Sept 2009 Dean Foods DF Presentation

8/14/2019 Sept 2009 Dean Foods DF Presentation

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Barclays CapitalBack to School

Consumer Conference

September 9, 2009


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Forward Looking Statements

The following statements made in this presentation are forward looking and are made pursuantto the safe harbor provision of the Private Securities Litigation Reform Act of 1995: statementsrelating to (1) projected sales (including for individual segments, for specific product lines and forthe company as a whole), profit margins, net income and earnings per share, (2) our growthstrategy including acquisitions and the integration of such acquisitions, (3) our branding initiatives(4) our integration, innovation, and research and development plans, and (5) our cost-savings

initiatives. These statements involve risks and uncertainties that may cause results to differmaterially from those set forth in this presentation. Financial projections are based on a numberof assumptions. Actual results could be materially different than projected if those assumptionsare erroneous. Sales, operating income, net income, financial performance and adjustedearnings per share can vary based on a variety of economic, governmental and competitivefactors, which are identified in our filings with the Securities and Exchange Commission,

including our Forms 10-K and 10-Q (which can be accessed on our website atwww.deanfoods.com or the website of the Securities and Exchange Commission atwww.sec.gov). The Company's ability to profit from its branding initiatives depends on a numberof factors including consumer acceptance of the Company's products. All forward lookingstatements in this presentation speak only as of the date of this presentation. We expressly

disclaim any obligation or undertaking to release publicly any updates or revisions to any suchstatements to reflect any change in our expectations with regard thereto or any changes in theevents, conditions or circumstances on which any such statement is based. Certain non-GAAPfinancial measures contained in this presentation, including adjusted diluted earnings per share,free cash flow, and consolidated adjusted operating income, have been adjusted to eliminate thenet expense or net gain related to certain items identified in our press releases. A full

reconciliation of these measures calculated according to GAAP and on an adjusted basis iscontained in such press releases, which are publicly available on our web site atwww.deanfoods.com/investors.


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Fresh Dairy Direct

WhiteWave - Morningstar

Agenda


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Three-Part Strategy to Win

Extend OurLow Cost Position Drive Revenue &Profit in Our Core Invest forGrowth

Our Investment Thesis

Procure$50M

Distribute$50M

WhiteWave

$50M

NetworkOptimization

$65M

Convert$85


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Advantaged Business Platforms

Note: Reflects full year 2008 information. *Proforma for Alpro acquisition that was completed in July 2009. Alspo net sales have beenconverted at a rate of $1.4 / 1 for purposes of this presentation

#1 US fresh milk

National chilled

direct storedelivery andplant footprint

National sellingwith local

execution Cost leadership

Strategic focus

Value-addedbrands in growthcategories

#1 in global soy

#1 US organicmilk

#2 US creamers

Emerging fruit-based beverage

US leader in longshelf-life private

label dairy Strong

foodservice andretail presence

$1.9B$9.8B $1.1BNet Sales*

TransformationStatus BeginningEarly Stages Complete


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A Very Strong First Half of 2009

$0.56

$0.95

1H08 1H09

+70%

Adjusted Diluted Earnings per Share*

*See Reconciliation of Non-GAAP Financial Measures contained in our most recent earnings press releaseposted on the Dean Foods web site for computation of adjusted diluted earnings per share and Free Cash Flow

$210

249

1H08 1H09

+19%

Free Cash Flow*

($ millions)


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$95

135

1H08 1H09

$285

350

1H08 1H09

A Very Strong First Half of 2009

$301

384

1H08 1H09

+28%

Adjusted Consol idated Operating Income*

($ millions)

Segment Operating Income

($ millions)

+23%

+43%

*See Reconciliation of Non-GAAP Financial Measures contained in our most recent earnings press releaseposted on the Dean Foods web site for computation of consolidated operating income


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Extending our Advantage

WhiteWave - Morningstar

Agenda


9/2999

-0.4%

2.4%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

71%

9%

5%

5%8%

2%

Milk

Ice Cream

Fresh Dairy Direct: Category Leadership

Largest US processor anddistributor of milk and otherdairy products

Products sold under more than35 familiar local and regionalbrands and a wide array ofprivate labels

Proven pass-through dynamic

$9.8B revenue (2008)

22,000 employees

5,800 company owned DSD routes

83 plants;160,000 locations served

40+ acquisitions

Competitor estimates derived from subtracting FDD pounds from USDA sales pounds

2008 2009

Fluid MilkDean

CompetitorsOther

Beverages

CulturedOtherFluid Dairy

Other


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40%

35%

25%

Branded

3rd Party

PrivateLabel

Compelling Growth Opportunities

FDD: #1 share in milk

Three 2009 tuck-inacquisitions announced

Investing to drive DSD

capability

71%9%Milk

Ice Cream

$900 million in 2008 net sales

Improving profitability

Longer-term strategy under

development


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An Opportunity to Drive Significant Value

Local

Overly complexproduct portfolio

Everything toeveryone productionin each facility

Limited selling

capability Supply chain

inherited throughacquisition

Patchwork of ITsystems

National

Simplified productportfolio

Specialized, longerrun, lower complexityproduction

A national selling

powerhouse Optimized supply

chain based onanalysis

Integrated IT


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Winning Through Cost Leadership

A clear opportunity to lower our $11.8B* cost structure

Dean Productivity Target =

$5.4B

Milk

Procure

$300+ million over the next 3 to 5 years

PackagingFuelIngredientsMRO

*Total Dean Foods,~$9.2B for Fresh Dairy Direct


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Extend our Low Cost Position: Solid Progress

ConversionAccelerated KPI tracker and continuous improvement process rollout15% of FDD facilities through deep-dive continuous improvement training in 2009Offsetting inflation in conversion costs - flat YTD with favorable trends

Network OptimizationClosing four facilities in 2009Evaluating larger opportunities going forward

ProcurementConsolidated purchasing driving savings - on track for over $10 million in 2009 Increased efforts to standardize and simplify to drive to the next level of opportunity

Direct Store DistributionGPS technology rollout complete4% fewer gallons of diesel and flat employee costs YTD

$50M

$50M

$85M

$65M


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An Opportunity to Drive Significant Value

Local

Overly complexproduct portfolio

Everything toeveryone productionin each facility

Limited sellingcapability

Supply chaininherited throughacquisition

Patchwork of IT

systems

National

Simplified productportfolio

Specialized, longerrun, lower complexity

production

A national sellingpowerhouse

Optimized supplychain based onanalysis

Integrated IT

Foundational

InformationTechnology

Immediate Cost

Reduction Supply Chain R&D

Total IT, SupplyChain and R&Dinvestments up~$20 million in

FY2009


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Fresh Dairy Direct

Driving to further differentiate ourlow cost position

$300 million* of defined opportunityover the next three to five years

On track to deliver $75 million* ofproductivity in 2009

Investing to drive current and futuregrowth

A Strong Current Position and Getting Stronger

The U.S. leader in fresh milk Most capable company in the industry

Broad national geographic reach and extensive production and

distribution capabilities

*Total Dean


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Extending our Advantage

Fresh Dairy Direct

Agenda


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1H08 1H091H08 1H09

WhiteWave-Morningstar: Strong Bottom Line Performance

Net Sales($ millions)

Operating Profit

($ millions)

+43%-4%

$1,271 1,227

$95

135


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23%

19%

22%

16%

12%

5%3%

WhiteWave + Alpro: A Brand Powerhouse


2,200 employees, 11 plants

A history of growth behind well

positioned value-added brands Strong 1H09 operating profit

growth

($ in billions)

$1.5$1.7

$1.9

FY 06 FY 07 FY08

*Proforma for Alpro acquisition that was completed in July 2009. Netsales have been converted at a rate of $1.4 / 1 for purposes of thispresentation

WW

Alpro*

Other


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$732 718

1H08 1H09

WhiteWave: Strong Profit Flow-through

Net Sales

($ millions)

-2%

Integrated supply chain and

IT infrastructure helpingdrive efficiencies

On track to deliver $14M incost savings in 2009

Organic milk no longermasking progress

Holding share in slowing

categories Continued growth in

creamers Exit of unprofitable

foodservice business

1H08 1H09

+31%

Operating Profit

($ millions)


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The Leading Global Soy Platform

Combined 2008 Sales*: $791M

9% increase* vs. 2007

World leading products andprocess technology

No. 1 soy platform in the world

Silk is the North American leaderAlpro is the European leader

Compelling heart health benefits

Category still nascent. Growth potential withrelatively low levels of HH penetration, evenin home markets

Expansion opportunity into new geographies

and broader food categories

Will leverage collective trans-Atlanticexpertise in marketing, operations and R&Dagainst global marketplace

*Proforma for Alpro acquisition completed in July 2009 using an exchange rate of $1.40 per 1


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Alpro: Investing to Grow

Home Markets

Core Markets

Gent, Belgium Headquarters

Annualized growth in net sales of 14% since2000

Significant room to increase per capita usage in

core markets and geographic footprint

325 million purchase price. Modestly accretiveto 2009 earnings, excluding one-timetransaction costs

The European leader in soybeverages and related productswith 260 million in 2008 net sales


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4

3

2NewSub-category

Geography

Soy: A Proven Growth Model

Volume/ buyer

Penetration

3

Medium/ light users(health and environment conscious)

Heavy users(lactose intolerant,

soy fans)

Increasevolume per

user

2

Increase penetration of users 1


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Horizon Organic: The Leading Milk Brand in the U.S.

2008 Sales: $433M

21% increase vs 2007

42% of organic milkcategory

Largest national milk brand in U.S.

Competing in largest, fastest growingvalue-added segment

Compelling,differentiated growthsegments targetingyoung children

Share stablein slowingcategory

Economics

steadilyimproving


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Creamers: Strong Consumption Trends and Innovation

2008 Sales: $535M

8% increase vs. 2007

23% of creamer category1

Increasing coffee consumptiontrends driving category

Well-positioned portfolio

#1 Dairy creamer, #2 flavored ND

#1 Away-from-home, #2 Retail

1Source: IRI Grocery (01/09); Internal Data. Creamers defined as Non dairy flavored creamers and halfand half. Share includes only WWFC Land OLakes and International Delight creamers (HO and Silkcreamers 2% additional share)

Retail categorybenefitting from

declines in premiumcoffeehouseconsumption


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US leader in long shelf-life privatelabel dairy

Well penetrated in leadingretailers, quick serve restaurants

Strong share of cultured andextended shelf life dairy

Compelling transformationopportunity


2,000 employees

Dallas headquarters

14 plants

Aerosol8%

Other2%

Ice Cream

Mix21%

Creamers41% Cottage

Cheese10%

SourCream

10%Yogurt8%

A Platform with Great Potential

ExtendedShelf Life

Cultured Simpli fy the business, reducing

complexity

Establish high quality, low costsupply chain

Improve revenue management

Drive growth in core categorieswith targeted customers


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$539508

1H08 1H09

Morningstar: Strong Profit Growth

Net Sales

($ millions)

-6%

Slight volume decline

Pass-through of lower dairycommodities

Relatively stronger retailbusiness offset by

challenged foodservice

Favorable commodities

Operational benefits fromfacility closure

Focus on revenuemanagement

1H08 1H09

+57%

Operating Profit

($ millions)


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WhiteWave-Morningstar

WhiteWave focused on driving growth Transformation that began in 2004 is complete

Strong profit growth trends leveraging capability andinfrastructure

Leading advantaged brands in key value-added categories focused marketing and innovation

Alpro acquisition creates clear global leader in soy

Morningstar is a uniquely positioned platformA strong business position with broad product and geographic

capabilities retail and foodservice private label

An upcoming transformation opportunity

Driving Strong Results


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Summary: Executing the Transformation, Driving Results

Leader in attractive categories Category leader across the refrigerated case

#1 position in large, stable fresh milk segment

Leading brands in growth categories

Defined strategies and initiatives

Fresh Dairy Direct driving toward differentiated

cost advantage

Significant early progress against $300 million

of defined productivity opportunities

WhiteWave-Morningstar realizing significantoperational leverage

Strong 1H09 financial results

Strong first half 2009 performance across thebusiness

A solid balance of year outlook


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Sept 2009 Dean Foods DF Presentation

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Transcript of Sept 2009 Dean Foods DF Presentation