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8/20/2019 THS Treehouse Foods 2015 Investor Day
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Monday, November 16, 2015
THS Investor Day
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Forward-looking Statements
This presentation may contain “forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995.” Forward-looking statements include all statements that do not relate solely tohistorical or current facts, and can generally be identified by the use of words such as “guidance,” “may,”
“should,” “could,” “expects,” “seeks to,” “anticipates,” “plans,” “believes,” “estimates,” “approximately,” “nearly,”
“intends,” “predicts,” “projects,” “potential”, “promises” or “continue” or the negative of such terms and other
comparable terminology. These statements are only predictions. The outcome of the events described in theseforward-looking statements is subject to known and unknown risks, uncertainties and other factors that may
cause the Company or its industry’s actual results, levels of activity, performance or achievements to bematerially different from any future results, levels of activity, performance or achievement expressed or impliedby these forward looking statements. TreeHouse’s Form 10-K for the period ending December 31, 2014 andother filings with the SEC, discuss some of the risk factors that could contribute to these differences. You arecautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, whenevaluating the information presented during this conference call. The Company expressly disclaims anyobligation or undertaking to disseminate any updates or revisions to any forward-looking statement containedherein, to reflect any change in expectations with regard thereto, or any other change in events, conditions or
circumstances on which any statement is based.
For the purpose of our discussion today, statements such as “Private Brands” or “the Private Brands business”
refer to the ConAgra Private Brands business. “Private label,” on the other hand, refers to the customer and
corporate brand industry.
2
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Other Information
Preliminary Financial InformationThe preliminary financial information with respect to the Company on a standalone basis after giving effect to the Acquisition andthe carve-out transactions included in the Evaluation Materials does not represent a comprehensive statement of the financialresults for the Company or of the seller. Such preliminary financial information has been derived from the seller’s internal booksand records, and the seller’s independent auditors have not completed their audit of such preliminary financial information and, asa result, such information is preliminary and subject to change (and such changes could be material). The carveout financialinformation varies from, and is not directly comparable to, the historical financial information of seller on a consolidated basis andany such differences may be material. No representations or warranties are made with respect to the accuracy or completeness of
the preliminary financial information. Accordingly, you should not place undue reliance on such financial information.
Statement R
egarding Non-GAAP Measures
This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities andExchange Commission. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company'sperformance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or includedin the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles.Adjusted EBITDA, Adjusted EBITDAS and Pro Forma Adjusted EBITDAS and any ratios derived therefrom, are non-GAAP financialmeasures that exclude certain items such as stock-based compensation and other items as more fully disclosed herein. Thesemeasures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for GAAP results.A historical reconciliation of Non-GAAP measures presented to the comparable GAAP information can be found herein. This non-GAAP financial information is provided as additional information for the Recipients and is not in accordance with or an alternativeto GAAP. Given the inherent uncertainty regarding adjusted items in any future period, a reconciliation of forward-looking financialmeasures to the most directly comparable GAAP measure is not feasible.
3
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Today’s Agenda
Topic Presenter
Transformation of Our TreeHouse Sam K. Reed
Acquisition of ConAgra Private Brands Dennis Riordan
Integration of ConAgra Private Brands Rob Hanlon and Lori Roberts
Private Label Shopper Insights Rachel Bishop
Organizational Evolution Chris Sliva
Financial Update Tim Young
Question & Answer Session Management Team
Lunch
4
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Transformation
of Our
TreeHouse
Sam K. Reed
Chairman, President & Chief Executive Officer
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In The Beginning…
6
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Growth 2005…
7
Category
Industrial Might
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Evolution 2010…
8
DestinationBrands
Own Brands
Generic
Premium Tiers
Private Label
Commodity
Premium
Value Added
Customer
Brand Architecture
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Evolution 2010…
Brand Innovation
CustomerMarketing
Lowest Cost
Fast Follower
NBE Quality
Transaction
Brand
Service
Customer
Brand Architecture
9
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Transformation 2015…
10
Consumer
Shopper Insights
We all share the same tire swing!
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Transformational Triggers in CPG
11
0% 5% 10% 15% 20% 25% 30% 35%
Simplify Operating Model
Business Model
Disruptive Technologies
Economic Demographic Shifts
Industry Consolidation
Going Global
Customer Demand
Source: KPMG’s FY15 Transformational Survey , Food, Drink & CPG industries; expected triggers/catalysts for company operating model transformation within the next 3 years
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The Transition of Our TreeHouse
12…From GrowthThru Evolution…To Transformation
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Growing Strong, Standing Tall
13
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Acquisition of ConAgra Private Brands
Dennis Riordan
EVP & Chief Financial Officer
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Key Highlights of Private Brands Announcement
Creates the Nation’s Largest Private Label Food & Beverage Manufacturer
Significant Opportunities for Operational Improvements
Expands Product Portfolio by 10 Sizable Complementary Categories
12th Major Deal Over the Last 10 Years
Substantial Free Cash Flow Generation for Debt Repayment
Experienced Operating Team Led by Industry Veterans
15
1
2
3
4
5
6
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Creates the Nation’s Largest Private Label
Food & Beverage Manufacturer
16
1
$392
$300 $692
$0
$200
$400
$600
$800
$3.2
$3.6 $6.8
$0.0
$2.0
$4.0
$6.0
$8.0
Pro Forma Net Sales ($ bn) (1) Pro Forma Adj. EBITDAS ($ mm) (1)
Source: TreeHouse Public Filings and transcript from November 2, 2015.(1) This financial information is preliminary and does not represent a comprehensive statement of the financial results for the Company or of the seller. Such preliminary financial information has been
derived from the seller’s internal books and records, and the seller’s independent auditors have not completed their audit of such preliminary financial information and, as a result, such information
is preliminary and subject to change (and such changes could be material). The carveout financial information varies from, and is not directly comparable to, the historical financial information ofseller on a consolidated basis and any such differences may be material. No representations or warranties are made with respect to the accuracy or completeness of the preliminary financialinformation. Accordingly, you should not place undue reliance on such financial information.
% Margin ~12% ~8% ~ 10%
+PrivateBrands
PrivateBrands
+PrivateBrands
PrivateBrands
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Combined Manufacturing Facilities
17
Private Brands’ complementary manufacturing footprint more than doublesTreeHouse’s number of facilities from 24 to 56
TreeHousePrivate Brands
Source: TreeHouse and ConAgra Public filings.
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Significant Opportunities for OperationalImprovements
2
~13.0%~12.0%
0.0%
5.0%
10.0%
15.0%
Ralcorp
FY 2012
TreeHouse
LTM 9/30/15
Historical Adj. EBITDAS Margins Adj. EBITDAS Margin Improvement (1)
Source: TreeHouse and Ralcorp Public Filings, Wall Street Research and TreeHouse transcript from November 2, 2015.Note: Excludes synergies.(1) This financial information is preliminary and does not represent a comprehensive statement of the financial results for the Company or of the seller. Such preliminary financial information has
been derived from the seller’s internal books and records, and the seller’s independent auditors have not completed their aud it of such preliminary financial information and, as a result, suchinformation is preliminary and subject to change (and such changes could be material). The carveout financial information varies from, and is not directly comparable to, the historical financialinformation of seller on a consolidated basis and any such differences may be material. No representations or warranties are made with respect to the accuracy or completeness of the preliminary financial information. Accordingly, you should not place undue reliance on such financial information.
(2) Ralcorp was acquired by ConAgra in 2013. The information presented above represents publicly disclosed financial information regarding Ralcorp for its fiscal year ended September 30, 2012.Ralcorp as a s tand-alone company is not equivalent to the Private Brands segment of ConAgra or the Target business being acquired. Such historical information regarding Ralcorp varies from,and is not directly comparable to, such information of the Target business being acquired and such differences may be material. Accordingly, you should not place undue reliance on such financialinformation.
(2)
~8.0%
~9.0%
4.0%
6.0%
8.0%
10.0%
Private BrandsToday MarginImprovement Private BrandsExpected ByYear 3
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Expands Product Portfolio by 10 SizableComplementary Categories
3
TreeHouse Today(1)
+ Private BrandsTreeHouse
+ 10Complementary
Categories
19
Source: TreeHouse Public Filings and transcript from November 2, 2015.(1) LTM period ending 9/30/15 per TreeHouse 10K and 10Q.(2) Other includes: Dry Dinners (4%), Aseptic Products (3%), Jams (2%) and Other Products (2%).
(3) Includes Mexican and other sauces.(4) Other includes: Dry Dinners (2%), Aseptic Products (1%), Jams (1%) and Other Products (1%).
Beverages
Dressings
BeverageEnhancers
Soups
Pickles
Snacks
Sauces (3)
Cereals
Other (2)
20%
14%
12%
11%
11%
10%
7%
5%
11%Snacks
RetailBakery
Bars
CondimentsPasta
Beverages
BeverageEnhancers
Soups
Pickles
Cereals
Other (3)
In-Store BakeryFrozen GriddleRefrigerated
Dough
29%
12%
11%9%
7%
6%
6%
5%
5%4%
5%
0%
Cookies &CrackersSweet & Salty
RTE Cereal
= New Categories
= Additional Categoriesin Product Groupings
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Overview of Private Brands Pillars
20
• Cookies, crackers,snack nuts, snackmixes, pretzels,
pita chips
• Syrups, sauces,spoonables,preserves, jellies
• Bars, fruit snacks • Domestic andimported drypasta, gluten-free
and healthypastas, risotto
• In-store bakeryproducts,refrigerated
dough, frozengriddle products
• Ready-to-eatcereal, hot cereal
Private BrandsLTM Net Sales: $3.6bn (1)
Snacks$1.3bn
37%
Condiments$250mm
7%
Bars$400mm
11%
Pasta$500mm
14%
Retail Bakery$650mm
18%
Cereal$450mm
13%
Source: TreeHouse public filings , TreeHouse transcript from November 2, 2015, IRI MULO L52W ended 8/23/2015 and other industry resources.(1) This financial information is preliminary and does not represent a comprehensive statement of the financial results for the Company or of the seller. Such preliminary financial information has been
derived from the seller’s internal books and records, and the seller’s independent auditors have not completed their audit of such preliminary financial information and, as a result, such informationis preliminary and subject to change (and s uch changes could be material). The carveout financial information varies from, and is not directly comparable to, the historical financial information ofseller on a consolidated basis and any such differences may be material. No representations or warranties are made with respe ct to the accuracy or completeness of the preliminary financial
information. Accordingly, you should not place undue reliance on such financial information.
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Purchase Priceand Financing
Purchase Price $2,700Expected Closing Q1 2016
New Debt Raised $1,800New Equity Issued to Market 1,000Transaction Fees & Expenses (100)
Total $2,700
Equity IssuanceNew Shares Issued 12.50% of Current TreeHouse Shares Outstanding 28.5%
Adjusted
EPS Accretion /Dilution
2016P ($0.20) – ($0.35)
2017P $0.55 – $0.702018P $1.50 – $1.65
Pro Forma LeveragePF 2015 Net Debt / EBITDAS 4.34x
PF Debt Pay-down / Year 0.6x
($ in millions)
Note: TreeHouse Share price of $84.22 as of 10/22/2015 market close. Equity issuance includes 5% discount. Assumes 1/1/2016 transaction close.
21
4Substantial Free Cash Flow Generation forDebt Repayment
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22
5 12th Major Deal Over the Last 10 Years
$708 $939
$1,158$1,501 $1,512
$1,817$2,050 $2,182
$2,294
$2,946$3,245
~$7,000
$76 $109$138 $157
$191
$283 $300 $297$323
$389 $392
$692
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 LTM9/30/15
ProForma
Net Sales ($ in millions)
Adjusted EBITDAS ($ in millions)
Source: Company Filings.Note: For a reconciliation of non-GAAP measures to the most comparable GAAP measures see slide 23.(1) This financial information is preliminary and does not represent a comprehensive statement of the financial results for the Company or of the seller. Such preliminary financial information has been
derived from the seller’s internal books and records, and the seller’s independent auditors have not completed their audit of such preliminary financial information and, as a result, such information is
preliminary and subject to change (and such changes could be material). The carve out financial information varies from, and is not directly comparable to, the historical financial information of selleron a consolidated basis and any such differences may be material. No representations or warranties are made with respect to t he accuracy or completeness of the preliminary financial information. Accordingly, you should not place undue reliance on such financial information.
PrivateBrands (1)
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TreeHouse Historical Adjusted EBITDASReconciliation
23
Source: TreeHouse company filings. Additional detail available in TreeHouse 8-K Filings.(1) Includes product rationalization costs.
FY FY FY FY FY FY FY FY FY FY LTM Quarter Ending
Fiscal Year Ended December 31 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9/30/15 9/30/14 9/30/15Net Income $12 $ 45 $42 $ 28 $ 81 $ 91 $94 $ 88 $ 87 $ 90 $112 $20 $28
Interest Expense 1 13 22 27 18 46 53 52 49 42 46 10 11
Interest Income - (1) (0) (0) - - (0) (1) (2) (1) (3) (0) (0)
Income Taxes 15 27 25 11 41 45 45 36 38 47 54 11 12
Discontinued Operations 1 (0) 0 0 - - - - - - - - -
Depreciation and Amortization 17 25 35 46 47 70 83 88 89 112 125 30 30
Stock-Based Compensation Expense 10 19 14 12 13 16 15 13 16 25 23 7 5
Write-down of Trade Names 5 8 - - 8 - - - - - - - -
Gain on Insurance Replacement of Fixed Assets - - - - (14) - - - - - - - -
Foreign Currency Loss on Translation of Intercompany Notes - - - 9 (5) 1 0 1 2 10 22 7 9
Gain on Foreign Currency Hedge Transaction - - (3) - - - - - - - - - -
Mark-to-market Adjustments - - - 7 (2) (4) (1) 1 (1) 3 3 (0) 2
Acquisition, Integration and Related Costs - 1 4 1 2 16 2 3 13 36 9 19 3
Gain on Curtailment of Post Retirement Benefits Plan - (29) - - - (2) - - - - - - -
Debt Refinancing Costs - - - - - - - - - 22 0 0 -
Restructuring / Facility Consolidation Costs(1) 10 1 (0) 13 1 5 8 16 28 2 2 0 0
Loss on Investment - - - - - - - - 4 - - 0 -
One-Time Factory Costs Associated with Inventory Reduction Program - - - 3 - - - - - - - - -
Revalue License Agreement and Other - - - 1 - - - - - - - - -
Gains: Fructose Settlement, Cairo Facility Gain, Tank Yard Sale (3) - - - - - - - - - - - -
Spin Related Costs 10 - - - - - - - - - - - -
Other Operating Income (0) - - - - - - - - - - - -
Adjusted EBITDAS $76 $109 $138 $157 $191 $283 $300 $297 $323 $389 $392 $103 $100
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24
6Experienced Operating Team Led by IndustryVeterans
Dennis Riordan Kevin Hunt
Interim President, PrivateBrands
Maintaining dual role asTreeHouse CFO
CFO of TreeHouse since Jan 2006
Senior Advisor
Previously served as Co-CEO andPresident of Ralcorp
20+ years of private labelexperience
Source: TreeHouse management.
Operating management of Private Brands has agreed to remain with the business after closing of the transaction
Role
Food IndustryExperience
(Yrs)
VP General Manager, Retail Bakery
VP General Manager, Cereal & Condiments
Sr. Director, HR
VP Counsel Legal
SVP Sales
VP General Manager, Pasta
16
25
21
12
29
14
Role
Food IndustryExperience
(Yrs)
VP IT
VP R&D
VP Finance
VP Operations
VP General Manager Lead; Snacks, Bars
20
16
36
28
20
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Portfolio
Private Brands
PartnershipCapabilities
Scale
Both businesses are bettertogether due to increased:
Reliability anddistribution scale
Customers will be reap benefitsof improved:
Efficiency andcoordination (Onepoint-of-contact)
Innovation andcategory insight
Stronger Together
25
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Integration of ConAgra Private Brands
Rob Hanlon, SVP & Chief Information Officer
Lori Roberts, SVP Human Resources
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Integration Priorities
27
Deliver 2015-2016 business plans
Accelerate Stabilization of Private Brands
Integrate the businesses
1
2
3
Create a renewed partnership with customers
Leverage the best of both operatingorganizations to drive growth
Organize to enable rapid, informed decisionmaking
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Integration Structure
28
Rachel Bishop, CSO & Integration Lead – Dedicated Lead Resources
Steering Committee
Operations &Supply Chain
TSA Procurement
Integrate and Capture Synergies
Strategy / 2016Business Plans
Sales / GTM
Stabilize & Accelerate
BusinessReporting
Culture &Communications
On-Site Admin
CorporateFinance
Customer ServiceSnacks
Private Brands Business
Operations
Human Resources
Cereals
Bars Pasta
CondimentsRetail
Bakery
Dennis Riordan, CFO &Interim President
Senior executives from both THS and Private Brands
Rob Hanlon, CIO & TSA Lead
Ensure alignment among TreeHouse, Private Brands and ConAgra to achieve no loss ofservices for both businesses
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Transition Services Scope
29
Support & Reporting ServicesOperational Services
Transportation& Load
Planning
Supplier OrderManagement
AccountsReceivable
AccountsPayable
CustomerOrder
Management
DataManagement
HumanResources,Benefits &
Payroll
Financial Accounting
Research &Development
Treasury
Supply ChainPlanning
WarehouseOperations &
3PL’s
Procurement
ContractManufacturing
Supply ChainFinance
Environment Health Safety
Marketing
BrokerCommission
Sales & Use TaxReal Estate &
Facilities
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Technology Separation Challenge
30
SharedPlatforms
TwoBusinesses
MasterData
Accounting
FinancialReporting
HR & Talent
Transportation
Recipes &Formulas
DemandPlanning
SupplyPlanning
Indirect Procurement
• 4 Dedicated Private Brandsplatforms.
• 2 Businesses on sharedplatforms.
•
9 Functions on sharedplatforms.
• 2 Years to transition toTreeHouse platform.
• Capabilities added toTreeHouse platform.
• Shared platform drives TSAservices.
• Ability to exit TSA services asplatforms are transitioned.
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Private Label Shopper Insights
Rachel Bishop
SVP & Chief Strategy Officer
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Consumers Are Seeking Benefits And Value
BenefitsPrice
= Value
45,066
41,281
+9%
20142011
As the number of brands multiplies,consumers have a wider array of benefitsoffered and lower price options, so they are
seeking more value
Number of Brands*
Note*: Includes brands with more than $10,000 of salesSource: Nielsen Scantrack 2014, 2011; TCG Analysis 32
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As They Seek Value, Becoming Less Brand Loyal
33
0
20
40
60
80
Good alternativeto name brands
Usuallyextremely goodvalue for money
Quality as goodas name brands
Some are higherquality thanname brand
For people ontight budgets &can’t afford the
best
2008 2014
Shopper Attitudes on Private Label (Top 2 Box)
“Store brands are…”
Source: Nielsen Homescan Survey, January/February 2014
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Especially Millennials
34
I have no real preference betweenprivate label vs. national brands
61%
47%
30%
Brand names are important inmy grocery purchasing decision
I change brand names frequently
51%
40%39%
BoomersMillennials
Attitudes Towards Brands & Loyalty
Source: ‘Trouble in Aisle 5’ Jefferies-Alix Partners (June 2012), Nielsen Homescan, Nielsen Scantrak; TCG Analysis
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We Sought to Better Understand the Shopper
35
ShopperTag-alongs
Customer testimonials Deep qualitative and quantitative analysis Private label shopper segmentation Customer specific shopper insight
PL ShopperSurvey
In-DepthData
Analysis
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And We Learned A Lot
36 Note: The model measures PL share growth on a unit share basis Source: Nielsen Scantrak and Homescan, 52 week periods ending 10/25/14,10/26/13, 10/27/12 and 10/29/11; TCG Analysis
Dimension
Demographics
Share of Influence
32%
Channel Sales
Pricing &Promotion 11%
14%
CategoryDynamics 43%
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Consumers Told Us What They Thought
37
“I’ve never noticed thestore brand crunchy
granola bars, but I buy
that brand of pasta and Ireally like it, so I am
going to try the bars.”
“My store’s private
brands are good quality,whereas at other stores
you have to be carefulwith their brands. At
other places I only buystore brands for items
I’m cooking with.”
“I’m not a big yogurt fan
but this is sweeter andjust has a better taste to
it than other brands, so Ialways come here for my
yogurt.”
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Openness to InnovationLow High
V a l u e
v s .
B e n e f i t s O r i e n t a t i o n
V a l u e - F o c u s e d
B e n e f i t s - F o c u s e d
Private Label Segments – Key Dimensions(Size of Bubble Reflects Segment’s Share of Total PL Spend)
We Segmented Private Label Shoppers
38
Quality Purists
Active Solution Seekers
Value Optimizers
Brand Loyalists
Detached Habitualist
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Quality Purists
Value Optimizers
Brand Loyalists
Active Solution Seekers
Detached Habitualists
100%100%
SS Coffee BuyersF+B Buyers
Segment Distribution of Total F+B and SS CoffeeBuyers (from Survey)
Next-Generation PLSegments +11% for SSCoffee vs Total
Note: SS Coffee Buyers defined by presence of P3M SS Coffee PurchaseSource: TreeHouse PL Growth Survey (2015); TCG Analysis
Single Serve Coffee Profile
39
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Insights Will Drive Innovation in Snack Nuts
40
53% 50% 46%
11%
Chips Tortilla Chips Pretzels Nuts
Snack Segments; Flavor as a % of Total
Flavored Original
Almonds:• Maui Onion• Balsamic Vinegar & Rosemary• Italian Herb• Sweet BBQ
Cashews:• Chipotle Cheddar• Black Pepper & Lime
Deluxe Mixed Nuts:•
Sriracha• Hot Dill
Flavors in Development
Sources: IRI Market Advantage, MULO 52 Weeks Ending 11/23/14 (Chips, Tortilla Chips & Pretzels); Nielsen xAOC, 52 weeks ending 12/20/14 (Nuts)
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-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
65%
60%
30%
20%
25%
5%
0%
10%
15%
-5%
Squeezable Fruit
Nut Butters
Dried Fruit Snacks
Fruit & Veggie ChipsTortilla and Pita Chip
Breakfast / Granola / Snack Bars
Health & Wellness Bars
Speciality Crackers
Trail Mix
RTE Popcorn
Nuts (Snacking & Baking)
Snack-centric Granola
=$1Bn in sales
AdjacenciesTHS Segment
C a t e g o r y 3 Y e a r C A G R
Private Label % Penetration
Source: IRI, Market Advantage, Total US – MULO, 52 weeks ending 01-01-12 vs. 52 weeks ending 12-28-14
Leveraging Insights in M&A
41
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Organizational Evolution
Chris Sliva
President, Bay Valley Foods
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Executive Summary
• Separate into four Divisions that are organized to drive EBITimprovement
• Move non-scale oriented functional support into each Division
• Functions that derive value from scale, e.g., procurement,logistics, IT, etc., remain centralized
• Sales will become a hybrid organization, with Divisionconnected resources at our top customers representing 70-80% of revenue, and multi-divisional resources at the balance
43
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TreeHouse Foods Operating Construct
44
Bay Valley Foods
OperatingDivisions
Beverages
Condiments
Snacks
Meals
FunctionalLeadership / Shared
ServicesGo-To-Market
SingleCustomer
Teams
Multi-Customer
Teams
StrategicShared
Customers
LimitedSupport
Customers
Ensure alignment with strategy
Provide policies and process
consistency
Allocate scarce resources(people, capital, etc.)
Leverage THS scale
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Applying Consumer, Asset Capability and Customer ViewLeads to Organizing BVF into 4 Broad Product Arenas
45
Tea
SweetenersWeight Mgmt DrinksSugar Free DrinksSingle Serve Coffee
Hot CerealMac n’ Cheese
Pasta SideDishes
PicklesSalsaPasta SauceSalad Dressing
SyrupCheese Sauce
Beverages
Meals
Condiments
• ~$850M net sales• 6 plants
•
~$650M net sales• 6 plants
• ~$1.1B net sales•
10 plants
Snacks• ~$700M net sales• 2 plants
NutsTrail MixBars
Snacks
MayonnaiseRefrigerated DressingJam / JelliesSaucesPudding
Soup / Broth / GravyInfant Feeding
Carton Soup
Liquid Beverage
EnhancersNon-Fat Dry Milk Non-Dairy Creamer
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Create Direct Connectivity and Accountability atCustomers Representing ~70% of Each Division’s Volume
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# of Customers 5 25 50 950
Net Sales* ~$1.3B ~$1B ~$700M ~$300M
% of Sales 40-45% 30-35% 15-20% 5-10%
Strategic Focus Growth GrowthGrowth &Pricing for
Services
StandardSolutions
SingleCustomer
Teams
MultiCustomer
Teams
StrategicShared
Customers
LimitedSupport
Customers
GTM Organization
Note: *Net sales figures exclude Canada
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SingleCustomer
Team Leader
Beverages
Acct Exec
Condiments Acct Exec
Meals AcctExec
Snacks AcctExec
MultiCustomer
Team Leader
Beverages
Acct Exec
Condiments Acct Exec
Meals AcctExec
Snacks AcctExec
StrategicShared
Customers
Full Portfolio Acct Exec
Full Portfolio Acct Exec
Full Portfolio Acct Exec
Full Portfolio Acct Exec
LimitedSupport
Customers
Tele Sales
Acct Exec
Broker AcctExec
Our New Structure Creates Increased Resources at TopCustomers and Greater Connection to the Divisions
MealsDivision
Beverages
Division
SnacksDivision
CondimentsDivision
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The TreeHouse Brand
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Executing the THS brand promise required changes in the operating company model
CategoryManagement
ProductInnovation
ConsumerInsights
Quality FoodSafety
CustomerService
Low CostProducts
Highlyefficient
distributionof a broad
portfolio of products
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CoffeeTrail
Mix
SaladDressingNon-DairyCreamer
5 % S
h a r e o f
F & B
C u s t o m e r ’ s C a t e g o r y D e v e l o p m e n t
Private Label Share
21%
T E S T
The TreeHouse Brand ConnectionA Customer’s View
M A I N T A I N
LowHigh
L o w
H i g h
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Financial Review
Tim Young
SVP & Chief Financial Officer, Bay Valley Foods
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September YTD 2015 Highlights
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Positives
Solid marginperformance in legacy
BVF businesses, despitedeclines in volume
Input costs trendedfavorably, helping
margins
Lower SG&A (partiallydue to reduced
incentives) and afavorable tax rate
Negatives
Volume / Mix down 2.9%,declines led by coffee
Coffee sales and profitabilitydeclined from prior year
due to continued
competitive pressures
Unfavorable FX negativelyimpacted profitability
b b 5
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September YTD 2014 to September YTD 2015Bridge – Operating Income
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(Unaudited)($ in 000’s)
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
$140,000
$150,000
$160,000
$170,000
OperatingIncome
9 Months EndedSeptember 30,
2014
Protenergy &Flagstone
(non-comparableperiods)
Coffee FX Incentive Comp Debt Refinancing& Acquisition
Costs
Legacy BusinessImprovements
OperatingIncome
9 Months EndedSeptember 30,
2015Baseline Better Worse
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September YTD 2015 Operating Segments
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2014 2015 Inc/(Dec) 2014 2015 Inc/(Dec) 2014 2015 Inc/(Dec)
Net Sales 1,489,014$ 1,768,938$ 18.8% 284,633$ 280,726$ -1.4% 268,942$ 291,327$ 8.3%
DOI 230,901$ 242,220$ 4.9% 33,837$ 39,454$ 16.6% 45,546$ 51,727$ 13.6%
DOI % 15.5% 13.7% 11.9% 14.1% 16.9% 17.8%
North American Retail Grocery Food Away From Home Industrial & Export
• Net sales growth results from acquisitions and continued expansionin natural, organic, and better for you products
• Margin variability due to competitive pressures in coffee, unfavorableFX, and sales mix, partially offset by favorable input costs
($ in 000’s)
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September YTD 2015 Sales Roll-Forward
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North American Food Away Industrial
Retail Grocery From Home & Export Total
2014 Net sales 1,489,014$ 100.0% 284,633$ 100.0% 268,942$ 100.0% 2,042,589$ 100.0%
Volume / Mix (73,568) -4.9% 1,200 0.4% 12,139 4.5% (60,229) -2.9%
Pricing (6,791) -0.5% (1,396) -0.5% (4,384) -1.6% (12,571) -0.6%
Acquisitions 393,275 26.4% 243 0.1% 20,750 7.7% 414,268 20.3%Foreign currency (32,992) -2.2% (3,954) -1.4% (6,120) -2.3% (43,066) -2.2%
2015 Net sales 1,768,938$ 118.8% 280,726$ 98.6% 291,327$ 108.3% 2,340,991$ 114.6%
($ in 000’s)
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TreeHouse Debt Capacity
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Outstanding asof 9/30/2015
Availability Interest Rate Expiration
Revolving Credit $428 mm $459 mm(2) 1.89%(3) May 2019
Term Loan $296 mm ― 1.89%(3) May 2021
Acquisition Term Loan $193 mm ― 1.89%(3) May 2019
High Yield Notes $400 mm ― 4.875% Fixed March 2022
Total Debt $1,324 mm(1)
Notes:(1) Includes $7.1 million of tax increment financing and other debt (2) Letters of credit issued but undrawn totaling $13.1 million have been included as a reduction to the calculation of available credit (3) Average interest rate on debt outstanding under Credit Facility for the three months ended September 30, 2015
Proforma leverage is expected to be less than 3.5 times debt to Adjusted EBITDA at12/31/2015
2016 W ki A ti E l di P i t
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2016 Working Assumptions – Excluding PrivateBrands
• Our focus in 2016 will be on improving margins throughsimplification and operating improvements, while keeping aneye on our top line.
• Input cost changes are expected to be benign in total, but withsome variability in certain commodities. We will need toaddress the probability of wider movements (up or down) asthe year progresses.
• We anticipate 100 bps of margin improvement from our on-going business next year.
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2016 W ki A ti E l di P i t
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2016 Working Assumptions – Excluding PrivateBrands
• 2016 SG&A spending:
– Increased IT spending anticipated to address the continued roll-out tolegacy locations.
– Expect G&A to revert back to traditional levels of 5.5% - 6.0% of
revenue in 2016, as incentive compensation is reset to target levels.
• Tax rates are expected to be in the 34% - 35% range.
• Interest expense to remain flat as rates are anticipated to riseslightly in 2016, offset by pay down of debt.
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Growing Strong, Standing Tall
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Thank You
Question & Answer Session