Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DEAN FOODS CO | d551565d8k.htm |
 FOCUS
June 2013
Exhibit 99.1 |
 Forward-looking statements
The following statements made in this presentation are “forward-looking”
and are made pursuant to the safe harbor provision
of the Private Securities Litigation Reform Act of 1995: statements relating to (1)
projected sales (including specific product lines and the company as a
whole), profit margins, net income, earnings per share, and covenant compliance, (2) our
branding initiatives, (3) our innovation and research and development plans, (4) our
cost-savings initiatives, including plant closures and route reductions,
and our ability to accelerate any such initiatives, (5) our plans related to
our leverage and cash flow, (6) our planned capital expenditures, (7) the
status of our litigation matters, (8) the impact of divestitures including
the sale of Morningstar and tax payments related thereto, and the spin-off of a
portion of our interest in The WhiteWave Foods Company, and (9) the
timing or amount of any future disposition of our remaining interest in The WhiteWave Foods
Company. These statements involve risks and uncertainties that may cause results to
differ materially from those set forth in this presentation. Financial
projections are based on a number of assumptions. Actual results could be materially different
than projected if those assumptions are erroneous. Sales, operating income,
net income, debt covenant compliance, financial performance and adjusted
earnings per share can vary based on a variety of economic, governmental and
competitive factors, 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
at
www.deanfoods.com
or
on
the
website
of
the
Securities
and
Exchange Commission at www.sec.gov). Our ability to profit from our branding
initiatives depends on a number of factors, including consumer acceptance of
our products. All forward-looking statements 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 such statements to reflect any change in our expectations with regard thereto or
any changes in the events, conditions or circumstances on which any such
statement is based. Any disposition of the Company’s remaining ownership interest in
The WhiteWave Foods Company would be subject to various conditions, including the
existence of satisfactory market conditions and Board approval, and in the
case of a tax-free disposition, the maintenance of the Company’s private letter
ruling from the Internal Revenue Service. Certain pro forma adjusted and historical
non-GAAP financial measures contained in this presentation, including
adjusted diluted earnings per share, free cash flow, adjusted EBITDA, consolidated adjusted
operating income and consolidated adjusted net income, are from continuing
operations and have been adjusted to eliminate the net expense or net gain
related to certain items identified in our earnings press releases, including the
Morningstar divestiture. A full reconciliation of these measures calculated
according to GAAP and on an adjusted basis is contained in such press
release, which is publicly available on our website at www.deanfoods.com/investors and at the end
of this presentation.
2 |
 Today’s agenda Who we
are Leadership team, vision and direction
Business strategy and company advantages
Financial performance
Conclusion
3 |
 Who
we are Trusted regional brands: 50+
Manufacturing facilities: 75+
Total employees: 19,000
3.0B gallons produced annually
Over 37,000 points of distribution
More than 2/3 of U.S. households
purchase a Dean Foods branded
product
annually
1
NYSE: DF
Market cap: $2.0B
2
Revenues: $9.0+B
Headquarters: Dallas
4
1.
Source IRI
2.
As of 6/3/2013 |
 Today’s agenda Who we
are Leadership team, vision and direction
Business strategy and company advantages
Financial performance
Conclusion
5 |
 Marty
Devine Chief Operating Officer
Strong management team and vision
Gregg Tanner
Chief Executive Officer
Rachel Gonzalez
EVP, General Counsel
Barbara Carlini
Chief Information Officer
Kim Warmbier
EVP, Chief HR Officer
Shay Braun
SVP, Procurement &
Operations Support
Chris Bellairs
EVP, Chief Financial Officer
To be the most
admired and
trusted provider of
wholesome, great-
tasting dairy
products at every
occasion
6 |
 Operational imperatives
Never compromise on quality, safety or customer service
Volume
Performance
Cost
Productivity
Effective
Pricing
Drive volume growth
at appropriate
economic returns
Gain share through
low cost, high service,
valued brands model
Augment volumes
with differentiated
products like TruMoo®
Build on unique
opportunities to create
a cost-advantaged
position
Expedite closure of
under-utilized plants,
routes
Use cost savings to
enable future growth
Improve pricing tools
and protocols to ensure
pass-through of
commodity inflation
Reduce commodity-
driven volatility
2012 success drives
2013 performance
7 |
 Today’s agenda Who we
are Leadership team, vision and direction
Business strategy and company advantages
Financial performance
Conclusion
8 |
 Dean
Foods at a glance Largest U.S. processor and
distributor of fluid milk, 5x
the size of the next largest
competitor
Portfolio of trusted brands,
complementary products –
milk, ice cream, cultured
dairy products, creamers,
ice cream mix, and other
dairy
Best-in-class nationwide
distribution platform with
extensive refrigerated
“direct store delivery”
systems
Cost control is part of our
DNA
9 |
 Distribution:
Broad nationwide distribution across channels
The country’s only
coast-to-coast processor and distributor of fresh milk 75+
manufacturing facilities 6,500 direct-store-delivery routes
Large Format 69%
Small Format 11%
Foodservice 13%
School/Govt 7%
10 |
 Portfolio: Strength across the dairy case Dean Foods
- fluid milk and
more
Dean Foods’
percent of national
branded share has increased
over the past three years
Ice cream, cultured products,
creamers, juice, tea and water
fill out the Dean Foods portfolio
3%
FRESH
CREAM (1)
2%
ESL & ESL
CREAMERS (2)
4%
CULTURED
5%
OTHER
BEVERAGES (3)
9%
ICE CREAM (4)
2%
OTHER (5)
26%
DEAN BRANDED WHITE
40%
PL WHITE AND FLAVORED
74%
FLUID MILK
(1) Includes half-and-half and whipping cream
(2) Includes creamers and other ESL fluids
(3) Includes fruit juice, fruit-flavored drinks, iced tea and water
(4) Includes ice cream, ice cream mix and ice cream novelties
(5) Includes items for resale such as butter, cheese, eggs and milkshakes
8%
TRUMOO
11 |
 White milk is a compelling, sustainable market opportunity
Fluid Milk Category Dynamics
Ubiquitous: in 90% of U.S. homes, over $20B of annual U.S. retail
sales¹ Strong health & wellness credentials
One of the largest, most profitable categories for retailers
Industry remains fragmented, large sophisticated platform provides significant competitive
advantages Relatively Stable Long-term
White Milk Consumption Trend²
12
1.
Symphony IRI Group, “Refrigerated Conventional White Milk Overview: Category
Decline Review”, July, 2010. 2.
IRI
Panel,
Total
All
Outlet,
Calendar
Year
2009
–
2012,
2006-2008
from
IRI
study
published
in
2011 |
 Scale: Dean Foods is the largest player in milk
We have the #1
or #2 position,
as measured by
sales of
branded white
milk, in 80% of
the IRI defined
geographies in
which we
operate
13 |
 Brands:
Leveraging TruMoo
Flavored milk is a $1B category, and TruMoo is
the largest flavored milk brand
TruMoo was recently ranked as the fourth most
successful consumer packaged goods brand of
2012 by Information Resources, Inc. (IRI)
TruMoo is Dean Foods’
largest national brand at
$636M of retail and school sales in 2012
No high fructose corn syrup, lower total sugar,
low fat, all the great nutrition of milk
Retail volumes up 7.6% in 2012
Marketing is working: TruMoo is at 75% HH
awareness, 14% trial, and repeat rates are at
60% and growing (above CPG norms)
1.SymphonyIRI MULO data ending 52 W/E 12/31/12
14
1 |
 Portfolio:
Ice cream
Strong regional ice cream business
Over $800 million in annual sales
Mix of regional brands, foodservice, and private label
Company-owned frozen distribution network
15 |
 Dean
Foods: Focused, disciplined, profitable
Extend our sustainable competitive advantages
Our relative size and capabilities afford us significant advantages versus our
competitive set –
we plan to extend those advantages
Continued focus on cost, volume outperformance, effective pricing
Lay the foundation for longer-term growth
Focus on cash flow generation and total shareholder returns
16 |
 Extend our
sustainable competitive advantages: Manufacturing and Procurement
Accelerating
cost
reduction
across
the
P&L
–
targeting
$120
million
in
2013 savings
Large
network
provides
opportunities
to
reduce
capacity
to
drive
efficiency
and
unit costs lower –
in the process of closing 10-15% of production facilities
Three plant closures announced late last year
Buena Park fluid milk, Shreveport announced this year
Two additional announcements this week
17
Leading network drives in-plant efficiency
through ongoing continuous improvement
program that works to alleviate efficiency
bottlenecks and propagate best practices
through employee-led initiatives
Leveraging the volume of our overall
purchases to obtain favorable pricing across
non-dairy commodities –
typically a 10-15%
cost advantage |
 Extend our
sustainable competitive advantages: Distribution
We have a significant opportunity to drive additional distribution savings
Leveraging technology
XataNet GPS units provide detailed analysis of location, speed, stop length, etc.
Also eliminates roughly 45 min per day of driver paperwork
RoadNet enables significant improvements in routing efficiency
We are instituting the same
continuous improvement
processes in distribution that
have been delivering
manufacturing savings
Large opportunity to reduce and
variablize our distribution assets
18 |
 Extend our
sustainable competitive advantages: Pricing and Selling
Passthrough is an effective hedge against
most milk commodity volatility
Prices are reset monthly in concert with changes
in Class I mover
Customers expect and accept these changes
We have developed and are implementing
technology to increase precision of pricing
across all SKUs
Leveraging risk management capabilities to
offer customers innovative pricing solutions
Reducing overhead to drive competitiveness
19 |
 Building long-term opportunities to grow
Investing in the R&D pipeline
Historical spending was skewed toward WhiteWave and Morningstar
We have the opportunity to utilize our broad manufacturing and distribution
capabilities for expansion into new value-added products and
extensions Expect to begin increasing the innovation we bring to market in
24+ months TruMoo demonstrates that
consumers value additional
benefits in fluid dairy
Open to strategic partnering with
others to drive growth and further
leverage our DSD network
20 |
 Focus on cash flow generation & total shareholder returns
Mid-single Avg EBIT Growth
Liability Mgmt
Cap-Ex Reduction Over Time
21
We expect $75-$100 million of normalized 2013 Free Cash Flow before one-time
items and litigation payments
Next 3-5
Years
Expect to provide more clarity on go-forward capital priorities by year
end *Free cash flow is a non-GAAP measure and is defined as net
cash provided by continuing operations less capital expenditures
|
 Today’s agenda
Who we are
Leadership team, vision and direction
Business strategy and company advantages
Financial performance
Conclusion
22 |
 Financial performance
Net Sales
$2.3B**
$9.3B*
$74M** +12%
$256M*
727M
3.0B
Operating Profit
2012 Total Shareholder Return: +47%
3/31/13 Leverage Ratio
***
: 2.13x
Market Capitalization: $2.0B
1 Quarter
2012
*On
a
rebased
basis,
excluding
among
other
items
the
results
of
Morningstar
and
WhiteWave,
See
Reconciliation
of
Non-GAAP
Financial
Measures
in
the
appendix to this presentation for computation and reconciliations
**See Reconciliation of Non-GAAP Financial Measures in the first quarter 2013 press
release earnings tables for computations and reconciliations
***
Excludes
WhiteWave
stand-alone
debt
and
any
amount
that
may
be
payable
in
connection
with
taxes
related
to
the
Morningstar
sale
23
Gallons
st |
 Volume and operating profit performance
Adjusted Operating Income per Gallon ($)
*See Reconciliation of Non-GAAP Financial Measures in our earnings releases for
the relevant quarters and in the appendix to this presentation
for computations
and reconciliations
24 |
 2010
Dramatic debt and leverage reduction
Ongoing Dean Foods
Net Debt
$ Millions
Total Leverage
Ratio 5.13x
4.64x 3.54x*
2.13x*
•
3/31 Net debt of $1.0B, excluding
WWAV, leverage at 2.13x*
•
$2.6B of Dean Foods’
net debt
reduction over past 12 months
driven by Morningstar sale,
WWAV IPO and strong operating
cash flows
•
Upcoming tax payments
primarily related to the
Morningstar sale will increase
leverage
•
Opportunity to monetize 34.4
million WWAV shares to further
reduce debt
Overview
2011
2012
2013
* Excludes WhiteWave stand-alone debt and any amount that may be
payable in connection with taxes related to the Morningstar sale
25 |
 2013
Expectations Low-to-Mid single digit growth
$0.45 to $0.55 per share
Approximately $430 –
460 million
Approximately $150 –
175 million
FY 13 Capital
Expenditures
FY 13 Adjusted
Diluted EPS*
FY 13 Adjusted
Operating Income*
FY 13 Adjusted EBITDA*
26
$0.11 -
$0.15
Q2
Adjusted
Diluted
EPS*
* See Reconciliation of Non-GAAP Financial Measures in the Q1 2013 earnings release
earnings tables
for computation |
 Today’s agenda
27
Who we are
Leadership team, vision and direction
Business strategy and company advantages
Financial performance
Conclusion |
 Summary
We have built sustainable competitive advantages
through our scale and capabilities. We are working to
extend these advantages.
We are putting pieces in place to build for the future
through:
Reducing and variablizing our cost structure
Improving pricing tools and protocols to reduce volatility
Increasing R&D and innovation efforts
We believe profit growth, combined with a focus on
free cash flow generation and rewarding shareholders
will result in superior returns
We aim to be a predictable, sustainable creator of
value for shareholders, with fewer surprises and less
volatility
Thank you for your interest
28 |
 Appendix:
Reconciliation of Non-GAAP Financial Measures
29
DEAN FOODS COMPANY
Reconciliation of GAAP to Adjusted Operating Income
(Unaudited)
(In thousands)
Three months ended
March 31, 2013
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
68,981
$
290
$
4,620
$
340
$
-
$
74,231
$
WhiteWave
41,994
-
-
5,479
(47,473)
-
Facility closing and reorganization costs
(5,610)
-
5,610
-
-
-
Other operating income (expense)
(33,915)
33,915
-
-
-
-
Total operating income
71,450
$
34,205
$
10,230
$
5,819
$
(47,473)
$
74,231
$
Twelve months ended
December 31, 2012
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
233,558
$
5,983
$
-
$
24,654
$
(8,111)
$
256,084
$
WhiteWave
192,557
-
-
1,085
(193,642)
-
Facility closing and reorganization costs
(55,787)
-
55,787
-
-
-
Other operating income (expense)
57,459
(57,459)
-
-
-
-
Total operating income
427,787
$
(51,476)
$
55,787
$
25,739
$
(201,753)
$
256,084
$
|
 Appendix:
Reconciliation of Non-GAAP Financial Measures (cont)
30
Three months ended
March 31, 2012
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
68,079
$
-
$
-
$
-
$
(2,234)
$
65,845
$
WhiteWave
46,995
-
-
-
(46,995)
-
Facility closing and reorganization costs
(25,435)
-
25,435
-
-
-
Other operating income (expense)
-
-
-
-
-
-
Total operating income
89,639
$
-
$
25,435
$
-
$
(49,229)
$
65,845
$
Three months ended
June 30, 2012
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
69,001
$
-
$
-
$
4,000
$
(1,262)
$
71,739
$
WhiteWave
45,085
-
-
-
(45,085)
-
Facility closing and reorganization costs
(6,217)
-
6,217
-
-
-
Other operating income (expense)
-
-
-
-
-
-
Total operating income
107,869
$
-
$
6,217
$
4,000
$
(46,347)
$
71,739
$
|
 Appendix:
Reconciliation of Non-GAAP Financial Measures (cont)
31
Three months ended
September 30, 2012
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
46,224
$
5,983
$
-
$
8,000
$
(3,448)
$
56,759
$
WhiteWave
50,435
-
-
-
(50,435)
-
Facility closing and reorganization costs
(6,080)
-
6,080
-
-
-
Other operating income (expense)
56,339
(56,339)
-
-
-
-
Total operating income
146,918
$
(50,356)
$
6,080
$
8,000
$
(53,883)
$
56,759
$
Three months ended
December 31, 2012
Adjustments to GAAP
GAAP
Asset write-down
and (gain) loss on
sale of assets
Facility closing
and reorganization
costs
Deal, integration
and separation
costs
WhiteWave
separation and
discontinued
operations
Adjusted
Operating income (loss):
Ongoing Dean Foods
50,254
$
-
$
-
$
12,654
$
(1,167)
$
61,741
$
WhiteWave
50,042
-
-
1,085
(51,127)
-
Facility closing and reorganization costs
(18,055)
-
18,055
-
-
-
Other operating income (expense)
1,120
(1,120)
-
-
-
-
Total operating income
83,361
$
(1,120)
$
18,055
$
13,739
$
(52,294)
$
61,741
$
|
 FOCUS
June
2013 |