Fourth Quarter and FY 2017 Earnings. February 26, 2018

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1 Fourth Quarter and FY 2017 Earnings February 26, 2018

2 Forward Looking Statements Some of the statements made in this presentation are forward-looking and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 including statements relating to: (1) our financial forecast, including projected sales (including specific product lines and the company as a whole), total volume, price realization, profit margins, net income, earnings per share, free cash flow, our leverage ratio and debt covenant compliance, (2) our regional and national branding and marketing initiatives, (3) our innovation, research and development plans and our ability to successfully launch new products or brands, (4) commodity prices and other inputs and our ability to forecast or predict commodity prices, milk production and milk exports, (5) our enterprise-wide cost productivity plan and other cost-saving initiatives, including plant closures and route reductions, and our ability to achieve expected savings, (6) our planned capital expenditures, (7) the status of our litigation matters, (8) our plans related to our capital structure, (9) our dividend policy, (10) possible repurchases of shares of our common stock, and (11) potential acquisitions. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in this presentation, including the risks disclosed in our filings with the Securities and Exchange Commission. Financial projections are based on a number of assumptions. Actual results could be materially different than projected if those assumptions are erroneous. The cost and supply of commodities and other raw materials are determined by market forces over which we have limited or no control. Sales, operating income, net income, debt covenant compliance, financial performance and earnings per share can vary based on a variety of economic, governmental and competitive factors, which are identified in our filings with the Securities and Exchange Commission, including our most recent Forms 10-K and 10-Q (which can be accessed on our website at or on the website of the Securities and Exchange Commission at Our ability to profit from our branding and marketing initiatives depends on a number of factors including consumer acceptance of our products. The declaration and payment of cash dividends under our dividend policy remains at the sole discretion of the Board of Directors and will depend upon our financial results, cash requirements, future prospects, restrictions in our credit agreement and debt covenant compliance, applicable law and other factors that may be deemed relevant by the Board. All forward-looking statements in this presentation speak only as of the date of this presentation. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based, except as required by law. Certain non-gaap financial measures contained in this presentation, including adjusted diluted earnings per share, free cash flow, adjusted EBITDA, net debt, total leverage, adjusted operating income and other adjusted measures, are from continuing operations and have been adjusted to eliminate the net expense or net gain related to certain items identified in our earnings press release. A full reconciliation of these measures calculated according to GAAP and on an adjusted basis is contained in such press release, which is publicly available in the investor relations section on our website. 2

3 Highlights

4 Our Strategic Plan

5 Our 3 Key Takeaways Winning in Private Label & Building and Buying Strong Brands Incremental Enterprise-Wide Cost Productivity Building our Capabilities: People, Technology & Infrastructure 5

6 Q4 and FY 2017 Highlights Dynamic and competitive retail environment driving lower volume Retailer investment in private label creating negative mix Focus on improving execution in securing volume Initial steps taken to reduce G&A costs One-time tax reform benefit to GAAP results of $44 million in 2017 Q4 17 Q4 16 Q4 YoY Adj. Operating Income* $51 $70 $(19) Adj. Net Income* (11) Adj. Diluted EPS* $0.25 $0.38 ($0.13) FY 17 FY 16 FY YoY Adj. Operating Income* (115) Adj. Net Income* (71) Adj. Diluted EPS* $0.80 $1.57 ($0.77) YTD FCF* (75) *See tables in the earnings release for computation and reconciliations of these Non-GAAP measures $ millions, except per gallon and per share 6

7 Business Update

8 Strengthening and broadening the #1 milk brand - DairyPure Maintaining leading dollar share on DairyPure and TruMoo in their respective category segments Change in US Dollar Share vs YAGO (MULOC ex Drug) weeks 12 weeks 4 weeks New Olympics marketing campaign launched in Q Strong DairyPure Mix-Ins launch receiving solid customer acceptance, to begin shipping in mid March 8

9 Driving portfolio diversification initiatives across categories and channels Now shipping Organic Valley products to over 700 key accounts and over 6,500 stores nationwide Uncle Matt s Organic: Driving incremental ACV in conventional channels Starting to penetrate national and regional accounts in conventional channels OV Fresh contributed to overall OV brand performance Food Service: Continued volume growth in 2017 Ice Cream: Expanding innovation in Friendly s cakes and sundae cups; geographic expansion continues for Mayfield Creamery 9

10 Cost productivity plan to ramp up through 2020 Base OPEX $150MM Savings Annual Recurring Savings Enterprise-Wide Cost Productivity Plan Largely targeted to offset inflation and volume deleverage Incremental annual run-rate savings of ~$150MM by end of 2020 Phased approach Estimate one-third of savings realization in 2018; two-thirds in

11 Rescaling our Supply Chain and Optimizing Spend Management Right-size the Network Integrate and Simplify Optimize Spend Match capacity with volume Holistic approach across operations and logistics Continue to deliver great quality and service Drive out waste OEE Routing efficiency Lean Six Sigma Coordinated approach to manage spend across all categories Leveraging size and scale for efficiencies Programmatic and structural changes to spend smarter 11

12 Integrating our Operating Model From To Legacy organization structure Flatter, leaner, and more agile structure Distributed support functions Centers of excellence Varying and limited spans of control Increased spans of control Manual and complex processes Simplified, streamlined and automated processes 12

13 Financial Results Financial Results

14 Q4 and FY 2017 Adjusted P&L* $ millions, except EPS Q4 17 $B/(W) vs. Q4 16 FY 17 $B/(W) vs. FY 16 Gross profit declines vs PY driven by mix and volume declines Lower incentive compensation, reduced headcount and advertising expense driving G&A reductions Effective tax rate of 26.5% post-reform Adjusted Gross Profit $448 ($49) $1,821 ($164) Selling & Logistics (331) 13 (1,348) 11 G&A** (66) 17 (295) 38 Total Adjusted Operating Costs (397) 30 (1,643) 49 Adjusted Operating Income 51 (19) 178 (115) Adjusted EBITDA 87 (25) 331 (123) Interest Expense (15) 2 (64) 2 38% (14) 7 (45) 44 Adjusted Diluted EPS $0.25 ($0.13) $0.80 ($0.77) *See tables in the earnings release for computation and reconciliations of these non-gaap measures **Includes adjusted amortization of intangibles $ millions, except per share 14

15 $14.49 $13.53 $14.43 $15.11 $16.34 $16.09 $15.52 $17.03 $16.67 $16.58 Raw milk costs remain stable Q4 costs down 1% sequentially; up 3% vs PY USDA forecasting supply growth of 1-2% in 2018 Class 1 Quarterly Average FY 16: $14.80; -9% FY 17: $16.45; 11% Q1 costs forecasted to be down 13% sequentially; down 15% YoY Q1 Forecast -15% YoY Expect full-year dairy commodity deflation Certain non-dairy commodities are a headwind Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 15

16 Free Cash Flow* Q4 FCF performance supported by lower sequential working capital investment Full year FCF higher when adjusting for discretionary pension contribution Twelve Months Ended $ in millions December 31, 2017 December 31, 2016 Net Cash Provided by Operating Activities $145 $257 Capital Expenditures $107 $145 Free Cash Flow Provided by Continuing Operations* $38 $113 *See tables in the earnings release for computation and reconciliations of these Non-GAAP measures 16

17 Sound Balance Sheet Q4 net debt sequentially down from prior quarter Net debt 2.68 times Bank EBITDA Flexible and liquid capital structure with debt maturities extended to 2020 and beyond Net Debt $ Millions / Leverage Ratio *Net debt is total consolidated funded indebtedness as calculated in accordance with our credit agreement except on an all cash netted basis. Bank EBITDA is calculated in accordance with our credit agreement. See tables in the earnings release for computation and reconciliation 17

18 2018 Outlook and Summary 2018 is a year of transformation and strategic cost reset; requires investment that will support longer-term growth Executing the commercial agenda of our strategic plan to Win in Private Label and Build & Buy Strong Brands Driving Operational Excellence with an aggressive enterprise-wide cost productivity plan Building our capabilities through investments in people, technology and infrastructure FY Adj EPS Guidance* FY FCF Guidance* FY Capex Guidance* $ $0.80 $30 - $50MM $135 - $160MM *Guidance provided on Non-GAAP basis. 18

19 Q&A