EX-99.2

EX-99.2 3 d304819dex992.htm EX-99.2 EX-99.2

CAGNY

2012

Exhibit 99.2

Gary Rodkin

CEO

This presentation contains forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. These statements are based on

management’s current views and assumptions of future events and financial

performance and are subject to uncertainty and changes in circumstances. The

company undertakes no responsibility for updating these statements. Readers of this

presentation should understand that these statements are not guarantees of

performance or results. Many factors could affect the company’s actual financial results

and cause them to vary materially from the expectations contained in the forward-

looking statements. These factors include, among other things: availability and prices of

raw materials, including any negative effects caused by inflation; the effectiveness of the

company’s product pricing, including any pricing actions and promotional changes;

future economic circumstances; industry conditions; the company’s ability to execute its

operating and restructuring plans; the success of the company’s innovation, marketing,

and cost-saving initiatives; the competitive environment and related market conditions;

operating efficiencies; the ultimate impact of any product recalls; the company’s succes

in efficiently and effectively integrating the company’s acquisitions; access to capital;

actions of governments and regulatory factors affecting the company’s businesses,

including the Patient Protection and Affordable Care Act; the amount and timing of

repurchases of the company’s common stock, if any; and other risks described in the

company’s reports filed with the Securities and Exchange Commission. The company’s

cautions readers not to place undue reliance on any forward-looking statements

included in this presentation, which speak only as of the date made.

Note on forward-looking statements

Today’s agenda

•

Gary Rodkin, CEO

•

Recipe for Growth

•

Customer Connect

•

Innovation and marketing

•

Supply chain

•

Algorithm and goals

•

Capital allocation

•

André

Hawaux,

President

Consumer Foods

•

John Gehring, CFO

Company overview

FY12 Operating Cash Flow

FY12 Debt/EBITDA**

$1.3 billion* (est.)

2X (est.)

Current Annualized Dividend: $0.96 / share

Current Dividend Yield:

3.5%

35%

65%

Consumer Foods

Commercial Foods

Fiscal 2012 sales: Approaching $13 billion (est.)

*Excludes any FY12 discretionary pension contributions

**The

inability

predict

the

amount

and

timing

future

items

makes

detailed

reconciliation

projections

impracticable.

Our journey: entering phase 2

•

Phase 1

–

Operational progress

•

Organizational wiring

•

Culture

•

Cost structure

•

Marketing and innovation

•

Balance sheet

•

Portfolio

•

Phase 2

–

Leverage strong foundation

–

Our Recipe for Growth

Platform

Sustainable growth

Core: drivers of success

1. Innovation

Significantly improved capabilities

Insights = clarity + consistency of message

2. Pricing

3. Marketing

1. Innovation

Core: drivers of success

Platform

Sustainable growth

Core: drivers of success

1. Innovation

Significantly improved capabilities

Insights = clarity + consistency of message

2. Pricing

3. Marketing

Platform

Sustainable growth

Core: drivers of success

1. Innovation

Significantly improved capabilities

Insights = clarity + consistency of message

2. Pricing

3. Marketing

Platform

Sustainable growth

PAM commercial

Hebrew National commercial

Marie Callender’s dessert pies

FY12 YTD

Net Sales

+27%

June 2011 –

December 2011

Sweet potatoes

2000

2011

Sweet Potatoes: Consumption

+52%

Source: USDA Economic Research Service,

November 11, 2011.

3.0

4.0

5.0

6.0

7.0

Whole grains

Whole Grain Growth, FY06 to FY11

Source: Milling and Baking News, 07/26/11

10,000,000

15,000,000

20,000,000

25,000,000

FY06

FY07

FY08

FY09

FY10

FY11

+10% CAGR

International markets

•

Commercial Foods primary markets

–

Europe, Canada, Latin America and Asia (includes JVs)

•

Consumer Foods primary markets

–

India

–

Mexico

–

Canada

–

Caribbean

Consumer Foods’

market in India is through Agro Tech Foods Limited, an Indian publicly-held company in which ConAgra Foods owns a majority

interest, and consolidates for GAAP accounting purposes.

Latin

America

Canada

Europe

India

Asia

Lamb Weston International

In nearly 100 countries (includes JVs)

Japan

China

Korea

Middle East

Leader:

Total international sales

Country performance:

12%

83%

51%

Total International Sales

$ Sales

increase vs.

year ago

FY12 YTD: June 2011 –

December 2011

Lamb Weston FY12 YTD

China/Hong Kong

32%

24%

39%

Australia

Singapore

Taiwan

Malaysia

Lamb Weston international opportunity

3.8 B

1.8 B

344 M

9.9 B

590 M

1.3 B

595 M

5.9 B

0.5 B

1.3 B

U.S. and Canada

Europe

Asia Pacific

Latin America

Middle East and Africa

= Population

= Pounds consumed

lbs/cap

Focus on key strategies

•

Potato pizza innovation

–

Introduced in Korea ten years ago

–

Beyond Korea; carried by major

pizza chains across Asia

–

Drives 10 million lbs. of business for

Lamb Weston annually

Expanding original regional ideas

International

India

Mexico

Canada

Caribbean

Consumer Foods primary markets

Consumer Foods’

market in India is through Agro Tech Foods Limited, an Indian publicly-held company in which ConAgra Foods owns a majority

interest, and consolidates for GAAP accounting purposes.

India

Canada

Canada: A leader in Frozen

•

Growing share

with 15-20% price premium

•

Most significant innovation

in a decade

•

Strong retailer support

+2.5

0.0

+1.8

Health

Wellness

27.7

24.4

23.9

Healthy Choice

Lean Cuisine

selections

Smart Ones

Source: Nielsen MarketTrack: National GB+DR+MM – Dollars – L52

Weeks Ending January 14, 2012 – Share of Single Serve Health &

Wellness

Del Monte Canada acquisition

•

Acquisition pending;

anticipate close in Q4 FY12

•

$150 million in sales

•

Tomatoes

•

Vegetables

•

Fruit and fruit snacks

Private label: Growing and

important to customers

•

Consumer appeal

•

Retailers expanding offerings

•

Strong market share potential

Focused

high

opportunity

private

label

Category

$171M

(+11%)

$153M

Competitors

CAG

$111

$42

$60

Holiday 10

Holiday 11

$111

Marie Callender’s/Reddi-wip

Healthy Choice Greek Frozen Yogurt

•

Deliciously thick and creamy

•

Made with healthy ingredients

like real fruit and yogurt cultures

•

Perfectly portioned at only

100 calories

Health and nutrition bars

•

20 SKUs

•

1150 Stores

•

Strong takeaway

•

8 SKUs

•

All divisions

•

April 2012 ship date

Customer Connect transformation

Tactical pricer

Multiple brand languages

Sales quota driven

ONE ConAgra Foods voice

From

Multi-year strategic plans

Category growth focus

Strategic pricing and trade

Short-term plans

Brand-centric

P&L focused sales leaders

Cost savings ($ in millions)

About $1.7 billion in savings delivered since beginning of initiatives in FY07

“Fuel”

driven cost reductions

•

Supplier collaboration

•

Complexity reduction

•

Plant optimization

•

Network optimization

•

Leverage SAP

•

Base productivity

$275

$240

$300

$280

$275

FY07

FY08

FY09

FY10

FY11

FY12 (est.)

Supply Chain commitments FY13-15

World

Class

Safety

99%

Launch

Fill Rate

Top 3

Kantar

Supply

Chain

18%

Cash

Conversion

Cycle

Improvement

100%

TEAM COMMITMENT

Uncompromised

Food Safety &

Quality

$200-250MM

Annual

Cost

Reductions

Food safety recognition

•

SQFI 2011 Quality Achievement Award Manufacturer of the Year

•

Strong food safety culture driven by

–

Leadership and employee commitment

–

Behaviors, training and education

–

Policies and procedures

–

Recognition

–

Investment

Consumer Foods growth focus

Total $ Margin Management

John Gehring

CFO

ConAgra Foods

Long-term goals

•

Sales growth of

3% annually

•

EPS* growth of 6-8% annually

•

ROIC* of 13-14%

*EPS

and

ROIC

guidance

discussed

this

presentation

has

been

adjusted

for

items

impacting

comparability.

EPS

guidance

based

diluted

EPS,

adjusted

for

items

impacting

comparability.

The

inability

predict

the

timing

and

amount

future

items

impacting

comparability

makes

detailed

reconciliation

projections

impracticable.

Financial priorities

Strong earnings and cash flows

Healthy balance sheet and strong liquidity

High-return capital allocation with

top-tier dividend

Operating cash flow

Operating Cash Flow (continuing operations)

*Excludes any FY12 discretionary pension contributions

$200

$400

$600

$800

$1,000

$1,200

$1,400

FY 08

FY09

FY10

FY11

FY12* (est.)

Cash flow

•

EPS: Long-term EPS* growth

of 6-8% annually

•

Working capital efficiency

•

Capital expenditures

–

Approximately $450 million/year

FY13-15

–

Focused on growth and cost

reduction

*Diluted

EPS,

adjusted

for

items

impacting

comparability

Target Operating

Cash Flows

$1.2 to $1.4 billion

per year for the

next 3 fiscal years

Healthy balance sheet

and strong liquidity

•

Strong investment grade credit rating

•

Strong liquidity, improved financial flexibility

–

Over $700 million of cash at end of Q2 FY12

–

Continued access to commercial paper markets

–

$1.5 billion revolving credit facility in place for 5 years

–

Manageable debt maturities

Debt-to-Capital

Debt/EBITDA*

42.4%

2.5x

41.4%

2.2x

40.7%

1.8x

FY09

FY10

FY11

38%

2.0x

FY12 (est.)

*See

Appendix

for

Regulation

reconciliation.

For

FY12

estimate,

the

inability

predict

the

amount

and

timing

future

items

makes

detailed

reconciliation

projections

impracticable.

Capital allocation:

Dividends & organic growth

•

Dividend payout: Top tier

•

Growth and profit

enhancement investments

–

New product and

capacity expansion

–

Supply Chain efficiency

Dividends &

Organic Growth

Capital allocation:

M&A process guidelines

Category upside / position within category

Customer need / relationships

Potential for ConAgra Foods to improve through:

–

Innovation

–

Supply chain

–

Distribution

Operating leverage/scale

Organic sales growth potential

Margin structure

EPS contribution

ROIC

Strategic fit

Financial fit

Acquisitions

Right assets / Right growth potential / Right price

Capital allocation:

Share repurchase

•

Recently increased program

by $750 million

•

As of Q2 earnings release

(12/20/11): $780 million remaining

Repurchase

Fiscal 2012: Confirming guidance

•

Low-

to mid-single digit EPS growth over $1.75* in FY11

•

Second-half expectations:

–

Y-O-Y growth concentrated in Q4

–

Toughest inflation headwinds in Q3

•

Consumer Foods inflation 10% for full fiscal year

•

Operating cash flow (continuing operations): $1.3B**

*Diluted EPS, adjusted for items impacting comparability. See Appendix for Regulation G reconciliation.

**Excludes any FY12 discretionary pension contributions

•

Sales

growth

annually

•

EPS* growth of 6-8% annually

Margin improvement

Operating leverage

Capital allocation

•

ROIC* of 13-14%

*EPS

and

ROIC

guidance

discussed

this

presentation

has

been

adjusted

for

items

impacting

comparability.

EPS

guidance

based

diluted

EPS,

adjusted

for

items

impacting

comparability.

The

inability

predict

the

timing

and

amount

future

items

impacting

comparability

makes

detailed

reconciliation

projections

impracticable.

Long-term goals

Summary

Focus: strong earnings and cash flow, healthy balance

sheet and liquidity, and high-return capital allocation

Cash flow expected to support strong dividend and

investments to drive sustainable business model

FY12 EPS* on track

Committed to EPS* growth of 6-8% long-term

*Diluted

EPS,

adjusted

for

items

impacting

comparability.

See

Appendix

for

Regulation

reconciliation.

CAGNY

2012

Appendix

Appendix: Regulation G

Reconciliation of FY11 diluted earnings per share, adjusted for items impacting comparability. Amounts may

be impacted by rounding.

FY11 Diluted EPS

Total FY11

Diluted EPS from continuing operations

$ 1.90

Items impacting comparability:

Expense related to restructuring charges

0.08

(Benefit) related to unallocated mark-to-market impact of derivatives

(0.05)

(Benefit) related to receipt of insurance proceeds from Garner, N.C., accident

(0.15)

(Benefit) of gain on early repayment of Trading & Merchandising divestiture-related PIK note

(0.04)

Rounding

0.01

Diluted EPS adjusted for items impacting comparability

$ 1.75

Appendix: Regulation G

Reconciliation of EBITDA to Income from continuing operations before income taxes and equity method

investment earnings

EBITDA:

Income

from

continuing

operations

before

income

taxes,

equity

method

investment

earnings,

depreciation

and

amortization.

Fifty-two Weeks

Ended

Fifty-two Weeks

Ended

Fifty-two Weeks

Ended

(Dollars in millions)

Q4 FY11

Q4 FY10

Q4 FY09

EBITDA

$ 1,763.3

$ 1,565.9

$ 1,399.2

Items excluded from EBITDA:

Interest expense, net

177.5

160.4

186.0

Depreciation and Amortization

360.9

324.1

304.9

Income from continuing operations before income taxes

and equity method investment earnings

$ 1,224.9

$ 1,081.4

$ 908.3

EBITDA is not a measure of financial performance under GAAP and should not be considered as a substitute of Income from

continuing operations before income taxes and equity method investment earnings. However, management believes

EBITDA may provide additional information with respect to the ConAgra Foods' cash generating capacity and its ability to

meet

its

future

debt

service.

Because

EBITDA

excludes

some,

but

not

all,

items

that

affect

net

income

and

the

definition

EBITDA may vary among other companies, the EBITDA measure presented by ConAgra Foods may not be comparable to

EBITDA measures of other companies.

Consumer Foods COGS

Major components

$1.4 B

$4.1 B

Logistics

Manufacturing

Procurement

$0.7 B

COGS base

% of procurement spend by

commodity class (current FY12 est.)

$6.2 B

Proteins

Fats & oils

Dairy

Grains and other ingredients

Seeds and nuts

Fruits, vegetables, legumes

Sweeteners, starches, other

Packaging

Energy

22%

13%

10%

29%