Keurig Dr Pepper Inc. · NASDAQ:KDP
Keurig Dr Pepper — Dr Pepper Snapple Group — Merger or Acquisition (May 2018)
30 slides from Keurig Dr Pepper's merger presentation, May 9, 2018
Slide 1: Forward Looking Statements
Forward Looking Statements Certain statements contained herein are “forward-looking statements” within the meaning of applicable securities laws and regulations. These forward-looking statements can generally be identified by the use of words such as “anticipate,” “expect,” “believe,” “could,” “esti
Slide 2: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 2
Slide 3: Transaction Summary
Transaction Summary TRANSACTION OVERVIEW • Keurig Green Mountain (“Keurig”, “KGM”, or “the Company”) and Dr Pepper Snapple Group, Inc. (“Dr Pepper Snapple” or “DPS”) an nounced on January 29, 2018 that the companies have entered into a definitive merger agreement to create Keurig Dr Pepper Inc. (“KD
Slide 4: Transaction Structure
Transaction Structure SOURCES AND USES PRO FORMA CAPITALIZATION PRO FORMA ORGANIZATIONAL STRUCTURE Dr Pepper 4 Note: Reflects management’s assumptions of Keurig Dr. Pepper capitalization at transaction close Dr Pepper Snapple Group, Inc. to be renamed Keurig Dr Pepper Snapple Group, Inc. Subsidiarie
Slide 5: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 5
Slide 6: Key Credit Highlights
Key 1 Credit Highlights EXPOSURE TO VERY LARGE, STABLE AND HISTORICALLY PROFITABLE INDUSTRY WITH GREAT BRANDS • • $160 billion market, with historically high margins and multiple growth opportunities Highly cash generative portfolio of brands, with strong exposure to expected higher-growth categorie
Slide 7: Combining Two Industry Leaders with Iconic Brand Portfolios
Combining Two Industry Leaders with Iconic Brand Portfolios • • Leading player in flavored beverages in North America across all major categories Over 50 owned, licensed and allied brands with 9 of the 10 leading brands holding No. 1 or No. 2 position Powerful distribution system enables point-of-sa
Slide 8: Our Vision is Based on Hiding in Plain Sight a Simple but Powerful Insight
Our Vision is Based on Hiding in Plain Sight a Simple but Powerful Insight… OUR VISION: A beverage for every need, available everywhere people shop and consume 8 “Retail” Outlets Behaviors Shopper Formats/Brands Needs/Occasions Consumer
Slide 9: Combined Capabilities Creates a Selling and Distribution Powerhouse
Combined Capabilities Creates a Selling and Distribution SEVEN DISTINCT ROUTE-TO-MARKET MODELS OFFERS NEAR-UNIVERSAL COVERAGE Powerhouse 1 2 3 4 5 6 7 Company-Owned DSD Independent Distributor Partners Warehouse Direct COLA System Fountain & Foodservice capabilities across both brand 9 Strengths Str
Slide 10: Combined Brand Portfolio Enhances Scale and Extends into Higher Growth Segments
Combined Brand Portfolio Enhances into Higher Growth Segments Scale and Extends RTD Coffee CSDs Juice Water Sport / Energy RTD Tea Tea SS Coffee Category Retail $ Trends1 (1%) to 1% Non-Colas +1 to 2% (2%) to 0% Coconut +10% 3% to 6% 6% to 10% 6% to 10% +10% 0% to 2% +10% Dr Pepper Snapple Keurig Gr
Slide 11: Experienced Management Team that has Transformed the Business
Experienced Management Team that has Transformed the Business Chief Executive Officer at Keurig Green Mountain since 2016 • Previously served as CEO of Pinnacle Foods from 2009-2016, where he increased the value of the company six times and completed a successful IPO of Pinnacle in 2013 Formerly ser
Slide 12: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 12
Slide 13: JAB Holdings Overview
JAB Holdings Overview PRIVATELY-HELD JAB HOLDINGS IS FOCUSED ON SUPERIOR VALUE CREATION IN THE CPG AND RETAIL SECTORS • • Portfolio companies comprised of premium brands with attractive growth and strong margin dynamics JAB Investments are overseen by three senior partners—Peter Harf, Bart Becht, an
Slide 14: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 14
Slide 15: Keurig Green Mountain Has Transformed Under Private Ownership
Keurig Green Mountain FROM has Transformed Under Private TO Ownership Unfocused management drifted into non-core category pursuits and international expansion Business model reliant on IP to keep partners and consumers in the closed system Disciplined business model focused on single-serve coffee in
Slide 16: Building on the Strengths of KGM's Strategic Assets
Building on the Strengths of KGM’s Strategic Assets RETAIL GROWTH ENGINE POWER OF KEURIG BRAND DIVERSE CHOICES KGM is THE driver of dollar growth Over 75 leading owned, licensed and partner brands The Top 50 Brands for the coffee category $ Share Chg ’10–’17 US Coffee Retail Sales ($ Billion) $10 --
Slide 17: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 17
Slide 18: DPS' Iconic Brands are Leaders in their Categories
DPS’ Iconic Brands are Leaders in FLAVOR LEADERS IN US CARBONATED SOFT DRINKS their Categories LEADING NON-CARBONATED BRANDS #1 In its flavor category #2 Overall flavored CSD in US #2 Lemon-lime CSD in the US #1 Ginger ale in US & Canada #2 Premium shelf-stable RTD tea in US #1 Branded apple juice i
Slide 19: DPS has a Proven Growth Model through Allied Partnerships
DPS has a Proven Growth Model through Allied Partnerships Reaching Key Consumer Needs #1 Selling Premium Imported Water +156% $ Growth CAGR ‘15 to ‘17 #1 Coconut Water Brand Across all Channels #2 Cold Brew Coffee in the Convenience Channel Only Growing Sports Drink in 2017 +$150M Sales Growth from
Slide 20: Five Distinct Route-to-Market Models Enable Broad Reach of DPS' US Portfolio
Five Distinct Route-to-Market Models Enable Broad Reach of DPS’ US Portfolio 1 2 3 Concentrate National Company 4 5 Warehouse Independent (ISO) All Retail Outlets Primarily National and Regional Restaurants All Retail Outlets Direct to Large and Small Formats for Non-Franchised Brands Channels Throu
Slide 21: Agenda
Agenda Transaction Summary Strategic Rationale JAB Holdings Overview Keurig Green Mountain Update Overview of Dr Pepper Snapple Financial Overview • • • • • • 21
Slide 22: Financial Policy Overview
Financial Policy Overview • Initial combined company debt estimated at $16.6 billion including $12.4 billion of funded new debt(1) and cash and existing commercial paper program structure remains consistent 22 (1) Includes Bond, Term Loan A, Funded Revolver; (2) DPS currently has approximately $4.2b
Slide 23: Credit Assumptions
Credit Assumptions (1) DPS currently has approximately $4.2bn of notes (2) Reflects management’s assumptions 23 Keurig Dr Pepper Inc. KDP capital structure –Current DPS shareholders receive a $18.9 billion dividend, and 13% pro forma ownership of KDP on a fully diluted basis –$9.0 billion of new equ
Slide 24: KGM Transformation Delivered Meaningful Performance Improvement
KGM Transformation Delivered Meaningful Performance Improvement 1 Actual results presented on a 52-week basis 2 Change from 2015 to 2017 3 At time of JAB acquisition in March 2016 4 Net debt represents gross bank debt plus capital leases less unrestricted cash Note: Operating Income metrics are non-
Slide 25: KGM Working Capital Optimization and Strong Cash Flow Enabled Rapid Deleveraging
KGM Working Capital Optimization and Strong Cash Flow Generation has Enabled Rapid Deleveraging OPERATING WORKING CAPITAL % OF SALES • Inventory Reduction • Receivable Terms Improvement • Extended Payment Terms Industry-Leading Improvement ) DEC ‘17 Note: Operating Working Capital defined as Trade r
Slide 26: KDP Committed to Investment Grade Ratings
KDP Committed to Investment Grade Ratings BUSINESS STRENGTHS LONG-TERM ANCHOR EHOLDERS Significant scale with North America focus Committed long-term anchor shareholders in JAB, JAB’s partners and Mondelez Proven management team that is personally invested Expanding profit margins and strong cash fl
Slide 27: KDP Committed to Investment Grade Ratings
KDP Committed to Investment Grade Ratings QR 228 BUSINESS CONSERVATIVE LONG-TERM STRENGTHS FINANCIAL POLICY ANCHOR SHAREHOLDERS Significant scale with North America focus Rapid deleveraging, committed to achieving <3.0x in 2-3 years Committed long-term anchor shareholders in JAB, JAB’s partners and
Slide 28: Reconciliation of Maple GAAP Operating Income to KGM Non-GAAP Operating Income
Reconciliation of Maple GAAP Operating Income to KGM Non-GAAP Operating Income Three Months Ended Three Months Ended December 30, 2017 December 24, 2016 December 26, 2015 December 27, 2014 Fiscal 20173 - - + = Fiscal 2015 + = (unaudited) (unaudited) (unaudited) (unaudited) Maple GAAP Operating Incom
Slide 29: Reconciliation of Maple GAAP Income Before Tax to KGM Adjusted EBITDA
Reconciliation of Maple GAAP Income Before Tax to KGM Adjusted EBITDA Three Months Ended Three Months Ended December 30, 2017 December 24, 2016 December 26, 2015 December 27, 2014 Fiscal 20175 - - + = Fiscal 2015 + = (unaudited) 182 (unaudited) (unaudited) (unaudited) 209 Maple GAAP Income Before Ta
Slide 30: Reconciliation of Maple GAAP Income Before Tax to KGM Adjusted EBITDA
Reconciliation of Maple GAAP Income Before Tax to KGM Adjusted EBITDA _Theee Months Ended “These Months Ended December 30, December 24, calendar Year December 26, December 27, Calendar Year Fecal 20175 + 2017 2016 207 Fiscal 2015 2015 2014 2015 (naudited) unaudited) unaudited) (wnaudited) (unaudited
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