Regarding Forward-looking statements/media/Files/F/... · $232.1 $257.3 $267.3 $294.1 $314.7 FY 2015 FY 2016 FY 2017 FY 2018 TTM 19Q3 8 Smart, Disciplined M&A Driving Share Gains

Investor PresentationNovember 2019

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, 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 presentation and that may affect the company's prospects in general include, but are not limited to, (a) general economic and business conditions and the competitive conditions in the baked foods industry, including promotional and price competition, (b) 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, (c) the success of productivity improvements and new product introductions, (d) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer's business, (e) fluctuations in commodity pricing, (f) energy and raw material costs and availability and hedging and counterparty risk, (g) our ability to fully integrate recent acquisitions into our business, (h) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value, (i) 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, (j) consolidation within the baking industry and related industries, (k) 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, (l) increasing legal complexity and legal proceedings that we are or may become subject to, (m) product recalls or safety concerns related to our products, and (n) 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.

2

Information Regarding Forward-Looking Statements

Flowers Investment Highlights

3

Priorities to Drive Margins

Leading Brands in a Large and Stable

Market

Focus on Shareholder

Returns

Executing on strategies designed to manage costs, leverage data-driven insights, and reposition our company for success

Operate the #1 organic bread and loaf bread brands in Dave’s Killer Breadand Nature’s Own, respectively, and recently-acquired Canyon Bakehouse, the #1 and fastest growing gluten-free bread brand in the U.S.

Dividend paid in 69 consecutive quarters and a management team that is aligned with shareholder interests

Growth in Underdeveloped

Markets

Strategy developed to capitalize on underdeveloped regions and build share in $32-billion fresh bakery market

BusinessOverview

Business Overview

Value Creation Strategy

Financial Review & Outlook

#1 loaf bread brand

#1 organic bread brand

#1 and FASTEST GROWING gluten-free

bread brand in U.S.

98% consumer awareness

Iconic snack cakes since 1914

5

Leading Fresh Bakery Brands Drive Our Business

Non-retail & other25%

Branded Breads50%

Branded Snack Cakes10%

Branded retail59%

SALES OVERVIEW BRAND PORTFOLIO HIGHLIGHTS

* 52 weeks ended Q3 2019Source: Internal Sales Data Warehouse 52 Weeks Ending Oct 5, 2019

Store branded

retail16%

TTM* Sales

$4.1B

6

Fresh Bakery Market Overview

$23.1 $23.7 $23.9 $24.0 $24.2

$-

$5.0

$10 .0

$15 .0

$20 .0

$25 .0

$30 .0

2014 2015 2016 2017 2018

$ in Billions

Large and stable market

$32B FRESH BAKERY MARKETRETAIL & FOODSERVICE US FRESH BAKERY - RETAIL OUTLETS

$7.4BFoodservice1

1. Data for Retail Outlets sourced from IRI. FY 2018.2. Data for Foodservice sourced from Techonomic 2018

$24.2BRetail Breads,

Snack Cakes, Tortillas2

7

Improving Competitive Position

17.2% Flowers

29.3% BBU/

Sara Lee

6.1% Pepperidge

Farm

24.5% Independent

bakers

22.9% Store brands

0.5

0.4

0.6

0.5

0.4

0.9 0.9 0.9

0.8

17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3

IRI Flowers custom data base Total US MultiOutlet – 12 weeks ended 6-Oct-2019

#2 Baker and Growing Share

FRESH PACKAGED BREADS SHARE FLOWERS MARKET SHARE CHANGE

$232.1 $257.3 $267.3

$294.1 $314.7

FY 2015 FY 2016 FY 2017 FY 2018 TTM 19Q3

8

Smart, Disciplined M&A Driving Share Gains

Organic Segment Source: Flowers Custom Database – IRi Total US Multi Outlet + C StoreGluten-free Segment Source: IRI Custom Scan Data Total US Multi Outlet + C Store combined with SPINS Total US Natural & Specialty Gourmet Channel

Capturing growth by anticipating shifting consumer preferences

TOTAL ORGANIC FRESH PACKAGED BREADS

TOTAL GLUTEN-FREE FRESH PACKAGED BREADS

$283.2

$365.0

$497.5

$613.0 $677.0

FY 2015 FY 2016 FY 2017 FY 2018 TTM 19Q3

FLO Share

63.8%FLO

Share 23.2%

$ in Millions

Underdeveloped Markets Provide Upside

9 IRI Flowers custom data base Total US Multi Outlet + Convenience – 12 weeks ending Oct 6, 2019

15.2

35.4

25.7

23.7

5.3

27.842.4

24.5

29.2

25.1

23.1

22.6

8.8

32.0

37.2

22.0

FRESH PACKAGED BREADS CATEGORY DOLLAR SHARE IN THE US

■ Flowers

■ Bimbo USA

■ Store Brands

■ Independents

Substantial room to grow share

CALIFORNIA & WEST

MID SOUTH, SOUTH CENTRAL, & SOUTHEAST

NORTHEASTGREAT LAKES & PLAINS

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Well Positioned as E-Commerce Accelerates

$242

$365

$538

$0

$10 0

$20 0

$30 0

$40 0

$50 0

$60 0

TTM 10/8/17 TTM 10/7/18 TTM 10/6/19

Fresh Bakery E-Commerce Channel Facts:

• $538M channel, +47% YOY growth1

• E-commerce is ~4% of total fresh bread & rolls category2

• Flowers’ leading brands provide a competitive advantage in the E-commerce channel

FRESH BREAD & ROLLS E-COMMERCE CHANNEL

1. IRI Syndicated E Market Highlights, 52 weeks ended Oct 6, 20192. IRI Syndicated E Market Highlights, FLO dollar share for 13 weeks ended Oct 6, 2019

$ in Millions

Broad Scale Is a Platform for Profitable Growth

47Operating bakeries

of the U.S. population

Warehouse distribution NATIONWIDE

Channels servedGrocery / Mass

Natural & Organic

Club & Dollar, C-store

E-commerce

Foodservice & Vending

9,200 employees

5,900IDP* territories

85%

Direct-store-distribution access to

11Information as of year-end fiscal 2018* “IDP” – Independent Distributor Partners

Value CreationStrategy

Business Overview



PRIORITIZE MARGINS

• Reduce organizational and indirect costs

• Strategic pricing

• Optimize portfolio and network

DEVELOP TEAM

• Restructure around priorities, drive execution

• Add critical capabilities to build brands, manage costs, and deliver insights

SMART M&A

• Proactive M&A in product and geographic adjacencies in the baked foods category

• Pivot portfolio to growing bakery segments

Project Centennial Defined our Strategic Priorities

13

FOCUS ON BRANDS

• Prioritize national brands

• Invest in brand growth and innovation

• Streamline product assortment

We're Delivering on the Playbook

14

HIGHLIGHTS

2017 2018 2019

TEAMDesigned new organization

and hired CMO

Stood up business units and created PG&S*,

FP&A* teams

Updated incentive compensation framework

BRANDSLaunched DKB breakfast

lineLaunched Nature’s Own

Perfectly Crafted lineNew ads for Nature’s

Own, Wonder

MARGINS~$32M gross savings primarily from lower

indirect spend

~$48M gross savings primarily from headcount

reductionStrategic pricing

M&A Created S&V* teamAcquired Canyon

BakehouseHired VP Corp Dev

* PG&S: Purchased Goods & Services, FP&A: Financial Planning & Analysis, S&V: Strategy & Ventures

New Org Structure Enables Execution on Strategic Priorities

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Aligned with Strategy

National

Clarified Portfolio Roles

Centralized

Metrics that Matter

Predictive Analytics

Regional

LEGACY ORGANIZATION NEW WAYS OF WORKING

Locally Managed

Duplicated

Overlapping

Inconsistent

Historical Reporting

Perspective

Brand Strategies

Cost Management

Responsibilities

KPIs

Insights

Providing a foundation for the company we want to become

Innovation and Marketing Investments in Key Brands

16

Wonder Honey Buns drive in-store

displays

New media campaigns for Nature’s Own and Wonder

Power of strategic partnerships: USO/Wonder/Tastykake

Nature’s Own Perfectly Crafted driving brand share growth

Tastykake Scoop Shop innovation driving

brand growth

Dave’s Killer Bread national launch of

organic English Muffins

Canyon Bakehouse #lovebreadagain campaign encourages fans to look for

new Stay Fresh items

Prioritizing Margin with Portfolio, Network Review

17

Drive profitability with…

Orient the Portfolio to… Optimize Network for…

• High-potential brands

• Disruptive innovation

• Value-over-volume

• Strategic customers

• Underdeveloped segments

• Today’s customer trends

• National scale

• Omni-channel

• Reduced complexity

• Workforce productivity

✓ Higher brand value

✓ Improved marketing ROI

✓ Profitable volume growth

✓ Capacity utilization

✓ Distribution efficiencies

✓ More scalable cost structure

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Pursue Smart M&A in Adjacencies

Disciplined approach to M&A to expand position and diversify in high-growth bakery categories GROW IN-STORE

BAKERY/DELI

• Grow specialty brands on the store perimeter

• Focus on platform assets that bring new capabilities

BUILD ON LEADING FOODSERVICE POSITION

• Expanding share of growing specialty products

• Leverage scale to be a strategic partner with foodservice customers

GROW BAKED SNACKS

• Evolve cake strategy to leverage dual-brand capabilities

• Further diversify into snacking


Business Overview



Project Centennial Roadmap

FY 2017 – 2018 FY 2019 & Beyond

Focus• Generate savings

• Design future organization

• Invest in growth

• Leverage capabilities

Targets• Sales growth: flat to +2%

• EBITDA margins: ~12% to 13%

• Sales growth: 3% to 4%

• EBITDA margins: ~13% to 14%

ProgressUpdate/Commentary

✓ Gross savings of $80M

✓ New org structure in place

✓ Sales growth on-target

× Margins impacted byinflationary headwinds

• Sales growth from DKB, Canyon, strategic pricing

• Margin targets pressured by product mix, soft volumes, inflation, competitive environment

• Margin target timeline extended beyond 2021, enabled by multi-year portfolio and network optimization initiatives

20

Financial Progress Impacted by Inflationary Pressures

21

Taking action to:

• Rationalize pricing

• Reduce stales & scrap

• Improve efficiencies

• Build a career-focused team

• Prioritize value over volume

• Address network complexity

% CHANGE: YE16 THROUGH 19Q3-TTM

4.1%

6.2%

8.3%

11.0%

2.4%

-3.3%

-6.8%-7.0%

-5.0%

-3.0%

-1.0%

1.0 %

3.0 %

5.0 %

7.0 %

9.0 %

11. 0%

13. 0%

✓ Delivered topline target ✓ Leveraged

indirect costs

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

22

Track Record of Growing Free Cash Flow & Dividends

* Cash provided by operating activities less purchase of plant, property, and equipment. See non-GAAP reconciliations at the end of this slide presentation.Note: FY03, FY08, FY14 were 53 weeks.

$-

$50

$100

$150

$200

$250

$300

Free Cash Flow* Dividends Paid

Strong free cash flow growth supports investments in the business, M&A strategy and capital returns

$ in Millions

FREE CASH FLOW AND DIVIDEND GROWTH

Top Line Drivers

• Market share gains

• Strategic acquisitions

Cash Flow Drivers

• Growing sales

• Focus on cash margins

• Predictable capex

Balanced Capital Allocation

23 *53-week year

Capital Allocation Principles:

• Capex to support core business growth

• Maintain investment grade credit rating

• Support strong dividend

• Smart, disciplined acquisitions

• Opportunistic share repurchases

$102 $120 $131 $141 $150 $158

$39 $7 $126 $3 $2 $7

$395

$200 $200

14FY* 15FY 16FY 17FY 18FY TTM 19Q3

Dividends Share Repurchases Cash for Acquisitions

$ in Millions

CAPITAL ALLOCATION

24

Investment-Grade Credit Rating Commitment

MAINTAINING FLEXIBILITY TO CAPITALIZE ON VALUE-CREATING OPPORTUNITIES

$984 $928

$805

$980 $878

15FY 16FY 17FY 18FY 19Q3

Total Debt (ex-lease liabilities)

Track-record of debt reduction following acquisitions

Aggregate Maturities* at 19Q3

At 19Q3, leverage ratio of 2.1X, ~$610M available liquidity on undrawn borrowing arrangements

*Maturities exclude unamortized debt discount and issuance costs

$- $4

$70

$410

$-

$400

Rem/19FY 20FY 21FY 22FY 23FY 24FY+

(Amounts in millions)

Q3 2019 Financial Review

25

NET SALES $966.6M +4.7% v PY

• Canyon acquisition +2.2%

• Price/Mix +2.1%; Volume +0.4%

• Growth from DKB, new products and pricing, offset by volume declines in non-retail & cake

CASH FLOWS - YTD

• Cash from Ops = $278.1 million

• Capex = $70.6 million

• Dividends = $119.8 million

• Debt paydown = $102.5 million

NET INCOME $43.4M +9.4% v PY

ADJ. EBITDA1 $95.1M -2.3% v PY

• Adj. EBITDA was 9.8% of sales, down 70 bps

• Adj. EBITDA decreased primarily due to higher workforce-related costs and marketing expenses

GAAP DILUTED EPS $0.20 +$0.01 v PY

ADJ. DILUTED EPS2 $0.22 -$0.01 v PY• GAAP EPS increased primarily due to lower

legal settlements, adj. EPS decreased primarily due to lower adj. EBITDA

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

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

FY 2019 Outlook (Revised November 6, 2019)

261. Canyon Bakehouse expected to contribute 1.8% to 2.0% of overall sales growth.2. Adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation.

Factors Affecting Outlook:

• Category volume elasticities

• Commodity market volatility may affect promotional environment

• Labor markets remain tight with higher wages

• Higher bakery workforce turnover is driving reduced manufacturing efficiencies

• Freight costs remain elevated

REVENUE CHG(1) GAAP EPS: $0.93 to $0.98

ADJ(2) EPS: $0.94 to $0.99

OTHER

+4.0% to +4.5%

Depreciation & amortization —$145 to $150 million

Other pension expense —$2.5 to $3.0 million

Net interest expense —$11 to $12 million

Effective tax rate —23.0% to 23.5%

Diluted shares outstanding —Approx. 212.0 million

Capital expenditures —$100 to $110 million

27

Our VisionAs America’s premier baker, we craft foods that make people smile. We are driven by a passion to boldly grow our business through inspiring leadership, teamwork, and creativity.

Today

1919

1968

1968 to 2018

One family-owned bakery in Thomasville, GA

More than 100 acquisitions

Listed publicly as FLO

Proudly Celebrating 100 Years!

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 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 EBIT as earnings before interest and taxes and EBITDA as earnings before interest, taxes, depreciation and amortization. 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. 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 expenses, 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 EBIT and adjusted EBITDA also exclude other components of net periodic pension and postretirement benefits expense (credit). 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 ratio of debt to EBITDA is used as a measure of financial leverage employed by the company. 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 in accordance with 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.

28

Reconciliation of Non-GAAP Financial Measures

29

For the 12 Week

Period Ended

For the 16 Week

Period Ended

For the 12 Week

Period Ended

For the 12 Week

Period Ended

Trailing 52 Week

Period Ended

52 Week Period

Ended

December 29, 2018 April 20, 2019 July 13, 2019 October 5, 2019 October 5, 2019 December 31, 2016

Net income 20,841$ 65,866$ 53,095$ 43,358$ 183,160$ 163,776$

Income tax expense 5,634 20,199 15,951 12,442 54,226 85,761

Interest expense, net 1,717 3,824 2,769 2,334 10,644 14,353

Depreciation and amortization 32,175 44,819 33,329 33,196 143,519 140,869

EBITDA 60,367 134,708 105,144 91,330 391,549 404,759

Other pension cost (benefit) 675 692 519 518 2,404 (5,638)

Pension plan settlement loss 1,148 - - - 1,148 6,646

Project Centennial consulting costs 347 - - - 347 6,324

Acquisition-related costs 4,476 22 - - 4,498 -

Restructuring and related impairment charges 7,210 718 2,047 3,277 13,252 -

Impairment of assets 3,516 - - - 3,516 24,877

Legal settlements (recovery) (164) 150 (1,286) - (1,300) 10,500

Executive retirement agreement - 1,331 (568) - 763 -

Loss (recovery) on inferior ingredients 1,219 (413) - - 806 -

Adjusted EBITDA 78,794$ 137,208$ 105,856$ 95,125$ 416,983$ 447,468$

Adjusted EBITDA % change 52 weeks ended

10/5/2019 vs. 52 weeks ended 12/31/2016 -6.8%

Reconciliation of Net Income to Adjusted EBITDA

Flowers Foods, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(000's omitted)


30

Net income per diluted common share 0.93$ to 0.98$

(Recovery) loss on inferior ingredients NM NM

Restructuring and related impairment charges 0.02 0.02

Legal settlements (recovery) NM NM

Executive retirement agreement NM NM

Canyon acquisition costs NM NM

Adjusted net income per diluted common share 0.94$ to 0.99$

NM - not meaningful.

Certain amounts may not add due to rounding.

Range Estimate

Flowers Foods, Inc.


Reconciliation of Earnings per Share - Full Year Fiscal 2019 Guidance

As of

October 5, 2019

Current maturities of long-term debt 3,714$

Long-term debt 874,284

Total debt 877,998

Less: Cash and cash equivalents 6,968

Net Debt 871,030$

Adjusted EBITDA for the Trailing Twelve Months Ended Oct 5, 2019 416,983$

Ratio of Net Debt to Trailing Twelve Month EBITDA 2.1

Reconciliation of Debt to Net Debt and Calculation of Net

Debt to Trailing Twelve Month Adjusted EBITDA Ratio

Flowers Foods, Inc.


(000's omitted)


31

Time Period

Cash Provided by

Operating

Activities

Purchase of Plant,

Property and

Equipment Free Cash Flow

3Q19 TTM 341,934$ 95,040$ 246,894$

FY18 295,893 99,422 196,471

FY17 297,389 75,232 222,157

FY16 356,562 101,727 254,835

FY15 335,674 90,773 244,901

FY14 315,183 83,778 231,405

FY13 270,484 99,181 171,303

FY12 216,880 67,259 149,621

FY11 134,290 79,162 55,128

FY10 306,050 98,404 207,646

FY09 236,009 72,093 163,916

FY08 94,872 86,861 8,011

FY07 214,598 88,125 126,473

FY06 151,276 61,792 89,484

FY05 113,979 58,846 55,133

FY04 123,068 46,029 77,039

FY03 87,989$ 43,618$ 44,371$

* Cash provided by operating activities less purchase of plant, property and equipment.

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow*

Flowers Foods, Inc.


(000's omitted)

Documents

Regarding Forward-looking statements/media/Files/F/... · $232.1 $257.3 $267.3 $294.1 $314.7 FY 2015 FY 2016 FY 2017 FY 2018 TTM 19Q3 8 Smart, Disciplined M&A Driving Share Gains