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| 8-K - FORM 8-K - CONAGRA BRANDS INC. | d675605d8k.htm |
 1
Feb. 18, 2014
Exhibit 99.1
CAGNY 2014 |
 Agenda
•
Gary
Rodkin,
CEO
•
John
Gehring,
CFO
2 |
 Note on forward-looking statements
3
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on management’s current expectations and are subject to uncertainty and
changes in circumstances. These risks and uncertainties include, among other things:
ConAgra Foods’ ability to realize the synergies and benefits contemplated by the acquisition of Ralcorp
Holdings, Inc., and its ability to effectively integrate the business of Ralcorp; the timing
and ability to consummate the potential joint venture combining the flour milling
businesses of ConAgra Foods, Cargill, Incorporated, and CHS Inc., including,
satisfying the financing and other closing conditions as well as the divestiture of
flour milling facilities within the expected timeframe or at all; ConAgra Foods’ ability to realize the
synergies and benefits contemplated by the potential joint venture; the availability and
prices of raw materials, including any negative effects caused by inflation or adverse
weather conditions; the effectiveness of ConAgra Foods’ product pricing,
including any pricing actions and promotional changes; the ultimate outcome of
litigation, including the lead paint matter; future economic circumstances; industry
conditions; ConAgra Foods’ ability to execute its operating and restructuring
plans; the success of ConAgra Foods’ cost-saving initiatives, innovation, and
marketing investments; the competitive environment and related market conditions; operating
efficiencies; the ultimate impact of any ConAgra Foods product recalls; access to capital;
actions of governments and regulatory factors affecting ConAgra Foods’
businesses, including the Patient Protection and Affordable Care Act; the amount and
timing of repurchases of ConAgra Foods’ common stock and debt, if any; and other risks
described in ConAgra Foods’ reports filed with the Securities and Exchange Commission,
including its most recent annual report on Form 10-K and subsequent reports on
Forms 10-Q and 8-K. Investors and security holders are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date they are made. ConAgra Foods disclaims any obligation to update or revise statements contained in
this presentation to reflect future events or circumstances or otherwise. |
 Current snapshot
4
ConAgra
Foods’
FY
2013
sales
mix
ConAgra
Foods’
FY
2013
sales
mix
ConAgra
Foods’
FY
2014
(est.)
sales
mix
ConAgra
Foods’
FY
2014
(est.)
sales
mix
Commercial Foods
Commercial Foods
Consumer Foods
Consumer Foods
Private Brands
Private Brands
41%
35%
24%
Commercial Foods
Commercial Foods
Consumer Foods
Consumer Foods
Private Brands
Private Brands
54%
39%
7% |
 Fiscal 2014: short-term issues
•
Ralcorp integration
•
Foodservice customer disruption
•
Consumer brand challenges
5 |
 Largest private brand food
business in North America.
Makes and sells private
brands to retail customers.
24%
24%
41%
Consumer Foods
35%
Commercial Foods
Private
Private
Brands
Brands |
 |
 Cost synergies
8
•
On track to deliver on commitments
•
Using scale in sourcing and procurement contracts
•
Robust pipeline |
 Engaging with customers
9
“We’re
excited
by
the
potential
of
leveraging
the
entire
portfolio.
It
really
simplifies
doing
business
with
you.”
–
ConAgra
Foods
retail
customer |
 Fast-growing retailers:
a focus on Private Label
10
Source: High-focus Private Label retailers comprised of 5 retailers.
Kantar Retail – Edible Grocery; Planet Retail;
Deloitte American pantry study, Progressive Grocer; Nielsen.
Dollar Sales Growth
“You’re a key
partner on our
journey.
We
will
move from
good to great
with private
brands as our
differentiator.”
–
ConAgra Foods
retail customer
High Focus
High Focus
Private Label
Private Label
Retailers
Retailers
Remaining
Remaining
Top 30
Top 30
Retailers
Retailers
2x |
 Private vs. National Brands
11
Source: Wall Street research. Comparisons based on a $10 national
brand retail price illustration. “We like your
strategy for
Private Brands.
You offer both
scale and
flexibility.”
–
ConAgra Foods
retail customer |
 Private Brands + Consumer Brands
12 |
 Growing appeal to consumers
13
Store brands as good as national brands
Source: 71% say brand names are not better products. 87% say they purchase store
brands occasionally or more often. Integer Group®
and M/A/R/C®
Research, 2013. PLMA 2013 survey of primary shoppers.
2010
57%
agree
71%
agree
2013 |
 Private label growth
Private label growth
14
Source: Nielsen Jan. 13, 2014 Scantrack, Total U.S. –
All Outlets Combined, UPC-coded.
Bars reflect excess growth of private label vs. branded food in terms of
year-over-year dollar sales growth ($ billions). |
 Distribution opportunity for ConAgra Foods
Potential: $20 million of
sales at one customer 15
= incremental sales opportunity
for ConAgra Foods in select categories |
 |
 Makes and sells
specialty food and ingredients to restaurants,
foodservice operators and other
food makers across the world.
35%
35%
24%
Private Brands
41%
Consumer Foods
Commercial Foods
Commercial Foods |
 Commercial Foods
18 |
 Lamb Weston
•
Leading North American supplier
•
Double-digit international growth
•
Major customer transition
•
Crop quality challenge |
 Global growth opportunity
20
Source:
Euromonitor
projections.
34%
34%
represents
represents
nominal
nominal
growth
growth
from
from
2012
2012
–
–
2017.
2017. |
 Ardent Mills: focused joint
venture
•
Proposed JV to be owned by
ConAgra Foods,
Cargill and CHS
•
Combine operations of
ConAgra Mills
and
Horizon
Milling
(a Cargill/CHS joint venture) to create a premier
flour milling company
•
Supported across North America by strong network of
mills and bakery mix facilities
•
Strategically and financially beneficial
21 |
 Makes and sells
leading consumer
branded food to retail
customers. |
 Consumer Foods
•
“Perfect at Retail”
4Ps approach
•
Brands to fix |
 “Perfect at Retail”
24 |
 Pricing
•
Right everyday pricing
•
Competitive promotions
•
Overall value
25 |
 Value at multiple price-points
26 |
 Packaging
27 |
 Placement
•
More facings for best sellers
•
Shopper-oriented displays
•
Retailer-efficient
space designs
28
Source: IRI Sales, 13 weeks ended Jan. 26, 2014
Source: IRI Sales, 13 weeks ended Jan. 26, 2014 |
 Promotion
29 |
 Focused improvement
initiatives
30 |
 Healthy Choice Turnaround
Transform by:
•
Focus on the core consumer
•
Leverage Café
Steamers
31 |
 ConAgra Foods: moving forward
•
Progress on near-term issues in FY15
•
Conviction in differentiating strategy
•
Confident in long-term goals |
 Feb. 18, 2014
CAGNY 2014
33
John Gehring
Chief Financial Officer |
 CFO agenda
•
Financial priorities
•
Productivity
•
EPS outlook
34 |
 Financial priorities
•
Strong earnings and cash flows
•
Healthy balance sheet and strong liquidity
•
Capital allocation
35
—
Debt repayment
—
Maintain strong dividend
—
Dividend growth, M&A, share repurchase
—
Debt repayment
Near term
Long term |
 Cash flow
•
Strong earnings drivers
–
Top-line fundamentals
–
Productivity
–
SG&A discipline
•
Working capital efficiency
•
Capital expenditure discipline
36 |
 37
Operating
&
free cash
flow growth
$1.5 billion of debt
repayment by FYE 2015
Strong dividend
Investment in growth &
cost savings
Earnings
growth
+
Working
capital
efficiency
+
CAPEX
discipline
Estimated operating cash flow:
FYE 2014 = $1.4 billion, FYE 2015 = $1.6+ billion |
 Healthy balance sheet and strong
liquidity
•
Commitment to investment grade
•
Debt / EBITDA*
Long-term
target:
<
3.0x
•
$1.5 billion by FY15
•
Additional $400+ million (Ardent Mills proceeds)
•
$1.5 billion revolver
•
Manageable debt maturities
38
Balance sheet
Debt repayment
Liquidity
*The
inability
to
predict
the
amount
and
timing
of
future
items
makes
a
detailed
reconciliation
of
projections
impracticable. |
 Productivity to fuel growth
39
Procurement
Manufacturing
Logistics
Supply
chain
Base productivity
Synergies
*$300 million cumulative by the end of fiscal 2017. All numbers
cited exclude items impacting comparability.
The inability to predict the amount and timing of future items makes a detailed
reconciliation of projections impracticable. |
 Supply Chain Opportunities
–
Scale
–
Collaborative sourcing
–
Design for preference and value
–
Commodity procurement and hedging
–
ConAgra Performance System
–
Reliability improvement
–
Zero-loss culture
–
Network optimization
–
Scale
–
Transportation sourcing
–
Single distribution network
40
Procurement
Manufacturing
Logistics |
 Incremental SG&A benefit
Enabled by restructuring
41
Corporate overhead / SG&A
Administrative efficiency
Incremental $ from SG&A efficiency initiatives:
$100+ million annual savings (run rate) by the end of FYE 2016
|
 Earnings Per Share (EPS*)
•
FY 2014: $2.22 to $2.25 per share*
•
Q3: approximately $0.60 per share*
•
Q4: approximately $0.65 per share*
42
*Diluted EPS, adjusted for items impacting comparability. The inability to predict
the amount and timing of future items makes a detailed reconciliation of
projections impracticable. |
 FY
2015 outlook - headlines
Top line
•
Address specific brand challenges
•
Stabilize and grow private brands
•
Drive international growth in Lamb Weston
Margin management
•
Low inflation
•
Strong
productivity
–
base
and
synergies
SG&A
•
Administrative cost efficiency
Ardent Mills first-year dilution
43
EPS growth
expected,
more details
with Q4
FYE 2014
release
Major drivers |
 Long-term goals
Annual EPS* growth = 10%+
Annual EPS* growth 7-9%
44
ROIC:
targeting
a
low
double
digit
ROIC
in
3
years
FY 2016 –17
After FY 2017
*Diluted EPS and ROIC guidance in this presentation assumes adjustment for items
impacting comparability. The inability to predict the amount and
timing of future items makes a detailed reconciliation of projections impracticable.
Long-term
annual sales
growth target =
3 -
4%
~
~ |
 |