Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Barclays Global Consumer Staples Conference 2024
51 slides from Flowers Foods's conference presentation, September 2024
Slide 1: Barclays Global Consumer Staples Conference
~_ a i TX Sas KL fie Ke Res 05 “Flowers FOODS BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE September 4-5, 2024
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
Slide 3: Business Overview & Strategy
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: Flowers branded, BBU, Pepperidge Farm mix
FLOWERS BRANDED 16% 25% BBU PEPPERIDGE FARM 28% 25% PRIVATE LABEL 5% OTHER BRANDS
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 $2 Present in 97.4% of households; buy the $25 $25 category every 16 days? $22 Con
Slide 8: Strategic Priorities
STRATEGIC PRIORITIES Aligned to long-term targets and disciplined capital policies LONG-TERM GROWTH TARGETS'2 Develop Team Focus on Brands Invest in team to drive portfolio Pursue targeted innovation and optimization through brand growth, marketing to enhance relevancy innovation and enhanced capabi
Slide 9: Developing Our Team with Enhanced Organizational Structure
DEVELOPING OUR TEAM WITH ENHANCED ORGANIZATIONAL STRUCTURE PRIORITIZING BRAND BUILDING AND ENABLING STRATEGIC INITIATIVES Chief Growth Officer leads growth initiatives and product development Chief Innovation Officer heads stand-alone innovation function Chief Supply Chain Officer focused on process
Slide 10: Away-From-Home
Away-From-Home • • • • • • • • • • • • • • • •
Slide 11: Branded retail and non-branded sales growth
CAGR 7.1%$ 3.3 B 16.4 $ 2.5 B 16.3 CAGR 2.7% $ 1.8 B $ 1.6 B Branded Retail Sales Non-branded and Non-retail Sales Dollar Share
Slide 12: Expanding Brand Presence Geographically
EXPANDING BRAND PRESENCE GEOGRAPHICALLY Under-developed markets offer significant growth potential Ley CAPITALIZING ON BRAND 6.9% GROWTH POTENTIAL BY 14.2% INCREASING PRESENCE share + Expand breadth and depth of distribution Drive awareness, trial, and repeat : with increased advertising and 9 16.7%
Slide 13: Category share by product FY'19 vs FY'23
FY' 2019 FY' 2023 28.0 28.8 8.7 9.5 8.8 6.8 LOAF SANDWICH BUNS/ROLLS BREAKFAST ITEMS (1) Circana Scan Data – Total US Multi Outlet+ w Conv Flowers Custom Database December 31, 2023 (2) 2019-2023
Slide 14: Margin expansion opportunity
Net income margin Adj EBITDA margin Branded Retail Mix Ingredients & Packaging as % of sales 14.0% 66.4% 67.0% +310 bps 30.5% 12.0% 11.9% 64.3% 65.0% 10.3% 10.1% 29.3% -190 bps 10.0% 63.0% 8.0% 61.0% 60.1% 6.0% 59.0% 27.4% 4.0% 57.0% 2.0% 4.0% 3.5% 55.0% 2.5% 0.0% 53.0% 2019 2020 TTM 2019 2020 TTM
Slide 15: Margin and cost optimization 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 Bread $925 # 1 Gluten-free Bread Brand Brand $147 Seeking out innovative 5Y
Slide 17: Financial Review & Capital Allocation
Slide 18: Q2 2024 Financial Review
Q2 2024 FINANCIAL REVIEW NET SALES CASH FLOWS — YTD ° Cash from Ops Dividends $1.225B .02% vy $168.4M $101.9M + Price/Mix +1.0%! * Volume -1.2%? Capex + Improved mix, partly offset by lower volume $61 aM NET INCOME GAAP DILUTED EPS S67.0M +5.0% v PY $0.32 +$0.02 v PY ADJ. EBITDA? ADJ. DILUTED EPS* $
Slide 19: Q2 2024 Financial Highlights
Q2 2024 FINANCIAL HIGHLIGHTS Sales declined modestly as lower volume, largely due to away- Adjusted EBITDA increased primarily due to lower materials, from-home business exits, was partly offset by improved mix supplies, labor, and other production costs, partly offset by softer sales Net income inc
Slide 20: Fiscal 2024 Guidance
FISCAL 2024 GUIDANCE (Provided August 16, 2024) SALES ADJ. EBITDA' ADJ. DIL. EPS? Fiscal 2024 Consideration Consumer resiliency Promotional environment OTHER Ability to mitigate cost inflation Depreciation & amortization Effective tax rate Business rationalizations New business wins Timing and effec
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 P| — 1.20- 1.30 1.20 FY'23 Adj. EBITDA D&A Net Int Exp Inc Tax Exp FY'24 + Pricing actions - Higher capital = Increased debt from | - Higher tax rate due employed from PP acquisition and to fewer discrete + Share gains acquisition and ERP | CA transition benefits + Innovation — Lowe
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) str
Slide 25: Capital returns FY'19-FY'23
• $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’ (MILLIONS) eee $491 $502 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 2015 2016 2017 2018 201
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
Slide 29: Market Share Review
Slide 30: Fresh Packaged Bread Category
FRESH PACKAGED BREAD CATEGORY Bread category outperforming overall food CATEGORY % UNIT CHANGE (Y/Y) "Fresh Packaged Breads =" General Food 10% i 1.4% 1.7% “1.8% -2.0% -2.3% 3.2% -3.2% 10'23 20'23 3Q'23 4Q'23 Source: Flowers Custom Database - Circana Total US Muiot with Conv Due to a change in metho
Slide 31: Private Label Momentum Fading
PRIVATE LABEL MOMENTUM FADING CHANGE IN PRIVATE LABEL UNIT SHARE (Y/Y) 1 0.9 0.8 0.6 a 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 Source: Flowers Custom Database - Circana Total US Mulo+ with Conv Due to a change in methodology and sources, data provided previously by Circana may not be comparable to current dat
Slide 32: Volume Trends
VOLUME TRENDS + Branded retail benefitting from stronger bread performance, offset by cake softness * Other pressured by business exits and weakness in away-from-home, partly offset by strength in private label and new business wins FLO Volume % Change (Y/Y ) TOTAL COMPANY BRANDED RETAIL OTHER 3Q'23
Slide 33: Branded Dollar Share
Branded Dollar Share Store Branded Dollar Share 78.00 27.00 26.2 77.3 77.00 76.8 24.9 76.4 24.6 25.00 76.00 23.6 23.1 75.3 22.7 75.1 23.00 75.00 74.00 73.7 21.00 73.00 19.00 72.00 17.00 71.00 70.00 15.00 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 L52 WE 07-14-24
Slide 34: Flowers Market Share
FLOWERS MARKET SHARE =FLO Bread Dollar Share FLO Cake Dollar Share 17.0 165 165 16.3 16.9 16.9 15.9 16.0 | | | : Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q12024 Q2 2024 34
Slide 35: Flowers Fresh Packaged Breads
FLOWERS FRESH PACKAGED BREADS mDollar Sales % Chg == Unit Sales % Chg 11.3% 10.1% 7.8% 5.6% 4.4% 3.3% 30% 2.2% 15% ~ Ba 15% “1.9% 1.7% -3.4% 4.2% -4.4% @3 2022 Q4 2022 Q1 2023 Q2 2023 Q@3 2023 Q4 2023 Q1 2024 Q2 2024 Source: Flowers Custom Database - Circana Total US Mulot with Conv 35 Due to a chan
Slide 36: Flowers Commercial Cake
FLOWERS COMMERCIAL CAKE = Dollar Sales % Chg 4.7% 19% L| _ 5.2% 75% 13.7% -15.1% -16.4% Q3 2022 Q4 2022 Q1 2023 Q2 2023 Source: Flowers Custom Database - Circana Total US Mulo+ with Conv Due to a change in methodology and sources, data provided previously by Circana may not be comparable to current
Slide 37: Organic Category Sales
ORGANIC CATEGORY SALES Millions mmm ORGANIC FRESH PACKAGED BREADS xFLO mms FLOWERS ORGANICS ——FLOWERS SHARE OF ORGANICS 73.1 74.3 74.3 71.3 68.8 65.9 $925.3 $956.5 $848.4 $703.2 $765.9 $557.2 $288.6 $318.6 $308.7 $312.9 $320.8 $331.7 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 L52 WE 07-14-24 Source: Fl
Slide 38: Gluten-Free Category Sales
GLUTEN-FREE CATEGORY SALES mmm GLUTEN FREE FPB XFLO = mm FLOWERS GF ——FLOWERS SHARE OF GF 35.5 35.7 36.6 31.8 27.8 21.2 $111.9 $61.1 $227.4 $240.2 FY 2019 FY 2020 FY 2021 fal US Mulot with Conv data provided previously by Circana may not be comparable to current data Source: Flowers Custom Database.
Slide 39: Reconciliation of Non-GAAP Financial Measures
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 diluted EPS reconciliation Q2
For the 12 Week For the 12 Week Period Ended Period Ended July 13, 2024 July 15, 2023 Net income per diluted common share $ 0.32 $ 0.30 Business process improvement costs 0.01 0.02 Impairment of assets NM — Restructuring charges 0.02 0.01 Restructuring-related implementation costs 0.01 — Acquisition
Slide 42: Adjusted EBITDA reconciliation, 12 weeks ended July 13, 2024
For the 12 Week For the 12 Week Period Ended Period Ended July 13, 2024 July 15, 2023 Net income $ 66,967 $ 63,760 Income tax expense 23,455 20,605 Interest expense, net 4,908 4,251 Depreciation and amortization 36,827 34,984 EBITDA 132,157 123,600 Other pension benefit (118) (62) Business process i
Slide 43: Adjusted net income reconciliation
For the 12 Week For the 12 Week Period Ended Period Ended July 13, 2024 July 15, 2023 Net income $ 66,967 $ 63,760 Business process improvement costs 1,205 4,941 Restructuring charges 5,104 1,875 Acquisition-related costs - 367 Impairment of assets 1,033 - Restructuring-related implementation costs
Slide 44: Trailing 52-week adjusted EBITDA reconciliation
For the 12 Week For the 12 Week For the 16 Week For the 12 Week Trailing 52 Week Period Ended Period Ended Period Ended Period Ended Period Ended October 7, 2023 December 30, 2023 April 20, 2024 July 13, 2024 July 13, 2024 Net income (loss) $ (46,730) $ 35,676 $ 73,043 $ 66,967 $ 128,956 Income tax
Slide 45: Fiscal year adjusted EBITDA reconciliation 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 46: Fiscal year adjusted EBITDA reconciliation 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 47: Fiscal year adjusted EBITDA reconciliation 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 48: 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 49: 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 50: 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 51: Fiscal 2024 adjusted EPS guidance reconciliation
Net income per diluted common share $ 1.12 to $ 1.22 Business process improvement costs 0.02 0.02 Impairment of assets 0.02 0.02 Restructuring charges 0.03 0.03 Restructuring-related implementation costs 0.01 0.01 Adjusted net income per diluted common share $ 1.20 to $ 1.30 NM – Not meaningful. Cer
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