Hostess Brands, Inc.

We've transformed the portfolio. We're well positioned for growth. This is not the old hostess. This is us.

Good morning and welcome to Hostess Brands 2022 Investor Day. I'm Amit Sharma, Vice President of Investor Relations. While we would certainly prefer to be with you in person today, we thank you for joining us virtually on this busy morning and look forward to spending the next few hours together. Before I provide an overview of the agenda for today, a reminder that today's presentation is subject to our disclosure on forward-looking statements. Please take a minute to review this slide. By now, everyone should have access to our earnings release and investor presentations, which are also available on our website at www.hostessbrands.com. This presentation is being webcast and a replay will be available on our website. During the course of this presentation, management will make a number of forward-looking statements, including expectations and assumptions regarding the company's future performance. Actual results may differ materially from these forward-looking statements, and we undertake no obligation to update or revise these forward-looking statements. A detailed list of these risks and uncertainties can be found in today's earnings release and in our SEC filings. We will be making a number of references to non-GAAP financial measures that we believe provide useful information to investors. A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release and presentation. We have an exciting agenda for you today. We are not only proud to share our outstanding performance in 2021 and the strong 2022 guidance, but more importantly, we are excited to share our vision for the next phase of growth for hostess brands. Andy Callahan, our CEO, will kick it off, followed by Mike Jernigan, our interim CFO and chief accounting officer, with a discussion of our fourth quarter and full year performance. We'll then dive into the heart of today's presentation with a deep dive into the next phase of Hostess Brands growth. where Andy, along with Dan O'Leary, our Chief Growth Officer, and Tina Lambert, VP of Growth and Innovation, will discuss how we are poised to unlock the exciting growth opportunities that lie ahead for hostess brands. Mike Jernigan will then come back and show us how that growth translates into an attractive long-term growth algorithm before Andy wraps it up with a few closing comments. A quick call out on logistics today. We'll have a short break after prepared comments before we begin a live question and answer session with today's presenters. You may ask questions at any time during today's presentation by typing them in the Q&A box. You're in for a treat today. And with that, let me hand it over to our CEO and President, Andy Callahan.

Good morning, everyone. I'm Andy Callahan, CEO of Hostess Brands. I'm thrilled to have the chance to introduce to you the new Hostess Brands and a few of the talented leaders building our future. At the end of today's Investor Day, I believe you will walk away with an elevated understanding of why we are so confident in our future. And you will be able to see that we are a differentiated snacking company with an advantaged business model that will drive sustained, profitable growth. We are proud of our progress. Since going public five years ago, we've built a world-class team and a strong, growing snacking business, including our addition of Vortman in 2020. We have the strong foundation of our iconic 100-year-old brands and have successfully emerged from the SPAC with a simplified equity structure, advanced talent and capabilities, and an expanded brand portfolio to launch us into the next phase of growth. Today, we are a transformationally different company than we were five years ago. We are revealing our new corporate look and logo, reflecting a more modern, agile growth company that will continue to scale. We will also tell you today about the differentiated results the new Hostess Brands now has a proven track record of delivering. And finally, you are going to hear about our path forward and why you should believe, like I do, that Hostess Brands is differentiated as one of the strongest North American pure play snacking companies in the market. Now, to summarize what you are going to learn today about the new Hostess Brands. First, we have built a fantastic foundation. We are proud of our strong performance during an unprecedented period of volatility and challenges. But we are even more excited about the future as we catapult into our next phase of growth. Second, we are building a snacking powerhouse with unique access to broad, fast-growing snacking occasions and a best-in-class business model that fits perfectly for our impulse-driven categories. And we are accelerating innovation, marketing, and consumer-facing capabilities to fully unlock the power of our iconic brands. Finally, we are confident in our ability to deliver top-tier financial performance over the long term, and today we'll introduce our new long-term growth algorithm. In addition to everything you will learn about our organic growth model today, Our strong cash flows and flexible balance sheet enable us to pursue strategic opportunities within the wider snacking universe that will unlock additional shareholder value. We've just wrapped up a fantastic 2021, and as you will see, we have strong momentum as we look ahead. Before I hand it over to Mike for a detailed review of our fourth quarter and full year earnings, let me highlight some takeaways from our strong fourth quarter, which caps off another outstanding year for Hostess Brands. And what a terrific year we had. Our sales, EBITDA, and EPS increased by strong double digits in the fourth quarter and meaningfully accelerated relative to year-to-date trends, demonstrating the strength of our business and our continued momentum, even as we continue to face industry-wide inflation and supply chain headwinds. With 16.1% net sales growth in the quarter, the fourth quarter was our 17th consecutive quarter of positive revenue growth and the eighth consecutive quarter of at least 9% sales growth, reflecting strong innovation and retail execution. Let me say that again. We just completed our eighth consecutive quarter of at least 9% sales growth. At the same time, fourth quarter gross margins of 37.2% and EBITDA margins of 24.6% were largely flat versus year-ago levels, even as we faced double-digit inflation in the quarter. We grew over 16%. maintained margins relatively flat despite double-digit inflation, and invested in growth. Wow. The hostess team showcased its strength, resilience, and agility, delivering record results despite facing one of the toughest operating environments in decades. While our sales and profits reached record high levels in 2021, With both net revenues and EBITDA growing by double digits, we were also lapping strong double-digit growth in 2020. In fact, on a two-year basis, our net revenue is up nearly 25%, with EBITDA growing even faster as we continue to deliver on our promise made at our 2019 Investor Day of sustainable, profitable growth. Our strong top line reflects outstanding performance in the measured channels. Our sweet baked goods point of sale was up over 14% for the last 52 weeks, with our share of the category increasing by 187 basis points to 21.3%, with record high market share in several channels, including our high growth, high margin convenience store channel. Our retail success is built on our outstanding execution, greater marketing investments, and strong new product innovation, which you will hear much more about through the rest of the presentations today. 2021 was our highest innovation year yet, and it is likely not a surprise that we led the category in the innovation growth as our new baby bunts continue to delight consumers with growing penetration and repeat. Our success at retail has come during a period in which we implemented multiple pricing actions. We have continued to upgrade our data, analytics, and shopper insight capabilities, and that's clearly visible in the agility, nimbleness, and timeliness with which our sales team proactively and successfully engage with our retail customers for multiple pricing actions in a fast-paced inflationary environment. We are proud of our top line growth and we are equally proud of our strong margins during a period of unprecedented inflationary headwinds, labor challenges and supply shortages. We are one of the very few food companies to post relatively flat gross margins and EBITDA margins in 2021. And we accomplished this while making incremental investments behind growth. This is a clear testament to the strong equity of our premium branded portfolio, advantage business model, and relentless focus on execution and efficiency. You will hear more about this from Mike. And that has positioned us to deliver an increase in total shareholder value of nearly 80% over the last three years, well ahead of our food peers. What a strong year we had. And I'm even more excited about our future. We delivered these amazing results due largely to the hard work and dedication of our great people. I want to sincerely thank all of the Hostess heroes out there working relentlessly to make Hostess the great company it is today. They are the backbone that will allow us to continue to bring joy to our consumers and customers while delivering great results as we move into our next phase of growth. Now, Mike is going to take you through our strong 2021 results and outlook for 2022 before we get into the heart of today's discussion on our long-term strategic agenda and why we feel confident in our ability to continue to deliver industry-leading shareholder returns.