Mead Johnson Nutrition — Q1 2016 Earnings Presentation
20 slides from Mead Johnson Nutrition's earnings presentation, Apr 28, 2016
Slide 1: First Quarter 2016 Earnings Call Presentation
First Quarter 2016 Earnings Call Presentation April 28, 2016
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the fact they use words such as “should,” “expect,” “anticipate,” “es
Slide 3: Sequential Sales Improvement in Q1 of 1.5%
Sequential Sales Improvement in Q1 of 1.5%* Sales: Sequential Sales: Year Over Year Constant Dollar* $ in Millions 1Q 2016 +1.5% +0.3% Reported Sales $962 Change versus 1Q 2015 Constant Dollar (6%) Foreign Exchange (6%) Reported Dollar (12%) 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 *Growth on a Const
Slide 4: Continued Significant Foreign Exchange Headwind
Continued Significant Foreign Exchange Headwind Foreign Exchange Impact* 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 Net Sales ($ Mil) ($56) ($43) ($69) ($62) ($64) Foreign Exchange Impact on Sales* 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 Favorable Unfavorable Asia Latin America North America/Europe (5%
Slide 5: 1Q 2016 Gross Margin in Line with Annual Guidance
1Q 2016 Gross Margin in Line with Annual Guidance Non-GAAP +50bps -40bps 64.0% 64.5% 64.1% 1Q 2015 Sales Manufacturing Dairy & Productivity Other Subtotal Foreign 1Q 2016 Other Exchange Commodities 5
Slide 6: Strong A&P Investments Continued in 1Q 2016
Strong A&P Investments Continued in 1Q 2016 A&P as % of Sales 18.4% 16.0% 15.6% 15.8% 13.2% 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 6
Slide 7: Fuel for Growth Savings Reinvested into A&P
Fuel for Growth Savings Reinvested into A&P $ in Millions Non-GAAP 1Q 2016 vs. 1Q 2015 Actual Constant $ % of Sales A&P $152 11% 15.8% SG&A $195 (10%) 20.3% R&D $25 (1%) 2.6% Total Operating Expense $372 (2%) 38.7% 7
Slide 8: Strong Start to Fuel for Growth Initiative
Strong Start to Fuel for Growth Initiative Non-GAAP SG&A by Function SG&A Corporate Headquarters $232.4 (Like for Like)(2) $208.2 Support Functions & Marketing Sales & Distribution 1Q 2015 1Q 2016 1Q 2015 1Q 2016 90%+ of 2016 savings secured (1) Selling, General and Administrative expenses on a cons
Slide 9: 1Q 2016: EBIT Margin by Segment
1Q 2016: EBIT Margin by Segment $ in Millions Non-GAAP North America Corporate Asia Latin America & Europe & Other Total Company EBIT $169 $41 $82 ($48) $244 vs. 1Q 2015, Constant $ (22%) (11%) +9% +30% (10%) +22% ex-VZ vs. 1Q 2015, Reported $ (27%) (29%) +5% +29% (19%) EBIT Margin 33.8% 25.5% 27.2%
Slide 10: Financial Results: From EBIT to Net Income
Financial Results: From EBIT to Net Income $ in Millions, except for per share data 1Q 2016 Non-GAAP Change vs. 1Q 2015 Actual Reported Constant $ EBIT $244 (19%) (10%) Interest Exp. $26 90% Tax $51 (21%) ETR 23.2% Net Income $163 (27%) Non-GAAP EPS $0.87 (20%) (11%) Diluted Shares – Average* 186.7
Slide 11: EPS Development
EPS Development Non-GAAP $0.16 $0.03 $0.06 $0.07 $0.10 $1.09 $0.97 $0.87 1Q 2015 Sales A&P Fuel for Share Subtotal Foreign 1Q 2016 Impact Growth Repurchases, Exchange net* *2015 Share Repurchase impact is net of increase in interest expense, as repurchases were financed with long-term debt. 11
Slide 12: 1Q 2016 Specified Charge was Mainly Venezuela Change
1Q 2016 Specified Charge was Mainly Venezuela Change • Venezuela government revised currency system in March 2016 • MJN recognized devaluation and fixed asset impairment charges(1) • Continuing to maintain local presence and operational capabilities 3/31/2016 $ in Millions Devaluation Impairment Tot
Slide 13: Cash Movement
Cash Movement $ in Millions $56 $160 $77 $26 $1,701 $1,702 Jan 1, 2016 Cash from Capex Dividends Foreign Exchange March 31, 2016 Operations & Other, mainly Venezuela* *Venezuela attributed to devaluation of cash balances 13
Slide 14: 2016 Guidance
2016 Guidance Full Year Guidance(1) Constant $ Reported $ Sales No change 0% to 2% (4%) to (6%) Non-GAAP EPS No change $3.48 - $3.60 Change Specified Items $2.91 - $3.03 GAAP EPS(2) (from $0.12 to $0.57) (1) Guidance provided in the company’s press release on April 28, 2016. (2) GAAP EPS is likely t
Slide 15: Appendix
Appendix 15
Slide 16: Reconciliation of Non-GAAP to GAAP Results
Reconciliation of Non-GAAP to GAAP Results This presentation contains non-GAAP financial measures, which may include non-GAAP net sales, gross profit, certain components of operating expenses, EBIT, earnings and earnings per share information. The items included in GAAP measures, but excluded for th
Slide 17: Reconciliation of Non-GAAP to GAAP Results Q1
Reconciliation of Non-GAAP to GAAP Results Q1 Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Q1 16 vs. Q1 15 - % Change % Change $ in Millions Specified Items (a) Specified Items (a) Increase / (Decrease) Due to except for per share data Foreign Mark-to- Investig Non-GAAP Exchan
Slide 18: Reconciliation of Sequential Sales Corporate and Other Expenses
Reconciliation of Sequential Sales $ in Millions Fourth Quarter 2015 Sales $ 967.0 First Quarter 2016 Sales 962.1 Percentage Change in Sales on a GAAP basis (0.5%) Impact of Foreign Exchange 2.0% Percentage Change in Sales in Constant Dollars 1.5% Third Quarter 2015 Sales $ 977.5 Fourth Quarter 2015
Slide 19: 2016 Q1 Sales and EBIT as reported
2016 Q1 Sales as reported Three Months Ended Sales as reported March 31, % Change $ in millions Foreign Constant Impact of Excluding 2016 2015 Reported Exchange Dollar Venezuela Venezuela Asia $ 500.6 $ 581.0 (14%) (5%) (9%) -- -- Latin America 160.3 204.4 (22%) (16%) (6%) (13%) 7% North America/Eur
Slide 20: 2016 Q1 Constant Dollar
2016 Q1 Constant Dollar Three Months Ended March 31, 2016 $ in millions except for per share data Gross Earnings Per Margin % Share SG&A GAAP 63.9% $0.39 $198.9 Specified Items 0.2% 0.48 (3.4) Non-GAAP1 64.1% 0.87 195.5 Impact of Foreign Exchange 0.5% 0.10 12.7 Constant Dollar Non-GAAP 64.6% $0.97 $
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