Hostess Brands — Barclays Global Consumer Staples Conference 2017
39 slides from Hostess Brands's conference presentation, Sep 6, 2017
Slide 1: Hostess Brands - Barclays Global Consumer Staples Conference
® 1 ® HOSTESS BRANDS Barclays Global Consumer Staples Conference September 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
® DEAN METROPOULOS Executive Chairman Founder and Executive Chairman of Metropoulos & Co. More than 30 years of successful experience revamping iconic brands throughout the consumer space Strong track record of growing revenues, reducing costs and enhancing capital efficiency of portfolio companies
Slide 4: Bill Toler, President & CEO
® BILL TOLER President & CEO Former CEO and President of AdvancePierre Foods Former President of Pinnacle Foods 30+ years of executive experience in the packaged food and consumer sectors Proven track record of brand growth, strategic planning, operations management, and profit growth 4
Slide 5: Agenda
® 5 AGENDA COMPANY OVERVIEW BRAND & CHANNEL POSITIONING GROWTH DRIVERS FINANCIAL OVERVIEW APPENDIX 2 1 4 3
Slide 6: Company Overview
® COMPANY OVERVIEW 1 6
Slide 7: Hostess Brands at a Glance
® 7 Kansas City, MO Product Portfolio with Numerous Iconic Brands #2 Market Position in $6.55bn Sweet Baked Goods Category Modern and Efficient National Manufacturing System Direct to Warehouse Distribution Model Driving Industry Leading Profitability Proven Platform with Multiple Avenues of Growth
Slide 8: Iconic Brand Delivering New and Classic Sweet Treats
ICONIC BRAND Delivering New and Classic Sweet Treats 8 75+ YEARS OLD 50+ YEARS OLD <50 YEARS OLD BRANDS SINCE RELAUNCH
Slide 9: Emotional Brand Connection
EMOTIONAL BRAND CONNECTION Consumers share a special emotional relationship with the 98 year old Hostess, a brand that defines the rapidly growing “Indulgent Snacking” trend 98 Year history 90%+ Brand awareness Source: Harmon Atchison, Awareness, Use and Status Perception Study, 12/8/14 9
Slide 10: Significant Growth Since Re-Launch with Meaningful Upside Potential
SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL Net Revenue ($ in millions) $555 $621 $728 $763 2014A 2015A 2016A LTM Ending 6/30/17 Total Increase 37.5% 17%12% Note: Does not include Superior pre-acquisition revenue. Financial results for 2016 and LTM Ending 6/30/16 are presente
Slide 11: Created a Compelling Growth Story
Created a Compelling Growth Story Powerful Hostess Brand Aggressive Capital Investment Competitively Advantaged Business Model Compelling Growth Story= 11 ® SINCE THE RELAUNCH, HOSTESS HAS…
Slide 12: Experienced Senior Leadership
® 12 Dean Metropoulos Executive Chairman Bill Toler President & CEO Tom Peterson EVP & CFO Michael Cramer EVP & Chief Administrative Officer Andrew Jacobs EVP & Chief Commercial Officer Burke Raine SVP & CMO Jolyn Sebree SVP, General Counsel & Corporate Secretary Darryl Riley SVP, Quality/ Food Safe
Slide 13: Brand & Channel Positioning
® 13 BRAND & CHANNEL POSITIONING 2
Slide 14: Strong Market Position in Key Segments
® Donuts ~$1.5B Snack Cakes ~$1.7B Pies, Bars & Other ~$450M Blondies, Brownies ~$300M Breakfast pastries, Danish ~$1.3B Muffins ~$500M SBG Cookies ~$800M Danish, Honey Buns, Sweet Rolls Mini and Jumbo Muffins Donettes Twinkies®, Zingers®, CupCakes, Ding Dongs®, Ho Hos® Fruit Pie STRONG MARKET POSIT
Slide 15: Further Strengthen the Core Business
® 7.4% 12.5% 15.0% 16.1% 17.1% 22.8% 2013 2014 2015 2016 2017 OldCo 52 Weeks Ending August 12 FURTHER STRENGTHEN THE CORE BUSINESS Hostess Still Has Significant Headroom For Growth and Share Gains 15 Notes: Hostess data does not include Superior. The Company has transitioned to a new Nielsen databas
Slide 16: Continued Core Brand Growth
® CONTINUED CORE BRAND GROWTH 16 Top Six Hostess Brands Posted Consumption Growth YTD Source: Nielsen Total Universe, Year To Date data through week ending 8/12/17. 4% 12% 10% 3% 30% 4% 5% Hostess Zingers Hostess Twinkies Hostess Ho Hos Hostess Donette Hostess Ding Dongs Hostess Cupcakes Hostess Hos
Slide 17: Solid First Half POS Performance
® 1Q17 2Q17 Permanent Items since 2015 Seasonal & LTO Programs 2017 Innovation 2016 Innovation Discontinued Items SOLID FIRST HALF POS PERFORMANCE 17 $280 $290 Total Nielsen POS ($ in millions) Source: Total Nielsen Universe, Hostess Q1 dollars through 04/01/17, Q2 dollar through 07/01/17. Growth vs
Slide 18: Category Is Strengthening
® 16.6% 16.8% 16.9% 16.9% 17.1% 17.3% 17.6% 17.7% 01/28/17 02/25/17 03/25/17 04/22/17 05/20/17 06/17/17 07/15/17 08/12/17 13 Weeks Ending CATEGORY IS STRENGTHENING 18 Source: Nielsen Total Universe, Sweet Baked Goods, Dollar Volume & % Chg through 8/12/17 (1) Represents Total Nielsen Universe Sweet
Slide 19: Broad Channel Opportunity
® BROAD CHANNEL OPPORTUNITY 19 Small Format Total US Mass Total Food 16.3% 16.1% 16.9% 52WE 8/15/15 52WE 8/13/16 52WE 8/12/17 18.7% 21.1% 22.3% 52WE 8/15/15 52WE 8/13/16 52WE 8/12/17 Source: Hostess Market Dollar Share, 52 weeks ending 8/15/15, 8/13/16 and 8/12/17. (Oldco) shares,Total Nielsen Unive
Slide 20: Growth Drivers
® 20 GROWTH DRIVERS 3
Slide 21: Future Opportunities
® FUTURE OPPORTUNITIES 21 Rebuild Core Business Innovation & Renovation White Space M&A
Slide 22: Rebuild Core Products
® REBUILD CORE PRODUCTS 22 More Items in More Stores Continue to Build Distribution 10%+ TDP Growth Drive Penetration in Channels Unlocked by Warehouse Model
Slide 23: 2017 Innovation
® 2017 INNOVATION 23 Cinnamon Sugar Crunch Donettes White Fudge Peanut Butter Apple Streusel Cupcake Expansion Twinkies
Slide 24: 2017 Renovation
® 2017 RENOVATION 24 The Chocodile Pies BrowniesSuzy Q’s
Slide 25: Whitespace - Key Focus Areas
® WHITESPACE – KEY FOCUS AREAS 25 In-Store Bakery Foodservice International 1 2 3
Slide 26: Whitespace Opportunity: In-Store Bakery
® WHITESPACE OPPORTUNITY In-Store Bakery (Sweets) is an $8.0 Billion Category 26 Source: Nielsen Perishable Group, In Store Bakery, Total US, 52 weeks ending 7/1/17. Note: Total In-Store Bakery is $11.3B Category (including Bread and Rolls) ISB – $ Share Breakfast Bakery 28% Desserts and Sweet Snack
Slide 27: M&A Strategy
® M&A STRATEGY 27 Leverage Hostess Brand and/or warehouse model Expand baking capabilities, including further into ISB, or move into attractive adjacent categories Facilitate building Hostess’ scale as broader snacking platform Provide cash flow and EPS accretion We are focused on potential
Slide 28: Financial Overview
® 28 FINANCIAL OVERVIEW 4
Slide 29: Tom Peterson, EVP & CFO
® TOM PETERSON EVP & CFO Served as Hostess Corporate Controller since relaunch Promoted to CFO in March 2016 Formerly a Managing Director at FTI Consulting and on the restructuring team of Legacy Hostess 20+ years of accounting and finance expertise 29
Slide 30: Significant Growth Since Re-Launch with Meaningful Upside Potential
® $555 $621 2014A 2015A 2016A LTM Ended 6/30/17 SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL 30 Net Revenue(1)(2) ($ in millions) Adjusted EBITDA(1)(2)(3) ($ in millions) $145 $178 $226 2014A 2015A 2016A LTM Ended 6/30/17 % Adj. EBITDA Margin(3) 26% 29% 30% $215 12% Total Incr
Slide 31: Momentum Continues in 1H 2017
® MOMENTUM CONTINUES IN 1H 2017… 31 Net Revenue ($ in millions) Adjusted Gross Profit(1) ($ in millions) % Adj. Gross Profit Margin(1) Adjusted EBITDA(1) ($ in millions) % Adj. EBITDA Margin(1) 30% (1) See “Use of Non-GAAP Financial Measures” and the Appendix for an explanation of all non-GAAP measu
Slide 32: 2016 Innovation Success to Lap
® 2016 INNOVATION SUCCESS TO LAP 32 1Q17 2Q17 3Q17 4Q17 Note: M&M’s is a registered trademarks of Mars, Incorporated. Ghostbusters is a registered trademark of Columbia Pictures Industries, Inc. Twinkies Innovation Brownie Innovation Return of Suzy Q • Strong Results and Share Gains • Lap Gets Easie
Slide 33: Strong Cash Flow Enables Multiple Value Creation Opportunities
® STRONG CASH FLOW ENABLES MULTIPLE VALUE CREATION OPPORTUNITIES 33 Notes: FCF defined as Adj. EBITDA-Capex and FCF conversion defined as Adj. EBITDA-Capex / Adj. EBITDA are non-GAAP financial measures. See “Use of Non- GAAP Financial Measures” and the Appendix for an explanation of all non-GAAP mea
Slide 34: Concluding Remarks
® CONCLUDING REMARKS Differentiated Business Model Drives Continued Growth 34 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 Ac
Slide 35: Appendix
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Slide 36: Adjusted EBITDA Reconciliation
® 36Footnotes on next page $ in millions Pro Forma Combined, Twelve Months ended 30-Jun-17 Six Months Ended 30-Jun-17 (Successor) Pro Forma Six Months Ended 30-Jun-16 Successor 4-Nov-16 to 31-Dec-16 Predecessor 1-Jan-16 to 3-Nov-16 Pro Forma Combined, Year Ended 31-Dec-16 Year Ended 31-Dec-15 Year E
Slide 37: Hostess Non-GAAP Reconciliations - Adjusted EBITDA Footnotes
® HOSTESS NON-GAAP RECONCILIATIONS Adjusted EBITDA 37 Footnotes from prior page: (1) For the pro forma combined twelve months ended June 30, 2017, the Successor period November 4, 2016 through December 31, 2016, and pro forma combined year ended December 31, 2016, we recorded a gain on extinguishmen
Slide 38: Hostess Non-GAAP Reconciliations - Adjusted Gross Profit
® 38Footnotes on next page HOSTESS NON-GAAP RECONCILIATIONS Adjusted Gross Profit $ in millions Successor 4-Nov-16 to 31-Dec-16 Predecessor 1-Jan-16 to 3-Nov-16 Pro Forma Combined, Year Ended 31-Dec-16 Year Ended 31-Dec-15 Year Ended 31-Dec-14 Net revenue $112.0 $615.6 $727.6 $620.8 $554.7 Cost of g
Slide 39: Glossary
® GLOSSARY 39 Term Definition BFY Better-for-you ISB In-store bakery SBG Sweet baked goods SKU Stock keeping unit
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