Ryan Seong Anthony Sorrentino Presented December 6, 2016 Cal-Maine Foods, Inc. Ryan Seong Anthony Sorrentino Presented December 6, 2016 Real Client Managed Portfolio

Real Client Managed Portfolio Agenda Current Holding Company and its Business Macroeconomic Overview and Drivers Industry Overview and Analysis Technical Analysis Financial Analysis Competitors Valuations Recommendation Real Client Managed Portfolio

Real Client Managed Portfolio Current Holding Historical Transactions and Valuations 12/16/2015 – Bought 100 at $47.68 Current Price $39.75 Realized Return 1/25/16 Dividend Paid $0.751 4/25/16 Dividend Paid $0.441 Total: 1.192/$47.68 = 2.51% (HPR) Unrealized Return Price Depreciation: 39.75/47.68-1 = (16.63%) 52 Week Range: $35.65 – $55.43 Market Cap: $1.93B Dividend Yield: 4.45% (1.76) P/E: 13.53 Extra Notes: Products & Services Breakdown Eggs Specialty Eggs Hatching Eggs SUPPLY CHAIN: Selling Industries Animal Food Production Meat Production Corn, Wheat, & Soybean Wholesaling Farm Supplies Wholesaling Market Segmentation Breakdown Retailers Processors and Manufacturers Food-Service establishments Exports Source: finance.yahoo.com Real Client Managed Portfolio

Business Overview Feed mills Breeder flocks Hatcheries Pullet growing Egg production Processing and Packaging Sales and Distribution Largest producer and marketer of shell eggs in the United States Founded 1957 in Mississippi Fully integrated operations Production, grading, packaging, marketing and distribution of shell eggs Growth strategy: Pursuit of acquisitions to grow layer base and broaden geographic reach 19 acquisitions since 1989 Products Non-specialty eggs, Specialty Eggs, Egg Products Specialty Brands: Egg-Land’s Best, Land O’ Lakes, Farmhouse, 4-Grain Real Client Managed Portfolio Sources: 2016 10-K, calmainefoods.com

Real Client Managed Portfolio SWOT Analysis Strengths Economies of scale Fully integrated operations Strong customer relationships Determined management team Weaknesses Litigations (Antitrust) Top 10 customers account for 70% of sales Disposal Liabilities EPA regulations for manure Marketing tactics to promote egg nutrition facts (vitamins, minerals, and protein) Opportunities Growing demand for specialty eggs Greater geographical coverage Changing consumer preferences Threats Volatility of egg and feed prices Up to 40%, often cannot pass higher feed prices to buyers Moderate regulation Risk of diseases Outbreaks of avian disease http://www.wsj.com/articles/SB10001424127887324328904578623683374193720 Real Client Managed Portfolio Sources: IBISWorld, Hoover’s, http://www.wsj.com/articles/

Macroeconomic Drivers Sources: census.gov, calmainefoods.com, IBISworld.com Real Client Managed Portfolio

Revenue Volatility: High Capital Intensity: High Industry Overview Selling Industries Corn, Wheat, & Soybean Wholesaling Farm Supplies Wholesaling Animal Food Production Chicken & Turkey Meat Production Life Cycle: Mature Revenue Volatility: High Capital Intensity: High Regulation: Moderate Real Client Managed Portfolio Sources: IBISWorld, Hoover’s

Real Client Managed Portfolio Industry Analysis Key Success Factors: Use of specialist equipment/facilities Technology to breed, feed mixes, climate control improves quality of output Efficiency Long-term sales contracts Large-scale supply contracts with downstream consumers Location Proximity to key markets Reduce storage and transit time Growing conditions Favorable weather locations Boosts production volume and quality of eggs Production of specialty eggs Profitability margins increase Trends: Health Perceptions – Health studies linking eggs to heart disease American Egg Board fought back and reverse the perception Specialty eggs segment, lower volatility Processed-egg products (egg whites and egg yolks in liquid and dry forms) – Convenience and storage HPAI – Revenue growth Falling feed costs (70% of production expenses) Corn, wheat, and soybean Regulations regarding cage space and trade Replace old equipment International Trade – Exports (4.1%) Imports (2.9%) Real Client Managed Portfolio Sources: IBISWorld, Hoover’s

. Porter’s 5 Forces Forces Level Factors Threat of New Entrants Moderate Threat of Substitutes Supplier Bargaining Power Low Buyer Bargaining Power Competitive Rivalry High Forces Level Factors Threat of New Entrants Moderate Costs of capital equipment Industry regulations (USDA, EPA, license) Threat of Substitutes Meat production industry Compete on price, taste, convenience and nutrition Supplier Bargaining Power Low Corn, wheat, and soybean wholesaling industry Low differentiation, high competition Buyer Bargaining Power Retail sector accounts for 55% of revenue (options for brand loyal and price sensitive consumers) Competitive Rivalry High Internal: Egg grades (appearance, color, strength, and size), specialty eggs, & price Source: IBISWorld, Hoover’s Threat of New Entrants: Cost of Capital Equipment: Chicken egg farm Laying houses and automatic feeding systems Regulations: Land and water permits Environmental laws regarding food safety USDA EPA Disposal of waste Competitive Rivalry: Internal: Brand Loyal Customers – Quality of eggs (diet of laying birds, housing conditions, and age) Price Sensitive Customers – Compete on low prices External: Protein – Compete on price, taste, convenience, and nutrition Real Client Managed Portfolio

Real Client Managed Portfolio Technical Analysis Source: bigcharts.com Real Client Managed Portfolio

Real Client Managed Portfolio Financial Analysis Real Client Managed Portfolio

Real Client Managed Portfolio Competitors Real Client Managed Portfolio

Real Client Managed Portfolio Competitors Real Client Managed Portfolio

Comparable Companies Company Comparable Set Ticker Latest Close Price Market Capitalization (Millions) Enterprise Value (Millions) Sanderson Farms, Inc. SAFM 81.09 1830.9 1,587.9 Industrias Bachoco S.A.B de C.V. IBA 45.76 2287.5 1,709.6 Pilgrim's Pride Corporation PPC 17.38 4368.1 5,296.9 Cal-Maine Foods, Inc. CALM 40.95 1987.3 1,706.5 Poultry producer in Mexico and United States: Breeding, processing, and marketing of chicken, eggs, swine, and animal feed. Also offers turkey and beef products. United States integrated poultry processing: Produces, processes, markets, and distributes chicken products Operations in United States, Mexico, and Puerto Rico: Produces, processes, markets, and distributes chicken products. Also offers fresh chicken products. Real Client Managed Portfolio

Real Client Managed Portfolio Comparable Valuation Company Comparable Set TEV/Total Revenue (30%) TEV/EBITDA (20%) TEV/EBIT (20%) P/E (30%) Sanderson Farms, Inc. 0.59 5.21 7.15 13.00 Industrias Bachoco S.A.B de C.V. 0.72 5.43 8.47 14.17 Pilgrim's Pride Corporation 0.66 6.08 7.60 10.22 Cal-Maine Foods, Inc. 1.11 6.96 8.52 13.93 Summary High 1.11 6.96 8.52 14.17 Low 0.59 5.21 7.15 10.22 Mean 0.77 5.92 7.93 12.83 Median 0.69 5.76 8.03 13.46 Implied Share Price High 37.13 Low 25.79 Mean 31.18 Median 30.90 Analysis 35.51 Real Client Managed Portfolio

DCF Valuation - Assumptions Real Client Managed Portfolio

Real Client Managed Portfolio DCF Valuation Implied Price: $39.46 Real Client Managed Portfolio

DCF Valuation – Sensitivity Analysis Real Client Managed Portfolio

Real Client Managed Portfolio Recommendation Implied Price $37.88 HOLD DCF Valuation $39.46 Comparable Valuation $35.51 60% 40% Real Client Managed Portfolio