Mead Johnson Nutrition — FY2015 Earnings Presentation
23 slides from Mead Johnson Nutrition's earnings presentation, Jan 28, 2016
Slide 1: Fourth Quarter and Full Year 2015 Earnings Call Presentation
Fourth Quarter and Full Year 2015 Earnings Call Presentation January 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: Net Sales Development
Net Sales Development $ in Millions Q1 Q2 Q3 Q4 2015 Full Year Sales $1,094 $1,032 $978 $967 $4,071 vs. 2014, Constant $ 3% (3%) (4%) (6%) (2%) Foreign Exchange (5%) (4%) (6%) (6%) (6%) Impact vs. 2014, Reported $ (2%) (7%) (10%) (12%) (8%) 3
Slide 4: Foreign Exchange Impacted Sales by $229MM in 2015
Foreign Exchange Impacted Sales by $229MM in 2015 $ in Millions, except for per share data Foreign Exchange Q1 Q2 Q3 Q4 2015 Impact on: Full Year Net Sales ($56) ($43) ($69) ($62) ($229) (5%) (4%) (6%) (6%) (6%) EPS ($0.03) ($0.03) ($0.09) ($0.10) ($0.26) 2013 2014 2015 Favorable FX Impact Unfavorab
Slide 5: Gross Margin Improved by 270 bps in 2015
Gross Margin Improved by 270 bps in 2015 Non-GAAP Q4 2015 Full Year 64.6% 63.9% +200bps +270bps 61.9% 61.9% 2014 Dairy Productivity Manufacturing Foreign 2015 2014 Dairy Productivity Manufacturing Foreign 2015 & Other Exchange & Other Exchange Commodities Commodities 5
Slide 6: Q4 SG&A Costs Down 6% versus Last Year
Q4 SG&A Costs Down 6% versus Last Year $ in Millions Non-GAAP Q4 2015 Full Year vs. 2014 vs. 2014 Actual Constant $ % of Sales Actual Constant $ % of Sales A&P $151 7% 15.6% $642 6% 15.8% SG&A $212 (6%) 21.9% $884 0% 21.7% R&D $29 4% 3.0% $108 2% 2.6% Other Expense $7 * 0.7% $15 * 0.4% Total OpEx $3
Slide 7: Fuel for Growth Starts to Deliver Lower Costs
Fuel for Growth Starts to Deliver Lower Costs Constant $ OpEx(1) Corporate & Other Costs(2) Headcount • First signs of Fuel for Growth • 3% Global Reduction savings from ~7,900 to ~7,700 R&D Corporate Headcount Marketing G&A 2014 Full Year 2015 Full Year 1st Half '15 2nd Half '15 Jun 2015 Dec 2015 (
Slide 8: 2015: EBIT Margin Improved 30 bps
2015: EBIT Margin Improved 30 bps $ in Millions Non-GAAP Q1 Q2 Q3 Q4 2015 Full Year EBIT $300 $222 $239 $220 $981 vs. 2014, Constant $ 4% (10%) 7% (3%) 0% vs. 2014, Reported $ 1% (13%) (3%) (13%) (7%) EBIT Margin 27.4% 21.5% 24.5% 22.7% 24.1% Change vs. 2014 +80bps -160bps +190bps -30bps +30bps 8
Slide 9: Asia
Asia $ in Millions 4Q 2015 2015 Full Year Change vs. 2014 Change vs. 2014 Actual Constant $ Reported Actual Constant $ Reported Sales $468 (10%) (15%) $2,039 (8%) (11%) EBIT $140 (24%) (28%) $682 (16%) (17%) EBIT Margin 29.9% -570bps 33.4% -250bps 9
Slide 10: Latin America
Latin America $ in Millions 4Q 2015 2015 Full Year Change vs. 2014 Change vs. 2014 Actual Constant $ Reported Actual Constant $ Reported Sales $170 (4%) (18%) $757 3% (13%) EBIT $34 15% (26%) $175 18% (12%) EBIT Margin 20.1% -220bps 23.1% +20bps 10
Slide 11: North America & Europe
North America & Europe $ in Millions 4Q 2015 2015 Full Year Change vs. 2014 Change vs. 2014 Actual Constant $ Reported Actual Constant $ Reported Sales $329 0% (3%) $1,275 4% 1% EBIT $97 14% 8% $362 29% 24% EBIT Margin 29.4% +270bps 28.4% +540bps 11
Slide 12: 2015 Financial Results: From EBIT to Net Income
2015 Financial Results: From EBIT to Net Income $ in Millions, except for per share data Non-GAAP Q4 2015 Full Year vs. 2014 vs. 2014 Actual Constant $ % of Sales Actual Constant $ % of Sales EBIT $220 (3%) 22.7% $981 0% 24.1% Interest Exp. $22 56% $65 6% Tax $46 (2%) $227 9% ETR 23.5% 24.8% Net Inc
Slide 13: EPS Development 2015
EPS Development 2015 Non-GAAP Q4 2015 Full Year $0.17 $0.03 $0.48 $0.09 $0.16 $0.15 $0.10 $0.26 $0.26 $0.92 $3.74 $0.88 $3.70 $0.78 $0.78 $3.44 4Q 2014 Sales Gross OpEx & 4Q 2015 Foreign 4Q 2015 2014 Sales Gross OpEx & ETR 2015 Foreign 2015 Margin Other Constant $ Exchange Full Year Margin Other Con
Slide 14: Cash Balance Increased ~$400MM in 2015
Cash Balance Increased ~$400MM in 2015 $ in Millions Growth $326 $58 31% $726 $1,437 $1,499 $1,701 $1,298 Jan 1, 2015 Free Cash Dividends Share Proceeds Other December Flows Repurchase from New 31, 2015 Debt 14
Slide 15: 2016: A Year of Transition
2016: A Year of Transition Investor Day Full Year Guidance(1)(2) Constant $ Reported $ Sales modest growth 0% to 2% (4%) to (6%) EBIT Margin some accretion 24% to 25% Non-GAAP EPS mid single-digit $3.48 - $3.60 GAAP EPS(3) $3.36 - $3.48 (1) Guidance provided in the company’s conference call and pres
Slide 16: Appendix
Appendix 16
Slide 17: 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 18: Reconciliation of Non-GAAP to GAAP Results Q4
Reconciliation of Non-GAAP to GAAP Results Q4 Three Months Ended December 31, 2015 Three Months Ended December 31, 2014 $ in millions, except per share data (a) (a) Specified Items Specified Items Mark‐to‐ Mark‐to‐ As Market Fuel For As As Market As (b) (b) Reported Pension Growth All Other Adjusted
Slide 19: Reconciliation of Non-GAAP to GAAP Results Full Year
Reconciliation of Non-GAAP to GAAP Results Full Year Year Ended December 31, 2015 Year Ended December 31, 2014 (a) (a) Specified Items Specified Items $ in millions, except per share data Mark‐to‐ Market Mark‐to‐ Investigati and As Market on Fuel For As As Other As (b) (b) Reported Pension Settlemen
Slide 20: 2015 Total Operational Expenses and Net Earnings
2015 Total Operational Expenses and Net Earnings Three months ended 1 Non‐GAAP December 31, % Change Years Ended December 31, % Change $ in millions Constant Constant 2015 2014 Reported Dollar 2015 2014 Reported Dollar Selling, General and Administrative $ 211.7 $ 239.7 (12%) (6%) $ 883.8 932.9 (5%)
Slide 21: Price, Volume, Earnings Free Cash Flow
Price, Volume, Earnings Three Months Ended December 31, % Change % Change Due to Constant Foreign 2015 % of Total 2014 % of Total Reported Dollar Volume Price Exchange Asia $468.0 48% $548.6 50% (15%) (10%) (7%) (3%) (5%) Latin America 169.8 18% 207.8 19% (18%) (4%) (9%) 5% (14%) North America/Europ
Slide 22: 2015 EBIT as reported; Reconciliation of Sequential Sales
2015 EBIT as reported Three months ended EBIT as reported December 31, % Change Years Ended December 31, % Change $ in millions Constant Constant 2015 2014 Reported Dollar 2015 2014 Reported Dollar Asia EBIT $ 139.9 $ 195.3 (28%) (24%) $ 682.0 $ 818.7 (17%) (16%) Latin America EBIT 34.2 46.4 (26%) 1
Slide 23: Reconciliation of EBIT, quarterly periods 2015
Reconciliation of EBIT, quarterly periods 2015 2015 EBIT (in millions) 1Q 2Q 3Q GAAP $ 285.2 $ 229.2 $ 226.0 Adjustments: IT and other separation costs - - - Severance and other costs 2.3 - - Legal, settlements and related costs 0.7 (5.7) 1.6 Pension MTM Adjustment - (1.5) 11.4 Administrative penalt
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