600.0
$477.6
$400.0
683.1
685.5
777.9
805.4
$942.0
1053.6
900.0
948.5
884.3
800.0
821.4
700.0
678.5
600.0
$200.0
$0.0
500.0
2006
6
1,000.0
1013.7
$1,113.1
$1,000.0
1,200.0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
CAL-MAINE LOCATIONS
Cal-Maine Locations
7
FULLY-INTEGRATED OPERATIONS
Feed mills
Sales and
distribution
Breeder
flocks
Processing
and
packaging
Hatcheries
Egg
production
8
Pullet
growing
EGG PRODUCTION FACILITIES
Contract
production
4%
96%
Companyowned
9
COMPANY-OWNED FACILITIES
 State-of–the-art
 Fully-automated
 Temperature
controlled
 Labor efficient
 Located near our customers
10
CAL-MAINE CUSTOMERS
8% Food Service
Retail
88%
4% Egg Products
(and Miscellaneous)
11
TOP 10 CUSTOMERS
% Fiscal 2016 Sales
1. Walmart and Sam’s Club
2. H.E. Butt Co.
3. CCF Brands
4. Publix Super Markets
5. Food Lion
6. Eggs America (Sysco, US Foodservice, etc.)
7. Topco
8. McLane
9. Costco
10. Shoprite
Total Top 10 customers
12
28.9%
9.1%
8.3%
8.2%
70.6%
Avian Influenza
 Outbreak in the upper Midwestern United
States with over 40 million laying hens and
pullets affected
 12% reduction in the national laying flock
13
MONTHLY HEN INVENTORY
Million Hens First Day of Month
315
2011
310
2012
305
2013
300
2014
2015
295
2016
290
285
280
275
270
265
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Source: USDA Chicken and Egg Report as Revised September 2016
14
ANNUAL EGG PRICES
Urner Barry Southeastern Regional Large Egg Market Price
(per dozen eggs)
$2.00
$1.79
$1.80
$1.53
$1.60
$1.43
$1.38
$1.40
$1.35
$1.22
$1.21
$1.12 $1.13
$1.20
$1.05
$0.93
$1.00
$0.80
$0.79
$0.78
$0.66
$0.78
$0.69
$0.72 $0.75
$0.60
$0.40
$0.20
$0.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(Monthly average by fiscal year)
15
VOLATILE FEED INGREDIENT PRICES
Corn Dollars per Bushel
Soy Bean Meal Dollars per Ton
900.00
9
800.00
8
700.00
7
600.00
6
500.00
5
400.00
4
300.00
3
200.00
2
100.00
1
0.00
0
(Monthly average)
16
Corn
$/bushel
Soy Meal
$/ton
22
17
23
20
10
0
29 29
1Q17
43
4Q16
42
3Q16
44
2Q16
41
1Q16
40
4Q15
43
3Q15
42
2Q15
45
1Q15
49
4Q14
47
3Q14
48
2Q14
55
1Q14
4Q13
Cents per Dozen Eggs Produced
3Q13
60
2Q13
1Q13
48
4Q12
45
3Q12
2Q12
50
1Q12
46
4Q11
3Q11
33
2Q11
35 35
1Q11
4Q10
36
3Q10
35
2Q10
37 38
1Q10
4Q09
39
3Q09
40
2Q09
1Q09
4Q08
3Q08
2Q08
1Q08
28
4Q07
30
3Q07
2Q07
1Q07
FEED COSTS
57
53
54
51
49 48
46
41 41
43
39
33
30
GROWTH STRATEGY
 Pursue acquisitions of existing shell egg production
and processing facilities
 Enhance production capacity and efficiency
 Increase value-added specialty egg business
18
GROWTH STRATEGY
Pursue acquisition opportunities
 Leverage solid track record with completion of 18
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
ACQUISITION OPPORTUNITIES
Top U.S. Egg Producers
Company
Cal-Maine Foods
Rose Acre Farms
Michael Foods
Hillandale Farms
Trillium Farm
Rembrandt
Midwest Poultry
Hickman's Egg
Daybreak Foods
Weaver Brothers
Prairie Star Farms
Sparboe Farms
Herbruck's Poultry
Fremont Farms
ISE America
Centrum Valley
Opal Foods
Kreider Farms
Wabash Valley
Center Fresh
Gemperle Farms
National Food Corp
Total Layers
36,380
25,590
13,450
12,500
11,400
11,060
9,200
9,200
8,000
7,800
7,240
7,000
6,890
6,400
6,240
6,100
5,400
4,900
4,900
4,800
4,650
4,190
Company
Total Layers
RW Sauder
Mahard Egg Farms
Dixie Egg/Foodonics
Cooper Farms
S & R Egg Farms
Esbenshade Farms
Creighton Bros.
Konos Inc.
Braswell Foods
Sunrise Acres Egg Farm
Forsman Farms
CHS(Hamilton Farm)
Giroux's Poultry Farm
Mercer Landmark
Kreher's Eggs
Heritage PMS/LaValle
Country Charm Eggs
Minnich Poultry
Berne Hi-Way Hatchery
Hemmelgarn & Sons
Oakdell Egg/Ritewood
Schipper Eggs
3,570
3,100
3,090
3,060
2,860
2,850
2,850
2,390
2,280
2,100
2,030
2,000
2,000
1,960
1,800
1,800
1,750
1,660
1,600
1,600
1,600
1,550
Company
Morning Fresh Farms
Latham Farms (L&R)
Egg Innovations
Simpson's Eggs
Pearl Valley Eggs
J.S. West/JEM Eggs
Wilcox Farms
Sunrise Farms Inc.
Pine Hill Egg Ranch
Iowa Cage-free
Demler Enterprises
Hertzfield Poultry Farms
Wenger Feeds/Dutchland
Hillside Poultry Farms Inc.
Arkansas Egg Co.
Sunrise Farms
SKS Enterprises
Vital Farms
Dakota Layers
Total
Layers in Production, December 31, 2015, in thousands
20
Source: Egg Industry Magazine – February 2016
Total Layers
1,500
1,450
1,400
1,370
1,350
1,340
1,300
1,200
1,150
1,120
1,100
1,100
780
770
600
600
500
400
0
281,820
DELTA EGG FARM
 Cal-Maine Foods acquired remaining 50 percent
membership interest in Delta Egg Farm, LLC, from
Sunbest Foods of Iowa, a Moark, LLC, affiliate.
 Acquisition effective March 1, 2014, at purchase price
of $17.0 million.*
 Delta Egg Farm, LLC, now wholly-owned subsidiary of
Cal-Maine Foods.
 1.2 Million Hen Production Capacity and Feed Mill – Delta, Utah
 0.4 Million Organic Egg Production Capacity – Chase, Kansas
*For the third quarter of fiscal 2014, the Company recorded a non-recurring, non-cash gain of $4.0 million in other income for
the excess of the purchase price over the carrying value of the Company’s 50 percent investment in the joint venture. This gain
is non-taxable, and therefore resulted in a $1.5 million reduction to the Company’s income tax expense for the third quarter of
fiscal 2014. Additionally, the Company recorded a $3.7 million decrease to deferred income tax liabilities related to the tax
basis of the equity investment in the joint venture.
21
GROWTH STRATEGY
Enhance production capacity and efficiency
22
•
•
Over $140 million of capital projects currently underway
•
Project in Utah will increase California compliant capacity up to
620,000 hens, with a net 345,000 additional hens
•
Will add approximately 2 million additional hens to fiscal year end
numbers
Projects in Kansas, Kentucky, Texas, Arkansas, Georgia and
Florida will increase Cage-Free and Organic capacity
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 80-100 new jobs in local community
 Fully online in early 2017
 Enhances ability to meet growing demand for cage-free and other
specialty eggs
23
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
 As of Q1 FY 2017, represented
24.69 percent of dozens sold and
50.3 percent of sales revenue
24
JOINT VENTURE
On July 25, 2014, Cal-Maine Foods, Inc. entered into
a joint venture with Hickman’s Egg Ranch, Inc.
to form Southwest Specialty Eggs, LLC
 Acquired Egg-Land’s Best franchise for state of Arizona
 Licensed to sell Egg-Land’s Best® and Land O’Lakes® branded
specialty eggs and other premium brands
 Added southern California markets and Clark County and Las
Vegas, Nevada, in September 2014
 Expanded market reach in specialty egg sales
25
SPECIALTY EGG SALES
Dozen Eggs Sold (in millions)
1200
1000
800
778
805
821
884
948
1,014
1,063
1,054
211
242
679
600
400
200
0
81
107
116
132
144
156
174
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Total
26
Specialty
RETAIL EGG MARKET ANALYSIS*
Dollars
Dozens
-16.1%
+3.6%
Total Specialty Eggs
+4.0%
+4.8%
Nutrient Enhanced Eggs
-1.8%
-1.1%
Cage Free Eggs
+16.7%
+20.5%
Organic Eggs
+24.6%
+23.8%
Total Fresh Eggs
40 weeks ending September 24, 2016, compared with same period for prior year.
Source:
27
KEY STRENGTHS
28
Low Cost
Producer
 Fully-integrated operations located in 16 states
Favorable Consumer
Demand Trends
 Eggs taste great and provide an affordable and
 Focused on automation throughout the supply chain
convenient source of protein
Attractive Growth
Profile
 Solid track record of internal growth and acquisitions
Solid Customer
Base
 Leading names of retail and institutional food service
Strong Balance
Sheet
 Solid financial position supports future growth
 Increasing sales of high-margin specialty eggs
customers
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, 2016
29
BALANCE SHEET HIGHLIGHTS
(Unaudited; in thousands)
August 27,
2016
Cash and short-term investments
$
306,848
$ 389,545
Total assets
$ 1,075,972
$1,111,765
Long-term debt, less current maturities
$
8,125
$
Shareholders' equity
$
887,427
$ 917,361
Working capital
$
498,815
$ 542,832
Debt to Capital
30
May 28,
2016
.03:1
9,250
.03:1
CASH USE PRIORITIES
 Variable Dividend
1/3 of Net Income Paid Quarterly
 Acquisition of Existing Capacity
31
CASH DIVIDENDS PAID*
*Cents per share, as adjusted for October 31, 2014, two-for-one stock split
98.3
75.1
44.1
19.1
24.0
21.6
14.7
7.9
8.6
7.1
0.0
32
26.0
23.5
16.318.2
10.6
3.4
5.1
21.2
10.0
6.6
2.2
35.0
31.7
25.2
21.7
19.1
29.6
0.0
18.1
3.4
0.0 0.0
STOCK OWNERSHIP & FLOAT
Holdings as of July 29, 2016
Ownership
Shares
Outstanding
% of
Total
Shares Owned by Adams Family
15,127,086
31.2%
1,910,735
3.9%
2,345,820
4.8%
Public Float
29,707,982
61.2%
Total Outstanding Shares
48,533,421
100.0%
(Excludes ESOP)
Shares Owned by Other Insiders
(Excludes ESOP)
Shares Owned by ESOP
33
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
34
FINANCIAL SUMMARY
Annual Net Sales and Operating Income
($ in millions)
Operating Income
Net Sales
$2,000.0
$1,800.0
$1,600.0
$1,400.0
$1,200.0
$915.9 $928.8 $910.1 $942.0
$1,000.0
$800.0
$600.0
$477.6
$598.1
$223.6
$121.5 $102.6
$83.5
$1,113
$88.7
$400.0
$200.0
$4.5
$0.0
$1,288
$1,441
$1,576
$1,909 $500.0
$470.3
$450.0
$350.0
$235.3
$146.1
(In millions)
35
$200.0
$50.0
$58.2
685
$250.0
$100.0
$0.0
FY 2013 Operating Income of $87.6 million excluding litigation settlement
683
$300.0
$150.0
$59.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Dozen
Eggs Sold
$400.0
679
778
805
821
884
948
1,014 1,063 1,054
INCOME STATEMENT – FY 2014-2016
FY2016
$1,908,650
FY2015
$1,576,128
FY2014
$1,440,907
Gross profit
648,074
395,721
302,764
Operating income
470,314
235,335
146,052
16,935
11,214
15,790
487,249
246,549
161,549
Net income
$ 316,041
$ 161,254
$ 109,207
Net income per common share (1) :
Basic
Diluted
$
$
(Unaudited; in thousands except per share amounts)
Net sales
Other income (expense)
Income before income taxes
Weighted average shares outstanding(12):
Basic
Diluted
(1) As adjusted for October 31, 2014, two-for-one stock split
36
6.56
6.53
48,195
48,365
$
$
3.35
3.33
48,136
48,437
$
$
2.27
2.26
48,095
48,297
OPERATING HIGHLIGHTS –
Dozen Eggs Sold (000)
Dozen Eggs Produced (000)
May 28,
2016
May 30,
2015
1,053,597
819,307
1,063,086
798,842
% Specialty Egg Sales (Dozen)
% Specialty Sales (Dollars)
Net Average Selling Price (Dozen)
Net Average Selling Price Specialty Egg (Dozen)
Feed Cost (Dozen)
37
FY2016
22.9%
29.1%
$
$
$
1.735
2.213
0.414
19.8%
27.2%
$
$
$
1.429
1.976
0.439
INCOME STATEMENT – YTD FY2017
(Unaudited; in thousands except per share amounts)
13 Weeks Ended
August 27,
August 29,
2015
2016
Net sales
$ 239,845
$ 609,895
(9,569)
263,071
(49,825)
220,108
1,285
549
(48,540)
220,657
Net income (loss)
$ (30,936)
$ 143,023
Net income (loss) per common share:
Basic
Diluted
$
$
$
$
Gross profit (loss)
Operating income (loss)
Other income
Income (loss) before income taxes
Weighted average shares outstanding:
Basic
Diluted
38
(0.64)
(0.64)
48,249
48,249
2.97
2.95
48,163
48,498
OPERATING HIGHLIGHTS – YTD FY2017
13 Weeks Ended
August 27,
2016
August 29,
2015
242,325
198,782
258,774
202,648
24.6%
50.3%
24.5%
27.1%
0.952
1.973
0.431
$ 2.243
$ 2.481
$ 0.419
Dozen Eggs Sold (000)
Dozen Eggs Produced (000)
% Specialty Egg Sales (Dozen)
% Specialty Sales (Dollars)
Net Average Selling Price (Dozen)
Net Avg Selling Price Specialty Egg (Doz)
Feed Cost (Dozen)
39
$
$
$