Dean Foods — Investor Presentation (June 2013)
32 slides from Dean Foods's investor presentation, Jun 12, 2013
Slide 1: FOCUS June 2013
FOCUS June 2013 Exhibit 99.1
Slide 2: Forward-looking statements
2 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 com
Slide 3: Today's agenda
3 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 4: Who we are
4 1. Source IRI 2. As of 6/3/2013 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 NYSE: DF Market cap: $2.0B
Slide 5: Today's agenda
5 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 6: Strong management team and vision
To be the most admired and trusted provider of wholesome, great- tasting dairy products at every occasion 6 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 W
Slide 7: 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
Slide 8: Today's agenda
8 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 9: Dean Foods at a glance
9 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 pla
Slide 10: Distribution: Broad nationwide distribution across channels
Large Format 69% Small Format 11% Foodservice 13% School/Govt 7% 10 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
Slide 11: Portfolio: Strength across the dairy case
26% DEAN BRANDED WHITE 40% PL WHITE AND FLAVORED 8% TRUMOO 11 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 Dea
Slide 12: Fluid Milk Category Dynamics
Fluid Milk Category Dynamics 12 White milk is a compelling, sustainable market opportunity Ubiquitous: in 90% of U.S. homes, over $20B of annual U.S. retail sales ¹ Strong health & wellness credentials One of the largest, most profitable categories for retailers Industry remains fragmented, large so
Slide 13: Scale: Dean Foods is the largest player in milk
13 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
Slide 14: Brands: Leveraging TruMoo
1.SymphonyIRI MULO data ending 52 W/E 12/31/12 14 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 Dea
Slide 15: Portfolio: Ice cream
15 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
Slide 16: Dean Foods: Focused, disciplined, profitable
16 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
Slide 17: Sustainable competitive advantages: Manufacturing and Procurement
17 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 p
Slide 18: Sustainable competitive advantages: Distribution
18 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
Slide 19: Sustainable competitive advantages: Pricing and Selling
19 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
Slide 20: Building long-term opportunities to grow
20 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 begi
Slide 21: Focus on cash flow generation & total shareholder returns
21 *Free cash flow is a non-GAAP measure and is defined as net cash provided by continuing operations less capital expenditures Focus on cash flow generation & total shareholder returns Mid-single Avg EBIT Growth Liability Mgmt Cap-Ex Reduction Over Time We expect $75-$100 million of normalized 2013
Slide 22: Today's agenda
22 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 23: Financial performance
$2.3B** $9.3B* 2012 Total Shareholder Return: +47% 3/31/13 Leverage Ratio *** : 2.13x Market Capitalization: $2.0B 1 Quarter 2012 *On a rebased basis, excluding among other items the results of Morningstar and WhiteWave, See Reconciliation of Non-GAAP Financial Measures in the appendix to this prese
Slide 24: Volume and operating profit performance
*See Reconciliation of Non-GAAP Financial Measures in our earnings releases for the relevant quarters and in the appendix to this presentation for computations and reconciliations 24 Volume and operating profit performance Adjusted Operating Income per Gallon ($)
Slide 25: Dramatic debt and leverage reduction
Overview * Excludes WhiteWave stand-alone debt and any amount that may be payable in connection with taxes related to the Morningstar sale 25 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, excl
Slide 26: 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 N
Slide 27: Today's agenda
27 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 28: Summary
28 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 vola
Slide 29: Appendix: Reconciliation of Non-GAAP Financial Measures
29 Appendix: Reconciliation of Non-GAAP Financial Measures 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 reorganizati
Slide 30: Appendix: Reconciliation of Non-GAAP Financial Measures (cont)
30 Appendix: Reconciliation of Non-GAAP Financial Measures (cont) 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 opera
Slide 31: Appendix: Reconciliation of Non-GAAP Financial Measures (cont)
31 Appendix: Reconciliation of Non-GAAP Financial Measures (cont) 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 o
Slide 32: FOCUS June 2013
FOCUS June 2013