Jefferies Global Industrials Conference

Transcription

1 NASDAQ: PENX

2 Jefferies Global Industrials Conference August 12, 2014 New York, NY NASDAQ: PENX Nature... Science... Solutions 2 Nature... Science... Solutions

3 Safe Harbor Statement The statements contained in this presentation that are not historical facts are forward-looking statements that represent management s beliefs and assumptions based on currently available information. Forward-looking statements can be identified by the use of words such as believes, may, will, looks, should, could, anticipates, expects, or comparable terminology or by discussions of strategies or trends. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly affect expected results. Actual future results could differ materially from those described in such forward-looking statements, and the Company does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed from time to time in the Company s filings with the Securities and Exchange Commission which include, but are not limited to: competition; the possibility of interruption of business activities due to equipment problems, accidents, strikes, weather or other factors; product development risk; changes in corn and other raw material prices and availability; the Company s inability to comply with the terms of instruments governing the Company s debt; changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company s products, including changes in government rules or incentives affecting ethanol consumption, unfavorable shifts in product mix; unanticipated costs, expenses or third party claims; impairment of the Company s long-lived assets that could result in a noncash charge to reported earnings; interest rate, chemical and energy cost volatility; changes in returns on pension plan assets and/or assumptions used for determining employee benefit expense and obligations; unforeseen developments in the industries in which Penford operates; and other factors described in the Risk Factors section in reports filed by the Company with the Securities and Exchange Commission. 3 Nature... Science... Solutions

4 Penford Corporation Overview Thomas D. Malkoski President & CEO 4 Nature... Science... Solutions

5 Penford Overview ESTABLISHED REPUTATION with more than 100 years of company history as a leader in specialty ingredients and products for food and industrial markets Leader in Specialty Ingredients Established End Markets BROAD RANGE of established end markets with over $467 million in revenue backed by a flexible supply chain and manufacturing Premier Customers LEADING SUPPLIER of ingredient-based solutions to a diverse base of premier customers in food, paper, packaging, biofuel and bioproducts 5 Nature... Science... Solutions

6 x Penford Fact Sheet Penford Corporation PENX:NASDAQ Headquarters: Centennial, Colorado Fiscal 2013 Revenue: (8/31/13) $467 million Divisions: Industrial Ingredients Cedar Rapids, IA 2013 Annual Revenue: $356 million Food Ingredients Centennial, CO 2013 Annual Revenue: $111 million As of July 1, 2014 Shares Outstanding 12.7 million Price per Share $13.75 Market Capitalization $175 million Enterprise Value* $253 million * EV = market cap. plus debt PENX Stock Price (2 years) Gross Profit Revenue 6 Nature... Science... Solutions

7 Broad Range of Established End Markets (fiscal 2013) Total Revenue $467 Million INDUSTRIAL 24% FOOD 76% 19% Specialty Applications 23% Animal Nutrition 27% Ethanol 31% Paper 24% Health & Wellness/ Other 13% Pet 30% Protein & Dairy 33% Coatings 7 Nature... Science... Solutions

8 Diverse Base of Premier Customers Industrial Food Paper Manufacturers Ethanol Blenders Packaging Chemical Companies Building Materials Consumer Products Restaurants Processors Grocery Retailers Food Manufacturers Beverages Custom Blenders Pet Treats and Nutrition 8 Nature... Science... Solutions

9 What Makes Penford Different? Proven marketplace success in specialty products supplying food ingredients and sustainable industrial bioproducts Commitment to technology development and scale up of innovative products and applications Flexible supply chain and manufacturing geared toward specialization Solutions focus that addresses consumer needs and creates value for customers Penford has strong core businesses that generate cash to fund investments in higher-margin specialty products. 9 Nature... Science... Solutions

10 The Specialty Products Advantage at Penford Higher order customer needs which are more important to customer s product performance, yielding higher profit margins for suppliers Higher barriers to entry from greater technical challenge and service requirements leading to more defensible and sustainable products Greater perceived value and customer loyalty for specialty suppliers resulting in integrated relationships Fewer competitors who are committed to specialization and technical support for customers Attractive margins with five-to-ten times the margins of commodity products 10 Nature... Science... Solutions

11 Commitment to Technology Development and Scale Up C E D AR R AP I D S, I A C E N T E N N I AL, C O R&D Laboratory & Pilot Plant R&D and Applications Lab Flexible manufacturing for customization and multiple product output choices Wide range of processes chemical, physical, and fermentation 3 R&D centers of excellence with 2 pilot plants and scale-up facilities Knowledge and technology transfer for expanded applications and shorter time to market 11 Nature... Science... Solutions

12 Strategic and Flexible Supply Chain & Manufacturing Plants Cedar Rapids, IA Idaho Falls, ID Richland, WA Plover, WI Berwick, PA North Charleston, SC 6 Plants strategically located near sources of raw materials/customers, each with multiple finished product capabilities 3 R&D Centers of Excellence with pilot facilities capable of commercial production R&D Centennial, CO Cedar Rapids, IA Tucson, AZ 12 Nature... Science... Solutions

13 The Penford Advantage: Solutions Focus Nature Renewable, sustainable resources Science Innovation through technology and application science Solutions Customer solutions designed to solve needs and create opportunities 13 Nature... Science... Solutions

14 A World of Solutions Gluten-free free Baked Baked Goods Pet Treats & Chews Dressings BioPlastics Bio-based Adhesives Printing & Writing Papers Cheese French Fry Coatings Napkins & Tissues Paper Plates Dairy & Smoothies Bio-based Latex Coatings Protein Coatings & Marinades Soups, Sauces & Gravies 14 Nature... Science... Solutions

15 Penford Industrial and Performance Bio-Products 15 Nature... Science... Solutions

16 Penford Industrial & Bio-Products Business Description Overview $330 million revenue business modified starches for paper and packaging; biofuel, and bio-products Integrated corn wet mill in center of corn belt producing up to 1.2 billion pounds of starch/yr; two smaller industrial facilities that manufacture specialty starches Paper and ethanol core businesses generate cash for reinvestment in specialty products Growth Opportunities: Performance Bio-Products Paper & Paperboard: sustainable products that replace chemical additives in paper coatings; novel products to strengthen packaging at disruptive cost in use savings Construction & agriculture: natural latex extender for carpet backing; replacements for synthetic binders in commercial erosion control and consumer landscaping Oil & gas: rheology additives to minimize fluid loss during drilling; encapsulation delivery systems used to stimulate oil & gas extraction; environmentally friendly, emulsion breaking technology that separates oil from water during production Personal care: naturally derived deposition polymers used in hair care and consumer products 16 Nature... Science... Solutions

17 Performance Bio-Solutions for Customer Needs Increases strength for durability Retention of fibers Lower cost than synthetics Paper Formation Economic strength additive for tissue and paper towels Fiber bonding for increased strength in packaging Print resolution Oil & grease resistance Surface Preparation Natural pigment binder for print resolution on uncoated paper Food wrap with oil and grease resistant coatings 17 Nature... Science... Solutions

18 Performance Bio-Solutions for Consumer Needs Petroleum displacement Natural products Environmentally safe Bio-Adhesives Proprietary formula for renewable school glue Customized laminating adhesive for playing cards Petroleum displacement Reduce production cost No VOC Bio-based Latex Consumer packaging with improved printability Sustainable binders with no VOCs for carpet backing Enhanced performance Renewable resources Environmentally safe Performance Bio-Polymers Naturally derived personal care ingredients High performance additives used in drilling 18 Nature... Science... Solutions

19 19 Nature... Science... Solutions Penford Food Ingredients

20 Penford Food Ingredients Business Description Overview $120+ million revenue business: specialized ingredient supplier for all segments of the food industry: restaurants, processors, branded marketers, retail Broad product family: potato, corn, tapioca and rice starches as well as customized blends with gum formulations Scale: Largest potato starch processor in North America: 3 dedicated potato plants for food ingredients strategically located in top yielding potato growing regions with capacity for additional growth Specialized capabilities: food corn starch modifications at Cedar Rapids facility Growth Opportunities Superior functionality: taste and texture, moisture control, particle suspension Convenience: better stability, longer shelf life, higher yields Health & wellness consumer trends: clean label, gluten-free, dietary fiber, protein Pet treats and nutrition: safer treats, nutritional additives, innovative pet products 20 Nature... Science... Solutions

21 Customer Solutions for Consumer Needs Taste & texture Moisture control Particle Suspension Functional Attributes Taste & texture under range of conditions Moisture control for better flavor Suspension for even flavor distribution Stabilization Extended hold times Yield & purge control Convenience Better emulsification and stability with gum additives Crispier fries, longer hold times Better yields for more profit 21 Nature... Science... Solutions

22 Customer Solutions for Consumer Needs Gluten-free Dietary fiber Sugar replacement Health & Wellness Exceptional tasting gluten-free choices Proprietary fibers for digestive health and calorie reduction Sugar replacement to satisfy consumer demand Safety Health & wellness Innovation Pet Nutrition & Treats Safe and wholesome pet products Healthier pet foods with nutritional additives and vitamins Innovative pet products that meet market needs 22 Nature... Science... Solutions

23 Strategies to Grow Shareholder Value Solutions Solutions that address relevant market needs with customized applications that help customers succeed Focus Resources on Value-Added Products Allocate resources to higher value products and transition mix to Specialty Products Innovation-Based Technology Platforms Invest in platforms that are market relevant, sustainable, defensible, and extendable Efficient & Flexible SC&O Productivity and process improvements Alliances or Acquisitions Strategic alliances or M&A for specialty ingredients 23 Nature... Science... Solutions

24 Creating Shareholder Value M&A Specialty Ingredients Proprietary, internally developed technologies Invest in human capital and proprietary CAPEX Segment penetration specialty ingredients Geographic expansion Grow share (valueadded paper starch and food corn) Strong value propositions Superior customer service High quality products Operational excellence Productivity CAPEX Risk management Partner to develop or manufacture new technologies Joint ventures License/acquire technology 24 Nature... Science... Solutions

25 Key Investment Considerations Leading Provider of Value-Added Ingredient Systems Transitioning Business Mix to Higher-Value Specialty Products Accelerating Pace of Innovation and Operating Momentum Strong Cash Flow and Access to Public Markets Experienced and Proven Management Team 25 Nature... Science... Solutions

26 Penford Corporation Headquarters 7094 S. Revere Parkway Centennial, CO (303)

27 NASDAQ: PENX