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Weekly Update

Monday, September 23, 2019 U.S. Stock Indexes Remain Near Record Despite Slump

U.S. stocks inched lower Monday, attributable to declines of industrial and materials companies. The Dow Jones Industrial, S&P 500, and the Nasdaq Composite each fell around 0.1%. The data is showing a weakening in the German manufacturing and services sector, indicative of a slowdown. Despite the slump, U.S. stocks remain roughly 1% from records, owing to a fairly strong U.S. economy. The Dow Jones Industrial Average decreased 1.0% on the week, finishing at 26,935. The S&P 500 decreased 0.5% on the week, finishing at 2,992. The NASDAQ Composite decreased 0.7% on the week, finishing at 8,118. Yield on the 10-year Treasury decreased sixteen basis points during the week, ending at 1.74. Crude oil increased 6.4% on the week, ending at $58.09 per barrel. Corn increased 0.5% on the week, ending at $3.71 per bushel.

NASDAQ Highs: The Chefs’ Warehouse, Inc. Lows: None NYSE Highs: Brown-Forman Corp. Lows: None

Featured Stocks of the Week:

Kraft Heinz Company (NASDAQ: KHC) 4-Year History

McDonald’s Corporation (NYSE: MCD) 10-Year History

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Mary Burke Partner

312.348.7081

mburke@lakeshorefoodadvisors.com

William Whipple

Partner

312.348.7076

wwhipple@lakeshorefoodadvisors.com

Lakeshore Food Advisors, LLC

20 North Wacker Drive

Suite 1701

Chicago, IL 60606

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The Lakeshore Food Chain

PricePrice

Compared to 52-Week RangePrice as Compared to

YE: ForwardEnterprise Value to

LTM: Total Debt

to LTM

Company Name 9/20/19 9/13/19 High Low 2018 2017 P/E Revenue EBITDA EBITDA

Dow Jones Industrial Average 26,935 (1.0%) 27,359 21,792 15.5% 9.0% 17.1xS&P 500 2,992 (0.5%) 3,026 2,351 19.4% 11.9% 17.7 NASDAQ Composite Index 8,118 (0.7%) 8,330 6,193 22.3% 17.6%

Sector Average: 19.1% 12.8%

AGRICULTURAL LAND HOLDINGS

Farmland Partners Inc. $6.61 (4.2%) $7.85 $4.45 45.6% (23.8%) NM 17.60x 26.5x 14.0xGladstone Land Corporation 11.96 (0.2%) 13.85 11.12 4.2% (10.9%) NM 18.57 24.5 15.5Limoneira Company 18.40 (9.3%) 27.96 17.05 (5.9%) (17.9%) 24.7 3.11 291.2 NM

Sector Average: 14.6% (17.6%) 24.7x 13.09x 114.1x 14.8x26935.08

INPUTS

American Vanguard Corporation $16.21 (3.1%) $21.19 $12.69 6.7% (17.5%) 19.9x 1.45x 11.2x 3.0xCF Industries Holdings, Inc. 49.29 (1.2%) 56.51 38.90 13.3% 15.9% 18.7 3.77 9.7 2.8Corteva, Inc. 28.92 (4.0%) 32.78 24.35 NA NA 21.0 4.45 67.8 8.2FMC Corporation 89.90 (1.3%) 92.76 69.36 21.6% (5.0%) 14.2 3.11 11.5 2.6Intrepid Potash, Inc. 3.43 (7.5%) 4.41 2.51 31.9% (27.9%) 16.0 2.99 8.3 1.2The Mosaic Company 20.69 (8.7%) 37.37 17.36 (29.2%) (19.4%) 13.7 1.33 6.3 2.4

* Nutrien Ltd. 68.47 (0.3%) 75.78 59.97 6.8% NA 16.3 2.12 9.8 2.8S&W Seed Company 2.42 (3.2%) 3.20 1.81 33.7% (37.9%) NM 0.92 5.6 1.3The Scotts Miracle-Gro Company 100.20 (1.7%) 114.63 57.96 63.0% (6.3%) 20.5 2.41 14.1 3.7Zoetis Inc. 125.62 3.8% 130.08 78.90 46.9% 74.4% 33.9 10.73 27.9 2.9

Sector Average: 21.6% (3.0%) 19.3x 3.33x 17.2x 3.1x

AGRICULTURAL EQUIPMENT

* Ag Growth International Inc. $44.70 (1.0%) $64.72 $41.30 (4.5%) (16.2%) 16.7x 1.63x 11.4x 5.5xAGCO Corporation 76.46 (0.4%) 80.64 49.50 37.3% 7.0% 14.5 0.83 8.7 2.5Art's-Way Manufacturing Co., Inc. 2.21 2.3% 3.81 1.85 10.5% (25.9%) 0.0 0.82 NM NM

* Buhler Industries Inc. 3.71 1.9% 3.98 2.60 (3.9%) (14.7%) 0.0 0.57 NM NMCNH Industrial N.V. 10.68 (4.6%) 12.68 8.41 16.0% (20.3%) 12.8 1.34 13.1 9.1Deere & Company 164.07 (0.8%) 171.22 128.32 10.0% 4.8% 15.4 2.43 15.3 7.4Lindsay Corporation 94.05 0.0% 109.50 73.00 (2.3%) 6.6% 38.6 2.19 44.9 5.1Titan Machinery Inc. 14.69 (2.5%) 21.88 11.99 11.7% (30.6%) 14.1 0.67 16.2 11.2

Sector Average: 9.4% (11.2%) 18.7x 1.31x 12.9x 6.8x

AGRIBUSINESS

The Andersons, Inc. $26.22 (5.6%) $39.00 $21.86 (12.3%) (15.8%) 16.1x 0.42x 12.2x 8.5xArcher-Daniels-Midland Company 40.90 (1.8%) 52.07 36.45 (0.2%) 2.0% 12.3 0.51 10.8 4.1Bunge Limited 55.96 (1.5%) 72.35 47.26 4.7% (16.6%) 21.5 0.37 9.6 4.4Darling Ingredients Inc. 19.80 (2.5%) 22.62 17.99 2.9% 9.2% 23.5 1.51 9.8 4.5

* Gruma, S.A.B. de C.V. 210.75 3.1% 241.80 165.03 (5.4%) (15.5%) 17.6 1.46 9.2 2.3Ingredion Incorporated 82.06 (1.8%) 107.52 73.00 (10.2%) (41.3%) 12.6 1.29 8.0 2.4Landec Corporation 10.76 (12.9%) 15.57 9.02 (9.1%) (14.6%) 39.5 0.84 21.6 7.1MGP Ingredients, Inc. 51.71 (2.4%) 100.00 44.12 (9.4%) (32.7%) 18.9 2.44 15.7 0.8

* Olam International Limited 1.89 2.7% 2.10 1.57 14.5% (6.9%) 12.7 0.45 12.7 11.1Sector Average: (2.7%) (14.7%) 19.4x 1.03x 12.2x 5.0x

DIVERSIFIED FOODS

B&G Foods, Inc. $19.56 (1.9%) $31.60 $16.70 (32.3%) (44.4%) 10.5x 1.87x 10.7x 6.3xCampbell Soup Company 46.76 1.0% 48.03 32.04 41.7% (2.8%) 18.6 2.79 14.5 5.6 Conagra Brands, Inc. 29.81 (0.2%) 37.60 20.22 39.6% (20.9%) 14.3 2.62 12.3 5.5 General Mills, Inc. 54.33 0.7% 56.40 36.42 39.5% (8.4%) 16.1 2.86 12.9 4.0 The Hain Celestial Group, Inc. 20.90 (4.8%) 27.68 14.45 31.8% (50.7%) 30.9 1.21 17.7 4.1 The J. M. Smucker Company 107.81 1.2% 128.43 91.32 15.3% (13.2%) 12.8 2.37 11.3 3.7 Kellogg Company 63.73 0.6% 73.43 51.34 11.8% (6.3%) 16.4 2.30 13.4 4.1 The Kraft Heinz Company 28.14 (3.8%) 58.08 24.86 (34.6%) (63.8%) 11.2 2.53 10.2 5.0 Lancaster Colony Corporation 143.28 (1.9%) 194.38 138.90 (19.0%) 10.9% 28.0 2.86 18.0 0.0 Mondelez International, Inc. 54.65 1.1% 56.72 38.79 36.5% 27.7% 21.5 3.82 18.5 4.2

* Nestlé S.A. 106.26 0.0% 113.20 77.74 33.2% 26.8% 23.0 3.71 17.5 2.3 * Nomad Foods Limited 20.76 (1.7%) 23.06 15.87 24.2% 22.8% 15.4 2.22 13.8 5.1

Post Holdings, Inc. 105.66 (0.7%) 113.73 83.88 18.5% 33.4% 21.4 2.39 12.2 5.6 The Simply Good Foods Company 29.23 (3.0%) 31.34 16.55 54.7% 105.0% 40.8 4.74 27.4 2.2 SunOpta Inc. 2.90 (10.8%) 10.23 2.56 (45.1%) (70.0%) NM 0.69 25.1 17.0 TreeHouse Foods, Inc. 56.42 (3.3%) 67.88 41.18 11.3% 14.1% 21.0 1.04 11.8 5.3 The Unilever Group 53.80 (1.2%) 57.77 45.30 13.5% 13.9% 20.5 3.28 11.7 2.1

Sector Average: 14.1% (1.5%) 18.8x 2.55x 15.2x 4.8x

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Notes: *Denotes local currency. Source: Capital IQ. Summary multiples adjusted for extraordinary and non-recurring items; outliers excluded from mean calculation.

PricePrice

Compared to 52-Week RangePrice as Compared to

YE: Forward Enterprise Value to LTM:Total Debt

to LTM

Company Name 9/20/19 9/13/19 High Low 2018 2017 P/E Revenue EBITDA EBITDA

ETHANOL

Green Plains Inc. $10.10 (6.4%) $19.39 $7.01 (23.0%) (40.1%) NM 0.38x NM NMPacific Ethanol, Inc. 0.66 (16.9%) 3.24 0.50 (23.8%) (85.6%) NM 0.23 NM NMRenewable Energy Group, Inc. 14.98 (5.7%) 32.52 9.90 (41.7%) 26.9% 10.2 0.35 39.3 12.4

Sector Average: (29.5%) (32.9%) 10.2x 0.32x 39.3x 12.4x

FRUIT & VEGETABLE

Calavo Growers, Inc. $94.38 0.9% $104.00 $67.52 29.4% 11.8% 31.1x 1.41x 27.9x 0.1xFresh Del Monte Produce Inc. 30.73 (3.2%) 35.78 22.98 8.7% (35.5%) 16.9 0.53 12.3 4.3 Lamb Weston Holdings, Inc. 73.52 1.9% 83.86 58.83 (0.1%) 30.2% 21.1 3.47 14.7 2.8 Seneca Foods Corporation 30.39 (3.8%) 35.90 21.97 7.7% (1.2%) 0.0 0.52 NM NM

* Total Produce plc 1.40 9.2% 2.18 1.23 (1.1%) (45.3%) 9.6 0.28 8.2 5.1 Sector Average: 8.9% (8.0%) 15.7x 0.68x 15.8x 3.1x

PROTEIN

Beyond Meat, Inc. $155.26 (0.5%) $239.71 $45.00 NA NA NM 55.3 NM NMCal-Maine Foods, Inc. 44.09 (2.9%) 50.69 36.65 4.2% (0.8%) NM 1.35 17.1 0.0 Hormel Foods Corporation 42.94 (0.1%) 46.26 37.00 0.6% 18.0% 24.3 2.37 16.4 0.2 Industrias Bachoco, S.A.B. de C.V. 51.73 (7.4%) 57.00 37.66 30.8% (9.7%) 12.9 0.61 9.3 1.5

* JBS S.A. 30.90 3.6% 31.20 8.17 166.6% 215.0% 13.4 0.70 10.4 4.4 Nathan's Famous, Inc. 70.75 (1.5%) 87.50 62.20 6.5% (6.3%) 0.0 3.71 12.9 5.2 Pilgrim's Pride Corporation 30.48 (1.1%) 32.71 14.83 96.5% (1.9%) 13.7 0.89 12.1 3.3 Sanderson Farms, Inc. 155.15 3.5% 158.32 93.98 56.3% 11.8% 18.4 1.02 20.0 0.2 Seaboard Corporation 4,090.00 (4.6%) 4,743.71 3,434.71 15.6% (7.3%) 0.0 0.70 26.9 6.3 Tyson Foods, Inc. 87.39 2.6% 94.07 49.77 63.7% 7.8% 14.5 1.07 10.7 3.1

Sector Average: 34.3% 1.5% 12.1x 1.38x 15.1x 2.7x

BAKING & INGREDIENTS

* ARYZTA AG $0.92 (5.6%) $12.69 $0.68 (15.5%) (97.6%) 8.4x 0.48x 5.4x 4.8xBalchem Corporation 98.10 (6.9%) 116.94 73.16 25.2% 21.7% 31.0 5.29 22.4 1.6 Flowers Foods, Inc. 22.86 2.4% 24.36 17.78 23.8% 18.4% 23.4 1.52 15.0 3.2

* Grupo Bimbo, S.A.B. de C.V. 37.07 0.9% 43.75 32.55 (5.3%) (14.8%) 22.1 0.97 8.0 3.2 J & J Snack Foods Corp. 191.64 1.3% 196.74 138.40 32.5% 26.2% 36.0 2.91 20.7 0.0

* Kerry Group plc 104.20 (0.8%) 111.10 85.31 20.5% 11.4% 25.6 2.95 21.1 2.5 McCormick & Company, Incorporated 160.14 1.9% 171.10 119.00 15.0% 57.1% 29.9 4.75 22.5 4.2

* Tate & Lyle plc 7.42 (0.4%) 8.10 6.28 12.4% 5.5% 14.0 1.37 7.9 1.3 Sector Average: 13.6% 3.5% 23.8x 2.53x 15.4x 2.6x

CANDY, NUTS, & SNACKS

Bridgford Foods Corporation $34.90 (1.1%) $38.00 $15.76 75.6% 178.1% 0.0x 1.74x 24.9x 1.1xThe Hershey Company 153.94 3.6% 162.20 99.15 43.6% 35.6% 26.1 4.62 18.0 2.2 John B. Sanfilippo & Son, Inc. 93.76 (1.1%) 96.88 53.12 68.5% 48.2% 28.0 1.25 15.1 0.4 Rocky Mountain Chocolate Factory, Inc. 9.53 2.0% 10.43 7.95 11.9% (19.1%) 0.0 1.59 11.0 0.8 Tootsie Roll Industries, Inc. 36.48 (4.1%) 40.82 27.26 12.5% 6.3% 0.0 4.30 23.9 0.1

Sector Average: 42.4% 49.8% 27.0x 2.70x 18.6x 0.9x

PET FOOD AND PRODUCTS

Central Garden & Pet Company $27.53 (3.2%) $40.59 $22.40 (20.1%) (29.3%) 14.9x 0.76x 8.5x 3.3xFreshpet, Inc. 49.61 (3.3%) 52.42 28.44 54.3% 161.8% 151.5 8.39 219.5 4.6

Sector Average: 17.1% 66.3% 14.9x 4.57x 8.5x 4.0x

WINE & BEVERAGE

The Boston Beer Company, Inc. $345.48 (11.3%) $444.65 $230.93 43.4% 80.8% 35.3x 3.83x 21.6x 0.4xBrown-Forman Corporation 63.65 (0.9%) 65.83 44.57 33.8% 15.9% 35.1 9.71 27.7 2.2 The Coca-Cola Company 53.91 (0.6%) 55.92 44.25 13.9% 17.5% 24.6 8.09 22.6 4.3 Constellation Brands, Inc. 205.10 0.5% 228.91 150.37 27.5% (10.3%) 23.9 6.53 14.0 4.7

* Cott Corporation 17.12 (4.7%) 21.31 15.62 (9.9%) (18.4%) 30.4 1.35 11.6 5.7 Craft Brew Alliance, Inc. 8.26 (10.6%) 18.71 8.02 (42.3%) (57.0%) 39.4 1.14 27.6 8.7 Crimson Wine Group, Ltd. 7.60 (2.8%) 9.01 7.00 (2.9%) (28.8%) 0.0 2.54 32.2 4.2

* Diageo plc 32.22 (1.8%) 36.34 25.13 15.3% 18.2% 22.9 6.96 18.9 2.9 Monster Beverage Corporation 58.35 (0.9%) 66.38 47.74 18.5% (7.8%) 27.4 7.66 21.5 0.0 Jones Soda Co. 0.44 (11.0%) 0.98 0.22 87.7% 21.0% 0.0 2.47 NM NMNational Beverage Corp. 45.04 (3.2%) 117.19 38.28 (37.2%) (53.8%) 17.7 1.97 11.0 0.3 PepsiCo, Inc. 134.71 (1.3%) 139.18 104.53 21.9% 12.3% 23.5 3.33 17.0 2.5 Starbucks Corporation 90.07 (0.5%) 99.72 54.71 39.9% 56.8% 30.1 4.38 20.6 2.1 Willamette Valley Vineyards, Inc. 7.11 (1.3%) 8.05 6.55 3.1% (13.9%) 0.0 2.50 11.1 2.4

Sector Average: 15.2% 2.3% 22.2x 4.46x 19.8x 3.1x

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PricePrice

Compared to 52-Week RangePrice as Compared to

YE: Forward Enterprise Value to LTM:Total Debt

to LTM

Company Name 9/20/19 9/13/19 High Low 2018 2017 P/E Revenue EBITDA EBITDA

DAIRY

* Danone S.A. $80.44 1.2% $82.38 $59.72 30.8% 15.0% 19.9x 2.68x 13.9x 4.1xDean Foods Company 1.41 (11.3%) 8.15 0.72 (63.0%) (87.8%) NM 0.19 NM NMLifeway Foods, Inc. 2.45 (12.2%) 4.75 1.81 30.3% (69.4%) 0.0 0.43 30.0 4.1

* Saputo Inc. 40.66 2.1% 46.41 35.56 3.8% (10.0%) 23.3 1.54 17.4 4.0 Sector Average: 0.5% (38.0%) 21.6x 1.21x 20.4x 4.1x

WHOLESALE, FOOD SERVICE, & DISTRIBUTION

The Chefs' Warehouse, Inc. $40.47 (0.3%) $42.06 $29.56 26.5% 97.4% 36.3x 1.06x 21.9x 5.7xCore-Mark Holding Company, Inc. 31.08 (6.0%) 40.95 22.53 33.7% (1.6%) 18.3 0.16 13.7 4.3 Performance Food Group Company 46.06 (1.2%) 47.26 28.05 42.7% 39.2% 25.7 0.31 14.1 3.1 SpartanNash Company 11.90 0.1% 23.00 8.82 (30.7%) (55.4%) 9.1 0.17 8.6 6.1 Sysco Corporation 78.24 (0.1%) 79.33 59.44 24.9% 28.8% 20.6 0.80 14.3 2.4 United Natural Foods, Inc. 11.92 (1.4%) 32.43 6.75 12.6% (75.8%) 6.6 0.22 10.0 8.4 US Foods Holding Corp. 42.81 1.5% 43.10 27.51 35.3% 34.1% 17.6 0.52 12.2 3.3

Sector Average: 20.7% 9.5% 19.2x 0.46x 13.5x 4.8x

MASS MERCHANDISE & CLUB STORES

BJ's Wholesale Club $26.36 (3.9%) $29.41 $19.31 19.0% NA 16.8x 0.57x 12.8x 6.6xCostco Wholesale Corporation 286.36 (1.9%) 307.34 189.51 40.6% 53.9% 34.4 0.83 20.2 1.1 Walmart Inc. 116.98 (0.4%) 118.19 85.78 25.6% 18.5% 23.5 0.78 12.5 2.3

Sector Average: 33.1% 36.2% 28.9x 0.73x 15.1x 1.7x

DOLLAR STORES

Dollar General Corporation $156.23 (1.0%) $162.34 $98.08 44.6% 68.0% 22.7x 1.91x 19.2x 4.1xDollar Tree, Inc. 111.07 (1.6%) 113.67 78.78 23.0% 3.5% 20.0 1.54 15.9 4.5

Sector Average: 33.8% 35.7% 21.3x 1.72x 17.5x 4.3x

TRADITIONAL RETAIL

* Ahold Delhaize $22.77 (0.5%) $24.01 $18.84 3.1% 24.2% 13.2x 0.57x 8.9x 3.7xIngles Markets, Incorporated 39.36 (5.4%) 43.65 25.57 44.6% 13.8% 10.1 0.39 6.3 3.3 The Kroger Co. 25.68 (2.1%) 31.98 20.70 (6.6%) (6.4%) 11.5 0.34 7.8 4.0 Village Super Market, Inc. 25.83 (3.4%) 32.20 23.75 (3.4%) 12.6% 0.0 0.19 5.1 0.8 Weis Markets, Inc. 38.56 (6.6%) 53.30 35.26 (19.3%) (6.8%) 0.0 0.32 6.6 1.2

Sector Average: (6.5%) 7.5% 11.6x 0.36x 6.9x 2.6x

SPECIALTY RETAIL

Natural Grocers by Vitamin Cottage, Inc. $10.71 (5.2%) $24.50 $8.50 (30.1%) 19.9% 24.9x 0.32x 6.1x 1.3xSprouts Farmers Market, Inc. 19.24 (4.2%) 28.69 16.46 (18.2%) (21.0%) 17.7 0.72 11.4 4.9

Sector Average: (24.1%) (0.5%) 21.3x 0.52x 8.8x 3.1x

TRADITIONAL RESTAURANTS

Brinker International, Inc. $43.37 (0.3%) $53.61 $36.44 (1.4%) 11.7% 10.4x 0.88x 7.6x 3.3xThe Cheesecake Factory Incorporated 40.03 (6.0%) 54.20 35.83 (8.0%) (16.9%) 14.9 1.20 12.8 4.7 Darden Restaurants, Inc. 119.80 (5.9%) 128.41 95.83 20.0% 24.8% 18.3 2.28 16.6 4.4 Dine Brands Global, Inc. 71.55 (3.1%) 104.00 65.63 6.3% 41.0% 10.1 3.40 12.1 7.6 Jack in the Box Inc. 89.57 1.8% 90.49 70.77 15.4% (8.7%) 19.2 3.66 12.8 3.9 McDonald's Corporation 209.39 (0.2%) 221.93 161.12 17.9% 21.7% 24.9 9.75 19.5 4.4 The Wendy's Company 20.76 6.9% 22.84 14.96 33.0% 26.4% 33.1 6.18 19.8 9.4 YUM! Brands, Inc. 112.30 0.8% 119.72 84.53 22.2% 37.6% 27.9 8.14 22.7 5.6

Sector Average: 13.2% 13.8% 19.8x 4.44x 15.5x 5.4x

HIGH-GROWTH RESTAURANTS

Chipotle Mexican Grill, Inc. $834.66 5.9% $857.90 $383.20 93.3% 188.8% 55.0x 4.84x 41.2x 4.4xEl Pollo Loco Holdings, Inc. 11.33 (3.0%) 18.47 9.60 (25.3%) 14.4% 15.9 1.61 11.8 5.0 The Habit Restaurants, Inc. 8.96 (4.4%) 16.55 8.43 (14.7%) (6.2%) 79.2 0.84 10.8 5.4 Noodles & Company 5.92 (5.0%) 13.50 5.13 (15.3%) 12.8% 28.5 1.22 19.4 10.5 Potbelly Corporation 4.54 (6.0%) 13.54 3.10 (43.6%) (63.1%) 60.5 0.80 15.3 11.1 Shake Shack Inc. 104.28 4.3% 105.84 40.67 129.6% 141.4% 142.1 6.59 51.8 4.8 Wingstop Inc. 87.53 0.6% 107.43 56.95 36.4% 124.6% 109.9 16.43 61.4 6.9

Sector Average: 22.9% 59.0% 70.2x 2.65x 25.1x 6.9x

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Major Indices (1-year & 12-year History)

S&P 500

Dow Jones Industrial Average

10-year Treasury

CBOE Market Volatility Index – VIX

Lakeshore Sector Indices vs. S&P 500 (1-year Only)

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500

1,000

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2,000

2,500

3,000

3,500

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1-year 12-year

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10,000

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25,000

30,000

Months/Years

1-year 12-year

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Months/Years

1-year 12-year

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13

26

39

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65

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1-year 12-year

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130

140

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160

Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19S&P 500 Inputs & Agribusiness Diversified Foods Protein Baking & Ingredients Grocery

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Food For Thought… Partner Column Written By William W. Whipple U.S. population in 1950 was a little over 150 million people – my brother was born in 1950. 1980’s U.S. population was 226+ million – today’s population is 320 million people. World Population in 1950 was 2.6 billion people , 1980 was 4.5 billion - and today’s population is 7.5 billion people! World Population has increased nearly 3 times since 1950. The United States represented 6% of the world’s population in 1950, 5% in 1980 and Today the United States represents 4% of the World’s Population. Combined Global GDP (US dollars) has increased from $4,081 in 1950 to $77,868 in 2014 – this is 19 times 1950’s World GDP level. Developing Countries are growing 30% faster than Advanced Economies. Huge growth awaits the world from Artificial Intelligence, Robotic, and Advanced Technology applications! General Mills acquisition of Blue Buffalo Pet Food for approximately $8 billion is performing well! In 2019, Blue Buffalo pet food sales grew by 11% to reach USD $1.43 billion ($268M operating profit or 18%) for the brand – that works out to approximately 30X operating profits. Q1 FY 20 Organic Pet sales growth was 7% higher than last year. (General Mills stock price was down on an overall organic sales decline of 1%.) Kraft Heinz Brazilian Owner, 3G, sold 25M shares of stock for $28.60/share this past week. 2 years ago, Kraft Heinz was trading at over $80/share…(Kraft Heinz recently closed on the sale of its Canadian cheese business to Parmalat for 4.5X EBITDA.) Kraft Heinz new director Alexandre Van Damme reported his indirect ownership in 250M of Kraft shares with a weighted price of 28.45/share - $7M investment! Fresh Del Monte Produce is up to nearly $31/share – off its lows of $23 this spring -but still down from its $66/share high in 2017. The company is trading at a 12+ P/E. Remember, the company reported a loss and suspended its dividend in 2018. The company sources, trades and produces fresh fruits (bananas, pineapples, avocados, etc.). The company’s most recent sales decline was the result of lower sales volume of banana and fresh/value-added businesses. FY 2020 is to be the turnaround year with many predicting a 60% increase in EBIT. Calavo Growers is up 25+% this year – although they have 60% exposure to the avocado!

Calavo Growers is up 25+% this year – although they have 60% exposure to the avocado! Pork Packer margins starting to return – as final new pork processing capacity came online in April/May 2019, processor margins had deteriorated to essentially $0/hd. Packer margins were crushed as new pork processing capacity exceeded the supply of hogs! Expect hog supplies to exceed capacity this fall. Processing margins have returned to $25/hd. Hopefully, Packers will keep the number of head processed moderate to stay in line with new/increased hog supplies / maintain processing margins. McDonald’s stock was $80 years ago and I thought it was too high! Today the stock trades for nearly $210/share – up over 30% the prior 12 months. The company pays a 2.4% dividend and increased its dividend 8%. And - I still feel the stock is over-valued! (McDonald’s just acquired a voice-ordering technology company that it hopes to integrate into its drive-thru process, mobile ordering and kiosks – plus data collection. McDonald’s has over a $1B cash-on-hand. Tyson Food‘s Holcomb, KS fire, which was 6% of industry capacity and 20% of Tyson capacity, clearly affected cattle feeder margins. But lower Q4 placements will drive beef prices back higher. Beef Processor margins remain over $100/head ($200/hd in June – grilling season). Tyson currently runs a 10% EBITDA margin with an EBITDA/valuation of around 9.5X. Despite Tyson Foods recently reduced FY19 earnings, their outlook from the ASF tailwind across chicken, beef and pork shows much improvement for 2020. I expect improved pricing from ASF demand plus lower input costs. U.S. Food & Drug Administration has concluded that salmonella infections in dog treats were sourced from 3 countries – Argentina, Brazil & Columbia. I hope this gives pause to brand usage on imported products! ASF continues to spread outside China! South Korea just reported its 1st outbreak of ASF - 4 months after North Korea reported its first outbreak! Have a good week!

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Food For Thought… General Mills Announces Q1 Earnings. General Mills reported revenue of $4.0 billion, a 2.2% decrease from prior year, due to lower organic volume partially offset by positive organic net price. The company endured substantial volume decline in their international segments, resulting in an Asian & Latin America market decline of 9% from prior year along with Europe & Australia segment decreasing 10%. Management attributed the struggles in the international markets to a continuing challenging retail environment, inventory reductions, distribution network changes, and overall lower volumes. The North American market net sales remained stable, nearly matching year-ago levels, as increased sales in cereal, yogurt, and snack markets were offset by a decrease in sales for the baking and meals segment. Gross Margin increased 190 basis points from prior year to 34.7%, as prior year result included a one-time purchase accounting inventory adjustment related to the Blue Buffalo acquisition. Operating profit increased 10% from prior year to $662 million due to an expansion of operating profit within the North America and pet segments. Jeffrey Harmening, CEO of General Mills commented, “On the bottom line, we delivered profit and earnings growth ahead of our expectations while continuing to invest in our brands and our capabilities. We remain on track to deliver our fiscal 2020 goals, including accelerating our organic sales growth, maintaining our strong margins, and reducing our leverage.”

General Mills (NYSE: GIS) 10-Year History

S&W Seed Company Announces FYE 2019 Results. S&W reported revenue of $109.7 million for FYE 2019 compared to $64.1 million in FYE 2018 with the increase primarily related to licensing revenue and an incline in sales of sorghum related to the acquisition of Chromatin. The company also entered into a termination agreement and an alfalfa license agreement with Pioneer Hi-Bred International, subsidiary of Corteva Agriscience, to replace its prior alfalfa distribution agreement with Pioneer. With this new agreement, S&W will receive an ag-

gregate of $25 million in quarterly payments from Pioneer between September 2019 and February 2021. Gross margin expanded from 23.0% to 37.1% due to the increase in revenue. S&W reported a net loss of $9.3 million compared to a net loss of $4.7 million the year prior as the company incurred goodwill and intangible asset impairment charges of $17.9 million. On a Non-GAAP adjusted basis, the company reported net income of $11.7 million for FYE 2019. Darden Restaurants Q1 Results. Darden Restaurants, comprised of restaurant chains such as Olive Garden, Longhorn Steakhouse, and The Capital Grille, and others, reported Q1 revenue of $2.1 billion, a 3.5% increase from the year prior. Increase in revenue was driven by the addition of 40 new restaurant locations, higher menu pricing, and same-store sales increase of 0.9%. Operating profit increased from $189.1 million in Q1 of 2018 to $201.5 million in Q1 of 2019 as the company kept marketing and labor expenses relatively consistent. During the quarter, the Company repurchased approximately 800,000 shares of its common stock for a total cost of approximately $95.0 million. In addition, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common stock. The company reaffirmed their FYE 2020 outlook of total sales growth of 5.3% to 6.3%, with same-restaurant sales growth of 1% to 2%. Tomato Suspension Agreement Signed. Representatives of Mexican tomato growers signed a new suspension agreement this past week that will end the 17.6% duty paid by importers of Mexican tomatoes and replace it with minimum reference prices for U.S. imports of Mexican tomatoes. The new agreement also suspends the dumping investigation of Mexican tomatoes into the U.S. Secretary of Commerce Wilbur Ross stated, “today’s successful outcome validates the Administration’s strong and smart approach to negotiating trade deals.” The suspension agreement eliminates the injurious effects of unfairly priced Mexican tomatoes, prevents price suppression and undercutting, and eliminates substantially all dumping. Additionally, the agreement allows commerce to audit up to 80 Mexican tomato producers and U.S. sellers each quarter, or with good cause. An excerpt from the release said, “tomato producers across America, including those in Florida, Texas, and Arizona will benefit from this agreement.”

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Heard on the Street… Kroger Expands Long-Lasting Apeel Produces Line. Kroger is expanding its partnership with Apeel Sciences to bring Apeel's longer-lasting produce to market. In addition to the original 109 stores, Kroger plans to bring Apeel's avocados to more than 1,100 stores across the country later this month. Kroger also announced an incoming rollout of limes and asparagus, its first Apeel vegetable products, via a pilot program in Cincinnati later this fall. Apeel Science Inc. develops edible, plant-based coating product that extends shelf endurance of perishable produces, such as avocados, asparagus and limes. Apeel’s produces maintains their just-harvested quality longer and are less reliant on refrigeration. Longer-lasting shelf-life effectively reduces food waste and extends customers' access to fresh fruits and vegetables. Kroger started waste reduction since its announcement of Zero Hunger Zero Waste initiative in 2017. As consumers are increasingly looking for products that align with their environmental concerns and grocers that carry those products, the expansion could position Kroger well with its customers. Kerry Invests In Plant-Based Ingredient Market. Kerry Taste & Nutrition introduced a portfolio of plant-based ingredients under the Radicle brand for use with plant-based proteins and dairy alternatives. Kerry believes that the rivalry among plant-based meat suppliers is making non-animal-sourced ingredients a lucrative area to enter. As competition heats up among plant-based makers and more items hit market shelves, taste and nutrition become the primary factors that affect purchase decision. Consumers not only care more about what’s on their plate but also how the foods are being cooked. Plant-based ingredients impart flavors and mouthfeel, mask off tastes, mimic textures and perform similarly to dairy and meat when cooked and eaten. Fairfield Gourmet Corp Is Acquiring Foxtail Foods. Foxtail Foods, a dessert manufacturer and distributor, has built brand presence in foodservice with Foxtail brand. The company is an exclusive supplier to Perkins Restaurant & Bakery and Marie Callender's Restaurant & Bakery. The deal will give Foxtail access to David’s Cookies production facilities in Cedar Grove and Fairfield, NJ, as well as Longwood. FL. Foxtail’s Fairfield, OH, location will allow the cookie brand to expand production and distribution footprint to the Midwest. Fairfield Gourmet is a New Jersey-based gourmet dessert supplier known for its coo-

kie brand David's Cookies. The addition of Foxtail Foods product line will solidify Fairfield Gourmet Foods position as a one-stop-shop for bakery and pastry items in the Food service, In Store Bakery, Frozen Grocery and Convenience Store segments. In addition, Foxtail Foods' Southern Ohio production facility will further expand "Fairfield Gourmet Foods" national distribution channels. USDA Forecasted Soybean And Corn Production Down From 2018. The Crop Production report issued by USDA’s National Agricultural Statistics Service (NASS) forecasted soybean and corn production down from 2018. Soybean production is down 19% from 2018, forecast at 3.68 billion bushels; corn growers are expected to decrease their production 4% from last year, forecast at 13.9 billion bushels. Yields for corn and soybean are expected to average 169.5 bushels per acre and 48.5 bushels per acre, respectively.

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M&A

Since 2017, the number of food transactions closed has slowly decreased year over year. Despite this slow decline, in 2019 YTD there have been 290+ closed transactions, and over 100+ announced. Due to the lengthy timelines from announcement to closing this should not set expectations too negatively as many transactions span multiple years. Looking specifically at 2019 trends it is interesting to note that four of the top five companies with the most M&A activity are companies operating in the cannabis field. The prolonged negotiations of cannabis that have delayed a resolution for the product have clearly sparked bullish and bearish approaches to any future outcome. Another

industry to keep on the watch list is the snacks sector. In the last three years food giants such as Campbell, Kellogg, Ferrero, Hershey, The Simply Good Foods Company, and Conagra Brands to name a few, have all been active in snack transactions, as demonstrated both in the announced and recently closed transactions depicted below. Snack growth, especially in the U.S., has been on the rise and is expected to grow further still. Overall, macro trends have been largely influencing M&A activity from a political and economic standpoint as well as changing consumer preferences. As a result, M&A activity in the food space remains steady.

Recent U.S. Food & Agribusiness M&A Activity ($ in millions) M&A Transactions Closed In Last 30 Days

M&A Transactions Announced In Last 30 Days

Top 5 Transactions Of 2019 YTD By Value

Top 5 Companies By M&A Activity 2019 YTD

Source: Capital IQ

Closed Date Target/Issuer Transaction Value Buyers/Investors Sellers

09/13/2019 Food Group of Companies of Services Group of America 1,800.0 US Foods, Inc. Services Group of America, Inc.

09/10/2019 Jet Ag and Jet Oxide product lines 0.54 Marrone Bio Innovations, Inc. (NasdaqCM:MBII) Jet Harvest Solutions

09/09/2019 Red Ace LLC 2.1 Bhang Corporation -

09/06/2019 Green Plains Cattle Company LLC 77.2 StepStone Group LP; AGR Partners Green Plains Inc. (NasdaqGS:GPRE)

09/06/2019 10 Dispensaries 49.0 Cannabinoid Biosciences, Inc. -

08/30/2019 Superior Cake Products, Inc. 65.0 Sara Lee Frozen Bakery Hostess Brands, Inc. (NasdaqCM:TWNK)

08/29/2019 GSRX Industries Inc. (OTCPK:GSRX) 12.1 Chemesis International Inc. (CNSX:CSI) -

Announced Date Target/Issuer Transaction Value Buyers/Investors Sellers

09/12/2019 Modern Meat, Inc. 2.6 Navis Resources Corp. (CNSX:SUV) -

09/10/2019 Plant in Houston 10.0 - Farmer Bros. Co. (NasdaqGS:FARM)

09/09/2019 AQUAhydrate, Inc. 50.8 The Alkaline Water Company Inc. (NasdaqCM:WTER) The Yucaipa Companies, LLC; SC Beverages, LLC

08/28/2019 Ukiah Ventures Inc. 1.9 Halo Labs Inc. (OTCPK:AGEE.F) -

08/27/2019 ONE Brands, LLC 397.0 The Hershey Company (NYSE:HSY) CAVU Venture Partners

08/27/2019 Substantially All Assets of Empire Farmstead Brewery, Inc. 3.3 Burnett Dairy Cooperative Empire Brewing Properties, LLC

08/22/2019 Substantially All Assets of NORPAC Foods, Inc. 149.5 Oregon Potato Co. NORPAC Foods, Inc.

08/21/2019 More Than Gourmet, Inc. 35.7 Ajinomoto Health & Nutrition North America, Inc. Culinary Group Holdings, LLC

08/21/2019 Quest Nutrition, LLC 1,000.0 Atkins Nutritionals Holdings, Inc. -

Closed Date Target/Issuer Transaction Value Buyers/Investors Sellers

09/13/2019 Food Group of Companies of Services Group of America 1,800.0 US Foods, Inc. Services Group of America, Inc.

07/29/2019 Cookies and Fruit Snacks Business of Kellogg Company 1,300.0 Ferrero International S.A. Kellogg Company (NYSE:K)

06/17/2019 Smart & Final Stores, Inc. 2,135.4 Apollo Management IX LP Glenhill Capital Advisors, LLC; Ares Private Equity Group

04/26/2019 Portfolio Of Wine And Spirits Brands And Six Winemaking Facili 1,700.0 E. & J. Gallo Winery, Inc. Constellation Brands, Inc. (NYSE:STZ)

02/25/2019 Schwan's Company 2,180.0 CJ Foods America Corp. -

Buyers/Investors Jan Feb Mar Apr May Jun Jul Aug Sep Total Transactions Involved In 2019 YTD Transaction Value Jushi Holdings Inc. 1 1 2 4 12.0 MedMen Enterprises Inc. 1 2 1 1 1 6 13.3 The Boston Beer Company, Inc. 3 3 109.6 Ventura Cannabis and Wellness Corp. 1 1 1 1 4 1.3 Vibe Bioscience Ltd. 2 1 3 3.2

M&A Closures Or Announcements By Month

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Commodities Overview (1-year & 12-year History) Soybeans Milk

Sugar Cotton

Cattle Oil

Broiler price based off spot closing price. All other commodity prices are based off the closing price of their respective nearby futures contract. Sources: Thomson Financial Data Securities, Capital IQ, Reuters, Edgar Online, Wall Street Journal, Barron’s, New York Times, Bloomberg, Chicago Tribune, Denver Post, MarketWatch, USDA, The Economist, BusinessWeek, Food Institute, Food Business News, Supermarket News, LPC, Company Press Releases. The information contained in this publication is compiled using publicly available news/media sources and industry-specific sources that Lakeshore Food Advisors, LLC (“LFA”) believes to be reliable, but the accuracy and completeness of which LFA cannot guarantee.

Please send your feedback and comments to Francesca Meffert at 312.348.6387 or fmeffert@lakeshorefoodadvisors.com.

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