Flowers Foods, Inc.

FLO

US3434981011

Food Processing

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Mar. 13	Transcript : Flowers Foods, Inc. Presents at Bank of America Consumer & Retail Technology Conference, Mar-13-2024 09:40 AM

Flowers Foods : Q2 2020 Investor Update Presentation

August 10, 2020 at 04:44 am EDT

Investor Update

August 7, 2020

Welcome

J.T. Rieck

Senior Vice President, Finance & Investor Relations

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Marketing & Innovation Strategy

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation

Question & Answer Session

Regarding Forward-Looking Statements

Statements contained in this presentation that are not historical facts are forward-looking statements. Forward-looking statements relate to current expectations regarding our future financial condition, performance and results of operations and the ultimate impact of the novel strain of coronavirus (COVID-19) pandemic on our business, results of operations and financial condition, planned capital expenditures, long-term objectives of management, supply and demand, pricing trends and market forces, and integration plans and expected benefits of transactions and are often identified by the use of words and phrases such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "would," "is likely to," "is expected to" or "will continue," or the negative of these terms or other comparable terminology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. Other factors that may cause actual results to differ from the forward-looking statements contained in this release and that may affect the company's prospects in general include, but are not limited to, (a) the ultimate impact of the COVID-19 pandemic and measures taken in response thereto, including, among other things, temporary or ongoing bakery closures, on our business, results of operations and financial condition, which are highly uncertain and are difficult to predict, (b) general economic and business conditions and the competitive conditions in the baked foods industry, including promotional and price competition, (c) changes in consumer demand for our products, including changes in consumer behavior, trends and preferences, including health and whole grain trends, and the movement toward more inexpensive store-branded products, (d) the success of productivity improvements and new product introductions, (e) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer's business, (f) fluctuations in commodity pricing, (g) energy and raw material costs and availability and hedging and counterparty risk, (h) our ability to fully integrate recent acquisitions into our business, (i) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value, (j) our ability to successfully implement our business strategies, including those strategies the company has initiated under Project Centennial, which may involve, among other things, the integration of recent acquisitions or the acquisition or disposition of assets at presently targeted values, the deployment of new systems and technology and an enhanced organizational structure, (k) consolidation within the baking industry and related industries, (l) disruptions in our direct-store delivery system, including litigation or an adverse ruling from a court or regulatory or government body that could affect the independent contractor classification of our independent distributors, (m) increasing legal complexity and legal proceedings that we are or may become subject to, (n) product recalls or safety concerns related to our products, and (o) the failure of our information technology systems to perform adequately, including any interruptions, intrusions or security breaches of such systems. The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other public disclosures made by the company, including the risk factors included in our most recently filed Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and disclosures made in other filings with the SEC and company press releases, for other factors that may cause actual results to differ materially from those projected by the company. We caution you not to place undue reliance on forward-looking statements, as they speak only as of the date made and are inherently uncertain. The company undertakes no obligation to publicly revise or update such statements, except as required by law.

Strategic

Priorities

Ryals

McMullian

President & Chief Executive Officer

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation Question & Answer Session

Today's Agenda
AGENDA	Strategic Priorities

Ryals McMullian | President & Chief Executive Officer

Growth Imperatives & Supply Chain Optimization

Brad Alexander | Chief Operating Officer

Driving Brand Relevance

Debo Mukherjee | Chief Marketing Officer

Brand Portfolio Strategy

Mark Courtney | Chief Brand Officer

Acquisition Strategy

Mark Gerrish | Vice President, Corporate Development

Financial Review & Capital Allocation

Steve Kinsey | Chief Financial Officer & Chief Accounting Officer

Question & Answer Session

Executive Management Team

Flowers Team - Meeting Unprecedented Challenges

Q2 2020 Financial Highlights

Sales increase reflecting the continued impact of the COVID-19 pandemic
Mix shift to branded retail products drove cost leverage and margin increase

COMPONENTS OF Q2'20 SALES GROWTH (MILLIONS)		ADJUSTED EBITDA (MILLIONS)1
+5.1%				$129
$106	+21%
GROWTH	12.5%
			GROWTH
	10.8%		Margin

Margin

Q2'19Q2'20

(1) Earnings before interest, taxes, depreciation & amortization, adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Strong Foundation and Clear Path Forward

Leader in Large and Attractive Categories

Operate the #1 loaf, organic, and gluten-free bread brands; gaining share in stable categories throughout the economic cycle

Leading Brands to Drive Growth

Brand-focused portfolio strategy drives above-market growth via innovation, improved brand presence and relevance, and M&A

Significant Margin Expansion Opportunity

Portfolio and supply chain optimization targeting improved price realization, cost containment, and data-driven insights to expand margins

Consistent Capital Allocation Maximizes Returns

Dividend paid in 71 consecutive quarters, opportunistic share repurchases, strong track record of generating value through M&A

Strategic Priorities Aligned to Long-term Growth Targets

DEVELOP TEAM	FOCUS ON BRANDS
Capabilities to build brands	Enhance relevancy
and create value	and expand presence

PRIORITIZE MARGINS	SMART M&A
Optimize portfolio	Proactive M&A in the
and supply chain	grain-based foods arena

Enhanced Organizational Structure

Better prioritizing brand building, cake turnaround, and foodservice profitability

Chief Brand Officer responsible for managing the brand portfolio and prioritizing brand-building investments
Chief Marketing Officer to lead stand-alone innovation function
President of Cake Operations focused exclusively on improving performance in that business
Foodservice refocused to maximize value over volume and prioritize a more profitable product mix

Growing Sales with Iconic Brands

Build brands through insights, innovation, and marketing

• Capitalize on portfolio opportunities

FLOWERS' BRANDED PRODUCTS DRIVING TOP LINE

CAGR

5.3% $2.7B		FY - 15


$2.2B		LTM - 20 ¹



$1.6B		$1.6B

Branded Sales

Non-branded Sales

CAGR
5.7%	18
14

Flowers' Share ²

(1) 52 weeks ended Q2 2020

11 (2) Internal Sales Data Warehouse 52 Weeks Ending July 11, 2020

Portfolio Strategy Drives Margins

Recent results demonstrate impact of shift to branded retail

Clarified brand strategy to drive margin expansion
Prioritizing a more profitable product mix
Repurposing capacity to grow branded retail business

SALES MIX1

Total sales up 5.3% y/y; branded retail up 12.5% y/y

Non-Retail &

Other

$915M

Store
Branded
Retail	Branded
$627M
Retail

$2.718B

12 (1) 52 weeks ended Q2 2020

Prioritizing Margins with Supply Chain Optimization

Reducing fixed costs, enhancing operating leverage

DISTRIBUTION AND NETWORK

Backhaul utilization
Cube optimization
Depot consolidation
Optimize number of bakeries
Limit overtime expense
Transition some routes to four-day delivery
Repurpose Lynchburg bakery

	BAKERY
	OPERATIONS		PROCUREMENT
•	SKU rationalization	•	Leverage scale with
•	Increase production		centralized buying

	run times	•	Direct materials savings
•	Quality improvement;	•	Buy better, more
	site line machines		strategically
•	Stale reduction	•	Leased labor
•	Optimize days	•	Packaging
	of availability	•	Ingredients

Minimize scrap
Automation

OVERHEAD

EXPENSES

Staffing optimization
Testing and implementing maintenance and measurement processes
Enhanced hiring procedures

Smart M&A

Track record of strategic growth investments

Pursuing disciplined
and highly strategic M&A
Seeking out innovative platform brands in grain-based foods beyond fresh packaged bread
Accelerating geographic expansion of growth and core brands

$68B GRAIN-BASED FOOD UNIVERSE

Fresh Packaged

Breads $15B

Other Grain-Based

Categories $53B

14 IRI Flowers custom data base Total US MultiOutlet - 52 weeks ended 19-Apr-2020

Strategic Priorities Drive Long-term Growth

Long-term	1	+1-2%	+4-6%	+7-9%

Growth Targets		SALES	ADJ. EBITDA2	ADJ. EPS3

DEVELOP TEAM

FOCUS ON BRANDS

PRIORITIZE MARGINS

SMART M&A

(1) Sales and adjusted EBITDA targets reflect organic business growth; adjusted EPS target includes the potential impact of future M&A and share repurchases.

15 (2) Earnings before interest, taxes, depreciation & amortization (EBITDA), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Earnings per share (EPS), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Growth Imperatives

Supply Chain Optimization

Brad

Alexander

Chief Operating Officer

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation Question & Answer Session

Key Takeaways

Potential of optimized	Organization is aligned	Portfolio strategy
portfolio, supply chain	around the fundamentals	informs supply chain
	of building brands	optimization initiatives

Q2 Illustrates Potential of Optimized Portfolio, Supply Chain

Strong Q2 results show effect initiatives could have on our

Significant margin increase as branded retail business grew to a larger percentage of sales

Combining right portfolio mix	Accelerating optimization
with improved bakery network	to deliver margin expansion
enhances margins	over time

longer-term results

SALES MIX

Q2 2019		Q2 2020		Q2 2019 ADJUSTED

				EBITDA MARGIN1
23%	19%		10.8%
	Branded Retail
60%			Q2 2020 ADJUSTED


	Store-branded Retail 14%
	67%	EBITDA MARGIN1
17%		Non-retail & Other	12.5%

(1) Earnings before interest, taxes, depreciation & amortization, adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Executing Against Operational Priorities

FOCUS

ON BRANDS

Enhance relevancy and expand presence

Marketing team focused on targeted innovation and marketing to generate awareness, drive trial and repeat
Brand team executing a portfolio strategy designed to opportunistically grow share

TARGET SALES GROWTH = 1-2%

PRIORITIZE

MARGINS

Optimize portfolio and supply chain

Portfolio strategy underpins supply chain optimization initiatives
Orienting asset base to higher margin products, reducing network complexity, enhancing product profitability

TARGET ADJ. EBITDA1 GROWTH = 4-6%

(1) Earnings before interest, taxes, depreciation & amortization, adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Leveraging Flexibility

Flexible fixed asset base can produce and distribute product for

any market

HOW WE GO TO MARKET

BAKERY

DEPOT

IDP

MARKETPLACE

VERSATILITY TO MEET CHANGING DEMAND

Branded retail

Store branded retail

Foodservice

Optimizing Network to Prioritize Margins

Portfolio strategy determines targeted brands and segments

Pivot capacity to most powerful brands
Maximize revenue and margin potential

Optimize and reallocate capacity to increase network utilization

Closed three bakeries since start of Project Centennial
Transitioned volume to more-efficient lines

Repurposed two bakeries to meet growing DKB demand

Tuscaloosa, AL and Lynchburg, VA converted to organic production
Lynchburg bakery expected to open in September 2020

Network Consolidation

BENEFITS	Lower cost		Fewer		Additional

to serve market		transport miles		network capacity

TODAY

BAKERY

DEPOT

MARKET

Increasing Product Profitability

STALE REDUCTION
• SKU rationalization	Realized
~130 hours

• Improved ordering	per week
• Lowering costs and	in additional
capacity,
increasing realized capacity	equivalent to an

additional bakery

Shifting Mix to Enhance Profitability

Increasing production of branded

retail means we can …

Be more selective about type and quality

of other business we accept

Reduce percentage of store branded

and foodservice products: Allows us to negotiate better pricing terms on the business we keep …

Resulting in

higher mix of branded retail products

and more profitable mix of store

branded and foodservice business

Driving Brand Relevance

Debo

Mukherjee

Chief Marketing Officer

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation Question & Answer Session

Key Takeaways

RELEVANCE		PRESENCE		GROWTH
Attractive category	Relevance ensures		Foundational consumer		Digital

with high	our brands		research informs
		capabilities /
penetration	resonate with		marketing and
		digital shelf
and frequency	consumers		innovation strategy

Fundamentals Stand Out Among Grocery Categories

•	Large, stable category with sales of $24B+	ATTRACTIVE BRAND ECONOMICS

•	Present in 98% of households; buy the category every 12 days
$6.0	$5.26	$5.87

Consumers willing to pay premium for brands

• Most profitable category for retailers1	$4.0	$2.91


	$2.0	$1.38

TOTAL US BREAD CATEGORY HOUSEHOLD PENETRATION & PURCHASE CYCLE FREQUENCY (DAYS)2

100.0

80.0

60.0

40.0

20.0

	$-
	Store


		Brand
12.4
BRANDED CATEGORY SHARE3
12.2
12.0
			79.9%

11.8
11.6				76.3%
11.4	75.3%	75.6%

11.2

7/16/17

11/5/17

2/25/18

6/17/18

10/7/18

1/27/19

5/19/19

9/8/19

12/29/19

% HH Buying

Purchase Cycle - Xactions Avg

2Q17

2Q18

2Q19

2Q20

(1) Willard Bishop SuperStudy 2019

27(2) Total US: IRI Panel Data 3/1/20, Rolling 13-week periods

Total US: IRI Multi Outlet, Quarterly Results

Creating Brand Relevance

Targeting brand	ANNUALIZED OPPORTUNITY
benefits to meet
>$350M
consumer desires
Delivering advertising	Relevance
•	Generate awareness
via media mix
to create awareness	•	Drive trial
Converting awareness	•	Convert to repeat
to trial and repeat	•	Disrupt via innovation

Brand Positioning & Messaging

Aided and Unaided Awareness

Trial

Repeat

(loyalists)

Consumer Insight-Driven Messaging to Create Brand Relevance

Developing relevant brand positioning through a deep understanding

of consumers' minds and needs

Messaging reflects the consumers' desire for functional and emotional benefits

INSPIRING		BAKING HAPPY

CHILDLIKE		AND HEALTHY
WONDER		INTO EVERY HOME

Consumer

Messaging

Brand Strategy

Reaching the consumer though relevance

Brand Architecture

Vision, positioning, personality

Foundational Research

Unlocking the consumers' minds and needs

Focus on Consumer Needs

At the intersection of each

Consumer Segment and Need State:

Defining the size of the opportunity and the brand's share of occasions.
Assessing the fit of every brand for the need and balancing the portfolio approach

Portfolio Size

Fit Share

ACTIVE	BUSY	BREAD	HEALTH	FUNCTIONAL
INFLUENCERS	BUDGETERS	AVOIDERS	ESTABLISHED	EATERS

TRADITIONAL

CONNECTION

HEALTHIER

CHOICES

QUICK AND

SIMPLE

HUNGER

RELIEF

COMFORT

AND BONDING

PERSONAL

INDULGENCE

BITES OF

ADVENTURE

Building Awareness Is Vital

AIDED 70%	AIDED 29%	AIDED 85%	DRIVING AWARENESS: MESSAGING AND
UNAIDED 15%	UNAIDED 10%	UNAIDED 35%
			POSITIONING FOR THE CORE CONSUMER1

AIDED 75%	AIDED 71%
UNAIDED 29%	UNAIDED 29%
PEER 1	PEER 2

Impressions (millions)

900

2019 2020

600

300

Audio / OOH

Display

Shopper

Social

Spot Radio

Video

YouTube

Source: IRI Panel Measures, Total US - 52 Week Ending 3/22/20

Flowers' Brands Have Strong Upside Opportunity For Growth

Driving growth through brand relevance

DRIVE HOUSEHOLD PENETRATION	DRIVE HIGHER CONSUMPTION
FOR FLO BRANDS	(REDUCE PURCHASE CYCLE)

•	Increase household penetration	100	50
•	Increase consumer loyalty	80	40

	(% repeat)	60	30
•	Drive consumption	40	20

	(lower # of days in purchase cycle)	20	10
		0	0

	% Hhld Penetration	Purchase Cycle (Days)
	Bread Category

Nature's Own	INCREASE LOYALTY RATE		SOUTHERN IRI REGION: PENETRATION FLO BRANDS

Wonder

Dave's Killer Bread

Peer 1

Peer 2

100	100
80
60	50
40

20	0
0

% Repeaters

	NATURE'S OWN
	PENETRATION
	Total US
	31.9%
	South Region
% Hhld Penetration	52.8%

Source: IRI Panel Measures, Total US - 52 Weeks Ending 3/22/20

Engaging the Changing Consumer with E-Commerce

Driving to win digital

consideration and shelf

Forced adoption of e-commerce due to COVID-19 driving large shift in retail channel
Expect increased trial to drive meaningful growth in enduring users
E-commercebenefits strong brands as awareness and search are key elements of online shopping
Developing new capabilities in Marketing and Sales Digitization to leverage shift in consumer habits

E-COMMERCE AS % OF BREAD

OMNICHANNEL SALES1

15%
			12.5%
10%
		6.2%
5%	4.4%
0%
	2Q'19	Pre-Covid '202	2Q'20

(1) IRI E-Commerce and Instacart data

33(2) IRI Period 2, 2020

Consumer Acquisition and Retention Through Marketing

Nature's Own drives home the Unique Selling		Seizing on consumers'

Proposition: "Scratch to Shelf in about 48 hours"		desires for Freshness

Brand Portfolio Strategy

Mark

Courtney

Chief Brand Officer

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation Question & Answer Session

Key Takeaways

RELEVANCE

PRESENCE

GROWTH

Clarified	Expand brand presence in	Leverage innovation to	Drive brand presence
underdeveloped geographies	create brand presence	with our retail partners
portfolio
through distribution	in underdeveloped	in a changing
strategy
and penetration	segments	marketplace

Capitalizing on Recent Trends

Increased household

DOLLAR SALES, % CHANGE VS YA

VOLUME SALES, % CHANGE VS YA

penetration and increased

DEPT-GENERAL FOOD

FRESH PACKAGED BREADS

FLOWERS BREAD

consumption are

driving category growth

18.2%

15.0%

13.2%

14.0%

Household penetration

7.9%

8.5%

for FLO brands up 250 BPS

% OF HOUSEHOLDS BUYING

92.8	93.7	YA	CY

35.538.0

Fresh Packaged Breads Category

Flowers Bread

37 Source: IRI Scan and Panel Data - Flowers Custom Database 12 Weeks Ending 7-12-2020

Driving Brand Presence with a Clear Portfolio Strategy

Clarified roles for our brands, channels, and categories

PREMIUM

GROWTHDrive premiumization of category

BRANDS

•	Expand premium growth
	brands, win with
	mainstream brands, and
	compete locally with
	strong regional brands
•	Align growth maps
	and brand strategies
	with network

MAINSTREAM BRANDS

Drive premium end of mainstream consumption

Drive value end of mainstream consumption

optimization plans

• Rationalizing brands

and SKUs

STRONG

REGIONALWin locally with strong regional brands

BRANDS

Expanding Brand Presence Geographically

Capitalizing

on brand growth potential by increasing presence

Under-developed markets offer huge growth potential

Focused approach
Expand breadth and depth of distribution
Drive awareness, trial, and repeat with increased advertising and shopper marketing
Intense focus by our DSD sales organization and IDPs

FLOWERS DOLLAR SHARE OF FRESH PACKAGED BREAD CATEGORY1

27.9 - 49.7

17.1 - 27.8

9.5 - 17.0

5.8 - 9.4

0.0 - 5.8

39 (1) IRI MULO, Calendar Year 2019

Leveraging Innovation to Create Presence in Adjacent Segments

Consumers expect our brands to offer solutions beyond loaf

FLOWERS DOLLAR SHARE1

30.4	TTM, 3 Years Ago	TTM

26.7

		9.9	10.7	7.1

				2.9

	LOAF	SANDWICH BUNS/ROLLS	BREAKFAST ITEMS
		LOAF	SANDWICH BUNS/ROLLS	BREAKFAST ITEMS

Segment Size (Annual)	$7.7 B	$3.5 B	$2.2 B

Flowers 3 Year $ Sales CAGR	+ 6.6%	+ 2.8%	+ 62.5%

40 (1) IRI Scan Data - Flowers Custom Database 12 Weeks Ending 7-12-2020, 52 Weeks Ending 7-12-2020 for annual numbers

Driving Brand Presence with Retail Partners

Consumer-relevantbrands appeal to a broad range of consumer demographics
Brand portfolio delivers incremental category sales and margin growth
Provide best-in-class category leadership as we navigate uncertain times

BRAND LOYALTY − % OF BUYER CATEGORY DOLLARS SPENT WITHIN BRAND1

		25.5
18.3		21.0
		15.0		15.8
			14.3	12.3

	8.2
Nature's Own	Wonder	Dave's Killer Bread Canyon Bakehouse	Peer 1	Peer 2	Peer 3	Peer 4

41	(1) IRI Panel Data Total US Category % Share of Requirements, 52 WE 7/12/2020. Peers are leading competitive national bread brands

Acquisition Strategy

Mark

Gerrish

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation Question & Answer Session

Vice President, Corporate Development

Key Takeaways

Positioned for growth	Structured	Partner with innovation	Explore opportunities
with strong free cash
approach drives	team to identify	in core and grain-
flow, balance sheet, and
repeatable process	opportunities	based adjacencies
M&A track record

Positioned for Growth Through M&A

Proven track record of acquiring and growing differentiated bakery brands

Strong balance sheet and cash flow generation enable investment

in further growth

DAVE'S KILLER BREAD TRACKED RETAIL SALES ($M)

#1 Organic Loaf

$570

5YR CAGR

+45%

CANYON BAKEHOUSE

TRACKED RETAIL SALES ($M)

#1 Gluten-free Loaf	$64

2YR CAGR
+58%
$26

$90

TTM-Q2'15TTM-Q2'20

TTM-Q2'18TTM-Q2'20

44 Source: IRI Scan Data - Flowers Custom Database

Structured Approach to M&A

Clearly defined, repeatable process

Link between corporate	Steady stream
development, strategy,
of opportunities
and innovation

Deep industry	Integration
relationships	is crucial

Explicit

strategic criteria

M&A is a capability

Monitoring and post-mortems

Role of Smart M&A

Partner with innovation team to identify opportunities beyond our core

SOLIDIFY THE CORE

• Infrastructure and distribution growth

in underdeveloped markets

Leverage existing brands

GEOGRAPHIC

EXPANSION

Fill in existing markets
Expand into newer markets

INNOVATIVE ADJACENCIES

• Gain exposure to growing, underdeveloped segments and innovative brands

Focus on platform assets that bring new capabilities

ALTERNATIVE DEAL

STRUCTURES

Joint ventures
Minority investments
Strategic partnerships

Financial Review

& Capital Allocation

Steve

Kinsey

Welcome

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation

Question & Answer Session

Chief Financial Officer & Chief Accounting Officer

Key Takeaways

Solid Q2 results,	Strong free cash	Long-term targets	Growth roadmap
supported by leading
positive 2020	flow, consistent	highlights long-
brands and growth
outlook	capital allocation	term opportunity
strategy

Q2 2020 Financial Review

NET SALES

$1.026B +5.1% v PY

Price/Mix +8.4%; Volume -3.3%
Growth from branded retail more than offsetting lower store-branded retail and foodservice sales

ADJ. EBITDA1

$128.5M +21.4% v PY

12.5% of sales, up 170 bps
Increased primarily due to improved product mix, partially offset by higher employee incentive costs and IDP fees on lower transportation costs

CASH FLOWS − YTD

Cash from Ops	Dividends
$275.8M	$82.6M
Capex
$46.6M

GAAP DILUTED EPS

$0.27 +$0.02 v PY

ADJ. DILUTED EPS2

$0.33 +$0.08 v PY

Increased adj. EBITDA partially offset by higher tax rate

49	(1)	Earnings before interest, taxes, depreciation & amortization (EBITDA), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.
(2)	Earnings per share (EPS), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Fiscal 2020 Guidance (Updated Aug 6, 2020)

SALES GROWTH1

+4.0% to +5.0%

OTHER

Depreciation & amortization -

$145 to $150 million

Net interest expense -

$11 million

Capital expenditures -

$85 to $95 million

ADJ. EPS2

$1.15 to $1.25

Effective tax rate -

Approx. 24.0% to 24.5%

Diluted shares outstanding -

Approx. 212.5 million

Fiscal 2020 H2

Considerations

Food at home consumption remains elevated, not as high as Q1 levels
Foodservice stabilizing and beginning to recover, still well below normal
Pace of return-to-work and back-to-school
Navigating pandemic impact on bakery operations

50 (1) Week 53 expected to contribute 1.5% of overall sales growth.

(2) Adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this presentation.

Steady Free Cash Flow

Strong free cash flow	Cash Flow Drivers
growth supports	• Growing sales
investments	• Focus on cash margins
in the business,
• Predictable capex
M&A strategy, and
capital returns

FREE CASH FLOW1 TO FUEL ACCRETIVE

INVESTMENTS (MILLIONS)

	$255	$263	$332
$245


		$222
		$196

FY-15

FY-16

FY-17

FY-18

FY-19

LTM-20

51 (1) Operating Cash flow minus Capital Expenditures. See non-GAAP reconciliations at the end of this presentation.

Consistent Capital Allocation

Capital Allocation Principles:

Capex to support core business growth
Maintain investment grade credit rating
Support strong dividend
Smart, disciplined acquisitions
Opportunistic share repurchases

CAPITAL ALLOCATION (MILLIONS)

$395	Dividends	Share Repurchases


	Cash for Acquisitions

$200

	$126	$3	$2	$7	$1
$7


$120	$131	$141	$150	$160	$163

FY-15

FY-16

FY-17

FY-18

FY-19

LTM-20

Track Record of De-LeveragingPost-M&A

Maintaining flexibility to capitalize	TOTAL DEBT1	(MILLIONS)

on value-creating opportunities
1968 to 2020: MORE THAN 100 ACQUISITIONS

$984	$928		$980
		$867
		$805

FY-15

FY-16

FY-17

FY-18

FY-19

53 (1) Excludes lease liabilities

Long Track Record of Growth

SALES GROWTH COMPONENTS1 (MILLIONS)

TOTAL SHAREHOLDER RETURNS

	10yr CAGR
	+5.2%					10yr TSR2
							+11.4%
	Aug	Aug	Aug	Aug	Aug	Aug	Aug	Aug	Aug	Aug	Aug
3	'10	'11	'12	'13	'14	'15	'16	'17	'18	'19	'20

	1.	Source: Company filings.
54	2.	Total Shareholder Return (TSR) assumes reinvestment of dividends. Source: NASDAQ
3.	Acquisition category includes sales for 12 months following purchase

Key Drivers to Achieving our Long-term Growth Targets

GROWTH	+1-2%	+4-6%	+7-9%
LONG-TERM
TARGETS1	SALES	ADJ. EBITDA2	ADJ. EPS3

Focus on leading, iconic brands to grow share

Portfolio strategy prioritizes higher-priced,higher-profit products and customers

Supply chain optimization enhances operating leverage, streamlines fixed cost structure

Strong free cash flow generation provides fuel for accretive M&A, opportunistic share repurchases, and dividends

(1) Sales and adjusted EBITDA targets reflect organic business growth; adjusted EPS target includes the potential impact of future M&A and share repurchases.

55 (2) Earnings before interest, taxes, depreciation & amortization (EBITDA), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Earnings per share (EPS), adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Roadmap to Delivering Long-term Targets

FY2020

Favorable mix shift
Accelerate optimization initiatives
Performance above

long-term targets

53-weekyear

FY2021

Adjust to the new-normal
Deliver operational improvements
Headwinds as

consumer behavior normalizes

52-weekyear

FY2022

Brands driving above-category sales growth
Performance in-line

with long-term targets

52-weekyear

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

Opportunity to grow through product adjacencies, innovation, and M&A

Question

Answer Session

Strategic Priorities

Growth Imperatives & Supply Chain Optimization

Driving Brand Relevance

Brand Portfolio Strategy

Acquisition Strategy

Financial Review & Capital Allocation

Question & Answer Session

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 statements, press releases and SEC filings, non-GAAP financial measures such as, EBITDA, adjusted EBITDA, adjusted EBIT, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted operating income, adjusted EPS, adjusted income tax expense, adjusted selling, distribution and administrative expenses (SD&A), gross margin excluding depreciation and amortization, free cash flow, and the ratio of net debt to adjusted EBITDA. The reconciliations attached provide reconciliations of the non-GAAP measures used in this presentation or release to the most comparable GAAP financial measure. The company's definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

The company defines EBITDA earnings before interest, taxes, depreciation and amortization. The company defines free cash flow as operating cash flow minus capital expenditures. The company believes that free cash flow provides investors a better understanding of the company's liquidity position. The company believes that EBITDA is a useful tool for managing the operations of its business and is an indicator of the company's ability to incur and service indebtedness and generate free cash flow. EBITDA is used as the primary performance measure in the company's 2014 Omnibus Equity and Incentive Compensation Plan. Furthermore, pursuant to the terms of our credit facility, EBITDA is used to determine the company's compliance with certain financial covenants. The company also believes that EBITDA measures are commonly reported and widely used by investors and other interested parties as measures of a company's operating performance and debt servicing ability because EBITDA measures assist in comparing performance on a consistent basis without regard to depreciation or amortization, which can vary significantly depending upon accounting methods and non-operating factors (such as historical cost). EBITDA is also a widely- accepted financial indicator of a company's ability to incur and service indebtedness.

EBITDA should not be considered an alternative to (a) income from operations or net income (loss) as a measure of operating performance; (b) cash flows provided by operating, investing and financing activities (as determined in accordance with GAAP) as a measure of the company's ability to meet its cash needs; or (c) any other indicator of performance or liquidity that has been determined in accordance with GAAP.

The company defines adjusted EBITDA, adjusted EBIT, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted operating income, adjusted EPS, adjusted income tax expense, adjusted SD&A, respectively, excluding the impact of asset impairment charges, Project Centennial consulting costs, lease terminations and legal settlements, acquisition-related costs, and pension plan settlements. Adjusted income tax expense also excludes the impact of tax reform. The company believes that these measures, when considered together with its GAAP financial results, provides management and investors with a more complete understanding of its business operating results, including underlying trends, by excluding the effects of certain charges.

The company defines net debt as total debt less cash and cash equivalents. Net debt to EBITDA is used as a measure of financial leverage employed by the company. The company defines free cash flow as operating cash flow minus capital expenditures. The company believes that free cash flow provides investors a better understanding of the company's liquidity position. Gross margin excluding depreciation and amortization is used as a performance measure to provide additional transparent information regarding our results of operations on a consolidated and segment basis. Changes in depreciation and amortization are separately discussed and include depreciation and amortization for materials, supplies, labor and other production costs and operating activities.

Presentation of gross margin includes depreciation and amortization in the materials, supplies, labor and other production costs according to GAAP. Our method of presenting gross margin excludes the depreciation and amortization components, as discussed above.

The reconciliations attached provide reconciliations of the non-GAAP measures used in this presentation or release to the most comparable GAAP financial measure.