THOMASVILLE, Ga., Aug. 19 /PRNewswire-FirstCall/ -- Flowers Foods
(NYSE: FLO) today reported results for its 12-week second quarter
and 28-week first half ended July 18, 2009. The company also
updated its sales guidance for the year. (Logo:
http://www.newscom.com/cgi-bin/prnh/20080530/CLF007LOGO )
Highlights: -- Increased second quarter sales 13.6% -- Delivered
operating margin of 8.0% of sales, a 34.4% increase -- Delivered
diluted earnings per share of $.33 for the quarter, a 26.9%
increase; includes a gain on acquisition of $.02 per diluted share
relating to a May 2009 acquisition -- Generated net cash from
operating activities of $55.6 million -- Increased branded retail
sales by 10.7% -- Maintained earnings guidance of $1.37 to $1.48
per diluted share, excluding the gain on acquisition of $.02;
revised sales guidance for fiscal 2009 George E. Deese, Flowers
Foods' Chairman, CEO, and President said, "Our team continues to
deliver good results in the face of a challenging marketplace. We
increased our overall sales by 13.6%, driven by the impressive
expansion of our branded sales and sales from last year's
acquisitions. The success of our strategic acquisitions, combined
with our efforts to improve costs and increase efficiencies, drove
our earnings and helped us deliver improved operating margins."
Commenting on updated 2009 sales guidance, Deese said, "We now
expect sales growth of 9.7% to 11.0%, which takes into
consideration the impact the economy has had on consumer spending
and certain competitive dynamics in the marketplace. However, we
have improved input costs in the second half, so we are maintaining
our earnings guidance for the year, excluding the $.02 gain on
acquisition. We expect to deliver solid earnings performance of
4.8% of sales to 5.1% of sales. Going forward, we will continue to
seek sustainable growth, manage our resources and operations
wisely, and invest prudently to create shareholder value over the
long term. Our business strategies have served us well for many
years in all economic environments and we remain committed to those
strategies." Second Quarter Results For the second quarter, sales
increased 13.6% to $614.4 million over the $540.7 million reported
for last year's second quarter. Net income attributable to Flowers
Foods was $30.3 million, or $.33 per diluted share, an increase of
26.7% over the $23.9 million, or $.26 per diluted share, reported
for the 2008 second quarter. The quarter's sales increase of 13.6%
was achieved through a favorable pricing/mix of 4.7%, acquisitions
contribution of 10.6%, partially offset by 1.7% lower volume.
Overall, the volume declines occurred primarily in the non-retail
channel. During the quarter, the company's direct-store-delivery
(DSD) sales grew at 15.1% due to a favorable pricing/mix of 3.4%,
acquisitions contribution of 12.1%, and a volume decline of .4%.
Sales through warehouse delivery increased 7.1%, reflecting
positive pricing/mix of 7.8% and the acquisition of a bakery mix
plant during the quarter that contributed 3.8%, which were
partially offset by volume declines of 4.5%. For the quarter, gross
margin as a percent of sales was flat at 45.7% compared to the
second quarter of 2008. While ingredient costs were up, decreases
in packaging and labor costs as a percent of sales and improved
manufacturing efficiencies offset the higher ingredient costs.
Selling, marketing, and administrative costs as a percent of sales
for the quarter were 35.3% compared to 36.6% in the prior year.
This improvement as a percent of sales was due primarily to
increased sales and lower employee-related costs as a percent of
sales. This decrease was achieved despite an increase in pension
expense this year as compared to last year. Depreciation and
amortization expenses for the second quarter remained relatively
stable as a percent of sales compared to the prior year despite
increases in both depreciation and amortization resulting from
acquisitions. Net interest income for the quarter decreased as a
result of increased interest expense due to debt incurred in
connection with the Holsum and ButterKrust acquisitions made in the
second half of last year. The effective tax rate for the quarter
was 36.6% as compared to 35.7% last year. This increase was the
result of state tax benefits recorded last year and lower earnings
of the company's variable interest entity this year as compared to
last year. During the second quarter of 2009, the company recorded
a gain on acquisition of $3.0 million, or $.02 per diluted share
after tax, relating to a mix business acquired in May 2009. The
fair value of the identifiable assets acquired and liabilities
assumed exceeded the fair value of the consideration paid, and in
accordance with the new accounting standard on business
combinations, the resulting gain is recorded to the income
statement as part of operations. Operating margin for the second
quarter was $48.9 million, or 8.0% of sales, an increase of 34.4%
over the operating margin for the second quarter of 2008. EBITDA
for the quarter was $67.5 million, or 11.0% of sales, an increase
of 28.9% over last year's second quarter. During the second
quarter, the company invested $13.3 million in capital improvements
and paid dividends of $16.1 million to shareholders. This was the
27th consecutive quarterly dividend paid by Flowers Foods. During
the quarter, the company acquired 285,800 shares of its common
stock under its share repurchase plan for $6.0 million, an average
of $21.03 per share. This brings total repurchases for the year to
1,230,391 shares at a cost of $27.6 million, an average of $22.45
per share. Since the inception of the share repurchase plan in
2002, the company has acquired 22.1 million shares of its common
stock for $352.1 million, an average of $15.94 per share. The plan
authorizes the company to repurchase up to 30.0 million shares of
common stock. First Half Results Sales for the first half increased
16.8% to $1.42 billion over the $1.22 billion reported for the
first half of 2008. Net income attributable to Flowers Foods was
$67.7 million, or $.73 per diluted share, an increase of 13.4% over
the $59.7 million, or $.65 per diluted share, reported for the 2008
first half. The sales increase of 16.8% was achieved through a
favorable pricing/mix of 5.9%, contribution from acquisitions of
11.3%, and a volume decrease of .4%. Overall, the volume declines
occurred primarily in the non-retail channel. Year-to-date, the
company's DSD sales grew at 18.2% due to favorable pricing/mix of
4.0%, volume increases of .7%, and acquisitions contribution of
13.5%. Sales through warehouse delivery increased 10.3%, reflecting
positive pricing/mix of 11.6%, volume declines of 3.0%, and the
recently acquired mix business contribution of 1.7%. Gross margin
for the first half was 46.3% of sales compared to 47.1% in the
first half of 2008. This decrease was the result of higher
ingredient costs, partially offset by lower labor costs as a
percent of sales and improved manufacturing efficiencies. For the
first half, selling, marketing, and administrative costs as a
percent of sales were 35.9% compared to 36.9% last year. This
improvement was due primarily to increased sales and lower
employee-related costs. This decrease was achieved despite a
significant increase in pension expense this year as compared to
last year. Depreciation and amortization expenses for the first
half remained relatively stable as a percent of sales compared to
the prior year despite increases in both depreciation and
amortization resulting from acquisitions. Net interest income
year-to-date decreased as a result of increased interest expense
due to debt incurred in connection with the acquisitions made in
the second half of last year. The effective tax rate for the
year-to-date was 36.6% compared to 35.7% last year. This increase
was the result of state tax benefits recorded last year and lower
earnings of the company's variable interest entity this year as
compared to last year. The full-year tax rate is expected to be
approximately 36.5%. For the first half, operating margin was
$108.1 million, or 7.6% of sales, an increase of 19.4% compared to
last year's first half. EBITDA for the first half was $151.0
million, or 10.6% of sales, an increase of 18.5% over EBITDA for
the first half of 2008. Fiscal 2009 Guidance The company maintained
its earnings guidance and revised sales guidance for fiscal 2009,
which will be a 52-week year compared to 53 weeks in fiscal 2008.
Deese said the company now expects sales growth of 9.7% to 11.0%,
with acquisitions accounting for 6.5% to 7.0% of the increase. The
53rd week accounted for approximately 2.0% of sales for fiscal
2008. Therefore, sales for fiscal 2009 are expected to be $2.650
billion to $2.680 billion. For 2009, excluding the gain on
acquisition, net income is expected to be 4.8% to 5.1% of sales, or
$127.1 million to $137.3 million. With approximately 93.0 million
average shares outstanding, earnings per diluted share excluding
the gain on acquisition of $.02 are expected to be $1.37 to $1.48,
an increase of 7.0% to 15.6% over fiscal 2008. Capital spending in
fiscal 2009 is expected to be approximately $75.0 million,
including the completion of the bread line at the company's new
bakery in Kentucky as well as costs for capital maintenance and
efficiency improvements in the company's other bakeries. "Our
team's experience, the efficiency of our bakeries and our
distribution systems, the quality of our products, and the strength
of our brands will allow Flowers Foods to achieve good results in
2009 and the years ahead," Deese said. The board of directors will
consider the dividend at its regularly scheduled meeting. Any
action taken will be announced following that meeting. Conference
Call Flowers Foods will broadcast its second quarter conference
call over the Internet at 8:30 a.m. (Eastern) August 19, 2009. The
call will be broadcast live on Flowers' Web site,
http://www.flowersfoods.com/, and can be accessed by clicking on
the web cast link on the home page. The call also will be archived
on the company's Web site. Company Information Headquartered in
Thomasville, Ga., Flowers Foods is one of the nation's leading
producers and marketers of packaged bakery foods for retail and
foodservice customers. Among the company's top brands are Nature's
Own, Whitewheat, Cobblestone Mill, Blue Bird, and Mrs. Freshley's.
Flowers operates 39 bakeries that are among the most efficient in
the baking industry. Flowers Foods produces, markets, and
distributes fresh bakery products that are delivered to customers
daily through a direct-store-delivery system serving the Southeast,
Mid-Atlantic, and Southwest as well as select markets in California
and Nevada. The company also produces and distributes fresh snack
cakes and frozen breads and rolls nationally through warehouse
distribution. For more information, visit
http://www.flowersfoods.com/ Statements contained in this press
release that are not historical facts are forward-looking
statements. 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) competitive conditions in the baked foods
industry, including promotional and price competition, (b) changes
in consumer demand for our 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) our
ability to fully integrate recent acquisitions into our business,
and (g) our ability to achieve cash flow from capital expenditures
and acquisitions and the availability of new acquisitions that
build shareholder value. In addition, our results may also be
affected by general factors such as economic and business
conditions (including the baked foods markets), interest and
inflation rates and such other factors as are described in the
company's filings with the Securities and Exchange Commission.
Flowers Foods Consolidated Statement of Income
--------------------------------------------------------------------------
(000's omitted, except per share data) For the For the For the For
the 12 Week 12 Week 28 Week 28 Week Period Period Period Period
Ended Ended Ended Ended -------- -------- -------- --------
07/18/09 07/12/08 07/18/09 07/12/08 -------- -------- --------
-------- Sales $614,448 $540,656 $1,421,455 $1,217,363 Materials,
supplies, labor and other production costs 333,339 293,594 762,801
643,564 Selling, marketing and administrative expenses 216,602
197,662 510,624 449,337 Depreciation and amortization 18,656 16,032
42,933 36,945 Gain on acquisition 3,013 0 3,013 0 Gain on sale 0
2,306 0 2,306 Gain on insurance recovery 0 686 0 686 --------
-------- -------- -------- Income before interest and income taxes
(EBIT) 48,864 36,360 108,110 90,509 Interest income, net 180 2,657
639 6,154 -------- -------- -------- -------- Income before income
taxes (EBT) 49,044 39,017 108,749 96,663 Income tax expense 17,947
13,931 39,819 34,493 -------- -------- -------- -------- Net income
31,097 25,086 68,930 62,170 Less: Net income attributable to
noncontrolling interest (756) (1,137) (1,208) (2,438) --------
-------- -------- -------- Net income attributable to Flowers
Foods, Inc. $30,341 $23,949 $67,722 $59,732 ======== ========
======== ======== Per share amounts: Net income attributable to
Flowers Foods, Inc. $0.33 $0.26 $0.73 $0.65 ======== ========
======== ======== Diluted weighted average shares outstanding
92,630 92,746 92,979 92,580 ======== ======== ======== ========
Flowers Foods Segment Reporting
--------------------------------------------------------------------------
(000's omitted) For the For the For the For the 12 Week 12 Week 28
Week 28 Week Period Ended Period Ended Period Ended Period Ended
------------ ------------ ------------ ------------ 07/18/09
07/12/08 07/18/09 07/12/08 ------------ ------------ ------------
------------ Sales: Direct-Store- Delivery $507,475 $440,802
$1,175,750 $994,683 Warehouse Delivery 106,973 99,854 245,705
222,680 ------------ ------------ ------------ ------------
$614,448 $540,656 $1,421,455 $1,217,363 ============ ============
============ ============ EBITDA: Direct-Store- Delivery $60,645
$48,540 $137,112 $117,890 Warehouse Delivery 15,769 10,117 34,639
23,098 Flowers Foods (8,894) (6,265) (20,708) (13,534) ------------
------------ ------------ ------------ $67,520 $52,392 $151,043
$127,454 ============ ============ ============ ============
Depreciation and Amortization: Direct-Store- Delivery $14,952
$12,153 $34,489 $28,111 Warehouse Delivery 3,661 3,656 8,307 8,378
Flowers Foods 43 223 137 456 ------------ ------------ ------------
------------ $18,656 $16,032 $42,933 $36,945 ============
============ ============ ============ EBIT: Direct-Store- Delivery
$45,693 $36,387 $102,623 $89,779 Warehouse Delivery 12,108 6,461
26,332 14,720 Flowers Foods (8,937) (6,488) (20,845) (13,990)
------------ ------------ ------------ ------------ $48,864 $36,360
$108,110 $90,509 ============ ============ ============
============ Flowers Foods Condensed Consolidated Balance Sheet
--------------------------------------------------------------------------
(000's omitted) 07/18/09 ---------- Assets
----------------------------------------------------------- Cash
and Cash Equivalents $20,100 Other Current Assets 338,867 Property,
Plant & Equipment, net 582,189 Distributor Notes Receivable
(includes $12,483 current portion) 106,905 Other Assets 11,466 Cost
in Excess of Net Tangible Assets, net 305,933 ---------- Total
Assets $1,365,460 ========== Liabilities and Stockholders' Equity
----------------------------------------------------------- Current
Liabilities $240,203 Bank Debt (includes $15,000 current portion)
236,750 Other Debt and Capital Leases (includes $5,357 current
portion) 29,567 Other Liabilities 176,476 Stockholders' Equity
682,464 ---------- Total Liabilities and Stockholders' Equity
$1,365,460 ========== Flowers Foods Condensed Consolidated
Statement of Cash Flows
--------------------------------------------------------------------------
(000's omitted) For the 12 Week For the 28 Week Period Ended Period
Ended --------------- --------------- 07/18/09 07/18/09
--------------- --------------- Cash flows from operating
activities: Net income $31,097 $68,930 Adjustments to reconcile net
income to net cash from operating activities: Total non-cash
adjustments 43,011 81,824 Changes in assets and liabilities
(18,501) (36,806) --------------- --------------- Net cash provided
by operating activities 55,607 113,948 ---------------
--------------- Cash flows from investing activities: Purchase of
property, plant and equipment (13,294) (28,183) Acquisitions, net
of cash acquired (8,842) (8,842) Other (1,258) (521)
--------------- --------------- Net cash disbursed for investing
activities (23,394) (37,546) --------------- --------------- Cash
flows from financing activities: Dividends paid (16,096) (30,056)
Stock options exercised 427 1,824 Income tax benefit related to
stock awards 0 1,352 Stock repurchases (6,009) (27,625) Decrease in
book overdraft (2,737) (1,297) Proceeds from debt borrowings
212,500 456,000 Debt and capital lease obligation payments
(218,283) (476,062) Other (432) (402) ---------------
--------------- Net cash disbursed for financing activities
(30,630) (76,266) --------------- --------------- Net increase in
cash and cash equivalents 1,583 136 Cash and cash equivalents at
beginning of period 18,517 19,964 --------------- ---------------
Cash and cash equivalents at end of period $20,100 $20,100
=============== =============== Flowers Foods Reconciliation of Net
Income to EBITDA
--------------------------------------------------------------------------
(000's omitted) For the 12 Week For the 28 Week Period Ended Period
Ended --------------- --------------- July 18, 2009 July 18, 2009
--------------- --------------- Net income attributable to Flowers
Foods, Inc. $30,341 $67,722 Net income attributable to
noncontrolling interest 756 1,208 Income tax expense 17,947 39,819
Interest income, net (180) (639) Depreciation and amortization
18,656 42,933 --------------- --------------- EBITDA $67,520
$151,043 =============== ===============
http://www.newscom.com/cgi-bin/prnh/20080530/CLF007LOGODATASOURCE:
Flowers Foods CONTACT: Investor Contact: Marta J. Turner, Executive
VP/Corporate Relations, +1-229-227-2348, or Media Contact: Mary A.
Krier, VP/Communications, +1-229-227-2333, both of Flowers Foods
Web Site: http://www.flowersfoods.com/
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