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Dr Pepper Snapple Group Overview
Investor RelationsHeather Catelotti(972) [email protected]
Media RelationsChris Barnes(972) [email protected]
Contact Information:
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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, 2014 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 October 22, 2015 earnings release for the definitions of core
financial measures and certain other terms used herein.
Important Disclosures
Deliver Shareholder Returns
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Strategic Vision and Priorities
Strategic
Priorities
• Build Our Brands
• Execute with Excellence
• Rapid Continuous
Improvement
Vision Be the Best Beverage Business
in the Americas
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Dr Pepper Snapple Group at a Glance
Rapid Continuous Improvement
Leading Brands
Source(s): DPS SEC filings, Company internal data
Delivering Shareholder Returns
Integrated Route to Market
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We Sell a Portfolio of Carbonated and Non-Carbonated
Beverages Primarily in North America
Our Segments at a Glance&
Beverage Concentrates
Packaged Beverages
Latin America Beverages
• Sells concentrate and syrup to third party bottlers
• U.S. and Canada
• Primarily CSDs
• Manufactures and distributes finished products
• U.S. and Canada
• CSDs and Non-Carbs
• Sells concentrate and manufactures & distributes finished products
• Primarily Mexico
• CSDs, Non-Carbs and Mineral Water
Source(s): Company internal data; 2014 Full Year Results
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We Compete in Large and Profitable Categories
Source(s): *Nielsen Scantrack XAOC incl Convenience 52 weeks ended 1/3/15
**Nielsen Homescan 52 weeks ended 6/14/14
* *
** **
We are the
flavor leader in
U.S. CSDs
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Our Brands are Leaders in Their Categories
#1 Pepper CSD in U.S.
#2 Overall Flavored CSD in U.S.
#2 Lemon / Lime CSD in U.S.
#1 Ginger Ale CSD in U.S. & Canada
#1 Orange CSD in U.S.
#1 Root Beer CSD in U.S.
#1 Grapefruit CSD in U.S. & Leading CSD
in Mexico
#1 Carbonated Mineral Water in Mexico
#1 Premium shelf-stable RTD tea in U.S.
#1 Branded apple juice in U.S
#1 Branded apple sauce in U.S
We are Flavor Leaders in U.S. CSDs
Allied Brands Complement our Portfolio
We have Leading Non-Carb Brands
Source(s): Nielsen Scantrack XAOC incl Convenience 52 weeks ended 1/3/15
#1 Branded shelf-stable fruit punch in U.S
A leading spicy tomato juice brand in
U.S., Canada and Mexico
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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; 2014 Full Year ResultsCore 4 includes 7UP, A&W, Canada Dry and Sunkist
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
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Strategic Priorities
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We Focus on Building Our Brands
Investing in Marketing and Focusing on Marketing Return on Investment
Consumer Relevant Programming
Source(s): DPS SEC filings
Brand Innovation
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We Focus on Consumer-Driven Innovation
World Class R&D Team and Facilities
Packaging Innovation
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We Promote Balance and Encourage Active Lifestyles
We Encourage Fit and Active Lifestyles
We’re Working Together as an Industry
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
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Strategic Priorities
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We Focus on Execution Excellence
Priority Brand Execution through Coke & Pepsi Affiliated Bottling Networks
Driving Distribution & Availability in DSD
Accelerating Growth of Allied BrandsWinning with Hispanics
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We Invest in Execution Support
Technology Drives Improvements in Execution
Revenue Margin Management Drives Price Realization and
Optimal Promotional Mix
Category Management Drives Optimal
Retail Assortment and Placement
Build Our Brands
Execute With Excellence
Rapid Continuous Improvement
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Strategic Priorities
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RCI is the Foundation of How We Operate
RCI is based on Lean and Six Sigma Principles
RCI is Driving Improvements Across the Business
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
Lower Inventory & Warehouse Space More Efficient Capital Spend Gross Margin Expansion
Source(s): DPS SEC filings, Company press releases, Company internal data
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Optimized Supply Chain
Manufacturing and Distribution Footprint
• Regional hub and spoke model
• 21 production facilities in U.S. and Mexico
• 118 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
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Cost of Goods Sold
Key Ingredients
Key Packaging Materials
• Sweeteners, Flavors and Colors
• Apples and Apple Juice Concentrate
• Fruit and Fruit Concentrate
• Aluminum Cans
• PET Bottles
• Glass
• Corrugated Paper Packaging
Hedgeable Commodities
• Roughly 20% of total Cost of Goods Sold
Source(s): Company internal data
* All Other COGS includes Labor & Overhead, purchases of finished products
(Allied brands) and Mexican Sugar Tax
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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 starting 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
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Our TSR Algorithm
Revenue
Net Income
EPS
Dividend Payout Ratio
TSR
+ low-single-digit
+ low to mid-single-digit
+ mid-single-digit
+ approximately 50 percent
+ double-digit
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Our Capital Strategy is Shareholder-Friendly
Debt Capital Target of ≤ 2.25x EBITDA
100% of Free Cash Flow Returned to
Shareholders
Increasing Dividends Per Share
Source(s): DPS SEC filings, Company internal data
16%
CAGR
Strong Free Cash Flow Conversion
Avg > 100%, long run target ~ 100%
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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, EVP Marketing
Over 25 years of experience with the company in Marketing Leadership
Source(s): Company internal data