Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Conagra Foods — CAGNY 2012
74 slides from Conagra Brands's conference presentation, Feb 21, 2012
Slide 1: CAGNY 2012
1 CAGNY 2012 CAGNY 2012 Exhibit 99.2
Slide 2: Gary Rodkin, CEO
2 Gary Rodkin CEO Gary Rodkin CEO
Slide 3: 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 statements are based on management’s current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circum
Slide 4: Today's agenda
Today’s agenda Gary Rodkin, CEO Recipe for Growth Customer Connect Innovation and marketing Supply chain Algorithm and goals Capital allocation 4 André Hawaux, President Consumer Foods John Gehring, CFO Today’s agenda • • Gary Rodkin, CEO • • Recipe for Growth • • Customer Connect • • Innovation and
Slide 5: Company overview
Company overview 5 FY12 Operating Cash Flow FY12 Debt/EBITDA** $1.3 billion* (est.) 2X (est.) Current Annualized Dividend: $0.96 / share Current Dividend Yield: 3.5% 35% 65% Consumer Foods Commercial Foods Fiscal 2012 sales: Approaching $13 billion (est.) *Excludes any FY12 discretionary pension con
Slide 6: Our journey: entering phase 2
Our journey: entering phase 2 Phase 1 Operational progress Organizational wiring Culture Cost structure Marketing and innovation Balance sheet Portfolio Phase 2 Leverage strong foundation Our Recipe for Growth 6 Our journey: entering phase 2 • • Phase 1 – – Operational progress • • Organizational wi
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Slide 9: Core: drivers of success
Platform Sustainable growth Core: drivers of success 9 1. Innovation Significantly improved capabilities Insights = clarity + consistency of message 2. Pricing 3. Marketing Platform Sustainable growth Core: drivers of success 1. Innovation Significantly improved capabilities Insights = clarity + con
Slide 10: Core: drivers of success
10 Core: drivers of success Platform Sustainable growth 1. Innovation 1. Innovation Core: drivers of success Platform Sustainable growth
Slide 11: Core: drivers of success
Core: drivers of success 11 1. Innovation Significantly improved capabilities Insights = clarity + consistency of message 3. Marketing Platform Sustainable growth Core: drivers of success 1. Innovation Significantly improved capabilities Insights = clarity + consistency of message 2. Pricing 2. Pric
Slide 12: Core: drivers of success
Core: drivers of success 12 1. Innovation Significantly improved capabilities Insights = clarity + consistency of message 2. Pricing Platform Sustainable growth Core: drivers of success 1. Innovation Significantly improved capabilities Insights = clarity + consistency of message 2. Pricing 3. Market
Slide 13: PAM commercial
13 PAM commercial PAM commercial
Slide 14: Hebrew National commercial
14 Hebrew National commercial Hebrew National commercial
Slide 15: Marie Callender's dessert pies
Marie Callender’s dessert pies 15 FY12 YTD Net Sales 1 +27% 1 June 2011 – December 2011 Marie Callender’s dessert pies FY12 YTD Net Sales +27%
Slide 16: Sweet potatoes
Sweet potatoes 16 2000 2011 Sweet Potatoes: Consumption +52% Source: USDA Economic Research Service, November 11, 2011. 3.0 4.0 5.0 6.0 7.0 Sweet potatoes 2000 2011 Sweet Potatoes: Consumption +52% Source: USDA Economic Research Service, November 11, 2011.
Slide 17: Whole grains
Whole grains 17 Whole Grain Growth, FY06 to FY11 Source: Milling and Baking News, 07/26/11 10,000,000 15,000,000 20,000,000 25,000,000 FY06 FY07 FY08 FY09 FY10 FY11 +10% CAGR Whole grains Whole Grain Growth, FY06 to FY11 Source: Milling and Baking News, 07/26/11 +10% CAGR
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Slide 19: International markets
International markets Commercial Foods primary markets Europe, Canada, Latin America and Asia (includes JVs) Consumer Foods primary markets India 1 Mexico Canada Caribbean 19 1 Consumer Foods’ market in India is through Agro Tech Foods Limited, an Indian publicly-held company in which ConAgra Foods
Slide 20: Lamb Weston International
Lamb Weston International 20 In nearly 100 countries (includes JVs) Japan China Korea Middle East Leader: Lamb Weston International In nearly 100 countries (includes JVs) Japan China Korea Middle East Leader:
Slide 21: Total international sales
Total international sales Country performance: 12% 83% 51% Total International Sales $ Sales increase vs. year ago FY12 YTD: June 2011 – December 2011 21 Lamb Weston FY12 YTD China/Hong Kong 32% 24% 39% Australia Singapore Taiwan Malaysia Total international sales Country performance: 12% 83% 51% To
Slide 22: Lamb Weston international opportunity
Lamb Weston international opportunity 3.8 B 1.8 B 344 M 9.9 B 590 M 1.3 B 595 M 5.9 B 0.5 B 1.3 B U.S. and Canada Europe Asia Pacific Latin America Middle East and Africa = Population = Pounds consumed 27 lbs/cap 10 lbs/cap <1 lbs/cap 2 lbs/cap <1 lbs/cap 22 Lamb Weston international opportunity 3.8
Slide 23: Focus on key strategies
Focus on key strategies Potato pizza innovation Introduced in Korea ten years ago Beyond Korea; carried by major pizza chains across Asia Drives 10 million lbs. of business for Lamb Weston annually 23 Expanding original regional ideas Focus on key strategies • • Potato pizza innovation – – Introduce
Slide 24: International
International 24 India Mexico Canada Caribbean Consumer Foods primary markets 1 Consumer Foods’ market in India is through Agro Tech Foods Limited, an Indian publicly-held company in which ConAgra Foods owns a majority interest, and consolidates for GAAP accounting purposes. 1 International India Me
Slide 25: Agro Tech Foods Limited
Agro Tech Foods Limited ConAgra foods
Slide 26: Canada
26 Canada
Slide 27: Canada: A leader in Frozen
Canada: A leader in Frozen 27 Growing share with 15-20% price premium Most significant innovation in a decade Strong retailer support $ Share - Health & Wellness 27.7 24.4 23.9 28 26 24 22 Healthy Choice Lean Cuisine selections Smart Ones Source: Nielsen MarketTrack: National GB+DR+MM – Dollars – L5
Slide 28: Del Monte Canada acquisition
Del Monte Canada acquisition 28 Acquisition pending; anticipate close in Q4 FY12 $150 million in sales Tomatoes Vegetables Fruit and fruit snacks Del Monte Canada acquisition • • Acquisition pending; anticipate close in Q4 FY12 • • $150 million in sales • • Tomatoes • • Vegetables • • Fruit and frui
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Slide 30: Private label: Growing and important to customers
Private label: Growing and important to customers Consumer appeal Retailers expanding offerings Strong market share potential 30 Focused on high opportunity private label categories Private label: Growing and important to customers • • Consumer appeal • • Retailers expanding offerings • • Strong mar
Slide 31: Great success in bars business
Great success in bars business 31 FY08 FY09 FY10 FY11 FY12 (est.) 250 220 190 160 130 100 Bars business trends – net sales FY08 – FY12 (est.) +18% CAGR Includes acquisitions Great success in bars business FY08 FY09 FY10 FY11 FY12 (est.) Bars business trends – net sales FY08 – FY12 (est.) +18% CAGR
Slide 32: Recent acquisition: National Pretzel Company
Recent acquisition: National Pretzel Company 32 Sales approaching $200 million 7% sales CAGR over 3 years Salty snacks: strong growth potential Recent acquisition: National Pretzel Company • • Sales approaching $200 million • • 7% sales CAGR over 3 years • • Salty snacks: strong growth potential
Slide 33: private,
private, label : 1 - inf best places citizenship +o work
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Slide 36: André Hawaux, President Consumer Foods
36 André Hawaux, President Consumer Foods
Slide 37: VAoVAI
VAoVAI l iA CO 1 UXT J YAY 7
Slide 38: Consumer Foods growth focus
Consumer Foods growth focus 38 Total $ Margin Management
Slide 39: 2011 Kantar PoweRanking report
2011 Kantar PoweRanking ® report ConAgra Foods moves from #9 to 39 #8
Slide 40: Five key areas of focus
Adopting best-in-class pricing and trade practices Driving category growth Developing win-win multi-year joint business plans Presenting ONE ConAgra Foods voice Five key areas of focus Establishing customer P&Ls as key measurement • • Adopting best-in-class pricing and trade practices • • Driving ca
Slide 41: Customer Connect strategies
Customer Connect strategies 41 Customer-facing organization redesign New Customer Development capabilities Joint Business Planning Customer Connect strategies Customer-facing organization redesign New Customer Development capabilities Joint Business Planning
Slide 42: Customer-facing redesign
Customer-facing redesign 42 One ConAgra Foods voice Decision making closer to customer “General business managers" Delivering growth and profit with valued solutions across categories Customer focused Collaborative and simplified Accountable Customer-facing redesign One ConAgra Foods voice Decision
Slide 43: Customer development capabilities
Customer development capabilities 43 Category Plan Commercialization Revenue Growth Management Customer Insights and Analytics Shopper Marketing In-Store Experience Customer and margin impact! Customer development capabilities Category Plan Commercialization Revenue Growth Management Customer Insigh
Slide 44: Revenue Growth Management
Revenue Growth Management 44 Creatig one centralized team focused on holistic revenue growth Establishing a consistent approach to pricing and trade Employing specialists to deliver robust pricing and trade analytics Building pricing mindset across the organization Revenue Growth Management
Slide 45: Pricing progress
Pricing progress Q4 FY11 Q3 FY11 Q2 FY12 Q1 FY12 Indexed Net Realized Price 45 100 104 104 105 95 100 105 Pricing progress Q4 FY11 Q3 FY11 Q2 FY12 Q1 FY12 Indexed Net Realized Price
Slide 46: Joint Business Planning (JBP)
Joint Business Planning (JBP) Two-way dialogue with customers Category growth focus Strategic, multi-year planning Tailored to customers’ specific needs Engaging the full organization 46 • • • • •
Slide 47: Frozen success
+ 2% CAGR +4% CAGR + 1.7 pts. + 3.1 pts.* Frozen success 47 *IRI all outlet HH Panel dollar share SSM 52 week ending 6/29/2008 and 52 week ending 9/25/2011, FY12 Forecast FY2008 to FY2011 progress ConAgra Foods frozen success: $2.0 billion and growing Volume Net Sales Gross Margin Share
Slide 48: Frozen Recipe for Growth
Frozen Recipe for Growth 48 Steaming MicroRite Tray Adjacencies MicroRite® (trademark and technology) is owned by Graphic Packaging International, Inc. (GPI)
Slide 49: Frozen desserts are a growing adjacency
Frozen desserts are a growing adjacency 49 $2 billion category (retail $) Occasion/flavor innovation Distribution expansion Strategic acquisitions $50 million + CAG sales growth over last 2 years Frozen Pie Category & Share Trend (All Outlet Dollars, 12-week Holiday Period) Source: IRI All Outlets s
Slide 50: Marie Callender's/Reddi-wip
50 Marie Callender’s/Reddi-wip
Slide 51: Healthy Choice Greek Frozen Yogurt
Healthy Choice Greek Frozen Yogurt Deliciously thick and creamy Made with healthy ingredients like real fruit and yogurt cultures Perfectly portioned at only 100 calories 51 • • •
Slide 52: Health and nutrition bars
Health and nutrition bars 52 20 SKUs 1150 Stores Strong takeaway 8 SKUs All divisions April 2012 ship date • • • • • •
Slide 53: Customer Connect transformation
Customer Connect transformation 53 Tactical pricer Multiple brand languages Sales quota driven ONE ConAgra Foods voice From To Multi-year strategic plans Category growth focus Strategic pricing and trade Short-term plans Brand-centric P&L focused sales leaders Customer Connect transformation Tactica
Slide 54: Cost savings
Cost savings ($ in millions) About $1.7 billion in savings delivered since beginning of initiatives in FY07 “Fuel” driven cost reductions Supplier collaboration Complexity reduction Plant optimization Network optimization Leverage SAP Base productivity $275 $240 $300 $300 $280 $275 FY07 FY08 FY09 FY
Slide 55: Supply Chain commitments FY13-15
Supply Chain commitments FY13-15 World Class Safety 99% Launch Fill Rate Top 3 Kantar Supply Chain 18% Cash Conversion Cycle Improvement 100% TEAM COMMITMENT Uncompromised Food Safety & Quality $200-250MM Annual Cost Reductions Supply Chain commitments FY13-15
Slide 56: Food safety recognition
Food safety recognition SQFI 2011 Quality Achievement Award Manufacturer of the Year Strong food safety culture driven by Leadership and employee commitment Behaviors, training and education Policies and procedures Recognition Investment 56 • • – – – – –
Slide 57: Consumer Foods growth focus
Consumer Foods growth focus 57 Total $ Margin Management
Slide 58: John Gehring, CFO ConAgra Foods
John Gehring CFO ConAgra Foods
Slide 59: Long-term goals
Long-term goals Sales growth of 3% annually EPS* growth of 6-8% annually ROIC* of 13-14% 59 *EPS and ROIC guidance discussed in this presentation has been adjusted for items impacting comparability. EPS guidance is based on diluted EPS, adjusted for items impacting comparability. The inability to pr
Slide 60: Financial priorities
Financial priorities Strong earnings and cash flows Healthy balance sheet and strong liquidity High-return capital allocation with top-tier dividend 60 1. 2. 3.
Slide 61: Operating cash flow
61 Operating cash flow Operating Cash Flow (continuing operations) *Excludes any FY12 discretionary pension contributions $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 FY 08 FY09 FY10 FY11 FY12* (est.)
Slide 62: Cash flow
Cash flow EPS: Long-term EPS* growth of 6-8% annually Working capital efficiency Capital expenditures Approximately $450 million/year FY13-15 Focused on growth and cost reduction *Diluted EPS, adjusted for items impacting comparability Target Operating Cash Flows $1.2 to $1.4 billion per year for th
Slide 63: Healthy balance sheet and strong liquidity
Healthy balance sheet and strong liquidity Strong investment grade credit rating Strong liquidity, improved financial flexibility Over $700 million of cash at end of Q2 FY12 Continued access to commercial paper markets $1.5 billion revolving credit facility in place for 5 years Manageable debt matur
Slide 64: Capital allocation: Dividends & organic growth
Capital allocation: Dividends & organic growth Dividend payout: Top tier Growth and profit enhancement investments New product and capacity expansion Supply Chain efficiency Dividends & Organic Growth 64 • • – –
Slide 65: Capital allocation: M&A process guidelines
Capital allocation: M&A process guidelines Category upside / position within category Customer need / relationships Potential for ConAgra Foods to improve through: Innovation Supply chain Distribution Operating leverage/scale Organic sales growth potential Margin structure EPS contribution ROIC Stra
Slide 66: Capital allocation: Share repurchase
Capital allocation: Share repurchase Recently increased program by $750 million As of Q2 earnings release (12/20/11): $780 million remaining Share Repurchase 66 • •
Slide 67: Fiscal 2012: Confirming guidance
Fiscal 2012: Confirming guidance Low- to mid-single digit EPS growth over $1.75* in FY11 Second-half expectations: Y-O-Y growth concentrated in Q4 Toughest inflation headwinds in Q3 Consumer Foods inflation 10% for full fiscal year Operating cash flow (continuing operations): $1.3B** 67 *Diluted EPS
Slide 68: Long-term goals
Sales growth of 3% annually EPS* growth of 6-8% annually Margin improvement Operating leverage Capital allocation ROIC* of 13-14% *EPS and ROIC guidance discussed in this presentation has been adjusted for items impacting comparability. EPS guidance is based on diluted EPS, adjusted for items impact
Slide 69: Summary
Summary Focus: strong earnings and cash flow, healthy balance sheet and liquidity, and high-return capital allocation Cash flow expected to support strong dividend and investments to drive sustainable business model FY12 EPS* on track Committed to EPS* growth of 6-8% long-term 69 *Diluted EPS, adjus
Slide 70: CAGNY 2012
70 CAGNY 2012
Slide 71: Appendix
Appendix 71
Slide 72: Appendix: Regulation G Reconciliation of FY11 diluted EPS
Appendix: Regulation G 72 Reconciliation of FY11 diluted earnings per share, adjusted for items impacting comparability. Amounts may be impacted by rounding. FY11 Diluted EPS Total FY11 Diluted EPS from continuing operations $ 1.90 Items impacting comparability: Expense related to restructuring char
Slide 73: Appendix: Regulation G Reconciliation of EBITDA
Appendix: Regulation G 73 Reconciliation of EBITDA to Income from continuing operations before income taxes and equity method investment earnings EBITDA: Income from continuing operations before income taxes, equity method investment earnings, depreciation and amortization. Fifty-two Weeks Ended Fif
Slide 74: Consumer Foods COGS
Consumer Foods COGS Major components $1.4 B $4.1 B Logistics Manufacturing Procurement $0.7 B COGS base % of procurement spend by commodity class (current FY12 est.) $6.2 B Proteins Fats & oils Dairy Grains and other ingredients Seeds and nuts Fruits, vegetables, legumes Sweeteners, starches, other