THOMASVILLE, Ga., Aug. 9, 2017 /PRNewswire/ -- Flowers Foods,
Inc. (NYSE: FLO), producer of Nature's Own, Wonder,
Tastykake, Dave's Killer Bread, and other bakery
foods, today reported financial results for the company's 12-week
second quarter ended July 15,
2017.
Second Quarter Summary:
Compared to the prior year
second quarter where applicable
- Sales decreased 0.9% to $926.6
million. Excluding sales related to a divestiture, sales
decreased 0.4%.
- Diluted EPS decreased 12.5% to $0.21.
- Adjusted diluted EPS(1) decreased 7.7% to
$0.24.
- Net income decreased 12.5% to $44.7
million.
- Adjusted net income(1) decreased 7.8% to
$50.5 million.
- Adjusted EBITDA(2) decreased 5.2% to $113.7 million.
(1) See
reconciliations of non-GAAP measures in the financial statements
following this release.
(2) Earnings
before Interest, Taxes, Depreciation and Amortization, adjusted for
certain items affecting comparability. See reconciliations of
non-GAAP measures in the financial statements following this
release.
To improve the profitability of its Warehouse segment, the
company will close a snack cake bakery in Winston-Salem, North Carolina in early
October. Sweet baked goods production will shift to more efficient
Flowers' snack cake bakeries. Employees affected by the closure
will be offered a severance package.
CEO's Remarks:
"We continue to take decisive action to
focus on the consumer and become a more efficient, streamlined
organization," said Allen Shiver,
Flowers Foods president and CEO. "Our portfolio of bread brands,
bolstered by the strength of Dave's Killer Bread, continues
to gain market share and improve our competitive position. In our
cake business, we are taking action to address share losses and
improve profitability. Our business is generating strong free cash
flow and supporting shareholder returns, our solid financial
position, and strategic investments.
"We are executing on our strategic priorities under Project
Centennial," Shiver continued. "During the quarter, gross margins
increased and manufacturing efficiencies improved. Our cost savings
initiatives moved forward in line with our expectations, and we
began transitioning to a new, lower-cost, performance-driven
structure designed to better address the changing consumer and
operating environment. We're on track with our progress, but as our
updated guidance reflects, we are realistic about the evolving
consumer environment. Our team is driving hard to build shareholder
value by reducing costs, strengthening the core business, and
capitalizing growth opportunities within the large bakery
category."
Updated Guidance for Fiscal 2017:
- Given category trends to date, the company now expects sales to
be in the range of $3.888 billion to $3.927
billion, a year-over-year change of approximately -1.0% to
0.0%.
- Adjusted diluted EPS is now expected to be in the range of
$0.85 to $0.90, excluding the gain on
the sale of the Cedar Rapids, Iowa
mix plant of $0.09 per share, costs
associated with the closing of the Winston-Salem bakery of approximately
$0.01 to $0.02 per share, and
consulting costs associated with Project Centennial of
approximately $0.11 to $0.12 per
share.
Matters Affecting Comparability:
In the second quarter
of 2017, the company recorded Project Centennial consulting costs
of $9.4 million. In the prior year
quarter, the company recorded Project Centennial consulting costs
of $1.3 million, and a pension
settlement charge of $4.6
million.
Reconciliation of
Earnings per Share to Adjusted Earnings per Share
|
|
|
|
For the 12
Week Period
Ended
|
|
For the 12
Week Period
Ended
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
Net income per
diluted common share
|
|
$
0.21
|
|
$
0.24
|
Project Centennial
consulting costs
|
|
0.03
|
|
-
|
Pension plan
settlement loss
|
|
-
|
|
0.02
|
Adjusted net income
per diluted common share
|
|
$
0.24
|
|
$
0.26
|
In fiscal 2016, costs associated with Project Centennial were
$1.2 million in the third quarter and
$3.8 million in the fourth quarter.
For the remainder of fiscal 2017, the company expects Project
Centennial consulting costs to be in the range of $10 million to $15 million. Additionally, the
company expects costs associated with the closing of the
Winston-Salem bakery to be
approximately $4.0 million to $6.0
million.
Update on Strategic Priorities:
The company continued
to deliver on its strategic priorities under Project Centennial.
During the second quarter, notable accomplishments included:
- Generating Fuel for Growth: Announced a new
organizational structure and initiated a voluntary separation
incentive program; made progress toward reducing purchased goods
and services spending by at least $45
million by fiscal 2018; implemented distributor enablement
initiatives to reduce stales; completed the first wave of
continuous improvement pilot programs that revealed efficiency
savings opportunities in the bakeries; began process of
rationalizing existing manufacturing and logistics network; will
close a snack cake facility in North
Carolina in early October.
- Reinvigorating the Core Business: Made substantial
progress on a streamlined brand assortment to be implemented by the
end of 2017; extended Dave's Killer Bread into the breakfast
segment with the launch of bagels and breakfast items, used a
third-party platform to efficiently expand distribution of fresh
products to new markets in the upper Midwest.
- Capitalizing on Growing Adjacencies: Formulated a
strategy and began to identify opportunities to diversify our brand
portfolio into attractive adjacent categories.
Consolidated Second Quarter 2017 Summary
Compared
to the prior year second quarter where applicable
- Sales decreased 0.9% to $926.6
million.
- Percentage point change in sales attributed to:
-
- Pricing/mix: 1.9%
- Volume: -2.3%
- Divestiture: -0.5%
- Net income decreased 12.5% to $44.7
million. Excluding matters affecting comparability, net
income decreased 7.8% to $50.5
million.
- Operating income decreased 13.8% to $70.2 million. Excluding matters affecting
comparability, operating income decreased 8.9% to $79.6 million.
- Adjusted EBITDA decreased 5.2% to $113.7
million, or 12.3% of sales, a 50 basis point decline.
- Materials, supplies, labor and other production costs
(exclusive of depreciation and amortization) were 50.5% of sales, a
60 basis point decline. This decline was primarily driven by fewer
outside purchases of certain Dave's Killer Bread (DKB) items
due to the additional organic production capacity provided by
Flowers bakeries in Mesa, Ariz.,
and Tuscaloosa, Ala., and improved
manufacturing efficiencies.
- Selling, distribution and administrative (SD&A) expenses
were 38.2% of sales, a 200 basis point increase. Of this increase,
90 basis points were due to incremental Project Centennial
consulting costs. The balance of the increase in SD&A expenses
was primarily driven by higher distributor distribution fees due to
a larger portion of sales being sold by independent
distributors.
- Depreciation and amortization (D&A) expenses were
$34.1 million, 3.7% of sales, a 20
basis point increase. This increase was driven by additional assets
being placed in service as well as higher amortization expense
associated with certain trademarks.
Overall softness in the fresh bakery category, a competitive
marketplace, and the divestiture of the mix manufacturing business
in January 2017 resulted in the
consolidated sales decline, partially offset by a net increase in
sales of branded organic breads. Sales of DKB branded products
continue to grow, driven by both volume and price, even though the
company cycled the national rollout of the DKB brand on its DSD
network at the beginning of the second quarter.
On a consolidated basis, branded retail sales decreased 0.2% to
$548.3 million, store branded retail
sales decreased 1.0% to $144.3
million, while non-retail and other sales decreased 2.3% to
$234.0 million. The decrease in the
branded retail category resulted from volume declines in cake and
buns and rolls, mostly offset by increased sales of organic bread.
Store branded retail sales declined as a result of volume declines
in cake, partially offset by growth in buns and rolls. The impact
of the mix manufacturing business divestiture principally resulted
in the decline in the non-retail and other category, which also
includes contract manufacturing, vending and foodservice.
DSD Segment Summary
Compared to the prior year
second quarter where applicable
- Sales increased 0.9% to $792.9
million
- Percentage point change in sales attributed to:
-
- Pricing/mix: 0.7%
- Volume: 0.2%
- Operating income decreased 0.7% to $79.6
million.
- EBITDA increased 0.7% to $108.9
million, or 13.7% of sales, a 10 basis point decline.
- Materials, supplies, labor and other production costs
(exclusive of depreciation and amortization) were 47.2% of segment
sales, a 30 basis point decrease. This decline was primarily driven
by sales increases due to improved pricing/mix, and lower outside
purchases of products.
- SD&A expenses were 39.1% of segment sales, a 40 basis
points increase. This increase was primarily driven by higher
distributor distribution fees due to a larger portion of sales
being sold by independent distributors. Lower workforce-related
costs and cost savings initiatives more than offset increased legal
costs and partially offset the higher distributor distribution fees
mentioned above.
- D&A expenses were $29.4
million.
DSD segment branded retail sales increased 1.2% to $514.6 million, store branded retail sales
increased 3.1% to $120.1 million,
while non-retail and other sales decreased 1.7% to $158.2 million. Branded retail sales increased
due to growth of branded organic products, mostly offset by
declines in other branded items, largely buns and rolls and cake.
The company continues to see substantial growth of the DKB brand
from both volume and price, despite having cycled the national
rollout of the brand at the beginning of the quarter. Furthermore,
the addition of DKB breakfast items, introduced during the quarter,
contributed to the increase. Store branded retail sales increased
primarily due to gains in buns and rolls. Non-retail and other
sales decreased primarily due to volume declines in foodservice,
partially offset by positive pricing/mix.
Warehouse Segment Summary
Compared to the prior
year second quarter where applicable
- Total segment sales decreased 10.4% to $133.7 million.
- Percentage point change in sales attributed to:
-
- Pricing/mix: 2.2%
- Volume: -9.6%
- Divestiture: -3.0%
- Operating income decreased 26.2% to $11.6 million.
- EBITDA decreased 19.5% to $16.4
million, 12.2% of sales, a 140 basis point decline.
- Materials, supplies, labor and other production costs
(exclusive of depreciation and amortization) were 70.2% of segment
sales, a 20 basis point increase. This increase was primarily
driven by sales declines.
- SD&A expenses were 17.6% of segment sales, a 120 basis
point increase. This increase was primarily driven by significantly
lower sales that spread the costs over a smaller sales base.
- D&A expenses were $4.8
million.
Decreased sales of snack cakes and Alpine Valley branded
organic breads, and the impact of our mix manufacturing business
divestiture resulted in the sales decrease in the Warehouse
segment. Branded retail sales declined 18.1% to $33.7 million, store branded retail sales
decreased 17.4% to $24.2 million,
while non-retail and other sales decreased 3.7% to $75.8 million. Branded retail sales decreased
largely due to volume declines in both cake and organic bread.
During the second quarter of fiscal 2016, the Warehouse segment's
Mesa bakery significantly
increased production of DKB products for the DSD segment. These
intercompany sales are not included in the amounts above, but are
included in the DSD segment. Branded cake sales were negatively
impacted by increased competition quarter over quarter. Store
branded retail sales decreased mainly due to volume decreases in
cake. The decrease in non-retail and other sales, which includes
contract manufacturing, vending and foodservice, was due primarily
to the mix manufacturing business divestiture and, to a lesser
extent, lost contract manufacturing business, partially offset by
volume gains in foodservice sales.
Unallocated Corporate Expense Summary
Note:
Comparisons are to consolidated sales
- SD&A expenses increased 130 basis points to 2.3% of
consolidated sales, including incremental Project Centennial
consulting costs of $8.1 million, or
90 basis points of sales.
Cash Flow, Dividends, Share Repurchases, and Capital
Allocation
In the second quarter of fiscal 2017, cash flow
from operating activities was $84.9
million, capital expenditures were $14.5 million, and dividends paid were
$35.7 million. During the quarter,
the company made net payments on debt and capital lease obligations
of $44.2 million.
The company repurchased 28,050 shares of its common stock in
connection with the vesting of a restricted stock award during the
period. There are 6.6 million shares remaining on the company's
current share repurchase authorization. As in the past, the company
expects to continue to make opportunistic share repurchases under
this authorization.
Conference Call
Flowers Foods will hold a conference
call to discuss its second quarter 2017 earnings at 8:30 a.m. (Eastern) on August 10, 2017. The call can be accessed by
following the webcast link on flowersfoods.com. The call also will
be archived on the company's website.
About Flowers Foods
Headquartered in Thomasville, Ga., Flowers Foods, Inc. (NYSE:
FLO) is one of the largest producers of fresh packaged bakery foods
in the United States with 2016
sales of $3.9 billion. Flowers
operates bakeries across the country that produce a wide range of
bakery products. Among the company's top brands are Nature's
Own, Wonder, Tastykake, and Dave's Killer
Bread. Learn more at www.flowersfoods.com.
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) 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, (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; and (m) 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.
Information Regarding Non-GAAP Financial Measures
The
company prepares its consolidated financial statements in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP). However, from time to time, the company may present in its
public statements, press releases and SEC filings, non-GAAP
financial measures such as, EBITDA, adjusted EBITDA, adjusted EBIT,
EBITDA margin, adjusted EBITDA margin, adjusted net income,
adjusted EBIT by segment, and adjusted EPS, adjusted selling,
distribution and administrative expenses (SD&A), gross margin
excluding depreciation and amortization and the ratio of net debt
to adjusted EBITDA. The reconciliations attached provide
reconciliations of the non-GAAP measures used in this presentation
or release to the most comparable GAAP financial measure. The
company's definitions of these non-GAAP measures may differ from
similarly titled measures used by others. These non-GAAP measures
should be considered supplemental to, and not a substitute for,
financial information prepared in accordance with GAAP.
The company defines EBITDA as earnings from continuing
operations before interest, income taxes, depreciation,
amortization and income attributable to non-controlling interest.
The company believes that EBITDA is a useful tool for managing the
operations of its business and is an indicator of the company's
ability to incur and service indebtedness and generate free cash
flow. EBITDA is used as the primary performance measure in the
company's 2014 Omnibus Equity and Incentive Compensation Plan.
Furthermore, pursuant to the terms of our credit facility, EBITDA
is used to determine the company's compliance with certain
financial covenants. The company also believes that EBITDA measures
are commonly reported and widely used by investors and other
interested parties as measures of a company's operating performance
and debt servicing ability because EBITDA measures assist in
comparing performance on a consistent basis without regard to
depreciation or amortization, which can vary significantly
depending upon accounting methods and non-operating factors (such
as historical cost). EBITDA is also a widely-accepted financial
indicator of a company's ability to incur and service
indebtedness.
EBITDA should not be considered an alternative to (a) income
from operations or net income (loss) as a measure of operating
performance; (b) cash flows provided by operating, investing and
financing activities (as determined in accordance with GAAP) as a
measure of the company's ability to meet its cash needs; or (c) any
other indicator of performance or liquidity that has been
determined in accordance with GAAP.
The company defines adjusted EBITDA, adjusted EBIT, adjusted net
income, adjusted EBIT by segment, and adjusted net income per
diluted share, respectively, excluding the impact of asset
impairment charges, acquisition-related costs, and pension plan
settlements. The company believes that these measures, when
considered together with its GAAP financial results, provides
management and investors with a more complete understanding of its
business operating results, including underlying trends, by
excluding the effects of certain charges.
Net debt to EBITDA is used as a measure of financial leverage
employed by the company. Gross margin excluding depreciation and
amortization is used as a performance measure to provide additional
transparent information regarding our results of operations on a
consolidated and segment basis. Changes in depreciation and
amortization are separately discussed and include depreciation and
amortization for materials, supplies, labor and other production
costs and operating activities.
Presentation of gross margin includes depreciation and
amortization in the materials, supplies, labor and other production
costs according to GAAP. Our method of presenting gross margin
excludes the depreciation and amortization components, as discussed
above.
The reconciliations attached provide reconciliations of the
non-GAAP measures used in this presentation or release to the most
comparable GAAP financial measure.
Flowers Foods,
Inc.
|
Consolidated
Statement of Income
|
(000's omitted,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
Sales
|
$
|
926,639
|
$
|
935,025
|
$
|
2,114,288
|
$
|
2,139,377
|
Materials, supplies,
labor and other production costs (exclusive of
depreciation and amortization shown separately below)
|
|
468,152
|
|
477,955
|
|
1,076,093
|
|
1,099,145
|
Selling, distribution
and administrative expenses
|
|
354,193
|
|
338,396
|
|
815,463
|
|
782,935
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
Depreciation and
amortization
|
|
34,128
|
|
32,598
|
|
81,316
|
|
76,065
|
Pension plan
settlement loss
|
|
-
|
|
4,641
|
|
-
|
|
4,641
|
Income from
operations (EBIT)
|
|
70,166
|
|
81,435
|
|
170,291
|
|
176,591
|
Interest expense,
net
|
|
3,278
|
|
3,010
|
|
8,326
|
|
5,788
|
Income before income
taxes (EBT)
|
|
66,888
|
|
78,425
|
|
161,965
|
|
170,803
|
Income tax
expense
|
|
22,148
|
|
27,270
|
|
56,807
|
|
60,285
|
Net income
|
$
|
44,740
|
$
|
51,155
|
$
|
105,158
|
$
|
110,518
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted common share
|
$
|
0.21
|
$
|
0.24
|
$
|
0.50
|
$
|
0.52
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
210,269
|
|
209,014
|
|
210,223
|
|
211,230
|
Flowers Foods,
Inc.
|
Segment
Reporting
|
(000's
omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
Sales:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
792,892
|
$
|
785,767
|
$
|
1,792,752
|
$
|
1,784,770
|
Warehouse Delivery
|
|
133,747
|
|
149,258
|
|
321,536
|
|
354,607
|
|
$
|
926,639
|
$
|
935,025
|
$
|
2,114,288
|
$
|
2,139,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
Divestiture:
|
|
|
|
|
|
|
|
|
Warehouse Delivery
|
$
|
-
|
$
|
-
|
$
|
(28,875)
|
$
|
-
|
|
$
|
-
|
$
|
-
|
$
|
(28,875)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
108,919
|
$
|
108,115
|
$
|
237,375
|
$
|
237,138
|
Warehouse Delivery (1)
|
|
16,350
|
|
20,309
|
|
67,356
|
|
45,328
|
Unallocated Corporate (2)
|
|
(20,975)
|
|
(14,391)
|
|
(53,124)
|
|
(29,810)
|
|
$
|
104,294
|
$
|
114,033
|
$
|
251,607
|
$
|
252,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
29,355
|
$
|
27,980
|
$
|
70,417
|
$
|
65,054
|
Warehouse Delivery
|
|
4,761
|
|
4,599
|
|
11,072
|
|
10,877
|
Unallocated Corporate
|
|
12
|
|
19
|
|
(173)
|
|
134
|
|
$
|
34,128
|
$
|
32,598
|
$
|
81,316
|
$
|
76,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
79,564
|
$
|
80,135
|
$
|
166,958
|
$
|
172,084
|
Warehouse Delivery (1)
|
|
11,589
|
|
15,710
|
|
56,284
|
|
34,451
|
Unallocated Corporate (2)
|
|
(20,987)
|
|
(14,410)
|
|
(52,951)
|
|
(29,944)
|
|
$
|
70,166
|
$
|
81,435
|
$
|
170,291
|
$
|
176,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The 28 week
period ended July 15, 2017 includes the gain on divestiture of
$28.9 million.
|
|
|
|
|
|
|
|
|
|
|
|
(2) The 12 week and
28 week periods ended July 16, 2016 include a pension plan
settlement loss of $4.6 million.
|
Flowers Foods,
Inc.
|
Condensed
Consolidated Balance Sheet
|
(000's
omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 15,
2017
|
Assets
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
7,179
|
|
|
|
|
Other Current
Assets
|
|
|
459,687
|
|
|
|
|
Property, Plant &
Equipment, net
|
|
|
741,885
|
|
|
|
|
Distributor Notes Receivable
(includes $22,410 current portion)
|
|
|
191,684
|
|
|
|
|
Other Assets
|
|
|
35,503
|
|
|
|
|
Cost in Excess of Net
Tangible Assets, net
|
|
|
1,285,770
|
|
|
|
|
Total Assets
|
|
$
|
2,721,708
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
$
|
345,861
|
|
|
|
|
Long-term Debt and Capital
Leases (includes $12,140 current portion)
|
|
847,005
|
|
|
|
|
Other Liabilities
|
|
|
264,255
|
|
|
|
|
Stockholders'
Equity
|
|
|
1,264,587
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
2,721,708
|
Flowers Foods,
Inc.
|
Condensed
Consolidated Statement of Cash Flows
|
(000's
omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
44,740
|
$
|
51,155
|
$
|
105,158
|
$
|
110,518
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
|
|
|
from operating
activities:
|
|
|
|
|
|
|
|
|
|
Total non-cash
adjustments
|
|
35,954
|
|
41,717
|
|
62,174
|
|
89,962
|
|
Changes in assets and
liabilities
|
|
4,208
|
|
(16,320)
|
|
(6,436)
|
|
(5,183)
|
Net cash provided
by operating activities
|
|
84,902
|
|
76,552
|
|
160,896
|
|
195,297
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(14,454)
|
|
(17,810)
|
|
(31,919)
|
|
(41,722)
|
|
Divestiture of
assets
|
|
-
|
|
-
|
|
41,230
|
|
-
|
|
Other
|
|
5,948
|
|
1,688
|
|
10,542
|
|
5,660
|
Net cash
(disbursed for) provided by investing activities
|
|
(8,506)
|
|
(16,122)
|
|
19,853
|
|
(36,062)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Dividends
paid
|
|
(35,716)
|
|
(33,372)
|
|
(69,601)
|
|
(64,609)
|
|
Exercise of stock
options
|
|
167
|
|
9,354
|
|
6,416
|
|
10,478
|
|
Stock repurchases,
including accelerated stock repurchases
|
|
(520)
|
|
-
|
|
(2,671)
|
|
(126,298)
|
|
Net change in debt
borrowings
|
|
(44,150)
|
|
(37,250)
|
|
(108,100)
|
|
23,750
|
|
Other
|
|
4,489
|
|
961
|
|
(6,024)
|
|
(5,342)
|
Net cash disbursed
for financing activities
|
|
(75,730)
|
|
(60,307)
|
|
(179,980)
|
|
(162,021)
|
Net increase
(decrease) in cash and cash equivalents
|
|
666
|
|
123
|
|
769
|
|
(2,786)
|
Cash and cash
equivalents at beginning of period
|
|
6,513
|
|
11,469
|
|
6,410
|
|
14,378
|
Cash and cash
equivalents at end of period
|
$
|
7,179
|
$
|
11,592
|
$
|
7,179
|
$
|
11,592
|
Flowers Foods,
Inc.
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(000's omitted,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Earnings per Share to Adjusted Earnings per Share
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted common share
|
|
$
0.21
|
|
$
0.24
|
|
$
0.50
|
|
$
0.52
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(0.09)
|
|
-
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Project Centennial
consulting costs
|
|
0.03
|
|
-
|
|
0.07
|
|
-
|
|
Pension plan
settlement loss
|
|
-
|
|
0.02
|
|
-
|
|
0.02
|
|
Adjusted net income
per diluted common share
|
|
$
0.24
|
|
$
0.26
|
|
$
0.49
|
|
$
0.54
|
|
Certain amounts
may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Gross Margin
|
|
|
|
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
|
|
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
926,639
|
|
$
935,025
|
|
|
|
|
|
Materials, supplies,
labor and other production costs (exclusive of
depreciation and amortization)
|
|
468,152
|
|
477,955
|
|
|
|
|
|
Gross Margin
excluding depreciation and amortization
|
|
458,487
|
|
457,070
|
|
|
|
|
|
Less depreciation and
amortization for production activities
|
|
19,740
|
|
19,869
|
|
|
|
|
|
Gross
Margin
|
|
$
438,747
|
|
$
437,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization for production activities
|
|
$
19,740
|
|
$
19,869
|
|
|
|
|
|
Depreciation and
amortization for selling, distribution and
administrative activities
|
|
14,388
|
|
12,729
|
|
|
|
|
|
Total depreciation
and amortization
|
|
$
34,128
|
|
$
32,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to Adjusted EBIT and Adjusted EBITDA
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
44,740
|
|
$
51,155
|
|
$
105,158
|
|
$
110,518
|
|
Income tax
expense
|
|
22,148
|
|
27,270
|
|
56,807
|
|
60,285
|
|
Interest expense,
net
|
|
3,278
|
|
3,010
|
|
8,326
|
|
5,788
|
|
EBIT
|
|
70,166
|
|
81,435
|
|
170,291
|
|
176,591
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
815
|
|
-
|
|
Project Centennial
consulting costs
|
|
9,389
|
|
1,256
|
|
24,795
|
|
1,256
|
|
Pension plan
settlement loss
|
|
-
|
|
4,641
|
|
-
|
|
4,641
|
|
Adjusted
EBIT
|
|
79,555
|
|
87,332
|
|
167,026
|
|
182,488
|
|
Depreciation and
amortization
|
|
34,128
|
|
32,598
|
|
81,316
|
|
76,065
|
|
Lease termination
depreciation impact
|
|
-
|
|
-
|
|
(1,844)
|
|
-
|
|
Adjusted
EBITDA
|
|
$
113,683
|
|
$
119,930
|
|
$
246,498
|
|
$
258,553
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
926,639
|
|
$
935,025
|
|
$
2,114,288
|
|
$
2,139,377
|
|
Adjusted EBITDA
margin
|
|
12.3%
|
|
12.8%
|
|
11.7%
|
|
12.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to Cash Flow from Operations
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
113,683
|
|
$
119,930
|
|
$
246,498
|
|
$
258,553
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities
|
|
1,826
|
|
9,119
|
|
(19,142)
|
|
13,897
|
|
Changes in assets and
liabilities
|
|
4,208
|
|
(16,320)
|
|
(6,436)
|
|
(5,183)
|
|
Income
taxes
|
|
(22,148)
|
|
(27,270)
|
|
(56,807)
|
|
(60,285)
|
|
Interest expense,
net
|
|
(3,278)
|
|
(3,010)
|
|
(8,326)
|
|
(5,788)
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
28,875
|
|
-
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
1,029
|
|
-
|
|
Project Centennial
consulting costs
|
|
(9,389)
|
|
(1,256)
|
|
(24,795)
|
|
(1,256)
|
|
Pension plan
settlement loss
|
|
-
|
|
(4,641)
|
|
-
|
|
(4,641)
|
|
Cash Flow From
Operations
|
|
$
84,902
|
|
$
76,552
|
|
$
160,896
|
|
$
195,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Income Tax Expense to Adjusted Income Tax Expense
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
$
22,148
|
|
$
27,270
|
|
$
56,807
|
|
$
60,285
|
|
Tax impact
of:
|
|
|
|
|
|
|
|
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(11,117)
|
|
-
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
314
|
|
-
|
|
Project Centennial
consulting costs
|
|
3,615
|
|
484
|
|
9,546
|
|
484
|
|
Pension plan
settlement loss
|
|
-
|
|
1,787
|
|
-
|
|
1,787
|
|
Adjusted income tax
expense
|
|
$
25,763
|
|
$
29,541
|
|
$
55,550
|
|
$
62,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
44,740
|
|
$
51,155
|
|
$
105,158
|
|
$
110,518
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(17,758)
|
|
-
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
501
|
|
-
|
|
Project Centennial
consulting costs
|
|
5,774
|
|
772
|
|
15,249
|
|
772
|
|
Pension plan
settlement loss
|
|
-
|
|
2,854
|
|
-
|
|
2,854
|
|
Adjusted net
income
|
|
$
50,514
|
|
$
54,781
|
|
$
103,150
|
|
$
114,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBIT to Adjusted EBIT and Adjusted EBITDA - DSD
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
$
79,564
|
|
$
80,135
|
|
$
166,958
|
|
$
172,084
|
|
Lease terminations
and legal settlement
|
|
-
|
|
-
|
|
815
|
|
-
|
|
Adjusted
EBIT
|
|
79,564
|
|
80,135
|
|
167,773
|
|
172,084
|
|
Depreciation and
amortization
|
|
29,355
|
|
27,980
|
|
70,417
|
|
65,054
|
|
Depreciation on lease
terminations
|
|
-
|
|
-
|
|
(1,844)
|
|
-
|
|
Adjusted
EBITDA
|
|
$
108,919
|
|
$
108,115
|
|
$
236,346
|
|
$
237,138
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
792,892
|
|
$
785,767
|
|
$
1,792,752
|
|
$
1,784,770
|
|
Adjusted EBITDA
margin
|
|
13.7%
|
|
13.8%
|
|
13.2%
|
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBIT to Adjusted EBIT and Adjusted EBITDA - Warehouse
Delivery
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
$
11,589
|
|
$
15,710
|
|
$
56,284
|
|
$
34,451
|
|
Gain on
divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
|
Adjusted
EBIT
|
|
11,589
|
|
15,710
|
|
27,409
|
|
34,451
|
|
Depreciation and
amortization
|
|
4,761
|
|
4,599
|
|
11,072
|
|
10,877
|
|
Adjusted
EBITDA
|
|
$
16,350
|
|
$
20,309
|
|
$
38,481
|
|
$
45,328
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
133,747
|
|
$
149,258
|
|
$
321,536
|
|
$
354,607
|
|
Adjusted EBITDA
margin
|
|
12.2%
|
|
13.6%
|
|
12.0%
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBIT to Adjusted EBIT and Adjusted EBITDA -
Corporate
|
|
|
|
|
For the 12
Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 28
Week
Period Ended
|
|
For the 28 Week
Period Ended
|
|
|
|
|
July 15,
2017
|
|
July 16,
2016
|
|
July 15,
2017
|
|
July 16,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
$
(20,987)
|
|
$
(14,410)
|
|
$
(52,951)
|
|
$
(29,944)
|
|
Project Centennial
consulting costs
|
|
9,389
|
|
1,256
|
|
24,795
|
|
1,256
|
|
Pension plan
settlement loss
|
|
-
|
|
4,641
|
|
-
|
|
4,641
|
|
Adjusted
EBIT
|
|
$
(11,598)
|
|
$
(8,513)
|
|
$
(28,156)
|
|
$
(24,047)
|
|
Depreciation and
amortization
|
|
12
|
|
19
|
|
(173)
|
|
134
|
|
Adjusted
EBITDA
|
|
$
(11,586)
|
|
$
(8,494)
|
|
$
(28,329)
|
|
$
(23,913)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Earnings per Share - Full
Year Fiscal 2017 Guidance
|
|
|
|
|
|
|
|
|
Range
Estimate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted common share
|
|
$
0.82
|
to
|
$
0.85
|
|
|
|
|
|
Gain on sale of
Specialty Blending
|
|
(0.09)
|
|
(0.09)
|
|
|
|
|
|
Project Centennial
consulting costs
|
|
0.11
|
|
0.12
|
|
|
|
|
|
Plant closure
costs
|
|
0.01
|
|
0.02
|
|
|
|
|
|
Adjusted net income
per diluted common share
|
|
$
0.85
|
to
|
$
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flowers Foods,
Inc.
|
Sales
Bridge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Total
Sales
|
|
For the 12 Week
Period Ended July 15, 2017
|
Volume
|
Price/Mix
|
Divestiture
|
Change
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
0.2%
|
0.7%
|
0.0%
|
0.9%
|
|
|
|
|
|
|
|
Warehouse
Delivery
|
-9.6%
|
2.2%
|
-3.0%
|
-10.4%
|
|
|
|
|
|
|
|
Total Flowers
Foods
|
-2.3%
|
1.9%
|
-0.5%
|
-0.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Total
Sales
|
|
For the 28 Week
Period Ended July 15, 2017
|
Volume
|
Price/Mix
|
Divestiture
|
Change
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
0.0%
|
0.4%
|
0.0%
|
0.4%
|
|
|
|
|
|
|
|
Warehouse
Delivery
|
-5.7%
|
-0.8%
|
-2.8%
|
-9.3%
|
|
|
|
|
|
|
|
Total Flowers
Foods
|
-1.5%
|
0.8%
|
-0.5%
|
-1.2%
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/flowers-foods-inc-reports-second-quarter-2017-results-300502287.html
SOURCE Flowers Foods, Inc.