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January 15, 2014

Aric Almirola

Brian Moffitt

Larry Pope

STEPHANIE ACKERMAN:テつ Good morning, everyone, and thank you for joining us today.テつ Our guests this morning are Aric Almirola, driver of the No.43 Ford for Richard Petty Motorsports; Brian Moffitt, chief executive officer of Richard Petty Motorsports; and Larry Pope, chief executive officer of Smithfield Foods.テつ Today Richard Petty Motorsports and Smithfield Foods are announcing a significant sponsorship extension for the No.43 team in the NASCAR Sprint Cup Series.
With that, I'll turn it over to CEO Larry Pope to elaborate on this extension for Smithfield Foods.
LARRY POPE:テつ Thank you, Stephanie, and good morning, everyone.テつ Smithfield Foods is very pleased to announce this morning a continued relationship between Smithfield and Richard Petty Motorsports and Aric Almirola as the driver.テつ Today we're entering into a multiyear extension of our existing agreement.テつ We've had a relationship with Richard Petty Motorsports for now two years, and we are entering our third season, and we're now signing a multiyear agreement through 2016.テつ I'm also pleased to announce that we are increasing our sponsorship support for Richard Petty Motorsports as we have done each year of the relationship we've had with them, so the financial commitment that Smithfield is making now into 2016 is multiples of where we initially started and substantial increase from where we were last year.テつ That's an indication of how pleased we are with the success we think the relationship between what Aric is doing on the track, the brands on the track and what it's doing for us with our customers.
We've seen the data supports the fact that this is the right way to reach our customers.テつ We're very pleased with the success we're achieving at retail and food service as a result of that, and as a result we're increasing our commitment.テつ We think we're with the best team in Motorsports, clearly the best team in NASCAR with the icon of the industry for 50 years plus, with a terrific driver behind the wheel and a wonderful young man who interacts with our customers and improves our brand image off the track.
So Smithfield Foods is extremely pleased to announce this this morning.テつ We're extremely excited about the 2014 season and what we're going to do both on track and off track.
STEPHANIE ACKERMAN:テつ Thank you, Mr.Pope.テつ Brian, congratulations on today's announcement.テつ Can you explain what impact this will have on the future of Richard Petty Motorsports.
BRIAN MOFFITT:テつ Thanks, everyone, for joining.テつ This is a significant day for Richard Petty Motorsports.テつ Most of you know the history of the last three years, four years, where we've been, and this is a significant step forward for us in the performance of Richard Petty Motorsports.テつ Because of Mr.Pope and everyone at Smithfield, Farmland and John Morrell Food Group, which are supporting the No.43 and Richard Petty Motorsports, we're able to reinvest more and significant dollars back into the team to where we're going to be adding more R&D and testing.テつ We've hired what I would call human capital, some great employees in Scott McDougall and Trent Owens coming aboard, as well as some others.テつ We have re‑signed Aric for an extension to match what we're doing with Smithfield.
So a lot of things that we have dealt with in the past we're now looking to the future, and the future prosperity of Richard Petty Motorsports and actually winning on the track and competing for the Chase and competing for a championship in the near future.
STEPHANIE ACKERMAN:テつ Aric, can you speak about what it means to have the support of Smithfield Foods behind you and the No.43 team?
ARIC ALMIROLA:テつ Well, it's great.テつ Like Larry said, it's a huge testament to the partnership that we've had, starting together.テつ We basically had our rookie season together in Sprint Cup in 2012, and we've grown.テつ As much as I've grown as a driver, they've grown as a sponsor.テつ We've just continued to grow that partnership and that relationship to now, and this increased investment in the commitment that they're showing to the race team and to me is going to be really, really substantial for us in our performance on the racetrack, as well.
It gives us the opportunity to go out and do the testing we need to do and to hire the people we need to hire that we think we need to be competitive.
It puts more pressure on me, but like I've said for the past few days talking about this, I welcome the pressure because without that pressure that means that we're not expected to run good, and so I welcome the pressure because we have the resources now and the tools that we need to be a lot more competitive and go out and give ourselves a chance to put that 43 car back in victory lane with Smithfield Foods on the quarterpanel.
I'm excited about it, and I can't wait to get to Daytona and start 2014.

Q.テつ For Aric, how nice is it to maybe‑‑ I assume you feel maybe a little bit more secure now that you have this three‑year commitment from Smithfield?
ARIC ALMIROLA:テつ I think the biggest thing for me is every race car driver goes out and races like it's their last race, maybe except a handful, and so this gives me the opportunity to be a lot more confident.テつ I'm not worried that if I make one mistake or whatever that they're going to be looking to figure out the next guy that's going to come in and do better.
It gives me a lot of confidence knowing that I have Richard Petty Motorsports behind me, and then obviously Smithfield Foods behind me and that they're committed to me and they support me.テつ We've had a lot of success already off the racetrack and some on the racetrack, and we look to continue to increase the success on the racetrack as well as off the racetrack.
It feels great to not have to be worrying in June or July where I'm going to get my next paycheck from.

Q.テつ And for Larry, obviously with the sale of the company, there were a lot of questions about whether you'd be able to continue the NASCAR sponsorship, and I'm curious if you had to do any convincing of anyone, or have you always been in control of this decision?
LARRY POPE:テつ I would tell you that I'm in control of this decision.テつ We do have new ownership out of China.テつ They are learning the branding world.テつ They're not a branding‑oriented company, so they're learning from us.テつ I have been reassured by my new boss, which is the chairman, that I have 100 percent authority over our U.S. operations.テつ Obviously I've got to deliver a profit, but beyond that, the decision‑making is even better than it was before, and I am 100 percent committed to NASCAR as an organization.テつ I believe it is the right way to communicate to our consumers.
My new owners have no issue with this at all and are 100 percent supportive.

Q.テつ I had wanted to ask Larry if you can elaborate on what additionally Richard Petty Motorsports will be doing in terms of marketing for Smithfield, and elaborate a bit on why you think Richard and Aric will help you connect with more potential consumers.
LARRY POPE:テつ I guess I would start by answering that second question.テつ I think if you think about NASCAR, there's no better name to associate in NASCAR than Richard Petty.テつ Now, Richard is at an age when he doesn't drive a car anymore, so someone else has got to drive the car, and we've got a lot more confidence in Aric behind the wheel than we do Richard behind the wheel right now.テつ Richard does a terrific job by being available off‑track to visit with our customers and to be part of interaction with the fans and the supporters of the sport who also buy our product.テつ So Richard has made his time more available because he's got the time, and Aric has limited availability, so it's the combination of those two that we're trying to, at Smithfield Foods‑‑ we're migrating ourselves from a commodity‑oriented company to a consumer packaged goods company, and we're learning it.テつ And the more we do this, the better we're getting at it, and the more we use NASCAR, the better we see the success coming to us.
We're going to be using more and more of NASCAR to be advertising our flagship brands, and our customers are recognizing it, and now they're expecting it.テつ We're seeing very nice lifts in before‑promotion program and after‑promotion sales.テつ Every time we do it we're sort of a little amazed at how good the sales numbers are.
We've been reluctant to put so much money‑‑ we've been racing three times before over the last 20 years without real success because we didn't know how to activate it.テつ How do we get the NASCAR into the grocery aisle?テつ And with the marketing people we've added to our organization, they know how to do it, some of which have racing experience with Anheuser‑Busch, so they know how to activate this.テつ They're teaching us how to activate it.テつ Aric is driving and Aric is wonderful young man off the track interacting, and we're learning how to use it.テつ Without abusing him, we're learning how to use it.
It's a process, and the more we do it, the more we like it.

Q.テつ Can you elaborate on how we will see‑‑ how you will get NASCAR into the grocery aisle and what role Richard will play.テつ Is he a spokesman?テつ Will he appear in ads?
LARRY POPE:テつ It's part of the contract.テつ Richard has already agreed to do that.テつ You've already probably seen the point of sale material with Richard standing beside Aric as we're doing promotions on the product, and I can tell you, we know in our business, the most important time we have with the customer is the 12 seconds before they make that decision what they're going to buy, and seeing Richard and Aric standing beside that product, we know that's an important few seconds we have with our decision making, so I know that cardboard billboard thing doesn't look like much to you at sale time, but it means an awful lot when it's at the end of the aisle.テつ So you're going to see it and you're going to see promotions, mostly promotions around product sales.テつ Television‑‑ we're seeing about television.テつ In fact, Richard did a commercial last year for us with the Eckrich brand already and Aric has already done commercials with us, so they're available for commercials with us as well as any other media exposure we want with them, and they both show up well on television.テつ They both do just fine.

Q.テつ Aric, could you talk a little bit about what it means‑‑ sponsorship is obviously a big issue everywhere, not just motorsports.テつ Talk a little bit about what it means to you and the interaction of you with your team members to have a repeat supportive sponsor like Smithfield.
ARIC ALMIROLA:テつ Well, I think it's great.テつ I think it's a true testament to Brian and his sales team and our marketing team to, at a time when there isn't sponsors coming in and increasing their commitment and stuff like that, that we've been able to do that with Smithfield Foods.
I think a lot of the credit goes to Brian and those guys for that, but it means a lot to us to have that commitment.テつ We've become family.テつ I think we say that a lot at Richard Petty Motorsports.テつ But it was a family‑run business back when it first started over 50 years ago, and it still is that way today.テつ Smithfield Foods up until this last year was a family‑run company and still runs like a family‑run company, and so you put those two companies together, I've felt like the son.テつ I've felt like the adopted son of both companies.テつ I feel like I fit in very well.テつ They've taken me into their family and they support me 100 percent.
It's been great just to be a part of such great organizations, and the commitment that they make not only to the race car by putting stickers on the race car, but the commitment they make off the racetrack, as well, the activations that they do at track, the giving back that they do in local communities in the race markets.テつ There's one side of it that's been great for me to be able to go out and drive a race car and do what I love and get paid to do it, but then the flipside of that is we go out and we give back thousands of dollars and thousands of pounds of meat and protein to these local food banks in local communities, and so that's a huge honor for me to be able to go and do that.
The tip of the iceberg for this year was I got to go to Tampa, my hometown, and donate $40,000 and 43,000 pounds of protein to my hometown to people that don't know where they're going to get their next meal from, and that's the kind of commitment and that's the kind of company that I get to represent.
I feel really blessed and lucky to have a chance to represent such a great organization and to be driving for such a great organization in Richard Petty Motorsports, and I think we're all just in a hurry to get that 43 car back to victory lane, and I think that's something we're going to be able to do.

Q.テつ I saw one report where it says 29 races a year for each of the three years.テつ Is that accurate?
BRIAN MOFFITT:テつ Yes, that's accurate.

Q.テつ And Larry, can you talk about how much performance matters on the track versus what you see specifically as far as sales off the track?
LARRY POPE:テつ Let me be clear.テつ I've made this comment before and I'll say it again. テつI love racing.テつ I lived in Daytona.テつ I went to the Daytona 500 before I went to elementary school, so I know a little bit about the sport over many, many years, and I don't want to tell you how old I am.テつ Let's just assume I've been going a long time.テつ I'm also the CEO of a big company and until very recently a publicly‑traded company.テつ So my first encounter with Richard Petty was, Richard, my gosh, it's an honor to get to know you.テつ We'd love to go racing with you, but let me be clear:テつ I'm in it for the money.テつ So as long as you sell bacon, ham and sausage, we're going to have a great relationship.テつ When you stop selling bacon, ham and sausage, this relationship is going to deteriorate fast.テつ That has to set the foundation.
So the sales growth and the sales promotion activity has to succeed.テつ That is fundamental, just like Aric running around the track.テつ He's got to succeed.テつ And that part is going extremely well.テつ Whether Aric shows up in victory lane or not, the sales activation we've been trying to do is working, and we've seen sales lifts that are certainly double digits and sometimes triple digits associated with a program when Aric is‑‑ and the geography is in an area that we run the promotion.テつ So off‑track the combination of what we're doing with the retailers and the public appearances, Aric and Richard do a fantastic job off‑track, so there's no issues, no issues off the track at all.テつ In fact, that's the big success story.
Now, what I want Aric to be is the subject of conversation on track.テつ I want a lot of chatter, and the way you do that is to be up front and contending to be up front and being in the mix, and I think they have been a bit hamstrung with maybe not quite enough resources to do all the fine tuning on the car, and as you well know, this is a 1 percent sport.テつ 99 percent puts you in 25th place.
So we're giving him the extra‑‑ the ability to have the extra 1 percent, and that's going to add a whole new dimension to that.テつ We sat down here toward the end of last year.テつ We said, guys, we love what's happening off the track, but we need to have a little bit better performance on track; what's it going to take.テつ And Richard and Brian said, let us put a proposal in front of you.テつ If you'll help us fund this, give us the resources and the engineering, we've got the driver.テつ We need to give the equipment a little bit more engineering and support, and I said, what is that going to take to do that.テつ They put the number in front of us, and Smithfield said, we'll write the check.テつ Now, go do the engineering, hire the people you need to hire, Aric, move up in the points.テつ It's no more complicated than that.テつ He knows that.テつ I'm very open with that.テつ I'm probably more satisfied with Aric in 15th place than Aric Almirola is.

Q.テつ And I also wanted to ask, I know the CEO from China came over for Richmond, one of the Richmond races last year.テつ I was curious what his impression was and if that kind of‑‑ if that mattered at all.
LARRY POPE:テつ Well, again, those people have never had much association with any of the sport, and certainly the whole concept of branding as such, they were overwhelmed.テつ They were overwhelmed by the fans and the people and the activity, and they didn't realize the attraction and the connection between racing and the brand.テつ So I think that was an eye‑opener for all of those people.テつ They are 100 percent supportive of that.
But again, they're learning.テつ They know so little about how a brand really works that, my gosh, if you put this on a car, do people really care?テつ Well, in this sport they really do care.
They haven't quivered even one second, and obviously everybody in the world loves riding around the track in the back and waving at the people.テつ That's a lot of fun for anybody.テつ So it got them excited about the sport.テつ They're 100 percent behind this.テつ What I need to do now is show that it delivers.

Q.テつ I just have a couple of follow‑up questions.テつ Larry, is it fair to say that this is the largest marketing initiative in the company's history?テつ And would it be fair or not to characterize Richard Petty as becoming a spokesman for the company?
LARRY POPE:テつ Richard is not a spokesperson for the company at this point.テつ Richard is certainly an advocate for the company.テつ He's willing to say nice things because I've asked him.テつ I've asked him even more importantly, does it bother you the fact that the company has a Chinese owner.テつ Richard says he doesn't have any problem with that at all.テつ He's not a spokesperson, he's an advocate for the brand.テつ It is our single largest marketing campaign today, substantially larger than anything we ever had with Paula Deen.テつ We did some television campaigns many years ago, particularly up in the Northeast, New York, that were of this similar size.
The thing that's different, though, is Smithfield is changing.テつ We're a consumer packaged goods company, and one of the things you have to do there, you have to continue to beat the branding and continue to stay with it.テつ We have had a tendency to go with strong marketing campaigns and back off when the finances are not as good.テつ The first thing you do is cut the marketing budget.テつ We are not cutting marketing.テつ That gives us the ability to build on it, and so it's a new day for Smithfield.
This is the single largest marketing campaign Smithfield has across the entire country.

Q.テつ Larry, do you feel you were not connecting enough with NASCAR fans before this relationship a few years ago?
LARRY POPE:テつ We didn't know how to do it.テつ All we thought was that we put the brand on the top of the hood and ride around the track and take some of our customers to the race and buy them dinner, let them meet the driver, and we thought that was what racing was.テつ That's not racing.テつ Racing is working a deal with Kroger and Safeway and Publix and Wal‑Mart. テつThat's racing.テつ That's moving it into the grocery aisle.テつ That's when you really have the‑‑ so you have a program before the race, long before the race, and a program that continues after the race.テつ We were not very good at doing that.
As a result of the people we have hired in marketing, they're teaching us how to do it because they've done racing before.テつ Show us how to make this customer buy that product, not just get a few high‑powered buyers who are our customers who get to fly out on a plane and go to a race and get ushered around in a fancy car.テつ How do we get that guy who goes and works his pickup truck and gets up in the morning, how do we get him to buy that bacon and stay loyal to that bacon, and we've seen the loyalty continue.テつ Once I can convert him from a competitor's bacon to our bacon, he keeps buying our bacon.テつ That's when success has occurred, and we see it working.
STEPHANIE ACKERMAN:テつ Mr.Pope, Brian, Aric, thank you again for joining us today, and congratulations on today's news, and best of luck to you in 2014.

FastScripts Transcript by ASAP Sports

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