Investor Update August 7, 2020
We Welcome Welcome Strategic Priorities Growth Imperatives & Supply Chain Optimization Marketing & Innovation Strategy Brand Portfolio Strategy J.T. Rieck Acquisition Strategy Senior Vice President, Financial Review & Capital Allocation Finance & Investor Relations 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. 3
Welcome Strategic Strateg egic ic P Prio iorit itie ies Growth Imperatives & Supply Chain Optimization Priorities Driving Brand Relevance Brand Portfolio Strategy Acquisition Strategy Financial Review & Capital Allocation Ryals Question & Answer Session McMullian President & Chief Executive Officer
Today’s Agenda Strategic Priorities AGENDA 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 5
Flowers Team – Meeting Unprecedented Challenges 6
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 COMPONENT NTS OF Q2’20 S SALES G GROWTH ( (MILLIONS) ADJUSTED TED E EBITD TDA ( (MILLIONS) S) 1 $129 $140 +5.1 % +5 $106 +21 % +2 $120 GROWTH 12.5% GROWTH $100 Margin 10.8% $80 Margin $60 $40 $20 $0 Q2'19 Q2'20 (1) Earnings before interest, taxes, depreciation & amortization, adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation. 7
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 8
Strategic Priorities Aligned to Long-term Growth Targets DEVEL ELOP T P TEAM AM FOCUS O ON BRAN ANDS Capabilities to build brands Enhance relevancy and create value and expand presence PRIOR ORITIZE M MARGINS SMA MART M& M& A Optimize portfolio Proactive M&A in the and supply chain grain-based foods arena 9
Enhanced Organizational Structure Better prioritizing • Chief Brand Officer responsible for managing the brand portfolio brand building, and prioritizing brand-building investments cake turnaround, and foodservice • Chief Marketing Officer to lead stand-alone innovation function profitability • 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 10
Growing Sales with Iconic Brands • Build brands through insights, innovation, and marketing • Capitalize on portfolio opportunities FL FLOWERS’ BRA RANDED PR PRODUCTS D DRI RIVIN ING T TOP P LINE CAGR CAGR 5.3 % $ 2.7B 5.7 % FY - 15 18 LTM - 20 ¹ 14 $ 2.2B $ 1.6B $ 1.6B Branded Sales Non-branded Sales 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 SALES MIX 1 Recent results demonstrate • Clarified brand strategy Total sales up 5.3% y/y; branded retail up 12.5% y/y impact of shift to drive margin to branded retail expansion Non-Retail & Other $915M • Prioritizing a more Store profitable product mix Branded Retail Branded $627M • Repurposing capacity Retail $2.718B to grow branded retail business (1) 52 weeks ended Q2 2020 12
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