0
Dean Foods Company
   Prudential Equity Group’s
 14th Annual Back to School
      Consumer Conference
         September 8...
Forward Looking Statements

The following statements made in this presentation are “forward looking” and are made pursuant...
Dean Foods Company: One of the nation’s
leading food and beverage companies

• Largest dairy company in the U.S.
   – Over...
A Unique Balance of Businesses

 Dairy Group                                  WhiteWave Foods
   –   Stable, predictable e...
Consistent EPS Growth Despite Dairy
                       Commodity Price Volatility
                              Dean F...
Estimated 2005 Net Sales by Segment



                             Dairy Group
                             $8.6 billion
...
Estimated 2005 Net Sales by Segment



                             Dairy Group
                             $8.6 billion
...
Dean Dairy Group

•   Nation’s largest dairy processor
•   Strong regional brands
•   Unique nationwide footprint
•   Nati...
National Refrigerated DSD Network
Coupled With Strong Regional Brands


                               • 105 facilities
  ...
Focus on Leading the Industry
in Customer Service

•   One-stop-shop solution
•   Simplified pricing
•   Superior responsi...
Focus on Volume and Marketshare Growth
         Dairy Group Fluid Milk and Cream Growth versus
                    USDA To...
Focus on Driving Efficiency

• Consolidating redundant
  facilities
• Creating specialized
  manufacturing facilities
• Op...
Experienced Leadership

• Alan Bernon named
  President of Dean Dairy Group
   – Effective January 1, 2006
   – 30 year da...
Estimated 2005 Net Sales by Segment



                             Dairy Group
                             $8.6 billion
...
WhiteWave Foods

• Leading brands
    –   Silk
    –   Horizon Organic
    –   International Delight
    –   Land O’Lakes
...
Branded products have become a core
  part of the Dean Foods portfolio over time

  1997             2002             2004...
Significant Strides Have Been Made
                         in Integrating the 3 Legacy Companies

                       ...
White Wave’s Focus is to Enable Continued
Growth and Superior Returns

Focused                                            ...
Creating a Leveraged,
Fully-Integrated Supply Chain
                              Distributed         Complex
      Under-...
Focused on Premium, High Growth and
Profit Potential Brands in the Dairy Case


                               Focused on ...
Focused on Premium, High Growth and
Profit Potential Brands in the Dairy Case


                               Focused on ...
… with a History of Innovation
             and Strong Growth
             1,200


             1,000
                    ...
WhiteWave Foods’
      Leading Brand Portfolio…



                                                                       ...
WhiteWave Foods’
      Leading Brand Portfolio…




                           $335 M




                                ...
Silk is driving growth in core ESL business


             $335 M
100%                                  Other
            ...
WhiteWave Foods’
      Leading Brand Portfolio…




                     $275 M




                                      ...
Horizon Organic Opportunity
 is Large and Growing
             $275 M
                                                    ...
WhiteWave Foods’
      Leading Brand Portfolio…




                     $235 M




                                      ...
International Delight – Opportunities for
 Sales and Profit Growth

                                                      ...
WhiteWave Foods’
      Leading Brand Portfolio…




                      $190 M




                                     ...
Land O’ Lakes is a Premium
 Dairy Brand
            $190 M
                                                        Strateg...
WhiteWave Foods’
      Leading Brand Portfolio…




                       and other
                        $100 M*




 ...
Non-core Brands Will Be Re-focused or
  Rationalized
                                                                     ...
Building a World Class Organization

• Joe Scalzo named
  President and CEO of WhiteWave
   – Proven executive with skills...
Focus on Shareholder Value
• Clarifying portfolio
   – Sale of Dean’s dips and Marie’s dressings
   – TreeHouse Spin-off

...
Focus on Shareholder Value
     Stock Price Performance, IPO – August 2005
$50                                            ...
Hurricane Katrina

•   New Orleans facility shut down
•   Significant gulf coast market disruption
•   Resin and fuel cost...
Summary
• Dairy Group continues to execute long-term
  strategy
   – Growing marketshare
   – Driving efficiency

• Signif...
Dean Foods Company
   Prudential Equity Group’s
 14th Annual Back to School
      Consumer Conference
         September 8...
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Transcript of "df 09/09/05"

  1. 1. Dean Foods Company Prudential Equity Group’s 14th Annual Back to School Consumer Conference September 8, 2005
  2. 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 Securities Litigation Reform Act of 1995: statements relating to (1) projected sales (including for individual segments, for specific product lines and for the company as a whole), profit margins, net income and earnings per share, (2) our growth strategy, and (3) our branding initiatives. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in this presentation. Financial projections are based on a number of assumptions. Actual results could be materially different than projected if those assumptions are erroneous. Sales, profit margins, net income and earnings per share can vary based on a variety of economic, governmental and competitive factors, all of which are identified in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10K (which can be accessed on our website at www.deanfoods.com or the website of the Securities and Exchange Commission at www.sec.gov). The success of our branding initiatives will depend on a number of factors, including customer and consumer acceptance of both the products themselves and the prices that we intend to charge for those products. We have many competitors with greater resources than ours, and significant additional spending or innovations by our competitors could render our products less successful than we currently expect. All forward looking statements 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 such statements to reflect any change in our expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.
  3. 3. Dean Foods Company: One of the nation’s leading food and beverage companies • Largest dairy company in the U.S. – Over $10 billion in net sales – Approximately 4X the size of nearest competitor • Uniquely positioned branded portfolio – On trend with healthy, better-for-you and premium product offerings – High-growth brands – Significant margin-enhancing opportunities • Extremely focused on shareholder value
  4. 4. A Unique Balance of Businesses Dairy Group WhiteWave Foods – Stable, predictable earnings – Significant growth potential – Synergy opportunities – Large, growing categories – Volume growth – Strong national brands – Strong cash flow – Value-added margins – National refrigerated direct – Leverage through store delivery network consolidation Positioned for 8-10% Long-Term Earnings 1 1 Excludes possible facility closing costs, future Per Share Growth acquisitions / divestitures and one-time items
  5. 5. Consistent EPS Growth Despite Dairy Commodity Price Volatility Dean Foods Adjusted Annual EPS vs. Class 1 Mover, 2002 – 2005 Est. $19.00 $2.50 Class I Mover (per hundredweight) $18.00 $2.25 Adjusted Annual EPS $17.00 $1.97 - $2.02 $2.00 $16.00 $1.74 $15.00 $1.75 $1.60 $14.00 $1.50 $13.00 $1.40 $12.00 $1.25 $11.00 $1.00 $10.00 $9.00 $0.75 FYE FYE FYE FYE 2002 2003 2004 2005E Adjusted Annual EPS Class 1 Mover * Adjusted to omit the net impact of facility closing costs, discontinued operations and one time items.
  6. 6. Estimated 2005 Net Sales by Segment Dairy Group $8.6 billion WhiteWave Foods $1.2 billion International $0.4 billion
  7. 7. Estimated 2005 Net Sales by Segment Dairy Group $8.6 billion WhiteWave Foods $1.2 billion International $0.4 billion
  8. 8. Dean Dairy Group • Nation’s largest dairy processor • Strong regional brands • Unique nationwide footprint • National refrigerated direct store delivery (DSD) network Estimated 2005 net sales of $8.6 billion
  9. 9. National Refrigerated DSD Network Coupled With Strong Regional Brands • 105 facilities • 30 facilities closed to date • 2 additional scheduled for 2005 closure • 6,500 DSD routes • 150,000 locations served DSD coverage Processing plants
  10. 10. Focus on Leading the Industry in Customer Service • One-stop-shop solution • Simplified pricing • Superior responsiveness • Focus on quality
  11. 11. Focus on Volume and Marketshare Growth Dairy Group Fluid Milk and Cream Growth versus USDA Total Consumption 5% 4.1% 4% 2.7% 3% 2% 1.5% 2.4% 1% 1.2% 0% 0.0% -1% -0.5% -0.8% -2% -2.3% -3% -2.9% -4% Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2005 2005 Dean Milk and Cream USDA Fresh Milk Volume Growth Volume Growth * Calculation is exclusive of cream volumes in 2005
  12. 12. Focus on Driving Efficiency • Consolidating redundant facilities • Creating specialized manufacturing facilities • Optimizing distribution • Leveraging scale • Improving margins
  13. 13. Experienced Leadership • Alan Bernon named President of Dean Dairy Group – Effective January 1, 2006 – 30 year dairy industry veteran – 20 years as president of Garelick/ COO of Dean Northeast region • Pete Schenkel to become vice-chairman of Dean January 1, 2006 – Will work closely with Alan
  14. 14. Estimated 2005 Net Sales by Segment Dairy Group $8.6 billion WhiteWave Foods $1.2 billion International $0.4 billion
  15. 15. WhiteWave Foods • Leading brands – Silk – Horizon Organic – International Delight – Land O’Lakes Estimated 2005 net sales of $1.2 billion¹ ¹ 2005 Net Sales includes Maries brand
  16. 16. Branded products have become a core part of the Dean Foods portfolio over time 1997 2002 2004 Purchased Entered licensing Purchased Morningstar agreement with Horizon Land O’ Lakes Organic 2005 2002 Merged 3 legacy companies Purchased under WhiteWave name White Wave
  17. 17. Significant Strides Have Been Made in Integrating the 3 Legacy Companies One, unified company; best-in-class brands, One company talent, and 3 separate, Sustainable growth and infrastructure legacy companies superior returns – 1 organization – 1 leadership team – 3 faces to the – Focused portfolio of – 1 “sales” face to customer premium brands the customer – 3 separate, – 1 face to the customer – Supply chain under-leveraged integration in – Fully integrated supply supply chains progress chain – Internal redundancy – Process and – Top-talent, brand- – Limited process systems build-out in centric organization and systems progress – Best-in-class processes infrastructure and systems Time
  18. 18. White Wave’s Focus is to Enable Continued Growth and Superior Returns Focused Top talent, Focused Focused brand centric portfolio of Product Organization organization core brands Portfolio • Preservation of legacy • Health and Strong strengths wellness Growth • Talent infusion from • Premium blue-chip consumer And Superior • High growth goods companies Returns • Profitable • Investment in capabilities to drive sales and marketing Best-in-class excellence supply chain & infrastructure • Fully integrated, leveraged supply chain Focused • CPG best practice Supply systems and Chain processes • Seamless customer experience
  19. 19. Creating a Leveraged, Fully-Integrated Supply Chain Distributed Complex Under-leveraged Mfg Footprint Distribution Short-run Plants 2,600 SKU’s 12 Company 65 Inefficient Owned Plants and Inventory Processing 30+ co-packers Locations Focus Reduced Dedicated, product product multi-line, portfolio on movement, long run plants largest full trucks (5 WWFC plants opportunities (11 inventory 3 strategic (~700 SKUs) locations) co-packers) Vertically Integrated Branded Supply Chain Focused Efficient Optimized Product Portfolio Manufacturing Distribution
  20. 20. Focused on Premium, High Growth and Profit Potential Brands in the Dairy Case Focused on brands that offer: • High growth • Health and wellness • High profit potential • Premium dairy brands • Synergy opportunities
  21. 21. Focused on Premium, High Growth and Profit Potential Brands in the Dairy Case Focused on brands that offer: • High growth • Health and wellness • High profit potential • Premium dairy brands • Synergy opportunities
  22. 22. … with a History of Innovation and Strong Growth 1,200 1,000 5 YR CAGR of Key Brands = 29% $ Millions 800 600 400 200 0 2000 2001 2002 2003 2004 2005 E * Pro forma assuming Dean owned these same businesses in all comparable periods
  23. 23. WhiteWave Foods’ Leading Brand Portfolio… $335 M and other $100 M * $275 M $190 M $235 M Estimated 2005 Net Sales * * 2005 Net Sales excludes Maries brand * 'other' category includes Tofu products, and Jakada, Farm Rich, Naturally Yours, Vitamite and IMO brands * Note: excludes Marie’s p. 23
  24. 24. WhiteWave Foods’ Leading Brand Portfolio… $335 M Estimated 2005 Net Sales * Note: excludes Marie’s p. 24
  25. 25. Silk is driving growth in core ESL business $335 M 100% Other Strategic focus 90% Aseptic 80% • Continue to drive the core refrigerated ESL business 70% into the mainstream 60% 50% • Eliminate Distractions 40% Extended • Integrate the supply chain 30% Shelf Life to drive margin expansion 20% • Continue to innovate 10% 0% Estimated 2005 Net Sales p. 25
  26. 26. WhiteWave Foods’ Leading Brand Portfolio… $275 M Estimated 2005 Net Sales * Note: excludes Marie’s p. 26
  27. 27. Horizon Organic Opportunity is Large and Growing $275 M Strategic focus 100% Other 90% • Rationalize product Non-milk 80% offerings to focus on Dairy largest opportunities 70% 60% • Optimize pricing to maximize long-term profitability 50% 40% • Integrate the supply chain Fluid Milk to drive margin expansion 30% • Continuously manage 20% organic milk supply 10% 0% Estimated 2005 Net Sales p. 27
  28. 28. WhiteWave Foods’ Leading Brand Portfolio… $235 M Estimated 2005 Net Sales * Note: excludes Marie’s p. 28
  29. 29. International Delight – Opportunities for Sales and Profit Growth Strategic focus $235 M 100% Away from 90% • Continue to be an Home innovation leader 80% (Bulk and PC) – Introduction of seasonal 70% flavors and “trans fat- 60% free” varieties At Home 50% • Capture the “Away from (Pints and Home” Opportunity 40% Quarts) 30% • Integrate the supply chain to drive margin expansion 20% 10% 0% Estimated 2005 Net Sales p. 29
  30. 30. WhiteWave Foods’ Leading Brand Portfolio… $190 M Estimated 2005 Net Sales * Note: excludes Marie’s p. 30
  31. 31. Land O’ Lakes is a Premium Dairy Brand $190 M Strategic focus 100% Other 90% 80% • Leverage brand equity Aerosol to build leadership in 70% premium dairy categories Aseptic 60% Portion • Innovate to introduce 50% Control value-added products 40% 30% • Continue to invest to drive national brand equity and Half & Half 20% continued growth 10% 0% Estimated 2005 Net Sales p. 31
  32. 32. WhiteWave Foods’ Leading Brand Portfolio… and other $100 M* Estimated 2005 Net Sales * 2005 Net Sales excludes Maries brand * 'other' category includes Tofu products, and the Jakada, Farm Rich, Naturally Yours, Vitamite and IMO brands * Note: excludes Marie’s p. 32
  33. 33. Non-core Brands Will Be Re-focused or Rationalized and other* Strategic focus $100 M 100% • Narrow Hershey’s 90% Other product, channel, and 80% customer focus 70% Private Label • Emphasize Hershey’s 60% Hershey’s shake product line Other 50% • Focus on brand profitability Hershey’s 40% SS Milk • Other brands will be re-focused or rationalized 30% Hershey’s • Private label will continue 20% Shakes to be reduced 10% 0% Estimated 2005 Net Sales * 2005 Net Sales excludes Maries brand p. 33
  34. 34. Building a World Class Organization • Joe Scalzo named President and CEO of WhiteWave – Proven executive with skills and experience to realize WhiteWave’s potential – Gillette, Coca-Cola, Procter & Gamble – Brand management, marketing, logistics and supply chain management experience – Passion for excellence
  35. 35. Focus on Shareholder Value • Clarifying portfolio – Sale of Dean’s dips and Marie’s dressings – TreeHouse Spin-off • Building a world-class management team • Optimizing operations – Dairy Group facility consolidation – WhiteWave supply chain efficiency • Optimizing capital structure – Efficient use of free cash flow
  36. 36. Focus on Shareholder Value Stock Price Performance, IPO – August 2005 $50 TreeHouse Spin-off $45 CAGR = 26% Acquired Horizon Organic $40 Acquired Dean Foods $35 $30 Acquired Morningstar $25 $20 Began WhiteWave consolidation $15 Acquired White Wave $10 $5 $0 6 7 8 9 0 1 2 3 4 96 97 98 99 00 01 02 03 04 05 -9 -9 -9 -9 -0 -0 -0 -0 -0 r- r- r- r- r- r- r- r- r- r- ct ct ct ct ct ct ct ct ct Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap O O O O O O O O O TreeHouse Foods was Spun-off from Dean Foods on June 27, 2005. Chart includes the value of TreeHouse Foods stock for June through August 2005 to show total shareholder return since IPO
  37. 37. Hurricane Katrina • New Orleans facility shut down • Significant gulf coast market disruption • Resin and fuel costs have increased significantly • WhiteWave continues to perform well • Maintaining guidance – $0.49 - $0.51 per share in the third quarter – $1.97 – $2.02 per share for the full year
  38. 38. Summary • Dairy Group continues to execute long-term strategy – Growing marketshare – Driving efficiency • Significant opportunities at WhiteWave Foods – Driving rapid growth in well-positioned brands – Pushing efficiency to grow profitability • Intense focus on shareholder value creation – History of shareholder enriching activities
  39. 39. Dean Foods Company Prudential Equity Group’s 14th Annual Back to School Consumer Conference September 8, 2005
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