Hostess Brands — FY2020 Earnings Presentation
30 slides from Hostess Brands's earnings presentation, Feb 24, 2021
Slide 1: Investor Presentation February 24, 2021
Investor Presentation February 24, 2021
Slide 2: Forward Looking Statements
2 Forward Looking Statements This investor presentation contains statements reflecting our views about the future performance of Hostess Brands, Inc. and its subsidiaries (referred to as “Hostess Brands” or the “Company”) that constitute “forward-looking statements” that involve substantial risks an
Slide 3: A Sustainable, Profitable Growth Story
3 A Sustainable, Profitable Growth Story Iconic Brands Continuous Innovation to Drive Growth Collaborative Customer Relationships Efficient Manufacturing & Distribution Model Proven Scalable Platform Adjusted Net Revenue and Adjusted EBITDA are non-GAAP financial measures. See “Use of Non-GAAP Finan
Slide 4: Exciting Opportunities for Future Growth
4 Exciting Opportunities for Future Growth Dedicated to Bringing Consumers the Comfort and Joy of ? Maintained an unrelenting focus on maintaining the health and safety of our employees while navigating the unpredictable COVID pandemic ? Delivered double-digit net revenue and EBITDA growth ? Develop
Slide 5: Well Positioned for Continued Growth
5 Well Positioned for Continued Growth * Adjusted Net Revenue and Adjusted EBITDA for year ended December 31, 2020 as compared to prior year are non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” and the Appendix for an explanation of all non-GAAP financial measures and reconcilia
Slide 6: Driven by Voortman and Hostess Brand Growth
$52.4 $63.7 2019 2020 6 Driven by Voortman® and Hostess® Brand Growth $216.7 $256.0 2019 2020 (in millions) 18.1% growth 21.6% growth Results are for three and twelve months ended December 31, 2020 and 2019. Adjusted Revenue and Adjusted EBITDA are non-GAAP financial measures. See “Use of Non-GAAP F
Slide 7: Continued Growth of Sweet Baked Goods
7 Continued Growth of Sweet Baked Goods Sweet Baked Goods net revenue growth driven by strong Hostess® branded sales, partially offset by lower private-label and non-Hostess® branded sales as we continue to strategically rebalance our portfolio to best serve customers and consumers while protecting
Slide 8: Growing Point-of-Sale Over 6% While Maintaining Market Share
8 Growing Point-of-Sale Over 6% While Maintaining Market Share in the Sweet Baked Goods Category 2017 2018 2019 18.0% 19.6% 19.5% 2017 2018 2019 $1,123 $1,275 $1,353 17.0% 2020 $1,199 2020 Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Point of Sale and Market Share
Slide 9: Meaningful Market Share Gains in Key Channels
9 Driven by Strong Growth in Convenience, Grocery and Dollar Channels Meaningful Market Share Gains in Key Channels $0 $100 $200 $300 $400 $500 $600 $700 Convenience Grocery Mass Dollar Club Drug 52 WE 12/28/2019 52 WE 12/26/2020 Market Share 26.9% 13.8% 14.0% 27.9% 22.4% 48.7% Market Share Change (
Slide 10: Growth Ahead of the Category Driven by Key Channels
10 Growth Ahead of the Category Driven by Strong Performance in Convenience, Grocery and Dollar Channels $0 $20 $40 $60 $80 $100 $120 $140 $160 Convenience Grocery Mass Dollar Club Drug 13 WE 12/28/2019 13 WE 12/26/2020 Market Share 27.7% 13.4% 11.5% 31.3% 21.5% 48.6% Market Share Change (bps) 219 4
Slide 11: Multi-Packs Continue Strong Growth
-5.2% 11 Multi-Packs Continue Strong Growth +2.6% Q4 2020 Q2 2020 Q4 2020 +2.9% +10.3% +6.6% Multi-Pack Single Serve Point-of-Sale Year-Over-Year Growth Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Q4 2020 - 13 weeks ended 12/26/20, Q3 2020 – 13 weeks ended 9/26/2
Slide 12: Flexibility to Invest in Growth and Generate Shareholder Value
12 Provides Flexibility to Invest in Growth and Generate Shareholder Value Disciplined Approach to Cash Management ? Reinvest in business for future growth ? De-leverage ? Strategic acquisitions ? Return Capital to Shareholders through Securities Repurchases History of successfully reducing leverage
Slide 13: Double-Digit Growth Across All Key Metrics
13 Double-Digit Growth Across All Key Metrics Driven by Contribution of Voortman Acquisition and Strong Hostess Demand Adjusted Net Revenue $256.0 $216.7 $39.3 18.1% $1,023.4 $907.7 $115.7 12.7% Adjusted Gross Profit $95.8 $75.3 $20.5 27.2% $369.4 $310.8 $58.5 18.8% Adjusted Gross Margin 37.4% 34.7%
Slide 14: 2021 Guidance
14 ($ in millions, except EPS and leverage ratio) 2020 Actuals 2021 Guidance Adjusted Net Revenue $1,023.4 3%-4.5% Growth Adjusted EBITDA $240.1 $255 – $265 (Growth of 6 – 10%) Adjusted EPS $0.75 $0.80 – $0.85* (Growth of 7 – 13%) Leverage Ratio 3.9x ~3x* (Improvement of ~1 full turn) Adjusted Net R
Slide 15: Long-Term Growth Drivers
ess , Long-Term y Growth Drivers y
Slide 16: Leading Peer Group Performance
16 Leading Peer Group Performance Indulgent Snacking Treats is the Fastest Growing Snacking Sub-Segment1 3 Strong Innovation Pipeline with Opportunities for Expansion within Existing Categories Growing Repeat Consumers Ahead of the Category Broad Reach Across Channels with Highest Distribution in SB
Slide 17: Snacking Market Growth
17 Snacking Market Growth 2017 2020 2022E +$10 Billion Source: 1 IRI Actuals Total US -Multi Outlet + Conv Calendar; Mintel Forecast Total US –Multi Outlet + Conv Calendar. 2 Hostess Consumer Snacking Survey (N = 6082; 12/2020); McKinsey Analytics $125B1 $170B2 $180B2
Slide 18: Well Positioned to Capture Top Consumer Preferences
18 Well Positioned to Capture Top Consumer Preferences Consumers Prefer Sweet Snacks More Than Better-For-You 46% 54% 63% 66% 68% 69% 74% Regional Hispanic snacks Snackified entrees Plant-based protein snacks Breakfast snacks Late-night snacks Better-for-you snacks Sweet Snacks Snack preference is f
Slide 19: Hostess Has Over 90% Brand Awareness
19 Hostess® Has Over 90% Brand Awareness +4.3% Increasing Repeat Buyers Growth Ahead of the Category SBG Category Increasing Households Buying Hostess Young Transitionals (Under 35 years old) Source: AYTM Awareness Study, July 2020, Which of the following brands have you heard of? Nielsen Panel 52 W
Slide 20: Leading Market Share at All-Time High
23% 24% 25% 26% 27% 28% $460 $500 $540 $580 2018 2019 2020 POS Market Share 20 Leading Market Share at All-Time High Convenience POS and Market Share Source: Nielsen, Total Nielsen Universe for the Company in the Convenience channel within the SBG Category for the 52 weeks ended December 26, 2020 an
Slide 21: Growth in $3.6 Billion Breakfast Sub-Category
21 Growth in $3.6 Billion Breakfast Sub-Category Driven by Strong Performance in Pastries and Doughnuts 10.1% 7.3% 9.6% 2.4% 3.5% 4.3% Breakfast Pastries Doughnut Total Breakfast Hostess Category POS Dollars Growth QTD vs Prior Year $341M Source: Nielsen, Total Nielsen Universe for the Company withi
Slide 22: Innovation Track Record
22 Strong Track Record of Success with 5.8% Increase in 3-Year Rolling Innovation Net Revenue Contribution vs. PY Core Development Building on Iconic Brand Favorites with Flavor Extensions Expanding Breakfast Accelerating Growth within Fastest Growing Subsegment of Category Limited-Time-Offers Keepi
Slide 23: Successfully Executing Against Building Blocks for Accretive Growth
23 Successfully Executing Against Building Blocks for Accretive Growth Transition to Warehouse Distribution Model and Integration into Hostess Operations Securing Cost Synergies Accelerate Growth through Increased Merchandising and Innovation Driving Expanded Depth of Distribution and Merchandising
Slide 24: Driving Increased Distribution Through Convenience Channel Expansion
24 Food C-Store Drug 91% US xAOC 61% Driving Increased Distribution through Expansion Into Convenience Channel and Increasing LTOs in 2021 Source: Nielsen, Total Nielsen Universe % ACV for the 52 weeks ending 12/26/20. ~$10 million of Annual Retail Revenue 5point Distribution GainAdditional Voortman
Slide 25: Developing More Brand Activation Activities for Future Growth
25 Developing More Brand Activation Activities for Future Growth 120% Increase in Consumer Engagement vs. YA Building eCommerce presence through Digital Shelf Optimization Driving Brand Activation Through Increasing Presence in Social and Other Media Outlets
Slide 26: Strengthening our core Hostess brand and expanding into adjacent categories
Strengthening our core Hostess brand and expanding into adjacent categories through innovation and strong partnerships with our customers 26 We delight consumers and build iconic brands supported by our core competencies to drive profitable growth Leveraging our highly efficient and profitable busin
Slide 27: Delivering Industry-Leading Total Shareholder Returns
Organic Revenue Growth Top Quartile of Peer Group1 27 Objective: Long-term leading performance in our peer group Delivering Industry-Leading Total Shareholder Returns Adjusted EBITDA Margin Top Quartile of Peer Group1 Free Cash Flow Conversion2 Top Quartile of Peer Group1 1. Peer group defined as S&
Slide 28: Appendix
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Slide 29: Non-GAAP Reconciliation - Fourth Quarter
29 1. Acquisition, disposal and integration operating costs are included in other operating expenses on the consolidated statement of operations for the three months December 31, 2020. 2. Facility transition operating costs are included in general and administrative expenses on the consolidated stat
Slide 30: Non-GAAP Reconciliation - Full Year
30 1. Acquisition, disposal and integration operating costs include $8.0 million of selling expense, $8.9 million of general and administrative expenses and $4.3 million of business combination transaction costs for the twelve months ended December 31, 2020. 2. Special employee incentive compensatio