Dean Foods — Investor Presentation (November 2013)
33 slides from Dean Foods's investor presentation, Nov 19, 2013
Slide 1: FOCUS November 2013
FOCUS November 2013 Exhibit 99.1
Slide 2: Forward-looking statements
2 Forward-looking statements The following statements made in this presentation are “forward-looking” and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995: statements relating to (1) projected sales (including specific product lines and the compa
Slide 3: Today's agenda
3 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 4: Who we are
4 1. Source IRI 2. As of 11/13/2013 Who we are Trusted regional brands: 50+ Manufacturing facilities: 70+ Total employees: 19,000 Nearly 3.0B gallons produced annually Over 37,000 points of distribution More than 2/3 of U.S. households purchase a Dean Foods branded product annually NYSE: DF Market c
Slide 5: Today's agenda
5 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 6: Strong management team and vision
To be the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion 6 Marty Devine Chief Commercial Officer Strong management team and vision Gregg Tanner Chief Executive Officer Rachel Gonzalez General Counsel Kim Warmbier Chief HR Officer Shay Braun Operations
Slide 7: Operational imperatives
Never compromise on quality, safety or customer service Volume Performance Cost Productivity Effective Pricing Drive volume growth at appropriate economic returns Gain share through low cost, high service, valued brands model Augment volumes with differentiated products like TruMoo ® Build on unique
Slide 8: Today's agenda
8 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 9: Dean Foods at a glance
9 Dean Foods at a glance Largest U.S. processor and distributor of fluid milk Portfolio of trusted brands, complementary products – milk, ice cream, cultured dairy products, creamers, ice cream mix, and other dairy Best-in-class nationwide distribution platform with extensive refrigerated “direct st
Slide 10: Distribution: Broad nationwide distribution across channels
Large Format 69% Small Format 11% Foodservice 13% School/Govt 7% 10 Distribution: Broad nationwide distribution across channels The country ’ s only coast-to-coast processor and distributor of fresh milk
Slide 11: Portfolio: Strength across the dairy case
26% DEAN BRANDED WHITE 40% PL WHITE AND FLAVORED 8% TRUMOO 11 Portfolio: Strength across the dairy case Dean Foods - fluid milk and more Dean Foods’ share of national branded fluid milk has increased over the past three years Ice cream, cultured products, creamers, juice, tea and water fill out the
Slide 12: Fluid Milk Category Dynamics
12 Fluid Milk Category Dynamics White milk is a compelling, sustainable market opportunity Ubiquitous: in 90% of U.S. homes, over $20B of annual U.S. retail sales One of the largest, most profitable categories for retailers Strong health & wellness credentials Industry remains fragmented, large soph
Slide 13: Scale: Dean Foods is the largest player in milk
13 Scale: Dean Foods is the largest player in milk We have the #1 or #2 position, as measured by sales of branded white milk, in 80% of the IRI defined geographies in which we operate 35% 34% 31% -150 Players averaging 0.2% share each
Slide 14: Brands: Growing TruMoo
1.SymphonyIRI MULO 14 Brands: Growing TruMoo Flavored milk is a $1B category, and TruMoo is the largest flavored milk brand TruMoo was recently ranked as the fourth most successful consumer packaged goods brand of 2012 by Information Resources, Inc. (IRI) TruMoo is Dean Foods ’ largest national bran
Slide 15: Portfolio: Ice cream
15 Portfolio: Ice cream Strong regional ice cream business Over $800 million in annual sales Mix of regional brands, foodservice, and private label Company-owned frozen distribution network
Slide 16: Dean Foods: Focused, disciplined, profitable
16 Dean Foods: Focused, disciplined, profitable Extend our sustainable competitive advantages Our relative size and capabilities afford us significant advantages versus our competitive set – we plan to extend those advantages Continued focus on cost, volume outperformance, effective pricing Lay the
Slide 17: Extend our sustainable competitive advantages: Manufacturing and Procurement
17 Extend our sustainable competitive advantages: Manufacturing and Procurement Accelerating cost reduction across the P&L – targeting $120 million in 2013 savings Large network provides opportunities to reduce capacity to drive efficiency and unit costs lower – in the process of closing 10-15% of p
Slide 18: Extend our sustainable competitive advantages: Logistics
18 Extend our sustainable competitive advantages: Logistics We have a significant opportunity to drive additional logistics savings Leveraging technology XataNet GPS units provide detailed analysis of location, speed, stop length, etc. Also eliminates roughly 45 min per day of driver paperwork RoadN
Slide 19: Extend our sustainable competitive advantages: Pricing and Selling
19 Extend our sustainable competitive advantages: Pricing and Selling Passthrough is an effective hedge against most milk commodity volatility Prices are reset monthly in concert with changes in Class I mover Customers expect and accept these changes We have developed and are implementing technology
Slide 20: Building long-term opportunities to grow
20 Building long-term opportunities to grow Investing in the R&D pipeline Historical spending was skewed toward WhiteWave and Morningstar We have the opportunity to utilize our broad manufacturing and distribution capabilities for expansion into new value-added products and extensions Expect to begi
Slide 21: Today's agenda
21 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 22: Financial performance
$6.7B $9.3B* 9/30/13 Leverage Ratio *** : 1.64x Market Capitalization: $1.7B 22 3Q13 YTD 2012 *On a rebased basis, excluding among other items the results of Morningstar and WhiteWave, See Reconciliation of Non-GAAP Financial Measures in the appendix to this presentation for computation and reconcil
Slide 23: Volume and operating profit performance
*See Reconciliation of Non-GAAP Financial Measures in our earnings releases for the relevant quarters and in the appendix to this presentation for computations and reconciliations 23 Volume and operating profit performance Adjusted Operating Income per Gallon ($) $66 $71 $62 $74 $65 $42 $57
Slide 24: Dramatic debt and leverage reduction
Overview **Net debt is total long term debt less all cash on hand. Calculated per Dean Foods credit agreement would be 2.3x 24 Dramatic debt and leverage reduction Ongoing Dean Foods Net Debt $ Millions • $1.6B of Dean Foods net debt reduction this year • Q3 total net debt of $671 million • Q3 net d
Slide 25: Focus on cash flow generation & total shareholder returns
25 *Free cash flow is a non-GAAP measure and is defined as net cash provided by continuing operations less capital expenditures Free Cash Flow Growth Productivity Investment Growth Investment Debt Paydown Share Repurchase and Regular Dividend Focus on cash flow generation & total shareholder returns
Slide 26: Approval of dividend policy instituting regular quarterly dividends
26 Approval of dividend policy instituting regular quarterly dividends • Expected initial dividend rate of $0.07 per quarter beginning in Q1 2014 • Provides solid return for stockholders while maintaining flexibility Increase in amount available for share repurchases to $300 million • Additional too
Slide 27: 2013 Expectations
27 * See Reconciliation of Non-GAAP Financial Measures in the Q3 2013 earnings release earnings tables for computation Q4 Adjusted Diluted EPS* FY 13 Adjusted Diluted EPS* FY 13 Adjusted EBITDA* FY 13 Capital Expenditures FY 13 Adjusted FCF $0.85 - $0.91 per share Approximately $391 – 400 million Ap
Slide 28: Today's agenda
28 Today ’ s agenda Who we are Leadership team, vision and direction Business strategy and company advantages Financial performance Conclusion
Slide 29: Summary
29 Summary We have built sustainable competitive advantages through our scale and capabilities. We are working to extend these advantages. We are putting pieces in place to build for the future through: Reducing and variablizing our cost structure Improving pricing tools and protocols to reduce vola
Slide 30: Reconciliation of Non-GAAP Financial Measures (cont)
30 Appendix: Reconciliation of Non-GAAP Financial Measures (cont) DEAN FOODS COMPANY Reconciliation of GAAP to Adjusted Operating Income (Unaudited) (In thousands) Twelve months ended December 31, 2012 Adjustments to GAAP GAAP Asset write-down and (gain) loss on sale of assets Facility closing and r
Slide 31: Reconciliation of Non-GAAP Financial Measures (cont)
31 Appendix: Reconciliation of Non-GAAP Financial Measures (cont) Three months ended March 31, 2012 Adjustments to GAAP GAAP Asset write-down and (gain) loss on sale of assets Facility closing and reorganization costs Deal, integration and separation costs WhiteWave separation and discontinued opera
Slide 32: Reconciliation of Non-GAAP Financial Measures (cont)
32 Appendix: Reconciliation of Non-GAAP Financial Measures (cont) Three months ended September 30, 2012 Adjustments to GAAP GAAP Asset write-down and (gain) loss on sale of assets Facility closing and reorganization costs Deal, integration and separation costs WhiteWave separation and discontinued o
Slide 33: FOCUS November 2013
FOCUS November 2013