Hostess Brands — Q1 2021 Earnings Presentation
25 slides from Hostess Brands's earnings presentation, May 17, 2021
Slide 1: Investor Presentation May 17, 2021
Investor Presentation May 17, 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 Net Revenue and Adjusted EBITDA are non-GAAP financial measures. See “Use of Non-GAAP Financial Meas
Slide 4: Consistent Track-record of Delivering Growth
4 Consistent Track-record of Delivering Growth Dedicated to Bringing Consumers the Comfort and Joy of ▪ Delivered 9% net revenue with growth from both SBG and Voortman ▪ Achieved strong Voortman growth and realization of synergies following successful integration in 2020 and increasing distribution
Slide 5: Focused on Advancing ESG Initiatives and Driving Shareholder Value
5 Focused on Advancing ESG Initiatives and Driving Shareholder Value * Adjusted Net Revenue and Adjusted EBITDA for the three months ended March 31, 2021 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
Slide 6: Q1 Net Revenue and Adjusted EBITDA Growth
$51.0 $62.5 Q1 2020 Q1 2021 6 Driven by Voortman® and Hostess® Brand Growth $243.5 $265.4 Q1 2020 Q1 2021 (in millions) 9.0% growth 22.5% growth Results are for three months ended March 31, 2021 and 2020. Adjusted Revenue and Adjusted EBITDA are non-GAAP financial measures. See “Use of Non-GAAP Fina
Slide 7: Strong Voortman Growth as Lap Q1 2020 Transition to Warehouse Model
7 Strong Voortman Growth as Lap Q1 2020 Transition to Warehouse Model Sweet Baked Goods $237.7 $226.4 $11.3 5.0% Cookies 27.7 17.1 10.6 62.0% Total Net Revenue $265.4 $243.5 $21.9 9.0% Sweet Baked Goods net revenue growth driven by strong Hostess® branded sales, partially offset by lower private-lab
Slide 8: Growing Point-of-Sale and Expanding Market Share in the Sweet Baked Goods Category
8 Growing Point-of-Sale and Expanding Market Share in the Sweet Baked Goods Category 2017 2018 2019 18.2% 18.9% 19.5% 2017 2018 2019 $1,109 $1,206 $1,292 16.6% 2020 $1,149 2020 Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Point of Sale and Market Share, 52 weeks e
Slide 9: Growth Ahead of the Category Driven by Strong Performance in Convenience, Grocery and Dollar Channels
9 Growth Ahead of the Category Driven by Strong Performance in Convenience, Grocery and Dollar Channels $0 $50 $100 $150 $200 Convenience Grocery Mass Dollar Club Drug 13 WE 4/4/2020 13 WE 4/3/2021 Market Share 28.6% 15.0% 13.1% 32.9% 22.5% 54.4% Market Share Change (bps) 327 139 (198) 786 (69) 570
Slide 10: Multi-Packs Continue Strong Growth
10 Multi-Packs Continue Strong Growth Multi-Pack Point-of-Sale Single Serve Point-of Sale Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Q1 2020 - 13 weeks ended 4/4/20, Q1 2021 – 13 weeks ended 4/3/21 Q1 2020 Q1 2021 15.7% 11.5% 7.6% (2.2%) -2.7% 10.1% -7.8% Q1 202
Slide 11: Provides Flexibility to Invest in Growth and Generate Shareholder Value
11 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 12: Strong Growth Across All Key Metrics
12 Strong Growth Across All Key Metrics Driven by Strong Hostess Demand and Achievement of Voortman Synergies Net Revenue $265.4 $243.5 $21.9 9.0% Adjusted Gross Profit $95.5 $84.3 $11.2 13.3% Adjusted Gross Margin 36.0% 34.6% 136bps Adjusted EBITDA $62.5 $51.0 $11.5 22.5% Adjusted EBITDA Margin 23.
Slide 13: 2021 Guidance
13 ($ in millions, except EPS and leverage ratio) 2021 Guidance Adjusted Net Revenue 3%-4.5% Growth Adjusted EBITDA $255 – $265 (Growth of 6 – 10%) Adjusted EPS $0.80 – $0.85* (Growth of 7 – 13%) Leverage Ratio ~3x* (Improvement of ~1 full turn) Adjusted Net Revenue, Adjusted EBITDA and Adjusted EPS
Slide 14: Long-Term Growth Drivers
f - Long-Term : Growth Drivers
Slide 15: Leading Peer Group Performance
15 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 Outperforming Competition in Key Growth Segments Broad Reach Across Channels with Highest Distribution in
Slide 16: Snacking Market Growth
16 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 17: Well Positioned to Capture Top Consumer Preferences
17 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 18: Leading Market Share at All-Time High
23% 24% 25% 26% 27% 28% $460 $500 $540 $580 2018 2019 2020 2021 POS Market Share 18 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 April 3, 2021 a
Slide 19: Growth in $3.6 Billion Breakfast Sub-Category
19 Growth in $3.6 Billion Breakfast Sub-Category Driven by Strong Performance in Pastries and Doughnuts 20.0% 12.2% 17.6% 1.1% -3.9% 0.8% Breakfast Pastries Doughnut Total Breakfast Hostess Category POS Dollars Growth QTD vs Prior Year $341M Source: Nielsen, Total Nielsen Universe for the Company wi
Slide 20: Strong Track Record of Innovation Success
20 Strong Track Record of Success with 5.8%1 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 Keep
Slide 21: Successfully Executing Against Building Blocks for Accretive Growth
21 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 22: 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 22 We delight consumers and build iconic brands supported by our core competencies to drive profitable growth Leveraging our highly efficient and profitable busin
Slide 23: Long-term Objective: Top Quartile Performance in Peer Group
Organic Revenue Growth Top Quartile of Peer Group1 23 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 24: Appendix
24 Appendix
Slide 25: Non-GAAP Reconciliation
25 1. Acquisition, disposal and integration related operating costs include $6.4 million of selling expense, $3.2 million of general and administrative expense and $4.3 million of business combination transaction costs. 2. Facility transition operating costs are included in general and administrativ