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8/14/2019 Sept 2009 Dean Foods DF Presentation
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Barclays CapitalBack to School
Consumer Conference
September 9, 2009
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Forward Looking Statements
The following statements made in this presentation are forward looking and are made pursuantto the safe harbor provision of the Private Securities Litigation Reform Act of 1995: statementsrelating to (1) projected sales (including for individual segments, for specific product lines and forthe company as a whole), profit margins, net income and earnings per share, (2) our growthstrategy including acquisitions and the integration of such acquisitions, (3) our branding initiatives(4) our integration, innovation, and research and development plans, and (5) our cost-savings
initiatives. These statements involve risks and uncertainties that may cause results to differmaterially from those set forth in this presentation. Financial projections are based on a numberof assumptions. Actual results could be materially different than projected if those assumptionsare erroneous. Sales, operating income, net income, financial performance and adjustedearnings per share can vary based on a variety of economic, governmental and competitivefactors, which are identified in our filings with the Securities and Exchange Commission,
including our Forms 10-K and 10-Q (which can be accessed on our website atwww.deanfoods.com or the website of the Securities and Exchange Commission atwww.sec.gov). The Company's ability to profit from its branding initiatives depends on a numberof factors including consumer acceptance of the Company's products. All forward lookingstatements in this presentation speak only as of the date of this presentation. We expressly
disclaim any obligation or undertaking to release publicly any updates or revisions to any suchstatements to reflect any change in our expectations with regard thereto or any changes in theevents, conditions or circumstances on which any such statement is based. Certain non-GAAPfinancial measures contained in this presentation, including adjusted diluted earnings per share,free cash flow, and consolidated adjusted operating income, have been adjusted to eliminate thenet expense or net gain related to certain items identified in our press releases. A full
reconciliation of these measures calculated according to GAAP and on an adjusted basis iscontained in such press releases, which are publicly available on our web site atwww.deanfoods.com/investors.
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Fresh Dairy Direct
WhiteWave - Morningstar
Agenda
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Three-Part Strategy to Win
Extend OurLow Cost Position Drive Revenue &Profit in Our Core Invest forGrowth
Our Investment Thesis
Procure$50M
Distribute$50M
WhiteWave
$50M
NetworkOptimization
$65M
Convert$85
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Advantaged Business Platforms
Note: Reflects full year 2008 information. *Proforma for Alpro acquisition that was completed in July 2009. Alspo net sales have beenconverted at a rate of $1.4 / 1 for purposes of this presentation
#1 US fresh milk
National chilled
direct storedelivery andplant footprint
National sellingwith local
execution Cost leadership
Strategic focus
Value-addedbrands in growthcategories
#1 in global soy
#1 US organicmilk
#2 US creamers
Emerging fruit-based beverage
US leader in longshelf-life private
label dairy Strong
foodservice andretail presence
$1.9B$9.8B $1.1BNet Sales*
TransformationStatus BeginningEarly Stages Complete
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A Very Strong First Half of 2009
$0.56
$0.95
1H08 1H09
+70%
Adjusted Diluted Earnings per Share*
*See Reconciliation of Non-GAAP Financial Measures contained in our most recent earnings press releaseposted on the Dean Foods web site for computation of adjusted diluted earnings per share and Free Cash Flow
$210
249
1H08 1H09
+19%
Free Cash Flow*
($ millions)
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$95
135
1H08 1H09
$285
350
1H08 1H09
A Very Strong First Half of 2009
$301
384
1H08 1H09
+28%
Adjusted Consol idated Operating Income*
($ millions)
Segment Operating Income
($ millions)
+23%
+43%
*See Reconciliation of Non-GAAP Financial Measures contained in our most recent earnings press releaseposted on the Dean Foods web site for computation of consolidated operating income
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Extending our Advantage
WhiteWave - Morningstar
Agenda
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-0.4%
2.4%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
71%
9%
5%
5%8%
2%
Milk
Ice Cream
Fresh Dairy Direct: Category Leadership
Largest US processor anddistributor of milk and otherdairy products
Products sold under more than35 familiar local and regionalbrands and a wide array ofprivate labels
Proven pass-through dynamic
$9.8B revenue (2008)
22,000 employees
5,800 company owned DSD routes
83 plants;160,000 locations served
40+ acquisitions
Competitor estimates derived from subtracting FDD pounds from USDA sales pounds
2008 2009
Fluid MilkDean
CompetitorsOther
Beverages
CulturedOtherFluid Dairy
Other
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40%
35%
25%
Branded
3rd Party
PrivateLabel
Compelling Growth Opportunities
FDD: #1 share in milk
Three 2009 tuck-inacquisitions announced
Investing to drive DSD
capability
71%9%Milk
Ice Cream
$900 million in 2008 net sales
Improving profitability
Longer-term strategy under
development
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An Opportunity to Drive Significant Value
Local
Overly complexproduct portfolio
Everything toeveryone productionin each facility
Limited selling
capability Supply chain
inherited throughacquisition
Patchwork of ITsystems
National
Simplified productportfolio
Specialized, longerrun, lower complexityproduction
A national selling
powerhouse Optimized supply
chain based onanalysis
Integrated IT
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Winning Through Cost Leadership
A clear opportunity to lower our $11.8B* cost structure
Dean Productivity Target =
$5.4B
Milk
Procure
$300+ million over the next 3 to 5 years
PackagingFuelIngredientsMRO
*Total Dean Foods,~$9.2B for Fresh Dairy Direct
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Extend our Low Cost Position: Solid Progress
ConversionAccelerated KPI tracker and continuous improvement process rollout15% of FDD facilities through deep-dive continuous improvement training in 2009Offsetting inflation in conversion costs - flat YTD with favorable trends
Network OptimizationClosing four facilities in 2009Evaluating larger opportunities going forward
ProcurementConsolidated purchasing driving savings - on track for over $10 million in 2009 Increased efforts to standardize and simplify to drive to the next level of opportunity
Direct Store DistributionGPS technology rollout complete4% fewer gallons of diesel and flat employee costs YTD
$50M
$50M
$85M
$65M
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An Opportunity to Drive Significant Value
Local
Overly complexproduct portfolio
Everything toeveryone productionin each facility
Limited sellingcapability
Supply chaininherited throughacquisition
Patchwork of IT
systems
National
Simplified productportfolio
Specialized, longerrun, lower complexity
production
A national sellingpowerhouse
Optimized supplychain based onanalysis
Integrated IT
Foundational
InformationTechnology
Immediate Cost
Reduction Supply Chain R&D
Total IT, SupplyChain and R&Dinvestments up~$20 million in
FY2009
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Fresh Dairy Direct
Driving to further differentiate ourlow cost position
$300 million* of defined opportunityover the next three to five years
On track to deliver $75 million* ofproductivity in 2009
Investing to drive current and futuregrowth
A Strong Current Position and Getting Stronger
The U.S. leader in fresh milk Most capable company in the industry
Broad national geographic reach and extensive production and
distribution capabilities
*Total Dean
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Extending our Advantage
Fresh Dairy Direct
Agenda
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1H08 1H091H08 1H09
WhiteWave-Morningstar: Strong Bottom Line Performance
Net Sales($ millions)
Operating Profit
($ millions)
+43%-4%
$1,271 1,227
$95
135
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23%
19%
22%
16%
12%
5%3%
WhiteWave + Alpro: A Brand Powerhouse
$1.9B revenue (2008)
2,200 employees, 11 plants
A history of growth behind well
positioned value-added brands Strong 1H09 operating profit
growth
($ in billions)
$1.5$1.7
$1.9
FY 06 FY 07 FY08
*Proforma for Alpro acquisition that was completed in July 2009. Netsales have been converted at a rate of $1.4 / 1 for purposes of thispresentation
WW
Alpro*
Other
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$732 718
1H08 1H09
WhiteWave: Strong Profit Flow-through
Net Sales
($ millions)
-2%
Integrated supply chain and
IT infrastructure helpingdrive efficiencies
On track to deliver $14M incost savings in 2009
Organic milk no longermasking progress
Holding share in slowing
categories Continued growth in
creamers Exit of unprofitable
foodservice business
1H08 1H09
+31%
Operating Profit
($ millions)
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The Leading Global Soy Platform
Combined 2008 Sales*: $791M
9% increase* vs. 2007
World leading products andprocess technology
No. 1 soy platform in the world
Silk is the North American leaderAlpro is the European leader
Compelling heart health benefits
Category still nascent. Growth potential withrelatively low levels of HH penetration, evenin home markets
Expansion opportunity into new geographies
and broader food categories
Will leverage collective trans-Atlanticexpertise in marketing, operations and R&Dagainst global marketplace
*Proforma for Alpro acquisition completed in July 2009 using an exchange rate of $1.40 per 1
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Alpro: Investing to Grow
Home Markets
Core Markets
Gent, Belgium Headquarters
Annualized growth in net sales of 14% since2000
Significant room to increase per capita usage in
core markets and geographic footprint
325 million purchase price. Modestly accretiveto 2009 earnings, excluding one-timetransaction costs
The European leader in soybeverages and related productswith 260 million in 2008 net sales
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4
3
2NewSub-category
Geography
Soy: A Proven Growth Model
Volume/ buyer
Penetration
3
Medium/ light users(health and environment conscious)
Heavy users(lactose intolerant,
soy fans)
Increasevolume per
user
2
Increase penetration of users 1
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Horizon Organic: The Leading Milk Brand in the U.S.
2008 Sales: $433M
21% increase vs 2007
42% of organic milkcategory
Largest national milk brand in U.S.
Competing in largest, fastest growingvalue-added segment
Compelling,differentiated growthsegments targetingyoung children
Share stablein slowingcategory
Economics
steadilyimproving
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Creamers: Strong Consumption Trends and Innovation
2008 Sales: $535M
8% increase vs. 2007
23% of creamer category1
Increasing coffee consumptiontrends driving category
Well-positioned portfolio
#1 Dairy creamer, #2 flavored ND
#1 Away-from-home, #2 Retail
1Source: IRI Grocery (01/09); Internal Data. Creamers defined as Non dairy flavored creamers and halfand half. Share includes only WWFC Land OLakes and International Delight creamers (HO and Silkcreamers 2% additional share)
Retail categorybenefitting from
declines in premiumcoffeehouseconsumption
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US leader in long shelf-life privatelabel dairy
Well penetrated in leadingretailers, quick serve restaurants
Strong share of cultured andextended shelf life dairy
Compelling transformationopportunity
$1.1B revenue (2008)
2,000 employees
Dallas headquarters
14 plants
Aerosol8%
Other2%
Ice Cream
Mix21%
Creamers41% Cottage
Cheese10%
SourCream
10%Yogurt8%
A Platform with Great Potential
ExtendedShelf Life
Cultured Simpli fy the business, reducing
complexity
Establish high quality, low costsupply chain
Improve revenue management
Drive growth in core categorieswith targeted customers
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$539508
1H08 1H09
Morningstar: Strong Profit Growth
Net Sales
($ millions)
-6%
Slight volume decline
Pass-through of lower dairycommodities
Relatively stronger retailbusiness offset by
challenged foodservice
Favorable commodities
Operational benefits fromfacility closure
Focus on revenuemanagement
1H08 1H09
+57%
Operating Profit
($ millions)
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WhiteWave-Morningstar
WhiteWave focused on driving growth Transformation that began in 2004 is complete
Strong profit growth trends leveraging capability andinfrastructure
Leading advantaged brands in key value-added categories focused marketing and innovation
Alpro acquisition creates clear global leader in soy
Morningstar is a uniquely positioned platformA strong business position with broad product and geographic
capabilities retail and foodservice private label
An upcoming transformation opportunity
Driving Strong Results
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Summary: Executing the Transformation, Driving Results
Leader in attractive categories Category leader across the refrigerated case
#1 position in large, stable fresh milk segment
Leading brands in growth categories
Defined strategies and initiatives
Fresh Dairy Direct driving toward differentiated
cost advantage
Significant early progress against $300 million
of defined productivity opportunities
WhiteWave-Morningstar realizing significantoperational leverage
Strong 1H09 financial results
Strong first half 2009 performance across thebusiness
A solid balance of year outlook
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