Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Investor Day (2019)
71 slides from Conagra Brands's investor day presentation, 2019
Slide 1: NOx
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Slide 2: Dave Biegger, Chief Supply Chain Officer
DAVE BIEGGER CHIEF SUPPLY CHAIN OFFICER 2
Slide 3: Dave Biegger, Chief Supply Chain Officer
DAVE BIEGGER CHIEF SUPPLY CHAIN OFFICER With Conagra since 2015 Previous Experience Campbell’s: 11 years Proctor & Gamble: 24 years 1
Slide 4: Key Messages
Key Messages 1 Supply Chain will exceed our 2016 Investor Day commitments and deliver an additional $1.1B in value by end of FY22. 2 We will continue to strengthen our capabilities to ensure successful delivery of our Innovation and Growth agenda. 3 Our success is driven by our culture, highly engag
Slide 5: What I Will Cover
What I Will Cover Differentiated Culture Our Results What We Will Deliver 3
Slide 6: What I Will Cover
What I Will Cover Differentiated Culture Our Results What We Will Deliver 4
Slide 7: Differentiators Are People, Culture, and Our Approach
Differentiators Are People, Culture, and Our Approach Supply Chain Vision One team, defined by innovative solutions, differentiated by inspired people, delivering the unimaginable High Performance Organization (HPO) 5
Slide 8: Differentiators Are People, Culture, and Our Approach
Differentiators Are People, Culture, and Our Approach Supply Chain Vision One team, defined by innovative solutions, differentiated by inspired people, delivering the unimaginable High Performance Organization (HPO) 6
Slide 9: Pillars of Supply Chain Vision
Pillars of Supply Chain Vision Our Our Our Our People Organization Communities Commitments We choose We choose this We choose to We choose this for culture be socially these results ourselves responsible 7
Slide 10: Power of Our Supply Chain Vision Development Process
Power of Our Supply Chain Vision Development Process • Involvement • Declaration - “One Team” • Focus areas • Volunteers - “Grass Roots” • Commitment to make the Vision a reality 8
Slide 11: Differentiators Are People, Culture, and Our Approach
Differentiators Are People, Culture, and Our Approach Supply Chain Vision One team, defined by innovative solutions, differentiated by inspired people, delivering the unimaginable High Performance Organization (HPO) 9
Slide 12: Building HPO Capabilities in Our Manufacturing Operations
Building HPO Capabilities in Our Manufacturing Operations Key Elements of HPO • Engagement and ownership: careers rather than jobs • Multi-skilled: leadership, operational, technical mastery • Flexible teams that flow to the work • Empowered, self-directed teams • Pay for skills and contributions 10
Slide 13: Building HPO Capabilities in Our Manufacturing Operations
Building HPO Capabilities in Our Manufacturing Operations Key Elements of HPO Fundamental Principles of HPO • Engagement and ownership: • Respect for capability of all careers rather than jobs • Principle-driven organization • Multi-skilled: leadership, operational, technical mastery • Total employe
Slide 14: The Power of HPO
The Power of HPO • More capable and engaged FY18 Manufacturing Labor Cost hourly workforce (Reduction with HPO) − Tapping into latent talent and capabilities − Leadership and deep ownership at 26% every level of Supply Chain − Self-directed teams • Differentiated Results − Cost, Safety, Service and
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Slide 16: What I Will Cover
What I Will Cover Differentiated Culture Our Results What We Will Deliver 14
Slide 17: We Will Deliver on Commitments From 2016 Investor Day
We Will Deliver on Commitments From 2016 Investor Day 2016 Commitments Progress $900MM $925MM Realized $500MM $500MM Productivity (3 years ending FY20) (3 years ending FY19F) Working $400MM $425MM Capital (3 years ending FY19) (3 years ending FY19F) Improved innovation execution Supply Chain a key G
Slide 18: We Will Deliver on Commitments From 2016 Investor Day
We Will Deliver on Commitments From 2016 Investor Day 2016 Commitments Progress $900MM $925MM Realized $500MM $500MM Productivity (3 years ending FY20) (3 years ending FY19F) Working $400MM $425MM Capital (3 years ending FY19) (3 years ending FY19F) Improved innovation execution Supply Chain a key G
Slide 19: Key Drivers to Deliver $500MM in Realized Productivity
Key Drivers to Deliver $500MM in Realized Productivity Manufacturing Materials Network Optimization 17
Slide 20: Key Drivers to Deliver $500MM in Realized Productivity
Key Drivers to Deliver $500MM in Realized Productivity Manufacturing Materials Network Optimization 18
Slide 21: Conagra Performance System (CPS)
Conagra Performance System (CPS) What Is CPS? How It Has Driven Value Legacy Conagra Frozen Efficiency HPO TPM +6.5% Reliability FY15 FY19 YTD $100MM per year in savings Integrated Systemic Approach 19 TPM = Total Productive Maintenance
Slide 22: Key Drivers to Deliver $500MM in Realized Productivity
Key Drivers to Deliver $500MM in Realized Productivity Manufacturing Materials Network Optimization 20
Slide 23: Mastering Complexity Introduced 2016 Investor Day
Mastering Complexity Introduced 2016 Investor Day Mastering Complexity Assortment Innovation Optimization Pipeline Price Pack Margin By Architecture Design Promo/Demand Supply Chain Shaping Optimization 21
Slide 24: "Margin By Design" Approach to Material Savings
“Margin By Design” Approach to Material Savings Mastering Complexity Margin By Design Assortment Innovation • Contemporizes ingredient pantry Optimization Pipeline • Designed for scale • Flexible recipes Price Pack Margin By • Enabled by technology platforms Architecture Design Improves consumer exp
Slide 25: Margin By Design Examples
Margin By Design Examples Packaging Ingredients How We Make • Plastic to paper • Contemporized recipe • Culinary at scale • Improved consumer • Simplified ingredients • Creating sauces using experience fresh ingredients • Cleaner label at lower cost • Lower cost • Reduces high cost flavors while imp
Slide 26: New Approach Has Elevated Materials Savings Performance
New Approach Has Elevated Materials Savings Performance Materials Design Savings $50MM +115% $21MM +11% $23MM FY17 FY18 FY19F Mastering Complexity and Margin By Design ramp up 24
Slide 27: Driving Value Through Supplier Excellence
Driving Value Through Supplier Excellence What Is Supplier Excellence? • Most critical suppliers • Strategic versus transactional approach • Joint business planning and reviews • Balanced scorecard approach How It Drives Value • Financial: Productivity and working capital • Operational Excellence: S
Slide 28: Unlocking Value Through Supplier Excellence
Unlocking Value Through Supplier Excellence • Supply risk mitigation for vanilla sourced from Madagascar − Multi-functional Value Chain Loss Analysis completed with supplier − Resulted in a new formulation Improved material reliability Reduced cost by ~$2MM Simplified the Supply Chain Mainta
Slide 29: Results of Supplier Excellence Approach
Results of Supplier Excellence Approach • 70% of spend delivering 3%+ in annual productivity savings • 75% of suppliers at payment term targets • Multiple innovation improvement wins • Year-over-year improvement in total scorecard metrics Win-win relationships with sustainable results 27
Slide 30: Key Drivers to Deliver $500MM in Realized Productivity
Key Drivers to Deliver $500MM in Realized Productivity Manufacturing Materials Network Optimization 28
Slide 31: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 3 4 M&A synergies 4 55 Industry partnerships 29
Slide 32: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 4 M&A synergies • 1,400 bps margin improvement • Quality 55 Industry partnerships 30
Slide 33: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 4 M&A synergies 55 Industry partnerships 31
Slide 34: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 4 M&A synergies • 1,200 bps margin improvement • Innovation capability 55 Industry partnerships 32
Slide 35: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 4 M&A synergies • Modernizing acquisitions • Average 480 bps margin improvement 55 Industry partnerships 33
Slide 36: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Fiber Bowl Technology Build new capacity 2 or capabilities 3 Outsource 4 M&A synergies 55 Industry partnerships 34
Slide 37: Network Optimization Approach
Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 3 4 M&A synergies 4 55 Industry partnerships 35
Slide 38: Key Drivers to Deliver $500MM in Realized Productivity
Key Drivers to Deliver $500MM in Realized Productivity Manufacturing Materials Network Optimization 36
Slide 39: We Will Deliver on Commitments From 2016 Investor Day
We Will Deliver on Commitments From 2016 Investor Day 2016 Commitments Progress $900MM $925MM Realized $500MM $500MM Productivity (3 years ending FY20) (3 years ending FY19F) Working $400MM $425MM Capital (3 years ending FY19) (3 years ending FY19F) Improved innovation execution Supply Chain a key G
Slide 40: On Track to Deliver $425MM Working Capital Improvement
On Track to Deliver $425MM Working Capital Improvement 43% Working Capital1 Reduction Key Drivers • Disciplined ownership of Working Capital across entire organization ~ • Improvement across all levers $541 2 3 24 Day Cash Conversion Cycle Improvement Notes: 1. Working capital defined as net account
Slide 41: We Will Deliver on Commitments From 2016 Investor Day
We Will Deliver on Commitments From 2016 Investor Day 2016 Commitments Progress $900MM $925MM Realized $500MM $500MM Productivity (3 years ending FY20) (3 years ending FY19F) Working $400MM $425MM Capital (3 years ending FY19) (3 years ending FY19F) Improved innovation execution Supply Chain a key G
Slide 42: Disciplined Performance to Upgrade Quality of Volume Base
Disciplined Performance to Upgrade Quality of Volume Base Executed on 5,000+ SKUs Key Drivers in past 3 Years • Organizational agility 1,400 - Cross-functional collaboration Renovated - Clarity and alignment 2,100 - Leaner organization Discontinued 700 Innovated • Disciplined SKU assortment 900 Acqu
Slide 43: Disciplined Approach Has Led to Margin Improvement
Disciplined Approach Has Led to Margin Improvement Refrigerated & Frozen pivoted to profitable topline growth Implementing Value Over Volume Return to Profitable Growth 17.0% +40 bps 17.4% +2.3% (7.7)% FY17 Trailing 4 Quarters (as of FY19 Q3) 1 2 Organic Net Sales Growth Adj. Op. Margin Note: “Adjus
Slide 44: Results Delivered in a Dynamic Environment
Results Delivered in a Dynamic Environment Changes in Operating Environment Enablers of Strong Results • Increased customer requirements • Our culture of engagement • Higher inflation • Disciplined processes • Multiple acquisitions and divestitures • Cross-functional alignment and collaboration • Le
Slide 45: What I Will Cover
What I Will Cover Differentiated Culture Our Results What We Will Deliver 43
Slide 46: Will Apply Proven Playbook to Deliver New Commitments
Will Apply Proven Playbook to Deliver New Commitments $1.1 Billion by the end of FY22 Realized Synergies Working Growth Productivity Capital $825MM $300MM $706MM $119MM 44 Note: Commitments are for FY’20-FY’22
Slide 47: Will Apply Proven Playbook to Deliver New Commitments
Will Apply Proven Playbook to Deliver New Commitments Realized Synergies Working Growth Productivity Capital $825MM $300MM $706MM $119MM 45 Note: Commitments are for FY’20-FY’22
Slide 48: Will Deliver $825MM in Savings by End of FY22
Will Deliver $825MM in Savings by End of FY22 Realized Productivity & Synergies Productivity Consolidate programs leveraging “best of best” Approach Materials Margin By Design, Supplier Excellence Program Implement in Pinnacle plants and continue in Legacy CPS Conagra plants Network Execute plant ne
Slide 49: Will Deliver $825MM in Savings by End of FY22
Will Deliver $825MM in Savings by End of FY22 Realized Productivity & Synergies Productivity Consolidate programs leveraging “best of best” Approach Materials Margin By Design, Supplier Excellence Program Implement in Pinnacle plants and continue in Legacy CPS Conagra plants Network Execute plant ne
Slide 50: Merging Complementary Productivity Programs
Merging Complementary Productivity Programs Conagra Brands Pinnacle MVP • Fully cross-functional team • Maximizing Value through Productivity • Mastering Complexity playbook - “Saving is everyone’s job” culture • Margin By Design - Robust productivity governance • Supplier engagement - Productivity
Slide 51: Realized Productivity Is Better Metric than Gross Productivity
Realized Productivity Is Better Metric than Gross Productivity Realized Productivity Gross Productivity • Net of Productivity projects and • Reflects only positive impact of projects operational offsets • Reconciliation to P&L leads to “backing • Uses actual market inflation into” inflation • Produc
Slide 52: Will Deliver $825MM in Savings by End of FY22
Will Deliver $825MM in Savings by End of FY22 Realized Productivity & Synergies Productivity Consolidate programs leveraging “best of best” Approach Materials Margin By Design, Supplier Excellence Program Implement in Pinnacle plants and continue in Legacy CPS Conagra plants Network Execute plant ne
Slide 53: Materials is Largest COGS Spend and Savings Pool
Materials is Largest COGS Spend and Savings Pool ~$7.8 Billion Combined Annual COGS Spend Other 2% Logistics Materials 14% 64% ~$5 Billion Materials Basket Manufacturing 20% Margin By Design and Supplier Excellence will deliver more than half of the $825MM target 51
Slide 54: Will Deliver $825MM in Savings by End of FY22
Will Deliver $825MM in Savings by End of FY22 Realized Productivity & Synergies Productivity Consolidate programs leveraging “best of best” Approach Materials Margin By Design, Supplier Excellence Program Implement in Pinnacle plants and continue in Legacy CPS Conagra plants Network Execute plant ne
Slide 55: CPS Will Be Applied to Legacy Pinnacle Plants
CPS Will Be Applied to Legacy Pinnacle Plants Initial wins have come quickly and been impactful Gluten-free Line Throughput CPS 250 bps margin increase + 26% HPO TPM Base 30 Days Frozen Vegetable Lines Efficiency Reliability + 10% Base 30 Days 53 TPM = Total Productive Maintenance
Slide 56: Will Deliver $825MM in Savings by End of FY22
Will Deliver $825MM in Savings by End of FY22 Realized Productivity & Synergies Productivity Consolidate programs leveraging “best of best” Approach Materials Margin By Design, Supplier Excellence Program Implement in Pinnacle plants and continue in Legacy CPS Conagra plants Network Execute plant ne
Slide 57: Will Continue to Use Same Network Optimization Approach
Will Continue to Use Same Network Optimization Approach 11 Consolidate footprint Build new capacity 2 or capabilities 3 Outsource 3 4 M&A synergies 4 55 Industry partnerships 55
Slide 58: Consolidation Approach Over Past Seven Years
Consolidation Approach Over Past Seven Years Generated over $250MM per year in ongoing savings Guiding Principles for Plant Consolidation: • Complementary and underutilized assets • Major non-ROI infrastructure capital spending is imminent • Structural operating and/or overhead costs better solved •
Slide 59: Perception That Major Consolidation Remains an Opportunity
Perception That Major Consolidation Remains an Opportunity Perception Reality • Many plants in same • Proximity not a factor geography easily combined • Plants in same categories • Only if underutilized and easily combined complementary assets • Pinnacle integration creates • Selective synergy oppor
Slide 60: Rapidly Changing Environment Requires New Solutions
Rapidly Changing Environment Requires New Solutions Strategic Focus: Distribution Network Customer Pinnacle Channel Transportation Requirements Acquisition Expansion • Service expectations • Overlapping • Evolving • Go-to-market • Speed and accuracy customers and transportation capabilities paradigm
Slide 61: Focus on Serving Customers and Supporting Growth
Focus on Serving Customers and Supporting Growth What We Will Do Expected Outcomes • Optimize number of distribution • Tailored network that delivers centers improvements in: • Leverage technology − Cost − Service • Evolve planning systems and operating strategy − Ability to serve multiple channels
Slide 62: Using These Levers Will Deliver $825MM by End of FY22
Using These Levers Will Deliver $825MM by End of FY22 Productivity Approach $825MM $119 COGS Synergies Materials $706 Realized CPS Productivity Network Optimization 60
Slide 63: Will Apply Proven Playbook to Deliver New Commitments
Will Apply Proven Playbook to Deliver New Commitments Realized Synergies Working Growth Productivity Capital $825MM $300MM $706MM $119MM 61 Note: Commitments are for FY’20-FY’22
Slide 64: Will Deliver Another 30% Reduction in Working Capital
Will Deliver Another 30% Reduction in Working Capital Three year commitment of $300MM reduction in Working Capital Terms Extension Inventory • Continue Legacy Conagra • Operating flexibility • Apply to Pinnacle • Network strategy 62
Slide 65: Will Deliver an Additional $1.1B by End of FY22
Will Deliver an Additional $1.1B by End of FY22 2016 Investor Day 2019 Investor Day $1.1B $900MM $925MM $300 MM Working Capital Working $400 MM $425 MM Capital $825 MM Savings Savings $500 MM $500 MM 2016 Progress 2019 Commitments Commitments Since 2016 63
Slide 66: Will Apply Proven Playbook to Deliver New Commitments
Will Apply Proven Playbook to Deliver New Commitments Realized Synergies Working Growth Productivity Capital $825MM $300MM $706MM $119MM 64 Note: Commitments are for FY’20-FY’22
Slide 67: Implementing Culinary Capabilities in Manufacturing
Implementing Culinary Capabilities in Manufacturing How We Make How We Source Kitchen of the Future Contemporizing ingredients: Innovative culinary, engineering and manufacturing capabilities: • Simplifying ingredient pantry • Whole or minimally processed • Flavor development ingredients • Late stag
Slide 68: Methods of Product/Process Development (MOPD)
Methods of Product/Process Development (MOPD) Mastering MOPD increases organizational capacity and agility What is MOPD? Why use MOPD? • Systematic, structured, multi- • Predictable and efficient process functional approach to deliver new • Quality product introductions right product initiatives the
Slide 69: Vertical Start-Ups
Vertical Start-Ups Improves speed-to-market, reduces cost and increases technical skills Traditional Approach Vertical Start-up Approach START UP START UP GOAL GOAL Goal: 50% EFFICIENCY EFFICIENCY Reduction START UP COST $ START UP COST $ 67
Slide 70: Wrap-Up
Wrap-Up 1 Supply Chain will exceed our 2016 Investor Day commitments and deliver an additional $1.1B in value by end of FY22. 2 We will continue to strengthen our capabilities to ensure successful delivery of our Innovation and Growth agenda. 3 Our success is driven by our culture, highly engaged pe
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