Dr Pepper Snapple Group Overview
Contact Information:
Investor Relations
Heather Catelotti
(972) 673-5869
heather.catelotti@dpsg.com
Media Relations
Chris Barnes
(972) 673-5539
chris.barnes@dpsg.com
Important Disclosures
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, statements
about future events, future financial performance including earnings estimates, plans, strategies, expectations,
prospects, competitive environment, regulation, and cost and availability of raw materials. Forward-looking statements
include all statements that are not historical facts and can be identified by the use of forward-looking terminology such
as the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these terms
or similar expressions. These forward-looking statements have been based on our current views with respect to future
events and financial performance. Our actual financial performance could differ materially from those projected in the
forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial
performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on
any forward-looking statements. All of the forward-looking statements are qualified in their entirety by reference to the
factors discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2015 and our other filings with the Securities and Exchange Commission. Forward-looking statements
represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to
update the forward-looking statements, and the estimates and assumptions associated with them, after the date of this
presentation, except to the extent required by applicable securities laws.
Non-GAAP Information
These materials include certain non-GAAP financial measures. Please refer to the “Investors” section of our website at
www.drpeppersnapplegroup.com to find a reconciliation of such non-GAAP financial measures to their most direct
GAAP counterpart.
Definitions
Please refer to the Definitions and attachments to our February 17, 2016 earnings release for the definitions of core
financial measures and certain other terms used herein.
2
Strategic Vision and Priorities
Vision
Strategic
Priorities
Be the Best Beverage Business
in the Americas
• Build Our Brands
• Execute with Excellence
• Rapid Continuous
Improvement
Deliver Shareholder Returns
3
Dr Pepper Snapple Group at a Glance
Leading Brands
Integrated Route to Market
Rapid Continuous Improvement
Delivering Shareholder Returns
Source(s): DPS SEC filings, Company internal data
4
We Sell a Portfolio of Carbonated and Non-Carbonated
Beverages Primarily in North America
Our Segments at a Glance&
*
Beverage Concentrates
•
•
•
Sells concentrate and syrup to third party bottlers
U.S. and Canada
Primarily CSDs
Packaged Beverages
*
•
•
•
Manufactures and distributes finished products
U.S. and Canada
CSDs and Non-Carbs
Latin America Beverages
Source(s): Company internal data; 2015 Full Year Results
•
Sells concentrate and manufactures & distributes
finished products
•
•
Primarily Mexico
CSDs, Non-Carbs and Mineral Water
* Data rounded for simplicity. See 10-K for exact numbers.”
5
We Compete in Large and Profitable Categories
*
*
We are the
flavor leader in
U.S. CSDs
Source(s): *Nielsen Scantrack XAOC incl Convenience 52 weeks ended 1/2/16
**Nielsen Homescan 52 weeks ended 1/30/16
6
Our Brands are Leaders in Their Categories
We are Flavor Leaders in U.S. CSDs
We have Leading Non-Carb Brands
#1 Pepper CSD in U.S.
#2 Overall Flavored CSD in U.S.
#1 Premium shelf-stable RTD tea in U.S.
#2 Lemon / Lime CSD in U.S.
#1 Branded apple juice in U.S.
#1 Branded apple sauce in U.S.
#1 Branded shelf-stable fruit punch in U.S
#1 Ginger Ale CSD in U.S. & Canada
A leading spicy tomato juice brand in
U.S., Canada and Mexico
#1 Orange CSD in U.S.
#1 Root Beer CSD in U.S.
Allied Brands Complement our Portfolio
#1 Grapefruit CSD in U.S. & Leading CSD
in Mexico
#1 Carbonated Mineral Water in Mexico
Source(s): Nielsen Scantrack XAOC incl Convenience 52 weeks ended 1/2/16, ranking based on volume
7
We Have a Balanced Route to Market
Total Bottler Case Sales
Dr Pepper Bottler Case Sales
*
*
Core 4 Bottler Case Sales
Snapple Bottler Case Sales
*
Source(s): Company internal data; 2015 Full Year Results
Core 4 includes 7UP, A&W, Canada Dry and Sunkist
*
* Data rounded for simplicity
8
Strategic Priorities
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
9
We Focus on Building Our Brands
Consumer Relevant Programming
Investing in Marketing and Focusing on Marketing Return on Investment
Source(s): DPS SEC filings
10
We Focus on Consumer-Driven Innovation
World Class R&D Team and Facilities
Brand Innovation
Packaging Innovation
11
We Promote Balance and Encourage Active Lifestyles
We’re Working Together as an Industry
We Encourage Fit and Active Lifestyles
12
Strategic Priorities
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
13
We Focus on Execution Excellence
Priority Brand Execution through Coke &
Pepsi Affiliated Bottling Networks
Driving Distribution & Availability in DSD
Winning with Hispanics
Accelerating Growth of Allied Brands
14
We Invest in Execution Support
Technology Drives Improvements in
Execution
Category Management Drives Optimal
Retail Assortment and Placement
Revenue Margin Management Drives Price Realization and
Optimal Promotional Mix
15
Strategic Priorities
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
16
RCI is the Foundation of How We Operate
RCI is based on Lean and Six Sigma Principles
We’re Embedding the RCI Mindset
throughout the Business with
“DPS In Action”
• Customer Driven Work
• Employee Led RCI
• Lean Daily Management
• Data Driven Solutions
RCI is Driving Growth and Productivity Across the Business
Lower Inventory & Warehouse Space
More Efficient Capital Spend
Source(s): DPS SEC filings, Company press releases, Company internal data
Gross Margin Expansion
17
Optimized Supply Chain
Manufacturing and Distribution Footprint
• Regional hub and spoke model
• 21 production facilities in U.S. and Mexico
• 113 distribution centers in U.S. and Mexico
• Approximately 16,000 employees in U.S. and 3,000
in Mexico & the Caribbean
Source(s): DPS SEC Filings
18
Cost of Goods Sold
Key Ingredients
• Sweeteners, Flavors and Colors
• Apples and Apple Juice Concentrate
• Fruit and Fruit Concentrate
Key Packaging Materials
• Aluminum Cans
• PET Bottles
• Glass
• Corrugated Paper Packaging
* All Other COGS includes Labor & Overhead, purchases of finished products
(Allied brands) and Mexican Sugar Tax
Source(s): Company internal data
Hedgeable Commodities
• Roughly 20% of total Cost of Goods Sold
19
International Expansion
Developing International Markets Organically
• Slow development over time with Non-carbs
• Bought back Snapple Asia Pacific rights in 2013
• Western Europe license agreement started in 2015
• Distributor model
CSD Expansion limited to North America
• Dr Pepper owned by Coke system outside North America
• 7UP owned by Pepsi system outside United States
• Both rights sold while under previous ownership
Source(s): Company internal data
20
Our TSR Algorithm
Revenue
+ low-single-digit
Net Income
+ low to mid-single-digit
EPS
+ mid-single-digit
Dividend Payout Ratio
+ approximately 50 percent
TSR
+ double-digit
21
Our Capital Strategy is Shareholder-Friendly
Strong Free Cash Flow Conversion
Avg > 100%, long run target ~ 100%
100% of Free Cash Flow Returned to
Shareholders
Increasing Dividends Per Share
10%
CAGR
Debt Capital Target of ≤ 2.25x EBITDA
Source(s): DPS SEC filings, Company internal data
22
Experienced Commercial Leadership
Larry Young, President and CEO
Over 30 years of experience including the Pepsi system and DPS
Marty Ellen, CFO
Over 25 years of experience including the Pepsi system and DPS
Jim Johnston, President – Beverage Concentrates and Latin America
Beverages
Over 30 years of experience in Sales, Marketing and Strategy in the industry
Rodger Collins, President – Packaged Beverages
Over 35 years experience with the company in Sales Leadership and Marketing
Jim Trebilcock, Chief Commercial Officer
Over 25 years of experience with the company in Marketing and Strategy
Leadership
Source(s): Company internal data
23