Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Barclays Global Consumer Staples Conference 2019
33 slides from Flowers Foods's conference presentation, Sep 4, 2019
Slide 1: Investor Briefing - Barclays Global Consumer Staples Conference September 2019
Investor Briefing BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE SEPTEMBER 2019
Slide 2: Forward-looking statements
Statements contained in this presentation that are not historical facts are forward-looking statements. Forward-looking statements relate to current expectations regarding our future financial condition, performance and results of operations, planned capital expenditures, long-term objectives of man
Slide 3: Presenters and Agenda
Presenters and Agenda Ryals McMullian President & Chief Executive Officer Steve Kinsey Chief Financial Officer & Chief Administrative Officer Business Overview & Strategic Priorities Financial Review & Outlook
Slide 4: Flowers Investment Highlights
Flowers Investment Highlights Priorities to Drive Margins Leading Brands in a Large and Stable Market Focus on Shareholder Returns Executing on strategies designed to manage costs, leverage data-driven insights, and reposition our company for success Operate the #1 organic bread and loaf bread brand
Slide 5: Business Overview
Business Overview Business Overview Value Creation Strategy Financial Review & Outlook
Slide 6: Leading Fresh Bakery Brands Drive Our Business
#1 loaf bread brand #1 organic bread brand #2 and FASTEST GROWING gluten-free bread brand in U.S. 98% consumer awareness Iconic snack cakes since 1914 Leading Fresh Bakery Brands Drive Our Business SALES OVERVIEW BRAND PORTFOLIO HIGHLIGHTS * 52 weeks ended Q2 2019 Source: Internal Sales Data Warehou
Slide 7: Fresh Bakery Market Overview
Fresh Bakery Market Overview $ in Billions Large and stable market $32B FRESH BAKERY MARKET RETAIL & FOODSERVICE US FRESH BAKERY - RETAIL OUTLETS $7.4B Foodservice1 Data for Retail Outlets sourced from IRI. FY 2018. Data for Foodservice sourced from Techonomic 2018 $24.2B Retail Breads, Snack Cakes,
Slide 8: Improving Competitive Position
Improving Competitive Position IRI Flowers custom data base Total US MultiOutlet – 12 weeks ended 14-Jul-2019 #2 Baker and Growing Share FRESH PACKAGED BREADS SHARE FLOWERS MARKET SHARE CHANGE
Slide 9: Smart, Disciplined M&A Driving Share Gains
Smart, Disciplined M&A Driving Share Gains Organic Segment Source: Flowers Custom Database – IRi Total US Multi Outlet + C Store Gluten-free Segment Source: IRI Custom Scan Data Total US Multi Outlet + C Store combined with SPINS Total US Natural & Specialty Gourmet Channel Capturing growth by antic
Slide 10: Underdeveloped Markets Provide Upside
Underdeveloped Markets Provide Upside IRI Flowers custom data base Total US Multi Outlet + Convenience – 12 weeks ending July 14, 2019 13.7 37.0 24.5 24.8 4.7 27.1 41.8 26.4 28.2 25.6 22.1 24.1 7.2 32.3 37.8 22.7 FRESH PACKAGED BREADS CATEGORY DOLLAR SHARE IN THE US ■ Flowers ■ Bimbo USA ■ Store Bra
Slide 11: Well Positioned as E-Commerce Accelerates
Well Positioned as E-Commerce Accelerates Fresh Bakery E-Commerce Channel Facts: $518.9M channel, +59% YOY growth1 E-commerce is ~4% of total fresh bread & rolls category2 Flowers’ leading brands provide a competitive advantage in the E-commerce channel FRESH BREAD & ROLLS E-COMMERCE CHANNEL IRI Syn
Slide 12: Broad Scale Is a Platform for Profitable Growth
Broad Scale Is a Platform for Profitable Growth 47 Operating bakeries of the U.S. population Warehouse distribution NATIONWIDE Channels served Grocery / Mass Natural & Organic Club & Dollar, C-store E-commerce Foodservice & Vending 9,200 employees 5,900 IDP* territories 85% Direct-store-distribution
Slide 13: Value Creation Strategy
Value Creation Strategy Business Overview Value Creation Strategy Financial Review & Outlook
Slide 14: Project Centennial Defined our Strategic Priorities
PRIORITIZE MARGINS Reduce organizational and indirect costs Strategic pricing Optimize portfolio and network DEVELOP TEAM Restructure around priorities, drive execution Add critical capabilities to build brands, manage costs, and deliver insights SMART M&A Proactive M&A in product and geographic adj
Slide 15: We're Delivering on the Playbook
We're Delivering on the Playbook HIGHLIGHTS 2017 2018 2019 TEAM Designed new organization and hired CMO Stood up business units and created PG&S*, FP&A* teams Updated incentive comp framework BRANDS Launched DKB breakfast line Launched Nature’s Own Perfectly Crafted line New ads for Nature’s Own, Wo
Slide 16: New Org Structure Enables Execution on Strategic Priorities
New Org Structure Enables Execution on Strategic Priorities Aligned with Strategy National Clarified Portfolio Roles Centralized Metrics that Matter Predictive Analytics Regional LEGACY ORGANIZATION NEW WAYS OF WORKING Locally Managed Duplicated Overlapping Inconsistent Historical Reporting Perspect
Slide 17: Innovation and Marketing Investments in Key Brands
Innovation and Marketing Investments in Key Brands Wonder Honey Buns drive in-store displays New media campaigns for Nature’s Own and Wonder Power of strategic partnerships: USO/Wonder/Tastykake Nature’s Own Perfectly Crafted driving brand share growth Tastykake Scoop Shop innovation driving brand g
Slide 18: Nature's Own & Wonder Creative Campaigns
Nature’s Own & Wonder Creative Campaigns
Slide 19: Prioritizing Margin with Portfolio, Network Review
Prioritizing Margin with Portfolio, Network Review Drive profitability with… Orient the Portfolio to… Optimize Network for… High-potential brands Disruptive innovation Value-over-volume Strategic customers Underdeveloped segments Today’s customer trends National scale Omni-channel Reduced complexity
Slide 20: Pursue Smart M&A in Adjacencies
Pursue Smart M&A in Adjacencies Disciplined approach to M&A to expand position and diversify in high-growth bakery categories GROW IN-STORE BAKERY/DELI Grow specialty brands on the store perimeter Focus on platform assets that bring new capabilities BUILD ON LEADING FOODSERVICE POSITION Expanding sh
Slide 21: Financial Review & Outlook
Financial Review & Outlook Business Overview Value Creation Strategy Financial Review & Outlook
Slide 22: Project Centennial Roadmap
Project Centennial Roadmap FY 2017 – 2018 FY 2019 & Beyond Focus Generate savings Design future organization Invest in growth Leverage capabilities Targets Sales growth: flat to +2% EBITDA margins: ~12% to 13% Sales growth: 3% to 4% EBITDA margins: ~13% to 14% Progress Update/ Commentary Gross savin
Slide 23: Financial Progress Impacted by Inflationary Pressures
Financial Progress Impacted by Inflationary Pressures Taking action to: Rationalize pricing Reduce stales & scrap Improve efficiencies Build a career- focused team Prioritize value over volume Address network complexity % CHANGE: YE16 THROUGH 19Q2TTM Delivered topline target Leveraged indirect costs
Slide 24: Track Record of Growing Free Cash Flow & Dividends
Track Record of Growing Free Cash Flow & Dividends * Operating Cash flow minus Capital Expenditures, see non-GAAP reconciliations in the appendix. Note: FY03, FY08, FY14 were 53 weeks. Strong free cash flow growth supports investments in the business, M&A strategy and capital returns $ in Millions F
Slide 25: Balanced Capital Allocation
Balanced Capital Allocation *53-week year Capital Allocation Principles: Capex to support core business growth Maintain investment grade credit rating Support strong dividend Smart, disciplined acquisitions Opportunistic share repurchases $ in Millions CAPITAL ALLOCATION
Slide 26: Investment-Grade Credit Rating Commitment
Investment-Grade Credit Rating Commitment MAINTAINING FLEXIBILITY TO CAPITALIZE ON VALUE-CREATING OPPORTUNITIES Total Debt (ex-lease liabilities) Track-record of debt reduction following acquisitions Aggregate Maturities at 19Q2 (Maturities)* At 19Q2, leverage ratio of 2.1X, ~$587M available liquidi
Slide 27: FY 2019 Outlook (Revised August 7, 2019)
FY 2019 Outlook (Revised August 7, 2019) Canyon Bakehouse expected to contribute 1.8% to 2.0% of overall sales growth. Adjusted for matters affecting comparability. See non-GAAP reconciliations in the appendix. Back-Half Considerations: Category volume elasticities Commodity market volatility may af
Slide 28: Our Vision
Our Vision As America’s premier baker, we craft foods that make people smile. We are driven by a passion to boldly grow our business through inspiring leadership, teamwork, and creativity. Today 1919 1968 1968 to 2018 One family-owned bakery in Thomasville, GA More than 100 acquisitions Listed publi
Slide 29: Regarding Non-GAAP Financial Measures
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 statements, press releases and SEC filings, non-GAAP financial
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
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