DPS CAGNY 2010

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Dr Pepper Snapple Presentation at 2010 Consumer Goods Analyst Conference

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<ul><li> 1. CAGNY February 17, 2010 </li></ul> <p> 2. Safe Harbor Statement This release contains forward-looking statements within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Actof 1934, as amended, including, in particular, statements about future events, futurefinancial performance, plans, strategies, expectations, prospects, competitiveenvironment, regulation, and cost and availability of raw materials. Forward-lookingstatements include all statements that are not historical facts and can be identified by theuse of forward-looking terminology such as the words may, will, expect, anticipate,believe, estimate, plan, intend or the negative of these terms or similarexpressions. These forward-looking statements have been based on our current viewswith respect to future events and financial performance. Our actual financial performancecould differ materially from those projected in the forward-looking statements due to theinherent uncertainty of estimates, forecasts and projections, and our financialperformance may be better or worse than anticipated. Given these uncertainties, youshould not put undue reliance on any forward-looking statements. All of the forward-looking statements are qualified in their entirety by reference to the factors discussedunder Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the yearended December 31, 2008 and our other filings with the Securities and ExchangeCommission. Forward-looking statements represent our estimates and assumptions onlyas of the date that they were made. We do not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, after thedate of this presentation, except to the extent required by applicable securities laws. 3. Strong Portfolio of Brands with Leadership PositionsFlavored CSDs Juice &amp; Juice DrinksPremium Tea Mixers Gourmet CSDs 4. Priority Focus Brands Drive Over 70% of Volume 5. And Generate Over $8bn in Retail Sales Estimated Retail Sales (Millions) $0$200$400 $600$4000 Source: The Nielsen Company and company estimates of non-measured channels including fountain foodservice. Estimates include sales by third-party bottlers and distributors. 6. Portfolio Also Contains Leading Regional, New and Allied Brands 7. Flavored CSDs Drive 80% of Our Business and Are Growing Flavored CSD Category Mix DPS Dollar Share(Retail Sales Dollars)Change 2009 vs 200650.6% 41.3% 49.3% 39.2% 48.3%47.8% 46.3% +2.1pts 20052006 20072008 1/2010 Flavored CSDs Source: The Nielsen Company U.S. Only 8. Route to Market is Broad, Balanced and Flexible Company Owned Distribution ~ 40%Fountain Foodservice ~ 10%Warehouse ~ 10%Bottling Partners ~ 40% 9. Spun-Off 5/08, DPS is an Amalgamation of Many Brand and Bottling CompaniesDr Pepper/7UP Companies, Inc.Manufacturing &amp; Distribution AssetsDallas / Fort Worth Dr Pepper Bottling Company Dr Pepper Bottling Company of Waco Seven Up Bottling Company of Waco Kemmerer Bottling Seven Up Bottling of IN / Northern KY Joyce Beverages Midwest Racine Seven Up Dr Pepper Bottling Co of Houston 7Up Detroit Inc. Beverage Management (OH) Full Service Beverage Co of Houston Snapple Beverage Corp.Metro Beverages, Inc. (Eastern IN) Klages (Akron, OH) Seven Up Bottling Co. of Dallas Mid-Continent Bottlers, Inc. A.J. Canfield Co. American Juice Co. Iowa Beverages All American Bottling Corp. (Rockford, IL) Dr Pepper Bottling Co. of Galveston Big Red Distributors, Inc. (Waco) All American Bottling Corp. (Minneapolis) Seven Up Bottling Company of Topeka All American Bottling Corp. (WV) Corsicana Dr Pepper Bottling Co. 7Up RC Bottling Company of Southern CA Duffy Motts Co.Select Beverages Beverages America Cotton Club of Cleveland, OH Iowa Beverage Manufacturers Metro Beverages, Inc. (Eastern IN) Big Red Bottling of South TX Skyline Beverages of WV Weinstein Beverage Co. of Spokane, WA AABC (CO, OK, TN, KY, AR, MI) Easley SeaBev 10. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 11. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 12. Priority Focus Brands Have Significant Growth Opportunities 8 oz Servings Per Capita238Goal = 100Goal = 20 26 62 11Average Top State Average Top StateJuice33Goal = 20 Goal = 5553AverageTop State Average Region Top Region Source: The Nielsen Company YTD 12/26/09 13. Dr Pepper is Americas Oldest Major Soft Drink Brand 14. And Still Has Plenty of Room to Grow DP Volume 288 oz DP Volume Share % CAGR +3.2 pt +4%198920091989 2009 8 oz Servings Per Capita Household Penetration % 215 62 3762 DP #1 CSD DP#1 CSD Source: The Nielsen Company and Nielsen Homescan YTD 12/26/09 15. Fountain Expansion is Driving Awareness and Trial Max &amp; Ermas R % Outlets 0% 20%40% 60% 80% 100% Source: Company specific data 16. Dr Pepper Cherry is Bringing in New Users and Growing the Base % HH Penetration Cherry is prompting additional light user purchases and 37.2bringing in new users 2.4pts23.7 CherryOnly15.09.6 DP TM DP Reg DP Diet DP Cherry # of Display Growth vs. LY+10% +2% DP TMDP TM ex Cherry Source: The Nielsen Company and Nielsen Homescan, Total US, 52 WE 10/31/09 17. Snapple Premium Restage is Working ACV% 16oz 6 pack Grocery 78787775 73 68564930 138 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/0916oz 6 pack Growth Cases vs 20082/09 3/09 4/09 5/09 6/09 7/09 8/099/09 Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting. 18. Exploiting $4bn Value-Tea Category with Multi-Pack PET ACV% 16.9oz 12 pack Grocery 51 52 51 50 49 5047 50 3730 20 23 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09Growth Cases vs 20081/09 2/093/094/095/09 6/097/09 8/09 9/09 Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting. 19. And Testing $0.79 Pre-Priced Cans 20. Motts #1 or #2 in Cost Advantaged Locations # 1 or # 2 #1 or #2 positionSource: The Nielsen Company U.S. Only 21. West Coast Capacity and Strong Innovation are Key Enablers 22. Crush Expansion Exceeding Expectations Highlights Latent Potential of Our Brands 23. Surrounding the Consumer Merchandising and POSDr Love Targeted PrintNational Media Massive Sampling 24. Where They Shop 25. Where They Play 26. Outdoor 27. Online 28. On TV 29. Run Commercials 30. Investing Behind Our Brands While Driving Down Costs GRP Growth vs. LYQ1 Q2 Q3 Q4 Cost per GRP down 10% Source: GRPs measured through The Nielsen Company, Arbitron and internal reporting 31. Brand Health Continues to ImproveTotal Brand Awareness+2 pts +3 pts+2 ptsQ1 Q3 Q1Q3 Q1Q3 Source: Ipsos 2009 32. Strong Innovation Pipeline Starts with Best-In-Class R&amp;D CapabilitiesKey Capabilities Flavors Sensory Science Sweeteners Antioxidants Vitamins &amp; Minerals Approved Functional Ingredients Emerging Functional Ingredients Nutrition, Claims &amp; Labeling Analytical Chemistry / Food Safety Process Development / Scale Up Technical Data Management 33. 2010 Line-up is Strong and Supports Continued Business MomentumMulti-Year Platforms 2010 New Products 34. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 35. Mixer Restage and New Capacity on Track 36. Venom Growing One Bottle at a Time ACV% Distribution 60 61 61 53 56 58 5850 52 4641 361/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/0911/0912/09Growth Cases vs 20081/09 2/093/094/095/09 6/097/09 8/09 9/09Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting. 37. Leveraging Allied Brands to Fill in Gaps and Leverage Asset Base 38. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 39. 5 Year Cold Drink Program on Track, Despite Tough EnvironmentCoolers Per 10,00035K Incremental Coolers Per Year Head of Population 186 Now 2 billion serving occasions over5 years 151 SW9 Pacific 4116NE9 Central/SE8 81 46 5 Year 1036 353535 35GOAL 23 2008 2009 2010 2011 2012 2013 40. Placements Driving Awareness and Returns 41. Balanced Routes to Market Enables Full Price/Pack ParticipationCompany Owned/ Bottling Partners Independent System 42. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 43. Changing Landscape Requires Continuous Improvement Consumer Insights Shopper Insights Innovation Local Marketing /Customer Development Demand Planning /Vendor Managed Inventory Technology (ASN, EDI, RFID, etc.) 44. Customer Results And Feedback Are Clear 45. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 46. 5 Year Supply Chain Optimization Journey Nearing CompletionFive Regional Centers Hub and Spoke Distribution1. South (2006-07) 4. West Coast (2009-10)2. Southeast (2008-09) 5. Midwest (2010-11)3. Northeast (2009) 47. Victorville, CA Regional Center on Schedule and on Budget 48. Core IT Infrastructure in Place Expanding SAP to Warehouse Direct Business and Mexico 49. Instilling One Set of Behaviors the Foundation of Our People Strategy 1. Laying the Foundation2. Mobilizing 3. Building Our BenchTying PerformanceCall to ACTION to OperationalWorkshops MetricsDPS Campus 50. Ensuring Environmental Sustainability as We Optimize 51. Focused on Delivering Against a Set of Key Priorities Build and Enhance Leading Brands Exploit Opportunities in High Growthand High Margin CategoriesIncrease Presence in High Margin Channels and Packages Leverage Integrated Business ModelStrengthen Route-to-Market Improve Operating Efficiencies 52. Building Revenue and Margin Management Capabilities Insights to improve decision-making Transparency into what works Enable better conversations with our customersDrive Productivity to Fuel Growth 53. Making Better Decisions with Real-Time and Consistent Information Improved sales and route analytics Better fleet utilization Greater sales efficiency Improved Customer Service 54. Leveraging Best-in-Class Procurement Processes2010 Priorities 8 step strategic sourcing process Formula and packaging optimization Reverse engineering of flavors Indirect and capital procurement Low cost country sourcing 55. Productivity Office Funding Continuous Improvement InitiativesProductivity Office Savings Impact Annual InvestmentsOngoing Savings 2009 20102011 2012 20132014 56. Results Show Our Focused Strategy is WorkingBuild and Enhance Leading BrandsExploit Opportunities in High Growth and High Margin Categories Increase Presence in High MarginChannels and PackagesLeverage Integrated Business Model Strengthen Route-to-MarketImprove Operating Efficiencies 57. Brands + Execution = Long Term Growth+ Volume/Price/Mix Net Sales + Distribution gainsGrowth 3-5%+ Cold drink equipment + Innovation+ Revenue growthEPS Growth + Operating efficiencies/High-single-digitcrush costs + Below-the-line leverage 58. Confident in Long-Term Algorithm Despite Significant Headwinds Challenges Responses Changing Consumer insightsconsumer needs Product / package innovationand demographics Availability Coastal, Hispanic, etc. Economic Constantly delivering consumer valueuncertainty Crushing costs Commodity costs Balanced pricing Mix management World class supply chain/procurement Productivity / Supply chain efficiency US/Canada/ Leading brands with significantMexico focus growth opportunities Execution excellence. distribution and availability 59. Packaging and Ingredients Drive 65% of COGS COGS Key Ingredients Components Sweeteners Apple / Juice ConcentratesIngredients Flavors / Colors ~20%Key Packaging Components Packaging ~45% Cans / Ends Bottles / Caps Glass Corrugated / Paperboard Labels / Films 60. Hedging and Procurement Best Practices Ensure Cost Visibility Aluminum Net Corn Key ItemsCovered Apple Juice Concentrate Natural Gas Heating Oil Min / max coveragepoliciesGovernance CommodityPurchasing Committee 61. Consistently Delivering Strong Net Income to Free Cash Flow Conversion Net Income to Free Cash Conversion %124%86% 87%75%2006 200720082009 Q3YTD Source: Reconciliation of non-GAAP financial measures can be found under the investor section at www.drpeppersnapple.com. 62. Opportunities Exist to Drive Additional Working Capital ProductivityA/RINVENTORY Reduce invalid deductions Drive forecast accuracy Credit to cash process Vendor managed inventory optimization Safety stock managementA/P Early pay discounts Vendor management Terms standardization Organizational capabilities CASH CONVERSION CYCLEKEY OPERATIONAL METRIC 63. Continuing to Invest in the Business to Fuel GrowthCapex % Net Sales Growth / Efficiencies Maintenance5% 5% 5%5%5%2008 2009 201020112012 64. Rapidly Approaching Our Target Capital Structure$1,200 Adjusted* Total Debt / EBITDA Target = 2.25x 10 yr note @ 6.82% $655 5 yr note $450@ 6.12%$400 3 yr noteCredit $2502 yr note@ 2.35%Facility@ 1.70% L + 200 30 yr note($405) @ 7.45% $0 2010 20112012 2013//2018// 2038 *Adjusted for unfunded pension liabilities, operating leases, stock-based compensation expenses and other items 65. Priorities for Free Cash Flow are Clear Achieve and maintain target capitalstructure Build modest cash reserves to maintainliquidity and financial flexibility Return excess cash to shareholdersover time 66. Key Takeaways Strong portfolio of brands with leadership positions Journey to integrate collection of powerful assets on track Focused on delivering against a set of key priorities Brands + Execution = Long Term Growth </p>