Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Conagra Foods — Investor Day (March 2006)
142 slides from Conagra Brands's investor day presentation, Mar 16, 2006
Slide 1: March 2006 Analyst & Investor Event
Co PS MARCH 2008 Analyst & Investor Event
Slide 2: Forward-looking statements
This presentation, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circums
Slide 3: Welcome - Gary Rodkin
Coe MARCH 2006 Analyst & Investor Event Welcome Gary Rodkin President and CEO
Slide 4: ConAgra Foods: Significant Potential
ConAgra Foods: Significant Potential
Slide 5: Commodity Expertise
Commodity Expertise
Slide 6: Supply Chain
Supply Chain . Logistics y Network Volume Profits Shortfalls Weal Decline Brand Aes Inventory! Service cutRaD ‘and Y Marketing 7 Lower “Innovationt Product Visibility
Slide 7: The New CAG
The New CAG: A true operating company that delivers sustainable profitable growth
Slide 8: Building the New ConAgra Foods
Building the New ConAgra Foods =a
Slide 9: Culture: A Root Cause of Underperformance
Culture: A Root Cause of Underperformance Resistance to “Corporate” | | Size, Not Scale
Slide 10: Execute with Excellence
Execute with Excellence
Slide 11: Building the New ConAgra Foods: Portfolio
Building the New ConAgra Foods Portfolio =a
Slide 12: Fewer, Bigger, Better
Fewer, Bigger, Better
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Slide 14: More
More 5 Old Revenue Base New Revenue Base “All Brands Created Equal” 4% on Everything 9% - 10% on Prioritized Brands Prior Model New Model
Slide 15: Commercial
Commercial
Slide 16: Consumer
HEAL I Ga Cress
Slide 17: Fewer, Bigger, Better
Fewer, Bigger, Better <
Slide 18: Slide 18
Slide 19: Slide 19
Slide 20: Lamb Weston
LambWeston. Hand Fulls ‘STOFFD SIND Ost RIDGE BAKE RY
Slide 21: Fewer, Bigger, Better
Fewer, Bigger, Better < oe
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Slide 23: Fewer, Bigger, Better
Fewer, Bigger, Better <
Slide 24: Divest Non-Core Operations
Divest Non-Core Operations = Packaged Meats = Cheese = Seafood & Cook’ orttce) LOUIS Blkemp SINGLETON SEAFOOD C
Slide 25: Refrigerated Meats: Clear Divestiture Candidate
Refrigerated Meats: Clear Divestiture Candidate onnee =15% CAG Sales —————————— Minimal EBIT EEE Complex and Inefficient ————————Q—SSESE————— Poor Execution and Customer Service Levels ES Likely Constant Drag on CAG Financial Metrics EEE
Slide 26: ~15% CAG Sales
=15% CAG Sales
Slide 27: Packaged Meats to be Divested
Packaged Meats to be Divested Drastically underperformed in important metrics Packaged Meats Other CAG Recent Sales Trend (10%) 1% Recent Gross Margin % < 10% 25% ... and are a drag on ConAgra’s performance and valuation
Slide 28: Meat Portfolio Complexity
Meat Portfolio Complexity ee Eight key meat brands utilized across multiple products and various distribution channels Products Tunch Dinner Deli Whole Whole Key Brands HotDogs Meats Meats Meats © Meats Turkey Ham Culinary Butterball @ e@ °@ eo oe °@ i) Cook's e ) Eckrich @ @ @ e i) i) ‘Armour 2) @
Slide 29: Inefficient and Complex Meat Supply Chain
inefficient and Complex Meat Supply Chain 5 Over 20 plants and 24 co-packing facilities Locations 1 Co-Packer ™ CAG plants v 1 5 4 8 8 § 7 = Eckrich Armour __Butterball__Healthy Choice Hebrew National Cook’s_UnbrandediOther Some locations produce non-meats products and multiple brands Note Includes
Slide 30: Cheese and Seafood Divestitures
Cheese and Seafood Divestitures \ Low Gross Margins | | Significant Working Capital Investments | ([ 4000+ SKUs Creates Complexity |
Slide 31: Impact of Divestitures on ConAgra Foods
Impact of Divestitures on ConAgra Foods Improved Business Fundamentals = Streamlined Portfolio = Catalyst for: - Reduced compkxity - Faster progress on other key initiatives Enables Aggressive Attack on Costs
Slide 32: Building the New ConAgra Foods: Cost Structure
ng the New ConAgra Foods [ Porro | Cost ctructures
Slide 33: Cost Structure
Cost Structure = Procurement = Manufacturing = Transportation and Warehousing = G&A Generate Savings Exceeding $500MMlyr by FY09 before the impact of inflation Significant Working Capital Improvements Fuel for Reinvestment
Slide 34: Major Financial News Today
Major Financial News Today Lowering the Earnings Base to $1.10-$1.15* = Brand investment | = Portfolio changes | Cost Reduction Programs with Implementation Costs | | More Sustainable Dividend Level * See Appendix A for reconciliation
Slide 35: New Earnings Base for FY07
New Earnings Base for FY07 (Rounded) Fy07 EPS EPS — Current Trajectory* $1.35 - $1.40 Impact of divestitures =($.25) Increased Marketing, R&D investment =($.08 - $.10) Cost reduction =$.08 - $.10+ FY07 Earnings Base $1.10-$1.15 * EPS - Current Trajectory approximates earings per share before items i
Slide 36: Sales: Ramp to 2-3% annual growth; EPS: 7-9%
Sales: Ramp to 2-3% annual growth EPS: Achieve 7-9% annual growth = Goal: Return to current EPS run rate during FY09 " Significant additional opportunity beyond FY09 - to eventually achieve peer group average EBIT margins
Slide 37: Organizational Structure: Streamlining
Organizational Structure: Streamlining [ I ] ms Commercial Products Jim Hardy. Doug Knudsen ml Owen Johnson President EVP & Chief im /e ‘Officer, Corp Secretary Alairs & External Affairs Jacqueline EVP. Development
Slide 38: Organizational Structure
[ I Greg Heckman Dean Hollis Jim Hardy Owen Johnson EVP EVP & Chief i Administrative Officer, Corp Secretary Commercial Consumer Products Foods Frank Sklarsky EVP and Chief Financial Officer HcCook Development
Slide 39: Organizational Structure: Streamlining
ganizational Structure: Streaml Gary Rodkin President and CEO Enterprise Functions Consumer Commercial Foods Products P&L P&L
Slide 40: Incentive Programs
Incentive Programs rosie |veeees > |Significant Reward: Combination of EBIT, 8 ROIC Growth as Flat t 2 H e Decline Decline Flat Growth ROIC Performance
Slide 41: Former Vision
Former Vision America’s Favorie Food Company
Slide 42: A true operating company
A true operating company that delivers sustainable
Slide 43: Summary of the New ConAgra Foods
Summary of the New ConAgra Foods Congr = Restructure and rewire organization > Integrated enterprise = Focus the portfolio m® Better RO! = Aggressively attack cost structure > Improved margins = Savings fuel top-line investment RB Drive marketing and innovation Execute with Excellence
Slide 44: Meeting Agenda
Meeting Agenda
Slide 45: Consumer Foods - Dean Hollis
Cops MARCH 2006 Analyst & Investor Event Consumer Foods Dean Hollis President & COO, Consumer Foods
Slide 46: Consumer Foods
Consumer Foods onnee | Brand Portfolio | | Product Fundamentals | | Profiles of Progress |
Slide 47: Meals & Entrees, Condiments & Sides, Snacks & Desserts
Meals & Entrees Condiments & Sides Snacks & Desserts its Grom P ot | pu , Paw Cooks CHOICE Wp Goiswve. “ prown'NServe.
Slide 48: Brand Portfolio
Brand Portfolio
Slide 49: Brand Portfolio
Brand Portfolio
Slide 50: Brand Portfolio
Brand Portfolio 5 ff 15 brands >$100MM ] | Leading national brands | { Strong regional brands | Strategic Private Label participation J ay
Slide 51: Brand Portfolio: Significant Opportunities Remain
Brand Portfolio HOWEVER, significant opportunities remain ... | | Only 15% SKU’s > 80% ACV Distribution } | New Product Sales less than % Industry Average | | Total A&P 2 Competitive Average J
Slide 52: Key Evaluation Criteria
Key Evaluation Criteria Ne Nee Nee Pick Battles 15% Lil 28% Manage for Cash 1%
Slide 53: Brand Portfolio: Building the Plan
Brand Portfolio: Building the Plan To build our plan, three questions to address: C1) How will we grow? Innovation Renovation Execution | Blocking and Tackling
Slide 54: Brand Portfolio: Building the Plan
Brand Portfolio: Building the Plan To build our plan, three questions to address: C1) How will we grow? (2) What levers will we pull? + Prioritize the Portfolio Innovation + SKU Optimization + Merchandising = Sales and Margin Up + Insights + Consumer Pull Renovation + Customer Push = Improved ROMI +
Slide 55: Building the Plan: Outcomes
To build our plan, three questions to address: (1) How will we grow? (2) What levers will we pull? For what outcome? oe Innovation Fix the Mix — | = Driving Renovation Demand Execution ug Supply |__ ill corresponding outcomes will differ based on brand prioritization
Slide 56: Brand Portfolio: Relevant to Consumer Trends
Brand Portfolio: Relevant to Consumer Trends‘ PAM Hunt's acini) ber al = Flavor adventure regia SB Lacnovie = Uncompromised quality Rig MewicClindors-> cs ys = CONVENIENCE Kin Coisiue Spec = Health and wellness = Trusted value brands — MANWIH
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Link to searchable text of slide shown above
Slide 58: Product Fundamentals
oduc amentals = Ethnic diversity of LaChoy, Rosarita, and Rotel = Healthy Choice leads with Flavor Adventures = New bold popcorn flavors = New flavor varieties on Egg Beaters HEALTHY#CHOIC Priavor Adventures creamy Dill Salmon
Slide 59: Product Fundamentals: Unsurpassed Quality
oduct damentals: Unsurpassed Quali is = Hebrew National = highest quality / Kosher “certified” = Egg Beaters — real eggs, real difference = Reddi-wip — made with real cream = Marie Callender’s Crocks - fresh frozen meats and vegetables = Snack Pack Pudding — milk #1 ingredient
Slide 60: Product Fundamentals: Trusted Value
Proqauct indamentais ‘usted aiue Deep understanding of consumer drivers Enhanced convenience Responsible nutrition Contemporary new offerings
Slide 61: Product Fundamentals: Convenience = Margin Up
>roduct Fundamentals: Convenience = Margin Up Sds = Microwaveable meal solutions in minutes = Meals with emphasis on “family” time = Healthy meals for active lifestyles = Portion controlled snacking
Slide 62: Expanding Frame of Reference: Targeting Shell Egg Users
Expanding Frame of Reference: Targeting Shell Egg Users = New advertising message = Relevant new items = Retail shelf adjacency
Slide 63: Commercial
Commercial
Slide 64: Better Connecting with Core Consumers
Better Connecting with Core Consumers = Targeted advertising, sponsorships and grass roots promotions = New distribution across all channels = Multiple “points of interruption” across the store ft euitt | amazoncom FedExKinkos.afe| ‘Oneaand Pee Sov
Slide 65: Driving Purchase Frequency and Buy Rate
Driving Purchase Frequency and Buy Rate = |mproved nutrtionals across the line = New varieties expanding consumption = Shelf merchandising improves shopability
Slide 66: Commercial
Commercial
Slide 67: Reddi-wip: Increasing Usage Occasions
rass: Reddi-wi Increasing Usage Occasions = |n-store tie-ins with seasonal “host foods” = New advertising and in-store promotions reinforcing everyday usage = New distribution opportunities, initially in club channel
Slide 68: Franchise Growth Via Consumer Immersion
Franchise Growth Via Consumer Immersion = Product improvements driving sales +30% = “Green is Good” increasing HHP +16% = New product pipeline re-loaded in FY07 = HEALTHYS CHOICE omaaen
Slide 69: The New ConAgra Foods
The New ConAgra Foods onnee = ) [ Finally, Prioritizing the Brand Portfolio ( Focused on Meaningful Consumer Trends | Serious about Renovation and Innovation | Execute with Excellence
Slide 70: Sales Strategies - Doug Knudsen
Cops MARCH 2006 Analyst & Investor Event Sales Strategies Doug Knudsen President, Sales
Slide 71: Present vs. Future Sales Organization
PRESENT i 5 Different Sales Organizations } | “ONE” Unified Sales Force | - Sas || Multiple Systems / Limited Too's}] i “ONE” System with Integrated Sales Tools ( “Push” Sales Focus ] | “Pull” Focus / Consumption Based { Trade Promotion Dependent _| {( Balanced Mix (Marketing /Trade) | _SSSSSSo—————
Slide 72: Sales Organization Priorities
Sales Organization Priorities Foods | [ Base Volume Growth Trade Spending Effectiveness — Channel Opportunities
Slide 73: Base Volume Growth - Store
Base Volume Growth - Store | = Objectives - Drive BASE category growth for customers - Increase everyday demand for ConAgra Foods brands - Reduce reliance on trade spending = Opportunities - Fix the Mix - ideal assortment - Improved shelf presence / adjacencies - Increased secondary placements - Opt
Slide 74: Store Initiative
Store Initiative (enizeg ses) Sales Execution on Top 10 Categories a Grow Key Categories ® Grow Priority Brands ™ Flawless In-Store Execution Microwave Popcom e Canned Pasta Meat Snacks Ay Liquid Eggs $88 ors Whipped Toppings Reid Cooking Sprays PM Canned Tomatoes HuntS eos Frozen Meals po Hereted M
Slide 75: Egg Beaters Objectives
re Egg Beaters Objectives = Liquid eggs adjacent to shell eggs = Full line distribution base and flavors - 7 SKU’s VEAL o = Everyday shelf price - $2.99 Egg Beaters Growth: +10-15%
Slide 76: Store Initiative: Whipped Topping Objectives
ore Initiative Whipped Topping Objectives = Adjacent to rfg pudding at eye level = Minimum 5 SKU’s = Cooler Program with Host Foods - Cocoa, Pies, Berries, Ice Cream »
Slide 77: Chef Boyardee Objectives
Chef Boyardee Objectives = Core Four at eye level = 40 oz. Center Shelf = Chef Brand Block = Minimum 18 SKU’s Chef Growth: +6-9%
Slide 78: Trade Spending Effectiveness
Trade Spending Effectiveness = $1.6B+ Annual Investment (Ex Divestitures) = Recently implemented Trade Promotion Management (TPM) system ~ Fully integrated moduk of SAP - Disciplined process and controls - Visibility to profitability by customer - Analytics by customer, brand and event evel = (STEP
Slide 79: Improving Trade Effectiveness
Improving Trade Effectiveness From To Impact $0.79 & $0.89| 5/$5 Features| Sales +8% Features +++ROIl S $s00mm Brand a $1.99 TPRs | 2/$4 Features) oo1o5 440% 4 Weeks 1 Week +4++ROI Promoted Promoted
Slide 80: Trade Spending Effectiveness
Trade Spending Effectiveness Opportunities = Shift lowest 10% RO! events = Target Customer's most effective merchandising vehicle
Slide 81: Channel Opportunities
Channel Opportunities ConAgra Foods Sales by Major Retail Channel (%) 56 Fastest Growing Channels 19 U 5 4 4 3 P (oe) __ oe oe Grocery] Mass! Membership Limited Drug! | Emerging Convenience| Military Supercenters Assortment Dollar Formats
Slide 82: More and Better Marketing
Slide 83: Platform Innovation: Brands
Slide 84: Platform Innovation: Categories
Slide 85: In-Store Execution
Slide 86: Channel Opportunity: Membership / Club
Slide 87: Channel Opportunity: Emerging Formats
Slide 88: Channel Opportunity: Convenience Stores
Slide 89: Channel Opportunity: Convenience Stores
Slide 90: The New ConAgra Foods
Slide 91: Commercial Products - Greg Heckman
Slide 92: Food Products Sales Channel Breakdown
Slide 93: Commercial Products: $4+ Billion in Sales
Slide 94: Recognized Business to Business Brands
Slide 95: Significant Scale
Slide 96: ConAgra Trade Group: Linking Supply & Demand
Slide 97: Solid Track Record
Slide 98: Expansive Customer Portfolio
Slide 99: Focused Growth Agenda
Slide 100: Expand on Strengths
Slide 101: Relevant Innovation: Lamb Weston MyFries
Slide 102: Relevant Innovation: Stuffed Spudz
Slide 103: Relevant Innovation: ConAgra Mills Ultragrain
Slide 104: Relevant Innovation: Gilroy Foods
Slide 105: Relevant Innovation: Spicetec
Slide 106: Customer Solutions
Slide 107: The New ConAgra Foods
Slide 108: Driving Supply Chain Excellence - Jim Hardy
Slide 109: Product Supply
Slide 110: Before: No Integration
Slide 111: After: Fully Integrated Supply Chain Organization
Slide 112: Enterprise Product Supply Vision
Slide 113: Strategic Priorities
Slide 114: Product Supply
Slide 115: Variable Cost Focus
Slide 116: Variable Cost Savings—Procurement
Slide 117: Variable Cost Savings—Manufacturing
Slide 118: Variable Cost Savings—Logistics
Slide 119: Fixed Cost Savings / Plant Rationalization
Slide 120: Product Supply Cost Savings
Slide 121: The New ConAgra Foods
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Slide 142: Searchable text section of graphics
Searchable text section of graphics shown above [L OGO] MARCH 2006 Analyst & Investor Event [LOGO] Not e on Forward-Looking Statements [LOGO] This presentation, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based