Flowers Foods, Inc. reported results for its 16-week first quarter ended April 20, 2013. Sales increased 25.9 percent to $1.13 billion. Diluted earnings per share (EPS), excluding certain benefit/costs, was $0.46, up 64.3 percent from last year’s first quarter. The company recorded a benefit of $0.37 per diluted share related to a bargain purchase accounting gain on the Sara Lee/California acquisition and acquisition-related costs of $0.02 per diluted share. Including the benefit and costs, diluted EPS was $0.81.
Volume increased 19.3 percent, acquisitions contributed 7.7 percent, and net price/mix was unfavorable 1.1 percent, driven by a change in product mix. Gross margin was 48.2 percent, compared to 46.7 percent for the first quarter of fiscal 2012. Earnings before interest, taxes, depreciation and amortization (EBITDA) margin, excluding the benefit/costs, was 12.3 percent for the quarter. Operating margin (EBIT), excluding the benefit/costs, was 9.2 percent. The company generated $86.8 million in cash flow from operations.
In January, the company announced an agreement to acquire certain Hostess bread assets. The agreement was approved by the bankruptcy court in March and is currently under regulatory review. In February, the company completed acquisition of the Sara Lee and Earthgrains brands for sliced breads, buns and rolls in the state of California from BBU, Inc. The new business is being rolled out in stages through early summer.
The company announced the election by the board of directors of Allen L. Shiver, current president of Flowers Foods, as chief executive officer and George E. Deese, current chairman of the board and chief executive officer, as executive chairman, effective May 22, 2013 at the annual shareholders meeting.
In April, the company entered into a new term loan with a commitment of up to $300.0 million and amended existing $500.0 million senior unsecured credit facility and existing term loan to reflect more favorable terms in anticipation of funding for acquisitions and other needs.
Chairman and CEO George Deese said in a prepared statement, “We believe the results we reported today reflect the best performance in the company’s history. We achieved substantial sales increases in both segments, across all channels, and in our primary product categories. We also delivered outstanding earnings. Throughout our company, team members performed incredibly well as they worked to serve customers’ needs following Hostess’ departure from the market last fall. Our investments in our bakeries and our distribution systems over several decades, combined with the strength and determination of our team, allowed us to take on new business and meet the needs of existing and new customers.”
“This is an exciting time for Flowers Foods as we focus on integrating Lepage Bakeries in the Northeast and Sara Lee in California, while maintaining the gains we have achieved in markets throughout the country in recent months,” Deese continued. “Looking ahead, we expect to have growth opportunities in our newer markets as customers and consumers gain confidence in Nature’s Own, Tastykake, and our other strong brands.”
