Tom Welke Senior Vice President, GSI Global Grain and Protein
Agenda GSI Overview Market Dynamics Growth Opportunities 2
At a Glance Leading global manufacturer of grain storage equipment as well as animal protein production systems Sales 2015E $750 - $775M EAME SA APAC Purchased 2011 2,800 employees, >500 independent dealers Animal Protein 40% Strong cash flow generation in U.S. Attractive mid-teen margins Longer term: macro trends driving growth in demand for grain storage and protein production NA Grain 60% increases exposure to counter-cyclical protein sector 3
Broad Range of Products and Brands Grain G R A I N Farm B I N S Commercial Material Handling Conditioning Structures Nesting Egg Collection Animal Protein Housing Feed / Watering Systems Climate Control 4
Global Footprint Assumption, IL Clear Lake & Sioux City, IA Omaha, NE Montreal, Quebec Budapest, Hungary Laer, Germany Shanghai, China Illinois Flora, Newton, Orleans, France Paris, Taylorville Bremen, AL Changzhou, China Queretaro, Mexico Passo Fundo, Brazil Model Farm, Zambia Model Farm Zambia Marau, Brazil Manufacturing/Sales Manufacturing/Assembly Penang, Malaysia Distribution Centers 2015: Sales into 85 countries from 13 manufacturing locations 5
Agenda GSI Overview Market Dynamics Growth Opportunities 6
Positive Long-Term Trends Growing Population Increasing need for grain storage Growing Middle Class Increasing demand for animal protein production Growing Grain Exports Grain movement from local production to overseas consumers Increasing handling speeds Reducing PostHarvest Loss Increasing demand for grain and protein infrastructure 7
Global Grain Flow Needs Efficient Storage Wheat Europe Corn Soy 38 15 Asia-Pacific -35 North America 43-10 Middle East -21-5 38 48-39 -2-89 Africa 85-40 -13-7 4-9 South America Source: http://www.ft.com/cms/s/0/dc1a8b88-1fd7-11e3-aa36-00144feab7de.html 8
Lack of Infrastructure in Developing Markets Causes High Losses Post-Harvest Loss Estimates Perishables have a higher loss percentage than grain 20%-40% Loss occurs though improper handling, conditioning and storage Need to improve knowledge and infrastructure 1%-10% OECD Africa GSI s Grain Equipment Systems will reduce post-harvest loss globally, particularly in emerging economies in APAC, Africa, and Latin America Source: FAO, ADM PHL Institute, AGCO Research 9
Developing Markets Need to Reduce Post-Harvest Losses The Need The Solution India Wheat Rot Corn Drying Philippines Small & secure storage Grain Storage Waste India Trucks carrying soybeans line up along highway to the Port of Paranagua, Brazil Solar powered Cool Box 10
Growing Focus on Food Security is Driving Protein Production The Need The Solution Recent Poultry Farm in Zimbabwe 11
Replacement of Aging Production Facilities in Developed Markets Poultry 20002010 25% Swine 20002010 Pre 1980 18% 10% 25% 19902000 75% are older than 15 years. US-installed poultry base has a $5B replacement cost 5% 33% 19801990 40% Pre 1980 19801990 44% 19902000 80% are older than 15 years. US-installed swine base has a $2B replacement cost Source: James Donald, PE, National Poultry Technology Center, Auburn University, and Management Estimates 12
Agenda GSI Overview Market Dynamics Growth Opportunities 13
Ambitious Growth Targets Sales Growth by Product Type Sales Growth by Region 5-8% CAGR Protein ROW 5-8% CAGR 8% ~40% $750M to $775M $750M to $775M CAGR Grain ~$350M North America ~25% ~60% ~$350M 25% ~75% 75% 2005 2015E 2025E 2005 2015E 2025E 14
Three-Point Growth Strategy 15
S T R AT E G Y # 1 : P R O D U C T L I N E E X PA N S I O N Product Line Expansion to Strengthen Leadership Position GSI PRODUCTS Process Actions INPUTS AGCO PRODUCTS GROW HARVEST GSI PRODUCTS STORE / MOVE CONVERT TO PROTEIN Treat seed Prepare soil Harvest Dry Feed animals Blend fertilizer Plant Move Store House animals Move Grow animals Apply chemicals NEW Dryer Poultry Convey Swine Silo Egg Treater Products NEW NEW Tower Blender NEW 16
S T R AT E G Y # 1 : P R O D U C T L I N E E X PA N S I O N Entering the Commercial Egg Market Completes GSI s Poultry Product Portfolio NEW PRODUCTS EXISTING PRODUCTS US Style Fans Cooling Heating Electronic Controls Environment Controls Conventional Nesting Conventional nest for breeders Storage Watering Broiler Feeders Chain Feeders Structures Housing Design Customized Structures Egg Layer Cage Enriched Nesting Cage Free Egg Collection Egg Production Feeding Non& Watering conventional Systems Nesting Breeder Pan 17
S T R AT E G Y # 1 : P R O D U C T L I N E E X PA N S I O N GSI is the US Market Leader for Cage Free Egg Production Commercial Egg Housing AGCO the Leader Enriched Cages (Colony) Cage-free (Aviaries) Companies Moving to Improve Animal Welfare Dunkin' Donuts announced that it would use cage-free eggs Sep 26, 2012 Aramark and Unilever have announced that eventually they'll only buy cage-free eggs Jun 9, 2013 Starbucks moves to cage-free eggs, revises policies on animal products Dec 23, 2014 USA, Canada Europe, USA, Canada Developed Markets McDonald s plans a shift to eggs from only cage-free hens Sep 9, 2015 Panera Bread says its eggs will be cage free by 2020 Nov 5, 2015 18
S T R AT E G Y # 1 : P R O D U C T L I N E E X PA N S I O N New Grain Products Provide More Complete Product Portfolio Commercial Structures Extended Catwalks Large Footprint Tower High-Capacity Conveyors Bulk Weighers Scales Screeners 19
S T R AT E G Y # 2 : V O L U M E G R O W T H How to Satisfy the World s Surging Appetite for Meat 140 Wall Street Journal Article by Jacob Bunge World Meat Production Additional 455 M metric tons of annual meat production needed by 2050 By type, in millions of metric tons Forecast 120 Chicken is widely expected to be the main choice 100 Over the next 35 years the world will need to increase meat production by another two-thirds Pork Increasing demand for large-scale food production and technology Beef 80 60 40 20 Poultry* 1961 70 80 90 2000 10 20 24 *includes chicken and turkey Source: Food and Agriculture Organization of the United Nations: Organization for Economic Cooperation and Development (forecast) http://www.wsj.com/articles/how-to-satisfy-the-worlds-surging-appetite-for-meat-1449238059 20
S T R AT E G Y # 2 : V O L U M E G R O W T H Expanding Globally Recent Projects Swine Farms Vertical Fertilizer Blender Two Story Poultry Layer House France Grain Port Terminal Storage, Conditioning Netherlands and Conveyance Russia Swine Farm China Poultry Farms Grain Storage US Poultry Broiler Farm China Turnkey Poultry Farm Egypt Grain Port Terminal Brazil Poultry Broiler House Brazil Turnkey Poultry Farm Zambia 21
S T R AT E G Y # 3 : M A I N TA I N I N G P R O F I TA B L E M A R G I N S The Power of a Global Manufacturing Supply Chain Nigeria Kenya GSI Production Sites 22
IN SUMMARY Well Positioned for Long-Term Profitable Growth Population growth and growing middle class driving demand for grain storage and increased protein consumption Leading market positions and brands with full product line offerings Strong earnings and cash flow contribution 23