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Pinnacle Foods Inc. Presentation to CAGNY

Pinnacle Foods presented at the CAGNY conference on March 24, 2016. The presentation included forward-looking statements and non-GAAP financial measures, and discussed these definitions. It introduced the executive leadership team and provided an overview of the company's portfolio following the acquisition of Boulder Brands. Pinnacle outlined its strategy of executing its playbook to drive organic growth and margin expansion, expanding its business through acquisitions and innovation, and evolving its portfolio focus.

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Pinnacle Foods Presentation to CAGNY March 24, 2016
This presentation contains “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs, projections and targets, many of which, by their nature, are inherently uncertain. Such expectations, beliefs, projections and targets are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs, projections and targets will be achieved and actual results may differ materially from what is expressed in or indicated by the forward- looking statements. Forward-looking statements are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including risks detailed in Pinnacle Foods Inc.’s (“Pinnacle Foods,” “Pinnacle” or the “Company”) filings with the U.S. Securities and Exchange Commission (the “SEC”). Nothing in this presentation should be regarded as a representation by any person that these forward-looking statements will be achieved. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws. This presentation includes certain financial measures, including Adjusted Gross Profit and Unleveraged Free Cash Flow, which differ from results using U.S. Generally Accepted Accounting Principles (GAAP). Non-GAAP financial measures typically exclude certain charges, which are not expected to occur routinely in future periods. The Company uses non-GAAP financial measures internally to focus management on performance excluding these special charges to gauge our business operating performance. Management believes this information is helpful to investors in understanding trends in the business. The most directly comparable GAAP financial measures and reconciliations to non-GAAP financial measures are set forth in the slides in this presentation and included in the Company’s filings with the SEC. Forward-Looking Statements & Non-GAAP Financial Measures 2
Bob Gamgort Chief Executive Officer Craig Steeneck EVP & CFO Maria Sceppaguercio SVP Investor Relations Pinnacle Management Mark Schiller EVP & President North America Retail Roger Deromedi Chairman 3
Pinnacle Leadership 4 Since IPO, continued development of the management team Bob Gamgort Craig Steeneck Mark Schiller Mike Wittman Chris Boever Mike Barkley Mary Beth DeNooyer Kelley Maggs Chief Executive Officer EVP & Chief Financial Officer EVP & President North America Retail EVP & Chief Supply Chain Officer EVP & Chief Customer Officer EVP & Chief Marketing Officer EVP & Chief Human Resources Officer EVP & General Counsel 7 years at Pinnacle 11 years at Pinnacle 5 years at Pinnacle <1 year at Pinnacle 4 years at Pinnacle 2 years at Pinnacle 3 years at Pinnacle 15 years at Pinnacle 30 years Relevant Industry Experience 25 years Relevant Industry Experience 30 years Relevant Industry Experience 30+ years Relevant Industry Experience 25 years Relevant Industry Experience 20 years Relevant Industry Experience 22 years Relevant Industry Experience 23 years Relevant Industry Experience IHF IHF Executive Leadership Team
Pinnacle Leadership Evolution to an independent Board Roger Deromedi Ray Silcock Ann Fandozzi Jane Nielsen Muktesh (Micky) Pant Yannis Skoufalos Mark Jung Current Position Chairman Pinnacle Foods, Former CEO Kraft Foods EVP & CFO Diamond Foods President & CEO vRide EVP & CFO Coach, Inc. CEO Yum! Restaurants China Global Product Supply Officer The Procter & Gamble Company Chairman Accela, Inc. On PF Board 9 Years 8 Years 4 Years 2 Years 1 Year < 1 Year <1 Year Expertise Food Sector & General Mgmt CPG Sector & Finance Consumer Staples & GM Beverages & Finance Food, Beverage & Restaurant CPG & Supply Chain Consumer Tech & Digital Content Former Companies Board of Directors New since IPO 5
Agenda  Overview  How We Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 6
Attractive Value Creation Results Since IPO Net Sales Operating Income EPS Dividend Yield In Line with Categories 10 – 12% 4 – 5% 7 – 8% 3 – 4% LT Organic Growth Target @ IPO 13% 14% ~3% Outpaced Categories 17% 2013 13% Outpaced Categories 10% 39% ~3% Outpaced Categories 42% 2014 2015 Accretive Acquisitions Accelerate Growth Beyond Algorithm 7 5% 10% ~3% 2016 Guidance X% ~10%* ~X% In Line with Categories Note: Excludes items affecting comparability. See reconciliation to GAAP financial measures in Appendix. * At mid-point of range.
2015 Pro Forma Net Sales: $3.2 billion Birds Eye Frozen 39% Specialty 11% Duncan Hines Grocery 34% Note: Pro forma for Boulder Brands acquired on January 15, 2016. Boulder Brands 16% Diversified Portfolio with Scale Boulder Brands acquisition brings Pinnacle above $3 billion in net sales 8
Agenda  Overview  How We Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 9
Executing Our Playbook 10  Invest differentially in brands using Portfolio Management Strategy  Deliver industry-leading efficiency  Generate exceptional cash flow
 Invest in marketing to drive growth and share expansion  Focus on breakthrough innovation  Maintain stable sales/market position and cash flow  Focus on brand renovation Leadership Brands Foundation Brands Portfolio Management Strategy 11
Leadership Brands Category Pinnacle Market Position Growing/ Holding Share Frozen Vegetables #1 Frozen Complete Bagged Meals #1 Frozen Prepared Seafood #2 Frozen Meat Substitutes #2 Shelf-Stable Pickles #1 Table Syrups #1 Cake/Brownie Mixes and Frostings #2 Shelf-Stable Salad Dressings #3 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions; market position ranks are among branded players. Composite share growth driven by Leadership Brands Composite $ Market Share vs. Year Ago 2012 2013 2014 2015 2016 YTD Change +0.1 pts. +0.3 pts. +0.2 pts. +0.5 pts. +0.9 pts. Consistent Market Share Growth 12
Productivity % of COGS Industry-Leading Efficiency 2013 2014 2016E2015 4.1% 3.7% 3.5%- 4.0%3.8% SG&A % of Net Sales Peer Avg.(1) Pinnacle Source: Pinnacle analysis. SG&A defined as selling, general and administrative expenses excluding marketing investment, intangible amortization and one-time items. (1) Peers: BGS, CAG, CPB, GIS, KHC, MKC, SJM. Peer Average represents 2015 fiscal year-end data. ~12% 9% Company culture focused on consistently delivering significant productivity savings and maintaining a lean and efficient organization structure 13
Significant Margin Expansion with Continued Upside Pinnacle Margin Expansion Gross margin expansion fuels operating margin growth… Note: Gross Margin and Operating Margin are on an adjusted basis. See reconciliation to GAAP financial measures in Appendix. 14 Food Company Comparison Gross Profit % Net Sales …with significant opportunity to expand further 2012 2013 2014 2015 +310 bps +270 bps Gross Margin Operating Margin 25.1% 16.7% 28.2% 14.0% 28.2% PF 22.6% 64.6%
$345m $325m $452m $382m 2012 2013 2014 2015 Unleveraged Free Cash Flow (1) ~4% ~6% Peer Average Pinnacle Free Cash Flow Yield (2) (1) See reconciliation to GAAP financial measures in Appendix. (2) Based on industry analysts’ valuation analyses using prices as of 3/18/2016. Superior Free Cash Flow Generation Consistent Unleveraged Free Cash Flow results in outsized Free Cash Flow Yield Higher inventories in 2015 primarily due to strong crop season pressured Free Cash Flow by $47m 15
Expanding Our Business 16
Expanding Our Business Organic Growth Acquisitions  Wish-Bone  Gardein  Boulder Brands  Innovation and Renovation  Trading Consumers Up / Driving Mix  Sales Force Effectiveness 17
Birds Eye 2015 Innovation Strong 2015 performance driven by base business growth and innovation platforms 18 Flavor Full Protein Blends Disney-Themed Total Birds Eye Performance vs. PY 2014 2015 2014 2015 $ Consumption $ Market Share +1.0% +6.7% +0.8 pts. +1.8 pts. 75% Incremental to Birds Eye, combined Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions.
Birds Eye 2016 Innovation Building on successful platforms introduced in 2015 Protein Blends Disney- Themed Flavor Full 19
Family Size Premium-Tier Innovation Platform 16% 17% 21% 24% 28% 34% 40% 2009 2010 2011 2012 2013 2014 2015 $ Market Share  Premium-tier distribution expansion planned in 2016  New capacity added in late 2015 to meet growing demand Birds Eye Voila! Family Size distribution and Q3 innovation launch continued the brand’s momentum in 2015 and the outlook for 2016 20 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions.
High consumer interest Structural barriers Competitive pricing pressure Category Dynamics Tap into excitement Innovate to address barriers Trade consumers up to higher-value offerings Pinnacle Strategy Baking Category 21
Price Tier/ Benefit PremiumSignature Duncan Hines tiered pricing/benefits strategy drives higher pricing and profitable mix Trading Consumers Up to Higher-Value Offerings Premium/ Extreme Indulgence Entry Level/ Everyday Baking Mid-Tier/ Special Recipes Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions. Share changes versus year ago. $ Share ∆ 2014 +0.7 pts. 2015 -0.4 pts. 2014 +0.4 pts. 2015 +0.9 pts. 2014 +0.6 pts. 2015 +-0.2 pts. Classic 22
 Kit includes mix, frosting and 6-inch disposable pan  Five popular flavors Innovating to Address Structural Barriers 2015 Launch 2016 New Items  Heart-shaped for Valentine’s Day and everyday occasions  Additional varieties planned in 2016 Perfect Size premium baking kits target smaller households 45% Incremental to Category 23
Wish-Bone 2016 Innovation Wish-Bone E.V.O.O. Wish-Bone Ristorante Italiano Reinvigorating the category with two new premium-tier platforms Better for You Oils Restaurant Experience  Healthy alternative sought by consumers  Highest level of EVOO in mainstream dressing  An artisan, restaurant-style experience  Packed with cheeses, herbs and spices 24
Gardein Innovation 2015 Innovation 2016 Innovation Rapidly growing plant-based protein offering  Expanded capacity in original Gardein production site in Vancouver  Acquired Hagerstown, MD facility to further expand capacity beyond 2016 $ Market Share Capacity 25 4.3% 6.3% 8.9% 11.7% 2012 2013 2014 2015 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions; share of frozen meat substitutes category.
Other Premium-Tier Innovation Seafood Hungry-Man 2016 2014/15 2016 2015 26
Sales Force Effectiveness 27 Advantage Survey RecognitionDistribution Point Expansion Channel Coverage OpportunityCustomer HQ Sales Increase Award-winning sales force drives improved category management and distribution expansion Leveraging businesses to cover all channels% Managed Directly by PF Sales Force 33% 67% 2012 2015 15.6 20.0 2012 2015 #7 2014 2015 Pinnacle Ranking Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions. #14 Club (in 000’s)
Expanding through Acquisitions Disciplined approach to M&A, with success integrating businesses that drive significant value creation North America focus    Existing or adjacent categories    Market leadership or line of sight to leadership    Synergy-rich transaction   Speed of integration    Acquisition date Oct. 2013 Nov. 2014 Jan. 2016 28
Boulder Brands Acquisition Attractive brand portfolio in growing health & wellness categories 39% 16% 23% 12% 10% 2015 Net Sales Strategic Rationale  Further expands Pinnacle’s health & wellness platform  Leverages scale and increases importance to broad range of retailers  Provides new growth platform in refrigerated temperature class  Offers significant synergies 29
Increased Scale and Capabilities Pinnacle Foods Boulder Brands % of Sales in North America 100% 98% # of Employees 4,300 841 Temperature Class Frozen Dry Grocery Refrigerated Retail Distribution Channel Traditional Natural & Organic Minimal # of Manufacturing Plants 13 3 % of Sales Self-Manufactured ~85% ~60%         30 Acquisition of Boulder Brands adds refrigerated capabilities and expanded reach in Natural & Organic channels
Boulder Brands consumption trends remain strong, with improvement in Smart Balance 31 +1.2% +9.9% -17.7% +2.7% +10.1% -15.0% Total Boulder Boulder excl. SB 12 weeks52 weeks Source: SPINS 2/21/16, Nielsen 2/13/16, and other customer data (US) 2/14/16. Smart Balance
Evolving Our Portfolio 32
Birds Eye Has Been our Vanguard in Health & Wellness since its Acquisition 33 April 2014 CAGNY Presentation
Evolving Our Portfolio *2015 is pro forma for Boulder Brands acquisition. 20162009 20142013 86% H&W 14% 45% Health & Wellness 55% 2009 2015* Since then, we have made significant progress toward tipping our portfolio to Health & Wellness 34
Health & Wellness Recognition 35 100 Cleanest Foods 2016 25 Best Frozen Foods 2016 Best New Products 2016Best New Vegan Product 2016 Pinnacle recognized with awards for innovation across the portfolio
Portfolio Addresses Consumer Health & Wellness Needs Affordable, convenient vegetables Plant-based protein Plant-based nutrition Crunchy Snacks Premium gluten-free brand Gluten-free snacking Veggie- based meals On-trend flavors, clean ingredients Plant-based       Vegetables    Soy Free    Gluten-Free       Natural      Organic   Non-GMO      Lactose Free/Reduced  Entire Product Line  Selected Products  36 Wish-Bone provides an essential ingredient in salad consumption Pure & Simple Meals Gluten-FreePlant-Based Consumption
Plant-Based Nutrition is at the Tipping Point of Becoming Mainstream TASTE “A diet higher in plant-based foods…is more health promoting and is associated with less environmental impact…” Scientific Report of the 2015 Dietary Guidelines Advisory Committee 37 ~1/3 of consumers actively avoid or reduce meat consumption Zogby Poll Beef vs. vegetables, per lb. to produce: • uses 47x more water • creates 67x more greenhouse gases Traditional protein supply cannot accommodate the population growth
The Gluten-Free Opportunity $5 $9 $12 $15 $19 $23 2013 2014 2015 2016E 2017E 2018E Significant category growth projected to continue, as diagnosis and awareness of celiac disease and gluten sensitivity grow Gluten-Free Sales Trend ($bn)  Most categories more than doubled in the past two years  2015 G-F share of overall composite categories still small at 6.5% Source: Mintel Group Ltd. report Gluten-free Foods – US – October 2015. 38
Gluten-Free Consumers Diagnosed with Celiac Disease Are/may be gluten intolerant/sensitive All Others 23% 35% Have No Choice Feel Better % of Gluten-Free Consumers Consumer Motivation Sources: Mintel Group Ltd. report Gluten-free Foods – US – October 2015; University of Chicago Medicine, Celiac Disease Center. 42% Better for Overall Health; More Natural 100%  97% of estimated celiac sufferers are undiagnosed  6X those diagnosed with celiac disease are estimated to suffer from Non-Celiac Gluten Sensitivity  Dedicated G-F brands preferred by gluten intolerant/sensitive consumers 39 Underlying gluten-free dynamics support continued growth
Separate Headquarters Locations Enable Portfolio Focus Against Consumer Trends 40 Focus on emerging health & wellness trends incubated in natural & organic channels New Jersey Boulder, CO Brands rooted in mainstream consumers and traditional channels
Agenda  Overview  How We Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 41
($m, except EPS) 2015 Vs. PY Net Sales – Consolidated Net Sales – NA Retail $2,656 $2,320 +2.5% +3.3% Gross Margin 28.2% +80 bps Operating Income (EBIT) $443 +5% Diluted EPS $1.92 +10% Note: Gross Margin, Operating Income (EBIT) and Diluted EPS are on an adjusted basis. See reconciliation to GAAP financial measures in Appendix. 2015 Full-Year Financial Results Third consecutive year of above-Algorithm growth 42
4.1% 3.7% 3.8% 3.5 – 4.0% 2.3% 2.7% 3.2% 2.0 – 3.0% 2013 2014 2015 2016E % of COGS Productivity in excess of inflation has enabled offset to weak industry environment with limited pricing Productivity and Inflation Note: 2016 includes Boulder Brands. 43 InflationProductivity
Conversion Logistics Proteins Grains & Oils PackagingVegetables & Fruit All Other Sugar & Cocoa 2015 Pro Forma Cost of Goods Sold: $2.3 billion More Inflationary  Sweeteners  Sugar  Eggs Deflationary  Grains & Oils  Proteins 2016 Outlook Diversity of cost basket serves as a natural hedge Input Cost Breakdown 44 Note: Pro forma for Boulder Brands acquired on January 15, 2016.
Tax-Related Cash Benefits Tax Shield Cash Benefit NOL tax benefit $17 $6 Wish-Bone & Gardein amortization 45 17 Boulder Brands amortization 19 7 Total Cash Tax Benefit $30 Cash Tax Benefits $m Tax benefits continue in 2016 and beyond, driven by residual NOLs and acquisition-related tax amortization… Duration of Benefit 11 years 12-13 years 13 years* …with opportunity to reduce effective tax rate over time 45 * $19m for three years, then declining gradually over the next ten years.
2012 2013 2014 2015 2016E Capital Expenditures Prudent investment approach against base business and acquisitions further supports strong cash flow $78m $84m $108m $135 - $145m $103m Base Pinnacle Acquisition-related Base Boulder Brands Acquisition-related Base Pinnacle 46
$345m $325m $452m $382m ~$425m 2012 2013 2014 2015 2016E Unleveraged Free Cash Flow Note: See reconciliation to GAAP financial measures in Appendix. Superior Free Cash Flow Generation Continued strong cash flow in 2016, as expected EBITDA growth and working capital management more than offset increased cash taxes 47
Pinnacle Has History of Deleveraging IPO proceeds used to reduce debt Note: Leverage statistics defined as Total Net Debt / Covenant Compliance EBITDA. 48 Target continued delevering of ~0.5X per year, consistent with historical pattern post acquisition 7.6X 6.2X 4.5X 4.9X 3.8X 4.8X 3.8X Apr ‘07 Blackstone LBO Dec ‘09 Birds Eye Acquisition Mar ‘13 IPO Oct ‘13 Wish-Bone Acquisition Dec ‘15 Dec ‘15 PF for BDBD Acquisition Dec ‘17 Estimate Approximate 2-year path to 3.8X Target deleveraging post acquisition
After servicing debt and paying dividends at approximately 50% of net earnings, cash flow deployed to highest priorities… Capital Allocation Strategy #1 Debt Reduction#2 49 Share Repurchase#3 Acquisitions#1 …with immediate capacity to make acquisitions
Net Sales Growth in line with categories Inflation 2.0% to 3.0% of COGS Nm Productivity 3.5% to 4.0% of COGS ETR ≥36.6% Diluted EPS $2.08 to $2.13 (Incl. ~$0.05 from Boulder Brands) CAPEX $135m to $145m Note: Diluted EPS and ETR adjusted for items affecting comparability. Outlook H2 weighted H2 weighted Q1 impacted by significant new product investment, Q2-Q4 strong growth 2016 Full Year Outlook 50
51 Executing our Playbook  Portfolio Management Strategy  Industry-leading efficiency  Superior free cash flow Expanding our Business  Innovation and renovation  Distribution expansion  Acquisition Evolving our Portfolio Focus  Pinnacle Playbook applied to faster growth categories  Mainstreaming Health and Wellness benefits How We Create Value
Appendix
Reconciliation to GAAP Financial Measures (1) Primarily includes: Plant integration and restructuring charges and expenses related to the Boulder acquisition. (2) Primarily includes: Foreign exchange losses resulting from intra-entity loans, equity-based compensation exp. related to the Hillshire agreement termination and mark-to-market losses. (3) Primarily includes: Hillshire agreement termination fee (net of costs), restructuring charges including integration costs, employee severance and non-recurring merger costs. (4) Primarily includes: Equity-based compensation expense resulting from liquidity event, fair value write-up of acquired inventories and mark-to-market gains/losses. (5) Primarily includes: Restructuring charges from plant consolidations, integration costs, non-recurring merger costs and employee severance. (6) Primarily includes: Bond redemption costs and management fee paid to sponsor. (7) Pro forma data reflects Adjusted Statement of Operations amounts assuming IPO and 2013 Refinancing occurred on the first day of Fiscal 2013. Year (52 Weeks) Ended December 29, 2013 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,656 $741 $425 $337 $212 117.3 $1.81 Acquisition, merger and other restructuring charges (1) 10 14 14 10 Other non-cash items (2) (1) 4 4 3 Adjusted 2,656 750 443 355 225 117.3 $1.92 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,591 $681 $512 $416 $248 116.9 $2.13 Acquisition, merger and other restructuring charges (3) 12 (130) (130) (79) Other non-cash items (4) 18 41 41 34 Adjusted 2,591 711 423 327 203 116.9 $1.74 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,464 $654 $293 $161 $89 108.6 $0.82 Acquisition, merger and other restructuring charges (5) 4 22 22 14 Other non-cash items (4) 6 6 6 3 Other adjustments (6) 53 76 55 Adjusted 2,464 664 374 265 161 108.6 $1.49 IPO and Refinancing (7) 26 16 8.0 Pro Forma $2,464 $664 $374 $291 $177 116.6 $1.52 Stock-based Compensation 1 8 8 6 0.05 Pro Forma Excluding Stock-based Compensation $665 $382 $299 $183 116.6 $1.57 Year (52 Weeks) Ended December 27, 2015 Year (52 Weeks) Ended December 28, 2014 53
(1) Primarily includes: Accelerated depreciation from plant consolidations, restructuring charges including integration costs and employee severance. (2) Primarily mark to market gains. (3) Primarily includes: Bond redemption costs. (4) Pro forma data reflects Adjusted Statement of Operations amounts assuming IPO occurred on the first day of Fiscal 2012. Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT Net Earnings Shares Per Share Reported $2,479 $585 $284 $53 86.5 $0.61 Acquisition, merger and other restructuring charges (1) 38 45 28 Other non-cash items (2) (1) Other adjustments (3) 1 21 23 Adjusted 2,479 623 350 104 86.5 $1.20 IPO (4) 30 30.9 Public company costs (4) (3) (2) Pro Forma $2,479 $623 $347 $132 117.4 $1.12 Year (53 Weeks) Ended December 30, 2012 Reconciliation to GAAP Financial Measures 54
(1) Primarily includes: Restructuring charges from plant consolidations, integration costs, non-recurring merger costs and employee severance. 2012 2013 2014 2015 Reported Cash Flows from Operating Activities $203 $262 $551 $373 Capital expenditures (78) (84) (103) (108) Hillshire termination fee (net of costs and cash taxes) (150) Acquisition, merger and other restructuring charges (1) 48 39 64 38 Free Cash Flow $173 $217 $362 $303 Cash interest expense 172 108 90 79 Unleveraged Free Cash Flow $345 $325 $452 $382 Reconciliation of Unleveraged Free Cash Flow to Reported Cash Flows from Operating Activities - $m Reconciliation to GAAP Financial Measures 55

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Pinnacle Foods Inc. Presentation to CAGNY

  • 1.
    Pinnacle Foods Presentationto CAGNY March 24, 2016
  • 2.
    This presentation contains“forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs, projections and targets, many of which, by their nature, are inherently uncertain. Such expectations, beliefs, projections and targets are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs, projections and targets will be achieved and actual results may differ materially from what is expressed in or indicated by the forward- looking statements. Forward-looking statements are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including risks detailed in Pinnacle Foods Inc.’s (“Pinnacle Foods,” “Pinnacle” or the “Company”) filings with the U.S. Securities and Exchange Commission (the “SEC”). Nothing in this presentation should be regarded as a representation by any person that these forward-looking statements will be achieved. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws. This presentation includes certain financial measures, including Adjusted Gross Profit and Unleveraged Free Cash Flow, which differ from results using U.S. Generally Accepted Accounting Principles (GAAP). Non-GAAP financial measures typically exclude certain charges, which are not expected to occur routinely in future periods. The Company uses non-GAAP financial measures internally to focus management on performance excluding these special charges to gauge our business operating performance. Management believes this information is helpful to investors in understanding trends in the business. The most directly comparable GAAP financial measures and reconciliations to non-GAAP financial measures are set forth in the slides in this presentation and included in the Company’s filings with the SEC. Forward-Looking Statements & Non-GAAP Financial Measures 2
  • 3.
    Bob Gamgort Chief ExecutiveOfficer Craig Steeneck EVP & CFO Maria Sceppaguercio SVP Investor Relations Pinnacle Management Mark Schiller EVP & President North America Retail Roger Deromedi Chairman 3
  • 4.
    Pinnacle Leadership 4 Since IPO,continued development of the management team Bob Gamgort Craig Steeneck Mark Schiller Mike Wittman Chris Boever Mike Barkley Mary Beth DeNooyer Kelley Maggs Chief Executive Officer EVP & Chief Financial Officer EVP & President North America Retail EVP & Chief Supply Chain Officer EVP & Chief Customer Officer EVP & Chief Marketing Officer EVP & Chief Human Resources Officer EVP & General Counsel 7 years at Pinnacle 11 years at Pinnacle 5 years at Pinnacle <1 year at Pinnacle 4 years at Pinnacle 2 years at Pinnacle 3 years at Pinnacle 15 years at Pinnacle 30 years Relevant Industry Experience 25 years Relevant Industry Experience 30 years Relevant Industry Experience 30+ years Relevant Industry Experience 25 years Relevant Industry Experience 20 years Relevant Industry Experience 22 years Relevant Industry Experience 23 years Relevant Industry Experience IHF IHF Executive Leadership Team
  • 5.
    Pinnacle Leadership Evolution toan independent Board Roger Deromedi Ray Silcock Ann Fandozzi Jane Nielsen Muktesh (Micky) Pant Yannis Skoufalos Mark Jung Current Position Chairman Pinnacle Foods, Former CEO Kraft Foods EVP & CFO Diamond Foods President & CEO vRide EVP & CFO Coach, Inc. CEO Yum! Restaurants China Global Product Supply Officer The Procter & Gamble Company Chairman Accela, Inc. On PF Board 9 Years 8 Years 4 Years 2 Years 1 Year < 1 Year <1 Year Expertise Food Sector & General Mgmt CPG Sector & Finance Consumer Staples & GM Beverages & Finance Food, Beverage & Restaurant CPG & Supply Chain Consumer Tech & Digital Content Former Companies Board of Directors New since IPO 5
  • 6.
    Agenda  Overview  HowWe Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 6
  • 7.
    Attractive Value CreationResults Since IPO Net Sales Operating Income EPS Dividend Yield In Line with Categories 10 – 12% 4 – 5% 7 – 8% 3 – 4% LT Organic Growth Target @ IPO 13% 14% ~3% Outpaced Categories 17% 2013 13% Outpaced Categories 10% 39% ~3% Outpaced Categories 42% 2014 2015 Accretive Acquisitions Accelerate Growth Beyond Algorithm 7 5% 10% ~3% 2016 Guidance X% ~10%* ~X% In Line with Categories Note: Excludes items affecting comparability. See reconciliation to GAAP financial measures in Appendix. * At mid-point of range.
  • 8.
    2015 Pro FormaNet Sales: $3.2 billion Birds Eye Frozen 39% Specialty 11% Duncan Hines Grocery 34% Note: Pro forma for Boulder Brands acquired on January 15, 2016. Boulder Brands 16% Diversified Portfolio with Scale Boulder Brands acquisition brings Pinnacle above $3 billion in net sales 8
  • 9.
    Agenda  Overview  HowWe Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 9
  • 10.
    Executing Our Playbook 10 Invest differentially in brands using Portfolio Management Strategy  Deliver industry-leading efficiency  Generate exceptional cash flow
  • 11.
     Invest inmarketing to drive growth and share expansion  Focus on breakthrough innovation  Maintain stable sales/market position and cash flow  Focus on brand renovation Leadership Brands Foundation Brands Portfolio Management Strategy 11
  • 12.
    Leadership Brands Category Pinnacle Market Position Growing/ Holding Share Frozen Vegetables#1 Frozen Complete Bagged Meals #1 Frozen Prepared Seafood #2 Frozen Meat Substitutes #2 Shelf-Stable Pickles #1 Table Syrups #1 Cake/Brownie Mixes and Frostings #2 Shelf-Stable Salad Dressings #3 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions; market position ranks are among branded players. Composite share growth driven by Leadership Brands Composite $ Market Share vs. Year Ago 2012 2013 2014 2015 2016 YTD Change +0.1 pts. +0.3 pts. +0.2 pts. +0.5 pts. +0.9 pts. Consistent Market Share Growth 12
  • 13.
    Productivity % ofCOGS Industry-Leading Efficiency 2013 2014 2016E2015 4.1% 3.7% 3.5%- 4.0%3.8% SG&A % of Net Sales Peer Avg.(1) Pinnacle Source: Pinnacle analysis. SG&A defined as selling, general and administrative expenses excluding marketing investment, intangible amortization and one-time items. (1) Peers: BGS, CAG, CPB, GIS, KHC, MKC, SJM. Peer Average represents 2015 fiscal year-end data. ~12% 9% Company culture focused on consistently delivering significant productivity savings and maintaining a lean and efficient organization structure 13
  • 14.
    Significant Margin Expansionwith Continued Upside Pinnacle Margin Expansion Gross margin expansion fuels operating margin growth… Note: Gross Margin and Operating Margin are on an adjusted basis. See reconciliation to GAAP financial measures in Appendix. 14 Food Company Comparison Gross Profit % Net Sales …with significant opportunity to expand further 2012 2013 2014 2015 +310 bps +270 bps Gross Margin Operating Margin 25.1% 16.7% 28.2% 14.0% 28.2% PF 22.6% 64.6%
  • 15.
    $345m $325m $452m $382m 2012 20132014 2015 Unleveraged Free Cash Flow (1) ~4% ~6% Peer Average Pinnacle Free Cash Flow Yield (2) (1) See reconciliation to GAAP financial measures in Appendix. (2) Based on industry analysts’ valuation analyses using prices as of 3/18/2016. Superior Free Cash Flow Generation Consistent Unleveraged Free Cash Flow results in outsized Free Cash Flow Yield Higher inventories in 2015 primarily due to strong crop season pressured Free Cash Flow by $47m 15
  • 16.
  • 17.
    Expanding Our Business OrganicGrowth Acquisitions  Wish-Bone  Gardein  Boulder Brands  Innovation and Renovation  Trading Consumers Up / Driving Mix  Sales Force Effectiveness 17
  • 18.
    Birds Eye 2015Innovation Strong 2015 performance driven by base business growth and innovation platforms 18 Flavor Full Protein Blends Disney-Themed Total Birds Eye Performance vs. PY 2014 2015 2014 2015 $ Consumption $ Market Share +1.0% +6.7% +0.8 pts. +1.8 pts. 75% Incremental to Birds Eye, combined Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions.
  • 19.
    Birds Eye 2016Innovation Building on successful platforms introduced in 2015 Protein Blends Disney- Themed Flavor Full 19
  • 20.
    Family Size Premium-Tier InnovationPlatform 16% 17% 21% 24% 28% 34% 40% 2009 2010 2011 2012 2013 2014 2015 $ Market Share  Premium-tier distribution expansion planned in 2016  New capacity added in late 2015 to meet growing demand Birds Eye Voila! Family Size distribution and Q3 innovation launch continued the brand’s momentum in 2015 and the outlook for 2016 20 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions.
  • 21.
    High consumer interest Structural barriers Competitive pricing pressure Category Dynamics Tap into excitement Innovateto address barriers Trade consumers up to higher-value offerings Pinnacle Strategy Baking Category 21
  • 22.
    Price Tier/ Benefit PremiumSignature Duncan Hinestiered pricing/benefits strategy drives higher pricing and profitable mix Trading Consumers Up to Higher-Value Offerings Premium/ Extreme Indulgence Entry Level/ Everyday Baking Mid-Tier/ Special Recipes Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions. Share changes versus year ago. $ Share ∆ 2014 +0.7 pts. 2015 -0.4 pts. 2014 +0.4 pts. 2015 +0.9 pts. 2014 +0.6 pts. 2015 +-0.2 pts. Classic 22
  • 23.
     Kit includesmix, frosting and 6-inch disposable pan  Five popular flavors Innovating to Address Structural Barriers 2015 Launch 2016 New Items  Heart-shaped for Valentine’s Day and everyday occasions  Additional varieties planned in 2016 Perfect Size premium baking kits target smaller households 45% Incremental to Category 23
  • 24.
    Wish-Bone 2016 Innovation Wish-BoneE.V.O.O. Wish-Bone Ristorante Italiano Reinvigorating the category with two new premium-tier platforms Better for You Oils Restaurant Experience  Healthy alternative sought by consumers  Highest level of EVOO in mainstream dressing  An artisan, restaurant-style experience  Packed with cheeses, herbs and spices 24
  • 25.
    Gardein Innovation 2015 Innovation 2016Innovation Rapidly growing plant-based protein offering  Expanded capacity in original Gardein production site in Vancouver  Acquired Hagerstown, MD facility to further expand capacity beyond 2016 $ Market Share Capacity 25 4.3% 6.3% 8.9% 11.7% 2012 2013 2014 2015 Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions; share of frozen meat substitutes category.
  • 26.
    Other Premium-Tier Innovation SeafoodHungry-Man 2016 2014/15 2016 2015 26
  • 27.
    Sales Force Effectiveness 27 AdvantageSurvey RecognitionDistribution Point Expansion Channel Coverage OpportunityCustomer HQ Sales Increase Award-winning sales force drives improved category management and distribution expansion Leveraging businesses to cover all channels% Managed Directly by PF Sales Force 33% 67% 2012 2015 15.6 20.0 2012 2015 #7 2014 2015 Pinnacle Ranking Source: IRI US Multi-Outlet data, based on IRI’s Pinnacle custom definitions. #14 Club (in 000’s)
  • 28.
    Expanding through Acquisitions Disciplinedapproach to M&A, with success integrating businesses that drive significant value creation North America focus    Existing or adjacent categories    Market leadership or line of sight to leadership    Synergy-rich transaction   Speed of integration    Acquisition date Oct. 2013 Nov. 2014 Jan. 2016 28
  • 29.
    Boulder Brands Acquisition Attractivebrand portfolio in growing health & wellness categories 39% 16% 23% 12% 10% 2015 Net Sales Strategic Rationale  Further expands Pinnacle’s health & wellness platform  Leverages scale and increases importance to broad range of retailers  Provides new growth platform in refrigerated temperature class  Offers significant synergies 29
  • 30.
    Increased Scale andCapabilities Pinnacle Foods Boulder Brands % of Sales in North America 100% 98% # of Employees 4,300 841 Temperature Class Frozen Dry Grocery Refrigerated Retail Distribution Channel Traditional Natural & Organic Minimal # of Manufacturing Plants 13 3 % of Sales Self-Manufactured ~85% ~60%         30 Acquisition of Boulder Brands adds refrigerated capabilities and expanded reach in Natural & Organic channels
  • 31.
    Boulder Brands consumptiontrends remain strong, with improvement in Smart Balance 31 +1.2% +9.9% -17.7% +2.7% +10.1% -15.0% Total Boulder Boulder excl. SB 12 weeks52 weeks Source: SPINS 2/21/16, Nielsen 2/13/16, and other customer data (US) 2/14/16. Smart Balance
  • 32.
  • 33.
    Birds Eye HasBeen our Vanguard in Health & Wellness since its Acquisition 33 April 2014 CAGNY Presentation
  • 34.
    Evolving Our Portfolio *2015is pro forma for Boulder Brands acquisition. 20162009 20142013 86% H&W 14% 45% Health & Wellness 55% 2009 2015* Since then, we have made significant progress toward tipping our portfolio to Health & Wellness 34
  • 35.
    Health & WellnessRecognition 35 100 Cleanest Foods 2016 25 Best Frozen Foods 2016 Best New Products 2016Best New Vegan Product 2016 Pinnacle recognized with awards for innovation across the portfolio
  • 36.
    Portfolio Addresses ConsumerHealth & Wellness Needs Affordable, convenient vegetables Plant-based protein Plant-based nutrition Crunchy Snacks Premium gluten-free brand Gluten-free snacking Veggie- based meals On-trend flavors, clean ingredients Plant-based       Vegetables    Soy Free    Gluten-Free       Natural      Organic   Non-GMO      Lactose Free/Reduced  Entire Product Line  Selected Products  36 Wish-Bone provides an essential ingredient in salad consumption Pure & Simple Meals Gluten-FreePlant-Based Consumption
  • 37.
    Plant-Based Nutrition isat the Tipping Point of Becoming Mainstream TASTE “A diet higher in plant-based foods…is more health promoting and is associated with less environmental impact…” Scientific Report of the 2015 Dietary Guidelines Advisory Committee 37 ~1/3 of consumers actively avoid or reduce meat consumption Zogby Poll Beef vs. vegetables, per lb. to produce: • uses 47x more water • creates 67x more greenhouse gases Traditional protein supply cannot accommodate the population growth
  • 38.
    The Gluten-Free Opportunity $5 $9 $12 $15 $19 $23 20132014 2015 2016E 2017E 2018E Significant category growth projected to continue, as diagnosis and awareness of celiac disease and gluten sensitivity grow Gluten-Free Sales Trend ($bn)  Most categories more than doubled in the past two years  2015 G-F share of overall composite categories still small at 6.5% Source: Mintel Group Ltd. report Gluten-free Foods – US – October 2015. 38
  • 39.
    Gluten-Free Consumers Diagnosed with CeliacDisease Are/may be gluten intolerant/sensitive All Others 23% 35% Have No Choice Feel Better % of Gluten-Free Consumers Consumer Motivation Sources: Mintel Group Ltd. report Gluten-free Foods – US – October 2015; University of Chicago Medicine, Celiac Disease Center. 42% Better for Overall Health; More Natural 100%  97% of estimated celiac sufferers are undiagnosed  6X those diagnosed with celiac disease are estimated to suffer from Non-Celiac Gluten Sensitivity  Dedicated G-F brands preferred by gluten intolerant/sensitive consumers 39 Underlying gluten-free dynamics support continued growth
  • 40.
    Separate Headquarters LocationsEnable Portfolio Focus Against Consumer Trends 40 Focus on emerging health & wellness trends incubated in natural & organic channels New Jersey Boulder, CO Brands rooted in mainstream consumers and traditional channels
  • 41.
    Agenda  Overview  HowWe Create Value  Executing Our Playbook  Expanding Our Business  Evolving Our Portfolio Focus  Financial Update 41
  • 42.
    ($m, except EPS)2015 Vs. PY Net Sales – Consolidated Net Sales – NA Retail $2,656 $2,320 +2.5% +3.3% Gross Margin 28.2% +80 bps Operating Income (EBIT) $443 +5% Diluted EPS $1.92 +10% Note: Gross Margin, Operating Income (EBIT) and Diluted EPS are on an adjusted basis. See reconciliation to GAAP financial measures in Appendix. 2015 Full-Year Financial Results Third consecutive year of above-Algorithm growth 42
  • 43.
    4.1% 3.7% 3.8% 3.5 – 4.0% 2.3% 2.7% 3.2% 2.0– 3.0% 2013 2014 2015 2016E % of COGS Productivity in excess of inflation has enabled offset to weak industry environment with limited pricing Productivity and Inflation Note: 2016 includes Boulder Brands. 43 InflationProductivity
  • 44.
    Conversion Logistics Proteins Grains & Oils PackagingVegetables &Fruit All Other Sugar & Cocoa 2015 Pro Forma Cost of Goods Sold: $2.3 billion More Inflationary  Sweeteners  Sugar  Eggs Deflationary  Grains & Oils  Proteins 2016 Outlook Diversity of cost basket serves as a natural hedge Input Cost Breakdown 44 Note: Pro forma for Boulder Brands acquired on January 15, 2016.
  • 45.
    Tax-Related Cash Benefits Tax Shield Cash Benefit NOLtax benefit $17 $6 Wish-Bone & Gardein amortization 45 17 Boulder Brands amortization 19 7 Total Cash Tax Benefit $30 Cash Tax Benefits $m Tax benefits continue in 2016 and beyond, driven by residual NOLs and acquisition-related tax amortization… Duration of Benefit 11 years 12-13 years 13 years* …with opportunity to reduce effective tax rate over time 45 * $19m for three years, then declining gradually over the next ten years.
  • 46.
    2012 2013 20142015 2016E Capital Expenditures Prudent investment approach against base business and acquisitions further supports strong cash flow $78m $84m $108m $135 - $145m $103m Base Pinnacle Acquisition-related Base Boulder Brands Acquisition-related Base Pinnacle 46
  • 47.
    $345m $325m $452m $382m ~$425m 2012 20132014 2015 2016E Unleveraged Free Cash Flow Note: See reconciliation to GAAP financial measures in Appendix. Superior Free Cash Flow Generation Continued strong cash flow in 2016, as expected EBITDA growth and working capital management more than offset increased cash taxes 47
  • 48.
    Pinnacle Has Historyof Deleveraging IPO proceeds used to reduce debt Note: Leverage statistics defined as Total Net Debt / Covenant Compliance EBITDA. 48 Target continued delevering of ~0.5X per year, consistent with historical pattern post acquisition 7.6X 6.2X 4.5X 4.9X 3.8X 4.8X 3.8X Apr ‘07 Blackstone LBO Dec ‘09 Birds Eye Acquisition Mar ‘13 IPO Oct ‘13 Wish-Bone Acquisition Dec ‘15 Dec ‘15 PF for BDBD Acquisition Dec ‘17 Estimate Approximate 2-year path to 3.8X Target deleveraging post acquisition
  • 49.
    After servicing debtand paying dividends at approximately 50% of net earnings, cash flow deployed to highest priorities… Capital Allocation Strategy #1 Debt Reduction#2 49 Share Repurchase#3 Acquisitions#1 …with immediate capacity to make acquisitions
  • 50.
    Net Sales Growthin line with categories Inflation 2.0% to 3.0% of COGS Nm Productivity 3.5% to 4.0% of COGS ETR ≥36.6% Diluted EPS $2.08 to $2.13 (Incl. ~$0.05 from Boulder Brands) CAPEX $135m to $145m Note: Diluted EPS and ETR adjusted for items affecting comparability. Outlook H2 weighted H2 weighted Q1 impacted by significant new product investment, Q2-Q4 strong growth 2016 Full Year Outlook 50
  • 51.
    51 Executing our Playbook Portfolio Management Strategy  Industry-leading efficiency  Superior free cash flow Expanding our Business  Innovation and renovation  Distribution expansion  Acquisition Evolving our Portfolio Focus  Pinnacle Playbook applied to faster growth categories  Mainstreaming Health and Wellness benefits How We Create Value
  • 52.
  • 53.
    Reconciliation to GAAPFinancial Measures (1) Primarily includes: Plant integration and restructuring charges and expenses related to the Boulder acquisition. (2) Primarily includes: Foreign exchange losses resulting from intra-entity loans, equity-based compensation exp. related to the Hillshire agreement termination and mark-to-market losses. (3) Primarily includes: Hillshire agreement termination fee (net of costs), restructuring charges including integration costs, employee severance and non-recurring merger costs. (4) Primarily includes: Equity-based compensation expense resulting from liquidity event, fair value write-up of acquired inventories and mark-to-market gains/losses. (5) Primarily includes: Restructuring charges from plant consolidations, integration costs, non-recurring merger costs and employee severance. (6) Primarily includes: Bond redemption costs and management fee paid to sponsor. (7) Pro forma data reflects Adjusted Statement of Operations amounts assuming IPO and 2013 Refinancing occurred on the first day of Fiscal 2013. Year (52 Weeks) Ended December 29, 2013 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,656 $741 $425 $337 $212 117.3 $1.81 Acquisition, merger and other restructuring charges (1) 10 14 14 10 Other non-cash items (2) (1) 4 4 3 Adjusted 2,656 750 443 355 225 117.3 $1.92 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,591 $681 $512 $416 $248 116.9 $2.13 Acquisition, merger and other restructuring charges (3) 12 (130) (130) (79) Other non-cash items (4) 18 41 41 34 Adjusted 2,591 711 423 327 203 116.9 $1.74 Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT EBT Net Earnings Shares Per Share Reported $2,464 $654 $293 $161 $89 108.6 $0.82 Acquisition, merger and other restructuring charges (5) 4 22 22 14 Other non-cash items (4) 6 6 6 3 Other adjustments (6) 53 76 55 Adjusted 2,464 664 374 265 161 108.6 $1.49 IPO and Refinancing (7) 26 16 8.0 Pro Forma $2,464 $664 $374 $291 $177 116.6 $1.52 Stock-based Compensation 1 8 8 6 0.05 Pro Forma Excluding Stock-based Compensation $665 $382 $299 $183 116.6 $1.57 Year (52 Weeks) Ended December 27, 2015 Year (52 Weeks) Ended December 28, 2014 53
  • 54.
    (1) Primarily includes: Accelerateddepreciation from plant consolidations, restructuring charges including integration costs and employee severance. (2) Primarily mark to market gains. (3) Primarily includes: Bond redemption costs. (4) Pro forma data reflects Adjusted Statement of Operations amounts assuming IPO occurred on the first day of Fiscal 2012. Diluted In millions, except per share Gross Diluted Earnings Net Sales Profit EBIT Net Earnings Shares Per Share Reported $2,479 $585 $284 $53 86.5 $0.61 Acquisition, merger and other restructuring charges (1) 38 45 28 Other non-cash items (2) (1) Other adjustments (3) 1 21 23 Adjusted 2,479 623 350 104 86.5 $1.20 IPO (4) 30 30.9 Public company costs (4) (3) (2) Pro Forma $2,479 $623 $347 $132 117.4 $1.12 Year (53 Weeks) Ended December 30, 2012 Reconciliation to GAAP Financial Measures 54
  • 55.
    (1) Primarily includes:Restructuring charges from plant consolidations, integration costs, non-recurring merger costs and employee severance. 2012 2013 2014 2015 Reported Cash Flows from Operating Activities $203 $262 $551 $373 Capital expenditures (78) (84) (103) (108) Hillshire termination fee (net of costs and cash taxes) (150) Acquisition, merger and other restructuring charges (1) 48 39 64 38 Free Cash Flow $173 $217 $362 $303 Cash interest expense 172 108 90 79 Unleveraged Free Cash Flow $345 $325 $452 $382 Reconciliation of Unleveraged Free Cash Flow to Reported Cash Flows from Operating Activities - $m Reconciliation to GAAP Financial Measures 55