Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Q3 2021 Earnings Presentation
25 slides from Flowers Foods's earnings presentation, Nov 11, 2021
Slide 1: Third Quarter 2021 Review
Third Quarter 2021 Review November 11, 2021
Slide 2: Regarding Forward-Looking Statements
Regarding Forward-Looking Statements Statements contained in this presentation and certain other written or oral statements made from time to time by Statements contained in this presentation and certain other written or oral statements made from time to time by Flowers Foods, Inc. (the “company”, “
Slide 3: Key Messages
Key Messages • Branded retail sales maintaining strength while non-retail sales recovering from pandemic effect • Investing in innovation and marketing intended to drive future branded retail growth • Mitigating impact of inflation in 2021 and remain confident we should be able to do so in 2022. Con
Slide 4: Q3 2021 Financial Highlights
Q3 2021 Financial Highlights • Sales increase due to price increases to mitigate inflation, and positive mix shift to branded retail products • Adjusted EBITDA margins decreased due to higher logistics costs and investments in marketing COMPONENTS OF Q3’21 SALES CHANGE (MILLIONS) ADJUSTED EBITDA (MI
Slide 5: Q3 2021 Comparison to Pre-Pandemic Results
Q3 2021 Comparison to Pre-Pandemic Results • Sales increased due to higher demand for branded retail products caused by the pandemic and internal growth initiatives • Mix shift to branded retail products drove cost leverage and margin increase COMPONENTS OF Q3’21 SALES GROWTH VS Q3’19 (MILLIONS) ADJ
Slide 6: Q3 2021 Financial Review
Q3 2021 Financial Review NET SALES CASH FLOWS – YTD $1.028B +3.9% v PY Cash from Ops Dividends $315.2M $131.5M • Price/Mix +6.4%; Volume -2.5% • Continued growth in branded retail, partial Capex recovery of non-retail, and price initiatives to mitigate inflation, offset by ongoing declines in $86.7M
Slide 7: Fiscal 2021 Guidance (Provided November 11, 2021)
Fiscal 2021 Guidance (Provided November 11, 2021) Fiscal 2021 SALES1 ADJ. EPS2 Considerations • Persistence of pandemic -2.0% to -1.0% $1.22 to $1.26 and impact on mix • Promotional environment • Ability to mitigate inflation OTHER • Demand elasticity Depreciation & amortization — Effective tax rate
Slide 8: Flowers' Market Share
Flowers’ Market Share FLO Bread Share FLO Cake Share 18.0 17.7 18.0 17.4 17.5 17.7 17.0 17.1 16.3 7.3 7.6 7.0 7.1 7.2 7.1 7.3 7.2 7.1 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 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 21.3% 19.3% 18.4% 16.4% 14.7% 14.4% 13.4% 10.9% 6.2% 3.6% 2.6% 2.7% -0.1% -2.0% -1.9% -5.1% -5.8% -9.6% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 9 Source: Flowers Custom Database – IRi To
Slide 10: Category Review: Flowers Commercial Cake
Category Review FLOWERS COMMERCIAL CAKE Dollar Sales % Chg Unit Sales % Chg 12.0% 7.6% 4.7% 4.8% 4.1% 1.2% 0.6% -0.1% -1.7% -1.3% -1.7% -2.1% -3.7% -4.3% -5.6% -6.0% -6.7% -8.0% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 10 Source: Flowers Custom Database – IRi Total US
Slide 11: Organics Generating Growth
Organics Generating Growth ORGANIC FRESH PACKAGED BREADS XFLO FLOWERS ORGANICS FLOWERS SHARE OF ORGANICS $1,000.0 75.0 70.7 68.7 $900.0 65.2 65.0 60.6 $800.0 52.7 55.0 $700.0 42.2 45.0 $600.0 $593.5 $638.0 $500.0 35.0 $467.9 $381.5 $400.0 $267.7 25.0 $300.0 $154.5 15.0 $200.0 $240.7 $247.9 $250.0 $2
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 40.0 31.8 28.9 30.0 $350.0 21.6 20.0 $300.0 12.4 7.2 $93.1 $104.6 5.4 10.0 $250.0 $32.6 $61.1 $17.2 - $11.9 $200.0 (10.0) $150.0 (20.0) $221.0 $229.8 $222.3 $229.2 $224.0 $100
Slide 13: Branded Products Gaining Share
Branded Products Gaining Share Fresh Packaged Breads Branded vs. Store Brand Share 79.7 80.6 75.8 76.2 76.9 75.2 24.8 24.2 23.8 23.1 20.3 19.4 FY 2016 FY 2017 FY2018 FY2019 FY 2020 TTM Branded Store branded 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% TARGETS1,2 SALES ADJ. EBITDA3 ADJ. EPS4 Focus on leading, iconic brands to grow share ROADMAP TO DELIVERING LONG-TERM TARGETS Portfolio strategy prioritizes higher-priced, higher-profit FY2020 FY2021 FY2022 prod
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 October 9, 2021 October 3, 2020 Net income per diluted common share $ 0.18 $ 0.21 Project Centennial consulting costs — 0.02 Rec
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 October 9, 2021 October 3, 2020 Sales $ 1,027,800 $ 989,650 Materials, supplies, labor and other production costs (exclusive of depreciation and amort
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 October 9, 2021 October 3, 2020 Selling, distribution and administrative expenses $ 426,575 $ 38
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 13 For the 16 For the 12 For the 12 Trailing 53 Week Period Week Period Week Period Week Period Week Period Ended Ended Ended Ended Ended January 2, 2021 April 24, 2021 Jul
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 October 9, 2021 October 3, 2020 Income tax expense $ 12,048 $ 13,113 Tax impact of: Project Centennial consulting
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 October 9, 2021 October 3, 2020 Net Income $ 38,852 $ 44,347 Project Centennial consulting costs - 3,801 ERP road mapping consult
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 October 9, 2021 Current maturities of long-term debt $ - Long-term debt 890,180 Total debt 890,180 Less: Cash and cash equi
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 $ 0.96 to $ 1.00 Business process improvement consulting costs 0.10 0.10 Recovery on inferior ingredients NM NM Multi-employer pensio
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 For the 12 Week Period Week Period Ended Ended October 3, 2020 October 5, 2019 Net income $ 44,347 $ 43,358 Income tax expense 13,113 12,442 Interest expense, net 2,755
Slide 25: 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