Hostess Brands — Consumer Analyst Group of New York Conference 2017
43 slides from Hostess Brands's conference presentation, Feb 21, 2017
Slide 1: Hostess Brands - Consumer Analyst Group of New York Conference February 2017
® HOSTESS BRANDS Consumer Analyst Group of New York Conference February 2017
Slide 2: Disclaimer: Forward Looking Statements
® DISCLAIMER Forward Looking Statements This investor presentation contains statements reflecting our views about our future performance that constitute “forward-looking statements” that involve substantial risks and uncertainties. Forward-looking statements are generally identified through the incl
Slide 3: Dean Metropoulos, Executive Chairman
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Slide 4: Bill Toler, President & CEO
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Slide 5: Business Overview, Leader of Category Growth, Growth Drivers, Financial Overview
BUSINESS OVERVIEW 1 2 3 4 LEADER OF CATEGORY GROWTH GROWTH DRIVERS FINANCIAL OVERVIEW ®
Slide 6: Business Overview
BUSINESS OVERVIEW 1 ®
Slide 7: Key Business Themes
Iconic Brands With Nearly 100-year History Snacking Trends Create Tailwinds for Growth Strong Market Share Momentum & Brand Innovation Best-in-class Financial Position KEY BUSINESS THEMES ®
Slide 8: Business Transformation
® BUSINESS TRANSFORMATION Hostess Brands Warehouse Model Shelf-life Technology
Slide 9: Iconic Brand Delivering Classic Sweet Treats
ICONIC BRAND Delivering Classic Sweet Treats
Slide 10: Emotional Brand Connection
EMOTIONAL BRAND CONNECTION U.S. consumers share a special emotional relationship with the 96 year old Hostess, a brand that defines the rapidly growing “Indulgent Snacking” trend 96 Year history 90%+ Brand awareness Notes:. Harmon Atchison, Awareness, Use and Status Perception Study, 12/8/14
Slide 11: Significant Growth Since Re-Launch With Meaningful Upside Potential
® SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL Notes: Superior Cake Products, Inc. figures are unaudited based upon actual/estimated results and do not contain any adjustments as a result of applying purchase accounting. Some figures may not add up exactly due to rounding. See
Slide 12: Since the Relaunch, Hostess Has Established a Best-in-Class Financial Position
SINCE THE RELAUNCH, HOSTESS HAS… Established a best-in-class financial position Strong and sustainable top-line growth Industry-leading EBITDA margins of ~29%(1) Significant Adjusted EBITDA to Free Cash Flow Conversion(2) Clean balance sheet — No legacy issues (1) See Appendix for an explanation of
Slide 13: Since the Relaunch, Hostess Has Created a Compelling Growth Story
SINCE THE RELAUNCH, HOSTESS HAS… Created a compelling growth story Powerful Hostess brand Aggressive capital investment Competitively advantaged business model Compelling growth story ® =
Slide 14: Leader of Category Growth
@) LEADER OF CATEGORY ccocasca0c00dhhhh ehewi
Slide 15: Selling at a Premium Price Point
® $2.63 $3.39 $4.39 $4.42 $4.75 SELLING AT A PREMIUM PRICE POINT Notes: Hostess data does not include Superior. The Company has transitioned to a new Nielsen database for Market Share and Industry Data, all prior periods have been restated utilizing the updated database. Source: Nielsen U.S. total u
Slide 16: Leading Category Growth
® LEADING CATEGORY GROWTH Notes: Hostess data does not include Superior. The Company has transitioned to a new Nielsen database for Market Share and Industry Data, all prior periods have been restated utilizing the updated database. (1) Nielsen U.S. total universe, 12 weeks ending 10/13/2012 compare
Slide 17: Strong Market Position in Key Segments
® STRONG MARKET POSITION IN KEY SEGMENTS Source: Nielsen U.S. total universe, 52 weeks ending 12/31/16 Note: Hostess data does not include Superior. The Company has transitioned to a new Nielsen database for Market Share and Industry Data, all prior periods have been restated utilizing the updated d
Slide 18: Strong Growth Momentum
® 11.1% 13.7% 15.6% 16.7% 22.8% 2H13 2014 2015 2016 OldCo STRONG GROWTH MOMENTUM(1) Notes: Hostess data does not include Superior. (1)Hostess market share, Total Nielsen Universe. Nielsen U.S. 24 weeks ending 10/13/2012, 52 weeks ending 1/4/2014, 52 weeks ending 1/3/2015, 1/2/2016, and 52 weeks endi
Slide 19: Growth Drivers
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Slide 20: Competitively Advantaged Business Model
® COMPETITIVELY ADVANTAGED BUSINESS MODEL Warehouse model Close partnerships with third party distributors Enhanced in-store merchandizing capabilities Compelling retailer economics Expanded distribution reach
Slide 21: Broad Channel Opportunity (Small Format)
® BROAD CHANNEL OPPORTUNITY Source: Hostess market share, Total Nielsen Universe. Nielsen U.S. 12 weeks ending 10/31/2012 compared to 52-weeks ending 12/31/2016. Market share based on retail sales dollars. The Company has transitioned to a new Nielsen database for Market Share and Industry Data, all
Slide 22: Broad Channel Opportunity (Large Format)
® BROAD CHANNEL OPPORTUNITY Source: Hostess market share, Total Nielsen Universe. Nielsen U.S. 12 weeks ending 10/31/2012 compared to 52-weeks ending 12/31/2016. Market share based on retail sales dollars. Club does not include Costco, only Sam’s and BJ’s. The Company has transitioned to a new Niels
Slide 23: Opportunities for the Future
® OPPORTUNITIES FOR THE FUTURE Rebuild Core Business Innovation & Line Extensions White Space
Slide 24: Rebuild Core Products
® REBUILD CORE PRODUCTS More items in more stores Continue to build distribution Drive penetration in channels unlocked by our warehouse model
Slide 25: 2016 Innovation & Line Extensions
® 2016 INNOVATION & LINE EXTENSIONS Drive penetration in channels unlocked by our warehouse model The Return of Suzy Q Brownie Innovation Twinkies Innovation New & Improved Whole Grain Mini Muffins Premium Seasonal E-Commerce Notes: M&M’s is a registered trademarks of Mars, Incorporated. Ghostbuster
Slide 26: 2017 Innovation & Line Extensions
® 2017 INNOVATION & LINE EXTENSIONS Drive penetration in channels unlocked by our warehouse model Cinnamon Sugar Crunch Donettes White Fudge Twinkies Innovation Peanut Butter Apple Streusel Cupcake Expansion
Slide 27: White Space: In-Store Bakery Is a Compelling Opportunity
® WHITE SPACE …IN-STORE BAKERY IS A COMPELLING OPPORTUNITY Source: Nielsen Perishable Group, In Store Bakery, 52 Weeks ending 12/31/16. Total In Store Bakery $11.6 Billion for 52wks ending 12/31/16. ISB - $ Share In-store bakery (sweets) is a $8.2 billion category Breakfast Bakery 30% Desserts and S
Slide 28: White Space: In-Store Bakery Is a Compelling Opportunity
® WHITE SPACE …IN-STORE BAKERY IS A COMPELLING OPPORTUNITY
Slide 29: White Space
® WHITE SPACE Drive penetration in channels unlocked by our warehouse model Frozen Aisle Schools Club Channel Licensing Canada Foodservice
Slide 30: Differentiated Business Model Drives Continued Growth
DIFFERENTIATED BUSINESS MODEL DRIVES CONTINUED GROWTH Hostess is well positioned for future growth… Warehouse distribution unique in SBG category Supports strength of innovation pipeline and speed-to-market Compelling opportunity for continued market share and volume gains across distribution channe
Slide 31: Financial Overview
FINANCIAL OVERVIEW 4 ®
Slide 32: Tom Peterson, EVP & CFO
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Slide 33: Significant Growth Since Re-Launch: Net Revenue
® SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL Notes: Superior Cake Products, Inc. figures are unaudited based upon actual/estimated results and do not contain any adjustments as a result of applying purchase accounting. Some figures may not add up exactly due to rounding. See
Slide 34: Significant Growth Since Re-Launch: Gross Profit
® SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL Notes: Superior Cake Products, Inc. figures are unaudited based upon actual/estimated results and do not contain any adjustments as a result of applying purchase accounting. Some figures may not add up exactly due to rounding. See
Slide 35: Strong Margin Profile
STRONG MARGIN PROFILE Established margin structure driven by… The health of the SBG category Hostess is a leading brand sold at a premium price Highly efficient operating model ®
Slide 36: Significant Growth Since Re-Launch: Adjusted EBITDA
® $145 $178 $202 $2 $4 $6 $147 $182 $208 2014A 2015A LTM 9/30/16A Notes: Superior Cake Products, Inc. figures are unaudited based upon actual/estimated results and do not contain any adjustments as a result of applying purchase accounting. Some figures may not add up exactly due to rounding. See App
Slide 37: Aggressive Capital Investment
® AGGRESSIVE CAPITAL INVESTMENT Distribution center (third-party) Headquarters Baking facility Kansas City, MO ~$150 million of capital invested in operations and systems
Slide 38: Sustainability of Margins
® SUSTAINABILITY OF MARGINS Pricing Manufacturing SG&A and Distribution
Slide 39: Attractive Margins Relative to Peers
ATTRACTIVE MARGINS RELATIVE TO PEERS Best-in-class financial position Approximately 29% LTM 9/30/16 Adjusted EBITDA Margins 85.8% LTM 9/30/16 Free Cash Flow Conversion (1) ® Notes: LTM as of 9/30/2016. (1) FCF conversion defined as (Adj. EBITDA-Capex) / Adj. EBITDA. Represents LTM 9/30/2016 Hostess
Slide 40: Appendix
APPENDIX 5 ®
Slide 41: Hostess Non-GAAP Reconciliations (Unaudited)
® HOSTESS NON-GAAP RECONCILIATIONS (UNAUDITED) Twelve Months Ended 30-Sep-16 Nine Months Ended 30-Sep-16 Three Months Ended 30-Sep-16 Twelve Months Ended 31-Dec-15 Nine Months Ended 30-Sep-15 Three Months Ended 30-Sep-15 Twelve Months Ended 31-Dec-14 Net income (loss) $98.7 $81.5 $33.5 $88.8 $71.6 (
Slide 42: Hostess Non-GAAP Reconciliations (Unaudited) Notes
® HOSTESS NON-GAAP RECONCILIATIONS (UNAUDITED) (1) For the nine months ended September 30, 2015, Hostess Holdings recorded a loss on a partial extinguishment of Hostess Holdings’ original Term Loan of $25.9 million, which consisted of prepayment penalties of $9.9 million and write-off of deferred fi
Slide 43: Glossary
® GLOSSARY Term Definition ACV All-commodity volume (%) BFY Better-for-you C-store Convenience store ISB In-store bakery LTO Limited time offer PHO Partially hydrogenated oils SBG Sweet baked goods SKU Stock keeping unit
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