Dr Pepper Snapple Group Safe Harbor statement & non-GAAP - PowerPoint PPT Presentation

Acquisition of November 22, 2016 Dr Pepper Snapple Group

Safe Harbor statement & non-GAAP information 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 page 10 of this presentation to find a reconciliation of such non-GAAP financial measures to their most direct GAAP counterpart. 2

Transaction Summary ● Dr Pepper Snapple Group (“DPS”) has agreed to acquire Bai Brands, LLC (“Bai”) for $1.7 billion in cash − Approximately $400 million net present value of tax benefits for a net price of $1.3 billion Overview − Represents ~3x net sales (1) ● Bai will operate within our Packaged Beverages segment and will continue to be led by Ben Weiss ● Solidifies position with fastest growing premium brand in enhanced water category Strategic ● Attractive high-growth platform with compelling investment returns Rationale Bai brand equity offers opportunities to extend to other growth categories ● Possible Mexico expansion opportunities and other markets to be evaluated over time ● ● Expected to add approximately $132 million (2) in incremental 2017 net sales (total Bai estimated 2017 net sales of $425 million) − Will retain important existing profits from the distribution of Bai products Pro Forma ● Approximately ($0.03) dilutive to reported diluted EPS in 2017 due primarily to strong marketing investment Impact behind the brand and increased interest expense Accretive to EPS by 2018 ● No synergies included or benefits from Rapid Continuous Improvement ● ● Purchase price will be funded with a combination of new unsecured notes and short term commercial paper Financing Expect to maintain strong investment grade credit profile ● No change to existing shareholder distributions – both dividends and share repurchases ● Timing Expected closing to occur in the first quarter of 2017 ● (1) Based on DPS estimate for Bai 2017 sales of approximately $425 million and purchase price adjusted for tax benefit step-up (net present value). 3 (2) Incremental DPS net sales for 2017 based on owning Bai versus being the largest distributor.

Bai is a Premium, Innovative Beverage Company with Outstanding Business Performance Performance Overview Product portfolio spans a broad range of beverage One of the fastest growing beverage brands ● ● categories under one umbrella brand ● Capitalizes on accelerating consumer trend of focus on ● 3-year historical Net Sales CAGR of ~145% and case volume CAGR of ~110% (1) better-for-you products ● Early adoption in both traditional and online channels with significant room for expanding distribution Bai estimated Net Sales expected to reach ~$500 ● million by 2018 (2) ● Already distribute 65% of Bai sales Categories Flavored Sparkling Coconut Functional Premium CSD water water water RTD tea Bai Bubbles Cocofusion Antiwater Supertea Black Provides a platform for future innovation Founded in 2008 Launch 2009 2014 2015 2016 2016 2016 (1) Source: Bai Management; represents Bai brand sales only and does not include DPS distributor mark-up. 4 (2) Based on DPS estimate for Bai brand sales only and does not include DPS distributor mark-up.

We are the Perfect Steward of the Bai Brand with Compelling Strategic Rationale • Enhances growth with attractive investment returns over time – Significant multi-channel ACV still available – Growing online channel presence • Fastest growing premium brand in enhanced water category ‒ Enhanced Water Category ~62 million cases in sales volume and growing +8% (1) ‒ Bai sales volume growing +127% (1) • Brand equity extends across other growth categories • Strong innovation pipeline • Possible Mexico expansion opportunities and other markets to be evaluated over time • We have played a key role in Bai’s success story and have a solid history with the brand (1) Source: Nielsen XAOC YTD 11/5/16 5

Bai Plays in Large Categories with Superior Growth Rates Total US addressable market (1) Euromonitor Retail market size $3.1 $0.8 $6.1 $15.9 $39.1 ($ in bn) Total addressable market: $65B 10.5% 7.1% 7.3% 6.2% 6.3% 5.0% 4.0% Growth 1.3% 0.7% 0.2% CAGR CAGR CAGR CAGR CAGR CAGR CAGR CAGR CAGR CAGR ’10A-’15A ’15A-’19E ’10A-’15A ’15A-’19E ’10A-’15A ’15A-’19E ’10A-’15A ’15A-’19E ’10A-’15A ’15A-’19E Enhanced Carbonated bottled RTD Still Carbonated Category water (2) water teas bottled water soft drinks Product % of Bai 56% 20% 19% 4% 1% 0% 2016E Gross Sales Source: Euromonitor (1) Retail selling price shown in $ in billions (RSP). (2) Includes Flavored water and Functional water categories per Euromonitor. 6

Bai Has a Highly Profitable Growth Model 2013A – 2016E Gross Profit 2013A – 2016E Net Sales ($ in million) ($ in million) $231 $118 $108 51% 46% 44% $41 $49 12% $16 $18 $2 2013A 2014A 2015A 2016E 2013A 2014A 2015A 2016E Gross Profit % of Net Sales ● One of the fastest growing beverage brands ● Exciting brand portfolio with exposure to on-trend, better-for-you, rapidly expanding categories ● Strong innovation pipeline to meet the needs of consumers seeking great tasting and low- calorie beverages 2013A-2015A sourced from Bai management and 2016E based on DPS estimate for Bai brand sales; represents Bai brand sales only and does not include DPS distributor mark-up. Financials subject to change pro forma for the 7 transaction under DPS accounting.

Financial Highlights ● Acquisition for $1.7 billion in cash; $1.3 billion net of tax benefits Represents ~3x net sales (1) − ● Transaction funded with a combination of new unsecured notes and $150 million of commercial paper − Maintain strong investment-grade credit rating ● Bai will improve our net sales and income from operations growth ‒ Expected total Bai net sales of $425 million and $79 million in income from operations in 2017 ‒ Expected to add $132 million of incremental sales and $43 million in incremental income from operations in 2017 ● Approximately ($0.03) dilutive to EPS in 2017 ‒ Strong marketing investment which will continue to drive growth ‒ # 2 in total brand spend behind Dr Pepper ‒ Consolidated pro forma cash interest expense of ~$170 million per year (incremental interest of ~$50 million) ‒ EPS accretive by 2018 ‒ No synergies included or benefits from Rapid Continuous Improvement ● Pro forma debt to EBITDA of 2.9x ‒ No changes to dividends and share repurchase distributions ‒ Incremental cash flows from Bai may be used to delever over time 8 (1) Based on DPS estimate for Bai 2017E sales of approximately $425 million and purchase price adjusted for tax benefit step-up (net present value).

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