Business Overview

www.BeesonInc.com Beeson & Associates, Inc. (502) 241-8460

1

What Our Clients are Looking For

• Commodity costs are a significant cost of goods sold

• Supplement internal commodity expertise

• Develop and implement a strategic business strategy to manage cost

• Track, report, and forecast key commodity costs

In short:

Become their trusted source for agricultural commodity and energy

information and management processes

http://www.beesoninc.com/


2

What We Heard

• Commodity cost surprises have impacted results multiple times

• An active search for commodity risk management help is underway

• Exposure to: flour, soybean oil, palm oil, and sugar

• Evaluating the need to establish a margin account

• Would like support during the 2013 planning process

In short:

The issue is on the “radar screen” and solutions are being evaluated



3

What is risk to the organization?

• Volume at risk is the mismatch of forward sales and commodity

ownership

• Price risk is the volatility of the market

• Risk = Volume X Price risks

What capability is there to manage risk?

• People, processes, and financial tools

What is our market opinion?

• Research and outlook

What are the benefits?

• Execute and track results

Customized Commodity Solutions

We strive to institute a complete solution Who We Have Helped



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4

Matt Beeson

• Founder 1995

• Key commodity purchasing roles

– Pillsbury, Brach Candies, KFC (PepsiCo)

• M.S. in Ag Econ University of Illinois

James Stewart

• Energy leader

• Key energy management roles

– Summit Energy, GE Appliances, Integrys Energy

• MBA University of Louisville

• Joined Beeson & Associates, Inc. 2011

Our Team

Blend of experience and education delivers results

Alex Norton

• Director: Risk Management

• Economics: Wake Forest

• MBA U Mass in progress

• Joined Beeson & Associates, Inc. in 2008

Philip Beeson

• Director: Commodity Services

• Finance at Johnson & Johnson

• Finance: Miami of Ohio

• Joined Beeson & Associates, Inc. 2011



5

2-day launch

• Learn your business needs

• Get underlying volume information

• Mutually set objectives of the program

Ongoing support

• Weekly market outlook

• Monthly strategy webinar

• Execution of strategies (if desired)

Track the results

• Provide results tracking

• Utilize proprietary web-based reporting Bundle(if desired)

The Process

We end with market outlook What we hear?

“This process changed the way

we think about and manage

the markets.”

“We no longer start with a

panicked feeling about

market direction, but put

together a business strategy

based on market conditions.”

“The positions we do take are

understood, quantified, and

tracked.”

“We have not had an

unmanageable commodity

surprise in the 4 years we

have been using this model.”



6

Weekly Update



7

Monthly Strategy Meeting



8

Example: You See What We See



9

Example: You See What We See



10

Reporting

Comparison vs. Market1000s better/(worse)

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 2011 Total

Flour $363 $372 $538 $308 $243 -$109 $12 $188 $152 -$94 -$72 -$49 $1,851

Palm Oil $90 $225 $368 $391 $418 $522 $197 $227 $314 $89 $97 $81 $3,020

Buttermilk $11 $0 $41 $69 $3 $52 $27 $8 $19 $5 $6 $4 $244

Sugar $30 $41 $83 $63 $33 $49 $36 $57 $78 $84 $41 $41 $635

Natural Gas $0 -$4 -$3 $1 $1 $1 $0 -$1 -$2 -$3 $0 $0 -$10

Total $493 $635 $1,027 $831 $699 $514 $272 $479 $561 $81 $72 $76 $5,740



11

Reporting

Comparison vs. Budget1000s better / - worse


Flour $79 $84 $90 $28 $37 -$72 -$47 $29 $44 -$50 -$59 -$41 $121

Palm Oil $1 $11 $7 $3 -$1 -$3 -$72 -$75 -$108 -$116 -$86 -$83 -$522

Buttermilk $13 -$2 $20 $34 -$43 -$20 -$38 -$54 -$48 -$49 -$38 -$30 -$255

Sugar -$2 -$3 -$4 -$3 -$3 -$3 -$2 -$3 -$3 $15 -$14 -$14 -$39

Apples $10 $3 $34 -$16 -$15 -$75 -$67 -$34 -$37 -$95 -$95 -$95 -$482

Cherries -$12 -$24 -$34 -$26 -$31 -$36 $16 $0 -$2 -$3 -$7 -$9 -$168

Natural Gas -$2 -$2 -$2 $1 $1 $0 $0 $0 $0 $0 $1 $1 -$2

Total $87 $66 $111 $22 -$55 -$209 -$210 -$135 -$155 -$299 -$298 -$271 -$1,347

Last Month's Update -$1,336

Comparison vs. Budget1000s better / - worse


Flour $79 $84 $90 $28 $37 -$72 -$47 $29 $44 -$50 -$59 -$41 $121

Palm Oil $1 $11 $7 $3 -$1 -$3 -$72 -$75 -$108 -$116 -$86 -$83 -$522

Buttermilk $13 -$2 $20 $34 -$43 -$20 -$38 -$54 -$48 -$49 -$38 -$30 -$255

Sugar -$2 -$3 -$4 -$3 -$3 -$3 -$2 -$3 -$3 $15 -$14 -$14 -$39

Apples $10 $3 $34 -$16 -$15 -$75 -$67 -$34 -$37 -$95 -$95 -$95 -$482

Cherries -$12 -$24 -$34 -$26 -$31 -$36 $16 $0 -$2 -$3 -$7 -$9 -$168

Natural Gas -$2 -$2 -$2 $1 $1 $0 $0 $0 $0 $0 $1 $1 -$2

Total $87 $66 $111 $22 -$55 -$209 -$210 -$135 -$155 -$299 -$298 -$271 -$1,347

Last Month's Update -$1,336

Note: several commodities were deleted for confidentiality reasons. Total does not add correctly



12

Accounting treatment

• Mark-to-market

• Hedge accounting

Cash impact

• Margin can be significant

Training

• Understanding and use of options

Implementation of Margin Account

Is it really necessary? Our Experience

Few of our clients manage their

own margin account

• Vendors will embed option

strategies

• Accounting and cash impacts

are insurmountable

• Most of the risk management

programs do not require it

However, it cannot be debated…

Flexibility of having an account

has advantages!


Business Overview

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