AgStar Presentation Template
Capital Investment Mark Greenwood
Agenda • Where is the industry today financially? • Where should you invest capital in your business? • Items to consider • Q&A
AgStar Sow Database • 19 F-T-F clients – Total of 952,000 sows
• • • • •
Avg OE > than 50% (GAAP) WC/Sow of $750 Current ratio 2.11 Debt per hd < $35/hd Avg. cost of production $161 – $59.63/cwt.
• All 19 clients are acceptable credit
Portfolio Overview • Average owner equity is over 50% today – Good chance to get over 60% by the end of 2012 – Clients are close to the equity levels that they had at the end of 2007
• Improved: Working Capital and Borrowing Base Margins – Continue to improve through 2012
• Many clients have feed coverage and hog coverage in 4th quarter – Open in the summer
• Focus is margin per head
Not Long Ago -The industry was on the edge…
So Where Should You Invest? If I owned a Swine Company: 1. Sows and sow facilities – Controlling the engine
2. Feed – Feed mills – Feed is a large % of overall cost
3. Grow-finish or wean-to-finish facilities 4. Land – Control part of my feed supply – You don’t have to own but control (rent or own)
So Where Should You Invest? • More farrowing crates – Push wean age up to > than 20-21 days
• New feeders if I own the barns especially – a .1 improvement in feed conversion is estimated = $3.50 estimated savings or lower costs – Corn at $5 and meal at $380/ton
• Again if I own the barn – Ventilation – Gating to improve ADG – A .1 improvement in ADG alone is worth over a $1 per head in yardage cost alone
What Else? • Pay down term debt – term revolvers • Research facilities – Allows you to test
• Financial Software – Many systems have breakeven by sow flow on a farrow to finish basis – Know costs of production to the penny • Allows you to focus on areas that need improvement
• Education – To the public and the team – More important than ever to tell your story
• Are you maximizing everything you have currently? –
$ value for your pigs and maximizing margins
Economic Implications of Attrition • Deen, 2002 – Typical attrition losses range from $8 to $10 / pig marketed
• Deen & Eggers, 2011 – Wean-to-finish summary of 1.8 M pigs in the Midwest U.S. Attrition Deads Lights / culls
Incidence, % Opportunity, $/pig 6.7% 14.4%
$6.15 $3.33
Invest in Market Intelligence Analysis & Forecasting
Collection & Reporting
Info. Processing & Dissemination
Primary Benefits to Business Bring insight and value to internal and external stakeholders
Drive response to significant events
Provide early warning: opportunities and threats via metrics/ trigger points
Monitor and assess key competitors
Support strategic planning processes
10
Questions? Contact Information: Mark Greenwood SVP Relationship Management Phone: 507-381-0968 Email: [email protected]
Thank you!!
Agenda • Where is the industry today financially? • Where should you invest capital in your business? • Items to consider • Q&A
AgStar Sow Database • 19 F-T-F clients – Total of 952,000 sows
• • • • •
Avg OE > than 50% (GAAP) WC/Sow of $750 Current ratio 2.11 Debt per hd < $35/hd Avg. cost of production $161 – $59.63/cwt.
• All 19 clients are acceptable credit
Portfolio Overview • Average owner equity is over 50% today – Good chance to get over 60% by the end of 2012 – Clients are close to the equity levels that they had at the end of 2007
• Improved: Working Capital and Borrowing Base Margins – Continue to improve through 2012
• Many clients have feed coverage and hog coverage in 4th quarter – Open in the summer
• Focus is margin per head
Not Long Ago -The industry was on the edge…
So Where Should You Invest? If I owned a Swine Company: 1. Sows and sow facilities – Controlling the engine
2. Feed – Feed mills – Feed is a large % of overall cost
3. Grow-finish or wean-to-finish facilities 4. Land – Control part of my feed supply – You don’t have to own but control (rent or own)
So Where Should You Invest? • More farrowing crates – Push wean age up to > than 20-21 days
• New feeders if I own the barns especially – a .1 improvement in feed conversion is estimated = $3.50 estimated savings or lower costs – Corn at $5 and meal at $380/ton
• Again if I own the barn – Ventilation – Gating to improve ADG – A .1 improvement in ADG alone is worth over a $1 per head in yardage cost alone
What Else? • Pay down term debt – term revolvers • Research facilities – Allows you to test
• Financial Software – Many systems have breakeven by sow flow on a farrow to finish basis – Know costs of production to the penny • Allows you to focus on areas that need improvement
• Education – To the public and the team – More important than ever to tell your story
• Are you maximizing everything you have currently? –
$ value for your pigs and maximizing margins
Economic Implications of Attrition • Deen, 2002 – Typical attrition losses range from $8 to $10 / pig marketed
• Deen & Eggers, 2011 – Wean-to-finish summary of 1.8 M pigs in the Midwest U.S. Attrition Deads Lights / culls
Incidence, % Opportunity, $/pig 6.7% 14.4%
$6.15 $3.33
Invest in Market Intelligence Analysis & Forecasting
Collection & Reporting
Info. Processing & Dissemination
Primary Benefits to Business Bring insight and value to internal and external stakeholders
Drive response to significant events
Provide early warning: opportunities and threats via metrics/ trigger points
Monitor and assess key competitors
Support strategic planning processes
10
Questions? Contact Information: Mark Greenwood SVP Relationship Management Phone: 507-381-0968 Email: [email protected]
Thank you!!
