Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Investor Presentation (June 2024)
50 slides from Flowers Foods's investor presentation, June 2024
Slide 1: Slide 1
Slide 2: Forward-looking statements
Statements contained in this presentation and certain other written or oral statements made from time to time by Flowers Foods, Inc. (the “company”, “Flowers Foods”, “Flowers”, “us”, “we”, or “our”) and its representatives that are not historical facts are forward-looking statements as defined in th
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Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Operate the #1 loaf, organic, and gluten-free bread brands; gaining share in stable categories throughout the economic cycle Brand-focused portfolio strategy drives above-market growth via innovation, improved brand presence and relevance, and M&A Attractive cash flow generatio
Slide 5: 100+ Year History of Growth and Evolution
100+ YEAR HISTORY OF GROWTH AND EVOLUTION ac » fies 2 2 D fy HIKE Na WonDen & canon} V #1 loaf, organic, and gluten-free bread brands in the U.S. v46 operating bakeries v 2nd-largest baked foods company in U.S. Y Proven business model V Efficient bakeries & distribution v Experienced team One family
Slide 6: Business Overview
BUSINESS OVERVIEW Diverse product line across the Majority of business composed Diversified channel mix with broad baked foods spectrum of faster-growing, higher-margin distribution reach and e-Commerce branded retail products upside 2023 SALES MARKET SHARE! SALES MIX BY CHANNEL? = Flowers Branded =
Slide 7: Large and Stable U.S. Fresh Bakery Market
LARGE AND STABLE U.S. FRESH BAKERY MARKET ESTIMATED $50B' U.S. MARKET FOR US FRESH BAKERY RETAIL SALES FRESH AND FROZEN BAKERY ATRETAIL (in bilions) Large and stable U.S. Fresh Bakery category $29 with sales of $29B+2 $26 Present in 97.4% of households; buy the $25 $25 category every 16 days? $22 Co
Slide 8: Strategic Priorities
STRATEGIC PRIORITIES Aligned to long-term targets and disciplined capital policies LONG-TERM GROWTH TARGETS'2 Develop Team Focus on Brands Invest in team to drive portfolio Pursue targeted innovation and optimization through brand growth, marketing to enhance relevancy innovation and enhanced capabi
Slide 9: Developing Our Team with Enhanced Organizational Structure
DEVELOPING OUR TEAM WITH ENHANCED ORGANIZATIONAL STRUCTURE PRIORITIZING BRAND BUILDING AND ENABLING STRATEGIC INITIATIVES Chief Growth Officer leads growth initiatives and product development Chief Innovation Officer heads stand-alone innovation function Chief Supply Chain Officer focused on process
Slide 10: Away-From-Home
Away-From-Home • • • • • • • • • • • • • • • •
Slide 11: Branded Retail and Non-branded Sales CAGR
CAGR CAGR 7.1% $ 3.3 B 0.4% $ 2.5 B CAGR 2.7% $ 1.8 B $ 1.6 B Branded Retail Sales Non-branded and Non-retail Sales Flowers' Share
Slide 12: Expanding Brand Presence Geographically
EXPANDING BRAND PRESENCE GEOGRAPHICALLY Under-developed markets offer significant growth potential 9 CAPITALIZING ON BRAND 7.3% GROWTH POTENTIAL BY 13.9% INCREASING PRESENCE 3.9% + Expand breadth and depth of distribution Drive awareness, trial, and repeat : with increased advertising and 9 18.3% sh
Slide 13: Circana Scan Data
(1) Circana Scan Data - Flowers Custom Database December 31, 2023 (2) 2019-2023
Slide 14: Portfolio Strategy Drives Margins
PORTFOLIO STRATEGY DRIVES MARGINS POST-PANDEMIC Significant margin increase as Combining right portfolio mix Recent results reflect impact of RESULTS SHOW branded retail business grew to with improved bakery network inflationary pressures on POTENTIAL BENEFIT a larger percentage of sales enhances ma
Slide 15: Margin and Efficiency Initiatives
• Backhaul utilization • Bakery of the future • Optimize strategic • Staffing optimization sourcing strategies • Cube optimization • Autonomous planning • Testing and • Leverage scale with implementing • Depot consolidation • SKU rationalization centralized buying maintenance and • Optimize number •
Slide 16: Positioned for Growth Through Smart M&A
POSITIONED FOR GROWTH THROUGH SMART M&A Proven track record fi 4 DAVE'S KILLER BREAD! &, CANYON BAKEHOUSE? of acquiring and growing TRACKED RETAIL SALES ($M) TRACKED RETAIL SALES ($M) differentiated bakery brands #1 organic Loaf $798 #1 Gluten-free Loaf $108 eens i eee 5YR CAGR platform brands in +
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Slide 18: Q1 2024 Financial Review
Q1 2024 FINANCIAL REVIEW NET SALES CASH FLOWS — 10’24 © Cash from Ops Dividends $1.577B +2.8% v py S105.1M $51.1M + Price/Mix +3.1%! + Volume -0.8%2 Capex + Papa Pita acquisition +0.5% $33.3M + Prior year price increases to mitigate inflation and acquisition contribution, partly offset by lower volu
Slide 19: Q1 2024 Financial Highlights
Q1 2024 FINANCIAL HIGHLIGHTS Sales grew due to prior year price increases to mitigate inflation Adjusted EBITDA increased due to higher sales and gross margin, and the acquisition contribution, partly offset by lower volume partly offset by higher labor and repairs and maintenance expense Net income
Slide 20: Fiscal 2024 Guidance
FISCAL 2024 GUIDANCE (Provided May 16, 2024) SALES ADJ. EBITDA' ADJ. DIL. EPS? $5.091.. $524. $1.20. $5.172B $553M_ $1.30 + Consumer resiiency * Promotional environment OTHER + Ability to mitigate cost inflation Depreciation & amortization Effective tax rate + Business rationalizations $160 = S165M
Slide 21: Long-Term Growth Target Scorecard
LONG-TERM GROWTH TARGET SCORECARD . Sales 1-2% 6.4% 2.5% 5.2% 5.4% 4.5% Adj -6% 23.4% 7.8% 5.9% 4.4% 5.0%4 EBITDA Asie. 7-9% 36.5% 13.7% 9.8% 5.7% 5.4%® ()__ Off FY'19 base. No reconciliation of the forecasted range for adjusted diluted EPS to diluted EPS and adjusted EBITDA to net income is include
Slide 22: Guidance Drivers
GUIDANCE DRIVERS 1.20 FY'23 EBITDA D&A Net Int Exp + Pricing actions - Higher capital - Increased debt from employed from PP acquisition and + Share gains acquisition and ERP CA transition + innovation - Lower interest KEY + Moderating ingredient income CONSIDERATIONS inflation + Savings initiatives
Slide 23: Consistent Sales and Margin Profile
CONSISTENT SALES AND MARGIN PROFILE Stable performance in a variety of economic environments Billions x w mmm Sales. ——=EBITDA margin” Recession | e Rew vo es Rata rd Cy we “e ot ® vo AP car her Or er 1 a oh oe 4 ro <g * 53-week year ** Adjusted for items affecting comparability. See non-GAAP reconc
Slide 24: Steady Free Cash Flow
STEADY FREE CASH FLOW Free cash flow! to fuel accretive investments Strong free cash flow CASH FLOW DRIVERS FREE CASH FLOW TYPICALLY IN EXCESS OF NET growth supports + Growing sales INCOME (MILLIONS) 2 investments in the business, M&A + Focus on cash . margins mFree Cash Flow —_= Net income (GAAP) s
Slide 25: Capital Returns and Allocation
• $275 • • • $35 $46 • $1 $10 $7 $176 $187 $195 $160 $167 FY'19 FY'20 FY'21 FY'22 FY'23
Slide 26: Track Record of De-Leveraging Post M&A
TRACK RECORD OF DE-LEVERAGING POST M&A REVENUE! (MILLIONS) ADJ. EBITDA'2 (MILLIONS) $522 oa a502 $447 $443 > gan fm > 2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 NET DEBT? (MILLIONS) NET DEBT? / ADJ. EBITDA’ $1,026 ; DE ce 24 2.0 20 s70s Hj $727 14 14 20
Slide 27: Long Track Record of Growth
LONG TRACK RECORD OF GROWTH SALES GROWTH COMPONENTS! (MILLIONS) TOTAL SHAREHOLDER RETURNS? $989 $5,091 10-year TSR CAGR +3.8% FY14 Acquisitions Core Business FY'23 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 13°14 15 16 “7 18 1. Source: Company filings. 2. Total Shareholder Return (TSR) assumes rein
Slide 28: Our Vision Has Never Been Clearer
>» FF OUR VISION HAS NEVER BEEN CLEARER Right structure with a passionate team committed to continued success Emotional connection of fresh bread offers innovative brands the opportunity to appeal powerfully to consumers Competitive, leading operator with combination of strong brands and scale Oppor
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Slide 30: Fresh Packaged Bread Category
FRESH PACKAGED BREAD CATEGORY Bread category outperforming overall food CATEGORY % UNIT CHANGE (Y/Y) "Fresh packaged bread "Overall food 1.5% i - 1.7% 1.9% 2.1% 2.9% 3.6% -3.5% 10°23 2023 3Q'23 4Q'23 Source: Flowers Custom Database - Circana Total US Mulo + C Store Due to a change in methodology and
Slide 31: Private Label Momentum Fading
PRIVATE LABEL MOMENTUM FADING CHANGE IN PRIVATE LABEL UNIT SHARE (Y/Y) 1.0 0.8 0.7 0.6 a 1Q'23 2Q'23 3Q'23 4Q'23 10'24 Source: Flowers Custom Database - Circana Total US Mulo + C Store Due to a change in methodology and sources, data provided previously by Circana may not be comparable to current da
Slide 32: Improving Volume Trends
IMPROVING VOLUME TRENDS Branded retail business inflecting positively FLO Volume % Change (Y/Y ) TOTAL COMPANY BRANDED RETAIL OTHER 1Q'23 2Q'23 3Q'23 4Q'23 10'24 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 0.3% — = = -0.3% -0.8% “% 15% 2.4% -2.2% 4.1% 44% -6.1% 6.3% -1.3% “7.4% 8.2%
Slide 33: Branded Dollar Share
Branded Dollar Share Store Branded Dollar Share 79.0 27.0 25.5 78.1 78.0 77.6 77.1 25.0 77.0 23.9 24.0 22.9 76.1 76.0 76.0 22.4 23.0 21.9 75.0 74.5 21.0 74.0 73.0 19.0 72.0 17.0 71.0 70.0 15.0 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 L52 WE 04-21-24
Slide 34: Flowers' Market Share
FLOWERS’ MARKET SHARE =FLO Bread Dollar Share = = FLO Cake Dollar Share 71 17.3 17.0 16.2 16.7 16.8 16.3 6.9 ; : | | : | | | Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Source: Flowers Custom Database - Circana Total US Muio + C Store Due to a change in methodology and sources, data prov
Slide 35: Flowers Fresh Packaged Breads
FLOWERS FRESH PACKAGED BREADS mDollar Sales % Chg == Unit Sales % Chg 11.0% 9.6% 9.8% 7.1% 5.0% 43% 2.9% zs 2.5% L| 0.1% 1.9% -2.3% -2.1% -3.0% “3.6% -4.5% “1.8% Q2 2022 @3 2022 Q4 2022 Q1 2023 Q2 2023 @3 2023 4 2023 Q1 2024 Source: Flowers Custom Database - Circana Total US Mulo + C Store 35 Due to
Slide 36: Flowers Commercial Cake
FLOWERS COMMERCIAL CAKE = Dollar Sales % Chg 8.1% 46% 17% L ~ 9.4% 13.7% -15.0% -16.5% Q2 2022 Q3 2022 Q4 2022 Q1 2023 Source: Flowers Custom Database - Circana Total US Mulo + C Store Due to a change in methodology and sources, data provided previously by Circana may not be comparable to current da
Slide 37: Organic Category Sales
ORGANIC CATEGORY SALES mms FLOWERS ORGANICS FLOWERS SHARE OF ORGANICS mmm ORGANIC FRESH PACKAGED BREADS xFLO 72.6 72.7 70.8 68.8 65.9 62.2 $816.5 a $730.1 g $596.0 $657.9 = $469.0 $284.9 $308.0 $297.9 $300.7 $306.8 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 L52 WE 04-21-24 37 Source: Flowers Custom Dat
Slide 38: Gluten-Free Category Sales
GLUTEN-FREE CATEGORY SALES mmm GLUTEN FREE FPB XFLO = mm FLOWERS GF 31.5 ——FLOWERS SHARE OF GF 34.4 33.1 33.3 28.2 21.2 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 L52 WE 04-21-24 38
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Slide 40: Information Regarding Non-GAAP Financial Measures
INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES Information Regarding Non-GAAP Financial Measures The company prepares its consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP), However, from time to time, the company may present in its public st
Slide 41: Adjusted Net Income per Diluted Share
For the 16-Week For the 16-Week Period Ended Period Ended 20-Apr-24 22-Apr-23 Net income per diluted common share $ 0.34 $ 0.33 Business process improvement costs 0.01 0.02 Impairment of assets 0.01 — Restructuring charges NM 0.01 Restructuring-related implementation costs NM — Acquisition-related c
Slide 42: Adjusted EBITDA, 16 Weeks Ended April 20, 2024
For the 16 Week For the 16 Week Period Ended Period Ended April 20, 2024 April 22, 2023 Net income $ 73,043 $ 70,710 Income tax expense 23,052 19,255 Interest expense, net 5,611 3,886 Depreciation and amortization 48,235 43,735 EBITDA 149,941 137,586 Other pension benefit (158) (83) Business process
Slide 43: Adjusted Net Income
For the 16 Week For the 16 Week Period Ended Period Ended April 20, 2024 April 22, 2023 Net income $ 73,043 $ 70,710 Business process improvement costs 2,762 4,664 Acquisition-related costs - 2,417 Restructuring charges 448 3,146 Impairment of assets 3,000 - Restructuring-related implementation cost
Slide 44: Adjusted EBITDA Reconciliation, Fiscal 2016-2023
For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Ended Ended Ended Ended Ended Ended Ended Ended December 30, 2023 December 31, 2022 January 1, 2022 January 2, 2021 December 28, 2019 Decemb
Slide 45: Adjusted EBITDA Reconciliation, Fiscal 2011-2016
For the Fiscal For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Year Ended Ended Ended Ended Ended January 2, 2016 January 3, 2015 December 28, 2013 December 29, 2012 December 31, 2011 Net Income $ 189,191 $ 175,739 $ 230,894 $ 136,121 $ 123,428 Income tax expense 103,
Slide 46: Adjusted EBITDA Reconciliation, Fiscal 2006-2011
For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Ended Ended Ended Ended Ended January 1, 2011 January 2, 2010 January 3, 2009 December 29, 2007 December 30, 2006 Net Income attributable to Flowers Foods, Inc. $ 137,047 $ 130,297 $ 119,233 $ 94,615
Slide 47: Sales and Adjusted EBITDA Margin by Fiscal Year
Adj EBITDA Sales Adj EBITDA Margin FY'23 5,090,830 501,738 9.9% FY'22 4,805,822 502,030 10.4% FY'21 4,330,767 490,861 11.3% FY'20 4,387,991 521,690 11.9% FY'19 4,123,974 422,726 10.3% FY'18 3,951,852 410,936 10.4% FY'17 3,920,733 443,250 11.3% FY'16 3,926,885 447,468 11.4% FY'15 3,778,505 433,597 11
Slide 48: Net Debt to Adjusted EBITDA
December 30, 2023 December 31, 2022 January 1, 2022 January 2, 2021 December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 January 2, 2016 Total debt* $ 1,048,144 $ 891,842 $ 890,609 $ 960,103 $ 866,508 $ 979,594 $ 805,086 $ 927,730 $ 988,389 Less: Cash and cash equivalents 22,527 1
Slide 49: Free Cash Flow Reconciliation
Cash Provided by Purchase of Plant, Operating Property and Time Period Activities Equipment Free Cash Flow FY'23 349,353 129,078 220,275 FY'22 360,889 169,071 191,818 FY'21 344,610 135,964 208,646 FY'20 454,464 97,929 356,535 FY'19 366,952 103,685 263,267 * Operating cash flow minus capital expendit
Slide 50: Fiscal 2024 Adjusted EPS Guidance Reconciliation
Net income per diluted common share $ 1.16 to $ 1.26 Business process improvement costs 0.01 0.01 Impairment of assets 0.01 0.01 Restructuring charges NM NM Restructuring-related implementation costs NM NM Adjusted net income per diluted common share $ 1.20 to $ 1.30 NM – Not meaningful. Certain amo