Flowers Foods Inc., producer of Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Tastykake and other bakery foods, reported financial results for the company's 16-week first-quarter ending April 23, 2022.
First-quarter summary
Compared to the prior year first quarter where applicable.
- Sales increased 10.3% to a quarter-record $1.436 billion.
- Net income increased 19.4% to $85.6 million. Adjusted net income increased 6.3% to $93.1 million.
- Adjusted EBITDA(1) increased 2.4% to a quarter-record $165.5 million, representing 11.5% of sales, a 90-basis point decrease.
- Diluted EPS increased $0.06 to $0.40. Adjusted diluted EPS(1) increased $0.03 to a quarter-record $0.44.
[1] Adjusted for items affecting comparability. See reconciliations of non-GAAP measures in the financial statements following this release.
"We delivered another quarter of record results, reflecting outstanding top line growth and disciplined execution on costs," Ryals McMullian, president and CEO of Flowers Foods, said in the announcement. "Focused implementation of our portfolio strategy drove market share gains for our leading brands, as consumers continued to gravitate to these differentiated products despite widespread inflation. To sustain this robust momentum, we intend to invest in marketing and advertising, introduce new and innovative products, and expand production capacity.
"We are adjusting our outlook for fiscal 2022 to account for improved pricing, higher-than-expected inflation, and supply chain disruptions," McMullian continued. "To mitigate resource shortages and volatile commodity prices, which increased beyond our initial expectations, we continue to execute on efficiency initiatives and we have implemented a price increase that will become effective in the second quarter. The resulting price lag, combined with the supply chain disruptions, is expected to impact EPS by a total of five cents in the second and third quarters. We are encouraged by the strong underlying fundamentals of our business, and our industry-leading team remains dedicated to enhancing long-term shareholder value."
For the 52-week fiscal 2022, the company expects:
- Sales in the range of approximately $4.764 billion to $4.850 billion, representing an increase of approximately 10.0% to 12.0% compared to the prior year period. Prior guidance called for sales of $4.660 billion to $4.695 billion, representing an increase of approximately 7.6% to 8.4% compared to the prior year period.
- Adjusted EPS(1) in the range of approximately $1.20 to $1.30, compared to prior guidance of $1.25 to $1.35.
The company's outlook is based on the following assumptions:
- Depreciation and amortization in the range of $135 million to $145 million.
- Net interest expense of approximately $7 million.
- An effective tax rate in the range of 24.0% to 24.5%.
- Weighted average diluted share count fo.r the year of approximately 213.5 million shares
- Capital expenditures in the range of $150 million to $160 million, with $60 million to $70 million related to our ERP upgrade.
Consolidated first-quarter operating highlights
Compared to the prior year first quarter where applicable
- Sales increased 10.3% to $1.436 billion, surpassing the previous record first-quarter results in 2020 that were influenced by the pandemic.
- Percentage point change in sales attributed to:
- Pricing/mix: 13.5%
- Volume: -3.2%
- Branded retail sales increased $94.4 million or 11.0% to $956.1 million, store branded retail sales increased $11.1 million or 6.9% to $173.6 million, while non-retail and other sales increased $28.2 million or 10.2% to $306.2 million.
- Branded retail sales increased primarily due to higher prices intended to offset inflationary pressures, and improved promotional efficiency, partially offset by volume declines in branded cake items partly due to supply constraints.
- Store branded retail sales increased primarily due to higher prices intended to offset inflationary pressures, partially offset by volume declines as consumer purchasing continued to shift to branded retail products.
- Non-retail and other sales increased primarily due to higher prices intended to offset inflationary pressures, partially offset by volume declines in fast food and co-manufactured items, supply chain disruptions, and targeted sales rationalization to improve profitability.
