Barclay s Back to School Consumer Conference September 6, 2017

Transcription

1 Barclay s Back to School Consumer Conference September 6,

2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available. The words anticipate, believe, estimate, project, expect, intend, plan, should, and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. We do not intend to update these forward-looking statements following the date of this presentation. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this presentation and other public statements we make. Such factors include, but are not limited to: our level of indebtedness and related obligations; disruptions in the financial markets; interest rates; changes in foreign currency exchange rates; customer consolidation; raw material and commodity costs; competition; integration of the Private Brands acquisition and our ability to continue to make acquisitions in accordance with our business strategy or effectively manage the growth from acquisitions; changes and developments affecting our industry, including customer preferences; the outcome of litigation and regulatory proceedings to which we may be a party; product recalls; changes in laws and regulations; and other risks that are set forth in the Risk Factors section, the Legal Proceedings section, the Management s Discussion and Analysis of Financial Condition and Results of Operations section, and other sections of our Annual Report on Form 10-K for the year ended December 31, 2016, and from time to time in our filings with the Securities and Exchange Commission. You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made when evaluating the information presented in this presentation. TreeHouse expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in its expectations with regard thereto, or any other change in events, conditions or circumstances on which any statement is based. 2

3 Today s Speakers Name Experience Joined THS Leadership Role Sam K. Reed 36 Years Founder Chairman of the Board, Chief Executive Officer Bob Aiken 28 Years July 2017 President & Chief Operating Officer Matthew Foulston 31 Years December 2016 Executive Vice President & Chief Financial Officer 3

4 Sam K. Reed Chairman & CEO 4

5 Building Out the TreeHouse Team: Proven Leaders with Deep Experience Joined THS Leadership Title Yrs of Experience Prior Experience Dec 2016 Matthew Foulston Chief Financial Officer 31 Ford, Mazda, Navistar, Compass Minerals Jan 2017 Chris Finck Chief Customer Officer 28 PepsiCo, Quaker Oats, Sara Lee, Bimbo Mar 2017 Moe Alkemade Chief Strategy Officer Jul 2017 Bob Aiken President & COO 28 Jul 2017 Lee Wise Treasurer Textron, Kraft Foods, Walgreens Boots Alliance Metz Baking, US Foods, Feeding America, Essendant E&Y, Brunswick, Mead Johnson 5

6 TreeHouse Strategic Growth Net Sales ($ in millions) $6,175 $6,200- $6,300 $2,946 $3,206 $708 $939 $1,158 $1,501 $1,512 $1,817 $2,050 $2,182 $2, E Number of Categories 6

7 We Have Unparalleled Leadership in Private Label We are the private label leader in over 20 of 32 categories: Baked Goods #1 Beverages #1 Condiments #1 Meals #1 Snacks #1 Rfgd Dough Creamers Pickles Pasta Snack Nuts Griddle Powdered Bevg Pourable Dressings Dry Dinners Trail Mix SS Bevg Preserves Bouillon Bars In-Store Bakery Pita Liquid Bevg Pretzels Other Blends Spoonable Dressings Cookies Broth Salsa Tomato Sauces Hot Cereal RTE Cereal Crackers Other Tea Syrups Cheese / Pudding Sauces 7

8 Private Label is Increasingly Relevant to Retailers We continue to be thrilled with Simple Truth. It continues to grow as a brand. More and more households continue to enter into the category and stay in the category. Mike Schlotman EVP & CFO, Kroger Sept 2016 Having a private brand from a margin mix has always been important but it's even more important now and the sourcing capability is even more important now. Doug McMillin President & CEO, Walmart April 2017 We're focused on enhancing our exclusive brand assortment in Food and Beverage while ensuring we are priced-right daily on key opening price point items. Mark J. Tritton EVP & Chief Merchandising Officer, Target August

9 The Digital Age Marketplace Consumers Customers Categories Competitors Capabilities 9

10 TreeHouse 2020 Strategically, transform TreeHouse to serve the private label marketplace of the Digital Age. Operationally, simplify Go-To-Market and supply chain to unlock operating margin expansion. Organizationally, unite all of TreeHouse as one entity dedicated to strategic category and customer growth. 10

11 Returning TreeHouse to Historical Levels of Profitability Adjusted EBITDA Margin Trends +300 BPS* TreeHouse FY 2010 Ralcorp FY 2012 TreeHouse FY 2015 Private Brands LTM 2015 TreeHouse FY 2016 TreeHouse FY 2017(F) TreeHouse 2020 Simplification Transformation Growth *Based upon current price, volume & mix. 11

12 1 We have built out an experienced senior management team. 2 The digital age marketplace is evolving rapidly, and private label is the place to be. 3 We are uniquely positioned to meet our customers private label aspirations. 4 TreeHouse 2020 is a strategic vehicle to transform our business to succeed in this digital age of private label. 12

13 Bob Aiken President & COO 13

14 What is Required to Win in Private Label? Right Category Portfolio Right Cost & Service Right Price 14

15 The TreeHouse Promise Broad Portfolio Featuring Clean Label, BFY, Innovation Strong Quality & Food Safety Leadership Cost Competitive & Solutions- Oriented Supply Chain Private Label Focus & Category Leadership Consumer Insights & Shopper Marketing 15

16 We Offer Customers a Comprehensive Portfolio Expanding Beyond the Center of the Store into Key Perimeter Categories In-Store Bakery Refrigerated Snacks Condiments Beverages Baked Goods Deli Produce Meals Frozen 16

17 We Have Significant Premium, Better for You, Natural & Organic Offerings 25% 20% 15% 10% 5% PBFYNO % of Sales <10% 19.5% # of PBFYNO Categories Baked Goods 6 of 8 Beverages 7 of 7 Condiments 6 of 9 Meals 4 of 5 Snacks 3 of 3 0% YE 2014 (Legacy) 1H 2017 Total 26 of 32 Excludes single serve beverages and Flagstone. 17

18 We are Re-Shaping Our Product Portfolio to Meet Consumer Demand Q217 YTD Revenue YTD Growth Rate Premium / Better For You / Natural / Organic 20% 4.3% National Brand Equivalent 68% -3.4% Opening Price Point / Value 12% -1.5% Excludes single serve beverages and Flagstone. 18

19 TreeHouse 2020: Enterprise-Wide Transformation Align Customer Base & Simplify the Product Portfolio Optimize the Manufacturing Network Increase Agility in our Delivery Approach Transform Operations to Continuous Improvement Culture Leverage Systems and Analytics to Drive Performance Stratify the customer base and focus on large and growing customers Simplify our total SKU count by targeting up to a 25% reduction Reduce our manufacturing footprint and increase capacity utilization by up to 20% Reduce our warehouse footprint Transform mixing centers to better serve emerging channels Implement a common plant operating system Implement Continuous Improvement methodologies and standardize processes SAP manufacturing implementation Utilize analytics tools to optimize pricing and margin Improved forecasting and planning 19

20 Value Add Profitability Customer and Category Simplification Focus on Customers that Drive Market Share and Through-put Customers 25% SKU Reduction Focused on Low Revenue / Profit SKUs Categories Collaboration Growth 1,000 + Customers 10% of Revenue Increased Complexity Numerous Changeovers Sales / SKU <$30,000 20

21 1 2 3 Our scale and capabilities are unparalleled in the industry at a time when retailers are placing greater emphasis on private label. We offer customers a comprehensive portfolio of premium, better for you, natural and organic products. TreeHouse 2020 is a well defined comprehensive plan to unlock value through competitive differentiation at scale. 4 The simplification opportunity remains enormous. 5 Simplification through SKU reduction will drive margin expansion and working capital improvement. 21

22 Matthew Foulston EVP & CFO 22

23 TreeHouse 2020 Action Target Action Timeframe Operational restructuring ~ 300 bps operating margin expansion* YE 2020 Realign production Facility closures Cease production permanently on a number of additional lines Deploy SAP across all manufacturing locations Improve capacity utilization by up to 20% Phase 1 Close 3 facilities Brooklyn Park, Plymouth, Dothan (partial) Cease production permanently on an additional ~20 lines Phase 2 Further details on restructuring actions through end 2018 YE 2019 Mid-Year YE 2018 Feb Earnings Call Phase 1 Plant Closing Charges (in $millions) Cash $29.7 Non-cash 14.8 Total $44.5 *Based upon current price, volume & mix. 23

24 TreeHouse 2020 Supply Chain Illustration Future vs. Current State SKU Count % ~25% Dothan AL Net Sales / SKU % ~35% AGM / SKU % ~50% Average Utilization / Line % ~10% Plant 2 Plant 3 24

25 Effective Margin Management Improved Revenue Management Capability TreeHouse Promise Customers Private Label Growth Plans Leadership Position in Over 20 of 32 Categories Best-in-Class Food Safety Category Breadth Protecting the Baseline Global Supply Chain Capability 25

26 We Generate Strong Free Cash Flow and Now Have Greater Capital Allocation Optionality We have paid down $470 million of debt since we closed the Private Brands transaction. Our leverage ratio 1 is now ~3.4x and reduces our variable interest rate by 25 bps in 2H. We will continue to focus on working capital optimization in 2H. Greater capital allocation optionality going forward. In $000s $3,000 $2,750 $2,500 $2, Net Debt Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Delivering on Our Deleveraging Commitment Below 3.5x by mid-year 1 Leverage ratio is net debt / EBITDAS as defined by our bank covenants Q4 16 Q1 17 Q2 17 Q3 17 Q

27 Investment Considerations 1 The digital age marketplace is evolving rapidly. We have unparalleled capabilities within food and beverage and we are uniquely positioned to meet our customers private label growth aspirations. 2 TreeHouse 2020 is a strategic vehicle to transform our business to succeed in this digital age of private label. 3 Simplification of our portfolio where it doesn t add value is critical to our success. 4 We will continue to generate substantial free cash flow and have greater capital allocation optionality. 27

28 Growing Strong, Standing Tall 28