Flowers Foods, Inc. · NYSE:FLO
Flowers Foods — Barclays Global Consumer Staples Conference 2023
45 slides from Flowers Foods's conference presentation, Sep 7, 2023
Slide 1: Barclays Global Consumer Staples Conference
“<Flowers FOODS BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE September 7, 2023
Slide 2: Forward-looking statements
Statements contained in this presentation 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-looking statements as defined in th
Slide 3: Business Overview & Strategy
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Operate the #1 loaf, organic, and gluten-free bread brands; gaining share in stable categories throughout the economic cycle Brand-focused portfolio strategy drives above-market growth via innovation, improved brand presence and relevance, and M&A Attractive cash flow generatio
Slide 5: 100+ Year History of Growth and Evolution
100+ YEAR HISTORY OF GROWTH AND EVOLUTION ac V #1 loaf, organic, and gluten-free bread brands in the U.S. v46 operating bakeries v 2nd-largest baked foods company in U.S. Y Proven business model V Efficient bakeries & distribution v Experienced team One family-owned bakery Listed publicly as “FLO” i
Slide 6: Business Overview
BUSINESS OVERVIEW Diverse product line across the Majority of business composed Diversified channel mix with broad baked foods spectrum of faster-growing, higher-margin distribution reach and e-Commerce branded retail products upside 2022 SALES MARKET SHARE! SALES MIX BY CHANNEL? = Flowers Branded =
Slide 7: Large and Stable U.S. Fresh Bakery Market
LARGE AND STABLE U.S. FRESH BAKERY MARKET =| ESTIMATED $47B' U.S. MARKET FOR US FRESH BAKERY RETAIL SALES FRESH AND FROZEN BAKERY AT RETAIL (52 weeks ended) $28 Large and stable U.S. Fresh Bakery category with sales of $28B+ $25 24 = $25 $22 $22 $ Present in 98% of households; buy the category 2820
Slide 8: Strategic Priorities
STRATEGIC PRIORITIES Aligned to long-term targets and disciplined capital policies LONG-TERM GROWTH TARGETS'2 Develop Team Focus on Brands Invest in team to drive portfolio Pursue targeted innovation and optimization through brand growth, marketing to enhance relevancy innovation and enhanced capabi
Slide 9: Developing Our Team with Enhanced Organizational Structure
DEVELOPING OUR TEAM WITH ENHANCED ORGANIZATIONAL STRUCTURE PRIORITIZING BRAND BUILDING AND ENABLING STRATEGIC INITIATIVES New Chief Growth Officer to lead growth initiatives, product development, innovation Chief Innovation Officer heads stand-alone innovation function Chief Supply Chain Officer foc
Slide 10: Foodservice
Foodservice • • • • • • • Foodservice • • • • • • • • • •
Slide 11: Branded Retail Sales and Flowers' Share
CAGR CAGR 7.4% $3.1B 1.8% $2.4B $1.6B $ 1.7B Branded Retail Sales Non-branded and Non-retail Sales Flowers' Share
Slide 12: Expanding Brand Presence Geographically
EXPANDING BRAND PRESENCE GEOGRAPHICALLY Under-developed markets offer significant growth potential 9 CAPITALIZING ON BRAND 7.0% GROWTH POTENTIAL BY 13.1% INCREASING PRESENCE 3.1% + Expand breadth and depth of distribution Drive awareness, trial, and repeat : with increased advertising and 9 18.2% sh
Slide 13: (1) Circana Scan Data - Flowers Custom Database January 01,2023
(1) Circana Scan Data - Flowers Custom Database January 01,2023 (2) 2018-2022
Slide 14: Portfolio Strategy Drives Margins
PORTFOLIO STRATEGY DRIVES MARGINS POST-PANDEMIC Significant margin increase as Combining right portfolio mix Recent results reflect impact of RESULTS SHOW branded retail business grew to with improved bakery network inflationary pressures on POTENTIAL BENEFIT a larger percentage of sales enhances ma
Slide 15: Margin and efficiency initiatives
• Backhaul utilization • Bakery of the future • Optimize strategic • Staffing optimization sourcing strategies • Cube optimization • Autonomous planning • Testing and • Leverage scale with implementing • Depot consolidation • SKU rationalization centralized buying maintenance and • Optimize number •
Slide 16: Positioned for Growth Through Smart M&A
POSITIONED FOR GROWTH THROUGH SMART M&A Proven track record fi 4 DAVE'S KILLER BREAD! &, CANYON BAKEHOUSE? of acquiring and growing TRACKED RETAIL SALES ($M) TRACKED RETAIL SALES ($M) differentiated bakery brands #1 organic Loat $731 #1 Gluten-free Loaf $129 Seeking out innovative AYR CAGR platform
Slide 17: Financial Review & Capital Allocation
Slide 18: Q2 2023 Financial Review
Q2 2023 FINANCIAL REVIEW NET SALES CASH FLOWS — YTD Cash from Ops Dividends 1.228B +8.8% v py $1. oY $128.9M $98.1M + Price/Mix +13.3%! + Volume -6.1%2 Capex + Papa Pita acquisition +1.6% $68.4M + Price increases to mitigate inflation and acquisition contribution, partly offset by lower volume NET I
Slide 19: Q2 2023 Financial Highlights
Q2 2023 FINANCIAL HIGHLIGHTS Sales grew due to price increases to mitigate inflation and the Adjusted EBITDA increased primarily due to improved gross acquisition contribution, partly offset by lower volume margin from increased sales, partly offset by higher SD&A Net income increased 18.8% to $63.8
Slide 20: Fiscal 2023 Guidance
FISCAL 2023 GUIDANCE (Provided August 10, 2023) SALES ADJ. EBITDA' ADJ. DIL. EPS! $5.095.. $503. $1.18. $5.141B $528M = $1.25 + Demand reversion * Ability to mitigate inflation OTHER * Consumer resiliency Depreciation & amortization Effective tax rate + Timing of cost savings initiatives $155 = $S16
Slide 21: Long-Term Growth Target Scorecard
LONG-TERM GROWTH TARGET SCORECARD . Sales 6.4% 2.5% 5.2% 5.5% Adj 4-6%4 23.4% 7.8% 5.9% 5.1% EBITDA * . . . Adj dil. “oes EPS 7-9%' 36.5% 13.7% 6.1% () OFF FY base (2) FY'20 was a 53-week year (3) Implied return using FY'23 guidance midpoint (4) No reconciliation of the forecasted range for Adjusted
Slide 22: Consistent Sales and Margin Profile
CONSISTENT SALES AND MARGIN PROFILE Stable performance in a variety of economic environments mmm Sales. ——Adj EBITDA margin* 12.0% $5 a SS 10.0% $4 8.0% fa g R 6.0% @ §3 ecession -——_ 4.0% $2 | | 2.0% $1 0.0% ¢ AN ‘ 2 © S a © ‘ © © 4 @ 2 5 > vy S é $ S < x a & RS & < & & g S - & & & & é « ge & & CS
Slide 23: Steady Free Cash Flow
STEADY FREE CASH FLOW Free cash flow! to fuel accretive investments Strong free cash flow CASH FLOW DRIVERS FREE CASH FLOW IN EXCESS OF NET INCOME growth supports + Growing sales (MILLIONS)? investments in the + Focus on cash business, M&A margins $450 ee CashElow’ Neti GAAP strategy and capital $40
Slide 24: Capital allocation
• $200 • • $35 • $10 $7 $1 $2 • $176 $187 $160 $167 $150 FY'18 FY'19 FY'20 FY'21 FY'22
Slide 25: Track Record of De-Leveraging Post M&A
TRACK RECORD OF DE-LEVERAGING POST M&A REVENUE! (MILLIONS) ADJ. EBITDA! (MILLIONS) $522 eno, fi $502 2015 2016 2017 2018 2019 2020 2021 2022 2015 = 2016 2017 2018 82019 2020 2021 2022 NET DEBT? (MILLIONS) NET DEBT? / ADJ. EBITDA’ £ 23 $974 son $954 22 21 20 salve see 14 14 2015 2016 2017. «2018 «422
Slide 26: Long Track Record of Growth
LONG TRACK RECORD OF GROWTH SALES GROWTH COMPONENTS! (MILLIONS) TOTAL SHAREHOLDER RETURNS? $774 $4,806 10-year TSR +6.5% Fiscal 2013 Acquisitions Core Business Fiscal 2022 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 12° '13 ‘14 #15 6 ‘17 18 19 '20 '21 '22 1. Source: Company filings. 2. Total Shareho
Slide 27: Our Vision Has Never Been Clearer
>» FF OUR VISION HAS NEVER BEEN CLEARER Right structure with a passionate team committed to continued success Emotional connection of fresh bread offers innovative brands the opportunity to appeal powerfully to consumers Competitive, leading operator with combination of strong brands and scale Oppor
Slide 28: Market Share Review
Slide 29: Flowers' Market Share
FLOWERS’ MARKET SHARE =FLO Bread Dollar Share = = FLO Cake Dollar Share 18.2 18.1 179 179 7.3 v7 168 17.3 17.4 7.2 7A 7.0 7A 68 | : : | ; : ; : : Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Source: Flowers Custom Database - Circana Total US Mull + C Store 29
Slide 30: Flowers Fresh Packaged Breads
FLOWERS FRESH PACKAGED BREADS mDollar Sales % Chg == Unit Sales % Chg 9.6% 9.6% 9.9% 6.9% 48% sass 26% ; -4.4% -4.9% 5.5% Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Source: Flowers Custom Database - Circana Total US Mull + C Store 30
Slide 31: Flowers Commercial Cake
FLOWERS COMMERCIAL CAKE Dollar Sales % Chg == Unit Sales % Chg 12.1% 9.3% 7.2% 4.3% 4.7% 4.2% LI] LI] = — “25% -2.2% 3.9% -4.9% “10% 6.5% 10.1% “14.0% 14.9% 16.3% Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 = Source: Flowers Custom Database - Circana Total US Mulo + C Sto
Slide 32: Organic Category Sales
ORGANIC CATEGORY SALES mms FLOWERS ORGANICS FLOWERS SHARE OF ORGANICS mmm ORGANIC FRESH PACKAGED BREADS xFLO 732 74.7 70.7 67.6 64.0 59.4 o $731.1 $769.6 S ca $657.3 = $470.2 $384.7 $262.7 $264.4 $284.3 $272.5 $267.3 $261.3 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 L52 WE 7-16-23 32 Source: Flowers Cu
Slide 33: Gluten-Free Category Sales
GLUTEN-FREE CATEGORY SALES mmm GLUTEN FREE FPB XFLO = mm FLOWERS GF-_ = FLOWERS SHARE OF GF 35.2 34.5 32.5 29.0 21.8 $130.4 12.5 $229.7 $229.1 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 52 WE 7-16-23 Source: Flowers Custom Database - Circana Total US Mulo + C Store 33
Slide 34: Branded vs Store Brand Market Share
BRANDED VS STORE BRAND MARKET SHARE FRESH PACKAGED BREAD CATEGORY 79.6 76.2 76.9 23.8 231 20.4 FY 2018 FY 2019 FY 2020 = Branded Dollar Share Source: Flowers Custom Database - Circana Total US Mulo + C Store 80.7 19.3 FY 2021 =Store Brand Dollar Share 80.5 19.5 FY 2022 79.8 20.2 L52 WE 7-16-23 34
Slide 35: Reconciliation of Non-GAAP Financial Measures
Slide 36: 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 37: Adjusted diluted EPS reconciliation
For the 12 Week For the 12 Week Period Ended Period Ended July 15, 2023 July 16, 2022 Net income per diluted common share $ 0.30 $ 0.25 Business process improvement costs 0.02 0.04 Restructuring charges 0.01 — Acquisition-related costs NM — Severance and lease termination — 0.01 Legal settlement — 0
Slide 38: Adjusted EBITDA reconciliation, 12 weeks ended July 15, 2023
For the 12 Week For the 12 Week Period Ended Period Ended July 15, 2023 July 16, 2022 Net income $ 63,760 $ 53,680 Income tax expense 20,605 16,689 Interest expense, net 4,251 1,504 Depreciation and amortization 34,984 32,922 EBITDA 123,600 104,795 Other pension benefit (62) (178) Business process i
Slide 39: Adjusted net income reconciliation
For the 12 Week For the 12 Week Period Ended Period Ended July 15, 2023 July 16, 2022 Net Income $ 63,760 $ 53,680 Business process improvement costs 4,941 8,743 Restructuring charges 1,875 - Legal settlement - 1,500 Severance and lease termination costs - 1,288 Acquisition-related costs 367 - Adjus
Slide 40: Adjusted EBITDA reconciliation by fiscal year
For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Ended Ended Ended Ended Ended Ended Ended December 31, 2022 January 1, 2022 January 2, 2021 December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2
Slide 41: Adjusted EBITDA reconciliation, fiscal 2011-2015
For the Fiscal For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Year Ended Ended Ended Ended Ended January 2, 2016 January 3, 2015 December 28, 2013 December 29, 2012 December 31, 2011 Net Income $ 189,191 $ 175,739 $ 230,894 $ 136,121 $ 123,428 Income tax expense 103,
Slide 42: Adjusted EBITDA reconciliation, fiscal 2006-2010
For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year For the Fiscal Year Ended Ended Ended Ended Ended January 1, 2011 January 2, 2010 January 3, 2009 December 29, 2007 December 30, 2006 Net Income attributable to Flowers Foods, Inc. $ 137,047 $ 130,297 $ 119,233 $ 94,615
Slide 43: Sales and Adjusted EBITDA margin history
Adj EBITDA Sales Adj EBITDA Margin FY22 4,805,822 502,030 10.4% FY21 4,330,767 490,861 11.3% FY20 4,387,991 521,690 11.9% FY19 4,123,974 422,726 10.3% FY18 3,951,852 410,936 10.4% FY17 3,920,733 443,250 11.3% FY16 3,926,885 447,468 11.4% FY15 3,778,505 433,597 11.5% FY14 3,748,973 429,044 11.4% FY13
Slide 44: Net debt to Adjusted EBITDA
December 31, 2022 January 1, 2022 January 2, 2021 December 28, 2019 December 29, 2018 December 30, 2017 December 31, 2016 January 2, 2016 Total debt* $ 891,842 $ 890,609 $ 960,103 $ 866,508 $ 979,594 $ 805,086 $ 927,730 $ 988,389 Less: Cash and cash equivalents 165,134 185,871 307,476 11,044 25,306
Slide 45: Free cash flow reconciliation
Cash Provided by Purchase of Plant, Operating Property and Time Period Activities Equipment Free Cash Flow FY'22 360,889 169,071 191,818 FY'21 344,610 135,964 208,646 FY'20 454,464 97,929 356,535 FY'19 366,952 103,685 263,267 FY'18 295,893 99,422 196,471 FY'17 297,389 75,232 222,157 FY'16 356,562 10
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