THIRD Q QUAR ARTER 2 2018 018 R REVI VIEW & & INVE VESTOR O OVERVI VIEW NOVEMBER 8, 2018
REGARDING FORWARD-LOOKING STATEMENTS Statements contained in this press release 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 release 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, including as a result of product recalls or safety concerns related to our products, (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
THIRD Q QUARTER 2 2018 8 REVIEW
HIGHLIGHTS: Announced acquisition of Canyon Bakehouse, a leading producer • of gluten-free bakery products Achieved record market share – ninth straight quarter • • Top 3 brands – Nature’s Own, Dave’s Killer Bread, Wonder – gained share • Began operation of a high-speed bun line in Pennsylvania, announced closure of an inefficient bakery in Vermont Despite progress on strategic priorities, challenging environment • impacted third quarter financial results and outlook 4
CANYON BAKEHOUSE ACQUISITION BY THE NUMBERS An n Inno nnovativ ive Leade der i in n Growing Glut uten-Free C ee Categ egory 206 • 21 gluten-free breads, buns, bagels, English muffins, and specialty items Transa nsaction D Details Employees • Top gluten-free loaf brand in natural and specialty food stores 1 • $205M, or $175M 165,625 sq. ft. • #2 brand in overall gluten-free loaf category 2 net future tax Recently constructed bakery • Fastest-growing gluten-free bread loaf brand in the U.S. 2 benefits of ~$30M with two production lines • Funded with cash Provi vides es E Entrance e to New ew Categ egory, A Advances es S Strategic P Plans on-hand and ~$ 70 M - $80 M • existing credit Creates value with addition of fast-growing brand in growing category Expected FY2019 sales facilities • Leverages Flowers’ powerful distribution network and retail partnerships ~ 45% • Expected to be to bring Canyon Bakehouse products to more consumers across the accretive to fiscal country Generated CAGR since 2014 2020 earnings 6.6% • Expected to close CAGR per year of gluten-free later in 4Q 2018, bread market since 2015, subject to outperforming broader retail regulatory approval baked goods market 3 and customary closing conditions (1) SPINS Natural and Specialty Outlet Gluten Free Loaf Bread for 52 Weeks Ending 10-07-18 (2) IRI Custom Database MultiOutlet + SPINS Natural and Specialty Gluten Free Loaf Bread for 12 Weeks Ending 10-07-18 5 (3) IRI Custom Database MultiOutlet Gluten Free Fresh Packaged Bread for Fiscal Year 2015 vs 52 Week Ending 10-07-18 and SPINS Database for Fiscal Year 2015 vs 52 Week Ending 10-07-18
Q3 2018 FINANCIAL REVIEW CASH FLOWS NET SALES $923.4M (1.0)% Cash from Ops = $83.4 million • Price/Mix 2.5%; Volume (3.5)% • Capex = $25.5 million • Volume declines from cycling prior-year • Dividends = $38.0 million • hurricane activity, lower cake and foodservice; partially offset by DKB growth, new products, expansion markets, and pricing ADJ. EBITDA 1 $97.5M DILUTED EPS $0.19 ADJ. DILUTED EPS 2 $0.23 Decreased 13.2% • 10.6% of sales, down 140bps Reduced adj. EBITDA offset by lower tax rate • • and lower net interest expense Margin impacted by lower volumes and • elevated input and transportation costs (1) Earnings before interest, taxes, depreciation & amortization, adjusted for matters affecting (2) Adjusted for matters affecting comparability. See non-GAAP comparability. See non-GAAP reconciliations at the end of this slide presentation. reconciliations at the end of this slide presentation. 6
REVISED FY 2018 OUTLOOK (AS O F N O VEMBER 7 , 2 0 1 8 ) OTHER Flat to +1.6% REVENUE CHG $145 to $150 million Depreciation & Amortization Net interest expense $7 to $8 million $0.76 to $0.81 GAAP EPS Effective tax rate 25.0% to 26.0% Diluted shares outstanding ~211.0 million $0.90 to $0.95 ADJ EPS 1 Capital expenditures $95 to $105 million (1) Adjusted for matters affecting comparability. See non-GAAP reconciliations at the end of this slide presentation. 7
OBJECTIVES FOR 2019 & BEYOND • Deliver organic sales growth above categories • Pursue accretive M&A opportunities • Target long-term sales growth of 3% to 4% • Execute on initiatives to realize 250bps of EBITDA margin expansion by fiscal 2021 • Achieve long-term diluted EPS CAGR of 8%-10% • Dividend yield of 2%-3% Taking Decisive Action to Reduce Costs, Drive Growth, and Create Shareholder Value 8
KEY TAKEAWAYS • Strong brands and a team committed to transforming the company • Clear objectives to grow sales, expand margins, and deliver shareholder value • Executing today with urgency on initiatives to reinvigorate the core, reduce costs to generate fuel for growth, and improve financial performance • Positioning Flowers to deliver sustainable long-term value 9
INVESTOR O OVERVIEW
LEADIN ING F FRE RESH SH B BAKERY B BRA RANDS DRI DRIVE O OUR R BUSIN SINESS Sales Overview Brand Portfolio Highlights TTM* Sales $3.9 billion Branded #1 loaf bread brand breads 49% Store branded #1 organic bread brand retail 15% Branded retail 59% Non-retail & other 98% consumer awareness 24% Branded snack cakes Iconic snack cakes since 1914 12% * 52 weeks ended Q3 2018 11 Source: SDW DSD + WD 52 Weeks Ending October 6, 2018
OPERATIONS OVERVIEW 47 Channels served • Grocery / Mass Operating Bakeries • Natural & Organic • Club & Dollar, C-store • E-commerce Direct-store-distribution access to • Foodservice & Vending 85 % of the U.S. 5,500 population 9,800 independent employees Warehouse distribution NATIONWIDE distributors Information as of year-end fiscal 2017 12
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