Hostess Brands — Gores Holdings — SPAC Merger (August 2016)
27 slides from Hostess Brands's SPAC merger presentation, Aug 8, 2016
Slide 1: Gores Holdings – Hostess Investor Presentation
GORES HOLDINGS – HOSTESS INVESTOR PRESENTATION August 2016
Slide 2: Disclaimer
DISCLAIMER This investor presentation (“Investor Presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of Hostess Holdings, L.P. (“Hostess”) or Gor
Slide 3: Presenters and Senior Leadership
PRESENTERS AND SENIOR LEADERSHIP Hostess Gores Holdings Dean Metropoulos Executive Chairman Executive Chairman of Hostess Founder and Executive Chairman of Metropoulos & Co. More than 30 years of successful experience revamping iconic brands throughout the consumer space Strong track record of growi
Slide 4: Long-Term Sponsorship from Premier Investors
LONG-TERM SPONSORSHIP FROM PREMIER INVESTORS The Gores Group / Gores Holdings, Inc. Gores Holdings, Inc is sponsored by an affiliate of The Gores Group, a global private equity firm with 28-year track record of operational investing Since 1987, Gores has acquired and operated 110 companies Managemen
Slide 5: Agenda
AGENDA I. BUSINESS OVERVIEW II. PROJECTIONS AND GROWTH OVERVIEW III. TRANSACTION SUMMARY AND TIMELINE PAGE 4
Slide 6: Hostess – The Opportunity
HOSTESS – THE OPPORTUNITY Hostess is a $1bn+ brand at Retail with potential upside in execution through white-space, innovation, and execution Snacking Trends Create Tailwinds For Growth Experienced and Tenured Management Team Driving Growth Iconic Brands With Nearly 100-year History Attractive Marg
Slide 7: Business Overview
x j Cd COMEBACK EVER. 7 =] ip j BUSINESS 9 Gores Hotpines cflostes
Slide 8: Key Investment Themes
KEY INVESTMENT THEMES Hostess Brand Hostess business transformation: Shelf-life Technology Warehouse Model Aggressive capital investment drove optimization of manufacturing, distribution and implementation of highly analytical IT systems Strong customer support Hostess brand driving Sweet Baked Good
Slide 9: Compelling Growth Story
COMPELLING GROWTH STORY Powerful Hostess brand Premium positioning in growing $6.8 billion SBG category1 Leading Market Shares: Over 16%2 total in SBG Leadership position in C-store Aggressive capital investment ~$140 million of capital invested in operations and systems Focused production in 3 core
Slide 10: Brand Strength Driving Growth and Category
BRAND STRENGTH DRIVING GROWTH AND CATEGORY Special emotional relationship with consumers U.S. consumers share a special emotional relationship with the 96 year old Hostess, a brand that defines the rapidly growing “Indulgent Snacking” trend 96 year history Brand awareness Leading category growth Hos
Slide 11: The Snacking Category Exhibits Strong Fundamental Trends
THE SNACKING CATEGORY EXHIBITS STRONG FUNDAMENTAL TRENDS Snacking is a growth category Snacking growth outpacing packaged foods – snacks replacing meals Dollar % change (2014-2015) 1.7% 3.1% 7.6% Packaged 1 In-Store Snacking Food1 Bakery2 Taste and enjoyment rule… Relevance across day parts Expandab
Slide 12: Hostess Still Has Significant Headroom for Growth and Share Gains
HOSTESS STILL HAS SIGNIFICANT HEADROOM FOR GROWTH AND SHARE GAINS Hostess $ share of SBG category1 22% ~7% gap to Old Co 15% 2016 OldCo Notes: Hostess data does not include Superior. 1 Hostess market share, Total Nielsen Universe. Nielsen U.S. 12 weeks ending 10/6/2012, year-to-date ending 5/21/2016
Slide 13: Hostess Has Significant Room for Growth In and Beyond SBG
HOSTESS HAS SIGNIFICANT ROOM FOR GROWTH BOTH IN AND BEYOND SBG IN-STORE BAKERY FREEZER INTERNATIONAL AISLE BFY NEW FILLINGS NEW FLAVORS NEW FORMS CLUB LICENSING FOOD-SERVICE TODAY1 1 $ B IN-AISLE WHITE SPACE2 1 $ 5 . B NEW AISLES AND CHANNELS2 2 $ B 1 Current sales, 5/21/2016, AC Nielsen total unive
Slide 14: Opportunities for the Future
OPPORTUNITIES FOR THE FUTURE Great Foundation Culture of Growth Innovation New products and platforms Line extensions and Core flavors Seasonal LTO programs ACV expansion Frozen Retail Food Service White SpaceClub International School items Acquisition of Superior Cake Products, Inc.1 Acquisitions &
Slide 15: Hostess' Approach to Better-for-You
HOSTESS’ APPROACH TO BETTER-FOR-YOU Objective: provide better-for-you options for consumers while maintaining brand equity and taste credentials Two-Pronged ® BFY Strategy Removal of Addition of negatives positives Phased approach to “cleaner label” on core Today – “0 grams trans fat per serving and
Slide 16: Projections and Growth Overview
PROJECTIONS AND GROWTH OVERVIEW
Slide 17: Significant Growth Since Re-Launch with Meaningful Upside Potential
SIGNIFICANT GROWTH SINCE RE-LAUNCH WITH MEANINGFUL UPSIDE POTENTIAL Net Revenue ($ in millions) $199 million increase +8% +11% $722 $781 +12% $42 $654 $39 $582 $33 $27 $366 $332 $738 $684 $14 $621 $17 $555 $316 $353 2014A 2015A H1’15 2016E H1’16 2017E Gross Profit1 ($ in millions) $339 $317 $13 $11
Slide 18: Sustainability of Margins
SUSTAINABILITY OF MARGINS Driver Commentary No material change in retail pricing model relative to legacy business Hostess is the leading brand in the premium segment Pricing As a category leader, retailers are supportive of our price structure since it generates a higher penny profit and profit mar
Slide 19: Low Maintenance Capex with Opportunities to Drive Productivity
LOW MAINTENANCE CAPEX WITH OPPORTUNITIES TO DRIVE PRODUCTIVITY ABOVE PLAN Actual and estimated Capex ($ in millions) $57 $3 $3 $8 $45 $41 $3 $3 $6 $3 $7 $9 $31 $24 $26 $3 $6 $3 $3 $5 $3 $2 $3 $7 $22 $19 $24 $19 $13 1 2013A 2014A 2015A 2016P 2017P Startup Capex2: one-time New Capacity Capex New Produ
Slide 20: Transaction Summary and Timeline
III. TRANSACTION SUMMARY AND TIMELINE ®
Slide 21: Illustrative Transaction Terms
ILLUSTRATIVE TRANSACTION TERMS Pro-forma enterprise value of $2,292 million (10.4x 2016E Adj. EBITDA) Pro-forma net debt / 2016E Adj. EBITDA of 4.5x1 Existing Hostess shareholders to be paid $522 million cash consideration2 and issued 46.6 million roll-over shares in Hostess at close C. Dean Metropo
Slide 22: Valuation Benchmarking to Peers
VALUATION BENCHMARKING TO PEERS Pro-forma firm value / 2016E Adj. EBITDA1 High growth food & beverage Snacking & baking Mid-cap food Median = 16.4x Median = 13.9x Median = 13.6x 3 18.3x 17.9x 16.4x 14.9x 15.2x 14.1x 13.8x 14.3x 13.6x 13.5x 12.4x 10.8x 10.4x 9.7x Pro-forma firm value / 2017E Adj. EBI
Slide 23: Attractive Margin Profile Relative to Peers
ATTRACTIVE MARGIN PROFILE RELATIVE TO PEERS 2016E Adj. EBITDA Margins High growth food & beverage Snacking & baking Mid-cap food Median = 13.6% Median = 18.6% Median = 17.8% 37.7% 30.5% 23.4% 23.1% 22.3% 20.5% 17.8% 17.5% 17.0% 13.6% 13.6% 13.8% 12.1% 10.3% WWAV HAIN LNCE FLO BGS PF MCK LANC THS 201
Slide 24: Anticipated Transaction Timeline
ANTICIPATED TRANSACTION TIMELINE Date Event Early July Business combination agreement executed Transaction announced July Preliminary proxy materials filed with SEC September o Set record date for shareholder vote Early-Mid o Mail final proxy materials to shareholders September Late September- o Hol
Slide 25: Hostess Non-GAAP Reconciliation (Unaudited)
HOSTESS NON?GAAP RECONCILIATION (UNAUDITED) Twelve Twelve Months Months Six Months Twelve Six Months Twelve (Estimated) (Estimated) Ended Months Ended Ended Months Ended Ending Ending 30-Jun-16 31-Dec-15 30-Jun-15 31-Dec-14 (in millions) 31-Dec-17 31-Dec-16 Net income (loss) $101.8 $74.9 $48.0 $88.8
Slide 26: Appendix
APPENDIX PAGE 25
Slide 27: Glossary
GLOSSARY Term Definition ACV All-commodity volume (%) BFY Better-for-you C-store Convenience store ISB In-store bakery LTO Limited time offer PHO Partially hydrogenated oils SBG Sweet baked goods SKU Stock keeping unit PAGE 26