Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Conagra Foods — CAGNY 2014
45 slides from Conagra Brands's conference presentation, Feb 18, 2014
Slide 1: CAGNY 2014
1 Feb. 18, 2014 CAGNY 2014 Exhibit 99.1
Slide 2: Agenda
Agenda Gary Rodkin, CEO John Gehring, CFO 2 • •
Slide 3: Note on forward-looking statements
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 circums
Slide 4: Current snapshot
Current snapshot 4 ConAgra Foods’ FY 2013 sales mix ConAgra Foods’ FY 2014 (est.) sales mix Commercial Foods Consumer Foods Private Brands 41% 35% 24% Commercial Foods Consumer Foods Private Brands 54% 39% 7% ConAgra Foods’ FY 2013 sales mix ConAgra Foods’ FY 2014 (est.) sales mix Commercial Foods C
Slide 5: Fiscal 2014: short-term issues
Fiscal 2014: short-term issues Ralcorp integration Foodservice customer disruption Consumer brand challenges 5 • • •
Slide 6: 24% Private Brands
24% Private Brands Largest private brand food business in North America. Makes and sells private brands to retail customers. 24% 41% Consumer Foods 35% Commercial Foods Private Brands
Slide 7: Private Brands: key focus areas
Private Brands: key focus areas * Organization » Volume * Supply chain performance » Cost synergies + Customerimpact
Slide 8: Cost synergies
Cost synergies 8 On track to deliver on commitments Using scale in sourcing and procurement contracts Robust pipeline • • •
Slide 9: Engaging with customers
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
Slide 10: Fast-growing retailers: a focus on Private Label
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
Slide 11: Private vs. National Brands
Private vs. National Brands 11 Source: Wall Street research. Comparisons based on a $10 national brand retail price illustration. “We like your strategy for Private Brands. You offer both scale and flexibility.” – ConAgra Foods retail customer
Slide 12: Private Brands + Consumer Brands
Private Brands + Consumer Brands 12
Slide 13: Growing appeal to consumers
Growing appeal to consumers 13 Store brands as good as national brands Source: 71% say brand names are not better products. 87% say they purchase store brands occasionally or more often. Integer Group® and M/A/R/C® Research, 2013. PLMA 2013 survey of primary shoppers. 2010 57% agree 71% agree 2013
Slide 14: Private label growth
Private label growth 14 Source: Nielsen Jan. 13, 2014 Scantrack, Total U.S. – All Outlets Combined, UPC-coded. Bars reflect excess growth of private label vs. branded food in terms of year-over-year dollar sales growth ($ billions). Private label growth
Slide 15: Distribution opportunity for ConAgra Foods
Distribution opportunity for ConAgra Foods Potential: $ 20 million of sales at one customer 15 = incremental sales opportunity for ConAgra Foods in select categories
Slide 16: ConAgra Foods differentiation
ConAgra Foods differentiation * Innovation * Procurement * Category and Shopper * Transportation and Insights Warehousing + Joint Business Planning « Food Safety expertise « Packaging “Your expanded portfolio is abig differentiator.” —Con Agra Foods retail customer pa | i " @Congrafoods i) i =|.) as
Slide 17: 35% Commercial Foods
35% Commercial Foods Makes and sells specialty food and ingredients to restaurants, foodservice operators and other food makers across the world. 35% 24% Private Brands 41% Consumer Foods Commercial Foods
Slide 18: Commercial Foods brands
LambWeston. Q ff IMSWANK ConAgra pes ConAgra Clesevee spicelec Coss lion Bakeries
Slide 19: Lamb Weston
Lamb Weston Leading North American supplier Double-digit international growth Major customer transition Crop quality challenge • • • •
Slide 20: Global growth opportunity
Global growth opportunity 20 Source: Euromonitor projections. 34% represents nominal growth from 2012 – 2017. 34% represents nominal growth from 2012 – 2017.
Slide 21: Ardent Mills: focused joint venture
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 facil
Slide 22: Consumer Foods
Makes and sells leading consumer branded food to retail customers.
Slide 23: Consumer Foods: Perfect at Retail 4Ps approach
Consumer Foods “Perfect at Retail” 4Ps approach Brands to fix • •
Slide 24: Perfect at Retail
“Perfect at Retail” 24
Slide 25: Pricing
Pricing Right everyday pricing Competitive promotions Overall value 25 • • •
Slide 26: Value at multiple price-points
Value at multiple price-points 26
Slide 27: lunts
a ee lunts cy 5 d 1, Gari) fdaeeiies chicken florentineafarfalle (2) @ ConAgra foods
Slide 28: Placement
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
Slide 29: Promotion
Promotion 29
Slide 30: Focused improvement initiatives
Focused improvement initiatives 30
Slide 31: Healthy Choice Turnaround
Healthy Choice Turnaround Transform by: Focus on the core consumer Leverage Café Steamers 31 • •
Slide 32: ConAgra Foods: moving forward
ConAgra Foods: moving forward Progress on near-term issues in FY15 Conviction in differentiating strategy Confident in long-term goals • • •
Slide 33: John Gehring, Chief Financial Officer
Feb. 18, 2014 CAGNY 2014 33 John Gehring Chief Financial Officer
Slide 34: CFO agenda
CFO agenda Financial priorities Productivity EPS outlook 34 • • •
Slide 35: Financial priorities
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 • • • — — — —
Slide 36: Cash flow
Cash flow Strong earnings drivers Top-line fundamentals Productivity SG&A discipline Working capital efficiency Capital expenditure discipline 36 • – – – • •
Slide 37: Operating & free cash flow growth
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
Slide 38: Healthy balance sheet and strong liquidity
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
Slide 39: Productivity to fuel growth
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 rec
Slide 40: Supply Chain Opportunities
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 L
Slide 41: Incremental SG&A benefit
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
Slide 42: Earnings Per Share (EPS)
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 projection
Slide 43: FY 2015 outlook - headlines
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 grow
Slide 44: Long-term goals
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 o
Slide 45: CAGNY 2014
CAGNY 2014 Feb. 18, 2014