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Recommendation: Buy Share Price (as of 2/4/15): $36.53 Sector Head: James Carlstedt Michael Metz Thomas Chadwick Cal- Maine Foods, Inc. (CALM:NASDAQ)

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Presentation on theme: "Recommendation: Buy Share Price (as of 2/4/15): $36.53 Sector Head: James Carlstedt Michael Metz Thomas Chadwick Cal- Maine Foods, Inc. (CALM:NASDAQ)"— Presentation transcript:

1 Recommendation: Buy Share Price (as of 2/4/15): $36.53 Sector Head: James Carlstedt Michael Metz Thomas Chadwick Cal- Maine Foods, Inc. (CALM:NASDAQ)

2 Fundamentals Sector: Consumer Staples Current Price: $36.53 Market Cap: $1.72B Beta:.61 P/E: Dividend Yield: 1/3 Net Income Paid Quarterly Last Years Annual Yield:2.87% Revenue: $1.45B EBITDA:$183M

3 Egg Industry Products –Shell Eggs –Specialty Shell Eggs –Egg Products- Liquid, Frozen –Food Service –Export

4 Cal- Maine Foods, Inc. Largest producer/ marketer of shell eggs in USA 3 Business Segments –Specialty Eggs –Regular Shell Eggs –Liquid, Frozen, or Dried Produces domestically

5 Highest Total Layers- USA

6 CALM’s Top Locations/ Brands Southwestern Southeastern Mid- Western Mid- Atlantic Egg-Land’s Best®, Land O’ Lakes®, Farmhouse®, and 4-Grain®

7 Top 10 Customers

8 Vertically Integrated

9 CALM Egg Growth

10 Top-Line Growth

11 Customer’s Health Choices

12 Risk Factors: 1.Egg Price Volatility 2.Feed Price Volatility 3.Shift to other products 4.Seasonality 5.Government Regulation 6.Consumer Demand 7.Barriers of Entry

13 Egg Price Volatility

14 Feed Price Volatility

15 Risk of Consumer’s Shifting to Other Products

16 Seasonality

17 Government Regulation/ Barriers to Entry Prop 2 California Animal Rights Activists –Animal Concentration

18 Consumer Demand

19 CAPEX Strategy Growth and Acquisition of Fragmented Market Improved Facilities

20 Acquisitions Completed 18 acquisitions since 1989 Acquired remaining 50% of Delta Egg Farms for $17M- 2014

21 Latest Earnings Report 12/23/14 reported Q2 of 2015 Net Sales $378.6 million (6.9% yoy) 36.6 million Net Income $0.76 per share Fiscal 2014: Billion Dozen Shell Eggs Sold

22 Financial Highlights

23 Institutional/ Insider Holdings 12/23/14 reported Q2 of 2015 Net Sales $378.6 million (6.9% yoy) 36.6 million Net Income $0.76 per share Fiscal 2014: Eggs Sold *13G/A Filing on BlackRock Institutional purchased a 6.3% stake

24 Recent Decline Due to Misunderstanding China temporarily banned imports of US chicken, turkey, and eggs –Effective January 8, 2015 –Strain of (HPAI) in Pacific Northwest Occurs only in wild birds/ small domestic flocks Hundreds of miles away from US commercial prod. Exports to China account for 0.7% of total US shell egg production

25 Stock Performance

26 Comparable Competitors* *main peers are Rose Acre Farms, Moark LLC, Rembrandt Enterprises, Daybreak Foods CALMTSNSAFMHRL Mtk Cap1.72B14.81B1.86B13.58B P/E P/B P/S Beta EPS

27 Thesis Leading producer Highly fragmented industry Price shock from Chinese ban Prop 2 – increased capex –Higher barrier to entry Acquisitions – seeking & a target Strong management – ROE & ROA Great dividend

28 DCF Valuation

29 Questions?


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