Hostess Brands — Q4 2018 Earnings Presentation
21 slides from Hostess Brands's earnings presentation, Feb 27, 2019
Slide 1: 4th Quarter 2018 Earnings Investor Presentation
4th Quarter 2018 Earnings Investor Presentation February 27, 2019
Slide 2: Disclaimer: Forward Looking Statements
DISCLAIMER 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
Slide 3: Hostess Brands – Highlights
3 32 HOSTESS BRANDS – HIGHLIGHTS 67 ICONIC AMERICAN BRANDS DELIVERING NEW AND CLASSIC 0 SWEET TREATS TO CUSTOMERS FOR GENERATIONS 112 192 0 176 240 163 222 245 255 142 155 KEY HIGHLIGHTS 230 LTM Net Sales: Product Portfolio with 0 $850.4 million 18% Market Continuous Direct to Proven 24 Numerous LTM
Slide 4: Profitable Growth Utilizing Our Core Competencies
3 32 PROFITABLE GROWTH 67 UTILIZING OUR CORE COMPETENCIES 0 112 192 Delighting consumers and building iconic brands supported by our core competencies to drive profitable growth 0 Strong Brand 176 Equity 240 Our Growth Strategy Strong Brand 163 Equity 222 245 Ø Strengthening our core Hostess brand a
Slide 5: Iconic Brands Delivering New and Classic Sweet Treats
ICONIC BRANDS DELIVERING NEW AND CLASSIC SWEET TREATS BRANDS SINCE <50 RELAUNCH 50+ YEARS OLD 85+ YEARS OLD YEARS OLD Hostess® Brand 90%+ Awareness Source: Harmon Atchison, Awareness, Use and Status Perception Study, 12/8/14 5
Slide 6: Strong Market Position and Growing in the SBG Category
3 32 STRONG MARKET POSITION 67 AND GROWING IN THE SBG CATEGORY 0 112 192 Market Share Point-of-Sale 0 176 18.0% 240 $1,197.1 CAGR 163 222 CAGR 4.3% 245 4.1% 17.0% $1,126.5 ) s n o i l 255 l $1,091.7 i M 142 ( 155 16.3% $ 230 0 $1,010.1 24 15.3% 210 230 250 2015 2016 2017 2018 2015 2016 2017 2018 230
Slide 7: Cost Efficient Operating Business Model Enabled by Warehouse Distribution
3 32 COST EFFICIENT OPERATING BUSINESS MODEL 67 ENABLED BY WAREHOUSE DISTRIBUTION AND EFFICIENT SUPPLY CHAIN 0 112 192 Our Business Model Generates 0 176 Hostess Brands Differentiation within Baking 240 ▪ Expanded distribution reach 163 222 ▪ Compelling retailer economics 245 ▪ Fast & scalable in-st
Slide 8: Collaborative Partnerships with Customers & Retailers Across Various Channels
3 32 COLLABORATIVE PARTNERSHIPS 67 WITH CUSTOMERS & RETAILERS ACROSS VARIOUS CHANNELS FOR SHARED GROWTH AND PROFIT 0 112 192 0 176 240 163 222 245 255 142 155 230 0 24 210 230 250 230 235 240 196 197 200 8
Slide 9: Leader of Innovation
LEADER OF INNOVATION WILLINGNESS TO REVITALIZE AND DISRUPT UNDERINVESTED CATEGORIES Innovation within the Core Launch new flavors of iconic products to leverage the brand’s power and expand the core Innovation Attracting New Consumers Attract new consumers with premium innovation such as the Hostess
Slide 10: Full Year 2018 Highlights
FULL YEAR 2018 HIGHLIGHTS
Slide 11: Full Year 2018 Highlights: Continued Growth Ahead of SBG Category
3 32 FULL YEAR 2018 HIGHLIGHTS 67 CONTINUED GROWTH AHEAD OF SBG CATEGORY 0 112 ■ Point-of-sale increased 6.3% and market share grew 107 bps to 18.0% for the year* 192 ■ Revenue growth of 9.6% for full year 2018 driven by Cloverhill acquisition with flat 0 176 organic net revenue 240 ■ Completed acqu
Slide 12: Growing Sales and Market Share in 2018 Across Multiple Channels
3 32 GROWING SALES AND MARKET SHARE IN 2018 67 ACROSS MULTIPLE CHANNELS 0 112 POS Change 5.2% 5.8% (4.9)% 8.2% 1,392.6% (8.2)% 192 (in '000s) 0 600,000 176 240 500,000 s r 163 a l l 400,000 222 o D 245 e l a 300,000 S f o 255 t n 142 i 200,000 o 155 P 100,000 230 0 24 0 Convenience Grocery Drug Doll
Slide 13: Pillars for 2019 Driving Profitable Growth
3 32 PILLARS FOR 2019 67 DRIVING PROFITABLE GROWTH 0 112 192 Grow the Core 0 176 240 163 Grow Through Innovation 222 245 255 142 155 Improve Through Agility & Efficiency 230 0 24 Cultivate Talent and Capabilities 210 230 250 230 235 Leverage Strong Cash Flow 240 196 197 200 13
Slide 14: Investing for Growth
3 32 INVESTING FOR GROWTH 67 0 112 192 Accelerating Growth in the Breakfast and Value Brand Segments Ø 0 Hostess’ “Fair Share” development in Breakfast presents an incremental POS 176 opportunity of over ~$100 million enabled by strategic acquisition of Cloverhill 240 Ø Expanding distribution of val
Slide 15: Financial Results
FINANCIAL RESULTS
Slide 16: Consolidated Financial Results
3 32 CONSOLIDATED FINANCIAL RESULTS 67 0 112 Quarter Ended Year Ended 192 December 31, December 31, December 31, December 31, ($ in millions, except per share data) 2018 2017 2018 2017 0 176 Net Revenue $ 214.8 $ 196.2 $ 850.4 $ 776.2 240 163 Adjusted Gross Profit $ 73.8 $ 80.8 $ 279.4 $ 326.9 222 2
Slide 17: Full-Year 2019 Guidance
3 32 FULL-YEAR 2019 GUIDANCE 67 0 112 192 2019 Guidance ($ in millions, except ratio, per share data and tax rate) 0 Growth well above the 176 Net Revenue SBG Category 240 Adjusted EBITDA $200 - $210 163 222 245 Adjusted EPS $0.57 - $0.62 255 142 Leverage Ratio 3.5x - 3.7x 155 230 Cash Flow from Ope
Slide 18: Appendix
APPENDIX
Slide 19: Non-GAAP Reconciliations: Adjusted Gross Profit and Gross Margin
3 32 NON-GAAP RECONCILIATIONS 67 ADJUSTED GROSS PROFIT AND GROSS MARGIN 0 112 192 Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended 0 ($ in millions) 12/31/18 12/31/17 12/31/18 12/31/17 176 Net revenue $ 214.8 $ 196.2 $ 850.4 $ 776.2 240 Cost of goods sold 146.0 115.4 583
Slide 20: Non-GAAP Reconciliations: Adjusted EBITDA
3 32 NON-GAAP RECONCILIATIONS 67 ADJUSTED EBITDA 0 112 192 Three Months Three Months Year Ended Year Ended $ in millions Ended 12/31/18 Ended 12/31/17 12/31/18 12/31/17 0 Net income $ 16.4 $ 189.6 $ 81.4 $ 258.1 176 240 Non-GAAP adjustments: Income tax provision 3.6 (98.8) 13.0 (67.2) 163 222 Intere
Slide 21: Non-GAAP Reconciliations: Adjusted Net Income and Adjusted EPS
3 32 67 NON-GAAP RECONCILIATIONS ADJUSTED NET INCOME ATTRIBUTABLE TO CLASS A 0 STOCKHOLDERS AND ADJUSTED EPS 112 192 Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended (in millions except share and per share data) 12/31/18 12/31/17 12/31/18 12/31/17 0 176 Net income attrib