Hostess Brands — Q3 2019 Earnings Presentation
20 slides from Hostess Brands's earnings presentation, Nov 6, 2019
Slide 1: Investor Presentation November 6, 2019
Investor Presentation November 6, 2019
Slide 2: Forward Looking Statements
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 risks and
Slide 3: A sustainable, profitable growth story
a sustainable, profitable growth story
Slide 4: Celebrating Years of Delighting Consumers
Celebrating 100 Years of Delighting Consumers Iconic Brands #1 Market Share LTM Net Revenue in Subcategory $906 million 19.2% Market Share LTM Adjusted EBITDA Continuous Innovation $204 million to Drive Growth Efficient Manufacturing & Distribution Model LTM Operating Cash Flow $141 million Proven S
Slide 5: We delight consumers and build iconic brands supported by our core competencies
We delight consumers and build iconic brands supported by our core competencies Strong Continuous to drive profitable growth Brand Equity Innovation Strengthening our core Hostess brand and expanding Core into adjacent categories through innovation and Significant strong partnerships with our custom
Slide 6: Snacking market growth and trends
increase in % of U.S. adults % snacking frequency 95 snack daily 21 in 2018 vs. 2017 Growth projected 1/3 of growing $ in snack market, snacking occasions 30B from 2018-2022 are in the morning ($150B-$180B) Source: Mintel Snacking Motivations and Attitudes, January 2019, Market sizing from NPD, Mint
Slide 7: Consistent Point-of-Sale and Market Share Growth in the Sweet Baked Goods Category
Consistent Point-of-Sale and Market Share Growth in the Sweet Baked Goods Category 18.5% $1,246 17.9% $1,185 16.8% $1,116 16.1% $1,069 2016 2017 2018 2019 2016 2017 2018 2019 Source: Nielsen, Total Nielsen Universe for the Company within the SBG Category. Point of Sale and Market Share, 52 weeks end
Slide 8: Growth Across Multiple Channels
Growth Across Multiple Channels POS Change 6.0% 3.5% 13.2% 19.5% 50.4% (2.5%) 8.8% $160 $140 $318 $120 $292 $100 $80 (In Millions) POS DollarsPOS $60 $40 $20 $0 Convenience Grocery Mass Dollar Club Drug Total Hostess 13 WE 9/29/2018 13 WE 9/28/2019 Market Share 24.7% 14.0% 15.8% 23.8% 23.5% 40.3% 19
Slide 9: Continued Industry-Leading Results
Continued Industry-Leading Results Net Revenue growth of 9.2% excluding ISB (in millions) % 7.7 % $227.2 19.0 Growth Growth $47.8 $211.0 $40.1 2018 2019 2018 2019 Quarter-to-Date results for three months ended September 30, 2019 and 2018. Adjusted EBITDA is a non-GAAP financial measure. See “Use of
Slide 10: Capital allocation priorities and net leverage
▪ Reinvest in business for future growth 4.5x 4.4x ▪ Strategic acquisitions 4.0x ▪ De-leverage 3.5x ▪ Return capital to shareholders Q4 Q1 Q2 Q3 2018 2019 2019 2019 1. Net Leverage ratio is net debt (total long-term debt less lease obligations, unamortized debt premiums and cash and cash equivalents
Slide 11: Meaningful Growth as Compared to Prior Year
Meaningful Growth as Compared to Prior Year Quarter Ended Year-to-Date Change Change September 30, September 30, Net Revenue $227.2 $211.0 $16.2 7.7% $691.0 $635.6 $55.4 8.7% Adjusted Gross Profit $75.2 $64.1 $11.1 17.3% $235.5 $205.6 $29.9 14.5% Adjusted Gross Margin 33.1% 30.4% 270 bps 34.1% 32.4%
Slide 12: Strategic priorities
Improve through Cultivate Talent Leverage Strong Grow the Core Grow through Innovation Agility & Efficiency & Capabilities Cash Flow Profitably drive core Accelerate Operate at lowest Focused on Generated from growth by building growth through practical cost and investing in talent, high cash the co
Slide 13: Strategic priorities progress
Improve through Cultivate Talent Leverage Strong Grow the Core Grow through Innovation Agility & Efficiency & Capabilities Cash Flow ✓ Executed multi- ✓ Launch of ✓ Cloverhill ✓ Expanding new ✓ Generated faced price Birthday Business hub for operating cash increase across all Cupcakes, improved mark
Slide 14: 2019 quarterly milestones
Revenue Growth Well Above the SBG Category & Significant Adjusted EBITDA Growth Q4 Finish 2019 Strong Q3 with Significant Revenue & Strong Back-to- EBITDA Growth Q2 School Programming Q1 Expand Distribution Complete Sale of In- Substantially of New Products Store Bakery Improve Net Execute
Slide 15: Narrowing Adjusted EBITDA and EPS Guidance Within Previously Disclosed Range
Narrowing Adjusted EBITDA and EPS Guidance Within Previously Disclosed Range 2019 Previous 2019 Updated ($ in millions, except ratio, per share data and tax rate) 2018 Actuals Guidance Guidance Growth well above Growth well above Net revenue $850.4 the SBG Category the SBG Category Adjusted EBITDA $
Slide 16: Delivering Industry-Leading Total Shareholder Returns
Organic Revenue Adjusted EBITDA Free Cash Flow Growth Margin Conversion Top Quartile of Top Quartile of Top Quartile of 1 1 Peer Group1 Peer Group Peer Group (Well ahead of the SBG Category) Delivering Industry-Leading Total Shareholder Returns 1. Peer group defined as S&P Composite 1500 Packaged Fo
Slide 17: Appendix
Appendix 17
Slide 18: Adjusted Gross Profit
Adjusted Gross Profit Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2019 ($ in millions, except percentages) Gross profit $70.4 $60.4 $229.1 $198.5 Non-GAAP adjustments: Acquisition and integration cos
Slide 19: Adjusted EBITDA
Adjusted EBITDA Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended ($ in millions, except percentages) September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2019 Net income $10.7 $11.2 $54.0 $65.1 Non-GAAP adjustments: Income tax provision 3.0 2.6 10.9 9.3 Int
Slide 20: Adjusted Net Income and EPS
Adjusted Net Income and EPS Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended ($ in millions, except per shares and per share data) September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2019 Net income $10.7 $11.2 $54.0 $65.1 Non-GAAP adjustments: Tax receiva