Mead Johnson Nutrition — Barclays Global Consumer Staples Conference 2016
18 slides from Mead Johnson Nutrition's conference presentation, Sep 7, 2016
Slide 1: Barclays Global Consumer Staples Conference
September 7, 2016 Barclays Global Consumer Staples Conference Michel Cup Executive VP and CFO
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 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,” “
Slide 3: Virtuous Circle of Financial Discipline and Growth
Virtuous Circle of Financial Discipline and Growth 3 Our Core Growth Strategies • Continue investment in science and innovation • Create superior brands • Create compelling, value-added propositions for consumers • Lead digital marketing conversion Financial Discipline Investment Growth
Slide 4: Strategic Roadmap Outlined at 2015 Investor Day
Strategic Roadmap Outlined at 2015 Investor Day 4 2017 2018 & Beyond2016 • Financial discipline • Focused investments • Expand China distribution in growth channels • Contribution from new growth initiatives • Emerging Markets expected to stabilize • Drive Toddler scale in North America to offset WI
Slide 5: First Year Progress of Our Strategic Roadmap
First Year Progress of Our Strategic Roadmap 5 Building short-term growth momentum is slower than previously expected • Fuel for Growth ahead of schedule • Launching Run4Cash program Focused demand-generating investments: • Increasing digital marketing • Expanding in China’s growing channels • Devel
Slide 6: Financial Discipline
6 Growth Momentum Financial Discipline Focused Investment
Slide 7: Financial Discipline Initiative
Financial Discipline 7 Initiative Initial 2018 Commitment Updated 2018 Goal Gross Margin Productivity 3 - 4% of COGS 3 - 4% of COGS A&P Efficiency 50 -100 bps 100 bps Fuel for Growth $120 MM (2016: $60 MM) $180 MM (2016: $75-80 MM) EBIT Margin Increase 300 bps 300 bps to ~ 27% EBIT margin Run4Cash ‒
Slide 8: Initiating Run4Cash Program
Initiating Run4Cash Program Focusing on Operating Working Capital (OWC)* * Operating Working Capital is defined as Inventory plus Accounts Receivable less Accounts Payable balance. 8 • 3Q program initiated for accounts payable • Focused on supply chain opportunities • Expect < 5% OWC by 2018
Slide 9: Fuel for Growth Expected to Deliver $180 Million by 2018
Fuel for Growth Expected to Deliver $180 Million by 2018 9 Original $ 120 MM Incremental $ 60 MM • Renegotiate key vendor contracts • Eliminate discretionary spend • Organizational optimization • Reduce outside services (e.g. consultants) • Simplification + standardization • Increase span of control
Slide 10: A&P Efficiency of 100bps Expected by 2018
A&P Efficiency of 100bps Expected by 2018 10 A&P as % of Net Sales Actions to Optimize A&P: • Prioritize investment choices to maximize ROI of key influence drivers • Optimize non-working media expenses • Leverage decision support tools better • Strengthen our focus on digital
Slide 11: Investment #1 Increasing Digital Marketing
Investment # 1 Increasing Digital Marketing (1) Trade investments represents Sales Discounts reported in Gross-to-Net Sales Adjustments. (2) Tencent, May 2016. Focused Investments 11 Demand-Generating Investments Trade Investments(1) Advertising & Promotion % of Gross Sales Digital: Nearly 30% of ad
Slide 12: Investment #2 Expanding in China's Growing Channels
Investment # 3 Developing Value-Added Offering Investment # 2 Expanding in China’s Growing Channels * MJN estimates based on multiple sources. Includes cross-channel sales; total of all channels exceeds 100%. Focused Investments 12 % of Category* Category Value MAT rates Aug. 2015 July 2016 Baby Sto
Slide 13: Enfinitas is Gaining Momentum
(1) Nielsen (2) MJN Offtake data Enfinitas is Gaining Momentum 13 Impactful Launch Retail Uptake(2)Distribution Reach in Baby Store(1)
Slide 14: Building Short-term Growth Momentum is Slower Than Expected
Building Short-term Growth Momentum is Slower Than Expected 14 • China strategy is working • Enfinitas and Enspire are gaining positive response • Corrective actions in Mexico result in improved sales growth • Strong market share gain in Canada • New U.S. innovation roll out • Macro economic challen
Slide 15: 2016 Guidance
(1) Guidance provided in the company’s earnings release on July 28, 2016. (2) GAAP EPS is likely to be impacted by future mark-to-market pension adjustments which cannot be estimated. 2016 Guidance 15 Net Sales GAAP EPS(2) Non-GAAP EPS Guidance(1) Constant $ 0% to (2%) Reported $ (5%) to (7%) Commen
Slide 16: Strategic Roadmap Progress
Strategic Roadmap Progress 16 2017 2018 & Beyond2016 Transition Building Growth Momentum Drive Profitable Growth • Strategy Remains Compelling • Continue to Invest in Our Future • Disciplined Approach to Cost Management • Creating an Stronger and More Agile Company • Commitment to Shareholder Value
Slide 17: Reconciliation of Non-GAAP to GAAP Results
Reconciliation of Non-GAAP to GAAP Results This presentation contains non-GAAP financial measures, each of which is listed in the tables below. The items included in GAAP measures, but excluded for the purpose of determining non-GAAP financial measures, include significant income/expenses not indica
Slide 18: Reconciliation of 2016 Guidance
Reconciliation of 2016 Guidance Low End High End Reported Sales (7%) (5%) Less impact of Foreign Currency (5%) (5%) Constant Dollar Sales (2%) 0% GAAP Earnings per Share * 2.91$ 3.03$ Less Specified Items 0.57 0.57 Non-GAAP Earnings per Share 3.48$ 3.60$ * GAAP guidance is likely to be impacted by p
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