Deepen CONSUMER CONNECTIONS REIGNITE CORE Meaningful INNOVATION CONFECTION Reinvent the SHOPPING EXPERIENCE REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
KEYS TO REIGNITING GROWTH DEEPEN Higher Brand Engagement Top of Mind Awareness CONSUMER CONNECTIONS Incrementality INNOVATION New Users/Occasions REINVENT Products Easier to Find SHOPPING Omni-Channel Availability EXPERIENCE REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
INCREASE CONSUMER ENGAGEMENT REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
INCREASE CONSUMER ENGAGEMENT REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
INCREASE CONSUMER ENGAGEMENT Hunter Jobbins @jabbins – Oct 30 Left my car for maybe 15 minutes in front of the dorms and I come back to this. College man 642M+ EARNED IMPRESSIONS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
DEEPEN BRAND EMOTIONAL CONNECTIONS THROUGH MEANINGFUL MOMENTS TRADITIONAL CELEBRATIONS EVERYDAY MOMENTS Valentine | Easter | Halloween | Holiday S’mores | Birthdays | Appreciations REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
INNOVATE CONFECTION PORTFOLIO TO CAPTURE NEW OCCASIONS MEANINGFUL CORE NEW PLATFORMS BRAND NEWS • Excitement • New textures and snacking portions • Variety • Relevance with new users • Increased Merchandising • Incrementality REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
INNOVATE CONFECTION PORTFOLIO TO CAPTURE NEW OCCASIONS MEANINGFUL CORE NEW PLATFORMS BRAND NEWS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
SIMPLE INGREDIENTS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
CHOICE & TRANSPARENCY PACK SIZES SMART LABEL SOURCE MAP Info for full portfolio of Transparency into origin Portionable choices to fit 2,200 ITEMS of ingredients from consumers’ lifestyles field to production available on-line by 2018 REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
REINVENT THE SHOPPING EXPERIENCE CURRENT SHOPPING EXPERIENCE REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
PACKAGING INNOVATION WILL IMPROVE SHOPPER EXPERIENCE IN AISLE COMING THIS MONTH! REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
PIPELINE OF EXPERIENTIAL SOLUTIONS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
# 1 “Alexa order Hershey’s CHOCOLATE Halloween candy.” LEADER IN SHARE INNOVATING VIA ECOMMERCE TEST AND LEARN ~45% CONFECTION INCREMENTAL CMG SHARE IN KEY OCCASIONS OMNI-CHANNEL RETAILERS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
REESE’S: STRONG GROWTH ON $2B BRAND ~$1.9b 2016 RETAIL SALES +4.7% CMG SHARE +0.3PTS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
HERSHEY’S: EXPANDING TO NEW OCCASIONS & USERS ~$1.5b RETAIL SALES GROWTH 4.9% ++ -2.4% 2016 Nov 2016 Dec 2017E YTD REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
KIT KAT: CONTEMPORIZING FOR NEW CONSUMERS ~$700m 2016 RETAIL SALES +5.7% CMG SHARE +0.1PTS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
ICE BREAKERS: LEVERAGING PROPRIETARY PRODUCT ~$475m 2016 RETAIL SALES +7.7% CMG SHARE +0.1PTS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
KISSES: DEEPENING CONNECTIONS ~$460m 2016 RETAIL SALES +2.0% CMG SHARE FLAT REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
BROAD PORTFOLIO DELIVERING AGAINST RANGE OF CONSUMER PREFERENCES LICORICE PREMIUM SNACKING CHOCOLATE & MINT COCONUT CHOCOLATE & FRUIT TOFFEE HARD CANDY MALT REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
Extend Confection Brands to NEW SNACKING EXPAND BREADTH USAGE OCCASIONS IN SNACKING LEVERAGE M&A in On-Trend Categories REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
SNACKFECTION, A BLURRING OF SWEET AND SALTY SNACKFECTION CHOCOLATE SALTY SNACKS Snackfection: A multi-textural and sensorial fusion of chocolate and other snacks, such as nuts, cookies and popcorn, that delivers a distinct eating experience for snacking occasions REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
LEVERAGE DEMAND LANDSCAPE TO IDENTIFY OPPORTUNITIES LARGER M&A INNOVATE INCREMENTALITY GROW CORE SMALLER LOWER FIT BRANDING HIGHER FIT REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
SNACKFECTION PLATFORMS CRUNCH-IFICATION – INTEGRATION OF SALTY SNACK ATTRIBUTES WITH CHOCOLATE POPPED SNACK MIX CRUNCHERS REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
M&A TO BOLSTER SNACKING PRESENCE BUILD SCALE HIGH GROWTH PORTFOLIO DIVERSIFICATION • Typically smaller • Brands for category leadership • On trend, differentiated brands • Enhance existing capabilities • Leverage advantaged Hershey capabilities • Financial synergies to scale REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
BARKTHINS: CAPTURE PREMIUM USERS & NEW OCCASIONS ADVANCES HERSHEY WELL POSITIONED TO LEVERAGE PORTFOLIO STRATEGY HERSHEY SCALE • Increase distribution with perimeter focus • On trend, high growth brand • Drive awareness with media and field • Premium, high income consumer marketing • Clean label, simple ingredients • Expand margins behind Hershey scale and • Fair trade and Non-GMO certifications chocolate expertise REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING
KRAVE: FAST GROWING MEAT SNACKS CATEGORY 2016 2017 • Scale via distribution growth and • Build awareness and drive trial category management expertise • Culinary inspired innovation to reach new consumer usage occasions U.S. ACV % 59% 32% 18% 2014 2015 2016 REIGNITE CORE CONFECTION & EXPAND BREADTH IN SNACKING Source: Nielsen xAOC + C
DELIVERING INNOVATIVE SNACKING LEADERSHIP REIGNITE CORE REALLOCATE CONFECTION & RESOURCES TO GROW EXPAND EXPAND BREADTH IN EXPAND MARGINS & INCREASE MARGINS SNACKING SHAREHOLDER FUEL GROWTH VALUE INVEST STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH
MARGIN EXPANSION ADJUSTED OPERATING INCOME MARGIN 20.4% 22 - 23% • Reset International Investment • Heighten SG&A Discipline • Continue COGS Optimization • Streamline Operating Model 2016 2016 2019E 2019E REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH See Appendix for 2016 Reconciliation of GAAP to Adjusted Operating Income Margin
RESET INTERNATIONAL INVESTMENT FOR OR PR PROF OFITAB ITABILITY ILITY & LO LONG NG TERM RM GRO GROWT WTH REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH
INTERNATIONAL & OTHER SEGMENT SEGMENT NET SALES GEOGRAPHIC SEGMENTATION $907m Global $731m Retail & Licensing China PORTFOLIO: Mexico Chocolate-focus Brazil CHANNEL: India Export Modern trade Markets 2011 2011 2016 2016 REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH Source: Hershey estimates; includes acquisition of Shanghai Golden Monkey, and exit of India edible oil business
TRANSFORMING BUSINESS AND CREATING A CHINA SUSTAINABLE LONG-TERM MODEL TRANSFORMING FOCUSED COST STRUCTURE PORTFOLIO ROUTE-TO-MARKET IMPROVEMENT • Focus on eCommerce • Chocolate as primary • Drive COGS and network growth driver efficiencies • Prioritization of key provinces & high growth cities • SKU rationalization • SG&A efficiencies • Focused DME investment • Channel reprioritization REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH
OTHER KEY MARKETS TO BE OPERATED MORE PROFITABLY GROSS MARGIN EXPANSION OPTIMIZED MARKETING SPEND SG&A EFFICIENCIES REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH
SEGMENT PROFITABILITY EXPECTED TO IMPROVE INTERNATIONAL & OTHER SEGMENT OPERATING INCOME ($M) $40 ++ • Price, Packtype, Innovation Maximization • Right-size infrastructure relative to size of opportunity -$29 • Focus on cost savings and productivity -$98 2014 2014 2015 2015 2016 2016 2019E 201 REALLOCATE RESOURCES TO EXPAND MARGINS & FUEL GROWTH Not to scale
DELIVERING INNOVATIVE SNACKING LEADERSHIP REIGNITE CORE REALLOCATE CONFECTION & RESOURCES TO EXPAND GROW MARGINS EXPAND BREADTH IN EXPAND MARGINS & INCREASE SNACKING SHAREHOLDER FUEL GROWTH VALUE INVEST STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
INTEGRATED INSIGHTS PERFORMANCE ENGINE HARMONIZED DATA TRANSFORMATIONAL ADVANCED ADVANTAGED INTEGRATED, ANALYTICS & COMMERCIAL SOLUTIONS & INSIGHTS CAPABILITIES PERFORMANCE TECHNOLOGY-ENABLED ENTERPRISE CONNECTIVITY STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
INTEGRATED INSIGHTS PERFORMANCE ENGINE TRANSFORMATIONAL ADVANCED COMMERCIAL ANALYTICS & INSIGHTS CAPABILITIES PRECISION INSIGHTS HARMONIZED DATA PRECISION EXECUTION INTEGRATED, ADVANTAGED REAL-TIME AND STRATEGIC CATEGORY & SOLUTIONS & PREDICTIVE ANALYTICS TOTAL STORE LEADERSHIP PERFORMANCE PROPRIETARY SNACKING DYNAMICALLY ROUTED DEMAND LANDSCAPE RETAIL SALES FORCE ROLE-BASED DATA AND SUPPLY CHAIN SCALE INSIGHTS DELIVERY AND AGILITY TECHNOLOGY-ENABLED ENTERPRISE CONNECTIVITY STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
INTEGRATED, HARMONIZED DATA INTERNAL DATA EXTERNAL DATA SYNDICATED DATA … … … Integrated, Harmonized, Single Source of Truth Customized Applications & Role Based Data & Insights Delivery Marketing Supply Chain Sales … STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
INTEGRATED, HARMONIZED DATA EXTERNAL DATA INTERNAL DATA SYNDICATED DATA ENABLES: TRANSFORMATIONAL, … … … REAL TIME ANALYTICS Integrated, Harmonized, Single Source of Truth PRECISION APPLICATIONS Customized Applications & Role Based Data & Insights Delivery AGILE, INTEGRATED EXECUTION Marketing Supply Chain Sales … STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
TRANSFORMATIONAL ANALYTICS & INSIGHTS PROPRIETARY REAL TIME & ROLE BASED DATA & SNACKING DEMAND PRECISION INSIGHTS PREDICTIVE INSIGHTS DELIVERY LANDSCAPE ANALYTICS STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
ROBUST SNACKING CONSUMER DEMAND LANDSCAPE Total Snacking View Category and Brand Level Insights Guiding Branding, Innovation & M&A Efforts STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
ADVANCED COMMERCIAL CAPABILITIES STRATEGIC CATEGORY DYNAMICALLY PRECISION SUPPLY CHAIN & TOTAL STORE ROUTED RETAIL EXECUTION SCALE & AGILITY LEADERSHIP SALES FORCE STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
ADVANTAGED SOLUTIONS & PERFORMANCE STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
HOLISTIC FRONT END LEADERSHIP PROPRIETARY INSIGHTS, TOTAL STORE ANALYTICS & RETAILER COLLABORATION FRONT END Happiness SALES LIFT Balance Well-being 2X Moderation Hershey Original Optimized Experience STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
PRECISION RETAIL EXECUTION PRECISION INSIGHTS, TECHNOLOGY & PROPRIETARY RETAIL SALES FORCE REAL TIME STORE LEVEL ANALYTICS EXECUTION & EVALUATION & PRIORITIZATION DOCUMENTATION +15% Entrance +5% In Aisle Endcap Produce STORE 52 WHICH PRIORITIES: STORE? 1. Easter Back of Store Produce Store 52 2.Reese NCAA 3.Krave Display Display STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
ATTACKING SUPPLY CHAIN COSTS REAL TIME & HARMONIZED DATA, ADVANCED ANALYTICS & SUPPLY CHAIN AGILITY VISIBILITY INTO US SUPPLY CHAIN # OF TOUCHES INEFFICIENCY PLANNE NNED EXCE CESS 2016 2019E STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
DELIVERING INNOVATIVE SNACKING LEADERSHIP REIGNITE CORE REALLOCATE CONFECTION & RESOURCES TO EXPAND GROW MARGINS EXPAND BREADTH IN EXPAND MARGINS & INCREASE SNACKING SHAREHOLDER FUEL GROWTH VALUE INVEST STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE
INCREASE SHAREHOLDER VALUE TOP QUARTILE SALES GROWTH & TOP QUARTILE MARGINS INCREASE SHAREHOLDER VALUE
OUR NET SALES PERFORMANCE REFLECTS A CHALLENGING ENVIRONMENT 9.3% HERSH RSHEY EY NET SALES LES 7.6% 7.2% 3.9% 0.7% -0.5% 2011 2011 2012 2012 2013 2013 2014 2014 2015 20 15 2016 2016 INCREASE SHAREHOLDER VALUE Source: Hershey Financials
WE HAVE ACHIEVED TOP QUARTILE SALES PERFORMANCE AMONG S&P FOOD GROUP PEERS U.S. RETAIL SALES 4 YEAR $ % CAGR 2016 $ % CHG VS YA Hershey McCormick 3.2 2.3 Hormel Hershey 2.4 0.7 Mead Johnson Hormel 2.0 0.3 Mondelez Mondelez 1.7 -0.2 McCormick Campbells 1.4 -0.3 Campbells Smuckers 1.1 -0.4 Tyson Tyson 1.0 -1.9 Smuckers Kraft-Heinz -0.8 -2.0 Kraft-Heinz Kellogg -1.1 -2.6 General Mills Mead Johnson -1.9 -3.8 Kellogg Conagra -2.4 -5.0 Conagra General Mills -2.8 -5.0 INCREASE SHAREHOLDER VALUE Source: Nielsen AOD xAOC + C
SOLID TRACK RECORD OF OPERATING MARGIN EXPANSION ADJUSTED OPERATING INCOME MARGIN HERSH RSHEY EY NET SALES LES ++ 19.6% 20.0% 20.4% 19.2% 18.5% 17.9% 17.7% 16.2% 15.0% 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 20 2015 15 2016 2016 2017E 2017E Source: Hershey Financials INCREASE SHAREHOLDER VALUE See Appendix for a Reconciliation of GAAP Operating Income Margin to Adjusted Operating Income Margin
FOCUSED ON GROSS AND OPERATING MARGIN EXPANSION ADJUSTED GROSS MARGIN % ADJUSTED OPER. INCOME MARGIN % 46%+ 22% - 23% 45.6% 20.4% 17.9% 42.4% 2011 2016 2019e 2011 2016 2019e Source: Hershey Financials INCREASE SHAREHOLDER VALUE Not to Scale See Appendix for a Reconciliation of GAAP to Adjusted Gross and Operating Income Margin
OUR EPS REMAINS STRONG ADJUSTED EPS-DILUTED $4.41 $4.12 $3.98 $3.72 $3.24 $2.83 2011 2012 2013 2014 2015 2016 Source: Hershey Financials Not to Scale INCREASE SHAREHOLDER VALUE See Appendix for a Reconciliation of GAAP EPS to Adjusted EPS
LONG TERM TARGETS LEVERAGING U.S. SCALE NET SALES +2-4% MARGIN IMPROVEMENT VIA COGS AND SG&A ADJUSTED DILUTED EPS +6-8% PROFITABLE DIVIDEND YIELD 2-3% INTERNATIONAL GROWTH TOTAL SHAREHOLDER RETURN ~ 10% INCREASE SHAREHOLDER VALUE Net Sales in Constant Currency
PATRICIA LITTLE CHIEF FINANCIAL OFFICER BUILDING SHAREHOLDER VALUE
DELIVERING INNOVATIVE SNACKING LEADERSHIP REIGNITE CORE REALLOCATE CONFECTION & RESOURCES TO EXPAND GROW MARGINS EXPAND BREADTH IN EXPAND MARGINS & INCREASE SNACKING SHAREHOLDER FUEL GROWTH VALUE INVEST STRENGTHEN CAPABILITIES & LEVERAGE TECHNOLOGY FOR COMMERCIAL ADVANTAGE BUILDING SHAREHOLDER VALUE
IT ALL STARTS WITH GROSS MARGIN HERSHEY ADJUSTED GROSS MARGIN S&P FOOD GROUP* 64.1 Mead Johnson 46.0% 46.0% 45.6 Hershey 45.6% ~45.8% 41.5 McCormick 39.8 Mondelez 39.2 Kellogg 38.8 Kraft-Heinz 44.9% 38.0 Smuckers 37.1 Campbells 35.6 General Mills 29.1 Conagra 22.7 Hormel 2013 2014 2015 2016 2017e 12.7 Tyson *Per Credit Suisse estimate/model for the latest year end BUILDING SHAREHOLDER VALUE See Appendix for a Reconciliation of Hershey GAAP Gross Margin to Adjusted Gross Margin
LEVERS FOR GROSS MARGIN EXPANSION FIXED COST LEVERAGE NET PRICE REALIZATION NEW MANUFACTURING PACKAGING OPTIMIZATION CAPABILITIES / TECHNOLOGY PRODUCTIVITY PRODUCT MIX BUILDING SHAREHOLDER VALUE
BENEFITS Granby, QC OF SCALE IN St. Hyacinthe, QC Ashland, OR Hershey , PA (2) Lancaster, PA NORTH AMERICA Robinson, IL Hazleton, PA Stuarts Draft, VA CAPACITY Memphis, TN UTILIZATION 65% Monterrey, Mex MANUFACTURING DISTRIBUTION FACILITIES: 11 CENTERS: 5 BUILDING SHAREHOLDER VALUE
INTERNATIONAL OPPORTUNITY CAPACITY UTILIZATION 40% MANUFACTURING DISTRIBUTION FACILITIES: 8 CENTERS: 8 BUILDING SHAREHOLDER VALUE
FOCUS ON COGS ~$100m ~$4.0b ANNUAL PRODUCTIVITY 2017-19 Distribution SG&A Raw Materials & Manufacturing OFFSETTING Packaging Overhead NORMAL INFLATION COGS Source: Hershey Financials BUILDING SHAREHOLDER VALUE
MAINTAINING COMMITMENT TO RESPONSIBLE SOURCING… COMMITMENT TO 100% CERTIFIED AND INVESTING IN SUSTAINABLE COCOA COCOA COMMUNITIES ENSURING THE INTEGRITY OF OUR SUPPLY CHAIN BUILDING SHAREHOLDER VALUE
…AND MINIMIZING OUR ENVIRONMENTAL FOOTPRINT PROGRESS AGAINST OUR EFFICIENT OPERATIONS GOALS NEW AMERICAN BUSINESS CLIMATE ACT GOALS CLIMATE SMART COCOA INITIATIVES BUILDING SHAREHOLDER VALUE
SOLID OPERATING CASH FLOW $B $B $1.2 +++ $1.2 $1.1 $1.0 $0.85 2012 2013 2014 2015 2016 2017-19E Source: Hershey Financials BUILDING SHAREHOLDER VALUE
CASH RETURNED TO SHAREHOLDERS $M $M $922 Dividends Share Buyback $879 SOLID TRACK RECORD OF RETURNING CASH TO SHAREHOLDERS $642 $420 $403 $202 $466 ~$5b IN DIVIDENDS $404 $402 $394 AND SHARE $125 $283 REPURCHASES* $263 $263 $100 $150 OVER THE LAST 10 YEARS $502 $476 $440 $341 $304 $252 COMMITTED TO A DIVIDEND PAYOUT RATIO OF AT LEAST 50% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Hershey Financials BUILDING SHAREHOLDER VALUE *Excludes shares repurchased in connection with the exercise of stock options
#1 #1 #4 #4 BUSINESS DEBT GROWTH REDUCTION CASH FLOW (INCL. M&A) FINANCIAL PRIORITIES FLEXIBILITY #3 #2 #2 SHARE DIVIDEND BUYBACK BUILDING SHAREHOLDER VALUE
CAPITAL EXPENDITURES $M $M $371 $357 $351 $$$ $270-$290 $270 2013 2013 2014 2014 2015 2015 2016 2016 2017e 2017e 2018 2018 to to 20 2019 19 % OF NET T 4.9% 5.0% 4.8% 3.6% |----- < 4% of net sales-----| SALES ES Source: Hershey Financials BUILDING SHAREHOLDER VALUE
M&A FOCUSED ON EXTENDING SNACKING BREADTH • Growth categories • Preference to be EPS accretive after 2 years • Continue to build on execution / implementation experience BUILDING SHAREHOLDER VALUE
DIVIDEND PAYOUT RATIO Kraft-Heinz 61.9% SOLID CASH FLOW ENABLES General Mills 59.0% Kellogg 52.7% Hershey 51.7% COMMITMENT TO Mead-Johnson 51.3% AT LEAST A McCormick 46.1% 50% PAYOUT Campbell 44.8% Conagra 44.2% Hormel 39.9% Smuckers 38.5% Mondelez 36.2% Tyson 19.0% BUILDING SHAREHOLDER VALUE *Last dividend payments X 4 divided by forward consensus estimates at 2/16/17
COMMITMENT TO SHARE BUYBACKS $M $M Option Replenishment Buyback / Share Count Reduction STOCK BUYBACKS IN $510 PLACE TO REDUCE $489 SHARE COUNT $454 (EXCLUDES OPTIONS) REPURCHASE 202 403 OPTIONS IN THE $249 420 OPEN MARKET AS A MATTER OF PRACTICE $159 125 252 PART OF 159 CAPITAL 124 107 69 DEPLOYMENT PHILOSOPHY 2012 2013 2014 2015 2016 Source: Hershey Financials BUILDING SHAREHOLDER VALUE
NET DEBT TO ADJUSTED EBITDA As of Decem embe ber 31, 2016 16 A / A1 1.5 DEBT RATING (S&P / Moody’s) 1.2 1.0 $1.0b (UNSECURED) CREDIT REVOLVER 0.8 IN PLACE 0.5 OUTSTANDING U.S. COMMERCIAL PAPER $474m 2012 2013 2014 2015 2016 Source: Hershey Financials BUILDING SHAREHOLDER VALUE
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