Attached files
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| 8-K - FORM 8-K - Pinnacle Foods Finance LLC | d8k.htm |
 Pinnacle Foods
Wells Fargo 2010 Consumer
Conference
September 30, 2010
Exhibit 99.1 |
 2
Forward-Looking Statements and GAAP Reconciliation
Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of
the times at, or by which, such performance or results will be achieved or whether such
performance or results will ever be achieved. Forward-looking information
is based on information available at the time and management’s good
faith belief with respect to future events, and is subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed in the
statements. Forward-looking statements speak only as of the date the
statements are made. Pinnacle Foods Finance LLC (“Pinnacle
Foods,”
“Pinnacle”
or the “Company”) assumes no obligation to update forward-looking
statements to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information except to the extent required by
applicable securities laws. If the Company does update one or more
forward-looking statements, no inference should be drawn that the
Company will make additional updates with respect thereto or with respect to
other forward-looking statements.
SEC rules regulate the use of “non-GAAP financial measures”
in public disclosures, such as “EBITDA”
“Adjusted EBITDA”
and “Consolidated EBITDA”, that are derived on the basis of methodologies
other than in accordance with generally accepted accounting principles, or
“GAAP.” These rules govern the manner in which non-GAAP
financial measures may be publicly presented and prohibit in all filings
with the SEC, among other things: •
exclusion of charges or liabilities that require, or will require, cash settlement
or would have required cash settlement, absent an ability to settle in
another manner, from a non-GAAP financial measure; and •
adjustment of a non-GAAP financial measure to eliminate or smooth items
identified as non-recurring, infrequent or unusual, when the nature of
the charge or gain is such that it has occurred in the past two years or is reasonably likely to
recur within the next two years.
We have included non-GAAP financial measures in this presentation, including
EBITDA, Adjusted EBITDA and Consolidated EBITDA, that may not comply with
the SEC rules governing the presentation of non-GAAP financial
measures. In addition, the Company’s measurements of Consolidated EBITDA
are based on definitions of EBITDA included in certain of the Company’s
debt agreements and, as a result, may not be comparable to those of other
companies. |
 3
To become a leading publicly-owned
food
company
by
creating
a
compelling
investment
opportunity
through
the
strength
of
our
brands
and
people. |
 4
Key Investment Highlights
•
Brand strength
•
Pinnacle brands hold #1 or #2 market position in 8 of 12 major category segments in
which they compete
•
Limited private label penetration across most categories
•
Improved health and nutrition profile with Birds Eye acquisition
•
Successful history of brand innovation and renovation
|
 5
Category Segments
Major Brands
Market
Position
IRI Market
Share
Frozen Vegetables
#1
26.6
Shelf-Stable Pickles, Peppers and Relish
#1
18.8
Baking Mixes and Frostings
#2
17.2
Frozen Waffles, Pancakes and French Toast¹
#2
15.1
Frozen Prepared Seafood²
#2
19.2
Frozen Complete Bagged Meals³
#2
23.7
Frozen Breakfast Entrées / Savory Handhelds
#2
8.7
Table Syrups²
#2
18.2
Canned Meat
2,4
#3
9.4
Bagels
#3
7.9
Single-Serve Frozen Dinners and
Entrées² #4
8.7
Frozen Pizza-for-One
#4
9.9
Iconic, Leading Brand Equities
(52-Weeks Ending August 2010)
Pinnacle holds the #1 or #2 market position in 8 of the 12 major
category segments
1. Aunt Jemima holds #1 share in frozen pancakes and French toast.
2. Combined market position among branded players.
3. Birds Eye Voila! holds the #1 market position in the value sub-segment of
frozen complete bagged meals. 4.
Armour
holds
#1
market
position
in
the
Vienna
sausage,
potted
meat
and
sliced
beef
segments.
Categories with above average private label penetration
|
 6
Product Improvements
Seafood: Whole Fish Fillets
Log Cabin: No HFCS
Duncan Hines:
Whole Grain Muffins
Brand Renovation and Innovation are Important Growth
Drivers
Updated Packaging
New Products |
 7
Key Investment Highlights
•
Brand strength
•
Pinnacle brands hold #1 or #2 market position in 8 of 12 major category segments in
which they compete
•
Limited private label penetration across most categories
•
Improved health and nutrition profile with Birds Eye acquisition
•
Successful history of brand innovation and renovation
•
Portfolio diversification
•
Participation in a broad set of categories
•
Limited input cost concentration
•
Scale where needed –
5
th
largest frozen food company |
 8
Participation in a Broad Set of Categories
Snacks 4%
3%
Private Label
7%
4%
6%
5%
20%
Canada 3%
Other 5%
5%
6%
9%
11%
Other 5%
Foodservice 7%
___________________________
Note: LTM as of 6/27/10.
Duncan Hines Grocery Division
Birds Eye Frozen Division
Specialty Foods Division |
 9
Pinnacle Now Ranks Fifth in Frozen
$ Share
16.9
5.3
4.9
4.6
4.1
3.8
2.9
2.4
2.0
1.7
$ Retail
Sales
$5,405MM
$1,706MM
$1,551MM
$1,467MM
$1,321MM
$1,219MM
$938MM
$769MM
$633MM
$542MM
Source:
Symphony
IRI
InfoScan
Reviews:
Total
Frozen
Categories;
Total
US
Food;
52
weeks
ending
June
13,
2010 |
 10
Key Investment Highlights
•
Brand strength
•
Pinnacle brands hold #1 or #2 market position in 8 of 12 major category segments in
which they compete
•
Limited private label penetration across most categories
•
Improved health and nutrition profile with Birds Eye acquisition
•
Successful history of brand innovation and renovation
•
Portfolio diversification
•
Participation in a broad set of categories
•
Limited input cost concentration
•
Scale where needed –
5
th
largest frozen food company
•
Nimble, responsive organization
•
Experienced senior team
•
Management alignment to value creation
•
Speed –
Birds Eye integration |
 Birds Eye Integration |
 12
Ideal Addition to the
Pinnacle Portfolio
Iconic brand with #1 market
position in $2.3B frozen
vegetable category
Products well aligned with
current consumer
preferences: health &
nutrition, quality and
convenience
Successful history of
innovation and new product
development
Improves Operating
Capabilities of
Both Businesses
Combination results in
diversified scale player with
leading EBITDA
margins…Pinnacle is now
the 5th largest manufacturer
in frozen food
Combined portfolio
enhances retail coverage,
especially within frozen food
segment
Achievable
Integration / Synergies
The combination will deliver
strong synergies
Similar business lines, sales
coverage, and information
systems enhance integration
Birds Eye Acquisition |
 13
Pinnacle Named Frozen Food Processor of the Year |
 14
Birds Eye Integration Complete; Synergies
Continue Ahead of Plan
•
Management has increased estimated synergies as a result of the Birds Eye
acquisition to $50 million, up from $45 million
•
Substantially all of the actions have been implemented to achieve full synergy
amount during FY 2011
•
Half of the annual savings will be realized in FY 2010 and the full annual savings
to be realized in FY 2011
•
The closing of Birds Eye’s Rochester Headquarters substantially completed in
Q3 2010 •
The Company has fully deployed the One Order, One Invoice, One Truck combined
distribution strategy in both the dry and frozen categories
•
Procurement functions have been integrated and are leveraging the
business’ combined scale
•
Administrative functions have been successfully integrated into the Company’s
new Cherry Hill, NJ facility |
 Financial Performance |
 16
1
st
Half (1H) 2010 Business Update
•
Strong
1H
results
with
Management
EBITDA
up
19%
y-o-y
to
$222
million
(1)
•
Cash
Flow
from
operations
of
$153
million
generated
in
the
first
6
months
of
2010
•
Gross Margin +330 bps from favorable product mix, beneficial movement in
commodity prices and productivity initiatives
(2)
•
Net
Leverage
has
declined
from
6.0x
at
the
time
of
the
Birds
Eye
transaction
to
5.6x
as
of
Q2
2010
•
Net Sales decline of 3.6% in 1H 2010 vs. 1H 2009 was driven by the Company’s
continued efforts to deemphasize Private Label and Foodservice offerings,
its announced discontinuation of Birds Eye's Steamfresh Meals, and a tough
trading environment •
North American Retail sales were approximately flat in 1H 2010 vs. 1H 2009
•
At
the
end
of
1H
the
Company
had
$143
million
of
cash
which
will
be
partially
used
to
fund
typical
seasonal working capital needs in the third quarter
•
Given its strong cash position, the Company does not anticipate any revolver draw
in 2010 •
Refinanced debt (replaced Term Loan C with $442MM Term Loan D and $400MM 8.25%
Senior Notes)
•
Leverage neutral transaction with reduction in overall cost of capital
•
Term Loan D applicable margin 150bps lower than Term Loan C
•
Enhanced current debt maturity profile (New Senior Notes due September 2017)
___________________________
1.
Before variable product contribution from exited businesses of $3.8mm and estimated
synergies associated with the Birds Eye Acquisition of $18.1mm. 2.
After
adjusting
actual
results
for
adjustments
per
Senior
Credit
Facility
and
Bond
Indenture |
 17
1H Financial Summary
___________________________
1.
Pro forma for Birds Eye acquisition.
Actual
Actual
H1
H1
($s in millions)
2009
(1)
2010
(2)
$
%
Net Sales
1,278
$
1,233
$
(46)
$
-3.6%
% Growth
COPS
982
935
47
4.8%
% Net Sales
76.8%
75.9%
Advertising and Consumer
45
37
8
17.3%
% Net Sales
3.5%
3.0%
SG&A and other
113
128
(15)
-13.3%
% Net Sales
8.9%
10.4%
EBIT
138
133
(6)
-4.1%
% Net Sales
10.8%
10.8%
Depreciation & Amortization
44
39
(5)
-11.6%
Reported EBITDA
182
171
(11)
-5.9%
% Net Sales
14.2%
13.9%
Adjusted EBITDA
187
222
35
18.5%
% Net Sales
14.7%
18.0%
Reported EBITDA
182
171
Adjustments per Senior Credit Facility and Bond Indentures
Non-cash items
1
28
Non-recurring items
4
20
Other adjustment items
1
2
Subtotal - Adjusted EBITDA
187
222
35
$
18.5%
Variable product contribution from exited businesses
10
3
Estimated synergies associated with the Birds Eye acquisition
-
18
Consolidated EBITDA (per Senior Credit Facility and Bond Indentures)
197
$
243
$
46
$
23.6%
Variance to Prior Year |
 18
Key Investment Highlights
Successful History
of Brand
Renovation and
Product
Innovation
Proven
Management
Team
Continued
Strong
Financial
Performance
Strong
Customer
Relationships
Increase in
Estimated
Synergies to
$50mm
Proven Brand
Equities
Birds Eye
Integration
Successfully
Completed
High Recurring
Cash Flow |