Hostess Brands — Q3 2021 Earnings Presentation
21 slides from Hostess Brands's earnings presentation, Nov 9, 2021
Slide 1: Investor Presentation November 9, 2021
Investor Presentation November 9, 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: Raising Full Year Top-Line Guidance
3 Raising Full Year Top-Line Guidance Our Mission is to Inspire Moments of Joy by Putting our into Everything We Do! ▪ 10.4% net revenue growth with broad-based Hostess® and Voortman® branded growth ▪ Outstanding retail performance and higher A&M investments driving market share gains and double-dig
Slide 4: Q3 Net Revenue and Adjusted EBITDA Growth
$60.2 $64.8 Q3 2020 Q3 2021 4 Driven by Hostess® Brand Growth $260.9 $288.0 Q3 2020 Q3 2021 (in millions) 10.4% growth 7.6% growth Results are for three months ended September 30, 2021 and 2020. Adjusted EBITDA is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” and the Appendi
Slide 5: Net Revenue by Category: Sweet Baked Goods and Cookies
5 Sweet Baked Goods $258.8 $234.1 $24.7 10.6% $759.0 $693.1 $65.9 9.5% Cookies 29.2 26.8 2.4 9.0% 85.9 74.3 11.6 15.6% Total Adjusted Net Revenue $288.0 $260.9 $27.1 10.4% $844.9 $767.4 $77.5 10.1% Adjusted Net Revenue is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” and the
Slide 6: Leading Sweet Baked Goods Growth Across Single-Serve and Multi-Pack
15.4% 2.8% 3.0% 6 12.4% 10.1% 13.6%Multi-Pack Point-of-Sale Single-Serve Point-of-Sale Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Q3 2021 – 13 weeks ended 10/2/21 and prior year comparable periods Q3 2020 Q3 2021 18.8% Q3 2020 Q3 2021 Two-year stack accelerated
Slide 7: Hostess Growth Driven by Superior Innovation, Retail Execution
7 Hostess® Growth Driven by Superior Innovation, Retail Execution Growing Share in On-Trend Consumer Morning Snacking Occasion 33.9% 15.2% 23.1% 7.3% -9.2% 2.1% Breakfast Pastries Doughnut Total Breakfast Hostess SBG Category Third Quarter POS Growth Source: Nielsen, Total Nielsen Universe for the C
Slide 8: Broad-based Gains Driving Growth Ahead of the Category
8 Broad-based Gains Driving Growth Ahead of the Category $0 $50 $100 $150 $200 Convenience Grocery Mass Dollar Club Drug 13 WE 10/3/2020 13 WE 10/2/2021 Market Share 30.6% 16.3% 11.1% 33.4% 24.1% 57.7% Market Share Change (bps) 292 229 (235) 444 204 765 POS Change 16.2% 16.6% (12.6)% 24.9% 33.1% 15.
Slide 9: Contributing to and Outperforming Category Point-of-Sale Growth
9 Contributing to and outperforming Sweet Baked Goods Category Point-of-Sale Growth 16.8% 19.0% 19.3% 19.4% 20.9% 2017 2018 2019 $1,116 $1,184 $1,250 $1,339 $1,471 2017 2018 2019 20202020 Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Point of Sale and Market Share,
Slide 10: Continued Market Share Gains Establish Strong Platform for Future Growth
23% 24% 25% 26% 27% 28% 29% 30% $460 $500 $540 $580 $620 2018 2019 2020 2021 POS Market Share 10 Market Share Increased to 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
Slide 11: Multi-pronged Approach to Innovation Pipeline
11 Multi-pronged Approach to Innovation Pipeline Establishing New Platforms for Continued Incremental Growth Core Development Building on Iconic Brand Favorites with Flavor Extensions Expanding Breakfast Accelerating Growth within Fastest Growing Subsegment of Category Limited-Time-Offers Keeping Pr
Slide 12: New Product Distribution and Consumer Trial
➢ Strong distribution achieving over 50% ACV ➢ Consumer Trial is exceeding expectations with a strong Repeat Rate ➢ Highly appealing to Hostess core consumer Source: NielsenIQ, Total NielsenIQ Universe / 13 WE 09-25-2021, NielsenIQ Homescan Panel All Outlets / All Buyers / 52 WE 9-11/202 ➢ Building
Slide 13: Digital First Mindset Enabling Rapid Learning
Digital First Mindset Enabling Rapid Learning & Continuous Improvement Advertising response rates exceeding CPG benchmarks eCommerce advertising driving incremental sales Increasing Social Engagement 13
Slide 14: Successfully Executing Against Building Blocks for Accretive Growth
14 Successfully Executing Against Building Blocks for Accretive Growth Well-Positioned to Take Advantage of Growing Consumer Trends Increase Depth of Distribution Increase Brand Awareness through Advertising & Marketing Leverage the Hostess-proven Merchandising Model ACV Expand Breadth of Distributi
Slide 15: Disciplined Approach to Cash Management and Leverage
15 Provides Flexibility to Invest in Growth and Generate Shareholder Value Disciplined Approach to Cash Management ▪ Reinvest in business for future growth ▪ Deleverage the balance sheet ▪ Strategic acquisitions ▪ Return capital to shareholders through securities repurchases ($50M executed YTD) Hist
Slide 16: Double-Digit YTD Net Revenue and Earnings Growth
16 Double-Digit YTD Net Revenue and Earnings Growth Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS are non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” in the Appendix for an explanation of all no
Slide 17: 2021 Guidance
17 Adjusted Net Revenue, Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” and the Appendix for an explanation of all non-GAAP financial measures. The Company’s leverage ratio is net debt (total long-term debt less cash) divided by adjusted EB
Slide 18: Top Quartile Peer Group Objectives
Organic Revenue Growth Top Quartile of Peer Group1 18 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 19: Appendix
Zes Appendix
Slide 20: Non-GAAP Reconciliation Notes
20 1. Acquisition, disposal and integration operating costs are included in general and administrative expenses on the consolidated statement of operations. 2. Costs related to certain corporate initiatives, of which $0.4 million is included in cost of goods sold, $0.8 million in general and adminis
Slide 21: Non-GAAP Reconciliation Notes
21 1. Acquisition, disposal and integration operating costs include $8.0 million of selling expense, $8.6 million of general and administrative expenses and $4.3 million of business combination transaction costs on the consolidated statement of operations. 2. COVID-19 costs are included in general a