Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Q2 2021 Earnings Presentation
29 slides from Flowers Foods's earnings presentation, Aug 12, 2021
Slide 1: Second Quarter 2021 Review
Second Quarter 2021 Review August 12, 2021
Slide 2: Regarding Forward-Looking Statements
Regarding Forward-Looking Statements Statements contained in this transcript 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-
Slide 3: Key Messages
Key Messages • Leading brands continue to drive strong financial performance well above pre-pandemic levels • Q2 reflected continued, though moderating, strength in branded retail sales and ongoing recovery for non-retail sales • Investing in innovation and marketing intended to drive future branded
Slide 4: Q2 2021 Financial Highlights
Q2 2021 Financial Highlights • Sales decrease reflects comparison to record results in the prior year as the pandemic drove a dramatic increase in demand for branded retail products in 2Q’20 • Adjusted EBITDA margins decreased due to moderating sales and higher costs, including investments in market
Slide 5: Q2 2021 Comparison to Pre-Pandemic Results
Q2 2021 Comparison to Pre-Pandemic Results • Sales increased due to higher, though moderating, demand for branded retail products caused by the pandemic • Mix shift to branded retail products drove cost leverage and margin increase COMPONENTS OF Q2’21 SALES GROWTH VS Q2’19 (MILLIONS) ADJUSTED EBITDA
Slide 6: Q2 2021 Financial Review
Q2 2021 Financial Review NET SALES CASH FLOWS – YTD $1.017B -0.8% v PY Cash from Ops Dividends $223.4M $87.0M • Price/Mix +3.1%; Volume -3.9% • Partial recovery of non-retail and other sales Capex offset by moderation of branded retail and continued declines in store branded sales $58.3M ADJ. EBITDA
Slide 7: Fiscal 2021 Guidance (Provided August 12, 2021)
Fiscal 2021 Guidance (Provided August 12, 2021) Fiscal 2021 SALES1 ADJ. EPS2 Considerations • Persistence of pandemic -3.0% to -2.0% $1.17 to $1.22 and impact on mix • Promotional environment • Ability to offset OTHER inflationary costs Depreciation & amortization — Effective tax rate — • Investment
Slide 8: Flowers' Market Share
Flowers’ Market Share FLO Bread Share FLO Cake Share 18.0 17.7 17.4 17.5 17.7 17.0 17.1 16.7 16.3 7.4 7.3 7.6 7.0 7.1 7.2 7.1 7.3 7.2 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 8 Source: Flowers Custom Database – IRi Total US Mulo + C Store
Slide 9: Category Review: Flowers Fresh Packaged Breads
Category Review FLOWERS FRESH PACKAGED BREADS Dollar Sales % Chg Unit Sales % Chg 21.4% 19.3% 18.4% 16.4% 14.8% 14.4% 13.4% 10.9% 6.2% 5.4% 2.6% 2.7% 0.9% -0.1% -2.1% -5.1% -5.9% -9.7% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 9 Source: Flowers Custom Database – IRi Tot
Slide 10: Category Review: Flowers Commercial Cake
Category Review FLOWERS COMMERCIAL CAKE Dollar Sales % Chg Unit Sales % Chg 12.4% 7.0% 5.0% 2.9% 1.8% 0.0% -0.7% -1.7% -2.5% -2.8% -3.1% -4.8% -4.8% -5.6% -6.0% -6.7% -7.2% -8.0% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 10 Source: Flowers Custom Database – IRi Total US
Slide 11: Organics Demonstrating Continued Strength
Organics Demonstrating Continued Strength ORGANIC FRESH PACKAGED BREADS XFLO FLOWERS ORGANICS FLOWERS SHARE OF ORGANICS $1,000.0 75.0 68.7 69.4 $900.0 65.2 65.0 60.6 $800.0 52.7 55.0 $700.0 42.2 45.0 $600.0 $593.5 $616.9 $500.0 35.0 $467.9 $381.5 $400.0 $267.7 25.0 $300.0 $155.6 15.0 $200.0 $240.8 $
Slide 12: Gluten-free Generating Growth
Gluten-free Generating Growth GLUTEN FREE FRESH PACKAGED BREADS XFLO FLOWERS GLUTEN FREE FLOWERS SHARE OF GLUTEN FREE $400.0 31.1 35.0 28.9 $350.0 21.6 25.0 $300.0 12.4 15.0 7.2 $93.1 $100.8 5.4 $250.0 $32.6 $61.1 5.0 $17.2 $11.9 $200.0 (5.0) $150.0 (15.0) $221.0 $229.8 $222.3 $229.2 $223.4 $100.0 $
Slide 13: Branded Products Gaining Share from Store Brands
Branded Products Gaining Share from Store Brands Fresh Packaged Breads Store Brand Share 24.7 24.2 23.8 23.1 20.4 19.7 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 L52 WE Q2 2021 Source: IRI Custom Database Total US + Convenience 13
Slide 14: Key Drivers to Achieving our Long-term Growth Targets
Key Drivers to Achieving our Long-term Growth Targets LONG-TERM GROWTH +1-2% +4-6% +7-9% TARGETS1 SALES ADJ. EBITDA2 ADJ. EPS3 Focus on leading, iconic brands to grow share ROADMAP TO DELIVERING LONG-TERM TARGETS Portfolio strategy prioritizes higher-priced, higher-profit FY2020 FY2021 FY2022 produc
Slide 15: 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 16: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Earnings per Share to Adjusted Earnings per Share For the 12 Week For the 12 Week Period Ended Period Ended July 17, 2021 July 11, 2020 Net income per diluted common share $ 0.26 $ 0.27 Project Centennial consulting costs — 0.02 Busines
Slide 17: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Gross Margin (000s omitted) For the 12 Week For the 12 Week Period Ended Period Ended July 17, 2021 July 11, 2020 Sales $ 1,017,309 $ 1,025,861 Materials, supplies, labor and other production costs (exclusive of depreciation and amortiz
Slide 18: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Selling, Distribution and Administrative Expenses to Adjusted SD&A (000s omitted) For the 12 Week For the 12 Week Period Ended Period Ended July 17, 2021 July 11, 2020 Selling, distribution and administrative expenses $ 407,707 $ 396,90
Slide 19: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to EBITDA and Adjusted EBITDA (000s omitted) For the 12 For the 13 For the 16 For the 12 Trailing 53 Week Period Week Period Week Period Week Period Week Period Ended Ended Ended Ended Ended October 3, 2020 January 2, 2021 Ap
Slide 20: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Income Tax Expense to Adjusted Income Tax Expense (000s omitted) For the 12 Week For the 12 Week Period Ended Period Ended July 17, 2021 July 11, 2020 Income tax expense $ 16,586 $ 18,493 Tax impact of: Project Centennial consulting cos
Slide 21: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted Net Income (000s omitted) For the 12 Week For the 12 Week Period Ended Period Ended July 17, 2021 July 11, 2020 Net Income $ 56,358 $ 57,919 Project Centennial consulting costs - 4,188 Restructuring and related im
Slide 22: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Debt to Net Debt and Calculation of Net Debt to Trailing Twelve Month Adjusted EBITDA Ratio (000s omitted) As of July 17, 2021 Current maturities of long-term debt $ - Long-term debt 889,878 Total debt 889,878 Less: Cash and cash equiva
Slide 23: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Earnings per Share - Full Year Fiscal 2021 Guidance Range Estimate Net income per diluted common share $ 1.04 to $ 1.09 Business process improvement consulting costs 0.06 0.06 Loss on inferior ingredients NM NM Acquisition consideration
Slide 24: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to EBITDA and Adjusted EBITDA (000s omitted) For the 12 Week For the 12 Week Period Period Ended Ended July 17, 2021 July 11, 2020 Net income $ 56,358 $ 57,919 Income tax expense 16,586 18,493 Interest expense, net 1,070 2,86
Slide 25: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to EBITDA and Adjusted EBITDA (000s omitted) For the 53 Week For the 52 Week Period Period Ended Ended January 2, 2021 December 28, 2019 Net income $ 152,318 $ 164,538 Income tax expense 48,393 47,545 Interest expense, net 12
Slide 26: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to EBITDA and Adjusted EBITDA (000s omitted) For the 12 For the 12 Week Period Week Period Ended Ended July 11, 2020 July 13, 2019 Net income $ 57,919 $ 53,095 Income tax expense 18,493 15,951 Interest expense, net 2,869 2,76
Slide 27: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Earnings per Share to Adjusted Earnings per Share For the 53 Week For the 52 Week Period Period Ended Ended January 2, 2021 December 28, 2019 Net income per diluted common share $ 0.72 $ 0.78 Loss (recovery) on inferior ingredients NM N
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Debt to Net Debt and Calculation of Net Debt to Trailing Twelve Month Adjusted EBITDA Ratio (000s omitted) 28
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Reconciliation of Debt to Net Debt and Calculation of Net Debt to Trailing Twelve Month Adjusted EBITDA Ratio (000s omitted) As of January 2, 2021 Current maturities of long-term debt $ - Long-term debt 960,103 Total debt 960,103 Less: Cash and cash equi